The following discussion of our financial condition and results of operationsshould be read in conjunction with our audited consolidated financial statementsand related notes and other financial information included elsewhere in thisAnnual Report on Form 10-K. The discussion contains forward-looking statements,such as our plans, expectations and intentions (including those related toclinical trials and business and expense trends), that are based upon currentexpectations and that involve risks and uncertainties. Our actual results maydiffer significantly from management's expectations. The factors that couldaffect these forward-looking statements are in Item 1A of Part I of this report.This discussion should not be construed to imply that the results discussedherein will necessarily continue into the future, or that any expectationsexpressed herein will necessarily be indicative of actual operating results inthe future. Such discussion represents only the best present assessment by ourmanagement.

Business Overview

We have generated aggregate product revenues from our two commercial businessesof $7.2 million and $7.1 million for the years ended December 31, 2021 and 2020,respectively. We currently have no revenue generated from our principaloperations in therapeutic and clinical product development.

Our products are based on multi-decade experience with human cell culture and aproprietary type of pluripotent stem cells, human parthenogenetic stem cells("hpSCs"). Our hpSCs are comparable to human embryonic stem cells ("hESCs") inthat they have the potential to be differentiated into many different cells inthe human body. However, the derivation of hpSCs does not require the use offertilized eggs or the destruction of viable human embryos and also offers thepotential for the creation of immune-matched cells and tissues that are lesslikely to be rejected following transplantation. Our collection of hpSCs, knownas UniStemCell, currently consists of 15 stem cell lines. We have facilitiesand manufacturing protocols that comply with the requirements of GoodManufacturing Practice (GMP) standards as promulgated by the U.S. Code ofFederal Regulations and enforced by the United States Food and DrugAdministration ("FDA").

COVID-19 Pandemic

The impact of the COVID-19 pandemic has been and will likely continue to beextensive in many aspects of society, which has resulted in and will likelycontinue to result in significant disruptions to the global economy, as well asbusinesses and capital markets around the world. Impacts to our business haveincluded a reduction in sales volume primarily from media sales in ourbiomedical market segment and professional channel sales in our anti-agingmarket segment, temporary or reduced occupancy of portions of our manufacturingfacilities, and disruptions or restrictions on our employee's ability to travelto such manufacturing facilities which caused minor delays in manufacturing. Ourmanufacturing facilities continue to operate as they are deemed essentialsuppliers in accordance with laws applicable to California and Maryland. We havetaken precautionary measures to better ensure the health and safety of ourworkers, including staggering employees' shifts and isolating at-risk employees.

The scope and duration of these delays and disruptions, and the ultimate impactsof COVID-19 on our operations, are currently unknown. We are continuing toactively monitor the situation and may take further precautionary and preemptiveactions as may be required by federal, state or local authorities or that wedetermine are in the best interests of public health and safety. We cannotpredict the effects that such actions, or the impact of COVID-19 on globalbusiness operations and economic conditions, may continue to have on ourbusiness, strategy, collaborations, or financial and operating results.

Market Opportunity and Growth Strategy

Therapeutic Market - Clinical Applications of hpSCs for Disease Treatments

With respect to therapeutic research and product candidates, we focus onapplications where cell and tissue therapy is already proven but where there isan insufficient supply of safe and functional cells or tissue. We believe thatthe most promising potential clinical applications of our technology are: 1)Parkinson's disease ("PD"); and 2) traumatic brain injury ("TBI"). Using ourproprietary technologies and know-how, we are creating neural stem cells fromhpSCs as a potential treatment of PD, TBI and stroke.

Our most advanced project is the neural stem cell program for the treatment ofParkinson's disease. In 2013 we published in Nature Scientific Reports the basisfor our patent on a new method of manufacturing neural stem cells which is usedto produce the clinical-grade cells necessary for future clinical studies andcommercialization. In 2014 we completed the majority of the preclinical researchestablishing the safety profile of NSC in various animal species includingnon-human primates. In June 2016 we published the results of a 12-monthpre-clinical non-human primate study, which demonstrated the safety, efficacyand mechanism of action of the ISC- hpNSC. In 2017 we dosed four patients inour Phase I trial of ISC-hpNSC, human parthenogenetic stem cell-derived neuralstem

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cells for the treatment of Parkinson's disease. We reported 12-month resultsfrom the first cohort and 6-month interim results of the second cohort at theSociety for Neuroscience annual meeting (Neuroscience 2018) in November 2018. InApril 2019, we announced the completion of subject enrollment, with the 12thsubject receiving a transplantation of the highest dose of cells. There havebeen no safety signals or serious adverse effects seen to date as related to thetransplanted ISC-hpNSC cells.

In August 2014 we announced the launch of a stroke program, evaluating the useof ISC-hpNSC transplantation for the treatment of ischemic stroke using arodent model of the disease. The Company has a considerable amount of safetydata on ISC-hpNSC from the Parkinson's disease program and, as there isevidence that transplantation of ISC-hpNSC may improve patient outcomes as anadjunctive therapeutic strategy in stroke, having a second program that can usethis safety dataset is therefore a logical extension. In 2015 the Companytogether with Tulane University demonstrated that NSC can significantly reduceneurological dysfunction after a stroke in animal models.

In October 2016 we announced the results of the pre-clinical rodent study,evaluating the use of ISC-hpNSC transplantation for the treatment of TBI. Thestudy was conducted at the University of South Florida Morsani College ofMedicine. We demonstrated that animals receiving injections of ISC-hpNSCdisplayed the highest levels of improvements in cognitive performance and motorcoordination compared to vehicle control treated animals. In February 2019, wepublished the results of the pre-clinical study in Theranostics, a prestigiouspeer-reviewed medical journal. The publication titled, "Human parthenogeneticneural stem cell grafts promote multiple regenerative processes in a traumaticbrain injury model," demonstrated that the clinical-grade neural stem cells usedin our Parkinson's disease clinical trial, ISC-hpNSC, significantly improvedTBI-associated motor, neurological, and cognitive deficits without any safetyissues.

Anti-Aging Cosmetic Market - Skin Care Products

Our wholly-owned subsidiary LSC develops, manufactures and offers for saleanti-aging skin care products based on two core technologies: encapsulatedextract derived from hpSC and specially selected targeted small molecules. LSC'sproducts include:

LSC's products are regulated as cosmetics. LSC's products are sold domesticallythrough a branded website, Amazon, ecommerce partners and through theprofessional channel (including dermatologists, plastic surgeons, medical, dayand resort spas).

Biomedical Market - Primary Human Cell Research Products

Our wholly-owned subsidiary LCT develops, manufactures and commercializesapproximately 200 human cell culture products, including frozen human "primary"cells and the reagents (called "media") needed to grow, maintain anddifferentiate the cells. LCT's scientists have used a standardized, methodical,scientific approach to basal medium optimization to systematically produceoptimized products designed to culture specific human cell types and to elicitspecific cellular behaviors. These techniques can also be used to produceproducts that do not contain non-human animal proteins, a feature desirable tothe research and therapeutic markets. Each LCT cell product is quality testedfor the expression of specific markers (to assure the cells are the correcttype), proliferation rate, viability, morphology and absence of pathogens. Eachcell system also contains associated donor information and all informed consentrequirements are strictly followed. LCT's research products are marketed andsold by its internal sales force, OEM partners and LCT brand distributors inEurope and Asia.

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Results of Operations

Comparison of the Years Ended December 31, 2021 and 2020

Product sales revenue for the year ended December 31, 2021 was $7.2 million,compared to $7.1 million for the year ended December 31, 2020. The increase wasprimarily attributable to a $342 thousand increase in sales in our biomedicalmarket segment, largely offset by a $294 thousand decrease in sales in ouranti-aging market during 2021 compared to 2020.

Our biomedical product sales continue to recover from the impacts of COVID-19 aspurchasing activity from our largest original equipment manufacturer customersincreases.

Our professional skin care products, which are largely marketed to medicalprofessionals and spas that offer walk-up retail, experienced a significantdecline in customer demand due to COVID-19 and the related restrictions as thesebusinesses have continued with limited or reduced operations during the yearended December 31, 2021. The impact of these restrictions was mitigated in-partby expanding our offering of professional skin care products through ourecommerce channel. Anti-aging product sales through our ecommerce channelremained consistent year-over-year.

Cost of Sales

Cost of sales for the year ended December 31, 2021 was $2.9 million, compared to$2.8 million for the year ended December 31, 2020. The increase was primarilyattributable to an increase in costs as a result of an increase in productsales. Profit margins have deteriorated for the year ended December 31, 2021 ascompared to 2020, largely as a result of rising raw materials and labor relatedcosts, and a scarcity of certain materials, principally plastics. In response,we have increased our supply of raw materials on hand and have, where possible,sourced materials from alternative vendors.

Cost of sales consists primarily of salaries and benefits associated withemployee efforts expended directly on the production of the Company's products,as well as related direct materials, general laboratory supplies and anallocation of overhead. We aim to continue refining our manufacturing processesand supply chain management to improve the cost of sales as a percentage ofrevenue for both LCT and LSC.

General and Administrative Expenses

General and administrative expenses for the year ended December 31, 2021 was$4.1 million, compared to $4.4 million for the year ended December 31, 2020. Thedecrease was primarily attributable to a decrease in personnel-related costs andstock-based compensation of $522 thousand, a $87 thousand decrease in consultingand servicing fees, and a $26 thousand decrease in investor relations fees,partially offset by an increase in impairment of intangible assets of$184 thousand, a $57 thousand increase in director and officer liabilityinsurance premiums, a $24 thousand increase in human resource related expenses,a $16 thousand gain on foreign currency exchange rate conversion, and a$15 thousand increase in filing fees.

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Selling and Marketing Expenses

Selling and marketing expenses for the year ended December 31, 2021 was$1.4 million, compared to $1.8 million for the year ended December 31, 2020. Thedecrease was primarily attributable to a $178 thousand decrease inpersonnel-related costs, sales commissions and stock-based compensation,primarily as a result of headcount reductions and grants from 2018 which wereissued and fully vested in 2021, and a $211 thousand decrease in marketing,advertising, and building related expenses, partially offset by a $17 thousandincrease in consulting and creative service fees. The reduction in marketing,advertising, and building related expenses was largely attributable to travelrestrictions as a result of COVID-19.

Research and Development Expenses

Research and development expenses for the year ended December 31, 2021 was$0.7 million, compared to $1.0 million for the year ended December 31, 2020. Thedecrease was primarily attributable to a $247 thousand decrease inpersonnel-related costs and stock-based compensation primarily as a result ofheadcount reductions and grants from 2018 which were issued and fully vested in2021, a $89 thousand decrease in materials and supplies related to clinicaltrial expenses, a $46 thousand decrease in consulting services, partially offsetby a $45 thousand increase in building and utilities related expenses and a$44 thousand decrease in our research and development tax credit related toqualifiable expenditures from our research and development activities of ourAustralia subsidiary, Cyto Therapeutics, which reduced research and developmentexpenses for years ended December 31, 2021 and 2020.

Our research and development efforts are primarily focused on the development oftreatments for Parkinson's disease, traumatic brain injury, liver diseases,stroke, and the creation of new GMP grade human parthenogenetic stem cell lines.These projects are long-term investments that involve developing both new stemcell lines and new differentiation techniques that can provide higher puritypopulations of functional cells. Research and development expenses are expensedas incurred and are accounted for on a project-by-project basis. However, muchof our research has potential applicability to each of our projects. As wecompleted Phase 1 of our clinical in June 2021, we do not anticipate significantinvestment in research and development efforts related to therapeutic andclinical product development efforts for the foreseeable future, or until suchtime that we initiate a Phase 2 clinical trial.

Other Income, Net

Other income, net, for the year ended December 31, 2021 was $1.0 million,compared to other income, net, of $94 thousand for the year endedDecember 31, 2020. The increase was primarily attributable to forgiveness of ourFirst Draw Loan and Second Draw Loan from the PPP, collectively totaling$1.1 million, partially offset by a decrease of $207 thousand for the change inthe fair value of the warrant liability during the prior year period. Thewarrants expired unexercised in March 2021 and, as such, no further change inthe fair value of the warrant liability will be recognized.

Liquidity and Capital Resources

As of December 31, 2021, we had an accumulated deficit of approximately$110 million and have, on an annual basis, incurred net losses and negativeoperating cash flows since inception. Substantially all of our operating losseshave resulted from the funding of our research and development programs andgeneral and administrative expenses associated with our operations. We incurrednet losses of $0.9 million and $2.7 million for years ended December 31, 2021and 2020, respectively. As of December 31, 2021, we had cash of $171 thousand,compared to $689 thousand as of December 31, 2020.

In May 2020, we received a first draw loan of $654 thousand from the PPP ("FirstDraw Loan") which provided additional liquidity to support our currentoperations. In March 2021, we received a second draw loan of $474 thousand fromthe PPP ("Second Draw Loan"). In June 2021, we applied for and receivedforgiveness of unpaid principal and accrued interest from our First Draw Loan inthe amount of $661 thousand. In August 2021, we applied for and receivedforgiveness of unpaid principal and accrued interest from our Second Draw Loanin the amount of $476 thousand. As of December 31, 2021, we are not eligible toreceive any additional funding, or have any further obligations, related to thePPP.

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Cash Flows

Comparison of the Years Ended December 31, 2021 and 2020

The following table provides information regarding our cash flows for the yearsended December 31, 2021 and 2020 (in thousands):

Net cash used in operating activities $ (1,297 ) $ (341 )Net cash used in investing activities

Operating Cash Flows

For the year ended December 31, 2021, net cash used in operating activities was$1.3 million, resulting primarily from our net loss of $899 thousand and netchanges in operating assets and liabilities of $823 thousand, consistingprimarily of an increase in accounts receivable of $441 thousand, inventory,net, of $268 thousand, and decrease in operating lease liabilities of $342thousand, partially offset by net non-cash adjustments of $425 thousand. For theyear ended December 31, 2020, net cash used in operating activities was$341 thousand, resulting primarily from our net loss of $2.7 million and changein fair value of warrant liability of $207 thousand, offset by non-cashadjustments of stock-based compensation expense of $1.3 million, operating leaseexpense of $265 thousand and depreciation and amortization of $253 thousand,coupled with net changes in operating assets and liabilities of $623 thousand.

Investing Cash Flows

Net cash used in investing activities for the year ended December 31, 2021 was$45 thousand, compared to $108 thousand for the year ended December 31, 2020.The decrease was attributable to a decrease in payments for patent licenses of$58 thousand and purchases of property and equipment of $5 thousandyear-over-year.

Financing Cash Flows

Net cash provided by financing activities for year ended December 31, 2021 was$0.8 million, compared to $0.7 million for the year ended December 31, 2020. Forthe year ended December 31, 2021, net cash provided by financing activitiesconsisted of $474 thousand in proceeds from our second draw loan under thePaycheck Protection Program, coupled with proceeds from a note payable from arelated party of $350 thousand. For the year ended December 31, 2020, net cashprovided by financing activities consisted of $654 thousand in proceeds from ourfirst draw loan under the Paycheck Protection Program.

Liquidity and Going Concern

Management continues to evaluate various financing sources and options to raiseworking capital to help fund our current research and development programs andoperations. We will need to obtain significant additional capital from sourcesincluding exercise of outstanding warrants, equity and/or debt financings,license arrangements, grants and/or collaborative research arrangements tosustain our operations and develop products. Unless we obtain additionalfinancing, we do not have sufficient cash on hand to sustain our operations atleast through one year after the issuance date. The timing and degree of anyfuture capital requirements will depend on many factors, including:

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Our failure to raise capital or enter into applicable arrangements when neededwould have a negative impact on our financial condition. Additional debtfinancing may be expensive and require us to pledge all or a substantial portionof its assets. Further, if additional funds are obtained through arrangementswith collaborative partners, these arrangements may require us to relinquishrights to some of its technologies, product candidates or products that we wouldotherwise seek to develop and commercialize on its own. If sufficient capital isnot available, we may be required to delay, reduce the scope of or eliminate oneor more of its product initiatives.

We currently have no revenue generated from our principal operations intherapeutic and clinical product development through research and developmentefforts. In addition, as we completed Phase 1 of our clinical in June 2021, wedo not anticipate significant investment in research and development effortsrelated to therapeutic and clinical product development efforts for theforeseeable future, or until such time that we initiate a Phase 2 clinicaltrial. There can be no assurance that we will be successful in maintaining ournormal operating cash flow and obtaining additional funds and that the timing ofour capital raising or future financing will result in cash flow sufficient tosustain our operations at least through one year after the issuance date.

Based on the factors above, there is substantial doubt about our ability tocontinue as a going concern. The consolidated financial statements were preparedassuming that we will continue to operate as a going concern. The consolidatedfinancial statements do not include any adjustments to reflect the possiblefuture effects on the recoverability and classification of assets or the amountsand classification of liabilities that may result from the outcome of thisuncertainty. Management's plans in regard to these matters are focused onmanaging our cash flow, the proper timing of our capital expenditures, andraising additional capital or financing in the future.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operationsis based upon our consolidated financial statements, which have been prepared inaccordance with accounting principles generally accepted in the United States.The preparation of these financial statements requires us to make estimates andassumptions that affect the reported amounts of assets, liabilities, revenues,expenses and related disclosures. On an on-going basis, we evaluate ourestimates and assumptions and we base our estimates on historical experience andon various other assumptions that are believed to be reasonable under thecircumstances, the results of which form the basis for making judgments aboutthe carrying values of assets and liabilities that are not readily apparent fromother sources. Actual results may differ from these estimates under differentassumptions and conditions.

Our significant accounting policies are more fully described in Note 1 to ourconsolidated financial statements included elsewhere in this Annual Report onForm 10-K. Our most critical accounting estimates include current andnon-current inventory, intangible assets, and stock-based compensation. Wereview our estimates and assumptions periodically and reflect the effects ofrevisions in the period in which they are deemed to be necessary. We believethat the following accounting policies are critical to the judgments andestimates used in preparation of our consolidated financial statements.

Intangible Assets

Our intangible assets consist of acquired patent licenses and capitalized legalfees related to the acquisition, filing, maintenance, and defense of patents andtrademarks. Amortization begins once the patent is issued by the appropriateauthoritative bodies. In the period in which a patent application is rejected orefforts to pursue the patent are abandoned, all the related accumulated costsare expensed. Our patents and other intangible assets are amortized on astraight-line basis over the shorter of the useful life of the underlyingpatent, which is generally 15 years, or when the intangible asset is rejected orabandoned. All amortization expense and impairment charges related to intangibleassets are included in general and administrative expense in our consolidatedstatements of operations.

Allowance for Excess and Obsolete Inventory

Our inventory, particularly within our biomedical market, consists of certainproducts that have a long or, when frozen, indefinite shelf life. In addition,future demand for our products is uncertain. Accordingly, at each reportingperiod, we estimate a reserve for allowance for excess and obsolete inventory.This estimate is computed using historical sales data and inventory turnoverrates, which are subjective in nature and fluctuate between periods. Theestablishment of a reserve for excess and obsolete inventory establishes a

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new cost basis in the inventory with a corresponding adjustment to cost ofsales. If we are unable to sell such inventory, any related reserves are reducedin the period of sale.

Stock-Based Compensation

We are required to measure and recognize compensation expense for allstock-based payment awards made to employees and consultants based on estimatedfair value. We estimate the fair value of stock options granted using theBlack-Scholes option-pricing model.

The determination of fair value of stock-based awards using the Black-Scholesoption-pricing model requires the use of certain estimates and subjectiveassumptions that affect the amount of stock-based compensation expenserecognized in our consolidated statements of operations. These include estimatesof the expected volatility of our stock price, expected option life, expecteddividends and the risk-free interest rate. Estimated volatility is a measure ofthe amount by which our stock price is expected to fluctuate each year duringthe expected life of the award. The expected option life is calculated using themid-point method as prescribed by accounting guidance for stock-basedcompensation. We determined expected dividend yield to be 0% given that we havenever declared or paid any cash dividends on our common stock, and we currentlydo not anticipate paying such cash dividends. The risk-free interest rate isbased upon United States Treasury securities with remaining terms similar to theexpected term of the share-based awards. If any of the assumptions used in theBlack-Scholes model change significantly, stock-based compensation expense maydiffer materially from what we have recorded in the current period.

Recently Issued Accounting Pronouncements

A description of recently issued accounting pronouncements that may potentiallyimpact our financial position and results of operations is disclosed in Note 1to our consolidated financial statements included in this Annual Report on Form10-K.

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