What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2022-03-22 compared with 2021-02-25 · 134 added, 117 removed, 475 unchanged (35% of the section changed)

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and Subsidiaries

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID Number 248 )

Financial Statements:

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

Caladrius Biosciences, Inc.

Board of Directors and Stockholders of Caladrius Biosciences, Inc.

Opinion on the financial statements

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New York, New York

February 25, 2021

March 22, 2022

CALADRIUS BIOSCIENCES, INC.

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Accumulated deficit ( 453,016 ) ( 425,550 )

Accumulated other comprehensive (loss) income ( 13 ) 2

Accumulated other comprehensive loss ( 70 ) ( 13 )

Total Caladrius Biosciences, Inc.

stockholders' equity 92,254 32,496

Noncontrolling interests ( 254 ) ( 263 )

Non-controlling interests ( 254 ) ( 254 )

Total equity 92,000 32,242

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Operating loss ( 29,050 ) ( 19,145 )

Other income:

Other income, net 132 740

Total other income, net 132 740

Other income (expense):

Investment income, net 151 132

Other expense, net ( 75 ) —

Total other income 76 132

Net loss before benefit from income taxes and noncontrolling interests ( 28,974 ) ( 19,013 )

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Other comprehensive loss:

Available for sale securities - net unrealized (loss) income ( 15 ) 34

Total other comprehensive (loss) income ( 15 ) 34

Available for sale securities - net unrealized loss ( 57 ) ( 15 )

Total other comprehensive loss ( 57 ) ( 15 )

Comprehensive loss ( 27,523 ) ( 8,156 )

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Balance at December 31, 2019 10 $ — 10,529 $ 11 $ 438,911 $ 2 $ ( 417,400 ) $ ( 708 ) $ 20,816 $ ( 263 ) $ 20,553

Adoption of accounting standard — — — — — — ( 62 ) — ( 62 ) — ( 62 )

Net loss — — — — — — ( 8,150 ) — ( 8,150 ) 9 ( 8,141 )

Unrealized gain on marketable securities — — — — — 34 — — 34 — 34

Unrealized loss on marketable securities — — — — — ( 15 ) — — ( 15 ) — ( 15 )

Share-based compensation — — 53 — 1,117 — — — 1,117 — 1,117

Net proceeds from issuance of common stock — — 569 1 1,313 — — — 1,314 — 1,314

Net proceeds from issuance of common stock and warrants — — 8,807 8 18,720 — — — 18,728 — 18,728

Balance at December 31, 2020 10 $ — 19,389 $ 19 $ 458,748 $ ( 13 ) $ ( 425,550 ) $ ( 708 ) $ 32,496 $ ( 254 ) $ 32,242

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Net proceeds from issuance of common stock and warrants — — 39,888 41 85,459 — — — 85,500 — 85,500

Proceeds from option exercises — — 7 — 24 — — — 24 — 24

Balance at December 31, 2021 10 $ — 59,801 $ 60 $ 545,988 $ ( 70 ) $ ( 453,016 ) $ ( 708 ) $ 92,254 $ ( 254 ) $ 92,000

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Purchases of property and equipment ( 60 ) ( 20 )

Net cash (used in) provided by investing activities ( 7,277 ) 21,432

Net cash used in investing activities ( 54,896 ) ( 7,277 )

Cash flows from financing activities:

Proceeds from exercise of options 24 —

Tax withholding payments on net share settlement equity awards ( 248 ) ( 148 )

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Caladrius Biosciences, Inc.

(“we,” “us,” "our," “Caladrius” or the “Company”) is a clinical-stage biopharmaceutical company dedicated to the development and commercialization of cellular therapies designed to reverse disease and/or promote the regeneration of damaged tissue.

The Company is developing first-in-class therapeutics based on the characteristics of naturally occurring autologous CD34+ cells and their ability to stimulate the growth of new microvasculature.

The Company's technology leverages these cells to enable the body's natural repair mechanisms using formulations unique to each medical indication.

The Company's goal is to develop and commercialize products that address important unmet medical needs based on a broad and versatile portfolio of candidates.

(“we,” “us,” “our,” “Caladrius” or the “Company”) is a clinical-stage biopharmaceutical company dedicated to the development of treatments and reversal of severe diseases.

The Company is developing what are intended to be first-in-class therapeutics based on the characteristics of naturally occurring CD34+ cells and their ability to stimulate the growth of new microvasculature.

Its technology is intended to leverage these cells to enable the body's natural repair mechanisms using formulations unique to each medical indication.

The Company's leadership team has decades of collective biopharmaceutical development experience.

Its goal is to develop and commercialize products that address important unmet medical needs based on a broad and versatile portfolio of candidates.

The Company's current product candidates include:

CLBS16, the subject of both a recently completed positive Phase 2a study and a newly initiated Phase 2b study in the U.S.

for the treatment of coronary microvascular dysfunction (“CMD”);

HONEDRA® (CLBS12), recipient of SAKIGAKE designation and eligible for early conditional approval in Japan for the treatment of critical limb ischemia (“CLI”) and Buerger’s Disease based on the results of an ongoing clinical trial;

CLBS201, designed to assess the safety and efficacy of CD34+ cell therapy as a treatment for pre-dialysis patients with chronic kidney disease (“CKD”) and OLOGO™ (CLBS14), a Regenerative Medicine Advanced Therapy (“RMAT”) designated therapy for which the Company is in discussion with the U.S.

Food and Drug Administration (the “FDA”) to finalize a Phase 3 protocol of reduced size and scope for a confirmatory trial in subjects with no-option refractory disabling angina (“NORDA”).

• XOWNA ® (CLBS16), the subject of both a completed positive Phase 2a study (ESCaPE-CMD) and an ongoing follow-on Phase 2b study (FREEDOM Trial) in the United States for the treatment of coronary microvascular dysfunction (“CMD”);

• HONEDRA ® (CLBS12), recipient of SAKIGAKE designation pursuant to which early conditional approval in Japan for the treatment of critical limb ischemia (“CLI”) and Buerger’s disease is being sought based on the current results of a clinical trial executed in Japan.

HONEDRA ® was the recipient of orphan drug designation in March 2021 from the U.S.

Food and Drug Administration (“FDA”) for Buerger's disease;

• CLBS201, designed to assess the safety and efficacy of CD34+ cell therapy as a treatment for patients with chronic kidney disease related to type 2 diabetes (diabetic kidney disease or “DKD”).

Ischemic Repair (CD34 Cell Technology)

The CD34+ cell was discovered as a result of the deliberate search for a cell capable of stimulating the development and/or repair of blood vessels.

All tissues in the body maintain their function by replacing cells over time.

In addition to the maintenance function, the body must also be capable of building new blood vessels after injury.

A CD34+ cell is an endothelial progenitor cell that has the ability to stimulate new blood vessel formation at the level of the microvasculature.

No other native cell discovered to date has demonstrated this same capability.

The Company's proprietary cell technology using autologous (a patient’s own naturally occurring) CD34+ cells has led to the development of therapeutic product candidates designed to address diseases and conditions caused by ischemia.

Ischemia occurs when the supply of oxygenated blood to healthy tissue is restricted or reduced.

Through the administration of CD34+ cells, Caladrius seeks to promote the development and formation of new microvasculature and thereby increase blood flow to the impacted area.

The Company believes that a number of conditions caused by underlying ischemic injury can be improved through its CD34+ cell technology including, but not limited to, Buerger's disease, CLI, CMD, and DKD.

XOWNA ® for Treatment of Coronary Microvascular Dysfunction

In 2017, with the assistance of a $ 1.9 million grant from the National Institutes of Health (Award Number R44HL135889), the Company initiated its program for XOWNA ® for the treatment of CMD, a disease that afflicts as many as 1.6 million patients in the United States alone, with no current targeted treatment options.

That study, the ESCaPE-CMD Trial, was a Phase 2a proof-of-concept open label study that enrolled patients at the Mayo Clinic in Rochester, MN and Cedars-Sinai Medical Center in Los Angeles, CA.

Those data showed a positive therapeutic effect with a statistically significant improvement in angina frequency, coronary flow reserve, Canadian Cardiovascular Society Angina Class and Seattle Angina Questionnaire scores, as well as an acceptable safety profile.

The full data set from that study was presented at the SCAI 2020 Scientific Sessions Virtual Conference on May 14, 2020 by Dr.

Timothy Henry, FACC, of the Christ Hospital in Cincinnati, Ohio.

In December 2020, the Company commenced enrollment in its Phase 2b FREEDOM Trial of XOWNA ® , a double-blind, randomized and placebo-controlled clinical trial designed to further evaluate the efficacy and safety of intracoronary artery delivery of autologous CD34+ cells in subjects with CMD and without obstructive coronary artery disease.

While early enrollment proceeded to plan with the first patient treated in January 2021, the impact of the COVID-19 pandemic contributed to a general slowing of enrollment.

Protocol amendments to the initial FREEDOM Trial protocol, as agreed to by the FDA, were implemented with the goal of enhancing breadth and speed of subject enrollment.

HONEDRA ® for Treatment of Critical Limb Ischemia

The Company's randomized, open-label, registration-eligible study of HONEDRA ® in Japan for the treatment of CLI and Buerger's disease has, to date, demonstrated positive trends in both safety and efficacy.

The HONEDRA ® study's enrollment, however, has been significantly curtailed by the COVID-19 pandemic's impact in Japan, including the States of Emergency in Japan that have persisted for much of the past 18 months.

Due to the significant and continued operational and financial burden incurred as a result of these COVID-19 delays, coupled with the unpredictability of the timing of site enrollment re-initiation, Caladrius suspended further enrollment and is focusing its efforts on consummating a partnership for the product in Japan.

Such a partnership may become the basis for the completion of development and registration of HONEDRA ® in Japan and may include the completion of enrollment of the four remaining no-option CLI subjects stipulated in the original protocol, if necessary, and/or exploration of the possibility of submitting the existing data to Japan's Pharmaceuticals and Medical Devices Agency (“PMDA”) under Japan's regenerative medicine regulations, which allow for conditional approval of innovative regenerative medicine products.

Despite receipt from FDA in March 2021 of orphan designation in the U.S.

for CLBS12 as a potential treatment for Buerger's disease, based on a response from the FDA in October 2021 regarding a development plan for U.S.

registration the Company decided not to pursue United States development in Buerger's disease at this time.

CLBS201 for Treatment of Diabetic Kidney Disease

Progressive kidney failure is associated with attrition of the microcirculation of the kidney.

Pre-clinical studies in kidney disease and injury models have demonstrated that protection or replenishment of the microcirculation results in improved kidney function.

Based on these observations, the Company has elected to move forward with a Phase 1, open-label, proof-of-concept trial evaluating CLBS201 dosed via intra-renal artery injections in subjects with DKD.

This protocol, as approved by an Institutional Review Board (the “IRB”), is expected to include six subjects in total with the first two subjects sequentially dosed and followed for a two-week safety observation period.

Clearance by the independent Data Safety Monitoring Board (“DSMB”) overseeing the study will then permit the treatment of the next four patients, with all patients being followed for safety and therapeutic effect.

A read-out of data will occur after at the six-month follow-up visit for all patients.

A key criterion for continued development of CLBS201 will be its ability to demonstrate a therapeutic effect that will make it competitive in the field of DKD treatment, i.e., kidney function regeneration, as indicated by increased glomerular filtration rate.

Additional Out-licensing Opportunities and Pipeline Diversification

The Company's broad intellectual property portfolio of cell therapy assets includes notable programs available for out-licensing in order to continue their clinical development.

The Company's current long-term strategy focuses on advancing its therapies through development with the ultimate objective of obtaining market authorizations and entering commercialization, either alone or with partners, to provide treatment options to patients suffering from life-threatening medical conditions.

The Company believes that it is well-positioned to realize potentially meaningful value increases within its own proprietary pipeline if it is successful in advancing its product candidates to their next significant development milestones.

In addition, the Company further desires to diversify its pipeline of development products candidates and is exploring a range of strategic transactions in furtherance of that goal.

The Company has taken, and intends to continue to take, active steps to identify assets and/or companies for acquisition and/or partnership that would complement its current development programs and de-risk its overall development portfolio.

Such assets potentially could target indications beyond cardiovascular disease as well as product categories outside of cell therapy.

The range of possible transactions includes an acquisition, merger, business combination, in-license or other strategic transaction, any of which could result in the issuance of securities that could significantly dilute the shares of its existing stockholders.

There can be no assurance that this exploration of strategic alternatives will result in Caladrius entering into or completing any transaction or that such transaction, if completed, will add to shareholder value.

Coronavirus Considerations

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In March 2020, the World Health Organization declared the outbreak of COVID-19 to be a pandemic, and the world's economies began to experience pronounced effects.

Despite the FDA approval of multiple COVID-19 vaccines in late 2020, there remains uncertainty around the extent and duration of disruption and any future related financial impact cannot be reasonably estimated at this time.

In response to the pandemic, we have implemented work from home as well as social distancing and other hygiene policies for employees when they must be in the office.

Our clinical study of HONEDRA® in Japan has experienced delays in enrollment due to the “State of Emergency” in effect in Japan for most of 2020 and re-implemented in Japan on Jan 7, 2021 and now extending through March 7, 2021 covering Tokyo and other regions in response to increased number of COVID-19 patients.

In response to the COVID-19 pandemic, the Company implemented a universal work from home policy as well as stringent social distancing and other hygiene policies for employees when they must be in the office.

The Company's clinical study of HONEDRA ® in Japan has experienced significant delays in enrollment due to the States of Emergency in effect in Japan for most of 2020 and re-implemented from January 7, 2021 through March 21, 2021 covering Tokyo and other regions in response to an increased number of COVID-19 infections.

Due to reported increases in COVID-19 cases and a low rate of vaccination in Japan, States of Emergency were renewed on April 25, 2021 through May 11, 2021 and then re-implemented in Tokyo from July 12, 2021 through September 30, 2021.

With the Company's expectation that

COVID-19 in Japan would continue to impact negatively enrollment of patients in the HONEDRA ® clinical trial, it elected to suspend trial enrollment, seek a development partner and consult with the Japanese regulatory authorities regarding the submission of patient data already accrued.

Caladrius' phase 2b trial of XOWNA ® in the U.S.

has also experienced delays in enrolling patients as a result of COVID-19.

Basis of Presentation

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This method incorporates various assumptions such as the risk-free interest rate, expected volatility, expected dividend yield and expected life of the options or warrants.

Stock based compensation expense also includes an estimate, which is made at the time of the grant, of the number of awards that are expected to be forfeited.

The fair value of the Company’s restricted stock and restricted stock units is based on the closing market price of the Company’s common stock on the date of grant.

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New Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses, which will require companies to present assets held at amortized cost and available for sale debt securities net of the amount expected to be collected.

The guidance requires the measurement of expected credit losses to be based on relevant information from past events, including historical experiences, current conditions and reasonable and supportable forecasts that affect collectability.

The guidance was effective for fiscal years and interim periods beginning after December 15, 2019 and early adoption was permitted.

The adoption of this guidance did not have a material impact on our consolidated financial statements.

In July 2019, the FASB issued ASU 2019-07, "Codification Updates to SEC Sections", to codify the SEC releases that clarify and improve the disclosure and presentation requirements of a variety of codification topics, thereby eliminating certain disclosure requirements that were redundant, duplicative, overlapping, outdated, or superseded.

For public companies, the amendments are effective upon issuance.

The Company determined that the adoption of this new accounting guidance did not have a material impact on its consolidated financial statements and footnote disclosures.

In October 2019, the FASB issued ASU 2019-12, which affects general principles within Topic 740, Income Taxes.

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For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020.

The Company believes that the adoption of this new accounting guidance will not have a material impact on its financial statements and footnote disclosures.

The Company believes that the adoption of this new accounting guidance has not had a material impact on its financial statements and footnote disclosures.

Note 3 – Available-for-Sale-Securities

The following table is a summary of available-for-sale securities recorded in cash and cash equivalents in the Company's Consolidated Balance Sheets (in thousands):

The following table is a summary of available-for-sale securities recorded in cash and cash equivalents or debt marketable securities in the Company's Consolidated Balance Sheets (in thousands):

December 31, 2021 December 31, 2020

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Operating lease liabilities - current 229 370

CIRM upfront funding - current — 1,600

Other 326 400

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2016-02, Leases (Topic 842) on January 1, 2019 and recognized leases with duration greater than 12 months on the balance sheet using the modified retrospective approach.

The Company has operating leases for two o ffices with terms that expire in 2022 and 2023.

The Company estimates its incremental borrowing rate at lease commencement to determine the present value of lease payments since most of the Company's leases do not provide an implicit rate of return.

The Company has operating leases for two o ffices with terms that expire in 2023 and 2025, respectively.

The Company estimates its incremental borrowing rate at lease commencement to determine the present value of lease payments as most of the Company's leases do not provide an implicit rate of return.

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

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Note 9 – Stockholders' Equity

The Company has used long-term incentive plans for the purpose of granting equity awards to employees of the Company, including officers, and nonemployees, including consultants and nonemployee members of the Company's board of directors (collectively, "Participants").

(collectively, the “Participants”).

The Participants may receive awards as determined by a committee of independent members of the Company's board of directors or, to the extent authorized by such committee with respect to certain Participants, a duly authorized employee (collectively, the “Committee”).

The incentive plan currently used by the Company is the 2018 Equity Incentive Compensation Plan (the "2018 Plan"), which was adopted by the stockholders of the Company in June 2018, and subsequently increased by the stockholders of the Company in June of 2020 with 2,500,000 shares authorized for issuance thereunder, plus any shares awarded under the 2015 Equity Compensation Plan (the "2015 Plan") or the Amended and Restated 2009 Equity Compensation Plan (the "2009 Plan") that are not issued due to their subsequent forfeiture, cancellation, or other settlement thereof.

The incentive plan currently used by the Company is the 2018 Equity Incentive Compensation Plan (the “2018 Plan”), as adopted by the stockholders of the Company in June 2018, and subsequently increased by the stockholders of the Company in June 2021 with 6,000,000 shares authorized for issuance thereunder and in June of 2020 with 2,500,000 shares authorized for issuance thereunder, plus any shares awarded under the 2015 Equity Compensation Plan (the “2015 Plan”) or the Amended and Restated 2009 Equity Compensation Plan (the “2009 Plan”) that are not issued due to their subsequent forfeiture, cancellation, or other settlement thereof.

Concurrent with the adoption of the 2018 Plan, no future awards will occur under the 2015 Plan or the 2009 Plan.

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Stock options vest either on the date of grant, ratably over a period determined at time of grant, or upon the accomplishment of specified business milestones, and generally expire 2 , 3 , or 10 years from the grant date depending on the status of the recipient as a nonemployee, employee or director of the Company.

As of December 31, 2020, there

were 1,376,030 shares available for future grants under the 2018 Plan.

As of December 31, 2021, there were 5,585,661 shares available for future grants under the 2018 Plan.

No additional awards may be made under the 2015 Plan or the 2009 Plan.

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As consideration for entering into the Purchase Agreement, the Company issued to Lincoln Park an additional 181,510 shares of common stock as commitment shares.

Pursuant to the Purchase Agreement, Lincoln Park purchased 250,000 shares of common stock, at a price of $ 4.00 per share, for a total gross purchase price of $ 1,000,000 (the “Initial Purchase”) upon commencement.

Pursuant to the Purchase Agreement, upon commencement Lincoln Park purchased 250,000 shares of common stock, at a price of $ 4.00 per share for a total gross purchase price of $ 1,000,000 (the “Initial Purchase”) upon commencement.

Thereafter, as often as every business day from and after one business day following the date of the Initial Purchase and over the 36 -month term of the Purchase Agreement, the Company has the right, from time to time, at its sole discretion and subject to certain conditions, to direct Lincoln Park to purchase up to 100,000 shares of common stock, with such amount increasing as the closing sale price of the common stock increases;

provided Lincoln Park’s obligation under any single such purchase will not exceed $ 2,500,000 , unless the Company and Lincoln Park mutually agree to increase the maximum amount of such single purchase (each, a “Regular Purchase”).

If the Company directs Lincoln Park to purchase the maximum number of shares of common stock it then may sell in a Regular Purchase, then in addition to such Regular Purchase, and subject to certain conditions and limitations in the Purchase Agreement, the Company may direct Lincoln Park in an “accelerated purchase” to purchase an additional amount of common stock that may not exceed the lesser of (i) 300 % the number of shares purchased pursuant to the corresponding Regular Purchase or (ii) 30 % of the total number of shares of the Company’s common stock traded during a specified period on the applicable purchase date as set forth in the Purchase Agreement.

Under certain circumstances and in accordance with the Purchase Agreement, the Company may direct Lincoln Park to purchase shares in multiple accelerated purchases on the same trading day.

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As of December 31, 2021, the Company had not made any sales of common stock to Lincoln Park under the Purchase Agreement other than the Initial Purchase.

In addition, the Company may not direct Lincoln Park to make Accelerated Purchases under the Purchase Agreement if the stock is below the specified floor price of $ 1.00 .

Common Stock Sales Agreement

In February 2018, the Company entered into a common stock sales agreement with H.C.

Wainwright & Co., LLC ("HCW") as sales agent, which was subsequently amended in August 2018 (the "Sales Agreement"), in connection with an “at the market offering” under which the Company from time to time may offer and sell shares of its common stock, having an

aggregate offering price of not more than $ 25.0 million.

In March 2019, subsequent to the filing of the Company's 2018 Form 10-K, the aggregate market value of its outstanding common stock held by non-affiliates was approximately $ 52.8 million.

Pursuant to General Instruction I.B.6 of Form S-3, since the aggregate market value of the Company's outstanding common stock held by non-affiliates was below $75.0 million at the time of its 2018 Form 10-K filing, the aggregate amount of securities that the Company was permitted to offer and sell at such time was reduced to $ 17.6 million (or a maximum of 4.8 million shares), which was equal to one-third of the aggregate market value of the Company's common stock held by non-affiliates at such time.

Subject to the terms and conditions of the Sales Agreement, HCW will use its commercially reasonable efforts consistent with its normal trading and sales practices to sell the shares from time to time, based upon the Company's instructions, including any price, time or size limits specified by the Company.

The Company has provided HCW with customary indemnification rights, and HCW will be entitled to a commission at a fixed commission rate equal to 3.0 % of the gross proceeds per share sold.

The Company has no obligation to sell any of the shares and may at any time suspend sales under the Sales Agreement or terminate the Sales Agreement.

The Sales Agreement will terminate upon the sale of all of the shares under the Sales Agreement unless terminated earlier by either party as permitted under the Sales Agreement.

During the year-ended December 31, 2020, the Company issued 3,558,778 shares of common stock under the Sales Agreement for net proceeds of $ 8.5 million.

As of year-ended December 31, 2020, the Company issued 3,784,912 shares of common stock under the Sales Agreement for net proceeds of $ 9.5 million since inception.

On February 12, 2021, we suspended the use of the at-the-market transactions facility (the “ATM”) and terminated the continuous offering pursuant to Sales Agreement entered into in February 2018 with HCW.

We will no longer make any sales of our common stock pursuant to the Sales Agreement unless and until a new prospectus supplement is filed with the Securities and Exchange Commission.

Wainwright & Co., LLC (“HCW”) as sales agent, which was subsequently amended in August 2018 (the “Sales Agreement”), in connection with an “at the market offering” under which the Company from time to time may offer and sell shares of its common stock, having an aggregate offering price of not more than $ 25.0 million.

The Company provided HCW with customary indemnification rights, and HCW was entitled to a commission at a fixed commission rate equal to 3.0 % of the gross proceeds per share sold.

On February 12, 2021, the Company suspended the use of the at-the-market transactions facility and terminated the continuous offering pursuant to the Sales Agreement.

As of the termination of the Sales Agreement on February 12, 2021, the Company had sold an aggregate 3,784,912 shares of its common stock pursuant to the Sales Agreement for net proceeds of $ 9.5 million since inception.

For the year ended December 31, 2021, the Company had no t issued any shares under the Sales Agreement.

At The Market Offering Agreement

On June 4, 2021, the Company entered into an At The Market Offering Agreement (the “ATM Agreement”) with HCW, as sales agent, in connection with an “at the market offering” under which the Company from time to time may offer and sell shares of its common stock, having an aggregate offering price of up to $ 50.0 million.

During the twelve months ended December 31, 2021, the Company had no t issued any shares under the ATM Agreement.

Having received a listing deficiency notice from Nasdaq on February 18, 2022 after the Company’s shares traded below $1.00 for 30 consecutive trading days, the Company will not be permitted to sell additional shares under the ATM Agreement until it re-establishes timely compliance.

Compliance may be reestablished by various mechanisms, including stock price appreciation at or above $1.00 for a requisite period of time and reverse stock split.

Registered Direct Offerings

In April 2020, the Company entered into a securities purchase agreement (the “April Purchase Agreement”) with certain investors (the “April Purchasers”).

Pursuant to the terms of the April Purchase Agreement, the Company agreed to sell to the Purchasers an aggregate of 2,162,166 shares of its common stock at a purchase price equal to $ 2.3125 per share.

In a concurrent private placement, the Company issued to the April Purchasers warrants to purchase an aggregate of 1,081,083 shares of its common stock.

In connection with the registered direct offering and concurrent private placement, the Company received gross proceeds of $ 5.0 million.

Each warrant is exercisable for one share of common stock and features an exercise price equal to $ 2.2500 per share.

The warrants are exercisable immediately upon issuance and will expire five and one-half years from the issuance date.

In May 2020, the Company entered into a securities purchase agreement (the “May Purchase Agreement”) with certain investors (the “May Purchasers”).

Pursuant to the terms of the May Purchase Agreement, the Company agreed to sell to the May Purchasers an aggregate of 2,084,850 shares of its common stock at a purchase price equal to $ 2.0625 per share.

In a concurrent private placement, the Company issued to the Purchasers warrants to purchase an aggregate of 1,042,425 shares of its common stock.

In connection with the registered direct offering and concurrent private placement, the Company received gross proceeds of $ 4.3 million.

Each warrant is exercisable for one share of common stock and features an exercise price equal to $ 2.0625 per share.

The warrants are exercisable immediately upon issuance and will expire five and one-half years from the issuance date.

In February 2021, the Company entered into a Securities Purchase Agreement (the “Institutional Purchase Agreement”) with certain institutional investors (the “Institutional Purchasers”).

Pursuant to the terms of the Institutional Purchase Agreement, the Company sold to the Institutional Purchasers in a registered direct offering an aggregate of 24,906,134 shares of its common stock and warrants to purchase an aggregate of 12,453,067 shares of its common stock at a combined purchase price equal to $ 2.45 per share and associated warrant.

Each warrant features an exercise price equal to $ 2.90 per share, is exercisable immediately upon issuance and will expire five years from the issuance date.

Additionally, in a concurrent non-brokered registered direct offering, the Company entered into a Securities Purchase Agreement (the “Additional Purchase Agreement”) with certain accredited investors (the “Additional Purchasers”).

Pursuant to the terms of the Additional Purchase Agreement, the Company sold to the Additional Purchasers an aggregate of 1,632,652 shares of its common stock and warrants to purchase an aggregate of 816,326 shares of its common stock at a combined purchase price equal to $ 2.45 per share and associated warrant.

Each warrant features an exercise price equal to $ 2.90 per share, is exercisable immediately upon issuance and will expire five years from the issuance date.

In connection with the registered direct offerings, the Company received gross proceeds of approximately $ 65.0 million.

Private Placement

On July 10, 2020, the Company entered into a securities purchase agreement (the “Private Placement”) with certain investors (the “Private Placement Purchasers”).

Pursuant to the terms of the Private Placement, the Company agreed to sell to the Private Placement Purchasers an aggregate of 969,694 shares of its common stock at a purchase price equal to $ 2.0625 per share, along with warrants to purchase an aggregate of 484,847 shares of its common stock.

In connection with the Private Placement, the Company received gross proceeds of $ 2.0 million.

Each warrant is exercisable for one share of common stock and features an exercise price equal to $ 2.0625 per share.

In January 2021, the Company entered into a securities purchase agreement (the “January Private Placement”) with certain investors (the “January Purchasers”).

Pursuant to the terms of the January Private Placement, the Company agreed to sell to the January Purchasers an aggregate of 12,500,000 shares of its common stock at a purchase price equal to $ 2.00 per share, along with warrants to purchase an aggregate of 6,250,000 shares of its common stock.

In connection with the January Private Placement, the Company received gross proceeds of $ 25.0 million.

Each warrant is exercisable for one share of common stock

and features an exercise price equal to $ 2.90 per share.

The warrants are exercisable immediately upon issuance and will expire five and one-half years from the issuance date.

Warrant Exercises

In January 2021, the Company issued 801,148 shares of common stock for net proceeds of $ 1.8 million in connection with warrant exercises associated with the April 23, 2020 securities purchase agreement and the May 25, 2020 securities purchase agreement.

Stock Options and Warrants

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The weighted average estimated fair value of restricted stock units issued for services in the years ended December 31, 2021 and 2020 was $ 1.59 and $ 2.65 per share, respectively.

The fair value of the restricted stock units was determined using the Company’s closing stock price on the date of issuance.

The fair value of the restricted stock units was determined using the

Company’s closing stock price on the date of issuance.

The vesting terms of restricted stock unit issuances are generally one year , or upon the achievement of performance-based milestones.

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Share-based Compensation

The Company utilizes share-based compensation in the form of stock options and restricted stock.

The Company utilizes share-based compensation in the form of stock options, restricted stock, and restricted stock units.

The following table summarizes the components of share-based compensation expense for the years ended December 31, 2021 and 2020 ($ in thousands):

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California Institute of Regenerative Medicine Grant Award

In February 2017, the California Institute for Regenerative Medicine ("CIRM") awarded the Company funds of up to $ 12.2 million to support the T-Rex Study.

In February 2017, the California Institute for Regenerative Medicine (“CIRM”) awarded the Company funds of up to $ 12.2 million to support The Sanford Project:

T-Rex Study, a prospective, randomized, placebo-controlled, double-blind Phase 2 clinical trial to evaluate the safety and efficacy of CLBS03 as a treatment for recent-onset type 1 diabetes.

The funding is based upon the achievement of certain milestones related to the proportion of subjects enrolled in California, as well as manufacturing and development costs incurred in California.

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The Company received $ 5.7 million in initial funding in May 2017, a $ 1.9 million milestone payment in December 2017, a $ 0.3 million progress payment in March 2018, and a $ 0.2 million progress payment in May 2019, of which the total was amortized over the estimated award period through July 2020 as a reduction to the related research and development expenses, with the final true up payment of $ 46 thousand received in September 2020 and recorded as a reduction to the related research and development expenses.

During the year ended December 31, 2020 and December 31, 2019, the Company amortized and recognized $ 1.6 million and $ 2.7 million in credits, respectively, in research and development related to CIRM funds received.

During the year ended December 31, 2021 and December 31, 2020 the Company amortized and recognized $ 0.0 million and $ 1.6 million in credits, respectively, to research and development related to CIRM funds received.

Note 12 – Income Taxes

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The provision (benefit) for income taxes is determined by applying the U.S.

Federal statutory rate of 21 % to income before income taxes as a result of the following ($ in thousands):

Federal statutory rate of 21 % to income before income taxes, and the components are set forth below ($ in thousands):

Years Ended December 31,

Federal benefit at statutory rate $ ( 6,085 ) $ ( 3,993 )

State and local (benefit) / expense net of U.S.

federal tax — —

Permanent non deductible expenses for U.S.

AMT credit benefit — —

Change in state deferred 622 5,122

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Other true ups 1,407 387

Effect of change in deferred tax rate — —

Sale of New Jersey State NOL's ( 10,872 ) —

Section 382 NOL Limitation

Sale of New Jersey State NOLs ( 1,508 ) ( 10,872 )

Valuation allowance for deferred tax assets ( 33,979 ) ( 1,521 )

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Accumulated net operating losses (tax effected) $ 36,281 $ 68,286

CIRM funding — 336

Right of use liability 201 176

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As of December 31, 2021, and 2020, the Company had approximately $ 281 million and $ 264 million, respectively, of Federal NOLs available to offset future taxable income expiring from 2030 through 2036.

The Company performed an analysis and determined that they had an ownership change of greater than 50% over a 3-year testing period on January 25, 2021.

As a result, $ 169 million of the $ 281 million of Federal NOLs will expire unutilized.

The Company wrote off that portion of the deferred tax asset and reduced the corresponding valuation allowance resulting in $ 112 million of remaining Federal NOL.

The write off of the deferred tax asset and the corresponding reduction in valuation allowance has no impact to the balance sheet or income statement.

Losses incurred before the ownership change on January 25, 2021 will be subject to an annual limitation of $173k under Internal Revenue Code Section 382, while losses incurred after January 25, 2021 will not be subject to limitations.

The Company may be able to utilize additional NOLs of approximately $ 1.1 million per year for the first five years after this ownership change as a result of the application of the Net Unrealized Built-in Gain rules.

As of December 31, 2021 and 2020, the Company had State NOLs available in New Jersey of $ 97 million and $ 99 million, respectively, California of $ 70 million and $ 70 million, respectively, and New York City of $ 13 million and $ 13 million, respectively, to offset future taxable income expiring from 2031 through 2041.

In accordance with Section 382 of the Internal Revenue code, the usage of the Company’s NOLs could be limited in the event of a change in ownership.

In accordance with Section 382 of the Internal Revenue code, the usage of the Company’s state NOLs would be limited given the change in ownership.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period when those temporary differences become deductible.

The Company performed an analysis and determined that they have had ownership change of greater than 50% over a 3-year testing period.

The last ownership change was determined to be on June 3, 2015.

Based on a market capitalization of $ 125 million and using an applicable federal rate of 2.5% the annual limitation would be approximately $ 3.0 million.

Post change losses from June 3, 2015 would not be subject to 382 limitations.

The Company applies the FASB’s provisions for uncertain tax positions.

The Company utilizes the two-step process to determine the amount of recognized tax benefit.

For tax positions meeting the more-likely-than-not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority.

The Company recognizes interest and penalties associated with certain tax positions as a component of income tax expense.

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The Company’s state tax returns remain open to examination for a period of three to four years from date of filing.

In December 2019, the Company received preliminary approval from the New Jersey Economic Development Authority ("NJEDA") to participate in the Technology Business Tax Certificate Transfer Program (the "Program").

In February 2021, the Company received preliminary approval from the New Jersey Economic Development Authority (“NJEDA”) to participate in the Technology Business Tax Certificate Transfer Program (the “Program”).

The Program permits qualified companies to sell a percentage of their New Jersey net operating losses (“NJ NOLs”) to unrelated profitable corporations.

On April 21, 2020, the Company received final approval from NJEDA to sell $ 11.5 million of its NJ NOLs, which was subsequently sold to a qualifying and approved buyer pursuant to the Program for net proceeds of $ 10.9 million.

The net proceeds have been recorded as a benefit from income taxes in the consolidated financial statements.

On April 12, 2021, the Company received final approval from NJEDA to sell a portion of our NJ NOLs, which were subsequently sold to a qualifying and approved buyer pursuant to the Program for net proceeds of $ 1.4 million.

The $ 1.5 million of our NJ NOL related tax benefits (“NJ NOL Tax Benefits”) have been recorded as a benefit from income taxes and the loss on sale of $ 0.1 million recorded in other income (expense) in the consolidated financial statements.

Note 13 – Contingencies

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While the outcome of pending claims cannot be predicted with certainty, the Company does not believe that the outcome of any pending claims will have a material adverse effect on the Company's financial condition or operating results.

Note 14 – Subsequent Events

Registered Direct Offerings

On February 12, 2021, we entered into a Securities Purchase Agreement (the “Institutional Purchase Agreement”) with certain institutional investors (the “Institutional Purchasers”).

Pursuant to the terms of the Institutional Purchase Agreement, we sold to the Institutional Purchasers in a registered direct offering an aggregate of 24,906,134 shares of our common stock and warrants to purchase an aggregate of 12,453,067 shares of our common stock at a combined purchase price equal to $ 2.45 per share and associated warrant.

Each warrant features an exercise price equal to $ 2.90 per share, is exercisable immediately upon issuance and will expire five years from the issuance date.

Additionally, in a concurrent non-brokered registered direct offering, we entered into a Securities Purchase Agreement (the “Additional Purchase Agreement”) with certain accredited investors (the “Additional Purchasers”).

Pursuant to the terms of the Additional Purchase Agreement, we sold to the Additional Purchasers an aggregate of 1,632,652 shares of our common stock and warrants to purchase an aggregate of 816,326 shares of our common stock at a combined purchase price equal to $ 2.45 per share and associated warrant.

Each warrant features an exercise price equal to $ 2.90 per share, is exercisable immediately upon issuance and will expire five years from the issuance date.

The closing of the offerings occurred on February 17, 2021.

In connection with the registered direct offerings, we received net proceeds of approximately $ 60.7 million.

Sales Pursuant to Common Stock Sales Agreement

On February 12, 2021, we suspended the use of the at-the-market transactions facility (the “ATM”) and terminated the continuous offering pursuant to the Common Stock Sales Agreement (“Sales Agreement”) entered into in February 2018 with H.C.

Wainwright & Co., LLC (“HCW”).

In accordance with the terms of the Sales Agreement, we could offer and sell shares of our common stock having an aggregate offering price of up to $ 25.0 million from time to time through HCW pursuant to the ATM program.

As of February 12, 2021, we had sold an aggregate of 3,784,912 shares of our common stock pursuant to the Sales Agreement for aggregate gross proceeds of $ 9.5 million.

We will no longer make any sales of our common stock pursuant to the Sales Agreement unless and until a new prospectus supplement is filed with the Securities and Exchange Commission.

Private Placement Offering

On January 21, 2021, the Company entered into a securities purchase agreement (the “January Private Placement”) with certain investors (the “January Purchasers”).

In connection with the January Private Placement, the Company received gross proceeds of $ 25.0 million.

Each warrant is exercisable for one share of common stock and features an exercise price equal to $ 2.90 per share.

The warrants are exercisable immediately upon issuance and will expire five and one-half years from the issuance date.

Warrant Exercises

Subsequent to December 31, 2020 the company issued 801,148 shares of common stock for net proceeds of $ 1.8 million in connection with warrant exercises associated with the April Purchase Agreement and May Purchase Agreement.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

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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 8. Financial Statements and Supplementary Data