What changed in this filing

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Item 1. Financial Statements

2023-08-14 compared with 2023-05-09 · 131 added, 106 removed, 527 unchanged (31% of the section changed)

25 unchanged sentences

issued 8,133,095

and 7,866,799 shares at March 31, 2023 and December 31, 2022, respectively;

outstanding, 7,998,342 and 7,866,061 shares at March 31, 2023 and December 31, 2022,

and 7,866,799 shares at June 30, 2023 and December 31, 2022, respectively;

outstanding, 8,132,357 and 7,866,061 shares at June 30, 2023 and December 31, 2022,

Additional paid-in capital 576,173 574,548

Treasury stock, at cost;

738 shares at March 31, 2023 and December 31, 2022

738 shares at June 30, 2023 and December 31, 2022

( 708 ) ( 708 )

11 unchanged sentences

(In thousands, except per share data)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Operating Expenses:

18 unchanged sentences

Basic and diluted shares

8,021 4,035 8,004 4,036

See accompanying notes to consolidated financial statements.

3 unchanged sentences

(In thousands)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Net loss $ ( 4,027 ) $ ( 6,626 ) $ ( 10,214 ) $ ( 10,852 )

Other comprehensive loss:

Available for sale securities - net unrealized loss ( 11 ) ( 126 )

Available for sale securities - net unrealized gain 12 126 1 —

Cumulative translation adjustment arising during the period ( 10 ) — ( 22 ) —

17 unchanged sentences

Shares Amount

Balance at March 31, 2022 4,035 $ 4 $ 546,637 $ ( 196 ) $ ( 457,242 ) $ ( 708 ) $ 88,495 $ ( 254 ) $ 88,241

Net loss — — — — ( 6,626 ) — ( 6,626 ) — ( 6,626 )

Share-based compensation ( 1 ) — 367 — — — 367 — 367

Proceeds from issuance of common stock 4 — 29 — — — 29 — 29

Unrealized gain on marketable securities — — — 126 — — 126 — 126

Balance at June 30, 2022 4,038 $ 4 $ 547,033 $ ( 70 ) $ ( 463,868 ) $ ( 708 ) $ 82,391 $ ( 254 ) $ 82,137

Common Stock Additional

Capital Accumulated

Comprehensive Loss Accumulated

Deficit Treasury

Lisata Therapeutics,

Stockholders'

Subsidiary Total

Shares Amount

Balance at December 31, 2021 3,986 $ 4 $ 546,044 $ ( 70 ) $ ( 453,016 ) $ ( 708 ) $ 92,254 $ ( 254 ) $ 92,000

1 unchanged sentence

Share-based compensation 48 — 960 — — — 960 — 960

Unrealized loss on marketable securities — — — ( 126 ) — — ( 126 ) — ( 126 )

Net proceeds from issuances of common stock 4 — 29 — — — 29 — 29

Balance at June 30, 2022 4,038 $ 4 $ 547,033 $ ( 70 ) $ ( 463,868 ) $ ( 708 ) $ 82,391 $ ( 254 ) $ 82,137

Common Stock Additional

Capital Accumulated

Comprehensive

Loss Accumulated

Deficit Treasury

Lisata Therapeutics,

Stockholders'

Subsidiary Total

Shares Amount

Balance at March 31, 2023 7,999 $ 8 $ 575,137 $ ( 52 ) $ ( 513,428 ) $ ( 708 ) $ 60,957 $ ( 254 ) $ 60,703

Net loss — — — — ( 4,027 ) — ( 4,027 ) — ( 4,027 )

Share-based compensation ( 25 ) — 584 — — — 584 — 584

Net proceeds from issuances of common stock 76 — 297 — — — 297 — 297

Proceeds from option exercises 83 — 155 — — — 155 — 155

Foreign Currency Translation Adjustment — — — ( 10 ) — — ( 10 ) — ( 10 )

Unrealized gain on marketable securities — — — 12 — — 12 — 12

Balance at June 30, 2023 8,133 $ 8 $ 576,173 $ ( 50 ) $ ( 517,455 ) $ ( 708 ) $ 57,968 $ ( 254 ) $ 57,714

Common Stock Additional

9 unchanged sentences

Share-based compensation 107 — 1,173 — — — 1,173 — 1,173

Net proceeds from issuances of common stock 76 — 297 — — — 297 — 297

Proceeds from option exercises 83 — 155 — — — 155 — 155

Foreign currency translation adjustment — — — ( 22 ) — — ( 22 ) — ( 22 )

Unrealized loss on marketable securities — — — ( 11 ) — — ( 11 ) — ( 11 )

Balance at March 31, 2023 7,999 $ 8 $ 575,137 $ ( 52 ) $ ( 513,428 ) $ ( 708 ) $ 60,957 $ ( 254 ) $ 60,703

Unrealized gain on marketable securities — — — 1 — — 1 — 1

Balance at June 30, 2023 8,133 $ 8 $ 576,173 $ ( 50 ) $ ( 517,455 ) $ ( 708 ) $ 57,968 $ ( 254 ) $ 57,714

See accompanying notes to consolidated financial statements.

3 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

3 unchanged sentences

Depreciation and amortization 95 14

(Gain) loss on disposal of fixed assets 3 —

Loss on disposal of fixed assets 3 —

Accretion on marketable securities ( 426 ) 900

7 unchanged sentences

Sale of marketable securities 64,400 60,070

Net cash provided by (used in) investing activities 4,289 ( 6,090 )

Investment in Cend Therapeutics — ( 10,000 )

Purchase of property and equipment — ( 235 )

Net cash provided by investing activities 3,564 19,544

Cash flows from financing activities:

Proceeds from exercise of options 155 —

Tax withholding payments on net share settlement equity awards ( 85 ) ( 168 )

Net cash used in financing activities ( 85 ) ( 168 )

Net proceeds from issuance of common stock 297 29

Net cash provided by (used in) financing activities 367 ( 139 )

Effect of exchange rate changes on cash ( 15 ) —

Net decrease in cash and cash equivalents ( 3,999 ) ( 11,900 )

Net (decrease) increase in cash and cash equivalents ( 8,464 ) 8,701

Cash and cash equivalents at beginning of period 32,154 24,647

9 unchanged sentences

LSTA1 actuates this active transport system in a tumor-specific manner, resulting in systemically co-administered anti-cancer drugs more efficiently penetrating and accumulating in the tumor, while normal tissues are not expected to be affected.

LSTA1 also has the potential to modify the tumor microenvironment (“TME”), with the objective of making tumors more susceptible to immunotherapies.

The Company and its collaborators have amassed significant non-clinical data demonstrating enhanced delivery of a range of emerging anti-cancer therapies, including immunotherapies and RNA-based therapeutics.

LSTA1 also has the potential to modify the tumor microenvironment (“TME”), thereby making tumors more susceptible to immunotherapies.

The Company and its collaborators have amassed significant non-clinical data demonstrating enhanced delivery of a range of existing and emerging anti-cancer therapies, including chemotherapeutics, immunotherapies and RNA-based therapeutics.

To date, LSTA1 has also demonstrated favorable safety, tolerability and activity in completed and ongoing clinical trials designed to enhance delivery of standard-of-care chemotherapy for pancreatic cancer.

The Company is exploring the potential of LSTA1 to enable a variety of treatment modalities to treat a range of solid tumors more effectively.

In addition, the Company has development programs based on its autologous CD34+ cell therapy technology platform that it will look to partner while incurring no additional capital outlay.

In addition, the Company has development programs based on its autologous CD34+ cell therapy technology platform that it is seeking to partner while incurring no additional capital outlay.

The Company's leadership team has decades of collective biopharmaceutical and pharmaceutical product development experience across a variety of therapeutic categories and at all stages of development from preclinical through to product registration and launch.

16 unchanged sentences

(i) Caladrius owned approximately 52 % of the Company's outstanding shares of common stock immediately following the close of the Merger;

(ii) although both entities contributed to the new management team of Lisata, the Caladrius team had more individuals on the management team and holds the chief executive officer (“CEO”), chief medical officer (“CMO”) and other senior management roles;

(ii) although both entities contributed to the new management team of Lisata, the Caladrius team provided a vast majority of the individuals on the management team and holds the chief executive officer (“CEO”), chief medical officer (“CMO”) and other senior management roles;

(iii) Caladrius paid a premium to acquire Cend’s assets;

8 unchanged sentences

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

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, including supply chain disruptions affecting the availability of qualified catheters used in the diagnosis of CMD and/or administration of XOWNA ® as well as with a contrast agent typically used in many catheter laboratories.

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, supply chain disruptions affecting the availability of qualified catheters used in the diagnosis of CMD and/or administration of XOWNA ® as well as with a contrast agent typically used in many catheter laboratories.

In May 2022, the Company announced that enrollment in the FREEDOM Trial was suspended and that it intended to conduct an interim analysis of the data from not less than the first 20 patients enrolled using the 6-month follow-up data to evaluate the efficacy and safety of XOWNA ® in subjects with CMD.

14 unchanged sentences

Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

In the opinion of management, the accompanying Consolidated Financial Statements of the Company and its subsidiaries, which are unaudited, include all normal and recurring adjustments considered necessary to present fairly the Company’s financial position as of March 31, 2023, and the results of its operations and its cash flows for the periods presented.

In the opinion of management, the accompanying Consolidated Financial Statements of the Company and its subsidiaries, which are unaudited, include all normal and recurring adjustments considered necessary to present fairly the Company’s financial position as of June 30, 2023, and the results of its operations and its cash flows for the periods presented.

The unaudited consolidated financial statements herein should be read together with the historical consolidated financial statements of the Company for the years ended December 31, 2022 and 2021 included in our 2022 Form 10-K.

Operating results for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

Operating results for the three and six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

Use of Estimates

2 unchanged sentences

Estimates also affect the reported amounts of expenses during the reporting period.

The Company bases its estimates on historical experience and other assumptions believed to be reasonable under the

circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

The Company bases its estimates on historical experience and other assumptions believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that

are not readily apparent from other sources.

The Company makes critical estimates and assumptions in determining stock-based awards values and the valuation of the Merger which was accounted for as an asset acquisition as substantially all of the fair value is concentrated in in-process research and development (“IPR&D”).

48 unchanged sentences

The Company expenses all share-based payment awards to employees, directors, and consultants, including grants of stock options, warrants, and restricted stock, over the requisite service period based on the grant date fair value of the awards.

Consultant awards are remeasured each reporting period through vesting.

For awards with performance-based vesting criteria, the Company estimates the probability of achievement of the performance criteria and recognizes compensation expense related to those awards expected to vest.

19 unchanged sentences

The Company accounts for contingent consideration payable upon achievement of certain regulatory, development or sales milestones in such asset acquisitions when the underlying contingency is probable and estimable.

Milestone payments made to third parties

subsequent to regulatory approval will be capitalized as intangible assets and amortized over the estimated remaining useful life of the related product.

Milestone payments made to third parties subsequent to regulatory approval will be capitalized as intangible assets and amortized over the estimated remaining useful life of the related product.

Intangible Asset

2 unchanged sentences

The intangible asset is stated at fair value and is amortized using the straight-line method over its estimated useful life of 5 years.

Amortization expense was $18 thousand for the three months ended March 31, 2023.

Amortization expense was $ 18 thousand for the three months ended June 30, 2023 and $ 35 thousand for the six months ended June 30, 2023.

The intangible asset is reviewed for potential impairment when events or circumstances indicate that carrying amounts may not be recoverable.

15 unchanged sentences

If licenses are bundled with other performance obligations, the Company would utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue.

There was no revenue recognized for the three months ended March 31, 2023 and 2022.

There was no revenue recognized for the three and six months ended June 30, 2023 and 2022.

At the inception of each arrangement that includes milestone payments (variable consideration), the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method.

4 unchanged sentences

Any such adjustments are allocated on a cumulative catch-up basis to satisfied and partially satisfied performance obligations, with the consideration allocated to an ongoing performance obligation being recognized over the period of performance.

For the three months ended March 31, 2023 and March 31, 2022, the Company has not recognized revenue related to milestones.

For the three and six months ended June 30, 2023 and June 30, 2022, the Company has not recognized revenue related to milestones.

For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and for which the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

20 unchanged sentences

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value

2 unchanged sentences

Money market funds 8,309 — — 8,309 4,871 — — 4,871

Agency bonds 4,833 — ( 3 ) 4,830 — — — —

Treasury bills 6,908 — ( 1 ) 6,907 — — — —

Municipal debt securities 605 — — 605 7,626 — ( 1 ) 7,625

2 unchanged sentences

The following table summarizes the classification of the available-for-sale securities in our Consolidated Balance Sheets (in thousands):

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Cash equivalents $ 19,478 $ 27,668

2 unchanged sentences

The following table summarizes our portfolio of available-for-sale securities by contractual maturity (in thousands):

March 31, 2023

June 30, 2023

Amortized Cost Estimated Fair Value

4 unchanged sentences

Property and equipment consisted of the following (in thousands):

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Furniture and fixtures $ — $ 25

4 unchanged sentences

Property and equipment, net $ 233 $ 296

The Company’s results included depreciation expense of approximately $ 30 thousand and $ 7 thousand for the three months ended March 31, 2023 and 2022, respectively.

The Company’s results included depreciation expense of approximately $ 60 thousand and $ 13 thousand for the six months ended June 30, 2023 and 2022, respectively.

Note 6 – Income (Loss) Per Share

For the three months ended March 31, 2023 and 2022, the Company incurred net losses and therefore no common stock equivalents were utilized in the calculation of diluted loss per share as they are anti-dilutive.

At March 31, 2023 and 2022, the Company excluded the following potentially dilutive securities (in thousands):

For the six months ended June 30, 2023 and 2022, the Company incurred net losses and therefore no common stock equivalents were utilized in the calculation of diluted loss per share as they are anti-dilutive.

At June 30, 2023 and 2022, the Company excluded the following potentially dilutive securities (in thousands):

Stock Options 1,339 174

8 unchanged sentences

Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement.

The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.

The Company's financial assets and liabilities that were accounted for at fair value on a recurring basis as of March 31, 2023 and December 31, 2022 (in thousands):

March 31, 2023 December 31, 2022

The Company’s assessment of the significance of a particular input to the fair value measurement requires

judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.

The Company's financial assets and liabilities that were accounted for at fair value on a recurring basis as of June 30, 2023 and December 31, 2022 (in thousands):

June 30, 2023 December 31, 2022

Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

Cash equivalents $ 19,478 $ — $ — $ 19,478 $ 27,668 $ — $ — $ 27,668

Marketable securities - available for sale — 33,936 — 33,936 — 37,072 — 37,072

$ 19,478 $ 33,936 $ — $ 53,414 $ 27,668 $ 37,072 $ — $ 64,740

The carrying values of cash, cash equivalents, accounts payable and accrued expenses approximate fair value as of March 31, 2023 and December 31, 2022, due to the short maturity nature of these items.

The carrying values of accounts payable and accrued expenses approximate fair value as of June 30, 2023 and December 31, 2022, due to the short maturity nature of these items.

Note 8 – Accrued Liabilities

Accrued liabilities as of March 31, 2023 and December 31, 2022 were as follows (in thousands):

March 31, 2023 December 31, 2022

Accrued liabilities as of June 30, 2023 and December 31, 2022 were as follows (in thousands):

June 30, 2023 December 31, 2022

Salaries, employee benefits and related taxes $ 2,125 $ 2,586

Operating lease liabilities — current 156 180

D&O insurance liabilities 956 —

Clinical and R&D related liabilities 924 785

Accounting & tax consulting liabilities 201 —

Operating lease liabilities — current 160 180

Other 171 177

3 unchanged sentences

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 offices, one of which expired on March 31, 2023 and the other expires in 2025.

The Company has an operating lease for one office which expires in 2025.

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.

1 unchanged sentence

For lease agreements entered into or reassessed after the adoption of Topic 842, the Company elected to account for non-lease components associated with its leases and lease components as a single lease component.

Each of the Company's leases includes options for the Company to extend the lease term and/or sub-lease space in whole or in part.

The Company's lease includes an option for the Company to extend the lease term and/or sub-lease space in whole or in part.

Operating lease liabilities and right-of-use assets were recorded in the following captions of our balance sheet as follows (in thousands):

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Right-of-Use Assets:

5 unchanged sentences

Total Operating Lease Liabilities $ 383 $ 485

As of March 31, 2023, the weighted average remaining lease term for our operating lease was 2.5 years, and the weighted average discount rate for our operating lease was 9.625 %.

As of June 30, 2023, the weighted average remaining lease term for our operating lease was 2.3 years, and the weighted average discount rate for our operating lease was 9.625 %.

As of December 31, 2022, the weighted average remaining lease term for our operating leases was 1.5 years, and the weighted average discount rate for our operating leases was 9.625 %.

Future minimum lease payments under the lease agreement as of March 31, 2023 were as follows (in thousands):

Future minimum lease payments under the lease agreement as of June 30, 2023 were as follows (in thousands):

Years ended Operating Leases

13 unchanged sentences

Pursuant to General Instruction I.B.6 of Form S-3, since the aggregate market value of our outstanding common stock held by non-affiliates was below $75.0 million at the time of such Form 10-K filing, the aggregate amount of securities that we are permitted to offer and sell was reduced to $ 17,698,943 , which was equal to one-third of the aggregate market value of our common stock held by non-affiliates as of September 21, 2022.

During the three months ended March 31, 2023 and since inception, the Company has no t issued any shares under the ATM Agreement.

In connection with the Merger closing, the Company issued an aggregate of 3,772,768 shares of common stock, based on the Exchange Ratio, to holders of Cend, in exchange for all of the Cend capital stock outstanding immediately prior to the closing of the Merger.

During the six months ended June 30, 2023, the Company issued 64,394 shares of common stock under the ATM Agreement for net proceeds of $ 270,774 .

Since inception, the Company has issued 64,394 shares of common stock under the ATM Agreement for net proceeds of $ 270,774 .

In connection with the Merger closing on September 15, 2022, the Company issued an aggregate of 3,772,768 shares of common stock, based on the Exchange Ratio, to holders of Cend, in exchange for all of the Cend capital stock outstanding immediately prior to the closing of the Merger.

Stock Options and Warrants

2 unchanged sentences

The Cend Plan stock options generally vest over a four-year term.

The following table summarizes the activity for stock options and warrants for the three months ended March 31, 2023:

The following table summarizes the activity for stock options and warrants for the six months ended June 30, 2023:

Stock Options Warrants

6 unchanged sentences

Expired ( 2,520 ) 224.37 ( 2,000 ) 88.35

Outstanding at March 31, 2023 1,492,682 $ 9.94 7.01 $ 359.4 1,423,774 $ 42.57 3.13 $ —

Vested at March 31, 2023

Outstanding at June 30, 2023 1,338,734 $ 10.79 6.44 $ 376.1 1,421,744 $ 42.51 3.17 $ —

Vested at June 30, 2023

or expected to vest in the future 1,333,367 $ 10.82 6.43 $ 373.0 1,421,744 $ 42.51 3.17 $ —

Vested at March 31, 2023 1,207,228 $ 10.90 6.64 $ 344.4 1,423,774 $ 42.57 3.13 $ —

Vested at June 30, 2023 1,222,064 $ 11.02 6.19 $ 337.7 1,421,744 $ 42.51 3.17 $ —

Restricted Stock

During the three months ended March 31, 2023 and 2022, the Company issued restricted stock for services as follows ($ in thousands):

Three Months Ended March 31,

During the six months ended June 30, 2023 and 2022, the Company issued restricted stock for services as follows (in thousands, except share data):

Six Months Ended June 30,

Number of restricted stock issued 159,950 70,745

2 unchanged sentences

Restricted Stock Units

During the three months ended March 31, 2023 and 2022, the Company issued restricted stock units for services as follows ($ in thousands, except share data):

Three Months Ended March 31,

During the six months ended June 30, 2023 and 2022, the Company issued restricted stock units for services as follows (in thousands, except share data):

Six Months Ended June 30,

Number of restricted stock units issued 188,850 91,990

Value of restricted stock units issued $ 567 $ 1,265

The weighted average estimated fair value of restricted stock issued for services in the three months ended March 31, 2023 and 2022 was $ 3.00 and $ 13.76 per share, respectively.

The weighted average estimated fair value of restricted stock issued for services in the six months ended June 30, 2023 and 2022 was $ 3.00 and $ 13.76 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.

3 unchanged sentences

We utilize 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 three months ended March 31, 2023 and 2022 (in thousands):

Three Months Ended March 31,

The following table summarizes the components of share-based compensation expense for the three and six months ended June 30, 2023 and 2022 (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Research and development $ 227 $ 141 $ 414 $ 359

1 unchanged sentence

Total share-based compensation expense $ 584 $ 367 $ 1,258 $ 1,128

Total compensation cost related to unvested awards not yet recognized and the weighted-average periods over which the awards were expected to be recognized at March 31, 2023 were as follows (in thousands):

Total compensation cost related to unvested awards not yet recognized and the weighted-average periods over which the awards were expected to be recognized at June 30, 2023 were as follows (in thousands):

Stock Options Restricted Stock Units Restricted Stock

1 unchanged sentence

Expected weighted-average period in years of compensation cost to be recognized 1.63 1.06 1.81

Total fair value of shares vested and the weighted average estimated fair values of shares granted for the three months ended March 31, 2023 and 2022 were as follows (in thousands):

Total fair value of shares vested and the weighted average estimated fair values of shares granted for the six months ended June 30, 2023 and 2022 were as follows (in thousands):

Stock Options

Three Months Ended March 31,

Six Months Ended June 30,

Total fair value of shares vested $ 641 $ 385

39 unchanged sentences

The Company will continue to evaluate its uncertain tax positions in future periods.

As of March 31, 2023, the Company does not believe there will be any material changes in its unrecognized tax positions over the next year.

As of June 30, 2023, the Company does not believe there will be any material changes in its unrecognized tax positions over the next year.

For years prior to 2019, the federal statute of limitations is closed for assessing tax.

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

On April 5, 2023, Lisata received final approval to sell a portion of their unused New Jersey net operating losses (“NJ NOLs”) through the State of New Jersey Economic Development Authority's Technology Business Tax Certificate Transfer Program (the “Program”).

The Program permits qualified companies to sell a percentage of their NJ NOLs to unrelated profitable corporations.

When the NOL’s are sold it will be a discrete event.

The Company will record a deferred income tax benefit and reduce the deferred tax asset (NJ NOLs) when the transaction closes and cash is received.

On April 5, 2023, the Company received final approval from the New Jersey Economic Development Authority (“NJEDA”) under the Technology Business Tax Certificate Transfer Program (“Program”) to sell a percentage of its New Jersey net operating losses (“NJ NOLs”), which were subsequently sold to a qualifying and approved buyer pursuant to the Program for net proceeds of $ 2.2 million.

The $ 2.3 million of NJ NOLs related tax benefits has been recorded as a benefit from income taxes and the loss on sale of $ 0.1 million recorded in other income (expense).

On August 16, 2022, the Inflation Reduction Act was signed into law.

2 unchanged sentences

Since the Company is in a net operating loss position, the capitalization of research and development costs did not have a material impact on the Company’s results of operations for the year ended December 31, 2022.

The Company will continue to monitor possible future impact of changes in tax legislation.

The Company will continue to monitor future impact of changes in tax legislation.

Note 13 – Australia Research and Development Tax Incentive

The Company’s Australian subsidiary, which conducts core research and development activities, is eligible to receive a refundable tax incentive between 43.5 % to 48.5 % (depending upon the income tax rate) for qualified research and development activities.

As of the three months ended March 31, 2023, $ 1.0 million was recorded as an income tax incentive receivable in the consolidated balance sheets, as the Company determined that the expenses met the eligibility criteria and the amounts claimed are expected to be received shortly after the related tax returns are filed.

As of the six months ended June 30, 2023, $ 1.1 million was recorded as an income tax incentive receivable in prepaid and other current assets in the consolidated balance sheets, as the Company determined that the expenses met the eligibility criteria and the amounts claimed are expected to be received shortly after the related tax returns are filed.

Note 14 – Contingencies

7 unchanged sentences

Lingmed filed an answer to Cend’s response on July 11, 2022.

The court held a case management conference on October 7, 2022, which resulted in a continuance until December 16, 2022.

On December 16, 2022, the court continued the case management conference until April 7, 2023.

At the April 7, 2023 case management conference, based on Lingmed reporting that it had not yet been able to effect service on an individually-named defendant through the Hague Convention, the court continued the conference until August 4, 2023.

The Company denies these allegations and intends to vigorously defend against this claim.

At a Case Management Conference held on August 4, 2023, the Court set a trial date in the matter for August 2, 2024.

The Company denies these allegations made by Lingmed and intends to vigorously defend itself.

Note 15 – License Agreements

1 unchanged sentence

In December 2015, Cend entered into a license agreement with Sanford Burnham Prebys (“SBP”) under which Cend was granted an exclusive, worldwide, royalty-bearing license to certain patent rights and know-how controlled by SBP related to the development of LSTA1.

At the time the license agreement was entered into, Cend’s founding shareholder, now a Lisata board member, was an executive at SBP.

At the time the license agreement was entered into, Cend’s founding shareholder was an executive at SBP.

The agreement provides the Company with the rights to grant and authorize sublicenses to use, sell, and otherwise exploit the patent rights.

17 unchanged sentences

Upon termination of the agreements for any reason, all rights and obligations of the Company with respect to the patents and patent applications shall terminate and revert to SBP.

SBP owned 382,030 shares of the Company’s common stock as of March 31, 2023 and is a related party.

SBP owned 382,030 shares of the Company’s common stock as of June 30, 2023 and is a related party.

University of California at San Diego

20 unchanged sentences

In connection with the close of the Merger, the Company was required to pay MIT a change of control fee of $ 0.3 million.

The agreement will expire upon the expiration or abandonment of all valid claims.

The agreement may be terminated in its entirety by the Company at any time by giving MIT six months prior written notice.

The agreement may be terminated in its entirety by MIT if the Company, at any time, (i) defaults in the payment of any sum when due and fails to make such payment within thirty days after receipt of written notice, or (ii) commits a material breach of its obligations under the agreement (aside from item (i)) and fails to cure that breach within sixty days after receipt of written notice.

The agreement expires upon the expiration or abandonment of all valid claims.

The agreement may be earlier terminated in its entirety by the Company at any time by giving MIT six months prior written notice.

The agreement may also be terminated in its entirety by MIT if the Company, at any time, (i) defaults in the payment of any sum when due and fails to make such payment within thirty days after receipt of written notice, or (ii) commits a material breach of its obligations under the agreement (aside from item (i)) and fails to cure that breach within sixty days after receipt of written notice.

Upon termination of the agreement for any reason, the rights and licenses granted to the Company shall terminate and revert to MIT.

Upon termination of the agreement for any reason, MIT may terminate a sublicensee but will allow the Company to assign any sublicenses to MIT provided that the sublicensee is in good standing upon termination of the agreement with the Company.

MIT owned 43,236 shares of the Company’s common stock as of March 31, 2023

On June 30, 2023, in accordance with the provisions of the license agreement, the Company provided notice to MIT that the license agreement would terminate effective December 30, 2023.

Until such date, the license remains in full force and effect.

MIT owned 43,236 shares of the Company’s common stock as of June 30, 2023 .

Note 16 – Research Collaboration and License Agreement

6 unchanged sentences

Unless terminated early, the Qilu Agreement will continue in effect until the expiration of all Qilu payment obligations.

Either party may terminate the Qilu Agreement if an undisputed material breach by the other party is not cured within a defined period of time, or upon notice for insolvency-related events of the other party that are not discharged within a defined time

Qilu may terminate the Qilu Agreement in its entirety, at any time with at least sixty days written notice.

1 unchanged sentence

Note 17 – Subsequent Events

Sale of New Jersey Net Operating Losses

On September 19, 2022, 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 5, 2023, the Company received final approval from the NJEDA, and it subsequently sold a portion of its NJ NOLs to a qualifying and approved buyer pursuant to the Program for net proceeds of $ 2.2 million.

Elimination of President and Chief Business Officer Position

On May 1, 2023, the Company, after a careful review of capital utilization and prioritization, eliminated the position of President and Chief Business Officer, and terminated the employment of Mr.

David Slack, effective immediately.

Pursuant to the employment agreement, dated as of September 15, 2022, by and between the Company and Mr.

Slack (the “Slack Employment Agreement”), the termination of Mr.

Slack’s employment also constituted his resignation from any director, officer, employee or committee position he had with the Company or any of its affiliates and the Slack Employment Agreement served as written notice of resignation upon such termination.

Accordingly, Mr.

Slack effectively resigned from the Company’s Board of Directors as of May 1, 2023 pursuant to the terms of the Slack Employment Agreement.

In connection with Mr.

Slack’s resignation and in accordance with the terms and conditions of the Slack Employment Agreement, Mr.

Slack is entitled to receive the following items of compensation:

(i) a lump sum payment of $24,134, representing earned but unpaid base salary, earned and vested but unpaid bonus amounts, accrued and unused paid time off, unreimbursed business expenses and other payments and benefits owed to Mr.

Slack under the terms of his compensation arrangements with the Company;

(ii) severance payments in a total amount of $478,400, to be paid over a period of 12 months following termination (the “Slack Severance Period”);

(iii) COBRA assistance for the duration of the Slack Severance Period, not including the portion of the monthly premium which Mr.

Slack would otherwise have paid if he had not resigned and (iv) a bonus payment equal to $239,200, representing 50% of Mr.

Slack’s base salary at the time of termination, paid in equal installments for the duration of the Slack Severance Period.

Also in connection with his termination, the exercise period of each of Mr.

Slack’s vested options was extended to three years following termination or the remaining term of such awards, whichever period is shorter.

Departure of Director

On July 11, 2023, the Company announced that Erkki Ruoslahti, M.D., Ph.D., had decided to retire from its Board of Directors.

Assignment of Tumor Penetrating Nanocomplex (TPN) platform

On July 21, 2023, the Company entered into a Technology Transfer Agreement with Impilo Therapeutics, Inc.

(“Impilo”), pursuant to which the Company will, subject to the satisfaction of customary closing conditions, transfer the rights to the Tumor Penetrating Nanocomplex (TPN) platform to Impilo (the “Transfer”).

In exchange, on the closing date of the Transfer (the “Closing Date”) and pursuant to an Equity Purchase Agreement, by and between the Company and Impilo, to become effective on the Closing Date, Impilo will issue to the Company 768,500 shares of its pre-seed preferred stock.

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-Q

Item 1. Financial Statements