10-Q 1 form10-q.htm
false Q3 --12-31 0001708599 0001708599 2023-01-01 2023-09-30 0001708599 2023-11-06 0001708599 2023-09-30 0001708599 2022-12-31 0001708599 us-gaap:RelatedPartyMember 2023-09-30 0001708599 us-gaap:RelatedPartyMember 2022-12-31 0001708599 us-gaap:SeriesAPreferredStockMember 2023-09-30 0001708599 us-gaap:SeriesAPreferredStockMember 2022-12-31 0001708599 us-gaap:SeriesBPreferredStockMember 2023-09-30 0001708599 us-gaap:SeriesBPreferredStockMember 2022-12-31 0001708599 2023-07-01 2023-09-30 0001708599 2022-07-01 2022-09-30 0001708599 2022-01-01 2022-09-30 0001708599 AGE:GrantRevenuesMember 2023-07-01 2023-09-30 0001708599 AGE:GrantRevenuesMember 2022-07-01 2022-09-30 0001708599 AGE:GrantRevenuesMember 2023-01-01 2023-09-30 0001708599 AGE:GrantRevenuesMember 2022-01-01 2022-09-30 0001708599 AGE:OtherRevenuesMember 2023-07-01 2023-09-30 0001708599 AGE:OtherRevenuesMember 2022-07-01 2022-09-30 0001708599 AGE:OtherRevenuesMember 2023-01-01 2023-09-30 0001708599 AGE:OtherRevenuesMember 2022-01-01 2022-09-30 0001708599 us-gaap:PreferredStockMember us-gaap:SeriesAPreferredStockMember 2023-06-30 0001708599 us-gaap:PreferredStockMember us-gaap:SeriesBPreferredStockMember 2023-06-30 0001708599 us-gaap:CommonStockMember 2023-06-30 0001708599 us-gaap:AdditionalPaidInCapitalMember 2023-06-30 0001708599 us-gaap:RetainedEarningsMember 2023-06-30 0001708599 us-gaap:NoncontrollingInterestMember 2023-06-30 0001708599 2023-06-30 0001708599 us-gaap:CommonStockMember 2022-06-30 0001708599 us-gaap:AdditionalPaidInCapitalMember 2022-06-30 0001708599 us-gaap:RetainedEarningsMember 2022-06-30 0001708599 us-gaap:NoncontrollingInterestMember 2022-06-30 0001708599 2022-06-30 0001708599 us-gaap:CommonStockMember 2022-12-31 0001708599 us-gaap:AdditionalPaidInCapitalMember 2022-12-31 0001708599 us-gaap:RetainedEarningsMember 2022-12-31 0001708599 us-gaap:NoncontrollingInterestMember 2022-12-31 0001708599 us-gaap:PreferredStockMember us-gaap:SeriesAPreferredStockMember 2022-12-31 0001708599 us-gaap:PreferredStockMember us-gaap:SeriesBPreferredStockMember 2022-12-31 0001708599 us-gaap:CommonStockMember 2021-12-31 0001708599 us-gaap:AdditionalPaidInCapitalMember 2021-12-31 0001708599 us-gaap:RetainedEarningsMember 2021-12-31 0001708599 us-gaap:NoncontrollingInterestMember 2021-12-31 0001708599 2021-12-31 0001708599 us-gaap:PreferredStockMember us-gaap:SeriesAPreferredStockMember 2023-07-01 2023-09-30 0001708599 us-gaap:PreferredStockMember us-gaap:SeriesBPreferredStockMember 2023-07-01 2023-09-30 0001708599 us-gaap:CommonStockMember 2023-07-01 2023-09-30 0001708599 us-gaap:AdditionalPaidInCapitalMember 2023-07-01 2023-09-30 0001708599 us-gaap:RetainedEarningsMember 2023-07-01 2023-09-30 0001708599 us-gaap:NoncontrollingInterestMember 2023-07-01 2023-09-30 0001708599 us-gaap:CommonStockMember 2022-07-01 2022-09-30 0001708599 us-gaap:AdditionalPaidInCapitalMember 2022-07-01 2022-09-30 0001708599 us-gaap:RetainedEarningsMember 2022-07-01 2022-09-30 0001708599 us-gaap:NoncontrollingInterestMember 2022-07-01 2022-09-30 0001708599 us-gaap:CommonStockMember 2023-01-01 2023-09-30 0001708599 us-gaap:AdditionalPaidInCapitalMember 2023-01-01 2023-09-30 0001708599 us-gaap:RetainedEarningsMember 2023-01-01 2023-09-30 0001708599 us-gaap:NoncontrollingInterestMember 2023-01-01 2023-09-30 0001708599 us-gaap:PreferredStockMember us-gaap:SeriesAPreferredStockMember 2023-01-01 2023-09-30 0001708599 us-gaap:PreferredStockMember us-gaap:SeriesBPreferredStockMember 2023-01-01 2023-09-30 0001708599 us-gaap:CommonStockMember 2022-01-01 2022-09-30 0001708599 us-gaap:AdditionalPaidInCapitalMember 2022-01-01 2022-09-30 0001708599 us-gaap:RetainedEarningsMember 2022-01-01 2022-09-30 0001708599 us-gaap:NoncontrollingInterestMember 2022-01-01 2022-09-30 0001708599 us-gaap:PreferredStockMember us-gaap:SeriesAPreferredStockMember 2023-09-30 0001708599 us-gaap:PreferredStockMember us-gaap:SeriesBPreferredStockMember 2023-09-30 0001708599 us-gaap:CommonStockMember 2023-09-30 0001708599 us-gaap:AdditionalPaidInCapitalMember 2023-09-30 0001708599 us-gaap:RetainedEarningsMember 2023-09-30 0001708599 us-gaap:NoncontrollingInterestMember 2023-09-30 0001708599 us-gaap:CommonStockMember 2022-09-30 0001708599 us-gaap:AdditionalPaidInCapitalMember 2022-09-30 0001708599 us-gaap:RetainedEarningsMember 2022-09-30 0001708599 us-gaap:NoncontrollingInterestMember 2022-09-30 0001708599 2022-09-30 0001708599 AGE:ConvertiblePromissoryNoteMember AGE:JuvenescenceLimitedMember 2023-03-31 0001708599 AGE:ConvertiblePromissoryNoteMember AGE:JuvenescenceLimitedMember 2023-03-01 2023-03-31 0001708599 AGE:JuvenescenceMember AGE:LoanFacilityAgreementMember 2023-09-30 0001708599 AGE:JuvenescenceMember AGE:LoanFacilityAgreementMember us-gaap:SubsequentEventMember 2023-11-09 0001708599 AGE:ReCyteTherapeuticsIncMember 2023-09-30 0001708599 AGE:MergerAgreementMember 2023-09-30 0001708599 AGE:MergerAgreementMember AGE:ReCyteTherapeuticsIncMember 2023-09-30 0001708599 us-gaap:FairValueInputsLevel3Member 2023-09-30 0001708599 AGE:LeaseAgreementMember 2022-01-01 2022-09-30 0001708599 AGE:LeaseAgreementMember 2023-01-01 2023-09-30 0001708599 AGE:NationalInstitutesOfHealthMember 2023-08-01 2023-08-31 0001708599 AGE:NationalInstitutesOfHealthMember 2023-07-01 2023-09-30 0001708599 AGE:NationalInstitutesOfHealthMember 2023-01-01 2023-09-30 0001708599 us-gaap:EmployeeStockOptionMember 2023-07-01 2023-09-30 0001708599 us-gaap:EmployeeStockOptionMember 2022-07-01 2022-09-30 0001708599 us-gaap:EmployeeStockOptionMember 2023-01-01 2023-09-30 0001708599 us-gaap:EmployeeStockOptionMember 2022-01-01 2022-09-30 0001708599 us-gaap:WarrantMember 2023-07-01 2023-09-30 0001708599 us-gaap:WarrantMember 2022-07-01 2022-09-30 0001708599 us-gaap:WarrantMember 2023-01-01 2023-09-30 0001708599 us-gaap:WarrantMember 2022-01-01 2022-09-30 0001708599 us-gaap:RestrictedStockUnitsRSUMember 2023-07-01 2023-09-30 0001708599 us-gaap:RestrictedStockUnitsRSUMember 2022-07-01 2022-09-30 0001708599 us-gaap:RestrictedStockUnitsRSUMember 2023-01-01 2023-09-30 0001708599 us-gaap:RestrictedStockUnitsRSUMember 2022-01-01 2022-09-30 0001708599 AGE:LoanAgreementsMember 2023-09-30 0001708599 AGE:LoanAgreementsMember 2022-09-30 0001708599 AGE:JuvenescenceMember AGE:ConvertibleNotePurchaseAgreementMember 2023-03-15 0001708599 AGE:JuvenescenceMember AGE:ConvertibleNotePurchaseAgreementMember 2023-03-15 2023-03-15 0001708599 AGE:SecuredConvertiblePromissoryNoteMember 2023-03-15 0001708599 AGE:SecuredConvertiblePromissoryNoteMember 2023-03-15 2023-03-15 0001708599 2023-03-15 0001708599 AGE:SecuredConvertiblePromissoryNoteMember AGE:JuvenescenceLimitedMember 2023-03-15 0001708599 AGE:SecuredConvertiblePromissoryNoteMember AGE:SubordinationAgreementMember 2023-03-15 0001708599 AGE:JuvenescenceLimitedMember 2023-07-31 2023-07-31 0001708599 AGE:JuvenescenceLimitedMember 2023-07-31 0001708599 AGE:JuvenescenceMember AGE:TwoThousandNineteenLoanAgreementMember 2019-08-12 2019-08-13 0001708599 AGE:JuvenescenceMember AGE:TwoThousandNineteenLoanAgreementMember 2021-02-09 2021-02-10 0001708599 AGE:TwoThousandNineteenLoanAgreementMember AGE:JuvenescenceMember 2021-11-07 2021-11-08 0001708599 AGE:TwoThousandNineteenLoanAgreementMember AGE:JuvenescenceMember 2021-12-31 0001708599 AGE:TwoThousandNineteenLoanAgreementMember AGE:JuvenescenceMember 2022-02-14 0001708599 AGE:TwoThousandAndTwentyLoanAgreementMember 2020-03-30 0001708599 AGE:TwoThousandAndTwentyLoanAgreementMember 2020-03-29 2020-03-30 0001708599 AGE:TwoThousandAndTwentyLoanAgreementMember 2023-09-30 0001708599 AGE:TwentyTwentyLoanAgreementMember 2023-07-01 2023-07-31 0001708599 AGE:TwoThousandAndTwentyLoanAgreementMember us-gaap:WarrantMember 2023-09-30 0001708599 AGE:TwentyTwentyWarrantMember AGE:TwoThousandAndTwentyLoanAgreementMember 2023-01-01 2023-09-30 0001708599 AGE:TwoThousandAndTwentyTwoSecuredConvertiblePromissoryNoteandSecurityAgreementMember 2022-02-14 0001708599 AGE:TwoThousandAndTwentyTwoSecuredConvertiblePromissoryNoteandSecurityAgreementMember 2022-02-14 2022-02-14 0001708599 AGE:SecuredConvertiblePromissoryNoteMember 2023-02-08 2023-02-09 0001708599 AGE:SecuredConvertiblePromissoryNoteMember 2023-05-09 2023-05-09 0001708599 AGE:FourthAmendmentMember 2023-07-31 2023-07-31 0001708599 AGE:SecuredConvertiblePromissoryNoteMember 2023-09-30 0001708599 AGE:SecuredConvertiblePromissoryNoteMember 2023-01-01 2023-09-30 0001708599 AGE:SecuredConvertiblePromissoryNoteMember 2023-07-01 2023-07-31 0001708599 us-gaap:LineOfCreditMember 2023-07-31 2023-07-31 0001708599 AGE:JuvenescenceMember 2023-09-30 0001708599 AGE:TwoThousandTwentyTwoWarrantsMember 2023-01-01 2023-09-30 0001708599 AGE:SecurityAgreementMember 2023-01-01 2023-09-30 0001708599 AGE:SecuredConvertiblePromissoryNoteMember AGE:JuvenescenceMember 2023-09-30 0001708599 AGE:SecuredConvertiblePromissoryNoteMember AGE:JuvenescenceMember 2023-03-13 0001708599 AGE:SecuredConvertiblePromissoryNoteMember AGE:JuvenescenceLimitedMember 2023-03-13 0001708599 AGE:SecuredConvertiblePromissoryNoteMember AGE:JuvenescenceLimitedMember 2023-03-13 2023-03-13 0001708599 AGE:SecuredConvertiblePromissoryNoteMember AGE:JuvenescenceMember 2023-07-31 0001708599 AGE:JuvenescenceMember 2023-07-31 0001708599 AGE:JuvenescenceMember AGE:SecuredConvertiblePromissoryNoteMember 2023-07-31 2023-07-31 0001708599 2023-07-31 0001708599 srt:MinimumMember AGE:JuvenescenceLimitedMember 2023-07-31 2023-07-31 0001708599 srt:MaximumMember AGE:JuvenescenceLimitedMember 2023-07-31 2023-07-31 0001708599 2023-07-31 2023-07-31 0001708599 AGE:JuvenescenceLimitedMember AGE:DerivativesAndHedgingMember 2023-07-31 2023-07-31 0001708599 2023-02-14 0001708599 AGE:RegistrationRightsAgreementsMember 2023-01-01 2023-09-30 0001708599 AGE:JuvenescenceMember 2023-01-01 2023-09-30 0001708599 AGE:JuvenescenceMember 2022-12-31 0001708599 AGE:TwoThousandAndTwentyLoanAgreementMember 2023-09-30 0001708599 AGE:SecuredNoteMember 2023-09-30 0001708599 us-gaap:DebtMember 2023-09-30 0001708599 AGE:TenThousandMillionSecuredNoteMember 2023-09-30 0001708599 AGE:TotalDebtNetMember 2023-09-30 0001708599 us-gaap:WarrantMember 2023-09-30 0001708599 AGE:InceptionDateMember 2022-02-14 0001708599 AGE:InceptionDateMember 2022-02-14 2022-02-14 0001708599 AGE:IssuanceDateMember 2022-02-14 0001708599 AGE:IssuanceDateMember 2022-02-14 2022-02-14 0001708599 AGE:IssuanceDateMember 2022-02-15 0001708599 AGE:IssuanceDateMember 2022-02-15 2022-02-15 0001708599 AGE:PeriodEndingMember 2022-03-31 0001708599 AGE:PeriodEndingMember 2022-02-14 2022-03-31 0001708599 AGE:IssuanceDateMember 2022-04-04 0001708599 AGE:IssuanceDateMember 2022-04-04 2022-04-04 0001708599 AGE:IssuanceDateMember 2022-06-06 0001708599 AGE:IssuanceDateMember 2022-06-06 2022-06-06 0001708599 AGE:PeriodEndingMember 2022-06-30 0001708599 AGE:PeriodEndingMember 2022-06-30 2022-06-30 0001708599 AGE:IssuanceDateMember 2022-08-16 0001708599 AGE:IssuanceDateMember 2022-08-15 2022-08-16 0001708599 AGE:PeriodEndingMember 2022-09-30 0001708599 AGE:PeriodEndingMember 2022-09-29 2022-09-30 0001708599 AGE:IssuanceDateMember 2022-10-21 0001708599 AGE:IssuanceDateMember 2022-10-20 2022-10-21 0001708599 AGE:IssuanceDateMember 2022-12-14 0001708599 AGE:IssuanceDateMember 2022-12-13 2022-12-14 0001708599 AGE:PeriodEndingMember 2022-12-31 0001708599 AGE:PeriodEndingMember 2022-12-30 2022-12-31 0001708599 AGE:IssuanceDateMember 2023-01-25 0001708599 AGE:IssuanceDateMember 2023-01-24 2023-01-25 0001708599 AGE:InceptionDateMember 2023-02-09 0001708599 AGE:InceptionDateMember 2023-02-08 2023-02-09 0001708599 AGE:IssuanceDateMember 2023-02-15 0001708599 AGE:IssuanceDateMember 2023-02-14 2023-02-15 0001708599 AGE:PeriodEndingMember 2023-03-31 0001708599 AGE:PeriodEndingMember 2023-03-30 2023-03-31 0001708599 AGE:IssuanceDateMember 2023-04-04 0001708599 AGE:IssuanceDateMember 2023-04-03 2023-04-04 0001708599 AGE:InitialMeasurementDateOfFourteenFebruaryTwoThousandAndTwentyTwoMember 2022-01-01 2022-12-31 0001708599 AGE:FourteenFebruaryTwoThousandAndTwentyTwoOneMember 2022-01-01 2022-12-31 0001708599 AGE:FifteenFebruaryTwentyThousandAndTwentyTwoMember 2022-01-01 2022-12-31 0001708599 AGE:FourAprilTwentyThousandAndTwentyTwoMember 2022-01-01 2022-12-31 0001708599 AGE:SixJuneTwentyThousandAndTwentyTwoMember 2022-01-01 2022-12-31 0001708599 AGE:SixteenAugustTwentyThousandAndTwentyTwoMember 2022-01-01 2022-12-31 0001708599 AGE:TwentyFirstOctoberTwoThousandAndTwentyTwoMember 2022-01-01 2022-12-31 0001708599 AGE:FourteenDecemberTwoThousandAndTwentyTwoMember 2022-01-01 2022-12-31 0001708599 2022-01-01 2022-12-31 0001708599 AGE:TwentyFiveJanuaryTwoThousandAndTwentyThreeMember 2023-01-01 2023-09-30 0001708599 AGE:TwoSeptemberTwoThousandAndTwentyThreeMember 2023-01-01 2023-09-30 0001708599 AGE:FifteenFebruaryTwentyThousandAndTwentyThreeMember 2023-01-01 2023-09-30 0001708599 AGE:FourthAprilTwentyThousandAndTwentyThreeMember 2023-01-01 2023-09-30 0001708599 AGE:JuvenescenceLimitedMember us-gaap:SeriesAPreferredStockMember 2023-07-24 0001708599 AGE:JuvenescenceLimitedMember us-gaap:SeriesBPreferredStockMember 2023-07-24 0001708599 AGE:JuvenescenceLimitedMember 2023-07-23 2023-07-24 0001708599 AGE:JuvenescenceLimitedMember AGE:TwoThousandAndTwentyLoanAgreementMember 2023-07-24 0001708599 AGE:JuvenescenceLimitedMember AGE:OriginationFeeMember 2023-07-24 0001708599 us-gaap:SeriesBPreferredStockMember 2023-07-24 0001708599 2023-07-23 2023-07-24 0001708599 us-gaap:SeriesBPreferredStockMember 2023-07-23 2023-07-24 0001708599 us-gaap:SeriesBPreferredStockMember us-gaap:PreferredStockMember 2023-07-23 2023-07-24 0001708599 AGE:JuvenescenceMember AGE:IssuanceAndSaleOfWarrantsMember 2023-09-30 0001708599 AGE:ChardanCapitalMarketsLLCMember 2021-01-08 0001708599 AGE:ChardanCapitalMarketsLLCMember 2021-01-07 2021-01-08 0001708599 AGE:ChardanCapitalMarketsLLCMember 2023-01-01 2023-09-30 0001708599 AGE:ChardanCapitalMarketsLLCMember 2022-01-01 2022-09-30 0001708599 AGE:EquityIncentivePlanMember us-gaap:EmployeeStockMember 2022-12-31 0001708599 AGE:EquityIncentivePlanMember us-gaap:EmployeeStockMember 2023-01-01 2023-09-30 0001708599 AGE:EquityIncentivePlanMember us-gaap:EmployeeStockMember 2023-09-30 0001708599 us-gaap:ResearchAndDevelopmentExpenseMember 2023-07-01 2023-09-30 0001708599 us-gaap:ResearchAndDevelopmentExpenseMember 2022-07-01 2022-09-30 0001708599 us-gaap:ResearchAndDevelopmentExpenseMember 2023-01-01 2023-09-30 0001708599 us-gaap:ResearchAndDevelopmentExpenseMember 2022-01-01 2022-09-30 0001708599 us-gaap:GeneralAndAdministrativeExpenseMember 2023-07-01 2023-09-30 0001708599 us-gaap:GeneralAndAdministrativeExpenseMember 2022-07-01 2022-09-30 0001708599 us-gaap:GeneralAndAdministrativeExpenseMember 2023-01-01 2023-09-30 0001708599 us-gaap:GeneralAndAdministrativeExpenseMember 2022-01-01 2022-09-30 0001708599 us-gaap:SegmentContinuingOperationsMember 2023-04-19 2023-04-20 0001708599 AGE:SegmentContinuingOperationsOneMember 2023-04-19 2023-04-20 0001708599 AGE:SegmentContinuingOperationsTwoMember 2023-04-19 2023-04-20 0001708599 us-gaap:SegmentContinuingOperationsMember 2023-05-16 2023-05-17 0001708599 AGE:SegmentContinuingOperationsOneMember 2023-05-16 2023-05-17 0001708599 AGE:SegmentContinuingOperationsTwoMember 2023-05-16 2023-05-17 0001708599 AGE:JuvenescenceLimitedMember 2023-07-24 2023-07-24 0001708599 AGE:SecuredConvertiblePromissoryNoteMember us-gaap:SubsequentEventMember 2023-10-03 2023-10-03 0001708599 AGE:SecuredConvertiblePromissoryNoteMember us-gaap:SubsequentEventMember 2023-10-31 0001708599 AGE:SecuredConvertiblePromissoryNoteMember us-gaap:SubsequentEventMember 2023-11-09 2023-11-09 0001708599 AGE:JuvenescenceLimitedMember 2023-07-24 0001708599 srt:RestatementAdjustmentMember 2023-09-30 0001708599 us-gaap:SubsequentEventMember 2023-11-14 0001708599 srt:RestatementAdjustmentMember us-gaap:SeriesAPreferredStockMember 2023-09-30 0001708599 us-gaap:SubsequentEventMember us-gaap:SeriesAPreferredStockMember 2023-11-14 0001708599 srt:RestatementAdjustmentMember us-gaap:SeriesBPreferredStockMember 2023-09-30 0001708599 us-gaap:SubsequentEventMember us-gaap:SeriesBPreferredStockMember 2023-11-14 0001708599 srt:RestatementAdjustmentMember us-gaap:PreferredStockMember us-gaap:SeriesAPreferredStockMember 2023-09-30 0001708599 us-gaap:SubsequentEventMember us-gaap:PreferredStockMember us-gaap:SeriesAPreferredStockMember 2023-11-14 0001708599 srt:RestatementAdjustmentMember us-gaap:PreferredStockMember us-gaap:SeriesBPreferredStockMember 2023-09-30 0001708599 us-gaap:SubsequentEventMember us-gaap:PreferredStockMember us-gaap:SeriesBPreferredStockMember 2023-11-14 iso4217:USD xbrli:shares iso4217:USD xbrli:shares xbrli:pure AGE:Integer utr:sqft

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2023

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from __________ to __________

 

Commission file number 1-38519

 

AgeX Therapeutics, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware   82-1436829
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)

 

1101 Marina Village Parkway, Suite 201

Alameda, California 94501

(Address of principal executive offices) (Zip Code)

 

Registrant’s telephone number, including area code: (510) 671-8370

 

Title of each class   Trading Symbol   Name of exchange on which registered
Common Stock, par value $0.0001 per share   AGE   NYSE American

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer Smaller reporting company
  Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

 

The number of shares common stock outstanding as of November 6, 2023 was 37,951,261, par value $0.0001 per share.

 

 

 

   
 

 

AGEX THERAPEUTICS, INC.

TABLE OF CONTENTS

 

 

Page

Number

Part I – FINANCIAL INFORMATION 3
  Item 1. Financial Statements 4
  Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 32
  Item 3. Quantitative and Qualitative Disclosures about Market Risk 36
  Item 4. Controls and Procedures 36
       
Part II – OTHER INFORMATION  
  Item 1. Legal Proceedings 37
  Item 1A. Risk Factors 37
  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 47
  Item 3. Default Upon Senior Securities 47
  Item 4. Mine Safety Disclosures 47
  Item 5. Other Information 47
  Item 6. Exhibits 48
       
SIGNATURES   49

 

2
 

 

PART I — FINANCIAL INFORMATION

 

This Report on Form 10-Q (“Report”) contains forward-looking statements that involve risks and uncertainties. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. All statements other than statements of historical facts contained in this Report are forward-looking statements. In some cases, you can identify forward-looking statements by words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” or the negative of these words or other comparable terminology.

 

Any forward-looking statements in this Report reflect our current views with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those discussed in this Report under Item 1 of the Notes to Condensed Financial Statements, under Risk Factors in this Report and those listed under Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K as filed with the Securities Exchange Commission (the “SEC”) on March 31, 2023, and additional risk factors discussed in our other reports filed with the SEC. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

 

References to “AgeX,” “our” or “we” mean AgeX Therapeutics, Inc.

 

The description or discussion in this Form 10-Q of any contract or agreement or of any series of AgeX preferred stock is a summary only and is qualified in all respects by reference to the full text of the applicable contract or agreement or the certificate of designation of the series of preferred stock.

 

3
 

 

Item 1. Financial Statements

 

AGEX THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value amounts)

(unaudited)

 

   September 30, 2023   December 31, 2022 
ASSETS          
Current assets:          
Cash and cash equivalents  $397   $645 
Accounts and grants receivable, net   67    4 
Related party receivables, net   4    - 
Prepaid expenses and other current assets   673    1,804 
Total current assets   1,141    2,453 
           
Restricted cash   50    50 
Intangible assets, net   640    738 
Convertible note receivable   10,379    - 
TOTAL ASSETS  $12,210   $3,241 
           
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT          
Current liabilities:          
Accounts payable and accrued liabilities  $1,671   $1,034 
Loans due to Juvenescence, net of debt issuance costs, current portion   1,526    7,646 
Related party payables, net   -    141 
Warrant liability   -    180 
Insurance premium liability and other current liabilities   7    1,077 
Total current liabilities   3,204    10,078 
           
Loans due to Juvenescence, net of debt issuance costs, net of current portion   693    10,478 
TOTAL LIABILITIES   3,897    20,556 
           
Commitments and contingencies (Note 11)   -     -  
           
Series A preferred stock; no par value; stated value $100 per share; 212 and nil shares issued and outstanding, respectively   21,135    - 
Series B preferred stock; no par value; stated value $100 per share; 148 and nil shares issued and outstanding, respectively   14,823    - 
           
Stockholders’ deficit:          
Preferred stock, $0.0001 par value, 5,000 shares authorized   -    - 
Common stock, $0.0001 par value, 200,000 shares authorized; and 37,951 and 37,949 shares issued and outstanding, respectively   4    4 
Additional paid-in capital   100,017    98,994 
Accumulated deficit   (127,557)   (116,210)
Total AgeX Therapeutics, Inc. stockholders’ deficit   (27,536)   (17,212)
Noncontrolling interest   (109)   (103)
Total stockholders’ deficit   (27,645)   (17,315)
TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT  $12,210   $3,241 

 

See accompanying notes to these condensed consolidated interim financial statements.

 

4
 

 

AGEX THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

 

   2023   2022   2023   2022 
  

Three Months Ended

September 30,

  

Nine Months Ended

September 30,

 
   2023   2022   2023   2022 
REVENUES                    
Grant revenues  $21   $-   $21   $- 
Other revenues   46    9    65    26 
Total revenues   67    9    86    26 
Cost of sales   (33)   (5)   (39)   (12)
                     
Gross profit   34    4    47    14 
                     
OPERATING EXPENSES                    
Research and development   218    162    552    817 
General and administrative   2,172    1,392    5,895    4,390 
Total operating expenses   2,390    1,554    6,447    5,207 
                     
Loss from operations   (2,356)   (1,550)   (6,400)   (5,193)
                     
OTHER EXPENSE, NET:                    
Interest expense, net   (3,036)   (923)   (4,928)   (2,357)
Change in fair value of warrants   -    35    (35)   (220)
Other income, net   3    2    10    9 
Total other expense, net   (3,033)   (886)   (4,953)   (2,568)
                     
NET LOSS   (5,389)   (2,436)   (11,353)   (7,761)
Net (income) loss attributable to noncontrolling interest   (12)   1    6    2 
                     
NET LOSS ATTRIBUTABLE TO AGEX  $(5,401)  $(2,435)  $(11,347)  $(7,759)
                     
NET LOSS PER COMMON SHARE:                    
BASIC AND DILUTED  $(0.14)  $(0.06)  $(0.30)  $(0.20)
                     
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:                    
BASIC AND DILUTED   37,951    37,946    37,951    37,944 

 

See accompanying notes to these condensed consolidated interim financial statements.

 

5
 

 

AGEX THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

(in thousands)

(unaudited)

 

  B                                        
     Three Months Ended September 30, 2023 
     Preferred Stock   AgeX’s Stockholders’ Deficit         
     Series A   Series B   Common Stock   Additional        Non   Total 
     Number of
Shares
   Amount   Number of
Shares
   Amount   Number of
Shares
   Par Value   Paid-In Capital   Accumulated Deficit   controlling Interest   Stockholders’
Deficit
 
BALANCE AT JUNE 30, 2023 --   -   $-    -   $-    37,951   $        4   $99,977   $(122,156)  $       (121)  $          (22,296)
Issuance of preferred stock     212    21,160    148    14,840    -    -    -    -    -    - 
Preferred stock issuance costs                      -    (25)                      -    (17)   -    -    -    -    -    - 
Stock-based compensation     -    -    -    -    -    -    40    -    -    40 
Net loss --   -    -    -    -    -    -    -    (5,401)   12    (5,389)
BALANCE AT SEPTEMBER 30, 2023 --   212   $21,135    148   $14,823    37,951   $4   $100,017   $(127,557)  $(109)  $(27,645)

 

                         
   Three Months Ended September 30, 2022 
   AgeX’s Stockholders’ Deficit         
   Common Stock   Additional       Non   Total  
  

Number of
Shares

   Par Value  

Paid-In

Capital

  

Accumulated

Deficit

   controlling
Interest
  

Stockholders’
Deficit

 
BALANCE AT JUNE 30, 2022   37,945   $4   $97,850   $(111,072)  $(44)  $(13,262)
Issuance of common stock upon vesting of restricted stock units, net of shares retired to pay employee’s taxes   2    -    (1)   -    -    (1)
Fair value of liability classified warrants issued   -    -    341    -    -    341 
Stock-based compensation   -    -    209    -    -    209 
Net loss   -    -    -    (2,435)   (1)   (2,436)
BALANCE AT SEPTEMBER 30, 2022   37,947   $     4   $98,399   $(113,507)  $        (45)  $(15,149)

 

See accompanying notes to these condensed consolidated interim financial statements.

 

6
 

 

AGEX THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

(in thousands)

(unaudited)

 

                                         
   Nine Months Ended September 30, 2023 
   Preferred Stock   AgeX’s Stockholders’ Deficit         
   Series A   Series B   Common Stock              
   Number of Shares   Amount   Number of Shares   Amount   Number of Shares   Par Value  

Additional

Paid-In Capital

   Accumulated Deficit  

Non

controlling Interest

  

Total
Stockholders’
Deficit

 
BALANCE AT DECEMBER 31, 2022   -   $-    -   $-    37,949   $    4   $98,994   $   (116,210)  $      (103)  $      (17,315)
Issuance of preferred stock   212    21,160    148    14,840    -    -    -    -    -    - 
Preferred stock issuance costs   -    (25)   -    (17)   -    

-

    -    -    -    - 
Issuance of common stock upon vesting of restricted stock units, net of shares retired to pay employee’s taxes                     -    -                      -    -    2    -    (1)   -    -    (1)
Fair value of liability classified warrants issued   -    -    -    -    -    -    879    -    -    879 
Stock-based compensation   -    -    -    -    -    -    145    -    -    145 
Net loss   -    -    -    -    -    -    -    (11,347)   (6)   (11,353)
BALANCE AT SEPTEMBER 30, 2023   212   $21,135    148   $14,823    37,951   $4   $100,017   $(127,557)  $(109)  $(27,645)

 

                         
   Nine Months Ended September 30, 2022 
   AgeX’s Stockholders’ Deficit         
   Common Stock   Additional       Non    Total 
  

Number of

Shares

   Par Value   Paid-In
Capital
   Accumulated
Deficit
  

controlling

Interest

  

Stockholders’
Deficit

 
BALANCE AT DECEMBER 31, 2021   37,941   $4   $93,912   $(105,748)  $(43)  $      (11,875)
Issuance of common stock upon vesting of restricted stock units, net of shares retired to pay employee’s taxes   6    -    (3)   -    -    (3)
Issuance of warrants   -    -    178    -    -    178 
Fair value of liability classified warrants issued   -    -    3,666    -    -    3,666 
Stock-based compensation   -    -    646    -    -    646 
Net loss   -    -    -    (7,759)   (2)   (7,761)
BALANCE AT SEPTEMBER 30, 2022   37,947   $4   $98,399   $(113,507)  $(45)  $(15,149)

 

See accompanying notes to these condensed consolidated interim financial statements.

 

7
 

 

AGEX THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

   2023   2022 
  

Nine Months Ended

September 30,

 
   2023   2022 
OPERATING ACTIVITIES:          
Net loss attributable to AgeX  $(11,347)  $(7,759)
Net loss attributable to noncontrolling interest   (6)   (2)
Adjustments to reconcile net loss attributable to AgeX to net cash used in operating activities:          
Change in fair value of warrants   35    220 
Amortization of intangible assets   98    99 
Amortization of debt issuance costs   5,170    2,221 
Stock-based compensation   145    646 
Changes in operating assets and liabilities:          
Accounts and grants receivable   (63)   24 
Prepaid expenses and other current assets   1,131    906 
Interest on convertible note receivable   (379)   - 
Accounts payable and accrued liabilities   571    (98)
Related party payables, net   (33)   110 
Insurance premium liability   (1,075)   (983)
Other current liabilities   5    (2)
Net cash used in operating activities   (5,748)   (4,618)
           
INVESTING ACTIVITIES:          
Cash advanced on convertible note receivable   (10,000)   - 
Net cash used in investing activities   (10,000)   - 
           
FINANCING ACTIVITIES:          
Drawdown on loan facilities from Juvenescence   15,500    4,500 
Net cash provided by financing activities   15,500    4,500 
           
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH   (248)   (118)
           
CASH, CASH EQUIVALENTS AND RESTRICTED CASH:          
At beginning of the period   695    634 
At end of the period  $447   $516 

 

See accompanying notes to these condensed consolidated interim financial statements.

 

8
 

 

AGEX THERAPEUTICS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(unaudited)

 

1. Organization, Business Overview and Liquidity

 

AgeX Therapeutics, Inc. (“AgeX”) was incorporated in January 2017 in the state of Delaware. AgeX is a biotechnology company focused on the development and commercialization of novel therapeutics targeting human aging and degenerative diseases. AgeX’s mission is to apply its comprehensive experience in fundamental biological processes of human aging to a broad range of age-associated medical conditions.

 

AgeX’s proprietary technology, based on telomerase-mediated cellular immortality and regenerative biology, allows AgeX to utilize telomerase-expressing regenerative pluripotent stem cells (“PSCs”) for the manufacture of cell-based therapies to regenerate tissues afflicted with age-related chronic degenerative disease. AgeX’s main technology platforms and product candidates are:

 

  PureStem® PSC-derived clonal embryonic progenitor cell lines that may be capable of generating a broad range of cell types for use in cell-based therapies;
     
  UniverCyte™ which uses the HLA-G gene to suppress rejection of transplanted cells and tissues to confer low immune observability to cells;
     
  AGEX-BAT1 using adipose brown fat cells for metabolic diseases such as Type II diabetes;
     
  AGEX-VASC1 using vascular progenitor cells to treat tissue ischemia; and
     
  Induced tissue regeneration or iTR technology to regenerate or rejuvenate cells to treat a variety of degenerative diseases including those associated with aging, as well as other potential tissue regeneration applications such as scarless wound repair.

 

Restructuring Plans and Merger Agreement

 

During March 2023, AgeX borrowed $10,000,000 from Juvenescence Limited (“Juvenescence”) under the terms of a Secured Convertible Promissory Note (the “$10 Million Secured Note”) and used the loan proceeds to make a $10,000,000 loan under the terms of a Convertible Promissory Note to Serina (the “Serina Note”), in order to provide financing to Serina Therapeutics, Inc. (“Serina”) in advance of corporate restructuring plans that include a potential merger between AgeX and Serina in which AgeX would be the surviving company.

 

On August 29, 2023, AgeX entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with Serina and Canaria Transaction Corporation, an Alabama corporation and wholly owned subsidiary of AgeX (“Merger Sub”). Serina currently has a pipeline of small molecule candidates targeting central nervous system (“CNS”) indications, enabled by the company’s proprietary POZ PlatformTM delivery technology. In addition to advancing Serina’s wholly owned pipeline assets, Serina is working with pharma partners currently advancing pre-clinical studies exploring POZ polymer lipid-nanoparticles (“LNPs”) in next generation LNP delivered RNA vaccines. In addition, Serina is advancing a lead drug candidate, SER-252 (POZ-apomorphine) for the treatment of advanced Parkinson’s Disease through pre-clinical studies towards the goal of an investigational new drug submission or “IND” to the Food and Drug Administration for the initiation of a Phase I clinical trial during the fourth quarter of 2024. Serina has two other pipeline assets that are positioned to enter IND enabling studies, SER-227 (POZ-buprenorphine) for certain post-operative pain indications, and SER-228 (POZ-cannabidiol) for treatment refractory epilepsy indications. Serina is also focused on expanding its LNP and anti-body drug conjugate partnering collaborations.

 

Upon the terms and subject to the satisfaction of the conditions described in the Merger Agreement, including that the Merger is approved by the stockholders of Serina and the issuance of AgeX common stock to Serina in the Merger is approved by the stockholders of AgeX, Merger Sub will be merged with and into Serina, with Serina surviving as a wholly owned subsidiary of AgeX (the “Merger”). There is no assurance the necessary approvals by AgeX stockholders and Serina stockholders will be obtained or that the other conditions to the Merger as provided in the Merger Agreement will be met.

 

AgeX’s restructuring plans also include a potential spinoff of AgeX’s subsidiary Reverse Bioengineering, Inc. (“Reverse Bio”) through a distribution of some or all of the shares of capital stock of Reverse Bio held by AgeX to AgeX stockholders following a financing of Reverse Bio through the sale of shares of Reverse Bio common stock to private investors (the “Reverse Bio Financing”). If the Reverse Bio spinoff is completed, Reverse Bio would become a separate publicly traded company.

 

9
 

 

Definitive agreements regarding the Reverse Bio Financing and a Reverse Bio spinoff have not yet been executed, nor has AgeX’s board of directors approved the Reverse Bio spinoff. Accordingly, there is a risk that the Reverse Bio Financing and the Reverse Bio spinoff may never be consummated.

 

Emerging Growth Company

 

AgeX is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012.

 

Going Concern

 

AgeX primarily finances its operations through loans from its largest stockholder, Juvenescence Limited (“Juvenescence”). AgeX has incurred operating losses and negative cash flows since inception and had an accumulated deficit of $127.6 million as of September 30, 2023. AgeX expects to continue to incur operating losses and negative cash flows.

 

Based on a strategic review of its operations, giving consideration to the status of its product development programs, human resources, capital needs and resources, and current conditions in the capital markets, AgeX’s board of directors and management have adopted operating plans and budgets to extend the period over which AgeX can continue its operations with its available cash resources. Notwithstanding those operating plans and budgets, based on AgeX’s most recent projected cash flows AgeX believes that its cash and cash equivalents of $0.4 million as of September 30, 2023 plus the loan facilities provided by Juvenescence to advance up to an additional $1 million to AgeX which was drawn in full in October 2023 and an additional $4.4 million line of credit made available to AgeX through an Allonge and Fifth Amendment to Amended and Restated Convertible Promissory Note with Juvenescence (the “Fifth Amendment”) on November 9, 2023 would not be sufficient to satisfy AgeX’s anticipated operating and other funding requirements for the next twelve months from the issuance of these condensed consolidated interim financial statements. These conditions raise substantial doubt about AgeX’s ability to continue as a going concern. AgeX will need to obtain substantial additional funding in connection with its continuing operations. The financial statements do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should AgeX not continue as a going concern. See Note 12, Subsequent Events, for further details on the Fifth Amendment.

 

Liquidity and Impact of COVID-19

 

In addition to general economic and capital market trends and conditions, AgeX’s ability to raise sufficient additional capital to finance its operations from time to time will depend on a number of factors specific to AgeX’s operations such as operating expenses and progress in out-licensing its technologies and development of its product candidates. Although AgeX has been able to reduce its operating expenses, with the exception of certain non-recurring expenses incurred related to the possible Merger between AgeX and Serina, by eliminating internal research and development activities and focusing instead on outsourcing research and development and seeking licensing arrangements for AgeX technologies, this approach has also made it more difficult for AgeX to make progress in developing its target product candidates and technologies, which in turn may make it more difficult for AgeX to raise capital. The unavailability or inadequacy of financing to meet future capital needs could force AgeX to modify, curtail, delay, or suspend some or all aspects of planned operations. Sales of additional equity securities could result in the dilution of the interests of its stockholders. AgeX cannot assure that adequate financing will be available on favorable terms, if at all.

 

2. Basis of Presentation and Summary of Significant Accounting Policies

 

The unaudited condensed consolidated interim financial statements presented herein, and discussed below, have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. In accordance with those rules and regulations certain information and footnote disclosures normally included in comprehensive consolidated financial statements have been condensed or omitted. The condensed consolidated balance sheet as of December 31, 2022 was derived from the audited consolidated financial statements at that date but does not include all the information and footnotes required by U.S. GAAP. These condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in AgeX’s Annual Report on Form 10-K for the year ended December 31, 2022.

 

The accompanying condensed consolidated interim financial statements, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of AgeX’s financial condition and results of operations. The condensed consolidated results of operations are not necessarily indicative of the results to be expected for any other interim period or for the entire year.

 

Principles of consolidation

 

The consolidated financial statements include the accounts of AgeX and its subsidiaries in which AgeX has a controlling financial interest. The consolidated financial statements also include certain variable interest entities in which AgeX is the primary beneficiary (as described in more detail below). For consolidated entities where AgeX has less than 100% of ownership, AgeX records net loss attributable to noncontrolling interest on the consolidated statement of operations equal to the percentage of the ownership interest retained in such entities by the respective noncontrolling parties. The noncontrolling interest is reflected as a separate element of stockholders’ equity (deficit) on AgeX’s consolidated balance sheets. Any material intercompany transactions and balances have been eliminated upon consolidation.

 

10
 

 

AgeX assesses whether it is the primary beneficiary of a variable interest entity (“VIE”) at the inception of the arrangement and at each reporting date. This assessment is based on its power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and AgeX’s obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. If the entity is within the scope of the variable interest model and meets the definition of a VIE, AgeX considers whether it must consolidate the VIE or provide additional disclosures regarding its involvement with the VIE. If AgeX determines that it is the primary beneficiary of the VIE, AgeX will consolidate the VIE. This analysis is performed at the initial investment in the entity or upon any reconsideration event. For entities AgeX holds as an equity investment that are not consolidated under the VIE model, AgeX will consider whether its investment constitutes a controlling financial interest in the entity and therefore should be considered for consolidation under the voting interest model.

 

AgeX has four subsidiaries, Reverse Bio, ReCyte Therapeutics, Inc. (“ReCyte”), and NeuroAirmid Therapeutics, Inc. (“NeuroAirmid”), Canaria Transaction Corporation (“Merger Sub”), and has incorporated but not yet capitalized a fourth subsidiary UniverXome Bioengineering, Inc.(“UniverXome”). Reverse Bio is a wholly owned subsidiary of AgeX through which AgeX plans to finance its iTRTM research and development efforts. AgeX is actively seeking equity financing for Reverse Bio and to the extent that such Reverse Bio Financing is obtained through the sale of capital stock or other equity securities by Reverse Bio, AgeX’s equity interest in Reverse Bio and its iTRTM business would be diluted. AgeX’s restructuring plans also include a potential spinoff of Reverse Bio through a distribution of some or all of the shares of capital stock of Reverse Bio held by AgeX to AgeX stockholders following the Reverse Bio Financing. ReCyte is an early stage pre-clinical research and development company involved in stem cell-derived endothelial and cardiovascular related progenitor cells for the treatment of vascular disorders and ischemic conditions. AgeX owns 94.8% of the outstanding capital stock of ReCyte. NeuroAirmid is jointly owned by AgeX with the University of California – Irvine and certain researchers and was recently organized to pursue clinical development and commercialization of cell therapies, focusing initially on Huntington’s Disease. AgeX owns 50% of the outstanding capital stock of NeuroAirmid. AgeX consolidates NeuroAirmid despite not having majority ownership interest as it has the ability to influence decision making and financial results through contractual rights and obligations as per Accounting Standards Codification (“ASC”) 810, Consolidation. Merger Sub was incorporated for the purpose of merging with Serina to implement the Merger. UniverXome is expected, in connection with the planned Merger, to hold certain AgeX assets and assume AgeX indebtedness obligations to Juvenescence.

 

Use of estimates

 

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and (ii) the reported amounts of revenues and expenses during the reporting period, in each case with consideration given to materiality. Significant estimates and assumptions which are subject to significant judgment include those related to going concern assessment of consolidated financial statements, useful lives associated with long-lived assets, including evaluation of asset impairment, allowances for uncollectible accounts receivables, loss contingencies, deferred income taxes and tax reserves, including valuation allowances related to deferred income taxes, determining the fair value of AgeX’s embedded derivatives in the convertible notes payable and receivable, and assumptions used to value stock-based awards or other equity instruments and liability classified warrants. Actual results could differ materially from those estimates. The financial information for private companies may not be available and, even if available, that information may be limited and/or unreliable. To the extent there are material differences between the estimates and actual results, AgeX’s future results of operations will be affected.

 

See Note 6, Warrant Liability, for discussion on estimated change in fair value of warrant liability.

 

Concentration of credit risk and other risks and uncertainties

 

Financial instruments that potentially subject AgeX to concentrations of risk consist principally of cash equivalents and a convertible note receivable. AgeX maintains its cash deposits in Federal Deposit Insurance Corporation insured financial institutions within the federally insured limits. Even if balances were to exceed the federally insured limits, AgeX does not believe that it would be exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held.

 

AgeX also monitors the creditworthiness of the borrower of the convertible promissory note. AgeX believes that any concentration of credit risk in a convertible note receivable was mitigated in part by (i) AgeX’s right to convert loan amounts owed to AgeX into shares of equity securities of the borrower in the event the borrower completes a financing in at least a designated amount, and (ii) AgeX’s right to tender the convertible note receivable to a lender to settle a convertible note payable. See Notes 4, Convertible Note Receivable and 5, Related Party Transactions.

 

Product candidates developed by AgeX and its subsidiaries will require approvals or clearances from the United States Food and Drug Administration or foreign regulatory agencies prior to commercial sales. There can be no assurance that any of the product candidates being developed or planned to be developed by AgeX or its subsidiaries will receive any of the required approvals or clearances. If regulatory approval or clearance were to be denied or any such approval or clearance was to be delayed, it would have a material adverse impact on AgeX.

 

11
 

 

Fair value measurements of financial instruments

 

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of the financial statement presentation date.

 

The carrying values of cash equivalents, accounts receivable and accounts payable, are carried at, or approximate, fair value as of the reporting date because of their short-term nature. Fair values for AgeX’s warrant liabilities are estimated by utilizing valuation models that consider current and expected stock prices, volatility, dividends, market interest rates, forward yield curves and discount rates. Such amounts and the recognition of such amounts are subject to significant estimates that may change in the future.

 

To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value (ASC 820-10-50, Fair Value Measurements and Disclosures):

 

  Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
     
  Level 2 – Inputs to the valuation methodology include observable quoted prices (other than quoted market prices included within Level 1) for similar assets or liabilities in active markets, and inputs that are observable for the assets or liabilities, either directly or indirectly, for substantially the full term of the financial instruments.
     
  Level 3 – Inputs to the valuation methodology are unobservable; that reflect management’s own assumptions about the assumptions market participants would make and significant to the fair value.

 

In determining fair value, AgeX utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, and also considers counterparty credit risk in its assessment of fair value. For the periods presented, AgeX has no financial assets recorded at fair value on a recurring basis, except for cash and cash equivalents primarily consisting of money market funds. These assets are measured at fair value using the period-end quoted market prices as a Level 1 input. The carrying amounts of accounts receivable, net, prepaid expenses and other current assets, related party amounts due to affiliates, accounts payable, accrued liabilities and other current liabilities approximate fair values because of the short-term nature of these items. The discounted conversion prices triggered by certain qualified events in the Serina Note and the $10 Million Secured Note are Level 3 on the fair value hierarchy and subject to fair valuation at inception and remeasurement at each reporting period. The fair value of the discounted conversion prices under both notes were determined to have an immaterial value at inception and life to date of the notes, as the probability of a future qualifying event is remote. The likelihood of the future qualifying event will be evaluated at the end of each reporting period. For additional information regarding the convertible notes and derivatives, see Notes 4, Convertible Note Receivable, 5, Related Party Transactions, and 12, Subsequent Events.

 

The accounting guidance establishes a hierarchy which requires an entity to maximize the use of quoted market prices and minimize the use of unobservable inputs. An asset or liability’s level is based on the lowest level of input that is significant to the fair value measurement. Fair value estimates are reviewed at the origination date and again at each applicable measurement date and interim or annual financial reporting dates, as applicable for the financial instrument, and are based upon certain market assumptions and pertinent information available to management at those times.

 

The methods and significant inputs and assumptions utilized in estimating the fair value of the warrant liabilities, as well as the respective hierarchy designations are discussed further in Note 6, Warrant Liability. The warrant liability measurement is considered a Level 3 measurement based on the availability of market data and inputs and the significance of any unobservable inputs as of the measurement date. As of September 30, 2023, AgeX has utilized the full credit subject to warrants, and accordingly, the warrants were fully issued for each of the advances of loan funds under the Secured Note.

 

See Note 6, Warrant Liability, for additional information on accounting for liability classified warrants and certain Level 3 warrant valuation tables.

 

Cash, cash equivalents, and restricted cash

 

In accordance with Accounting Standards Update (“ASU”) 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, a reconciliation of AgeX’s cash and cash equivalents in the condensed consolidated balance sheets to cash, cash equivalents and restricted cash in the condensed consolidated statements of cash flows for all periods presented is as follows (in thousands):

 

  

September 30, 2023

(unaudited)

  

December 31, 2022

 
Cash and cash equivalents  $397   $645 
Restricted cash (1)   50    50 
Cash, cash equivalents, and restricted cash as shown in the condensed consolidated statements of cash flows  $447   $695 

 

(1) Restricted cash entirely represents the deposit required to maintain AgeX’s corporate credit card program.

 

12
 

 

Long-lived intangible assets, net

 

Long-lived intangible assets, consisting primarily of acquired in-process research and development (“IPR&D”) and patents is stated at acquired cost, less accumulated amortization. Amortization expense is computed using the straight-line method over the estimated useful life of 10 years. See Note 3, Selected Balance Sheet Components.

 

Impairment of long-lived assets

 

AgeX assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that such assets might be impaired and the carrying value may not be recoverable. AgeX’s long-lived assets consists entirely of intangible assets. If events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable and the expected undiscounted future cash flows attributable to the asset are less than the carrying amount of the asset, an impairment loss, equal to the excess of the carrying value of the asset over its fair value, is recorded. As of September 30, 2023, there has been no impairment of long-lived assets.

 

Leases

 

AgeX accounts for leases in accordance with ASU 2016-02, Leases (Topic 842) (“ASC 842”), and its subsequent amendments affecting AgeX: (i) ASU 2018-10, Codification Improvements to Topic 842, Leases, and (ii) ASU 2018-11, Leases (Topic 842): Targeted Improvements, using the modified retrospective method. AgeX management determines if an arrangement is a lease at inception. Leases are classified as either financing or operating, with classification affecting the pattern of expense recognition in the consolidated statements of operations. When determining whether a lease is a financing lease or an operating lease, ASC 842 does not specifically define criteria to determine “major part of remaining economic life of the underlying asset” and “substantially all of the fair value of the underlying asset.” For lease classification determination, AgeX continues to use (i) 75% or greater to determine whether the lease term is a major part of the remaining economic life of the underlying asset and (ii) 90% or greater to determine whether the present value of the sum of lease payments is substantially all of the fair value of the underlying asset. Under the available practical expedients, and as applicable, AgeX accounts for the lease and non-lease components as a single lease component. AgeX recognizes right-of-use (“ROU”) assets and lease liabilities for leases with terms greater than twelve months in the condensed consolidated balance sheets.

 

ROU assets represent an entity’s right to use an underlying asset during the lease term and lease liabilities represent an entity’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. If the lease agreement does not provide an implicit rate in the contract, an entity uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the entity will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. AgeX does not capitalize leases that have terms of twelve months or less.

 

AgeX leases office space in Alameda, California. For 2022 base monthly rent was $1,074 and for 2023 base monthly rent is $844 for slightly less space at the same building. AgeX has elected to not apply the recognition requirements under ASC 842 for the lease agreements and instead recognizes the lease payments as lease cost on a straight-line basis over the lease term as lease payments are not deemed material.

 

Accounting for warrants

 

AgeX determines the accounting classification of warrants it issues, as either liability or equity, by first assessing whether the warrants meet liability classification in accordance with ASC 480-10, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, then in accordance with ASC 815-40, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock. Under ASC 480, warrants are considered liability classified if the warrants are mandatorily redeemable, obligate AgeX to settle the warrants or the underlying shares by paying cash or other assets, or warrants that must or may require settlement by issuing a variable number of shares. If warrants do not meet liability classification under ASC 480-10, AgeX assesses the requirements under ASC 815-40, which states that contracts that require or may require the issuer to settle the contract for cash are liabilities recorded at fair value, irrespective of the likelihood of the transaction occurring that triggers the net cash settlement feature. If the warrants do not require liability classification under ASC 815-40, and in order to conclude equity classification, AgeX also assesses whether the warrants are indexed to its common stock and whether the warrants are classified as equity under ASC 815-40 or other applicable U.S. GAAP. After all relevant assessments, AgeX concludes whether the warrants are classified as liability or equity. Liability classified warrants require fair value accounting at issuance and subsequent to initial issuance with all changes in fair value after the issuance date recorded in the statements of operations. Equity classified warrants only require fair value accounting at issuance with no changes recognized subsequent to the issuance date. AgeX has liability classified warrants as of September 30, 2023. See Notes 5, Related Party Transactions and 6, Warrant Liability, for additional information regarding warrants.

 

13
 

 

Revenue recognition

 

AgeX recognizes revenue in a manner that depicts the transfer of control of a product or a service to a customer and reflects the amount of the consideration it expects to receive in exchange for such product or service. In doing so, AgeX follows a five-step approach: (i) identify the contract with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations, and (v) recognize revenue when (or as) the customer obtains control of the product or service. AgeX considers the terms of a contract and all relevant facts and circumstances when applying the revenue recognition standard. AgeX applies the revenue recognition standard, including the use of any practical expedients, consistently to contracts with similar characteristics and in similar circumstances.

 

Grant revenues – AgeX accounts for grants received to perform research and development services in accordance with ASC 730-20, Research and Development Arrangements. At the inception of the grant, we perform an assessment as to whether the grant is a liability or a contract to perform research and development services for others. If AgeX or a subsidiary receiving the grant is obligated to repay the grant funds to the grantor regardless of the outcome of the research and development activities, then AgeX is required to estimate and recognize that liability. Alternatively, if AgeX or a subsidiary receiving the grant is not required to repay, or if it is required to repay the grant funds only if the research and development activities are successful, then the grant agreement is accounted for as a contract to perform research and development services for others, in which case, grant revenue is recognized when the related research and development expenses are incurred.

 

In applying the provisions of Topic 606, AgeX has determined that government grants are out of the scope of Topic 606 because the government entities do not meet the definition of a “customer”, as defined by Topic 606, as there is not considered to be a transfer of control of good or services to the government entities funding the grant. In the absence of applicable guidance under U.S. GAAP, AgeX’s policy is to recognize grant revenue when the related costs are incurred, provided that the applicable conditions under the government contracts have been met. Only costs that are allowable under the grant award, certain government regulations and the National Institutes of Health (“NIH”) supplemental policy and procedure manual may be claimed for reimbursement, and the reimbursements are subject to routine audits from governmental agencies from time to time. Costs incurred are recorded in research and development expenses on the accompanying consolidated statements of operations.

 

AgeX believes the recognition of revenue as costs are incurred and amounts become realizable is analogous to the concept of transfer of control of a service over time under ASC 606.

 

In August 2023, AgeX was awarded a grant of up to approximately $341,000 from the NIH, National Heart, Lung and Blood Institute. The NIH grant will provide funding for continued development of AgeX’s technologies toward treating cardiovascular disease over a one year period starting September 1, 2023. Based on our evaluation under the accounting guidance aforementioned, this grant agreement is accounted for as a contract to perform research and development services for others, in which case, grant revenue is recognized when the related research and development expenses are incurred. Accordingly, grant funds are made available by the NIH as allowable expenses are incurred. For the three and nine months ended September 30, 2023, AgeX incurred approximately $21,000 of allowable expenses under the NIH grant and recognized a corresponding amount of grant revenues.

 

ESI BIO Research Products – AgeX, through its ESI BIO research product division, markets a number of products related to human pluripotent stem cells (“PSC lines”), including research-grade PSC lines and PSC lines produced under current good manufacturing practices or “cGMP”. AgeX offers cells from PSC lines to customers under contracts that permit the customers to utilize PSC lines for the research, development, and commercialization of cell-based therapies or other products in defined fields of application. The compensation to AgeX for providing the PSC line cells under such contracts may include up-front payments, milestone payments related to product development, regulatory matters, and commercialization, and the payment of royalties on sales of products developed from AgeX PSC lines. Revenues from the sale of research products have not been significant during the periods presented in the condensed consolidated interim financial statements included in this Report.

 

Arrangements with multiple performance obligations – AgeX may enter into contracts with customers that include multiple performance obligations. For such arrangements, AgeX will allocate revenue to each performance obligation based on its relative standalone selling price. AgeX will determine or estimate standalone selling prices based on the prices charged, or that would be charged, to customers for that product or service. As of September 30, 2023 and December 31, 2022, AgeX did not have significant arrangements with multiple performance obligations.

 

14
 

 

Research and development

 

Research and development expenses consist primarily of personnel costs and related benefits, including stock-based compensation, amortization of intangible assets, outside consultants and contractors, sponsored research agreements with certain universities, and suppliers, and license fees paid to third parties to acquire patents or licenses to use patents and other technology. Research and development expenses incurred and reimbursed by grants from third parties or governmental agencies if any and as applicable, approximate the respective revenues recognized in the condensed consolidated statements of operations.

 

General and administrative

 

General and administrative expenses consist primarily of compensation and related benefits, including stock-based compensation, for executive and corporate personnel, and professional and consulting fees.

 

Basic and diluted net loss per share attributable to common stockholders

 

Basic loss per share is calculated by dividing net loss attributable to AgeX common stockholders by the weighted average number of shares of common stock outstanding, net of unvested restricted stock or restricted stock units, subject to repurchase by AgeX, if any, during the period. Diluted loss per share is calculated by dividing the net income attributable to AgeX common stockholders, if any, by the weighted average number of shares of common stock outstanding, adjusted for the effects of potentially dilutive common stock issuable under outstanding stock options, warrants, and restricted stock units, using the treasury-stock method, and convertible preferred stock, if any, using the if-converted method, and treasury stock held by subsidiaries, if any.

 

For the three and nine months ended September 30, 2023 and 2022, because AgeX reported a net loss attributable to common stockholders, all potentially dilutive common stock, comprised of stock options, restricted stock units and warrants, is antidilutive.

 

The following weighted average common stock equivalents were excluded from the computation of diluted net loss per share of common stock for the periods presented because including them would have been antidilutive (in thousands):

 

  

Three Months Ended

September 30,

  

Nine Months Ended

September 30,

 
   2023   2022   2023   2022 
Stock options   3,276    3,264    3,266    3,310 
Warrants (1)   12,132    10,616    12,716    8,947 
Restricted stock units   -    9    -    12 

 

(1) As of September 30, 2023 and 2022, AgeX had issued Juvenescence warrants to purchase 11,539,348 and 10,919,485 shares, respectively, of AgeX common stock as consideration for certain loan agreements discussed in Note 5, Related Party Transactions.

 

Reclassifications

 

Certain reclassifications have been made to the prior period’s condensed consolidated interim financial statements to conform to current year presentation. Additionally, certain financial information is presented on a rounded basis, which may cause minor differences.

 

Recently adopted accounting pronouncements

 

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and subsequent amendments to the initial guidance under ASU 2018-19, ASU 2019-04, ASU 2019-05 and ASU 2019-10, which amends the current approach to estimate credit losses on certain financial assets. This ASU requires immediate recognition of management’s estimates of current expected credit losses. Under the prior model, losses were recognized only as they were incurred, which FASB has noted delayed recognition of expected losses that might not yet have met the threshold of being probable. The standard is applicable to all financial assets (and net investment in leases) that are not accounted for at fair value through net income, such as trade receivables, loans, debt securities, and net investment in leases, thereby bringing consistency in accounting treatment across different types of financial instruments and requiring consideration of a broader range of variables when forming loss estimates. Subsequent changes in the valuation allowance are recorded in current earnings and reversal of previous losses are permitted. AgeX adopted this standard as of January 1, 2023, and it did not have a material impact on the condensed consolidated interim financial statements.

 

15
 

 

In March 2022, the FASB issued ASU No. 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging – Portfolio Layer Method, which clarifies the guidance in ASC 815 on fair value hedge accounting of interest rate risk for portfolios of financial assets. The ASU amends the guidance in ASU 2017-12 (released on August 28, 2017) that, among other things, established the “last-of-layer” method for making the fair value hedge accounting for these portfolios more accessible. ASU 2022-01 renames that method the “portfolio layer” method and addresses feedback from stakeholders regarding its application. AgeX adopted this standard as of January 1, 2023, and it did not have a material impact on the condensed consolidated interim financial statements.

 

In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which amends the accounting for credit losses on financial instruments. This amendment eliminates the recognition and measurement guidance on troubled debt restructurings for creditors that have adopted the new credit losses guidance in ASC 326 and requires enhanced disclosures about loan modifications for borrowers experiencing financial difficulty. The new guidance also requires public business entities to present gross write-offs by year of origination in their vintage disclosures. The guidance became effective for AgeX on January 1, 2023 and includes interim periods. Entities can elect to adopt the guidance on troubled debt restructurings using either a prospective or modified retrospective transition. If an entity elects to apply a modified retrospective transition, it will record a cumulative effect adjustment to retained earnings in the period of adoption. This ASU did not have a material impact on the condensed consolidated interim financial statements.

 

On July 14, 2023, the FASB issued ASU No. 2023-02, Presentation of Financial Statements (Topic 205), Income Statement – Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation – Stock Compensation, which amends or supersedes various SEC paragraphs within the codification to conform to past announcements and guidance issued by the SEC. Specifically, the ASU responds to (1) the issuance of SEC Staff Accounting Bulletin (SAB) 120; (2) the SEC staff announcement at the March 24, 2022, EITF meeting; and (3) SAB Topic 6.B, “Accounting Series Release No. 280 — General Revision of Regulation S-X: Income or Loss Applicable to Common Stock.” This ASU is effective immediately and did not have a material impact on AgeX’s condensed consolidated interim financial statements.

 

3. Selected Balance Sheet Components

 

Intangible assets, net

 

At September 30, 2023 and December 31, 2022, intangible assets, primarily consisting of acquired IPR&D and patents, and accumulated amortization were as follows (in thousands):

 

  

September 30, 2023

(unaudited)

  

December 31, 2022

 
Intangible assets  $1,312   $1,312 
Accumulated amortization   (672)   (574)
Total intangible assets, net  $640   $738 

 

AgeX recognized $33,000 and $98,000 in amortization expense of intangible assets, included in research and development expenses, for the three and nine months ended September 30, 2023, respectively and $33,000 and $99,000 for the same periods in 2022, respectively.

 

Amortization of intangible assets for periods subsequent to September 30, 2023 is as follows (in thousands):

 

Year Ending December 31, 

Amortization

Expense

 
2023  $33 
2024       131 
2025   131 
2026   132 
Thereafter   213 
Total  $640 

 

Accounts payable and accrued liabilities

 

At September 30, 2023 and December 31, 2022, accounts payable and accrued liabilities were comprised of the following (in thousands):

 

  

September 30, 2023

(unaudited)

  

December 31, 2022

 
Accounts payable  $1,172   $568 
Accrued compensation   206    193 
Accrued vendors and other expenses   293    273 
Total accounts payable and accrued liabilities  $1,671   $1,034 

 

16
 

 

4. Convertible Note Receivable

 

On March 15, 2023, AgeX and Serina entered into a Convertible Note Purchase Agreement (the “Serina Note Purchase Agreement”), pursuant to which AgeX lent to Serina an aggregate principal amount of $10,000,000 as evidenced by the Serina Note on that date. Interest on the principal amount under the Serina Note accrues on the unpaid principal amount at a simple interest rate equal to 7% per annum, computed on the basis of the 360-day year of twelve 30-day months. The outstanding principal amount and accrued interest of $10,379,000 under the Serina Note will become due and payable on March 15, 2026.

 

In connection with the issuance of the Serina Note, AgeX is entitled to elect one member to the board of directors of Serina and receive certain information and inspection rights as well as participation rights for subsequent equity issuances.

 

The principal balance of the Serina Note with accrued interest will automatically convert into Serina preferred stock if Serina raises at least $25,000,000 through the sale of shares of Serina preferred stock (“qualifying event”). The conversion price per share shall be the lower of (a) 80% of the lowest price at which the shares of preferred stock were sold, and (b) a “capped price” equal to $105,000,000 divided by Serina’s then fully diluted capitalization. AgeX has the option to convert the Serina Note into Serina preferred stock after a sale of Serina preferred stock regardless of the amount sold by Serina. AgeX evaluated the 20% discounted conversion feature of the Serina Note under ASC 815-15, Derivatives and Hedging—Embedded Derivatives, and concluded that it was an embedded derivative which should be bifurcated from the note and accounted for separately. The 20% discount was determined to have an immaterial value at inception and life to date of the Serina Note, as the probability of a future qualifying event is remote. The likelihood of the future qualifying event will be evaluated at the end of each reporting period and any adjustments will be included in Interest (income) expense, net in the Other (income) expense, net section of the condensed consolidated statements of operations.

 

AgeX may (i) at its election, upon a change of control (as defined in the Serina Note), convert the Serina Note in whole or in part into either (a) cash in an amount equal to 100% of the outstanding principal amount of the Serina Note, plus interest, or (b) into the highest ranking shares of Serina then issued at a conversion price equal to the lowest price per share at which the most senior series of Serina shares has been sold in a single transaction or a series of related transactions through which Serina raised at least $5,000,000 or (ii) if the Serina Note remains outstanding as of the maturity date, AgeX may convert the Serina Note into the most senior shares of Serina issued at the time of conversion at a conversion price equal to the capped price.

 

If the Merger is consummated, the Serina Note will be canceled for no consideration.

 

The outstanding principal balance of the Serina Note with accrued interest may become immediately due and payable prior to the stated maturity date if an Event of Default as defined in the Serina Note occurs. In addition to this and any other remedy, both in equity and in law, upon the occurrence of an Event of Default, an interest rate of 10% per annum and computed on the basis of the 360-day year of twelve 30-day months, shall apply to the Convertible Amount until fully paid. Events of Default under the Serina Note include: (i) the commission of any act of bankruptcy by Serina or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X), (ii) the execution by Serina of a general assignment for the benefit of creditors, (iii) the filing by or against Serina or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) of a petition in bankruptcy or any petition for relief under the federal bankruptcy act (or, in each case, under any similar insolvency law) or the continuation of such petition without dismissal for a period of 60 calendar days or more, (iv) the appointment of a receiver or trustee to take possession of the property or assets of Serina or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X), (v) failure of Serina to pay any amount due under the Serina Note when due, which failure to pay is not cured by Serina within 5 business days of written notice thereof, (vi) unless waived by AgeX, Serina’s material breach of any representation, warranty or covenant of Serina under the Serina Note Purchase Agreement, Serina Note or other agreements entered in connection therewith, which breach, if curable, is not cured by Serina within 10 business days of written notice by AgeX thereof, (vii) Serina or any subsidiary shall default on any of its obligations under any indebtedness which default causes the indebtedness thereunder to (x) become prematurely due and payable, (y) be placed on demand or (z) become capable of being declared by or on behalf of a creditor thereunder to be prematurely due and payable or being placed on demand, in each case, as a result of such default or any provision having a similar effect (howsoever prescribed), (viii) any monetary judgment, writ or similar final process shall be entered or filed against Serina, any subsidiary or any of their respective property or other assets for more than $250,000, and such judgment, writ or similar final process shall remain unvacated, unbonded or unstayed for a period of 45 calendar days, and (ix) Serina experiences a Material Adverse Effect (as defined in the Serina Note Purchase Agreement).

 

The Serina Note Purchase Agreement and Serina Note each includes certain covenants that among other matters require financial reporting and impose certain restrictions, including (i) restrictions on the incurrence of additional indebtedness by Serina and its subsidiaries; (ii) requiring that Serina use note proceeds and funds that may be raised through certain equity offerings only for research and development work, professional and administrative expenses, and for general working capital; and (iii) prohibiting Serina from entering into any material sale or transfer transactions outside of the ordinary course of business, other than in a merger between AgeX and Serina, without the consent of AgeX.

 

Subordination Agreement

 

In connection with the issuance of the Serina Note, Serina, each other holder of Serina indebtedness (each a “Serina Lender”), and AgeX entered into a Subordination Agreement, dated March 15, 2023, pursuant to which each Serina Lender agreed to subordinate to AgeX’s rights of repayment with respect to the obligations owed under the Serina Note Purchase Agreement and the Serina Note (i) all Serina indebtedness owed to such Serina Lender under certain convertible notes between each Serina Lender and Serina, which aggregate principal amount of all of such convertible notes equals $1,450,000, and (ii) any related security interests.

 

17
 

 

5. Related Party Transactions

 

During July 2023, AgeX and Juvenescence entered into an Exchange Agreement pursuant to which AgeX issued shares of Series A Preferred Stock and Series B Preferred Stock to Juvenescence in exchange for the extinguishment of a total of $36 million of indebtedness under the 2020 Loan Agreement, the Secured Note, and the $10 Million Secured Note discussed below. The unused portion of the line of credit under the Secured Note remains available to AgeX subject to the terms and conditions of the Secured Note.

 

2019 Loan Agreement

 

On August 13, 2019, AgeX and Juvenescence entered into a Loan Facility Agreement (the “2019 Loan Agreement”) pursuant to which Juvenescence provided to AgeX a $2 million line of credit for a period of 18 months. On February 10, 2021, AgeX entered into an amendment (the “First Amendment”) to the 2019 Loan Agreement which extended the maturity date of loans under the 2019 Loan Agreement to February 14, 2022, and increased the amount of the loan facility by $4 million. On November 8, 2021, AgeX entered into Amendment No. 2 to the 2019 Loan Agreement which increased the amount of the loan facility by another $1 million. As of December 31, 2021, AgeX had borrowed all of the $7 million total line of credit under the 2019 Loan Agreement, as amended. On February 14, 2022, AgeX refinanced the $7 million outstanding principal amount of the loans and a $160,000 origination fee due under the 2019 Loan Agreement, as amended. See discussion regarding the 2022 Secured Convertible Promissory Note within this Note 5.

 

2020 Loan Agreement

 

On March 30, 2020, AgeX and Juvenescence entered into a new Secured Convertible Facility Agreement (the “2020 Loan Agreement”) pursuant to which Juvenescence provided to AgeX an $8 million line of credit for a period of 18 months. Through September 30, 2023, AgeX had drawn the full $8 million line of credit. AgeX issued to Juvenescence 28,500 shares of AgeX common stock as an arrangement fee for the loan facility when AgeX borrowed an aggregate of $3 million under the 2020 Loan Agreement, and AgeX issued to Juvenescence warrants to purchase a total of 3,670,663 shares of AgeX common stock (“2020 Warrants”) as determined by the warrant formula described below of which 1,182,262 are outstanding as of September 30, 2023. On March 13, 2023, the 2020 Loan Agreement was amended to extend the maturity date to March 30, 2024. During July 2023, the full $8 million of 2020 Loan Agreement indebtedness was extinguished in exchange for shares of Series A Preferred Stock pursuant to the Exchange Agreement.

 

2020 Warrants — Under the terms of the 2020 Loan Agreement, each time AgeX received an advance of funds under the 2020 Loan Agreement, AgeX issued to Juvenescence a number of 2020 Warrants equal to 50% of the number determined by dividing the amount of the advance by the applicable Market Price. The Market Price set each 2020 Warrant when issued was the closing price per share of AgeX common stock on the NYSE American on the date of the applicable notice from AgeX requesting a draw of funds that triggered the obligation to issue the 2020 Warrant. The 2020 Warrants will expire at 5:00 p.m. New York time three years after the date of issue. AgeX had issued to Juvenescence 2020 Warrants to purchase a total of 3,670,663 shares of AgeX common stock of which 1,182,262 are outstanding as of September 30, 2023. The exercise prices of the 2020 Warrants issued through and that are still outstanding as of September 30, 2023 range from $0.81 per share to $1.895 per share representing the market closing price on the NYSE American of AgeX common stock on the one day prior to delivery of the drawdown notices. The number of shares issuable upon exercise of the warrants and the exercise price per share are subject to adjustment upon the occurrence of certain events such as a stock split or reverse split or combination of the common stock, stock dividend, recapitalization or reclassification of the common stock, and similar events.

 

2022 Secured Convertible Promissory Note and Security Agreement

 

On February 14, 2022, AgeX and Juvenescence entered into a Secured Convertible Promissory Note (the “Secured Note”) pursuant to which Juvenescence agreed to provide to AgeX a $13,160,000 line of credit for a period of 12 months. AgeX drew an initial $8,160,000 of the line of credit and used $7,160,000 to refinance the outstanding principal and the loan origination fees under the 2019 Loan Agreement with Juvenescence. On February 9, 2023, AgeX and Juvenescence entered into an Amended and Restated Secured Convertible Promissory Note which amends and restates the Secured Note and added $2 million to the line of credit available to be borrowed by AgeX under the Secured Note subject to Juvenescence’s discretion to approve each loan draw. On May 9, 2023, AgeX and Juvenescence entered into an Allonge and Second Amendment to Amended and Restated Convertible Promissory Note (the “Second Amendment”) that increased the amount of the line of credit available to AgeX by $4,000,000, subject to the terms of the Secured Note and Juvenescence’s discretion to approve and fund each of AgeX’s future draws of that additional amount of credit. On June 2, 2023, AgeX and Juvenescence entered into a Third Amendment to Amended and Restated Convertible Promissory Note (the “Third Amendment’), to provide that (i) AgeX may draw on the available portion of the line of credit under the Secured Note until the earlier of the date a Qualified Offering as defined in the Secured Note is consummated by AgeX or October 31, 2023 (subject to Juvenescence’s discretion to