AGE AgeX Therapeutics Inc

AgeX Therapeutics, Inc. (“AgeX”; NYSE American: AGE), a biotechnology company developing therapeutics for human aging and regeneration, reported its financial and operating results for the quarter and nine months ended September 30, 2023.

Third Quarter and Recent Highlights

• $36 Million of Indebtedness Converted into Preferred Stock
• Signed Agreement and Plan of Merger and Reorganization to Acquire Serina Therapeutics, Inc.
• Obtained $4.4 million addition to line of credit from Juvenescence Limited

Liquidity and Capital Resources

Issuance of Preferred Stock to Eliminate $36 Million of Indebtedness

During July 2023, AgeX and Juvenescence Limited 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 a loan agreement and certain promissory notes. The shares of Preferred Stock are convertible into shares of common stock and do not bear dividends but rank senior of AgeX common stock with respect to any distributions to stockholders arising from a liquidation of AgeX or a reorganization, merger, consolidation, or sale of assets that is deemed a liquidation under the terms of the Preferred Stock.

Increase in Line of Credit

On October 31, 2023, AgeX made a final draw of loan funds available under a line of credit from Juvenescence Limited. On November 9, 2023, AgeX and Juvenescence entered into an amendment of the secured, convertible promissory note for the line of credit that increases the amount of the line of credit by $4,400,000, subject to Juvenescence’s discretion to approve and fund each of AgeX’s future loan draws. AgeX also entered into an additional Pledge Agreement to add shares of a subsidiary to the collateral under a Security Agreement in favor of Juvenescence, and three of AgeX’s subsidiaries entered into a Guaranty Agreement and Joinder Agreement pursuant to which they each agreed to guaranty AgeX’s obligations to Juvenescence pursuant to the amended promissory note, and to grant Juvenescence a security interest in their respective assets pursuant to the Security Agreement to secure their obligations to Juvenescence.

Balance Sheet Information

Cash, cash equivalents, and restricted cash totaled $0.4 million as of September 30, 2023.

Amendment to Preferred Stock and Elimination of Stockholders Deficit

During July 2023, AgeX and Juvenescence Limited 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. On November 7, 2023, certain terms of the AgeX Series A Preferred Stock and Series B Preferred Stock were amended (i) to clarify that certain change of control or disposition of asset transactions would be treated as a deemed liquidation if the applicable transaction is approved by the Board of Directors or stockholders of AgeX, and (ii) to provide that in case of such a deemed liquidation transaction holders of Preferred Stock would receive the same type of consideration as that distributed or paid to holders of AgeX common stock. This amendment permits the classification of the Series A Preferred Stock and Series B Preferred Stock as permanent equity, rather than as temporary or mezzanine equity, under Accounting Standards Codification 480, Distinguishing Liability from Equity. A pro-forma condensed consolidated balance sheet is provided, following the GAAP financial statements for the third quarter, as an illustration of the Preferred Stock classified as permanent equity, eliminating the stockholders deficit.

 

Third Quarter 2023 Operating Results

Operating expenses: Operating expenses for the three months ended September 30, 2023 were $2.4 million, as compared to $1.6 million for the same period of 2022.

Research and development expenses for the three months ended September 30, 2023 were approximately $0.2 million, consistent with the same period of 2022.

General and administrative expenses increased by $0.8 million to $2.2 million as compared to $1.4 million during the same period of 2022. The net increase is largely attributable to professional fees for legal services, consulting expenses incurred in connection with due diligence, and other expenses related to the proposed merger between AgeX and Serina Therapeutics Inc.

Other expense, net: Net other expense for the three months ended September 30, 2023 is primarily comprised of $3.2 million amortization of deferred debt issuance costs to interest expense, write off of deferred debt cost upon $36 million debt exchanged for Preferred Stock in July 2023 offset by $0.2 million interest income primarily earned from a $10 million loan extended to Serina in March 2023.

Net loss attributable to AgeX: The net loss attributable to AgeX for the three months ended September 30, 2023 was $5.4 million, or ($0.14) per share (basic and diluted) compared to $2.4 million, or ($0.06) per share (basic and diluted), for 2022. The increase in net loss per share year over year is primarily due to certain non-recurring expenses related to the proposed merger with Serina, and a write off of deferred debt costs upon the exchange of $36 million of indebtedness for Preferred Stock during July 2023.

Going Concern Considerations

As required under Accounting Standards Update 2014-15, Presentation of Financial Statements-Going Concern (ASC 205-40), AgeX evaluates whether conditions and/or events raise substantial doubt about its ability to meet its future financial obligations as they become due within one year after the date its financial statements are issued. Based on AgeX’s most recent projected cash flows, AgeX believes that its cash and cash equivalents and available sources of debt and equity capital including the loan facilities provided by Juvenescence to advance up to an additional $4.4 million to AgeX as of November 13, 2023 would not be sufficient to satisfy AgeX’s anticipated operating and other funding requirements for the twelve months following the filing of AgeX’s Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2023. These factors raise substantial doubt regarding the ability of AgeX to continue as a going concern.

About AgeX Therapeutics

AgeX Therapeutics, Inc. (NYSE American: AGE) is focused on developing and commercializing innovative therapeutics to treat human diseases to increase healthspan and combat the effects of aging. For more information, please visit www.agexinc.com or connect with the company on Twitter, LinkedIn, Facebook, and YouTube.

Forward-Looking Statements

Certain statements contained in this release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that are not historical fact including, but not limited to statements that contain words such as “will,” “believes,” “plans,” “anticipates,” “expects,” “estimates” should also be considered forward-looking statements. Forward-looking statements involve risks and uncertainties. Actual results may differ materially from the results anticipated in these forward-looking statements and as such should be evaluated together with the many uncertainties that affect the business of AgeX Therapeutics, Inc. and its subsidiaries, particularly those mentioned in the cautionary statements found in more detail in the “Risk Factors” section of AgeX’s most recent Annual Report on Form 10-K, most recent Quarterly Report on Form 10-Q, and other reports filed with the Securities and Exchange Commission (copies of which may be obtained at www.sec.gov). Subsequent events and developments may cause these forward-looking statements to change. AgeX specifically disclaims any obligation or intention to update or revise these forward-looking statements as a result of changed events or circumstances that occur after the date of this release, except as required by applicable law.

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

AGEX THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

AGEX THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

 

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

 

 

Non-GAAP Financial Measures

 

This earnings release includes stockholders equity(deficit) prepared in accordance with accounting principles generally accepted in the United States (GAAP) and includes certain historical non-GAAP adjustments to the balance sheet. In particular, AgeX has provided a non-GAAP pro forma presentation of Series A Preferred Stock and Series B Preferred Stock classified as permanent equity, eliminating the stockholders deficit, based on a post-September 30, 2023 amendment to the liquidation provisions of the Preferred Stock. Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable financial measures prepared in accordance with GAAP. However, AgeX believes the non-GAAP presentation of stockholders equity, when viewed in conjunction with our GAAP presentation, is helpful in understanding AgeX’s current capital structure.

AGEX THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED PRO FORMA BALANCE SHEET

(in thousands, except par value amounts)

(unaudited)

 

 

 

September 30, 2023

 

Adjustment

 

Adjusted Balance

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

397

 

 

$

-

 

 

$

397

 

Accounts and grants receivable, net

 

 

67

 

 

 

-

 

 

 

67

 

Related party receivables, net

 

 

4

 

 

 

-

 

 

 

4

 

Prepaid expenses and other current assets

 

 

673

 

 

 

-

 

 

 

673

 

Total current assets

 

 

1,141

 

 

 

-

 

 

 

1,141

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted cash

 

 

50

 

 

 

-

 

 

 

50

 

Intangible assets, net

 

 

640

 

 

 

-

 

 

 

640

 

Convertible note receivable

 

 

10,379

 

 

 

-

 

 

 

10,379

 

TOTAL ASSETS

 

$

12,210

 

 

$

-

 

 

$

12,210

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

1,671

 

 

$

-

 

 

$

1,671

 

Loan due to Juvenescence, net of debt issuance costs, current portion

 

 

1,526

 

 

 

-

 

 

 

1,526

 

Insurance premium liability and other current liabilities

 

 

7

 

 

 

-

 

 

 

7

 

Total current liabilities

 

 

3,204

 

 

 

-

 

 

 

3,204

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loan due to Juvenescence, net of debt issuance costs, net of current portion

 

 

693

 

 

 

-

 

 

 

693

 

TOTAL LIABILITIES

 

 

3,897

 

 

 

-

 

 

 

3,897

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series A preferred stock; no par value; stated value $100 per share; 212 and nil shares issued and outstanding, respectively

 

 

21,135

 

 

 

(21,135

)

 

 

-

 

Series B preferred stock; no par value; stated value $100 per share; 148 and nil shares issued and outstanding, respectively

 

 

14,823

 

 

 

(14,823

)

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity (deficit):

 

 

 

 

 

 

 

 

 

 

 

Preferred stock, $0.0001 par value, 5,000 shares authorized; and

 

 

 

 

 

 

 

 

 

 

 

 

Series A Preferred stock - 212 and nil shares issued and outstanding, respectively

 

 

-

 

 

 

-

 

 

 

-

 

Series B Preferred stock - 148 and nil shares issued and outstanding, respectively

 

 

-

 

 

 

-

 

 

 

-

 

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

 

 

 

35,958

 

 

 

135,975

 

Accumulated deficit

 

 

(127,557

)

 

 

-

 

 

 

(127,557

)

Total AgeX Therapeutics, Inc. stockholders’ equity (deficit)

 

 

(27,536

)

 

 

35,958

 

 

 

8,422

 

Noncontrolling interest

 

 

(109

)

 

 

-

 

 

 

(109

)

Total stockholders’ equity (deficit)

 

 

(27,645

)

 

 

35,958

 

 

 

8,313

 

TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

$

12,210

 

 

$

-

 

 

$

12,210

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20231114746069/en/

Andrea E. Park apark@agexinc.com (510) 671-8620