UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, September 30, 2021

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: 001-38295001-40060

Longeveron Inc.

(Exact name of registrant as specified in its charter)

1951 NW 7^th Avenue, Suite 520, Miami, Florida 33136

(Address of Principal Executive Offices)

Registrant’s Telephone Number, Including Area Code: (305) 909-0840

Securities registered pursuant to Section 12(b) of the Act:

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. ☐

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 pursuant 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 ☒

As of MayNovember 12, 2021, the registrant had 3,280,7433,417,796 shares of Class A common stock, $0.001 par value per shares, and 15,702,834 shares of Class B common stock, $0.001 par value per share, outstanding.

LONGEVERON INC.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Longeveron Inc.

Condensed Balance Sheets

(In thousands, except share and per share data)

See accompanying notes to unaudited condensed financial statements.

Longeveron Inc.

Condensed Statements of Operations

(In thousands, except per share data)

(Unaudited)

See accompanying notes to unaudited condensed financial statements.

Longeveron Inc.

Condensed Statements of Members’ Equity and Stockholders’ Equity

For the Nine Months Ended September 30, 2021 and 2020
(In Thousands, Except Share Amounts)

(Unaudited)

See accompanying notes to unaudited condensed financial statements.

3

Longeveron Inc.

Condensed Statements of Cash FlowsMembers’ Equity and Stockholders’ Equity

For the Three Months Ended September 30, 2021 and 2020
(In thousands)

Thousands, Except Share Amounts) (Unaudited)

See accompanying notes to unaudited condensed financial statements.

Longeveron Inc.

Condensed Statements of Cash Flows

(In thousands) (Unaudited)

See notes to unaudited condensed financial statements.

Longeveron Inc.

Notes to the Condensed Financial Statements (Unaudited)

Three and Nine Month Periods Ended March 31,September 30, 2021 and 2020

1. Nature of Business, Basis of Presentation, and Liquidity

Nature of business:

On February 12, 2021, Longeveron LLC converted its corporate form (the “Corporate Conversion”) from a Delaware limited liability company (Longeveron, LLC) to a Delaware corporation, Longeveron Inc. (the “Company,” “Longeveron” or “we,” “us,” or “our”). Longeveron LLC was formed as a Delaware limited liability company on October 9, 2014 and authorized to transact business in Florida on December 15, 2014. The Company is a clinical stage biotechnology company developing cellular therapies for specific aging-related and life-threatening conditions. The Company operates out of its leased facilities in Miami, Florida.

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, dependence on licenses, protection of proprietary technology, dependence on key personnel, compliance with government regulations and the need to obtain additional financing to fund operations. Product candidates currently under development will require significant additional research and development efforts, including extensive pre-clinical studies and clinical trials and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel infrastructure and extensive compliance and reporting capabilities.

The Company’s product candidates are currently in development. There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be obtained, that any products developed will obtain necessary government regulatory approval or that any approved products will be commercially viable. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will generate significant revenue from product sales. The Company operates in an environment of rapid technological change and substantial competition from, among others, existing pharmaceutical and biotechnology companies. In addition, the Company is dependent upon the services of its employees, partners and consultants.

Initial Public Offering (“IPO”):

As part of the Company’s IPO, onOn February 12, 2021 our Class A common stock began to trade on NASDAQ under the stock symbol “LGVN”. Pursuant to the IPO, the Company sold 2,660,000 shares of Class A common stock at a public offering price of $10.00 per share for aggregate gross proceeds of $26.6 million prior to deducting underwriting discounts, commissions, and other offering expenses. In addition, the Company granted the underwriters a 30-day option to purchase up to an additional 399,000 shares at the public offering price less the underwriting discounts and commissions.

On March 15, 2021, the Company’s underwriters partially exercised its over-allotment option, resulting in the Company selling an additional 250,000 shares of Class A common stock at a public offering price of $10.00 per share for aggregate gross proceeds of $2.5 million prior to deducting underwriting discounts, commissions, and other offering expenses.

Basis of presentation:

The accompanying unaudited Condensed Financial Statements have been prepared in accordance with the requirements of Article 8 of Regulation S-X promulgated under the Exchange Act and, therefore, do not include all information and footnotes necessary for a fair presentation of financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America.America (“U.S. GAAP”). These unaudited Condensed Financial Statements should be read in conjunction with our Financial Statements and related notes, included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC. Unless otherwise stated, references to particular years or quarters refer to our fiscal years ended December 31 and the associated quarters of those fiscal years.

TheseThe Condensed Financial Statements are unaudited, but include all adjustments, including normal recurring adjustments, which, in the opinion of management, are necessary to present fairly our financial position, results of operations and cash flows for the interim periods presented. The Condensed Balance Sheet as of December 31, 2020 has been derived from the audited financial statements at that date but does not include all of the information and notes required by generally accepted accounting principlesU.S. GAAP for complete financial statements. Results of operations for interim periods are not necessarily indicative of the results that may be expected for the year as a whole.

Liquidity:

Since inception, the Company has primarily been engaged in organizational activities, including raising capital, and research and development activities. The Company does not yet have a product that has been approved by the U.S. Food and Drug Administration (“FDA”), and has only generated revenues from grants, clinical trials and contract manufacturing. The Company has not yet achieved profitable operations or generated positive cash flows from operations. The Company intends to continue its efforts to raise additional equity financing, develop its intellectual property, and secure regulatory approvals to commercialize its products. There is no assurance that profitable operations, if achieved, could be sustained on a continuing basis. Further, the Company’s future operations are dependent on the success of the Company’s efforts to raise additional capital, its research and commercialization efforts, regulatory approval, and, ultimately, the market acceptance of the Company’s products. These financial statements do not include adjustments that might result from the outcome of these uncertainties.

The Company has incurred recurring losses from operations since its inception, including a net loss of $3.1$13.0 million and $0.2$2.4 million for the threenine months ended March 31,September 30, 2021 and 2020, respectively. In addition, as of March 31,September 30, 2021, the Company had an accumulated deficit of $30.0$39.9 million. The Company expects to continue to generate operating losses for the foreseeable future.

As of March 31,September 30, 2021, the Company had cash, and cash equivalents of $24.5$9.7 million and short-term investments of $9.2 million. The Company believes that its cash and cash equivalents and investments as of March 31,September 30, 2021 will enable it to fund its operating expenses and capital expenditure requirements through at least the next 12 months from the date of issuance of these financial statements.

2. Summary of Significant Accounting Policies

Use of estimates:

The presentation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Accounting Standard Updates

In December 2019, the FASBFinancial Accounting Standards Board issued ASUAccounting Standards Update 2019-12, “Income Taxes (Topic 740)”. The amendments in this ASU simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and by clarifying and amending other areas of Topic 740. The amendments in this ASU are effective for annual and interim periods beginning after December 15, 2020. We adopted this ASU on January 1, 2021 with no material impact on our consolidated financial statements.

A variety of proposed or otherwise potential accounting standards are currently under consideration by standard-setting organizations and certain regulatory agencies. Because of the tentative and preliminary nature of such proposed standards, management has not yet determined the effect, if any, that the implementation of such proposed standards would have on the Company’s financial statements.

Cash and cash equivalents:

The Company considers cash to consist of cash on hand and temporary investments having an original maturity of 90 days or less that are readily convertible into cash.

Short-term investments:

Short-term investments at September 30, 2021 consisted of marketable fixed income securities, primarily corporate bonds, which are categorized as available-for-sale securities and are thus marked to market and stated at fair value in accordance with ASC 820 FairValue Measurement. These investments are considered Level 2 investments within the ASC 820 fair value hierarchy. The fair value of corporate bonds is determined using standard market valuation methodologies, including discounted cash flows, matrix pricing and / or other similar techniques. The inputs to these valuation techniques include but are not limited to market interest rates, credit rating of the issuer or counterparty, industry sector of the issuer, coupon rate, call provisions, maturity, estimated duration and assumptions regarding liquidity and estimated future cash flows. In addition to bond characteristics, the valuation methodologies incorporate market data, such as actual trades completed, bids and actual dealer quotes, where such information is available. Accordingly, the estimated fair values are based on available market information and judgments about financial instruments categorized within Level 2 of the fair value hierarchy. Interest and dividends are recorded when earned. Realized gains and losses on investments are determined by specific identification and are recognized as incurred in the statement of operations. Changes in net unrealized gains and losses are reported in the statement of operations in the current period and represent the change in the fair value of investment holdings during the reporting period. Changes in net unrealized gains and losses were not significant for the three and nine months ended September 30, 2021, and there were no such changes for the three and nine months ended September 30, 2020.

Inventory:

The Company will begin carrying inventory of its biological products on its balance sheets following commercial launch of such products. Inventory will consist of raw materials, biological products in process, and finished goods available for sale. The Company will determine its inventory values using the average cost method. Inventory will be valued at the lower of cost or net realizable value and will exclude units that the Company anticipates distributing for clinical evaluation. As of each of March 31,September 30, 2021 and December 31, 2020, all of the Company’s biological products were anticipated to be distributed for clinical evaluation.

The Company does not currently carry any inventory for its biological products, as it has yet to launch a product for commercial distribution. Historically the Company’s operations have focused on clinical trials and discovery efforts, and accordingly, costs of manufactured clinical doses of biological product candidates were expensed as incurred, consistent with the accounting for all other research and development costs. Once the Company begins commercial distribution, costs of all newly manufactured biological products will be allocated either for use in commercial distribution, which will be carried as inventory and not expensed, or for research and development efforts, which will continue to be expensed as incurred.

Accounts and grants receivable:

Accounts and grants receivable include amounts due from customers, granting institutions and others. The amounts as of March 31,September 30, 2021 and December 31, 2020 are certaindeemed to be collected,collectible and no amount has been recognized for doubtful accounts. Maryland-TEDCOMSCRF-TEDCO generally advance grant funds and therefore a receivable is not usually recognized. In addition, for the Clinical trial revenue, most participants pay in advance of treatment. Advanced grant funds and prepayments for the Clinical trial revenue are recorded to deferred revenue.

Accounts and grants receivable by source, as of (in thousands):

Deferred offering costs:

The Company recorded certain legal, professional and other third-party fees that were directly associated with in-process equity financings as deferred offering costs until the applicable equity financing was consummated. After consummation of an equity financing, these costs will beare recorded in stockholders’ equity as a reduction of proceeds generated as a result of the offering. At March 31,September 30, 2021 the deferred offering costs accrued as of December 31, 2020 of $0.6 million were recorded to stockholder’sstockholders’ equity.

Property and equipment:

Property and equipment, including improvements that extend useful lives of related assets, are valued at cost, while maintenance and repairs are charged to operations as incurred. Depreciation is calculated using the straight-line method based on the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of the estimated useful life of the asset or the original term of the lease. Depreciation expense is recorded in the research and development line of the Statement of Operations as the assets are primarily related to the Company’s clinical programs.

Intangible assets:

Intangible assets include payments on license agreements with the Company’s co-founder and chief scientific officer (“CSO”) and the University of Miami (“UM”) (see Note 8)9) and legal costs incurred related to patents and trademarks. License agreements have been recorded at the value of cash consideration, and/orcommon stock and membership units transferred to the respective parties when acquired.

Payments on license agreements are amortized using the straight-line method over the estimated useful lifeterm of 20the agreements, which range from 5-20 years. Patents are amortized over their estimated useful life, once issued. The Company considers trademarks to have an indefinite useful life and evaluates them for impairment on an annual basis. Amortization expense is recorded in the research and development line of the Statement of Operations as the assets are primarily related to the Company’s clinical programs.

Impairment of Long-Lived Assets:

The Company evaluates long-lived assets for impairment, including property and equipment and intangible assets, when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Upon the occurrence of a triggering event, the asset is reviewed to assess whether the estimated undiscounted cash flows expected from the use of the asset plus the residual value from the ultimate disposal exceeds the carrying value of the asset. If the carrying value exceeds the estimated recoverable amounts, the asset is written down to the estimated fair value. Any resulting impairment loss is reflected on the statements of operations. Upon evaluation, management determined that there was no impairment of long-lived assets as of March 31,September 30, 2021 and December 31, 2020.

Deferred revenue:

The unearned portion of advanced grant funds and prepayments for Clinical trial revenue, which will be recognized as revenue when the Company meets the respective performance obligations, has been presented as deferred revenue in the accompanying balance sheets. For the threenine months ended March 31,September 30, 2021 and 2020, the Company recognized nil and $0.2$0.3 million, respectively, of funds that were previously classified as deferred revenue.revenue (of which nil and $0.2 million was attributable to each of the three-month periods ended September 30, 2021 and 2020).

Revenue recognition:

The Company recognizes revenue when performance obligations related to respective revenue streams are met. For Grant revenue, the Company considers the performance obligation met when the grant related expenses are incurred, or supplies and materials are received. The Company is paid in tranches pursuant to terms of the related grant agreements, and then applies payments based on regular expense reimbursement submissions to grantors. There are no remaining performance obligations or variable consideration once grant expense reporting to the grantor is complete. For Clinical trial revenue, the Company considers the performance obligation met when the participant has received the treatment. The Company usually receives prepayment for these services or receives payment at the time the treatment is provided, and there are no remaining performance obligations or variable consideration once the participant received the treatment. For Contract Manufacturing Revenue,manufacturing revenue, the Company considers the performance obligation met when the contractual obligation and / or statement of work has been satisfied. Payment terms may vary depending on specific contract terms. There are no significant judgments affecting the determination of the amount and timing of revenue recognition.

Revenue by source (in thousands):

The Company records cost of revenues based on expenses directly related to revenue. For Grants, the Company records allocated expenses for Research and development costs to a grant as a cost of revenues. For the Clinical trial revenue directly related expenses for that program are allocated and expensed as incurred. These expenses are similar to those described under “Research and development expense” below.

Research and development expense:

Research and development costs are charged to expense when incurred in accordance with ASC 730. ASC 730 addresses the proper accounting and reporting for research and development costs. It identifies: 1) those activities that should be identified as research and development; 2) the elements of costs that should be identified with research and development activities, and the accounting for these costs; and 3) the financial statement disclosures related to them. Research and development costs include costs such as clinical trial expenses, contracted research and license agreement fees with no alternative future use, supplies and materials, salaries, share-based compensation, employee benefits, property and equipment depreciation and allocation of various corporate costs. The Company accrues for costs incurred by external service providers, including contract research organizations and clinical investigators, based on its estimates of service performed and costs incurred. These estimates include the level of services performed by the third parties, patient enrollment in clinical trials, administrative costs incurred by the third parties, and other indicators of the services completed. Based on the timing of amounts invoiced by service providers, the Company may also record payments made to those providers as prepaid expenses that will be recognized as expense in future periods as the related services are rendered.

Concentrations of credit risk:

Financial instruments which potentially subject the Company to credit risk consist principally of cash and cash equivalents, short-term investments and accounts and grants receivable. Cash and cash equivalents are held in United States financial institutions. At times, the Company may maintain balances in excess of the federally insured amounts.

Income taxes:

Prior to its Corporate Conversion, the Company was treated as a partnership for U.S. federal and state income tax purposes. Consequently, the Company passed its earnings and losses through to its members based on the terms of the Company’s Operating Agreement. Accordingly, no provision for income taxes is recorded in the accompanying financial statements for periods prior periods.to the conversion.

Following the Corporate Conversion, the Company's tax provision consists of taxes currently payable or receivable, plus any change during the period in deferred tax assets and liabilities. The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. In addition, a valuation allowance is established to reduce any deferred tax asset for which it is determined that it is more likely than not that some portion of the deferred tax asset will not be realized. The Company's tax provision was nil for the threenine months ended March 31,September 30, 2021 due to net operating losses. The Company has not recorded any tax benefit for the net operating losses incurred due to the uncertainty of realizing a benefit in the future.

The Company recognizes the tax benefits from uncertain tax positions that the Company has taken or expects to take on a tax return. In the unlikely event an uncertain tax position exists in which the Company could incur income taxes, the Company would evaluate whether there is a probability that the uncertain tax position taken would be sustained upon examination by a taxing authority. Reserves for uncertain tax positions would then be recorded if the Company determined it is probable that either a position would not be sustained upon examination or a payment would have to be made to a taxing authority and the amount was reasonably estimable. As of March 31,September 30, 2021 and December 31, 2020, the Company does not believe it has any uncertain tax positions that would result in the Company having a liability to the taxing authority. It is the Company’s policy to expense any interest and penalties associated with its tax obligations when they are probable and estimable.

Equity-based compensation:

The Company accounts for equity-based compensation expense by the measurement and recognition of compensation expense for stock-based awards based on estimated fair values on the date of grant. The fair value of the options is estimated at the date of the grant using the Black-Scholes option-pricing model.

The Black-Scholes option-pricing model requires the input of highly subjective assumptions, the most significant of which are the expected share price volatility, the expected life of the option award, the risk-free rate of return, and dividends during the expected term. Because the option-pricing model is sensitive to changes in the input assumptions, different determinations of the required inputs may result in different fair value estimates of the options.

The

Neither the Company’s stock options ornor its restricted stock units (“RSU”RSUs”) do not trade on an active market. Volatility is a measure of the amount by which a financial variable, such as a stock price, has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. Given the Company’s limited historical data, the Company utilizes the average historical volatility of similar publicly traded companies that are in the same industry. The risk-free interest rate is the average U.S. treasury rate (having a term that most closely approximates the expected life of the option) for the period in which the option was granted. The expected life is the period of time that the options granted are expected to remain outstanding. Options granted have a maximum term of ten years. The Company had insufficient historical data to utilize in determining its expected life assumptions and, therefore, uses the simplified method for determining expected life.

Comprehensive Loss

Comprehensive loss was equal to net loss for the threenine months ended March 31,September 30, 2021 and 2020.

3. Short-term investments

Short-term investments consisted of the following (in thousands):

4. Property and equipment, net

Major components of property and equipment are as follows (in thousands):

Depreciation and amortization expense amounted to approximately $0.2 and $0.5 million for each of the three and nine months ended March 31,September 30, 2021 and 2020.2020, respectively.

4.

5. Intangible assets, net

Major components of intangible assets as of March 31,September 30, 2021 are as follows (in thousands):

Major components of intangible assets as of December 31, 2020 are as follows:

Amortization expense related to intangible assets totaled less than $0.1 million for each of the three monthsthree- and nine-month periods ended March 31,September 30, 2021 and 2020.

Future amortization expense for intangible assets as of March 31,September 30, 2021 is approximately as follows (in thousands):

9

5. 6. Leases

In accordance with Accounting Standards Update 2016-02, “Leases (Topic 842)”, the Company records a Right-of-use (ROU) asset and a lease liability related to its operating leases (there are no finance leases). The Company’s corporate office lease expires in March 2027. As of March 31,September 30, 2021, the ROU asset and lease liability were approximately $2.0$1.9 million and $3.5$3.3 million, respectively. As of December 31, 2020, the ROU asset and lease liability were approximately $2.1 million and $3.7 million, respectively.

Future minimum payments under the operating leases as of March 31,September 30, 2021 are as follows (in thousands):

During the three monthsthree- and nine-month periods ended March 31,September 30, in each of 2021 and 2020, the Company incurred approximately $0.2 million and $0.3$0.5 million of total lease costs, respectively, that are included in the general and administrative expenses in the statements of operations.

On July 1, 2020, the Company entered into a sublease agreement for a portion of its leased space for a one-year period ending JuneSeptember 30, 2021, with three optional one-year renewal periods, and $10,000 in monthly payments.payments to the Company. This sublease agreement was amended on July 29, 2021, effective August 1, 2021. The amendment to the sublease increased the number of cleanrooms occupied by the lessee, changed the expiration date to July 31, 2022, increased the base rent to $22,500, beginning on September 1, 2021, and increased the security deposit to $22,500. For the threenine months ended March 31,September 30, 2021, $30,000$102,500 was recognized as sublease income, and is included in other income in the accompanying statements of operations.

6.7. Members’ Equity and Stockholders’ Equity 

IPO

On February 12, 2021, as part ofThe Corporate Conversion undertaken immediately prior to the Company’s IPO our Class A common stock began to trade on NASDAQ under the stock symbol “LGVN”. Pursuant to our IPO, the Company sold 2,660,000 shares of Class A common stock at a public offering price of $10.00 per share for aggregate gross proceeds of $26,600,000 prior to deducting underwriting discounts, commissions, and other offering expenses.

Immediately prior to the IPO, the Company converted its corporate form from a Delaware limited liability company to a Delaware corporation with the name change to Longeveron Inc. The conversion caused all existing Series A and B units to convert into Class B common stock and all existing Series C units to convert into Class A common stock. The purpose of the Corporate Conversion was to reorganize the Company structure so that the entity that offered the Company’s Class A common stock to the public iswas a Delaware corporation rather than a Delaware limited liability company, and so that the Company’s existing investors own the Company’s Class A common stock or Class B common stock rather than equity interests in a limited liability company.

On

Pursuant to the IPO, the Company sold 2,660,000 shares of Class A common stock at a public offering price of $10.00 per share for aggregate gross proceeds of $26.6 million prior to deducting underwriting discounts, commissions, and other offering expenses. Thereafter, on March 15, 2021, the Company sold an additional 250,000 shares of Class A common stock at a public offering price of $10.00 per share for additional aggregate gross proceeds of $2,500,000 prior to deducting underwriting discounts, commissions, and other offering expenses, pursuant to a partial exercise of the over-allotment option held by the underwriters.

Class A Common Stock

During the threenine months ended March 31,September 30, 2021 and prior to the Corporate Conversion, the Company issued 1,130 Series C Common Membership Units (“Series C Units”), as payment for existing consulting agreements, with an aggregate value of $0.1 million. As part of the Corporate Conversion, 63,893 outstanding Series C units (which includes the units referenced in the prior sentence) were converted into 344,077 shares of Class A common stock.

Also, during the three and nine months ended March 31,September 30, 2021, the Company issued 26,6666,000 and 163,719 unregistered shares of Class A common stock shares, with an aggregate value of $0.2less than $0.1 million and $1.2 million, respectively, as payment under consulting and license agreements.

During the yearnine months ended December 31,September 30, 2020, the Company issued 18,335 Series C Units for $1.1 million in cash.cash (none during the three months ended September 30, 2020). The Company also issued 734 Series C Units with an aggregate value of $0.1 million as payment under consulting agreements.

Class B Common Stock

As part ofIn connection with the Corporate Conversion, 2,000,000 outstanding Series A and B units were converted into 15,702,834 shares of unregistered Class B common stock.

Holders of Class A common stock generally have rights identical to holders of Class B common stock, except that holders of Class A common stock are entitled to one vote per share and holders of Class B common stock are entitled to five (5) votes per share. The holders of Class B common stock may convert oneeach share of Class B common stock into one share of Class A common stock. The holders ofstock at any time at the holder’s option. Class B common stockshares are entitled to five (5) votes per share, and holders of Class A common stock are entitled to one (1) vote per share.not publicly tradable.

Warrants

As a resultpart of the IPO, the underwriter received warrants to purchase 106,400 shares of Class A common stock. The warrants are exercisable at any time and from time to time, in whole or in part, during the four and a half-year period commencing six months from FebruaryAugust 12, 2021, at a price of $12.00 per Class A common stock share. Total grant date fair value of warrants as of September 30, 2021, estimated using the Black-Scholes pricing model, was approximately $0.5 million.

7.8. Equity Incentive Plan

RSUs

As part of the Company’s IPO, on January 29, 2021, the Company adopted and approved the 2021 Incentive Award Plan (“2021 Incentive Plan”). Under the 2021 Incentive Plan, the Company may grant cash and equity incentive awards to eligible service providers in order to attract, motivate and retain the talent for which the Company competes. The material terms of the 2021 Incentive Plan are summarized below.

On

Prior to the IPO, on January 29, 2021, the Board approved the granting of 159,817 Series C RSUs under the Company’s existing 2017 Longeveron LLC Incentive Plan (the “2017 Incentive Plan”), which, thereafter converted to RSUs exercisable for Class A common stock as part of the Corporate Conversion, in the IPO. More specifically, 159,817 RSUs were converted tointo 855,247 RSUs exercisable for Class A common stock. During FebruaryBased upon a third party valuation, the calculated fair value of each January 2021 oneRSU was $9.00.

One employee resigned from the Company therebyin February 2021, forfeiting 16,113 RSUs,RSUs. In May and June 2021, annual grants of 5,000 RSUs each were grantedmade to sixeach of the Directors. AsCompany’s Directors, based on a fair market value at the time of March 31,grant of $0.1 million.

Generally, the RSUs vest upon attainment of a time-vesting event, by which the RSUs vest in 25% increments per year, on each of the first, second, third and fourth anniversaries of the date of grant, assuming continued service. Such yearly vesting will vest pro-rata per quarter at the end of each quarter. The RSUs granted in January of 2021 included accelerated time-based vesting (as having been earned for prior years of service, and hence were treated as earned “catch-up” awards), and an additional vesting requirement whereby the holder must remain employed by the Company had 869,134 RSUs granted and outstanding. RSUs have no exercise price and are convertible into Class A common stock shares upon meeting the vesting requirements. The RSUs shall vest, subject to the Participant’s continued Service to the Company, only upon satisfaction of bothas of the IPO settlement date, which was the third quarterly settlement date following criteria:the Company’s IPO (October 1, 2021).

The fair value of each RSU grant made during 2021 will be recognized as stock-based compensation ratably over the related vesting periods, which approximates the service period. As noted inperiod, except for May 2021 grants to the paragraph above, in orderCompany’s Directors, which vest over two years with 50% of the RSUs vesting on grant date and the remaining RSUs vesting 25% on each of the first and second anniversaries of the grant date.

On July 20, 2021, the Company granted a bonus for RSUs to vest they must be held asthe completion of the IPO Settlement Date, which has been determined to Mr. Green, Mr. Lehr and Dr. Hare of $100,000, $75,000 and $75,000. The bonus would be October 1, 2021. However, somepaid out in cash and RSUs. With Mr. Green, Mr. Lehr and Dr. Hare received 8,223, 6,167 and 12,335 RSUs with accelerated vesting as described above will be ratably vested overeach. The RSU were issued based on a fair market value at the seven and half month period ending ontime of grant, July 20, 2021, of $6.08. 

As of September 30, 2021.2021, the Company had 897,564 RSUs granted and outstanding.

Based upon a third party valuation, the calculated fair value of each RSU was $9.00. RSU activity for the threenine months ended March 31,September 30, 2021 was as follows:

Stock Options

Stock options may be granted under the 2021 Incentive Plan. The exercise price of options is equal to the fair market value of the Company’s Class A common stock as of the grant date. Options historically granted have generally become exercisable over four years and expire ten years from the date of grant. The 2021 Incentive Plan provides for equity grants to be granted up to 5% of the outstanding common stock shares.

The fair value of the options issued are estimated using the Black-Scholes option-pricing model and have the following assumptions: a dividend yield of 0%; an expected life of 10 years; volatility of 95%; and risk-free interest rate based on the grant date ranging from of 1.23% to 1.62%. Each option grant made during 2021 will be expensed ratably over the option vesting periods, which approximates the service period.

As of September 30, 2021, the Company has recorded issued and outstanding options to purchase a total of 321,000 shares of Class A common stock pursuant to the 2021 Incentive Plan, at a weighted average exercise price of $5.95 per share.

For the threenine months ended March 31,September 30, 2021:

Stock Option activity for the nine months ended September 30, 2021 was as follows:

On April 22, 2021, the Company granted awards of 64,125 Class A common stock options to employees. The stock option awards have four-year vesting periods, vesting 25% per year, and have an exercise price of $5.73. Based upon a Black-Scholes calculation, the price per share to be expensed was $5.03 and a total cost of $0.3 million would be expensed ratably over 48 months.

On May 5, 2021, the Company granted an award of 10,000 Class A common stock options to an employee. The stock option award has a four-year vesting period, vesting 25% per year, and has an exercise price of $5.89. Based upon a Black-Scholes calculation, the price per share to be expensed was $5.17 and a total cost of less than $0.1 million would be expensed ratably over 48 months.

On May 17, 2021, the Company granted an award of 30,000 Class A common stock options to an employee. The stock option award has a four-year vesting period, vesting 25% per year, and has an exercise price of $5.29. Based upon a Black-Scholes calculation, the price per share to be expensed was $4.64 and a total cost of approximately $0.1 million would be expensed ratably over 48 months.

On June 1, 2021, the Company granted an award of 5,000 Class A common stock options to an employee. The stock option award has a four-year vesting period, vesting 25% per year, and has an exercise price of $6.77. Based upon a Black-Scholes calculation, the price per share to be expensed was $5.94 and a total cost of less than $0.1 million would be expensed ratably over 48 months.

On July 20, 2021, the Company granted 225,000 Class A common stock options to executives. Mr. Green was granted 75,000 Class A common stock options and Mr. Lehr, Dr. Hare and Mr. Clavijo were each granted 50,000 Class A common stock options. The stock options have four-year vesting periods, vesting 12.5% on July 22, 2021 and the remaining vesting equally over the remaining four years, with an exercise price of $6.08. Based upon a Black-Scholes calculation, the price per share to be expensed was $5.32 and a total cost of $1.2 million would be expensed ratably over 48 months.

For the nine months ended September 30, 2021 and 2020, the equity-based compensation expense amounted to approximately $1,265,000$6.0 million ($2.5 million for the three months ended September 30, 2021) and $13,000,$36,000 ($12,000 for the three months ended September 30, 2020), respectively, which is included in the research and development and general and administrative expenses in the accompanying statements of operations for the threenine months ended March 31,September 30, 2021 and 2020. As of March 31,September 30, 2021, the remaining unrecognized equity basedequity-based compensation of approximately $6.6$3.7 million will be recognized over approximately 2.753.8 years.

8. 9. Commitments and Contingencies