UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

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, 2021~~September 30, 2023

☐ 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: 001-38295~~

File Number: 001-40060

Longeveron Inc.

(Exact name of registrant as specified in its charter)

Delaware		~~001-40060~~		47-2174146
(State or Other Jurisdiction of Incorporation)		~~(Commission File Number)~~		(IRS Employer Identification No.)

1951 NW 7^thAvenue, Suite 520, Miami, Florida		33136
(Address of principal executive offices)		(Zip Code)

~~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

(Registrant’s telephone number, including area code)

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

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.001 per share	LGVN	The ~~NASDAQ~~Nasdaq Capital Market
Transferable Subscription Rights	LGVNR	The Nasdaq Capital Market

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

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

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

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided 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 ~~May 12, 2021,~~November 8, 2023, the registrant had ~~3,280,743~~8,895,574 shares of Class A common stock, $0.001 par value per shares, and ~~15,702,834~~14,855,539 shares of Class B common stock, $0.001 par value per share, outstanding.

LONGEVERON INC.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION		1
ITEM 1.	Condensed Financial Statements	1
	Condensed Balance Sheets as of ~~March 31, 2021~~September 30, 2023 (unaudited) and December 31, ~~2020~~2022	1
	Condensed Statements of Operations for the three and nine months ended ~~March 31, 2021~~September 30, 2023 and ~~2020~~2022 (unaudited)	2
	Condensed Statements of ~~Members’ Equity~~Comprehensive Loss for the three and nine months ended September 30, 2023 and 2022 (unaudited)	3
	Condensed Statements of Stockholders’ Equity for the three and nine months ended ~~March 31, 2021~~September 30, 2023 and ~~year ended December 31, 2020~~2022 (unaudited)	34
	Condensed Statements of Cash Flows for the ~~three~~nine months ended ~~March 31, 2021~~September 30, 2023 and ~~2020~~2022 (unaudited)	46
	Notes to Condensed Financial Statements (unaudited)	57
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1519
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	2433
ITEM 4.	Controls and Procedures	2433
PART II. OTHER INFORMATION		34
ITEM ~~1A.~~1.	~~Risk Factors~~Legal Proceedings	2534
ITEM 1A.	Risk Factors	34
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2635
ITEM 6.	Exhibits	2636
~~SIGNATURES~~	27
SIGNATURES		37

PART I. FINANCIAL INFORMATION

Item 1. Condensed Financial Statements.

Longeveron Inc.

Condensed Balance Sheets

(In thousands, except share and per share data)

March 31,
2021 December 31,
2020
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 24,461 $ 816
Prepaid expenses and other current assets 836 52
Deferred offering costs - 561
Accounts and grants receivable - 420
Total current assets 25,297 1,849
Property and equipment, net 3,417 3,597
Intangible assets, net 1,533 1,547
Right-of-use (ROU) asset 2,008 2,070
Other assets 177 177
Total assets $ 32,432 $ 9,240
Liabilities, members’ equity and stockholders’ equity
Current liabilities:
Accounts payable $ 895 $ 1,590
Accounts expenses 961 1,542
Current portion of lease liability 517 511
Short-term note payable 19 38
Current portion of loans 4 139
Deferred revenue 385 10
Total current liabilities 2,781 3,830
Long-term liabilities:
Long-term loans 146 311
Lease liability 3,010 3,142
Total long-term liabilities 3,156 3,453
Total liabilities 5,937 7,283
Commitments and contingencies (Note 8)
Members’ equity and stockholders’ equity:
Members’ equity - 1,957
Preferred stock, $0.001 par value per share, 5,000,000 shares authorized, no shares issued and outstanding at March 31, 2021; no shares authorized, issued and outstanding, at December 31, 2020 - -
Class A common stock, $0.001 par value per share, 84,295,000 shares authorized, 3,280,743 shares issued and outstanding at March 31, 2021; no shares authorized, issued and outstanding, at December 31, 2020 3 -
Class B common stock, $0.001 par value per share, 15,705,000 shares authorized, 15,702,834 shares issued and outstanding at March 31, 2021; no shares authorized, issued and outstanding, at December 31, 2020 16 -
Additional paid-in capital 56,580 -
Stock subscription receivable (100 ) -
Accumulated deficit (30,004 ) -
Total members’ equity and stockholders’ equity 26,495 1,957
Total liabilities, members’ equity and stockholders’ equity $ 32,432 $ 9,240

	September 30, 2023			December 31, 2022
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	1,967		$	10,503
Marketable securities		1,966			9,155
Prepaid expenses and other current assets		1,015			404
Accounts and grants receivable		96			218
Total current assets		5,044			20,280
Property and equipment, net		2,544			2,949
Intangible assets, net		2,539			2,409
Operating lease asset		1,301			1,531
Other assets		197			244
Total assets	$	11,625		$	27,413
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	829		$	1,751
Accrued expenses		1,473			650
Current portion of lease liability		586			564
Estimated lawsuit liability		-			1,398
Deferred revenue		506			506
Total current liabilities		3,394			4,869
Long-term liabilities:
Lease liability		1,599			2,041
Total long-term liabilities		1,599			2,041
Total liabilities		4,993			6,910
Commitments and contingencies (Note 9)
Stockholders’ equity:
Preferred stock, $0.001 par value per share, 5,000,000 shares authorized, no shares issued and outstanding at September 30, 2023 and December 31, 2022		-			-
Class A common stock, $0.001 par value per share, 84,295,000 shares authorized, 6,455,336 shares issued and outstanding at September 30, 2023; 6,127,320 issued and outstanding at December 31, 2022		6			6
Class B common stock, $0.001 par value per share, 15,705,000 shares authorized, 14,855,539 shares issued and outstanding at September 30, 2023; 14,891,085 issued and outstanding, at December 31, 2022		15			15
Additional paid-in capital		85,976			83,712
Stock subscription receivable		(100	)		(100	)
Accumulated deficit		(78,956	)		(62,773	)
Accumulated other comprehensive loss		(309	)		(357	)
Total stockholders’ equity		6,632			20,503
Total liabilities and stockholders’ equity	$	11,625		$	27,413

See accompanying notes to unaudited condensed financial statements.

Longeveron Inc.

Condensed Statements of Operations

(In thousands, except per share data)

(Unaudited)

Three months ended
March 31,
2021 2020
Revenues
Grant revenue $ 211 $ 946
Clinical trial revenue 165 762
Total revenues 376 1,708
Cost of revenues 227 896
Gross profit 149 812

Operating expenses
General and administrative 2,201 686
Research and development 1,350 289
Selling and marketing 56 50
Total operating expenses 3,607 1,025
Loss from operations (3,458 ) (213 )
Other income and (expenses)
Forgiveness of Paycheck Protection Program loan 300 -
Other income, net 47 -
Total other income and (expenses), net 347 -
Net loss $ (3,111 ) $ (213 )
Basic and diluted net loss per share $ (0.18 ) $ -
Basic and diluted weighted average common shares outstanding 17,491,066 -

	Three months ended September 30,						Nine months ended September 30,
	2023			2022			2023			2022
Revenues
Clinical trial revenue	$	150		$	210		$	605		$	860
Grant revenue		-			55			41			241
Total revenues		150			265			646			1,101
Cost of revenues		96			173			423			549
Gross profit		54			92			223			552

Operating expenses
General and administrative		3,092			2,074			8,322			6,481
Research and development		1,843			2,960			6,910			6,107
Selling and marketing		280			245			580			766
Total operating expenses		5,215			5,279			15,812			13,354
Loss from operations		(5,161	)		(5,187	)		(15,589	)		(12,802	)
Other income and (expenses)
Non-operating lawsuit expense		-			-			-			(1,398	)
Other income and (expenses), net		55			(57	)		204			(178	)
Total other income and (expenses), net		55			(57	)		204			(1,576	)
Net loss	$	(5,106	)	$	(5,244	)	$	(15,385	)	$	(14,378	)
Deemed dividend attributable to warrant down round feature		(798	)		-			(798	)		-
Net loss attributable to common stockholders	$	(5,904	)	$	(5,244	)	$	(16,183	)	$	(14,378	)
Basic and diluted net loss per share	$	(0.28	)	$	(0.25	)	$	(0.77	)	$	(0.69	)
Basic and diluted weighted average common shares outstanding		21,178,767			21,001,613			21,106,464			20,952,569

See accompanying notes to unaudited condensed financial statements.

Longeveron Inc.

Condensed Statements of ~~Members’ Equity and~~Comprehensive Loss

(In thousands)

(Unaudited)

	Three months ended September 30,						Nine months ended September 30,
	2023			2022			2023			2022

Net loss	$	(5,106	)	$	(5,244	)	$	(15,385	)	$	(14,378	)
Other comprehensive gain:
Net unrealized gain on available-for-sale securities		26			-			48			-
Total comprehensive loss	$	(5,080	)	$	(5,244	)	$	(15,337	)	$	(14,378	)

See accompanying notes to unaudited condensed financial statements.

Longeveron Inc.

Condensed Statements of Stockholders’ Equity

(In ~~Thousands, Except Share Amounts)~~thousands, except share amounts)

(Unaudited)

Series A Units Series B Units Series C Units Class A Common Stock Class B Common Stock Additional
Number of Units Amount Number of Units Amount Number of Units Amount Number Amount Number Amount Subscription
Receivable Paid-In
Capital Accumulated
Deficit Total
Equity
Balance at December 31, 2019 1,000,000 $ 250 1,000,000 $ 1,832 43,695 $ 2,513 - - - - (150 ) - - 4.445
Series C units issued for cash - - - - 18,335 1,100 - - - - - - - 1,100
Issuance of Series C units as payment for amounts accrued - - - - 734 44 - - - - - - - 44
Equity-based compensation - - - - - 39 - - - - - - - 39
Cash received pursuant to subscription receivable - - - - - - - - - - 50 - - 50
Net loss - - - (3,609 ) - (112 ) - - - - - - - (3721 )

Balance at December 31, 2020 1,000,000 $ 250 1,000,000 $ (1,777 ) 62,764 $ 3,584 - $ - - $ - $ (100 ) - - $ 1,957
Conversion of Units into Class A and B common stock (1,000,000 ) (250 ) (1,000,000 ) 1,777 (62,764 ) (3,584 ) 338,030 - 15,702,834 16 - 28,934 (26,893 ) -
Initial public offering and overallotment of Class A common stock, net of $2,969 in issuance costs - - - - - - 2,910,000 3 - - - 26,131 - 26,134
Class A common stock, issued for consulting - - - - - - 32,713 - - - - 250 - 250
Equity based compensation - - - - - - - - - - - 1,265 - 1,265
Net loss - - - - - - - - - - - - (3,111 ) (3,111 )
Balance at March 31, 2021 - - - - - - 3,280,743 3 15,702,834 16 (100 ) 56,580 (30,004 ) 26,495

	Class A Common Stock					Class B Common Stock					Subscription			Additional Paid-In			Accumulated			Accumulated Other Comprehensive			Total Stockholder’s
	Number			Amount		Number			Amount		Receivable			Capital			Deficit			Loss			Equity
Balance at December 31, 2022		6,127,320		$	6		14,891,085		$	15	$	(100	)	$	83,712		$	(62,773	)	$	(357	)	$	20,503
Conversion of Class B common stock for Class A common stock		35,546			-		(35,546	)		-		-			-			-			-			-
Class A common stock, issued for RSUs vested		227,030			-		-			-		-			-			-			-			-
Class A common stock, held for taxes on RSUs vested		(43,057	)		-		-			-		-			(153	)		-			-			(153	)
Class A common stock issued for stock rights offering		108,497			-		-			-		-			-			-			-			-
Equity-based compensation		-			-		-			-		-			1,619			-			-			1,619
Unrealized gain attributable to change in market value of available for sale investments		-			-		-			-		-			-			-			48			48
Dividend attributable to down round feature of 2021 warrants		-			-		-			-		-			798			(798	)		-			-
Net loss		-			-		-			-		-			-			(15,385	)		-			(15,385	)
Balance at September 30, 2023		6,455,336		$	6		14,855,539		$	15	$	(100	)	$	85,976		$	(78,956	)	$	(309	)	$	6,632

	Class A Common Stock					Class B Common Stock						Subscription			Additional Paid-In			Accumulated			Accumulated Other Comprehensive		Total Stockholder’s
	Number			Amount		Number			Amount			Receivable			Capital			Deficit			Loss		Equity
Balance at December 31, 2021		5,175,361		$	5		15,702,834		$	16		$	(100	)	$	81,470		$	(43,938	)	$	-	$	37,453
Conversion of Units into Class A and B common stock		641,749			1		(641,749	)		(1	)		-			-			-			-		-
Class A common stock, issued for RSUs vested		152,117			-		-			-			-			-			-			-		-
Class A common stock, held for taxes on RSUs vested		(28,234	)		-		-			-			-			(321	)		-			-		(321	)
Class A common stock options exercised		374			-		-			-			-			-			-			-		-
Equity-based compensation		-			-		-			-			-			1,861			-			-		1,861
Net loss		-			-		-			-			-			-			(14,378	)		-		(14,378	)
Balance at September 30, 2022		5,941,367		$	6		15,061,085		$	15		$	(100	)	$	83,010		$	(58,316	)	$	-	$	24,615

See accompanying notes to unaudited condensed financial statements.

Longeveron Inc.

Condensed Statements of ~~Cash Flows~~Stockholders’ Equity

(In ~~thousands)~~thousands, except share amounts)

(Unaudited)

Three months ended
March 31,
2021 2020
Cash flows from operating activities
Net loss $ (3,111 ) $ (213 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 195 195
Forgiveness of Paycheck Protection Program loan (300 ) -
Equity issued for consulting services 119 44
Equity based compensation 1,265 13
Changes in operating assets and liabilities:
Accounts and grants receivable 420 (210 )
Prepaid expenses and other current assets (785 ) (45 )
Other assets - 24
Accounts payable (644 ) 15
Deferred revenue 375 (163 )
Accrued expenses (503 ) 7
ROU asset and lease liability (63 ) (65 )
Net cash used in operating activities (3,032 ) (398 )
Cash flows from investing activities
Acquisition of property and equipment - (130 )
Acquisition of intangible assets - (10 )
Net cash used in investing activities - (140 )
Cash flows from financing activities
Proceeds from initial public offering of common stock, net of commissions and expenses 26,696 -
Proceeds from issuance of Series C units - 1,100
Repayments of short-term note payable (19 ) -
Proceeds from subscription agreement - 50
Net cash provided by financing activities 26,677 1,150
Increase in cash and cash equivalents 23,645 612
Cash and cash equivalents at beginning of the period 816 1,866
Cash and cash equivalents at end of the period $ 24,461 $ 2,478
Supplement Disclosure of Non-cash Investing and Financing Activities:
Conversion of Series A, B and C units into Class A and B common stock $ (2,057 ) $ -

	Class A Common Stock					Class B Common Stock				Subscription			Additional Paid-In			Accumulated			Accumulated Other Comprehensive			Total Stockholder’s
	Number			Amount		Number		Amount		Receivable			Capital			Deficit			Loss			Equity
Balance at June 30, 2023		6,314,225		$	6		14,855,539	$	15	$	(100	)	$	84,729		$	(73,052	)	$	(335	)	$	11,263
Class A common stock, issued for RSUs vested		47,307			-		-		-		-			-			-			-			-
Class A common stock, held for taxes on RSUs vested		(14,693	)		-		-		-		-			(50	)		-			-			(50	)
Class A common stock issued for stock rights offering		108,497			-		-		-		-			-			-			-			-
Equity-based compensation		-			-		-		-		-			499			-			-			499
Unrealized gain attributable to change in market value of available for sale investments		-			-		-		-		-			-			-			26			26
Dividend attributable to down round feature of 2021 warrants		-			-		-		-		-			798			(798	)		-			-
Net loss		-			-		-		-		-			-			(5,106	)		-			(5,106	)
Balance at September 30, 2023		6,455,336		$	6		14,855,539	$	15	$	(100	)	$	85,976		$	(78,956	)	$	(309	)	$	6,632

	Class A Common Stock					Class B Common Stock				Subscription			Additional Paid-In			Accumulated			Accumulated Other Comprehensive		Total Stockholder’s
	Number			Amount		Number		Amount		Receivable			Capital			Deficit			Loss		Equity
Balance at June 30, 2022		5,925,935		$	6		15,061,085	$	15	$	(100	)	$	82,532		$	(53,072	)	$	-	$	29,381
Conversion of Units into Class A and B common stock		-					-		-		-			-			-			-		-
Class A common stock, issued for RSUs vested		20,158			-		-		-		-			-			-			-		-
Class A common stock, held for taxes on RSUs vested		(4,726	)		-		-		-		-			(27	)		-			-		(27	)
Class A common stock options exercised		-			-		-		-		-			-			-			-		-
Equity-based compensation		-			-		-		-		-			505			-			-		505
Net loss		-			-		-		-		-			-			(5,244	)		-		(5,244	)
Balance at September 30, 2022		5,941,367		$	6		15,061,085	$	15	$	(100	)	$	83,010		$	(58,316	)	$	-	$	24,615

See accompanying notes to unaudited condensed financial statements.

Longeveron Inc.

Condensed Statements of Cash Flows

(In thousands)

(Unaudited)

	Nine months ended September 30,
	2023			2022
Cash flows from operating activities
Net loss	$	(15,385	)	$	(14,378	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		710			657
Interest earned on marketable securities		180			170
Equity issued for consulting services		-			170
Equity-based compensation		1,619			1,691
Non-operating lawsuit expense		-			1,398
Changes in operating assets and liabilities:
Accounts and grants receivable		122			(122	)
Prepaid expenses and other current assets		(611	)		(462	)
Other assets		47			(61	)
Accounts payable		(922	)		(41	)
Deferred revenue		-			307
Estimated lawsuit liability		(1,398	)		-
Accrued expenses		823			(599	)
Lease asset and lease liability		(190	)		(391	)
Net cash used in operating activities		(15,005	)		(11,661	)
Cash flows from investing activities
Proceeds from the sale of marketable securities		7,057			591
Acquisition of property and equipment		(137	)		(503	)
Acquisition of intangible assets		(298	)		(195	)
Net cash provided by (used in) investing activities		6,622			(107	)
Cash flows from financing activities
Payments for taxes on RSUs vested		(153	)		(316	)
Net cash used in financing activities		(153	)		(316	)
Change in cash and cash equivalents		(8,536	)		(12,084	)
Cash and cash equivalents at beginning of the period		10,503			25,658
Cash and cash equivalents at end of the period	$	1,967		$	13,574
Supplement Disclosure of Non-cash Investing and Financing Activities:
Vesting of RSUs into Class A common stock	$	(717	)	$	(1,295	)
Dividend attributable to down round feature of warrants	$	798		$	-

See accompanying notes to unaudited condensed financial statements.

Longeveron Inc.

Notes to the Condensed Financial Statements (Unaudited)

Three and Nine Month Periods Ended ~~March 31, 2021~~September 30, 2023 and ~~2020~~2022

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

Nature of business:

Longeveron was formed as a Delaware limited liability company on October 9, 2014, and was authorized to transact business in Florida on December 15, 2014. 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~~conditions and 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, on 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 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 interim condensed balance sheet as of September 30, 2023, and the condensed statements of operations, statement of comprehensive loss, stockholders’ equity, and cash flows for the three and nine months ended September 30, 2023 and 2022, are unaudited. The unaudited ~~Condensed Financial Statements~~condensed financial statements have been prepared ~~in accordance with~~according to the ~~requirements~~rules and regulations of ~~Article 8 of Regulation S-X promulgated under~~ the Securities and Exchange ~~Act~~Commission (“SEC”) and, therefore, ~~do not include all~~certain information and ~~footnotes necessary for a fair presentation of~~disclosures normally included in financial ~~position, results of operations, and cash flows~~statements prepared in ~~conformity~~accordance with accounting principles generally accepted in the United States of America. 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.

~~These Condensed Financial Statements are unaudited, but include all adjustments, including normal recurring adjustments, which, in~~America (“U.S. GAAP”) have been omitted. In the opinion of management, the accompanying unaudited condensed financial statements for the periods presented reflect all adjustments which are normal and recurring, and necessary to ~~present~~ fairly ~~our~~state the financial position, results of operations, and cash flows ~~for~~of the ~~interim periods presented. The Condensed Balance Sheet as of December 31, 2020 has been derived from~~Company. These unaudited condensed financial statements and notes should be read in conjunction with the audited financial statements ~~at that date but does not include all of the information~~ and notes ~~required by generally accepted accounting principles for complete financial statements. Results of operations for interim periods are not necessarily indicative of~~thereto in the ~~results that may be expected for~~Company’s 2022 Annual Report on Form 10-K filed with the ~~year as a whole.~~SEC on March 14, 2023.

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.~~approved products, if any. 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~~$15.4 million and ~~$0.2~~$14.4 million for the ~~three~~nine months ended ~~March 31, 2021~~September 30, 2023 and ~~2020,~~2022, respectively. In addition, as of ~~March 31, 2021,~~September 30, 2023, the Company had an accumulated deficit of ~~$30.0~~$79.0 million. The Company expects to continue to generate operating losses for the foreseeable future.

As of ~~March 31, 2021,~~September 30, 2023, the Company had cash and cash equivalents of ~~$24.5~~$2.0 million and marketable securities of $2.0 million. The Company ~~believes~~has prepared a cash flow forecast which indicates that it does not have sufficient cash to meet its ~~cash and cash equivalents as of March 31, 2021 will enable it to fund its operating expenses and capital~~minimum expenditure ~~requirements through at least the next 12 months~~commitments for one year from the date ~~of issuance of~~ these condensed financial ~~statements.~~statements are available to be issued and therefore needs to raise additional funds to continue as a going concern. As a result, there is substantial doubt about the Company’s ability to continue as a going concern. To address the future funding requirements, management has undertaken the following initiatives:

●

On October 11, 2023 the Company entered into a securities purchase agreement with an institutional and accredited investor (the “Purchaser”) relating to the registered direct offering and sale of an aggregate of 2,365,000 shares of the Company’s Class A common stock, par value $0.001 per share and pre-funded warrants to purchase up to 59,243 shares of Class A common stock at an exercise price of $0.001 per share, at a purchase price of $1.65 per share and $1.649 per pre-funded Warrant (the “Offering”), which Offering closed and was funded October 13, 2023.

In a concurrent private placement, the Company also sold to the Purchaser unregistered Series A warrants to purchase up to an aggregate of 2,424,243 shares of its Class A common stock and unregistered Series B warrants to purchase up to an aggregate of 2,424,243 shares of its Class A common stock (the “Warrants”)(collectively, the “Private Placement”). The unregistered Series A Warrants have an exercise price of $1.65 per share, will become exercisable commencing on the effective date of stockholder approval of the issuance of the shares issuable upon the exercise of the Series A Warrants, and have a term of five and one-half years from the date of issuance. The unregistered Series B Warrants have an exercise price of $1.65 per share, will become exercisable commencing on the effective date of stockholder approval of the issuance of the shares issuable upon the exercise of the Series B Warrants, and have a term of eighteen months from the date of issuance. Each Warrant is exercisable for one share of Class A common stock. The net proceeds to the Company from the Offering and Private Placement was approximately $3.5 million, after deducting placement agent fees and other offering expenses payable by the Company.

●

the Company will attempt to use equity instruments to provide a portion of the compensation due to vendors and collaboration partners;

●

the Company plans to pursue potential partnerships for pipeline programs, however, there can be no assurances that it can consummate such transactions;

●

the Company will continue to support its Bahamas Registry to generate revenue; and

●

since 2016 our clinical programs have received over $16.0 million in competitive extramural grant awards ($11.5 million which has been directly awarded to us and which are recognized as revenue when the performance obligations are met) from the National Institutes of Health (NIH), Alzheimer’s Association, and Maryland Stem Cell Research Fund (MSCRF), and the Company plans to submit additional contract and grant applications for further support of its programs with various funding agencies.

The Company’s condensed financial statements do not include any adjustments to the assets carrying amount, to the expenses presented and to the reclassification of the condensed balance sheets items that could be necessary should the Company be unable to continue its operations.

2. Summary of Significant Accounting Policies

Basis of presentation:

The financial statements of the Company were prepared in accordance with U.S. GAAP.

Certain reclassifications have been made to prior year financial statements to conform to classifications used in the current year. These reclassifications had no impact on net loss, stockholders’ equity or cash flows as previously reported.

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 FASB issued ASU 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 condensed financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments. The standard requires that credit losses be reported using an expected losses model rather than the incurred losses model that is currently used, and establishes additional disclosures related to credit risks. For available-for-sale debt securities with unrealized losses, these standards now require allowances to be recorded instead of reducing the amortized cost of the investment. These standards limit the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and requires the reversal of previously recognized credit losses if fair value increases. The adoption of the standard as of January 1, 2023 did not have a material impact on the Company’s condensed financial statements; however, the Company did record net unrealized gains and losses in the condensed statement of comprehensive loss for the three and nine month periods ended September 30, 2023.

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.

~~Inventory:~~Marketable securities:

Marketable securities at September 30, 2023 and December 31, 2022 consisted of marketable fixed income securities, primarily corporate bonds, as well as U.S. Government and agency obligations 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 1 and Level 2 investments within the ASC 820 fair value hierarchy. The ~~Company will begin carrying inventory~~fair value of ~~its biological products~~Level 1 investments, including cash equivalents, money funds and U.S. government securities, are substantially based on ~~its balance sheets following commercial launch~~quoted market prices. 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 ~~products. Inventory will consist~~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 1 and Level 2 of ~~raw materials, biological products~~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 ~~process,~~the statement of operations. Changes in net unrealized gains and ~~finished goods available~~losses are reported in other comprehensive loss and represent the change in the fair value of investment holdings during the reporting period. Changes in net unrealized gains and losses were less than $0.1 million 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, 2021~~the three and ~~2020, all of the Company’s biological products were anticipated to be distributed for clinical evaluation.~~nine months ended September 30, 2023 and 2022.

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~~September 30, 2023 and December 31, ~~2021 and 2020~~2022 are certain to be collected, and no amount has been recognized for doubtful accounts. ~~Maryland-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):

	March 31, 2021		December 31, 2020		September 30, 2023		December 31, 2022
Alzheimer’s Association – Grant	$	-	$	339
National Institutes of Health – Grant		-		66	$	96	$	218
Clinical Trial receivable		-		15
Total	$	-	$	420	$	96	$	218

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 be~~are recorded in stockholders’ equity as a reduction of proceeds generated as a result of the offering. ~~At March 31, 2021 the deferred offering costs as of December 31, 2020 of $0.6 million were recorded to stockholder’s equity.~~

Property and equipment:

Property and equipment, including improvements that extend useful lives of related assets, are ~~valued~~recorded 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~~condensed statements of ~~Operations~~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/or~~common stock and membership units transferred to the respective parties when acquired.

Payments onfor license agreements are amortized using the straight-line method over the estimated ~~useful life~~term 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~~condensed statements of ~~Operations~~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 condensed statements of operations. Upon evaluation, management determined that there was no impairment of long-lived assets ~~as of March 31, 2021~~during the three and ~~December 31, 2020.~~nine months ended September 30, 2023 and 2022.

Deferred revenue:

The unearned portion of advanced grant funds and prepayments for ~~Clinical~~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 condensed balance sheets. For the ~~three~~nine months ended ~~March 31, 2021~~September 30, 2023 and ~~2020,~~2022, the Company recognized ~~nil~~$0 and ~~$0.2~~less than $0.1 million, respectively, of funds that were previously classified as deferred ~~revenue.~~revenue ($0 and $0.1 million, respectively for the three months ended September 30, 2023 and 2022).

Revenue recognition:

The Company recognizes revenue when performance obligations related to respective revenue streams are met. For ~~Grant~~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~~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~~receives the treatment. For ~~Contract Manufacturing Revenue,~~contract manufacturing revenue, the Company considers the performance obligation met when the contractual obligation ~~and /~~ 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):

Three months ended
March 31,
2021 2020
National Institutes of Health – Grant $ - $ 714
Clinical trial revenue 165 762
Alzheimer’s Association – Grant 170 197
Maryland – TEDCO – Grant 41 35
Total $ 376 $ 1,708

	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
National Institute of Health - grant	$	-	$	41	$	41	$	123
Clinical trial revenue		150		210		605		860
MSCRF – TEDCO¹ - grant		-		14		-		118
Total	$	150	$	265	$	646	$	1,101

¹	Maryland Stem Cell Research Fund (MSCRF) - Maryland Technology Development Corporation (TEDCO)

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.~~730 Research and Development. 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~~U.S. 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~~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~~Company’s tax provision was ~~nil~~$0 for the three and nine months ended ~~March 31, 2021~~September 30, 2023 and 2022 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, 2021~~September 30, 2023 and December 31, ~~2020,~~2022, the Company does not believe it has any uncertain tax positions that would result in the Company having a liability to ~~the~~a 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 stock 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~~has insufficient historical data to utilize in determining its expected life assumptions and, therefore, uses the simplified method for determining expected life.

3. Marketable securities

The following is summary of marketable securities that the Company measures at fair value (in thousands):

	Fair Value at September 30, 2023
	Level 1		Level 2		Level 3		Total
U.S. government agencies	$	-	$	751	$	-	$	751
Corporate and foreign bonds		-		1,215		-		1,215
Money market funds⁽¹⁾		847		-		-		847
Accrued income		20		-		-		20
Total marketable securities	$	867	$	1,966	$	-	$	2,833

⁽¹⁾	Money market funds are included in cash and cash equivalents in the condensed balance sheet.

~~Comprehensive Loss~~

	Fair Value at December 31, 2022
	Level 1		Level 2		Level 3		Total

U.S. Treasury obligations	$	97	$	-	$	-	$	97
U.S. government agencies		-		1,250		-		1,250
Corporate and foreign bonds		-		7,808		-		7,808
Money market funds⁽¹⁾		607		-		-		607
Accrued income		65		-		-		65
Total marketable securities	$	769	$	9,058	$	-	$	9,827

⁽¹⁾	Money market funds are included in cash and cash equivalents in the condensed balance sheet.

~~Comprehensive loss was equal~~As of both September 30, 2023 and December 31, 2022, the Company reported accrued interest receivable related to ~~net loss for~~marketable securities of less than $0.1 million. These amounts are recorded in other assets on the ~~three months ended March 31, 2021~~condensed balance sheets and ~~2020.~~are not included in the carrying value of the marketable securities.

3. 4. Property and equipment, net

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

	Useful Lives	March 31, 2021		December 31, 2020		Useful Lives	September 30, 2023		December 31, 2022
Leasehold improvements	10 years	$	4,310	$	4,310	10 years	$	4,328	$	4,328
Furniture/Lab equipment	7 years		2,059		2,059	7 years		2,366		2,264
Computer equipment	5 years		14		14	5 years		80		46
Software/Website	3 years		38		38	3 years		38		38
Total property and equipment			6,421		6,421			6,812		6,676
Less accumulated depreciation and amortization			3,004		2,824			4,268		3,727
Property and equipment, net		$	3,417	$	3,597		$	2,544	$	2,949

Depreciation and amortization expense amounted to approximately $0.2 million for each of the ~~three months~~three-month periods ended ~~March 31, 2021~~September 30, 2023 and ~~2020.~~2022, and $0.5 million for each of the nine-month periods ended September 30, 2023 and 2022, respectively.

4. 5. Intangible assets, net

Major components of intangible assets as of ~~March 31, 2021~~September 30, 2023 are as follows (in thousands):

	Useful Lives	Cost		Accumulated Amortization			Total		Useful Lives	Cost		Accumulated Amortization			Total
License agreements	20 years	$	1,233	$	(293	)	$	940	20 years	$	2,043	$	(853	)	$	1,190
Patent Costs			466		-			466			1,156		-			1,156
Trademark costs			127		-			127			193		-			193
Total		$	1,826	$	(293	)	$	1,533		$	3,392	$	(853	)	$	2,539

Major components of intangible assets as of December 31, ~~2020~~2022 are as follows:

	Useful Lives	Cost		Accumulated Amortization			Total
License agreements	20 years	$	2,043	$	(685	)	$	1,358
Patent Costs			887		-			887
Trademark costs			164		-			164
Total		$	3,094	$	(685	)	$	2,409

Useful Lives Cost Accumulated Amortization Total
License agreements 20 years $ 1,233 $ (279 ) $ 954
Patent Costs 466 - 466
Trademark costs 127 - 127
Total $ 1,826 $ (279 ) $ 1,547

Amortization expense related to intangible assets ~~totaled less than~~amounted to approximately $0.1 million and $0.2 million for each of the ~~three months~~three- and nine-month periods ended ~~March 31, 2021~~September 30, 2023 and ~~2020.~~2022, respectively.

Future amortization expense for intangible assets as of ~~March 31, 2021~~September 30, 2023 is approximately as follows (in thousands):

Year Ending December 31,	Amount
2021	$	46
2022		62
2023		62
Years Ending December 31,			Amount
2023 (remaining three months)			$	56
2024		62		224
2025		62		224
2026				224
2027				224
Thereafter		646		238
Total	$	940	$	1,190

5. 6. Leases

~~In accordance with Accounting Standards Update 2016-02, “Leases (Topic 842)”, the~~The Company records ~~a Right-of-use (ROU)~~an operating lease asset and aan operating 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, 2021,~~September 30, 2023, the ~~ROU~~operating lease asset and operating lease liability were approximately ~~$2.0~~$1.3 million and ~~$3.5~~$2.2 million, respectively. As of December 31, ~~2020,~~2022, the ~~ROU~~operating lease asset and operating lease liability were approximately ~~$2.1~~$1.5 million and ~~$3.7~~$2.6 million, respectively.

Future minimum payments under the operating leases as of ~~March 31, 2021~~September 30, 2023 are as follows (in thousands):

Year Ending December 31, Amount
2021 (remaining nine months) $ 495
2022 671
2023 687
2024 702
2025 718
Thereafter 920
Total 4,193
Less: Interest 666
Present Value of Lease Liability $ 3,527

Years Ending December 31,	Amount
2023 (remaining three months)	$	171
2024		682
2025		682
2026		682
2027		169
Total		2,386
Less: Interest		201
Present value of operating lease liability	$	2,185

During each of the three ~~months~~month periods ended ~~March 31, 2021~~September 30, 2023 and ~~2020,~~2022, the Company incurred approximately $0.2 million of total lease costs and ~~$0.3~~for the nine month periods ended September 30, 2023 and 2022, the Company incurred approximately $0.7 million and $0.6 million of total lease costs, respectively, that are included in the general and administrative expenses in the statements of operations.

7. Stockholders’ Equity

Class A Common Stock

On April 18, 2023, the Company finalized the Separation Agreement dated March 31, 2023, for Dr. Christopher Min, the Company’s former Chief Medical Officer. In part for his agreement to a general release the Company agreed to pay Dr. Min: $112,000 as severance compensation and allowed for the immediate acceleration and vesting of 40,000 RSUs that were previously granted.

On ~~July 1, 2020,~~April 19, 2023, the Company finalized the Separation Agreement effective June 9, 2023, for James Clavijo, the Company’s former Chief Financial Officer. In part for his agreement to a general release the Company agreed to pay Mr. Clavijo $275,000 as severance compensation, three months of payment for COBRA insurance coverage and the immediate acceleration and vesting of 6,690 RSUs that were previously granted. Mr. Clavijo entered into a ~~sublease~~concurrent consulting agreement ~~for~~with the Company to continue as interim Chief Financial Officer until a ~~portion of its leased space for a one-year period ending June 30, 2021, with three optional one-year renewal periods, and $10,000 in monthly payments. For~~permanent successor joined the ~~three months ended March 31, 2021, $30,000 was recognized as sublease income, and is included in other income in the accompanying statements of operations.~~

~~6. Members’ Equity and Stockholders’ Equity~~

~~IPO~~Company.

On ~~February 12, 2021, as part of the Company’s IPO, our Class A common stock began to trade on NASDAQ under the stock symbol “LGVN”. Pursuant to our IPO,~~June 27, 2023 the Company ~~sold 2,660,000~~filed a registration statement with the SEC to conduct a tradeable subscription rights offering for up to $30.0 million of shares of Class A common stock to its stockholders and holders of certain warrants to purchase common stock. On July 28, 2023 the Company filed a first amendment to the registration statement. On August 16, 2023, the registration statement was declared effective by the SEC, and on August 22, 2023, the Company launched the subscription rights offering at a ~~public offering~~subscription price of ~~$10.00~~$3.00 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~~On September 21, 2023, the subscription period for the rights offering of the ~~Corporate Conversion was to reorganize~~Company expired. At the ~~Company structure so that~~end of the entity that offered the Company’s Class A common stock to the public is 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 March 15, 2021,~~subscription period, the Company sold ~~250,000~~108,497 shares of its Class A common stock at a ~~public offering~~ price of ~~$10.00~~$3.00 per share. There were no net proceeds to the Company after deducting the $0.3 million of expenses associated with the rights offering.

Restricted Stock Units (RSUs) are taxable upon vesting based on the market value on the date of vesting. The Company is required to make mandatory tax withholding for the payment and satisfaction of income tax, social security tax, payroll tax, or payment on account of other tax related to withholding obligations that arise by reason of vesting of an RSU. The taxable income is calculated by multiplying the number of vested RSUs for each individual by the closing share ~~for aggregate gross proceeds of $2,500,000 prior to deducting underwriting discounts, commissions, and other offering expenses, pursuant to a partial exercise~~price as of the ~~over-allotment option held by the underwriters.~~

~~Class A Common Stock~~

vesting date and a tax liability is calculated based on each individual’s tax bracket. During the ~~three~~nine months ended ~~March 31, 2021 and prior to the Corporate Conversion, the Company issued 1,130 Series C Common Membership Units (“Series C Units”), as payment~~September 30, 2023, a total of 227,030 RSUs vested 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 months ended March 31, 2021,~~stock shares. Of that amount, the Company ~~issued 26,666 unregistered shares of~~withheld 43,057 Class A common stock shares ~~with an aggregate value of $0.2 million, as payment under consulting agreements.~~to satisfy employee tax liabilities. The shares withheld are available for reissuance pursuant to the Company’s 2021 Incentive Award Plan.

During the ~~year~~nine months ended ~~December 31, 2020, the Company issued 18,335 Series C Units~~September 30, 2023, no stock options were exercised for ~~$1.1 million in cash. The Company also issued 734 Series C Units with an aggregate value of $0.1 million as payment under consulting agreements.~~Class A common stock shares.

Class B Common Stock

~~As part of~~In connection with the Corporate Conversion, 2,000,000 outstanding Series A and B units were converted into 15,702,834 shares of our 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 ~~one~~each share of Class B common stock into one share of Class A common ~~stock. The holders~~stock at any time at the holder’s option, and is otherwise subject to automatic conversion in certain circumstances. Class B common stock is not publicly tradeable.

During the nine months ended September 30, 2023, stockholders exchanged 35,546 shares of Class B common stock ~~are entitled to five (5) votes per share, and holders~~for 35,546 shares of Class A common stock. During the year ended December 31, 2022, stockholders exchanged 811,749 shares of Class B common stock ~~are entitled to one (1) vote per share.~~for 811,749 shares of Class A common stock.

Warrants

As ~~a result~~part of the ~~IPO~~Company’s initial public offering (“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 February~~August 12, 2021, at a price of $12.00 per share and the fair value of the warrants as of December 31, 2021 was approximately $0.5 million. During 2021, the underwriters assigned 95,760 of the warrants to its employees. As of December 31, 2022, 51,061 warrants have been exercised for Class A common stock ~~share. Total grant date fair value~~shares at an exercise price of ~~warrants estimated using the Black-Scholes pricing model was approximately $0.5 million.~~$12.00 for $612,732.

~~7. Equity Incentive Plan~~

As part of the ~~IPO,~~2021 PIPE Offering, the Company issued 1,169,288 warrants to investors to purchase up to a number of shares of Class A common stock equal to the number of shares of Class A common stock purchased by such investor in the offering, at an exercise price of $17.50 per share (the “Purchaser Warrants”). The Purchaser Warrants were immediately exercisable, expire five years from the date of issuance and have certain downward pricing adjustment mechanisms, subject to a floor, as set forth in greater detail therein. In addition, the Company granted the underwriters warrants, under similar terms, to purchase 46,722 shares of Class A common stock, at an exercise price of $17.50 per share.

On August 16, 2023, the Company announced its Stock Rights Offering, which triggered the downward pricing mechanism on ~~January 29, 2021,~~the Purchaser Warrants, at which time these warrants were adjusted downward to an exercise price of $5.25 for the period remaining through expiration. This resulted in a deemed dividend to common stockholders of approximately $0.8 million for the change in the fair value of the warrants using a Black-Scholes pricing model.

8. Equity Incentive Plan

As part of the Company’s IPO, the Company adopted and approved the 2021 Incentive Award Plan, ~~(“2021 Incentive Plan”). Under the 2021 Incentive Plan,~~under which, 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~~

On July 31, 2023, the Company granted Lisa Locklear, Executive Vice President and Chief Financial Officer, a signing bonus of 40,000 Restricted Stock Units, which vest in quarterly installments on each of October 1, 2023, January 1, 2024, April 1, 2024, and July 31, 2024.

On July 24, 2023, the Company granted Nataliya Agafonova, Chief Medical Officer, a signing bonus of 30,000 Restricted Stock Units, which vest in quarterly installments on each of July 24, 2023, October 1, 2023, January 1, 2024, and April 1, 2024.

On March 1, 2023, the Company granted Mr. Hashad a signing bonus of 50,000 Restricted Stock Units, which vest in quarterly installments on each of April 1, 2023, July 1, 2023, September 1, 2023, and December 31, 2023. Mr. Hashad will also receive annual long-term equity incentive awards through 2026 consisting of 50,000 shares of time-based vesting stock options and up to 125,000 of performance share units “(PSUs”), in accordance with the terms of the Longeveron 2021 Incentive ~~Plan are summarized below.~~Award Plan.

~~On January 29, 2021,~~

As of September 30, 2023 and December 31, 2022, the ~~Board approved~~Company had 122,947 and 329,746, respectively, RSUs outstanding (unvested).

RSU activity for the ~~granting of 159,817 Series C~~ nine months ended September 30, 2023 was as follows:

	Number of RSUs
Outstanding (unvested) at December 31, 2022		329,746
RSU granted		130,000
RSUs vested		(227,030	)
RSU expired/forfeited		(109,769	)
Outstanding (unvested) at September 30, 2023		122,947

Stock Options

Stock options may be granted under the ~~Company’s existing 2017 Longeveron LLC~~2021 Incentive ~~Plan (the “2017 Incentive Plan”), which thereafter converted~~Plan. The exercise price of options is set to ~~RSUs exercisable for~~equal the fair market value of the Company’s Class A common stock as ~~part~~ of the ~~Corporate Conversion in the IPO. More specifically, 159,817 RSUs were converted to 855,247 RSUs~~grant date. Options historically granted have generally become exercisable ~~for Class A common stock. During February 2021, one employee resigned~~over four years and expire ten years from the ~~Company thereby forfeiting 16,113 RSUs, and 5,000 RSUs each were~~date of grant. The 2021 Incentive Plan provides for equity grants to be granted up to ~~six~~5% of the ~~Directors. As of March 31, 2021, the Company had 869,134 RSUs granted and outstanding. RSUs have no exercise price and are convertible into Class A~~outstanding 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 both of the following criteria:~~shares.

	●	Time-Based Vesting: Subject to the attainment of a time vesting event, the RSUs shall vest in 25% increments per year, on each of the first, second, third and fourth anniversary of the date of grant. Such yearly vesting will vest pro-rata per quarter at the end of each quarter. However, vesting of certain RSUs have been accelerated as having been vested due to being earned for prior years of service, and hence are treated as earned “catch-up” awards; and

●

~~IPO Settlement Date: The IPO settlement date is a date on the third quarterly settlement date following the Company’s IPO. (This date will effectively be October 1, 2021).~~

The fair value of ~~each RSU~~the options issued is estimated using the Black-Scholes option-pricing model and using 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 4.01%. Each option grant made during ~~2021~~2023 and 2022 will be ~~recognized as stock-based compensation~~expensed ratably over the ~~related~~option vesting periods, which approximates the service period.

As ~~noted in~~of September 30, 2023 and December 31, 2022, the ~~paragraph above, in order~~Company has recorded issued and outstanding options to purchase a total of 380,968, and 470,191 shares, respectively, of Class A common stock pursuant to the 2021 Incentive Plan, at a weighted average exercise price of $6.04, and $7.07 per share, respectively.

For the nine months ended September 30, 2023:

	Number of Stock Options
Stock options vested (based on ratable vesting)		168,928
Stock options unvested		212,040
Total stock options outstanding at September 30, 2023		380,968

For the year ended December 31, 2022:

	Number of Stock Options
Stock options vested (based on ratable vesting)		151,258
Stock options unvested		318,933
Total stock options outstanding at December 31, 2022		470,191

Stock Option activity for ~~RSUs~~the nine months ended September 30, 2023 was as follows:

	Number of Stock Options			Weighted Average Exercise Price
Outstanding at December 31, 2022		470,191		$	7.07
Options granted		50,000		$	3.62
Options exercised		-			-
Options expired/forfeited		(139,223	)	$	8.63
Outstanding at September 30, 2023		380,968		$	6.04

On March 1, 2023, the Company granted an award of 50,000 Class A common stock options to ~~vest they must be held as~~Mr. Hashad. The stock option award has a one-year vesting period, vesting on the first anniversary of the ~~IPO Settlement Date, which~~grant date, and has ~~been determined to be October 1, 2021. However, some RSUs with accelerated vesting as described above will be ratably vested over the seven and half month period ending on September 30, 2021.~~

an exercise price of $3.62 per share. Based upon a ~~third party valuation,~~Black-Scholes calculation, the ~~calculated fair value~~price per share to be expensed was $3.23 and a total cost of ~~each RSU~~$0.2 million would be expensed ratably over 12 months.

For the three-month periods ended September 30, 2023 and 2022, equity-based compensation expense was ~~$9.00. RSU activity~~$0.5 million, and for the ~~three~~nine months ended ~~March 31, 2021 was as follows:~~

	~~Number of~~ ~~RSUs~~
~~Outstanding at December 31, 2020~~	-
~~RSU granted~~		~~885,247~~
~~RSU exercised~~		-
~~RSU expired/forfeited~~		~~16,113~~
~~Outstanding at March 31, 2021~~		~~869,134~~

~~For the three months ended March 31, 2021~~September 30, 2023 and ~~2020, the~~2022, equity-based compensation expense amounted to approximately ~~$1,265,000~~$1.6 million and ~~$13,000, respectively, which is~~$1.9 million, respectively. These amounts are included in the research and development and general and administrative expenses in the ~~accompanying~~condensed statements of operations for the three and nine months ended ~~March 31, 2021~~September 30, 2023 and ~~2020.~~ 2022.

As of ~~March 31, 2021,~~September 30, 2023, the remaining unrecognized ~~equity based~~equity-based compensation (which includes RSUs, PSUs and stock options) of approximately ~~$6.6~~$1.0 million will be recognized over approximately ~~2.75~~3.2 years.

9. Commitments and Contingencies

Master Services Agreements:

As of ~~March 31, 2021,~~September 30, 2023, the Company had ~~two~~four active master services agreements with third parties to conduct its clinical trials and manage clinical research programs and clinical development services on behalf of the Company. The Company expects these agreements or amended current agreements to have total expenditures of ~~less than $1.0.~~approximately $1.9 million ~~for 2021.~~over the next two years.

Consulting Services ~~Agreement:~~Agreements:

On November 20, 2014, the Company entered into a ten-year consulting services agreement with Dr. Joshua Hare, its ~~CSO.~~Chief Science Officer (“CSO”). Under the agreement, the Company has agreed to pay the CSO ~~$270,000~~$265,000 annually. The compensation payments are for scientific knowledge, medical research, technical knowledge, skills, and abilities to be provided by the CSO to further develop the intellectual property rights assigned by the CSO to the Company. This agreement requires the CSO to also assign to the Company the exclusive right, title, and interest in any work product developed from his efforts during the term of this agreement. On November 16, 2022, the Company accounted for but had not issued 48,140 RSUs with an aggregate value of $0.2 million as payment for accrued expenses under the consulting agreement with the CSO. These shares were issued on May 24, 2023. As of ~~March~~September 30, 2023 and December 31, ~~2021,~~2022, the Company had an accrued balance due to the CSO of ~~$0.3~~$0.1 million and aless than $0.1 million, respectively, which is included in accrued expenses in the accompanying condensed balance ~~due of $0.3 million as of December 31, 2020.~~sheets.

Technology Services Agreement:

On March 27, 2015, the Company entered into a technology services agreement with Optimal Networks, Inc. (a related company owned by ~~a board member’s~~Dr. Joshua Hare’s brother-in-law) for use of information technology services. The ~~Company agreed to issue the related party equity incentive units in the amount equal to 50%~~technology services agreement was terminated as of the charges for invoiced services, with such equity to be issued annually on or about the anniversary date of the agreement. During 2017, the Company issued 1,901 Series C Units, and on November 22, 2019 and January 29, 2021, the Company issued 820 and 410 Series C Units, respectively, as payment for an aggregate of $0.2 million of accrued technology services. The Series C units were converted to 16,755 Class A common stock shares.April 14, 2023. As of ~~March 31, 2021,~~September 30, 2023, and December 31, ~~2020,~~2022, the Company owed $0 and less than $0.1 million, respectively, pursuant to this agreement, which is included in accounts payable in the accompanying ~~March 31, 2021 and December 31, 2020~~condensed balance sheets.

Exclusive Licensing Agreements:

UM Agreement

On November 20, 2014, the Company entered into an ~~exclusive license agreement~~Exclusive License Agreement with UM for the use of certain ~~stem cell aging-related frailty~~Aging-related Frailty Mesenchymal Stem Cell (“MSC”) technology rights developed by ~~the CSO while employed~~our Chief Science Officer at UM. The ~~Company recorded~~UM License is a worldwide, exclusive license, with right to sublicense, with respect to any and all know-how specifically related to the ~~value~~development of the ~~membership units issued~~culture-expanded MSCs for Aging-related Frailty used at the Human-induced pluripotent stem cell-derived MSCs (“IMSCs”), all standard operating procedures used to ~~obtain this license agreement as an intangible asset.~~create the IMSCs, and all data supporting isolation, culture, expansion, processing, cryopreservation and management of the IMSCs. The Company is required to pay UM up(i) a license issue fee of $5,000, (ii) a running royalty in an amount equal to 3%three percent of annual net sales on products or services developed from the ~~technology.~~technology, payable on a country-by-country basis beginning on the date of first commercial sale through termination of the UM License Agreement, and which may be reduced to the extent we are required to pay royalties to a third party for the same product or process, (iii) escalating annual cash payments of up to $50,000, subject to offset. The agreement extends for up to 20 years from the last date a product or process is commercialized from the technology. Under the agreement, the Company is required to pay an annual fee to UM. On December 11, 2017, the November 20, 2014 agreement with UM was amended. The amendment provided that for a $5,000 fee the dates of the milestone completions were amendedtechnology and replaced as follows: (a) by December 31, 2021, to have completed Phase II clinical trials for the products; and (b) by September 1, 2025, to have completed Phase III clinical trials for products. In addition, one-year extensions may be granted on these milestone dates by making a payment of $5,000. Upon completion of the Phase II clinical trials, a milestone payment of $250,000 is due. Upon completion of the Phase III clinical trials, a milestone payment of $750,000 is due. As of March 31, 2020, the Company had accrued $50,000 based on the terms of the agreement. In addition, on November 14, 2014, as required by the license agreement the Company issued 20,000 series C membership units valued at $0.5 million to UM. The Company recorded this $500,000 as an intangible asset that is amortized over the life of the license agreement which was defined as 20 years. As of March 31, 2021, the Company had accrued $162,500 in milestone fees payable to UM based on the estimated progress to date.

~~The UM agreement~~ was amended ~~on March 3,~~in 2017 to modify certain milestone completion dates as detailed below In 2021 ~~to increase~~ the license fee ~~due to UM. The Company agreed to pay UM~~was increased by an additional ~~fee, which will be recorded as legal costs, of $0.1 million,~~$100,000, to defray patent ~~costs, with $70,000 due within thirty (30) days of~~costs. In addition, the ~~effective date of the amendment, and the remainder to be paid in equal installments of $7,500 on the 2~~^nd~~, 3~~^rd~~, and 5~~^th ~~year anniversaries of the effective date. The~~ Company ~~also agreed to issue an additional~~issued 110,387 unregistered shares of Class A common stock ~~shares~~ to UM.

The ~~Company and UM agreed~~milestone payment amendments shifted the triggering payments to ~~the following modification~~three payments of ~~the milestone payments: (a) No payment will~~$500,000, to be ~~due upon the completion of Phase 2 clinical trials for the product; (b) a one-time payment of $0.5 million, payable~~paid within six months ofof: (a) the completion of the first Phase 3 clinical trial of the products (based upon the final data unblinding); ~~(c) a one-time payment of $0.5 million payable within six months of~~(b) the receipt by the Company of approval for the first new drug application (“NDA”), biologics application (“BLA”), or other marketing or licensing application for the product; and ~~(d) a one-time payment of $0.5 million payable within six months of~~(c) the first sale following product approval. “Approval” refers to Product approval, licensure, or other marketing authorization by the U.S. Food and Drug Administration, or any successor agency. The ~~amendment~~amendments also provided for the ~~Company’s~~Company��s license of additional technology, to the extent not previously included in the UM License and granted the Company an exclusive option to obtain an exclusive license for (a) the ~~HLHS IND~~Hypoplastic Left Heart Syndrome (“HLHS”) investigational new drug application (“IND”) with ckit+ cells; and (b) UMP-438 titled “Method of Determining Responsiveness to Cell Therapy in Dilated Cardiomyopathy.”

The Company has the right to terminate the UM License upon 60 days’ prior written notice, and either party has the right to terminate upon a breach of the UM License. For the three- and nine-month periods ended September 30, 2023 and 2022, we recorded milestone fees due to UM of $12,500 and $37,500, respectively, and as of September 30, 2023 and December 31, 2022, we had accrued $52,500 and $50,000, respectively, which is included in accrued expenses in the accompanying condensed balance sheets.

CD271

On December 22, 2016, the Company entered into an exclusive license agreement with an affiliated entity of ~~the CSO~~Dr. Joshua Hare, JMH MD Holdings, LLC (“JMHMD”), for the use of CD271 cellular therapy technology. The Company recorded the value of the cash consideration and membership units issued to obtain this license agreement as an intangible asset. The Company is required to pay as royalty, 1% of the annual net sales of the licensed product(s) used, leased, or sold by or for licensee or its sub-licensees. If the Company sublicenses the technology, it is also required to pay an amount equal to 10% of the net sales of the sub-licensees. In addition, on December 23, 2016, as required by the license agreement, the Company paid an initial fee of $250,000 to JMHMD, and issued to it 10,000 Series C Units, valued at $250,000. The $0.5 million of value provided to JMHMD for the license agreement, along with professional fees of approximately $27,000, were recorded as an intangible asset that is amortized over the life of the license agreement which was defined as 20 years. Further, expenses related to the furtherance of the ~~CD271+~~CD271 technology is being capitalized and amortized as incurred over 20 years. There were no license fees due during the ~~three~~nine months ended ~~March 31, 2021 or~~September 30, 2023 and the year ended December 31, ~~2020~~2022 pertaining to this agreement.

Other Royalty

Under the grant award agreement with the Alzheimer’s Association, the Company may be required to make revenue sharing or distribution of revenue payments for products or inventions generated or resulting from this clinical trial program. The potential payments, although not currently defined, could result in a maximum payment of five times (5x) the award ~~amount.~~amount of $3.0 million.

Contingencies – ~~COVID-19 Pandemic~~Legal

~~The COVID-19 outbreak could adversely impact~~On September 13, 2021, the ~~Company’s ability to conduct business~~Company and certain of its directors and officers were named as defendants in a securities lawsuit filed in the ~~future. In December 2019, it was first reported that there had been an outbreak~~U.S. District Court for the Southern District of Florida and brought on behalf of a ~~novel strain~~purported class. The suit alleges there were materially false and misleading statements made (or omissions of coronavirus, SARS-CoV-2, COVID-19, in China. As COVID-19 continues to spread globally, including throughout the United States, the Company may experience disruptions that could severely impact its business, including:

●

~~impact to the financial markets;~~

●

~~disruption in the ability to provide product in foreign markets;~~

●

~~disruption on the ability to source materials;~~

●

~~disruption in the ability to manufacture our product;~~

●

~~delays or difficulties in completing the Company’s regulatory work;~~

●

limitations on the Company’s employee resources ability to work, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people; and

●

~~additional repercussions on the Company’s ability to operate its business.~~

The global outbreak of COVID-19 continues to rapidly evolve. The extent to which COVID-19 impacts the Company’s results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19, the ultimate geographic spread of COVID-19, the duration of the outbreak, travel restrictions imposed by countries in which the Company conducts business, business closures or business disruption in the world, a reduction in time spent out of home and the actions taken throughout the world, includingrequired information) in the Company’s ~~markets, to contain COVID-19 or treat its impact. The future impact~~initial public offering materials and in other disclosures during the period from our initial public offering on February 12, 2021, through August 12, 2021, in violation of the ~~outbreak is highly uncertain and cannot be predicted, and the Company cannot provide any assurance that the outbreak will not have~~federal securities laws. The action sought damages on behalf of a ~~material adverse impact on the Company’s operations or future results or filings with regulatory health authorities. The extent~~proposed class of ~~the impact to the Company, if any, will depend on future developments, including actions taken to contain COVID-19.~~

The Company continues to monitor how the COVID-19 pandemic is affecting the Company’s employees, business, and clinical trials. In response to the spread of COVID-19, the Company has instructed all employees who can perform their essential employment duties from home to do so. The Company’s laboratory scientists, cell processing scientists and other manufacturing personnel continue to work from the Company GMP facility on a day-to-day basis, and as such cell production has been minimally impacted. When the pandemic began to emerge in the U.S., mostpurchasers of the Company’s ~~ongoing clinical trials had completed enrollment, however~~common stock during said period. On July 12, 2022, all parties preliminarily agreed to settle the action for approximately $1.4 million, which settlement was preliminarily approved by the Court on or about May 12, 2023, and which settlement amount was paid on May 24, 2023. Legal expenses incurred in ordinary business activities are reported within general and administrative expenses.

On or about May 18, 2023, a ~~few subjects that were currently on study and in follow-up experienced some difficulties in adhering to the protocol schedule. Because~~former employee of the Company ~~primarily enrolls elderly subjects~~filed a charge with the Equal Employment Opportunities Commission (“EEOC”) and the Florida Commission on Human Relations alleging discrimination based on disability, and on or about August 15, 2023, the former employee filed a complaint in Miami-Dade Circuit Court alleging unpaid wages were outstanding. Both matters were addressed and fully resolved and settled in a mediation between the Company and the former employee held on September 28, 2023, by which it was agreed that the former employee would be paid $75,000 (a total of $35,000 towards this resolution will be paid by Longeveron and all remaining costs will be covered by Longeveron’s insurance carrier) and that the EEOC and FCHR charges will be withdrawn and the action in the trials, who are at particular risk for poor outcomes related to COVID-19 infection, the Company has experienced some disruption in executing the follow-up visits in Company protocols. While the Company believes the number of instances where a visit was missed completely is small, the Company cannot predict whether thisMiami-Dade Circuit Court will ~~have a material impact on the Company clinical results in the future. If too many subjects drop-out or the protocol is no longer effective, the Company may have to restart the clinical trial entirely.~~

9. ~~Short-term Note Payable~~

On September 27, 2020, the Company entered into a premium finance agreement to finance its insurance policies for approximately $63,000. The note requires down payment of $6,334, ratable monthly payments of $6,499, including interest at 5.353% and matures in June 2021. As of March 31, 2021, the outstanding balance was $19,000.

be dismissed with prejudice.

10. ~~Long-term Loan~~

On April 16, 2020, the Company received a loan from the Small Business Administration (SBA) pursuant to the Paycheck Protection Program (PPP) as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) in the amount of $300,390. The loan had interest at a rate of 1.00%, and initial maturity in 24 months. It was anticipated that not more than 25% of the forgiven amount may be for non-payroll costs. The Company also received $10,000 from the SBA for the Economic Relief Fund; this amount does not need to be repaid and was recorded as Other Income for the year ended December 31, 2020. As of December 31, 2020, the outstanding balance of the PPP loan was $300,390. On March 4, 2021, the full balance due for the PPP loan was forgiven by the SBA.

On May 12, 2020, the Company received a loan from the SBA pursuant to the Disaster Recovery Plan as part of the CARES Act in the amount of $150,000. This loan will require payments beginning on May 12, 2021 of $734 per month. The note will mature in 30 years and bears an interest rate of 3.75%. Due to part of the notes being due within one year, the Company recorded $4,009 and $138,879 in the current portion of loans line on the Balance Sheet as of March 31, 2021 and December 31, 2020, respectively.

~~Future debt obligations at March 31, 2020 for Long-term loans are as follows (in thousands):~~

Year Ending December 31, Amount
2021 (remaining nine months) $ 4
2022 3
2023 3
2024 3
2025 3
Thereafter 134
Total $ 150

~~11.~~ Employee Benefits Plan

The Company sponsors a defined contribution employee benefit plan (the “Plan”) under the provisions of Section 401(k) of the Internal Revenue Code. The Plan covers substantially all full-time employees of the Company ~~who have completed one year~~upon commencement of ~~service.~~employment. Contributions to the Plan by the Company are at the discretion of the Board of Directors.

The Company contributed approximately ~~$16,000 and $11,000~~$0.1 million to the Plan during both of the ~~year~~nine month periods ended ~~March 31, 2021~~September 30, 2023 and ~~2020, respectively.~~2022, and less than $0.1 million for both of the three months ended September 30, 2023 and 2022.

~~12.~~ 11. Loss Per Share

Basic and diluted net loss per share have been computed using the weighted-average number of shares of common stock outstanding during the period. We have outstanding stock-based awards that are not used in the calculation of diluted net loss per share because to do so would be anti-dilutive.

The following instruments ~~(in thousands)~~ were excluded from the calculation of diluted net loss per share because their effects would be ~~antidilutive:~~antidilutive (in thousands):

	Three months ended March 31,				Nine months ended September 30,
	2021		2020		2023		2022
Equity awards		869		-
RSUs						123		302
PSUs						125		-
Stock options						381		416
Warrants		106		-		1,271		1,271
Total		975		-		1,900		1,989

~~14.~~ 12. Subsequent Events

On ~~April 22, 2021,~~October 11, 2023 the Company ~~granted 64,125~~entered into a securities purchase agreement with an institutional and accredited investor relating to the registered direct offering and sale of an aggregate of 2,365,000 shares of the Company’s Class A common stock, ~~options~~par value $0.001 per share and pre-funded warrants to ~~its officers and employees. The~~purchase up to 59,243 shares of Class A common stock ~~options vest quarterly over four years~~at an exercise price of $0.001 per share, at a ~~rate~~purchase price of ~~25%~~$1.65 per ~~year.~~share and $1.649 per pre-funded Warrant, which Offering closed and was funded on October 13, 2023.

In a concurrent private placement, the Company also sold to the Purchaser unregistered Series A warrants to purchase up to an aggregate of 2,424,243 shares of its Class A common stock and unregistered Series B warrants to purchase up to an aggregate of 2,424,243 shares of its Class A common stock. The ~~stock options may not be exercised until after October 1, 2021. The stock options~~unregistered Series A Warrants will have an exercise price of ~~$5.73,~~$1.65 per share, will become exercisable commencing on the ~~closing~~effective date of stockholder approval of the issuance of the shares issuable upon the exercise of the Series A Warrants, and have a term of five and one-half years from the date of issuance. The unregistered Series B Warrants will have an exercise price of $1.65 per share, will become exercisable commencing on ~~April 22, 2021.~~the effective date of stockholder approval of the issuance of the shares issuable upon the exercise of the Series B Warrants, and have a term of eighteen months from the date of issuance. Each Warrant is exercisable for one share of Class A common stock. The net proceeds to the Company from the Offering and Private Placement was approximately $3.5 million, after deducting placement agent fees and other offering expenses payable by the Company.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

In this document, the terms “Longeveron,” “Company,” “we,” “us,” and “our” refer to Longeveron Inc. We have no subsidiaries.

This Quarterly Report on Form 10-Q (this “10-Q”) contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that reflect our current expectations about our future results, performance, prospects, and opportunities. This 10-Q contains forward-looking statements that can involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this ~~report,~~10-Q, including statements regarding our future results of operations and financial position, business strategy, prospective products, product approvals, research and development costs, future revenue, timing and likelihood of success, plans and objectives of management for future operations, future capital raising, future results of anticipated products and prospects, plans and objectives of management are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. ~~Forward-looking~~Factors that could cause actual results to differ materially from those expressed or implied in any forward-looking statements contained in this report include, but are not limited to, statements about:

	●	the ability of our clinical trials to demonstrate safety and efficacy of our product candidates, and other positive results;

	●	the timing and focus of our ongoing and future preclinical studies and clinical trials, and the reporting of data from those studies and trials;

	●	the size of the market opportunity for our product candidates, including our estimates of the number of patients who suffer from the diseases we are targeting;

	●	the success of competing therapies that are or may become available;

	●	the beneficial characteristics, safety, efficacy, and therapeutic effects of our product candidates;

	●	our ability to obtain and maintain regulatory approval of our product candidates;

	●	our plans relating to the further development of our product candidates, including additional disease states or indications we may pursue;

	●	~~existing regulations and regulatory developments in the United States, Japan and other jurisdictions;~~

	●	our plans and ability to obtain or protect intellectual property rights, including extensions of existing patent terms where available and our ability to avoid infringing the intellectual property rights of others;

	●	the need to hire additional personnel and our ability to attract and retain such personnel;

	●	our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

	●	our need to raise additional capital, the ~~effect that global pathogens could~~difficulties we may face in obtaining access to capital, and the dilutive impact it may have on ~~financial markets, materials sourcing, patients, governments and population (e.g., COVID-19);~~our investors;

	●	our financial ~~performance;~~performance and ability to continue as a going concern; and

	●	the period over which we estimate our existing cash and cash equivalents will be sufficient to fund our future operating expenses and capital expenditure requirements.

The forward-looking statements contained in this 10-Q are made on the basis of the views and assumptions of management regarding future events and business performance as of the date this 10-Q is filed with the Securities and Exchange Commission (the “SEC”). In addition, we operate in a highly competitive and rapidly changing environment; therefore, new risk factors can arise, and it is not possible for management to predict all such risk factors, nor to assess the impact of all such risk factors on our business or the extent to which any individual risk factor, or combination of risk factors, may cause results to differ materially from those contained in any forward-looking statement. We do not undertake any obligation to update these statements to reflect events or circumstances occurring after the date this 10-Q is filed. In addition, this discussion and analysis should be read in conjunction with our unaudited condensed financial statements and notes thereto included in this 10-Q and the audited condensed financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2022, filed with the SEC on March ~~30, 2021~~14, 2023 (“~~2020~~2022 10-K”). Operating results are not necessarily indicative of results that may occur in future periods.

Overview and Recent Developments

Overview

Pursuant to our IPO in February of 2021, we sold 2,660,000 shares of Class A common stock at an IPO price of $10.00 per share for aggregate gross proceeds of $26,600,000 prior to deducting underwriting discounts, commissions, and other offering expenses. On February 12, 2021, our Class A common stock began to trade on NASDAQ under the stock symbol “LGVN”.

On March 15, 2021, the underwriters of our IPO partially exercised its overallotment option, pursuant to which we sold 250,000 shares of Class A common stock at a public offering price of $10.00 per share for aggregate gross proceeds of $2,500,000 prior to deducting underwriting discounts, commissions, and other offering expenses.

We are a clinical stage biotechnology company developing ~~cellular therapies for aging-related and life-threatening conditions. Our~~regenerative medicines to address unmet medical needs. The Company’s lead investigational product is ~~Lomecel-B, which is derived from culture-expanded MSCs that are~~Lomecel-B™, an allogeneic Mesenchymal Stem Cell (“MSC”) formulation sourced from bone marrow of young, healthy adult donors. ~~We believe that by using the same cells~~Lomecel-B™ has multiple potential mechanisms of action that promote tissue repair ~~organ maintenance,~~ and healing with broad potential applications across a spectrum of disease areas. The underlying mechanism(s) of action that lead to the tissue repair programs include the stimulation of new blood vessel formation, modulation of the immune system, ~~function, we can develop safe~~reduction in tissue fibrosis, and ~~effective therapies for some~~the stimulation of endogenous cells to divide and increase the ~~most difficult disorders associated with~~numbers of certain specialized cells in the ~~aging process.~~body.

We are currently ~~sponsoring Phase 1~~pursuing three pipeline indications: Hypoplastic Left Heart Syndrome (“HLHS”), Alzheimer’s disease (“AD”), and ~~2 clinical trials in the following indications: Aging Frailty, AD, the Metabolic Syndrome, ARDS, and HLHS.~~Aging-related Frailty. Our mission is to advance ~~Lomecel-B~~Lomecel-B™ and other cell-based ~~product~~ candidates into pivotal Phase 3 ~~(i.e. pivotal)~~ trials, ~~for multiple indications,~~ with the goal of achieving regulatory approvals, subsequent commercialization, and broad use by the healthcare community.

HLHS

Our HLHS program is focused on the potential clinical benefits of Lomecel-B™ as an adjunct therapeutic to standard-of-care HLHS surgery. HLHS is a rare and devastating congenital heart defect in which the left ventricle is severely underdeveloped. As such, babies born with this condition die shortly after birth without undergoing a complex series of ~~March 31, 2021,~~reconstructive heart surgeries. Despite the ~~U.S. FDA has authorized us~~life-saving surgical interventions, clinical studies show that only 50 to ~~conduct six~~60 percent of affected individuals survive to adolescence. We have early clinical ~~trials evaluating Lomecel-B.~~state evidence supporting pro-vascular, pro-regenerative, anti-fibrotic, and anti-inflammatory properties of Lomecel-B™ to improve heart function in HLHS patients. We have completed ~~five out~~a Phase 1 open-label study (“ELPIS I”)¹ that supported the safety and tolerability of ~~six of these studies, with~~Lomecel-B™ for HLHS, when directly injected into the ~~remaining currently ongoing study~~functional right ventricle during the second-stage standard-of-care surgery (adding minimal additional time to the surgical procedure). Preliminary data also suggested potential benefits on heart function. In addition, our early clinical stage data is favorable as compared to historical controls for ~~ARDS anticipated to continue into 2022. Japan’s Pharmaceutical~~survival and ~~Medical Device Agency (PMDA) approved a Clinical Trial Notification (CTN) submitted~~reduced need for heart transplants. The improvement in HLHS survival following the Phase 1 ELPIS I clinical trial has resulted in acceptance by the ~~National Center~~American Heart Association (“AHA”) for ~~Geriatrics and Gerontology (NCGG)~~a poster presentation at an AHA meeting in November 2023. The ELPIS I trial showed 100 percent survival in children up to ~~conduct~~5 years of age after receiving of Lomecel-B™, compared to a 20 percent mortality rate observed from historical control data. Longeveron is currently conducting a controlled Phase 2 trial (“ELPIS II”) to compare the effects of Lomecel-B™ as an adjunct therapeutic versus standard-of-care (HLHS surgery alone). A positive outcome could allow this trial to serve as a registrational study and adoption of Lomecel-B™ as part of standard-of-care treatment in HLHS patients.

Alzheimer’s Disease

In September 2023, we completed our Phase 2a Alzheimer’s disease clinical trial, known as the CLEAR MIND study. This trial enrolled patients with mild Alzheimer’s disease and was designed as a randomized, double-blind, placebo-controlled study across ten U.S. centers. Our primary objective was to assess safety, and we tested three distinct Lomecel-B^TM dosing regimens against a placebo.

The study demonstrated positive results. Notably, all Lomecel-B™ treatment groups met the safety primary endpoint and showed slowing/prevention of disease worsening relative to the placebo. There were statistically significant improvements in the secondary efficacy endpoint for both the low-dose Lomecel-B^TM group and the pooled treatment groups compared to the placebo. Other doses also showed promising results in slowing/prevention of disease worsening. These findings support both the safety and potential therapeutic benefit of Lomecel-B ~~infusion~~ ^TMin ~~Japanese Aging~~managing mild Alzheimer’s disease, laying a strong groundwork for subsequent trials in this indication and potentially others.

The trial also entailed careful evaluation of potential target engagement through fluid-based biomarkers, imaging biomarkers, and vascular function assessment. We anticipate additional data from these assessments in the coming weeks and commit to making an announcement once these analyses are completed.

Sunjay Kaushal, MD, PhD, Joshua M Hare, MD, Jessica R Hoffman, PhD, Riley M Boyd, BA, Kevin N Ramdas, MD, MPH, Nicholas Pietris, MD, Shelby Kutty, MD, PhD, MS, James S Tweddell, MD, S Adil Husain, MD, Shaji C Menon, MBBS, MD, MS, Linda M Lambert, MSN-cFNP, David A Danford, MD, Seth J Kligerman, MD, Narutoshi Hibino, MD, PhD, Laxminarayana Korutla, PhD, Prashanth Vallabhajosyula, MD, MS, Michael J Campbell, MD, Aisha Khan, PhD, Eric Naioti, MSPH, Keyvan Yousefi, PharmD, PhD, Danial Mehranfard, PharmD, MBA, Lisa McClain-Moss, Anthony A Oliva, PhD, Michael E Davis, PhD. “Intramyocardial cell-based therapy with Lomecel-B™ during bidirectional cavopulmonary anastomosis for hypoplastic left heart syndrome: The ELPIS phase I trial” (2023) European Heart Journal Open, 2023.

Aging-related Frailty ~~subjects, and we expect this study to initiate in 2021. Additionally, we sponsor a registry in The Bahamas under the approval and authority~~

Improvement of the ~~National Stem Cell Ethics Committee. The Bahamas Registry Trial administers Lomecel-B~~quality of life for the aging population is one of the strategic directions of the Company. Life expectancy has substantially increased over the past century due to ~~eligible participants at two private clinics~~medical and public health advancements. However, this longevity increase has not been paralleled by health span – the period of time one can expect to live in ~~Nassau for~~relatively good health and independence. For many developed and developing countries, health span lags life-expectancy by over a variety of indications. While Lomecel-B is considered an investigational product in The Bahamas, under the approval terms from the National Stem Cell Ethics Committee, we are permitted to charge a fee to participatedecade. This has placed tremendous strain on healthcare systems in the ~~Registry Trial.~~

management of aging-related ailments and presents additional socioeconomic consequences due to patient decreased independence and quality-of-life. Since ~~our founding in 2014, we have focused the majority of our time and resources on the following: organizing and staffing our company, building, staffing and equipping~~these strains continue to increase with demographic shifts towards an increasingly older population, improving health span has become a GMP manufacturing facility with research and development labs, business planning, raising capital, establishing our intellectual property portfolio, generating clinical safety and efficacy data in our selected disease conditions and indications, and developing and expanding our manufacturing processes and capabilities.

~~We manufacture our own product candidates~~priority for clinical trials. In 2017 we opened a manufacturing facility comprised of eight clean rooms, two research and development laboratories, and warehouse and storage space. We have supply contracts with two third party suppliers for fresh bone marrow, which we use to produce our product candidate for clinical testing and research and development. From time to time, we enter into contract development and manufacturing contracts or arrangements with third parties who seek to utilize our product development capabilities.

When appropriate funding opportunities arise, we routinely apply for grant funding to support our ongoing research and since 2016 we have received approximately $16.0 million in grant awards ($11.9 million of which has been directly awarded to us and is recognizedhealth agencies, such as ~~revenue when the performance obligations are met) from~~ the National Institute on Aging ~~(NIA) of the National Institutes of Health (NIH), National Heart Lung and Blood Institute (NHLBI)~~(“NIA”) of the NIH, the ~~Alzheimer’s Association,~~Japanese Pharmaceuticals and Medical Devices Agency (“PMDA”), and the ~~Maryland Stem Cell Research Fund (MSCRF) of the Maryland TEDCO.~~

~~Impact of COVID-19 Pandemic~~

~~We continue to monitor how the COVID-19 pandemic is affecting~~European Medicines Agency (“EMA”). As we age, we experience a decline in our employees, business, and clinical trials. In response to the spread of COVID-19, we have instructed all employees who can perform their essential employment duties from home to do so. Our laboratory scientists, cell processing scientistsown stem cells, a decrease in immune system function (known as “immunosenescence”), diminished blood vessel functioning, chronic inflammation (known as “inflammaging”), and other ~~manufacturing personnel continue~~aging-related alterations that affect biological functioning. Our preliminary clinical data suggest that Lomecel-B™ can potentially address these problems through multiple mechanisms of action (“MOAs”) that simultaneously target key aging-related processes. Longeveron is currently engaged in a Phase 2 trial studying Lomecel-B™ in Aging-related Frailty under INDs with the US FDA and under the PMDA in Japan. There are currently 5 patients enrolled and we are planning to ~~work from our GMP facility on a day-to-day basis, and as such cell production has been minimally impacted. When~~complete the ~~pandemic began to emerge~~enrollment by the end of 2024. In addition, we are using Lomecel-B™ in ~~the U.S., most of our ongoing clinical~~registry trials had completed enrollment. However, a few subjects that were currently on study and in follow-up experienced some difficulties in adhering to the protocol schedule. Because we primarily enroll elderly subjects in our trials, who are at particular risk for poor outcomes related to COVID-19 infection, we have experienced some disruption in executing the follow-up visits in our protocols. These disruptions were due to a number of reasons that include an unwillingness of the subject to leave their residence to visit the hospital or clinic, the inability to leave their residence due to regional “stay-at-home” orders, and temporary clinical site closures. We have attempted to mitigate this disruption by conducting remote visits where feasible (telemedicine), arranging for in-home visits for phlebotomy in order to collect blood samples and perform protocol-specific assessments if feasible, and amending protocols to increase the window of time for follow-up visits. In spite of these efforts, several subjects either missed their scheduled follow up visit, had their follow up visit outside of the protocol-defined window of time, or dropped out of the trial prior to completing. While we believe the number of instances where a visit was missed completely is small, we cannot predict whether this will have a material impact on our clinical results until the data from the trials are analyzed. If too many subjects drop-out or the protocol is no longer effective, we may have to restart the clinical trial entirely.

~~In July 2020 the Bahamian government halted travel from the U.S. into The Bahamas, which resulted in the temporary cessation of participation~~ in The Bahamas ~~Registry Trial. While this travel restriction has now been lifted, participation~~as part of the real world data generation for the aging population.

Summary of Clinical Development Strategy

Our core mission is to become a world-leading regenerative medicine company through the development, approval, and commercialization of a novel cell therapy product for unmet medical needs, with a focus on HLHS. Key elements of our current business strategy are as follows.

●

Execution of ELPIS II, a Phase 2 randomized controlled trial set forth in greater detail below, to measure the efficacy of Lomecel-B™ in HLHS. This trial is ongoing and is being conducted in collaboration with the National Heart, Lung, and Blood Institute (“NHLBI”) through grants from the NIH.

	●	Continue to pursue the therapeutic potential of Lomecel-B™ in mild AD. We completed a Phase 2a trial (CLEAR MIND) which demonstrated the potential benefits of Lomecel-B™ over placebo to maintain cognitive function and deterioration of brain structure atrophy, with no safety issues observed. We will continue our analysis of the study (biomarkers, neurocognitive, and quality of life data) which should provide additional valuable information regarding the target engagement and clinical benefits. Once the study data analysis is completed, we will discuss the data with the scientific advisors in order to further develop our clinical development strategy. Our objective is to forge strategic collaborations for the advancement of Lomecel-B™ in addressing Alzheimer’s disease. We are actively in pursuit of a partnership to propel this initiative forward.

	●	Continue developing our international programs. Japan is our first non-U.S. territory in which we are conducting a randomized, double-blinded, placebo-controlled clinical trial to evaluate Lomecel-B™ for Aging-related Frailty. With successful completion of this trial and demonstration of safety, we intend to seek marketing approval under the Act on the Safety of Regenerative Medicine (“ASRM”). We also intend to explore conditional or full approval in Japan of Lomecel-B™ under the Pharmaceuticals and Medical Devices (“PMD”) Act for the treatment of Aging-related Frailty in the future, which will be guided by results from this trial and potentially others in our Frailty program. We may also explore other indications in Japan, and potentially pursue Aging-related Frailty and other indications in additional international locations for further development and commercialization. We also continue to successfully enroll in our Frailty and Cognitive Impairment registry trials in The Bahamas and are launching an Osteoarthritis registry trial.

●

Expand our manufacturing capabilities to commercial-scale production. We operate a current good manufacturing practice (“cGMP”)-compliant manufacturing facility and produce our own product candidates for testing. We continue to improve and expand our capabilities with the goal of achieving cost-effective manufacturing that may potentially satisfy future commercial demand for potential Lomecel-B™ commercialization.

●

Collaborative arrangements and out-licensing opportunities. We will be opportunistic and consider entering co-development, out-licensing, or other collaboration agreements for the purpose of eventually commercializing Lomecel-B™ and other products domestically and internationally if appropriate approvals are obtained.

●

Product candidate development pipeline through internal research and development, and in-licensing. Through our research and development program, and through strategic in-licensing agreements, or other business development arrangements, we intend to actively explore promising potential additions to our pipeline.

●

Continue to expand our intellectual property portfolio. Our intellectual property is vitally important to our business strategy, and we take significant steps to develop this property and protect its value. Results from our ongoing research and development efforts are intended to add to our existing intellectual property portfolio.

Clinical Development Pipeline in ~~the Registry Trial remains lower than anticipated, due~~2023

We are currently in ~~part to pandemic-related effects on international travel. We expect that the COVID-19 pandemic will continue to impact our business, results of operations,~~ clinical development ~~timelines and financial condition. At this time, there is significant uncertainty relating to the trajectory~~ of the COVID-19 pandemic and impact of related responses. The impact of COVID-19 on our future results will largely depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic concentration and continued spread of the disease, the duration of the pandemic, travel restrictions to and social distancing within the United States and other countries, business closures or business disruptions, the continued impact on financial markets and the global economy, and the effectiveness of the global response to contain and treat the disease.

a single product, Lomecel-B™ for three potential indications (See Figure 1).

~~Recent Developments~~

~~In the first quarter of 2021 we announced successful completion of the following clinical trials:~~

Indication

Geography

Phase 1

Phase 2

Phase 3

HLHS

U.S.

●

Phase 2b clinical study of Lomecel-B infusion for subjects with Aging Frailty. This 150-subject, randomized, placebo-controlled multicenter trial is intended to evaluate the safety and tolerability of intravenous infusion of 4 different doses of Lomecel-B compared to placebo, and the effect on signs and symptoms of Aging Frailty, including exercise tolerance, mobility, and grip strength, and various other endpoints. The top-line trial results are anticipated in the third quarter of 2021.

Aging-related Frailty

Japan

Alzheimer’s disease

U.S.

Figure 1: Lomecel-B™ clinical development pipeline

●

~~Phase 1 clinical study of Lomecel-B injection in~~

Hypoplastic Left Heart Syndrome (HLHS) ~~subjects.~~. The FDA granted Lomecel-B™ for the treatment of HLHS a Rare Pediatric Disease (“RPD”) Designation (on November 8, 2021), Orphan Drug Designation (“ODD”) (on December 2, 2021), and Fast Track Designation (on August 24, 2022). HLHS is a rare congenital heart condition affecting approximately 1,000 newborns in the US annually. HLHS is a birth defect that affects normal blood flow through the heart. As the baby develops during pregnancy, the left side of the heart does not form correctly. It is one type of congenital heart defect present at birth. Because a baby with this defect needs surgery or other procedures soon after birth, HLHS is considered a critical congenital heart defect. To prevent certain death shortly after birth, these babies undergo a series of three heart surgeries (staged surgical palliation) that converts the normally 4-chamber heart into a 3-chamber one with a single ventricle (the right ventricle) supporting systemic circulation. Despite these life-saving surgeries, HLHS patients nevertheless still have high early mortality and morbidity rates due primarily to heart failure.

We are currently conducting an ongoing Phase 2 clinical trial (ELPIS II) under FDA IND 017677. ELPIS II is a multi-center, randomized, double-blind, controlled clinical trial designed to evaluate Lomecel-B™ as an adjunct therapy to the standard-of-care second-stage HLHS heart reconstructive surgery which is typically performed at 4-6 months after birth. The primary objective is to evaluate improvement in heart function after Lomecel-B™ treatment versus standard-of-care surgery alone (38 subjects total: 19 per arm). This ~~10-subject~~trial is over 50% enrolled and is funded in part by the NHLBI/NIH. While we cannot predict a specific time when the trial will be fully enrolled, the plan is to complete enrollment in 2024.

ELPIS II is a next-step trial to our completed 10-patient open-label Phase 1 trial (ELPIS I) under the same IND. This Phase 1 trial was designed to evaluate the safety and tolerability of Lomecel-B™ as an adjunct to the second-stage HLHS surgery, and to obtain preliminary evidence of Lomecel-B™ effect to support a next-phase trial. The primary safety endpoint was met: no major adverse cardiac events (“MACE”) or treatment-related infections during the first month post-treatment, and no triggering of stopping rules. Furthermore, fluid-based and imaging biomarker data supported multiple potentially relevant mechanisms-of-action of Lomecel-B™, and the potential to improve post-surgical heart function. In addition to the 12-month follow-up evaluation on ELPIS, we continue to follow these patients on an annual basis. All 10 patients remain alive without the need for a heart transplant for 3.5 to 5.0 years since treatment with Lomecel-B™ (updated as of May 9, 2023), and five have already successfully undergone the third-stage surgery. Based on historical data, over 15% of patients would be expected to have received a heart transplant or have died within 3-years after the second-stage surgery, rising to nearly 20% by 5 years.

We are prosecuting a number of patent applications relating to the administration of mesenchymal stem cells for treating HLHS in Taiwan and the Bahamas.

Alzheimer’s disease. Alzheimer’s disease, a devastating neurologic disease leading to cognitive decline, has very limited therapeutic options. An estimated 6.7 million Americans aged 65 and older have Alzheimer’s disease, and this number is projected to more than double by 2060. Lomecel-B™ treated patients showed a slowing/prevention of disease worsening compared to placebo in the completed Phase 2 a study (CLEAR MIND), and with no safety concerns identified. These results align with those of our earlier Phase I study².

Aging-related Frailty. Aging-related Frailty is a life-threatening geriatric condition that disproportionately increases risks for poor clinical outcomes from disease and injury. While the definition of Aging-related Frailty lacks consensus and would be a new indication from a regulatory standpoint, and while Aging-related Frailty has no approved pharmaceutical or biologic treatments, there are a number of companies now working to develop potential therapeutics for this unmet medical need. We will work with regulatory agencies, such as the U.S. FDA and Japan’s PMDA, to advance Lomecel-B™ as potentially the first approved drug for Aging-related Frailty.

○

We have previously completed two U.S. clinical trials under FDA IND 016644. One is a multicenter, randomized, placebo-controlled Phase 2b trial which showed that a single infusion of Lomecel-B™ significantly improved 6-Minute Walk Test (“6MWT”) distance 9 months after infusion, and also showed a dose-dependent increase in 6MWT distance 6 months after infusion. The second is a multicenter, randomized, placebo-controlled Phase 1/2 trial (“HERA Trial”) that showed that Lomecel-B™ was generally safe and well tolerated in patient with Aging-related Frailty, and showed that hemagglutinin inhibition (“HAI”) assay results in the Lomecel-B™ and placebo groups to influenza were not statistically different, indicating Lomecel-B™ does not suppress the immune system.

○

Japan Clinical Trial: The Japanese PMDA has approved a Clinical Trial Notification (“CTN”), which is equivalent to a U.S. IND, allowing an Investigator-sponsored Phase 2 clinical study ~~evaluated~~for Aging-related Frailty patients in Japan. This study is a 45-patient randomized placebo-controlled study with a primary objective of evaluating the safety ~~and tolerability~~ of ~~intramyocardial Lomecel-B injection during cardiac reconstructive surgery. Administration of Lomecel-B at doses of 2.5 × 10~~⁶ ~~cells/kg of body weight was shown to be well-tolerated,~~Lomecel-B™ in Japanese patients with ~~no serious adverse events reported that were considered to be related to the investigational therapy. Full results expected~~Aging-related Frailty. Patient screening began in the ~~second~~ 4^thquarter of ~~2021,~~2022, and ~~Phase 2 trial expected~~the first patient was randomized in the first quarter of 2023. The goal of this study is to ~~commence~~enable ASRM approval when combined with previous clinical results in ~~second half~~non-Japanese patients.

We are prosecuting a number of ~~2021. Additionally, we were granted expanded access (“compassionate use”) approval by the U.S. FDA for~~patent applications relating to the administration of ~~Lomecel-B to~~mesenchymal stem cells for Aging-related Frailty in Taiwan, the Bahamas and United States.

○

The Bahamas Registry Trials: We sponsor and operate Registry Trials in Nassau and Lyford Cay in The Bahamas, where participants may receive Lomecel-B™ for Aging-related Frailty and other indications, at the participant’s own expense. Lomecel-B™ is designated as an investigational product in The Bahamas.

Mark Brody, Marc Agronin, Brad J. Herskowitz, Susan Y. Bookheimer, Gary W. Small, Benjamin Hitchinson, Kevin Ramdas, Tyler Wishard, Katalina Fernández McInerney, Bruno Vellas, Felipe Sierra, Zhijie Jiang, Lisa McClain-Moss, Carmen Perez, Ana Fuquay, Savannah Rodriguez, Joshua M. Hare, Anthony A. Oliva Jr., Bernard Baumel. “Results and insights from a ~~child with HLHS. Lomecel-B was administered peri-operatively via intramyocardial injection, and~~phase I clinical trial of Lomecel-B™ for Alzheimer’s disease” (2023) Alzheimer’s & Dementia: The Journal of the ~~child was discharged from the hospital and is currently being followed per protocol.~~Alzheimer’s Association 19:261-273.

Impact of Macroeconomic Conditions

We ~~also expanded enrollment criteria~~have experienced some supply constraints and marginal price increases, however, to date current macroeconomic conditions have not materially impacted our programs or our operations. We continue to monitor economic conditions in the U.S. and globally and expect to act proactively where possible to minimize the impact of continued inflation or supply constraints on materials and inventory needed for our Phase 1 ARDS “RECOVER” trial to include mild ARDS, in addition to moderate and severe ARDS. This trial is currently enrolling subjects with ARDS related to COVID-19 infection and is partially funded by a TEDCO grant from the Maryland Stem Cell Research Fund.operations.

Additionally, we entered into an expanded and amended exclusive license agreement (ELA) related to Lomecel-B technology rights with the University of Miami (UM) and entered into a Cooperative Research and Development Agreement (CRADA) with UM.

Components of Our Results of Operations

Revenue

We have historically generated revenue from three sources:

●

Grant ~~awards~~.awards. Extramural grant award funding, which is non-dilutive, has been a core strategy for supporting our ongoing clinical research. Since 2016 weour clinical programs have received over $16.0 million in competitive extramural grant awards ($11.5 million which has been directly awarded ~~approximately $11.9 million in grants, with details of these awards provided under~~to us and which are recognized as revenue when the ~~heading “Grant Awards” below.~~performance obligations are met) from the NIH, Alzheimer’s Association, and Maryland Stem Cell Research Fund (“MSCRF”).

	●
	●	The Bahamas Registry ~~Trial~~.Trial. Participants in The Bahamas Registry Trial pay us a fee to receive ~~Lomecel-B,~~Lomecel-B™, imported ~~by us~~ into The Bahamas, and administered at one of two private medical clinics in Nassau. While ~~Lomecel-B~~Lomecel-B™ is considered an investigational product in The Bahamas, under the approval terms received from the National Stem Cell Ethics Committee, we are permitted to charge a fee for participation in the Registry Trial. The fee is recognized as revenue and is used to pay for the costs associated with manufacturing and testing of ~~Lomecel-B,~~Lomecel-B™, administration, shipping and importation fees, data collection and management, biological sample collection and sample processing for biomarkers and other data, and overall management of the Registry, including personnel costs. ~~Lomecel-B~~Lomecel-B™ is considered an investigational treatment in The Bahamas and is not licensed for commercial sale.

	●
	●	Contract development and manufacturing ~~services~~.services. From time to time, we enter into fee-for-service agreements with third parties for our product development and manufacturing capabilities.

CostCost of ~~revenues~~Revenues

We record cost of revenues based on expenses directly related to revenue. For ~~Grants~~grants we record allocated expenses for ~~Research~~research and development costs to a grant as a cost of revenues. For the ~~Clinical~~clinical trial revenue, directly related expenses for that program are allocated and accrued as incurred. These expenses are similar to those described under “Research and ~~development expense”~~Development Expenses” below.

Selling and Marketing Expenses

Selling and marketing expenses consist primarily of royalty and license fees associated with our agreements with the ~~UM,~~University of Miami as well as attending and sponsoring industry, investment, organization and medical conferences and events.

Research and Development Expenses

Research and development costs are charged to expense when incurred in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 730 Research and ~~Development,~~Development. ASC 730 addresses the proper accounting and reporting for research and development costs. It identifies: ~~1. Those~~first, those activities that should be identified as research and ~~development, 2. The~~development; second, the elements of costs that should be identified with research and development activities, and the accounting for these ~~costs,~~costs; and ~~3. The~~third, the financial statement disclosures related to them. ~~Research and Development.~~ Research and development 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. We accrue for costs incurred by external service providers, including ~~CROs~~contract research organizations (“CROs”) and clinical investigators, based on estimates of service performed and costs incurred. These estimates include the level of services performed by the third parties, subject 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, we 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.

We currently do not carry any inventory for our product candidates, as we have yet to receive regulatory approval and launch a product for commercial distribution. Historically our operations have focused on conducting clinical trials, product research and development efforts, and improving and refining our manufacturing processes, and accordingly, manufactured clinical doses of product candidates were expensed as incurred, consistent with the accounting for all other research and development costs. Once we begin commercial distribution, all newly manufactured approved 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.

We expect that our research and development expenses will increase in the future as we increase our headcount to support increased research and development activities relating to our clinical programs, as well as incur additional expenses related to our clinical trials.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in our executive, finance, business development and administrative functions. General and administrative expenses also include public company related expenses; legal fees relating to corporate matters; insurance costs; professional fees for accounting, auditing, tax and consulting services; travel expenses; and facility-related expenses, which include direct depreciation costs and allocated expenses for rent and maintenance of facilities and other operating costs. We capitalized 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 be recorded in shareholders’ equity as a reduction of proceeds generated as a result of the offering.

We expect that our general and administrative expenses will increase in the future as we increase our headcount to support ~~increased~~the administrative activities ~~relating~~related to ~~our becoming a public company. We also expect to incur additional expenses associated with~~ being a public company, including costs of accounting, audit, legal, regulatory and tax-related services associated with maintaining compliance with Nasdaq and SEC ~~requirements;~~requirements, director and officer insurance ~~costs;~~costs, and investor and public relations costs.

Other Income and Expenses

Interest income consists of interest earned on cash ~~equivalents.~~equivalents and marketable securities. We expect our interest income to ~~increase~~fluctuate due to changes in the ~~$27.1 million in net proceeds from our IPO.~~current cash and marketable securities balances. Other income consists of funds earned that are not part of our normal operations. In past years they have been primarily a result of tax refunds received for social security taxes as part of a research and development tax credit program.

Income Taxes

As of March 31, 2021, we were treated as a C corporation for federal and state income tax purposes. Prior to February 12, 2021, we were treated as a partnership for federal and state income tax purposes, whereby, we pass our earnings and losses through to our members based on the terms of our Operating Agreement. No provision for income taxes has been recorded for the ~~three~~nine months ended ~~March 31, 2021 and 2020. As we converted from an LLC to a C corporation during~~September 30, 2023 or for the ~~year~~years ended December 31, ~~2021, we~~2022 and 2021. We may incur income taxes in the future if we have earnings. At this time the Company has not evaluated the ~~that~~ impact of any future profits.

RESULTS OF OPERATIONS

COMPARISON OF THE THREE MONTHS ENDED ~~MARCH 31, 2021~~SEPTEMBER 30, 2023 AND ~~2020~~2022

The following table summarizes our results of operations for the three months ended ~~March 31, 2021~~September 30, 2023 and ~~2020,~~2022, together with the changes in those items in dollars (in thousands):

Three Months Ended
March 31, Increase
2021 2020 (Decrease)
Revenues $ 376 $ 1,708 $ (1,332 )
Cost of revenues 227 896 (669 )
Gross profit 149 812 (663 )
Expenses
General and administrative 2,201 686 1,515
Research and development 1,350 289 1,061
Selling and marketing 56 50 6
Total operating expenses 3,607 1,025 2,582

Loss from operations (3,458 ) (213 ) (3,245 )
Forgiveness of Paycheck Protection Program loan 300 - 300
Other income 47 - 47
Net loss $ (3,111 ) $ (213 ) $ (2,898 )

	Three Months Ended September 30,						Increase
	2023			2022			(Decrease)
Revenues	$	150		$	265		$	(115	)
Cost of revenues		96			173			(77	)
Gross profit		54			92			(38	)
Expenses
General and administrative		3,092			2,074			1,018
Research and development		1,843			2,960			(1,117	)
Selling and marketing		280			245			35
Total operating expenses		5,215			5,279			(64	)

Loss from operations		(5,161	)		(5,187	)		(26	)
Other income and (expense), net		55			(57	)		112
Net loss	$	(5,106	)	$	(5,244	)	$	(138	)

Revenues, Cost of Revenues and Gross Profit: Revenues for each of the three months ended ~~March 31, 2021~~September 30, 2023 and ~~2020~~2022 were approximately $0.4 million and $1.7 million, respectively. Revenues for the three months ended March 31, 2021 were approximately $1.3 million, or 78%, lower when compared to the same period in 2020, primarily due to a decrease in clinical trial revenue year-over-year and grant revenue compared to that recorded in 2020. Grant revenue for the three months ended March 31, 2021 and 2020 was $0.2 million and ~~$0.9~~$0.3 million, respectively. Grant revenue for the three months ended ~~March 31, 2021~~September 30, 2023 and 2022 was ~~approximately $0.7~~$0 and $0.1 million, respectively. The decrease of $0.1 million, or ~~78% lower when compared to the same period in 2020,~~100%, was primarily due to a reduction in grant funds available due in part to the completion of the grant-funded clinical trials. Clinical trial revenue, which ~~comes~~is derived from the Bahamas Registry Trial, for the ~~three months~~three-month periods ended ~~March 31, 2021~~September 30, 2023 and ~~2020~~2022 was $0.2 ~~million and $0.8, respectively.~~million. Clinical trial revenue for the three months ended ~~March 31, 2021 was approximately $0.6~~September 30, 2023 decreased by less than $0.1 million, or ~~78%~~29%, ~~lower when~~ compared to the same period in ~~2020. During the first quarter~~2022 as a result of 2021, clinical trial revenue, which is comprised of The Bahamas Registry Trial, was negatively impacted by COVID-19 travel restrictions, as participants continued to have concerns with respect to for international travel.a decrease in participant demand.

Related cost of revenues was approximately ~~$0.2~~$0.1 million and ~~$0.9~~$0.2 million for the three months ended ~~March 31, 2021~~September 30, 2023 and ~~2020,~~2022, respectively. ~~Cost~~The decrease of ~~revenues for the three months ended March 31, 2021 was approximately $0.7~~$0.1 million, or ~~75%~~45%, ~~lower when compared to the same period in 2020,~~was primarily due to ~~lower cost of~~the decrease in the revenues ~~for grants incurred in 2021 and lower costs related to~~earned from the Bahamas Registry Trial. This resulted in a gross profit of approximately $0.1 million for both of the three ~~months~~month-periods ended ~~March 31, 2021, a decrease of approximately $0.7 million, or 82%, when compared with a gross profit of approximately $0.8 million for the same period in 2020.~~September 30, 2023 and 2022.

General and Administrative Expense: General and administrative expenses for the three months ended ~~March 31, 2021~~September 30, 2023 increased to approximately ~~$2.2~~$3.1 million, compared to ~~$0.7~~$2.1 million for the same period in ~~2020.~~2022. The increase of approximately ~~$1.5~~$1.0 million, or ~~221%~~49%, was primarily related to ~~an increase for~~increases of $0.3 million in compensation ~~insurance~~and benefit expenses, $0.4 million of expenses related to legal and professional ~~expenses incurred during the current period; including $0.8~~fees and $0.4 million of ~~equity based~~expenses related to the subscription rights offering. These increases were partially offset by a decrease of $0.1 million in stock-based compensation ~~recorded for the RSUs granted. For 2021, general and administrative expenses consisted primarily of rent, professional fees, insurance, and paid and accrued compensation costs.~~

expense.

Research and Development ~~Expenses:~~Expenses: Research and development expenses for the three months ended ~~March 31, 2021, increased~~September 30, 2023 decreased to approximately ~~$1.4~~$1.8 million, from approximately ~~$0.3~~$3.0 million for the same period in ~~2020.~~2022. The ~~increase~~decrease of $1.1 million, or ~~367%~~38%, was primarily due to ~~an increase~~a decrease of $1.0 million in research and development ~~expenses that were not reimbursable by grants; including $0.4 million of equity based compensation recorded for the RSUs granted.~~expenses. Research and development expenses consisted primarily of the following items (less those expenses allocated to the cost of revenues for the grants) (in thousands):

Three Months Ended
March 31,
2021 2020
Clinical trial expenses-statistics, monitoring, labs, sites, etc. $ 361 $ 15
Supplies and costs to manufacture Lomecel-B 66 29
Employee compensation and benefits 171 80
Equity-based compensation 6 16
Depreciation 180 179
Amortization 15 17
Travel 9 4
Equity based compensation 437 -
Other activities 105 (51 )
$ 1,350 $ 289

	Three Months Ended September 30,
	2023		2022
Clinical trial expenses-statistics, monitoring, labs, sites, etc.	$	1,019	$	1,737
Supplies and costs to manufacture Lomecel-B™		64		287
Employee compensation and benefits		384		569
Equity-based compensation		141		101
Depreciation		176		184
Amortization		56		56
Travel		3		16
Other activities		-		10
	$	1,843	$	2,960

Selling and Marketing Expenses: Selling and marketing expenses for the three months ended ~~March 31, 2021~~September 30, 2023 and ~~2020 was~~2022 were approximately ~~$0.1 million.~~$0.3 million and $0.2 million, respectively. Selling and marketing expenses ~~consists~~consist primarily of ~~marketing fees recorded for our clinical programs.~~investor and public relations expenses.

~~Forgiveness of Paycheck Protection Program loan:~~ Forgiveness of Paycheck Protection Program loan for the three months ended March 31, 2021, increased to approximately $0.3 million, compared to $0 for the same period in 2020. The increase of $0.3 million, or 100% was due to the non-recurring nature of the forgiveness of the PPP loan.

Other ~~Income:~~Income and (Expense): Other income for the three months ended ~~March 31, 2021~~September 30, 2023 was $0.1 million, which consisted of interest income. Other expense for the three months ended September 30, 2022 was less than $0.1 million. ~~Other income~~

Net Loss: Net loss was approximately $5.1 million and $5.2 million for the three-month periods ended September 30, 2023 and 2022, respectively.

COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

The following table summarizes our results of operations for the nine months ended September 30, 2023 and 2022, together with the changes in those items in dollars (in thousands):

	Nine Months Ended September 30,						Increase
	2023			2022			(Decrease)
Revenues	$	646		$	1,101		$	(455	)
Cost of revenues		423			549			(126	)
Gross profit		223			552			(329	)
Expenses
General and administrative		8,322			6,481			1,841
Research and development		6,910			6,107			803
Selling and marketing		580			766			(186	)
Total operating expenses		15,812			13,354			2,458

Loss from operations		(15,589	)		(12,802	)		(2,787	)
Non-operating Lawsuit expense		-			(1,398	)		1,398
Other income and (expense), net		204			(178	)		382
Net loss	$	(15,385	)	$	(14,378	)	$	(1,007	)

Revenues, Cost of Revenues and Gross Profit: Revenues for each of the nine months ended September 30, 2023 and 2022 were approximately $0.6 million and $1.1 million, respectively. Revenues for the nine months ended September 30, 2023 were approximately $0.5 million, or 41% lower when compared to the same period in 2022. Grant revenue for the nine months ended September 30, 2023 and 2022 was less than $0.1 million and $0.2 million, respectively. Grant revenue for the nine months ended September 30, 2023 was approximately $0.2 million, or 83% lower, when compared to the same period in 2022, primarily due to a reduction in grant funds available due in part to the completion of the grant-funded clinical trials. Clinical trial revenue, which is derived from the Bahamas Registry Trial, for the nine months ended September 30, 2023 and 2022 was $0.6 million and $0.9 million, respectively. Clinical trial revenue for the nine months ended September 30, 2023 was approximately $0.3 million, or 30%, lower when compared to the same period in 2022. Clinical trial revenue in 2023 decreased as a result of ~~$30,000 received~~a decrease in ~~rental payments recorded~~participant demand.

Related cost of revenues was approximately $0.4 million and $0.5 million for the nine months ended September 30, 2023 and 2022, respectively. Cost of revenues for the nine months ended September 30, 2023 was $0.1 million, or 23%, less when compared to the same period in 2022, primarily due to the corresponding decrease in the revenues earned from the Bahamas Registry Trial. This resulted in a ~~sublease~~gross profit of approximately $0.2 million and ~~$17,000 from a gain resulting from an equity exchange.~~$0.6 million for the nine months ended September 30, 2023 and 2022, respectively.

~~Net Loss:~~General and Administrative Expense: ~~Net loss~~General and administrative expenses for the nine months ended September 30, 2023 increased to approximately ~~$3.1~~$8.3 million, ~~for the three months ended March 31, 2021, from a net loss of $0.2~~compared to $6.5 million for the same period in ~~2020.~~2022. The increase of approximately $1.8 million, or 28%, was primarily related to an increase of $1.2 million in compensation and benefit expenses, $0.5 million of expenses related to legal and professional fees and $0.4 million of expenses related to the subscription rights offering. These increases were partially offset by a decrease of $0.4 million in stock-based compensation expense.

Research and Development Expenses: Research and development expenses for the nine months ended September 30, 2023, increased to approximately $6.9 million, from approximately $6.1 million for the same period in 2022. The increase of $0.8 million, or 13%, was primarily due to an increase of $0.3 million in research and development expenses, an increase of $0.3 million in supplies to manufacture Lomecel-B™, an increase of $0.2 million in compensation and benefit expenses, and an increase in equity-based compensation allocated to research and development expenses of $0.1 million. Research and development expenses consisted primarily of the following items (less those expenses allocated to the cost of revenues for the grants) (in thousands):

	Nine Months Ended September 30,
	2023		2022
Clinical trial expenses-statistics, monitoring, labs, sites, etc.	$	3,499	$	2,867
Supplies and costs to manufacture Lomecel-B™		619		532
Employee compensation and benefits		1,421		1,579
Equity-based compensation		418		298
Depreciation		542		501
Amortization		168		156
Travel		11		57
Other activities		232		117
	$	6,910	$	6,107

Selling and Marketing Expenses: Selling and marketing expenses for the nine months ended September 30, 2023 and 2022 were approximately $0.6 million and $0.8 million, respectively. Selling and marketing expenses consist primarily of investor and public relations expenses.

Non-operating Lawsuit Expense: Non-operating lawsuit expense for the nine months ended September 30, 2022 was approximately $1.4 million. Additional detail can be found in Part II, Item 1 “Legal Proceedings” of this Quarterly Report on Form 10-Q. Legal expenses incurred in ordinary business activities are reported within general and administrative expenses. There was no non-operating lawsuit expense in the current year period.

Other Income and (Expense): Other income for the nine months ended September 30, 2023 was $0.2 million. Other income consisted of interest income. Other expense for the nine months ended September 30, 2022 was $0.2 million.

Net Loss: Net loss increased to approximately $15.3 million for the nine months ended September 30, 2023, from a net loss of $14.4 million for the same period in 2022. The increase in the net loss of ~~$2.9~~$0.9 million, or ~~1,361%~~6%, was ~~for reasons~~a result of the items outlined above.

Cash Flows

The following table summarizes our sources and uses of cash for the period presented (in thousands):

Three Months Ended
March 31,
2021 2020
Net cash used in operating activities $ (3,032 ) $ (398 )
Net cash used in investing activities - (140 )
Net cash provided by financing activities 26,677 1,150
Net increase in cash and cash equivalents $ 23,645 $ 612

	Nine Months Ended September 30,
	2023			2022
Net cash used in operating activities	$	(15,005	)	$	(11,661	)
Net cash provided by (used in) investing activities		6,622			(107	)
Net cash used in financing activities		(153	)		(316	)
Change in cash and cash equivalents	$	(8,536	)	$	(12,084	)

Operating Activities. We have incurred losses since inception. Net cash used in operating activities for the ~~three~~nine months ended ~~March 31, 2021~~September 30, 2023 was ~~$3.0~~$15.0 million, consisting primarily of our net loss of ~~$3.1~~$15.3 million ~~as we incurred~~and payments for accounts payable of $0.9 million prepaid and other assets of $0.6 million and the non-operating lawsuit of $1.4 million. This was partially offset by non-cash expenses ~~associated with research activities for our lead product candidates~~of $1.5 million in equity-based compensation expenses, $0.7 million in depreciation and ~~incurred general~~amortization, and ~~administrative expenses; including $1.3 million~~an increase in accrued expenses of ~~equity based compensation recorded for the RSUs granted.~~$0.8 million. Net cash used in operating activities for the ~~three~~nine months ended ~~March 31, 2020~~September 30, 2022 was ~~$0.4~~$11.7 million, consisting primarily of our net loss of ~~$0.2~~$14.4 million ~~as we incurred~~and payments for prepaid expenses ~~associated with research~~and other assets of $0.5 million and accrued expenses of $0.7 million. This was partially offset by non-cash expenses of $4.1 million, primarily due to $1.4 million in non-operating lawsuit expenses, equity-based compensation expenses of $1.7 million, and depreciation and amortization of $0.7 million.

Investing Activities. Net cash provided by investing activities for ~~our lead product candidates~~the nine months ended September 30, 2023 was $6.6 million consisting primarily of proceeds from the sale of marketable securities. Net cash used by investing activities for the nine months ended September 30, 2022 was $0.1 million, consisting primarily of acquisitions of property and ~~incurred general~~equipment and ~~administrative expenses.~~intangible assets that were in excess of proceeds from the sale of marketable securities.

~~Investing~~Financing Activities. Net cash used in ~~investing~~financing activities for the ~~three~~nine months ended ~~March 31, 2021~~September 30, 2023 was ~~nil because there were no purchases~~$0.2 million for the payment of ~~property and equipment and capitalized intangible costs.~~taxes upon vesting of RSUs. Net cash used ~~in investing activities for the three months ended March 31, 2020 was $0.1 million consisting of purchases of property and equipment and capitalized intangible costs.~~

~~Financing Activities~~. ~~Net cash provided~~ by financing activities for the ~~three~~nine months ended ~~March 31, 2021~~September 30, 2022 was ~~$26.7~~$0.3 million ~~consisting of: $26.1 million in net proceeds received from our IPO. Net cash provided by financing activities~~ for the ~~three months ended March 31, 2020 was $1.1 million consisting~~payment of ~~$1.1 million in net proceeds received from subscription~~taxes upon vesting of ~~our Series C membership units issued prior to our 2021 corporate conversion event.~~RSUs.

LIQUIDITY AND CAPITAL RESOURCES

Since our inception, we have incurred significant operating losses. We expect to incur significant expenses and operating losses as we advance the preclinical and clinical development of our programs. We expect that our sales, research and development and general and administrative costs will increase in connection with conducting additional preclinical studies and clinical trials for our current and future programs and product candidates, contracting with CROs to support preclinical studies and clinical trials, expanding our intellectual property portfolio, and providing general and administrative support for our operations. As a result, we will need additional capital to fund our operations, which we may obtain from additional equity or debt financings, collaborations, licensing arrangements, or other sources.

To date, we have financed our operations primarily through our IPO, private placement and registered equity financings, grant awards, and fees generated from the Bahamas Registry Trial and contract manufacturing services. Since we were formed, we have raised approximately ~~$56.1~~$77.5 million in gross proceeds from the issuance of equity. As of ~~March 31, 2021, we~~September 30, 2023, the Company had ~~$24.5 million in~~ cash, and cash equivalents of $2.0 million, marketable securities of $2.0 million and working capital of approximately ~~$22.5~~$1.7 million. We have less than $0.1 million of indebtedness as of March 31, 2021 from loans provided by the Small Business Administration (SBA). Revenue from our Bahamas Registry Trial, after the Bahamas lifted its COVID-19 travel restrictions, has been slowed due to continued concerns with respect to international travel.

Capital ~~in 2020~~Raising Efforts

~~During 2020,~~On December 3, 2021, we ~~received $1.1 million from~~closed a private purchase and sale to certain accredited investors ~~in exchange for 18,335 Series C membership units. These units were subsequently converted into~~of an aggregate of 1,169,288 shares of ~~Class A Common Stock as part of our corporate conversion, as discussed below.~~

~~On September 15, 2020, we were awarded a $0.7 million grant from the Maryland Stem Cell Research Commission (TEDCO) for the use of our cell-based technology for ARDS due to COVID-19 and the Flu.~~

~~Capital in 2021~~

~~As part of our IPO, on February 12, 2021~~ our Class A common stock ~~began~~and warrants to ~~trade on NASDAQ under the stock symbol “LGVN”. Pursuant to the IPO, we sold 2,660,000~~purchase 1,169,288 shares of Class A common stock at ~~a public offering~~an initial exercise price of ~~$10.00~~$17.50 per share, ~~for~~which are subject to pricing reset under certain conditions, resulting in aggregate gross proceeds of ~~$26.6~~$20.5 million prior to deducting ~~underwriting discounts, commissions,~~fees and ~~other~~ offering ~~expenses. In addition, we granted~~expenses (the “2021 PIPE Offering”). We also issued warrants exercisable for 46,772 shares of Class A common stock to affiliates of the ~~underwriters~~Placement Agent, with an exercise price of $17.50 per share.

On August 16, 2023, the Company announced its rights offering, which triggered the downward pricing mechanism on certain warrants of the 2021 PIPE Offering, at which time these warrants were adjusted downward to an exercise price of $5.25 for the period remaining through expiration.

On June 27, 2023 the Company filed a ~~30-day option~~registration statement with the SEC to conduct a tradeable subscription rights offering for up to $30.0 million of shares of Class A common stock to its stockholders and holders of certain warrants to purchase common stock On July 28, 2023 the Company filed a first amendment to the registration statement. On August 16, 2023, the registration statement was declared effective by the SEC, and on August 22, 2023 the Company launched the subscription rights offering at a subscription price of $3.00 per share of Class A common stock. On September 21, 2023, the subscription period for the rights offering of the Company expired. At the end of the subscription period, the Company sold 108,497 shares of its Class A common stock at a price of $3.00 per share. There were no net proceeds to the Company after deducting the $0.3 million of expenses associated with the rights offering.

On October 11, 2023 the Company entered into a securities purchase agreement with an institutional and accredited investor (the “Purchaser”) relating to the registered direct offering and sale of an aggregate of 2,365,000 shares of the Company’s Class A common stock, par value $0.001 per share and pre-funded warrants to purchase up to ~~an additional 399,000 shares at the public offering price less the underwriting discounts and commissions.~~

~~On March 15, 2021, our underwriters partially exercised its over-allotment option, resulting in the sale of 250,000~~59,243 shares of Class A common stock at ~~a public offering~~an exercise price of ~~$10.00~~$0.001 per share, ~~for aggregate gross proceeds~~at a purchase price of ~~$2.5 million prior~~$1.65 per share of common stock and $1.649 per pre-funded Warrant, which Offering closed and was funded on October 13, 2023.

In a concurrent private placement, the Company also sold to ~~deducting underwriting discounts, commissions, and other offering expenses.~~

~~The underwriter also received~~the Purchaser unregistered Series A warrants to purchase ~~106,400~~up to an aggregate of 2,424,243 shares of its Class A common stock ~~shares. The~~and unregistered Series B 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 February 12, 2021, at a price~~purchase up to an aggregate of ~~$12.00 per~~2,424,243 shares of its Class A common ~~stock share.~~stock. The unregistered Series A Warrants will have an exercise price of $1.65 per share, will become exercisable commencing on the effective date of stockholder approval of the issuance of the shares issuable upon the exercise of the Series A Warrants, and have a term of five and one-half years from the date of issuance. The unregistered Series B Warrants will have an exercise price of $1.65 per share, will become exercisable commencing on the effective date of stockholder approval of the issuance of the shares issuable upon the exercise of the Series B Warrants, and have a term of eighteen months from the date of issuance. Each Warrant is exercisable for one share of Class A common stock. The net proceeds to the Company from the Offering and Private Placement was approximately $3.5 million, after deducting placement agent fees and other offering expenses payable by the Company.

Grant Awards

~~During the last several years we have been awarded several governmental and non-profit association grants. As of March 31, 2021,~~Through September 30, 2023, we have been awarded approximately $11.9 million in governmental and non-profit association grants, which ishave been used to fund our clinical trials, research and development, production and overhead. Grant awards are recognized as revenue, and depending on the funding mechanism, are deposited directly in our accounts as lump sums, which are staggered over a predetermined period, or drawn down from a federal payment management system account for reimbursement of expenses incurred. Revenue recognition occurs when the grant related expenses are incurred or supplies and materials are received. As of ~~March 31, 2021,~~September 30, 2023, and December 31, ~~2020,~~2022, the amount of unused grant funds that were available for us to draw was approximately ~~$1.2~~$0.1 million and ~~$1.4~~$0.8 million, respectively. ~~The following table summarizes the grants awarded (in thousands).~~

~~Longeveron Project~~	~~Funding Agency~~⁽¹⁾	~~Total~~ ~~Amount~~ ~~($)~~		~~Status of Award~~
~~Aging Frailty Phase 2b Trial~~	~~SBIR (DHHS) NIA~~		~~3,957,813~~		~~Ongoing~~
~~Aging Frailty Phase 2b Trial~~	~~SBIR (DHHS) NIA~~		~~283,040~~		~~Complete~~
~~Alzheimer’s Disease Phase 1 Trial~~⁽²⁾	~~Alzheimer’s Association~~		~~3,000,000~~		~~Ongoing~~
~~Alzheimer’s Disease Phase 1 Trial~~	~~Alzheimer’s Association~~		~~1,000,000~~		~~Complete~~
~~The Metabolic Syndrome Sub-Study~~	~~STTR (DHHS) NIA~~		~~150,000~~		~~Complete~~
~~The Metabolic Syndrome Sub-Study~~	~~STTR (DHHS) NIA~~		~~901,486~~		~~Ongoing~~
~~Aging Frailty Influenza Vaccine Trial (“HERA”)~~	~~Maryland TEDCO~~		~~750,000~~		~~Complete~~
~~HLHS Phase 1 Trial~~	~~Maryland TEDCO~~		~~750,000~~		~~Complete~~
~~HLHS Phase 2 Trial~~⁽³⁾	~~UG3 (DHHS) NHLBI~~		~~477,566~~		~~Ongoing~~
~~ARDS Phase 1~~⁽⁴⁾	~~Maryland TEDCO~~		~~650,000~~		~~Ongoing~~
~~Total~~			~~11,919,905~~

~~(1)~~	SBIR=Small Business Innovation Research programs; STTR=Small Business Technology Transfer programs; DHHS=Department of Health and Human Services; NIA = National Institute on Aging; NHLBI=National Heart, Lung, and Blood Institute.

~~(2)~~	Under the grant award agreement with the Alzheimer’s Association, we may be required to make revenue sharing or distribution of revenue payments for products or inventions generated or resulting from this clinical trial program. The potential payments, although not currently defined, could result in a maximum payment of five times (5x) the award amount.

~~(3)~~	The HLHS Phase 2b clinical trial grant was awarded to the University of Maryland, and the trial will be conducted under our IND and will test Lomecel-B. The total award was $4.6 million, and we will receive approximately $0.5 million directly.

~~(4)~~

~~Maryland TEDCO has sent the first tranche of $325,000.~~

Terms and Conditions of Grant Awards

Grant projects are typically divided into periods (e.g., a three-year grant may have three one-year periods), and the total amount awarded is divided according to the number of periods. At pre-specified time points, which are detailed in the grant award notifications, we are required to submit interim financial and scientific reports to the granting agency totaling funds spent, and in some cases, detailing use of proceeds and progress made during the reporting period. After funding the initial period, receipt of additional grant funds is contingent upon satisfactory submission of our interim reports to the granting agency.

Grant awards arise from submitting detailed research proposals to granting agencies, and winning a highly competitive and rigorous application review and process that is judged on the merits of the proposal. There are typically multiple applicants applying and competing for a finite amount of funds. As such we cannot be sure that we will be awarded grant funds in the future despite our past success in receiving such awards.

Funding Requirements

Our operating costs will continue to increase substantially for the foreseeable future in connection with our ongoing activities. In past years we have been able to fund a large portion of our clinical programs and our administrative overhead with the use of grant funding.

Specifically, our expenses will increase as we:

●

advance the clinical development of ~~Lomecel-B~~Lomecel-B™ for the treatment of several disease states and indications;

	●
	●	pursue the preclinical and clinical development of other current and future research programs and product candidates;

	●
	●	in-license or acquire the rights to other products, product candidates or technologies;

	●
	●	maintain, expand, and protect our intellectual property portfolio;

	●
	●	hire additional personnel in research, manufacturing, and regulatory and clinical development as well as management personnel;

	●
	●	seek regulatory approval for any product candidates that successfully complete clinical development; and

	●
	●	expand our operational, financial and management systems and increase personnel, including personnel to support our operations as a public company.

We believe that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements into the ~~second half~~first quarter of ~~2022.~~

We2024.We have based these estimates on assumptions that may prove to be imprecise, and we could utilize our available capital resources sooner than we expect.

Because of the numerous risks and uncertainties associated with research, development, and commercialization of our product candidates, it is difficult to estimate with certainty the amount of our working capital requirements. Our future funding requirements will depend on many factors, including:

	●	the progress, costs, and results of our clinical trials for our programs for our cell-based ~~therapies;~~

	●	~~the progress, costs~~therapies, and ~~results of~~ additional research and preclinical studies in other research programs we initiate in the future;

	●	the costs and timing of process development and manufacturing scale-up activities associated with our product candidates and other programs we advance through preclinical and clinical development;

	●	our ability to establish and maintain strategic collaborations, licensing or other agreements and the financial terms of such agreements;

	●	the extent to which we in-license or acquire rights to other products, product candidates or technologies; and

	●	the costs and timing of preparing, filing and prosecuting patent applications, maintaining and protecting our intellectual property rights and defending against any intellectual property-related claims.

Further, our operating results may change in the future, and we may need additional funds to meet operational needs and capital requirements associated with such operating plans.

Until such time, if ever, that we can generate product revenue sufficient to achieve profitability, we expect to finance our cash needs through a combination of equity offerings, debt financings, grant awards, collaboration agreements, other third-party funding, strategic alliances, licensing arrangements and marketing and distribution arrangements.

We currently have no credit facility or committed sources of capital. Debt financing and ~~preferred~~ equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends. If we raise additional funds through other third-party funding, collaboration agreements, strategic alliances, licensing arrangements or marketing and distribution arrangements, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our biologic drug development or future commercialization efforts or grant rights to develop and market products or product candidates that we would otherwise prefer to develop and market ourselves.

In order to meet our operational goals, we will need to obtain additional capital, which we will likely obtain through a variety of means, including through public or private equity, debt financings or other sources, including up-front payments and milestone payments from strategic collaborations. To the extent that we raise additional capital through the sale of convertible debt or equity securities, current stockholder ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect stockholder rights. Such financing will likely result in dilution to stockholders, and may result in imposition of debt covenants, increased fixed payment obligations or other restrictions that may affect our business. If we raise additional funds through up-front payments or milestone payments pursuant to strategic collaborations with third parties, we may have to relinquish valuable rights to our product candidates, or grant licenses on terms that are not favorable to us. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans.

Contractual Obligations and Commitments

As of ~~March 31, 2021,~~September 30, 2023, we have ~~$4.2~~$2.2 million in operating lease obligations and $0.5 million in CRO payment obligations. We enter into contracts in the normal course of business with third-party contract organizations for clinical trials, preclinical studies, manufacturing and other services and products for operating purposes. These contracts generally provide for termination following a certain period after notice and therefore we believe that our non-cancelable obligations under these agreements are not ~~material and they are not included in the table above.~~material.

We have not included milestone or royalty payments or other contractual payment obligations if the timing and amount of such obligations are unknown or uncertain.

Critical Accounting ~~Policies and Use~~Estimates

For a discussion of ~~Estimates~~

Our management’s discussion and analysis of financial condition, results of operations and liquidity are based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). The preparation of our financial statements and related disclosures requires us to make estimates, judgements and assumptions that affect the reported amounts of assets and liabilities and the 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. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may materially differ from these estimates under different assumptions or conditions. On an on-going basis, we review our estimates to ensure that they appropriately reflect changes in our business or new information as it becomes available.

~~We believe there have been no significant changes in~~ our critical accounting ~~policies and significant judgments and~~ estimates, ~~as discussed in “Item 7. Management’s~~refer to “Management’s Discussion and Analysis of ~~Financial Condition and~~ Results of ~~Operations”~~Operations and Financial Condition” in Part II, Item 7 and the notes to our financial statements in Part II, Item 8 of our ~~2020~~2022 Form 10-K. See also Note 1 to the condensed financial statements. There have been no material changes to our critical accounting estimates since the filing of our 2022 Form 10-K.

~~Off-Balance Sheet Arrangements~~Emerging Growth Company Status

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act, or JOBS Act, which is a law intended to encourage funding of small businesses in the U.S. by easing many of the country’s securities regulations, and we may take advantage of reduced reporting requirements that are otherwise applicable to public companies. Section 107 of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with those standards. We have ~~no off-balance sheet arrangements.~~elected to take advantage of the extended transition period for complying with new or revised accounting standards, and as a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates. The JOBS Act also exempts us from having to provide an auditor attestation of internal control over financial reporting under Sarbanes-Oxley Act Section 404(b).

We will remain an “emerging growth company” until the earliest of (1) the last day of the fiscal year in which we have total annual gross revenues of $1.07 billion or more, (2) the last day of the fiscal year following the fifth anniversary of the completion of our IPO, (3) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years or (4) the date on which we are deemed to be a large accelerated filer under the rules of the SEC, which generally is when a company has more than $700 million in market value of its reported class of stock held by non-affiliates and has been a public company for at least 12 months and has filed at least one Annual Report on Form 10-K.

Recent Accounting Pronouncements

A description of recent accounting pronouncements that may potentially impact our financial position, results of operations or cash flows is disclosed in Note 2 to our unaudited condensed financial statements included in Item 1 of this 10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There were no material changes in our exposure to market risk since the disclosure included in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our ~~2020~~2022 10-K.

Item 4. Controls and Procedures.

Disclosure controls and procedures

Our management, under the supervision of and with the participation of our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective.

Changes in internal control over financial reporting

In response to the COVID-19 pandemic, most of our corporate employees, including all those involved in the operation of our internal controls over financial report, have been working remotely since mid-March 2020. Despite this change, thereThere were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended ~~March 31, 2021~~September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ~~We are continuously monitoring and assessing the impact of COVID-19 on our internal controls to minimize any impact it may have on their design and operating effectiveness.~~

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, the Company could become involved in disputes and various litigation matters that arise in the normal course of business. These may include disputes and lawsuits related to intellectual property, licensing, contract law and employee relations matters.

As previously disclosed in our 10-Q filed with the SEC on November 12, 2021, a securities class action lawsuit was filed on or about September 13, 2021 against the Company and certain of our directors and officers in the United States District Court for the Southern District of Florida. On or about April 26, 2022, plaintiff filed an amended complaint with related allegations. The complaint, as amended, alleged that there were materially false and misleading statements made (or omissions of material information) in the Company’s initial public offering documents and in other disclosures during the period from our initial public offering on February 12, 2021, through August 12, 2021, in violation of federal securities laws. The complaint sought unspecified damages on behalf of a purported class of purchasers of our common stock during said period. On July 12, 2022, all parties preliminarily agreed to settle the action for approximately $1.4 million, which amount was accrued as of June 30, 2022 and was paid during the quarter ended June 30, 2023.

On or about May 18, 2023, a former employee of the Company filed a charge with the Equal Employment Opportunities Commission (“EEOC”) and the Florida Commission on Human Relations alleging discrimination based on disability, and on or about August 15, 2023, the former employee filed a complaint in Miami-Dade Circuit Court alleging unpaid wages were outstanding. Both matters were addressed and fully resolved and settled in a mediation between the Company and the former employee held on September 28, 2023, by which it was agreed that the former employee would be paid $75,000 (a total of $35,000 towards this resolution will be paid by Longeveron and all remaining costs will be covered by Longeveron’s insurance carrier) and that the EEOC and FCHR charges will be withdrawn and the action in the Miami-Dade Circuit Court will be dismissed with prejudice.

Item 1A. Risk Factors.

~~The following disclosure supplements~~Adverse developments affecting the discussion of certain risks and uncertainties previously disclosed in our 2020 10-K. These risks and uncertainties, along with those previously disclosed, could materially adversely affect our business, results of operations, financial ~~position~~services industry, such as actual events or ~~cash flows.~~

~~We face risks related to the current COVID-19 pandemic and other health epidemics and outbreaks.~~

The global outbreak of COVID-19 is currently impacting countries, communities, supply chains and markets. As of the date of this Quarterly Report on Form 10-Q, the COVID-19 pandemic has impacted our Bahamas Registry Trial business. It is also possible that the COVID-19 pandemicconcerns involving liquidity, defaults, or non-performance by financial institutions or transactional counterparties, could adversely affect ~~our business,~~the Company’s financial condition and results of ~~operations,~~operations.

Actual events involving limited liquidity, defaults, non-performance, or other adverse developments that affect financial ~~condition~~institutions, transactional counterparties or ~~liquidity~~other companies in the ~~future.~~financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. For example, ~~it could impact~~on March 10, 2023, Silicon Valley Bank (“SVB”) was closed by the ~~timing~~California Department of Financial Protection and ~~enrollment~~Innovation, which appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver. Further, on Monday, May 1, 2023, First Republic Bank (“FRB”) was closed by the California Department of Financial Protection and Innovation, the FDIC was appointed as receiver and JPMorgan Chase Bank, National Association (N.A.) acquired all of FRB’s deposit accounts and substantially all of its assets. Although we are not a borrower or party to any such instruments with SVB, FRB or any other financial institution currently in receivership, if any of our ~~collaborators’ planned~~banking entities with which we do business were to be placed into receivership, we may be unable to access such funds. In addition, if any of our suppliers or ~~ongoing clinical trials, delaying clinical site initiation, regulatory review~~other parties with whom we conduct business are unable to access funds pursuant to such instruments or lending arrangements with such a financial institution, such parties’ ability to satisfy their obligations to us or to enter into new commercial arrangements with us could be adversely affected. Uncertainty remains over liquidity concerns in the broader financial services industry, including financial institutions with which we do business, borrow money or have funds on deposit. The results of or concerns with events like this could include a variety of material and adverse impacts on the ~~potential receipt of regulatory approvals, payment of milestones under~~Company. In addition, investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more difficult for us to acquire financing on acceptable terms or at all. Any decline in available funding generally could, among other risks, adversely impact our ~~license agreements and commercialization of one~~ability to meet our operating demands or ~~more of~~continue to develop our product candidates, ~~if approved. The COVID-19 pandemic could also disrupt the production capabilities~~or result in breaches of our ~~contract manufacturing facility. Further,~~financial and/or contractual obligations. Any of these impacts, or any other impacts resulting from the ~~outbreak of COVID-19 has heightened the risk that a significant portion of~~factors described above or other related or similar factors not described above, could have material adverse impacts on our ~~workforce will suffer illness~~ liquidity and our current and/or ~~otherwise be unable to work. The impact of the COVID-19 pandemic is fluid~~projected business operations and ~~continues to evolve,~~financial condition and ~~therefore, we cannot currently predict the extent to which our business, clinical trials,~~ results of ~~operations, financial condition or liquidity will ultimately be impacted. In addition, COVID-19 could materially and adversely impact our operations due to, among other factors:~~operations.

	●	~~a general decline in busines activity;~~

	●	difficulty accessing the capital and credit markets on favorable terms, or at all, and a severe disruption and instability in the global financial markets, or deteriorations in credit and financing conditions which could affect our access to capital necessary to fund business operations;

	●	the potential negative impact on the health of our employees, especially if a significant number of them or any of their family members are impacted or if any of our senior leaders are impacted for an extended period of time;

	●	the potential negative impact on our ability to monitor the investigative sites participating in our clinical studies in person or even remotely, which could result in a deviation from pre-pandemic protocols and/or site monitoring and data management plans, and delays in our ability to perform data-related tasks dependent on communications with personnel at the investigative sites, such as resolution of open data queries, the cumulative effects of which could lead to delayed or missed identification of non-compliance with good clinical practice (GCP), and/or unrecognized data errors.

	●	potential delays in the preparation and submission of applications for regulatory approval of our products, as well as potential delays in FDA’s ability to review applications in a timely manner consistent with past practices;

	●	~~potential difficulty in adequately overseeing and/or evaluating the manufacturing process at the facilities that will manufacture future commercial;~~

●

~~a deterioration in our ability to ensure business continuity during a disruption.~~

To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in the “Risk Factors” section of our 2020 10-K, such as those relating to our significant operating losses, our need for substantial additional funding to develop our products and support our operations, delays or difficulties in developing and commercializing our product candidates, and delays in clinical trials and regulatory approvals relating to our products.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

~~Reference is made to Item 3.02 of that certain Current Report on Form 8-K of the Company filed with the SEC on March 9, 2021.~~ISSUER PURCHASES OF EQUITY SECURITIES

Period	Total Number of Shares Purchased (a)		Average Price Paid per Share (or Unit)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
July 1-31, 2023		-	$	-		-		-
August 1-31, 2023		8,999	$	3.29		-		-
September 1-30, 2023		5,694	$	2.57		-		-
Total		14,693	$	3.01		-		-

(a)

Includes shares withheld from employees to satisfy minimum tax withholding obligations associated with the vesting of restricted stock units during the period.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

~~None.~~

Item 6. Exhibits.

Exhibit No.		Description

~~10.1~~4.1		~~Second Amendment~~Form of Pre-Funded Common Stock Purchase Warrant, incorporated by reference to Exhibit 4.1 to the ~~Exclusive License~~Registrant’s Current Report on Form 8-K filed October 13, 2023.

4.2		Form of Series A/B Common Stock Purchase Warrant, incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed October 13, 2023.

4.3		Form of Placement Agent Warrant, incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K filed October 13, 2023.

10.1		Form of Securities Purchase Agreement, ~~with~~dated October 11, 2023, by and between the ~~University of Miami, dated March 3, 2021,~~Company and the Purchaser signatory thereto, incorporated by reference to Exhibit 10.1 to the ~~Company’s current report~~Registrant’s Current Report on Form 8-K filed ~~March 9, 2021.~~ October 13, 2023.

10.2		~~Collaborative Research and Development~~Form of Dealer-Manager Agreement with ~~the University of Miami, dated March 3, 2021,~~R.F. Lafferty & Co. Inc., incorporated by reference to Exhibit ~~10.2~~1.1 to the ~~Company’s current report~~Registrant’s Current Report on Form 8-K filed ~~March 9, 2021.~~August 18, 2023.

31.1		Certification of principal executive officer, pursuant to SEC Rules 13a-14(a) and 15d-14(a) adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of principal financial officer, pursuant to SEC Rules 13a-14(a) and 15d-14(a) adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of principal executive officer, and principal financial officer, pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Inline XBRL Instance Document

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	LONGEVERON INC.

Date: ~~May 14, 2021~~November 9, 2023	/s/ ~~Geoff Green~~Mohamed Wa’el Ahmed Hashad
	~~Geoff Green~~Mohamed Wa’el Ahmed Hashad
	Chief Executive Officer
	(~~principal executive officer)~~Principal Executive Officer)

Date: ~~May 14, 2021~~November 9, 2023	/s/ ~~James Clavijo~~Lisa A. Locklear
	~~James Clavijo~~Lisa A. Locklear
	Executive Vice President and Chief Financial Officer
	(~~principal financial~~Principal Financial and ~~accounting officer)~~Accounting Officer)

2737

iso4217:USD xbrli:shares

	Series A Units						Series B Units						Series C Units						Class A Common Stock				Class B Common Stock							Additional
	Number of Units			Amount			Number of Units			Amount			Number of Units			Amount			Number		Amount		Number		Amount		Subscription Receivable			Paid-In Capital		Accumulated Deficit			Total Equity
Balance at December 31, 2019		1,000,000		$	250			1,000,000		$	1,832			43,695		$	2,513			-		-		-		-		(150	)		-		-			4.445
Series C units issued for cash		-			-			-			-			18,335			1,100			-		-		-		-		-			-		-			1,100
Issuance of Series C units as payment for amounts accrued		-			-			-			-			734			44			-		-		-		-		-			-		-			44
Equity-based compensation		-			-			-			-			-			39			-		-		-		-		-			-		-			39
Cash received pursuant to subscription receivable		-			-			-			-			-			-			-		-		-		-		50			-		-			50
Net loss		-			-			-			(3,609	)		-			(112	)		-		-		-		-		-			-		-			(3721	)

Balance at December 31, 2020		1,000,000		$	250			1,000,000		$	(1,777	)		62,764		$	3,584			-	$	-		-	$	-	$	(100	)		-		-		$	1,957
Conversion of Units into Class A and B common stock		(1,000,000	)		(250	)		(1,000,000	)		1,777			(62,764	)		(3,584	)		338,030		-		15,702,834		16		-			28,934		(26,893	)		-
Initial public offering and overallotment of Class A common stock, net of $2,969 in issuance costs		-			-			-			-			-			-			2,910,000		3		-		-		-			26,131		-			26,134
Class A common stock, issued for consulting		-			-			-			-			-			-			32,713		-		-		-		-			250		-			250
Equity based compensation		-			-			-			-			-			-			-		-		-		-		-			1,265		-			1,265
Net loss		-			-			-			-			-			-			-		-		-		-		-			-		(3,111	)		(3,111	)
Balance at March 31, 2021		-			-			-			-			-			-			3,280,743		3		15,702,834		16		(100	)		56,580		(30,004	)		26,495

Year Ending December 31,	Amount
2021 (remaining nine months)	$	495
2022		671
2023		687
2024		702
2025		718
Thereafter		920
Total		4,193
Less: Interest		666
Present Value of Lease Liability	$	3,527