Serina Therapeutics, Inc.(SER) - 2021 Q3 - Quarterly Report

PART I — FINANCIAL INFORMATION This section presents the company's core financial statements and management's discussion and analysis of its financial condition and operational results Item 1. Financial Statements The financial statements reveal a net loss of $6.5 million and a $10.0 million stockholders' deficit, with critical liquidity dependent on Juvenescence loans Condensed Consolidated Balance Sheets Total assets decreased to $2.4 million, liabilities rose to $12.4 million, and stockholders' deficit worsened to $10.0 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | Sep 30, 2021 (Unaudited) (in thousands) | Dec 31, 2020 (in thousands) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $731 | $527 | | Total current assets | $1,475 | $2,283 | | TOTAL ASSETS | $2,427 | $3,925 | | Liabilities & Stockholders' Deficit | | | | Total current liabilities | $6,598 | $5,357 | | Loan due to Juvenescence (Total) | $11,407 | $5,860 | | TOTAL LIABILITIES | $12,405 | $9,321 | | Total stockholders' deficit | ($9,978) | ($5,396) | | TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $2,427 | $3,925 | Condensed Consolidated Statements of Operations Q3 2021 revenues were minimal at $24,000, with net loss from continuing operations improving to $2.0 million due to expense reductions Q3 2021 vs Q3 2020 Statement of Operations (in thousands, except per share data) | Metric | Q3 2021 (in thousands) | Q3 2020 (in thousands) | | :--- | :--- | :--- | | Total revenues | $24 | $69 | | Research and development | $275 | $653 | | General and administrative | $1,421 | $1,796 | | Loss from operations | ($1,674) | ($2,397) | | Net Loss from Continuing Operations | ($1,955) | ($2,524) | | Net Loss Attributable to AgeX | ($1,955) | ($2,543) | | Net Loss Per Share (Basic & Diluted) | ($0.05) | ($0.07) | Nine Months 2021 vs 2020 Statement of Operations (in thousands, except per share data) | Metric | Nine Months 2021 (in thousands) | Nine Months 2020 (in thousands) | | :--- | :--- | :--- | | Total revenues | $117 | $203 | | Research and development | $1,080 | $2,809 | | General and administrative | $5,191 | $5,146 | | Gain on deconsolidation of LifeMap Sciences | $106 | $0 | | Loss from operations | ($6,066) | ($7,773) | | Net Loss from Continuing Operations | ($6,423) | ($7,989) | | Net Loss Attributable to AgeX | ($6,517) | ($8,419) | | Net Loss Per Share (Basic & Diluted) | ($0.17) | ($0.22) | Condensed Consolidated Statements of Cash Flows Net cash used in operations was $6.2 million, offset by $6.0 million from financing activities, primarily Juvenescence loans Cash Flow Summary for Nine Months Ended Sep 30 (in thousands) | Cash Flow Activity | 2021 (in thousands) | 2020 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | ($6,208) | ($6,197) | | Net cash provided by (used in) investing activities | $416 | ($20) | | Net cash provided by financing activities | $5,996 | $4,969 | | Net Increase (Decrease) in Cash | $204 | ($1,245) | - Financing activities were the primary source of cash, with $5.5 million drawn from the Juvenescence loan facility and approximately $496,000 raised from the issuance of common stock[28] - Investing activities were primarily impacted by the receipt of $466,000 from the sale of LifeMap Sciences[28] Notes to Financial Statements Notes reveal a 'Going Concern' warning, heavy reliance on Juvenescence loans, and the disposition of LifeMap Sciences - The company has substantial doubt about its ability to continue as a going concern, as its cash of $0.7 million and available loan facilities are not sufficient to fund operations for the next twelve months[36] - On March 15, 2021, AgeX disposed of its majority-owned subsidiary LifeMap Sciences in a cash-out merger. AgeX received approximately $466,400 in cash. The results of LifeMap are now reported as discontinued operations[11][12][13] - AgeX is financed primarily through loans from its largest stockholder, Juvenescence. As of September 30, 2021, AgeX had borrowed $5.5 million under the 2019 Loan Agreement and $7.5 million under the 2020 Loan Agreement[90][98][100] - A Paycheck Protection Program (PPP) loan of $432,952 obtained in April 2020 was forgiven in full in February 2021[132] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) MD&A highlights critical financial condition, dependence on Juvenescence, and significant reductions in R&D and G&A expenses Results of Operations Q3 2021 revenues declined by 65.2%, while R&D and G&A expenses decreased by 57.9% and 20.9% respectively Operating Expense Changes (in thousands) | Expense Category | Q3 2021 (in thousands) | Q3 2020 (in thousands) | $ Change (in thousands) | % Change | | :--- | :--- | :--- | :--- | :--- | | Research and development | $275 | $653 | ($378) | (57.9)% | | General and administrative | $1,421 | $1,796 | ($375) | (20.9)% | | Total Operating Expenses | $1,696 | $2,449 | ($753) | (30.7)% | - The decrease in R&D expenses is attributed to scaled-down activities following the layoff of 11 employees in May 2020 and the shutdown of lab facilities as of December 31, 2020[153] - Other income in 2021 primarily consists of a $437,000 gain recognized upon the forgiveness of the company's PPP Loan in February 2021[159] Liquidity and Capital Resources Substantial doubt exists about going concern, with an accumulated deficit of $103.6 million and insufficient funding for the next twelve months - Management states that cash, cash equivalents, and available loan facilities are not sufficient to satisfy operating requirements for the next twelve months, raising substantial doubt about the company's ability to continue as a going concern[165] - As of September 30, 2021, the company had an accumulated deficit of $103.6 million and expects to continue incurring operating losses and negative cash flows[164] - During the nine months ended September 30, 2021, the company drew $5.5 million from its loan agreements with Juvenescence and raised approximately $496,000 in gross proceeds from its at-the-market (ATM) stock offering[174] PART II — OTHER INFORMATION This section details the company's updated risk factors, particularly regarding its going concern status, and its equity sales activities Item 1A. Risk Factors The primary risk factor update emphasizes substantial doubt about the company's ability to continue as a going concern - The company explicitly states that its cash, available credit, and potential proceeds from its ATM offering are not sufficient to satisfy funding requirements for the next twelve months, raising substantial doubt about its ability to continue as a going concern[184] - The company had an accumulated deficit of $103.6 million as of September 30, 2021, and expects continued operating losses and negative cash flows[185] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company generated approximately $480,790 in net proceeds from its at-the-market stock offering for working capital At-the-Market (ATM) Offering Activity (Nine Months Ended Sep 30, 2021) | Metric | Amount (USD) | | :--- | :--- | | Shares Sold | 242,200 | | Gross Proceeds | $495,708 | | Total Expenses | $14,918 | | Net Proceeds | ~$480,790 | - The net proceeds from the ATM offering were used for working capital, including payments for professional fees, insurance premiums, consulting fees, and director compensation[192]