UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DCD.C. 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, ~~2022~~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~~^th~~Avenue, Suite 520~~, ~~Miami, Florida 33136~~

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

~~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

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, 2022,~~10, 2023, the registrant had ~~5,372,442~~6,226,225 shares of Class A common stock, $0.001 par value per shares, and ~~15,565,062~~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

ITEM 1.	Condensed Financial Statements		1
	Condensed Balance Sheets as of March 31, ~~2022~~2023 (unaudited) and December 31, ~~2021~~2022		1
	Condensed Statements of Operations for the three months ended March 31, ~~2022~~2023 and ~~2021~~2022 (unaudited)		2
	Condensed Statements of ~~Members’ Equity~~Comprehensive Loss for the three months ended March 31, 2023 and 2022 (unaudited)	3
	Condensed Statements of Stockholders’ Equity for the three months ended March 31, ~~2022~~2023 and ~~2021~~2022 (unaudited)		34
	Condensed Statements of Cash Flows for the three months ended March 31, ~~2022~~2023 and ~~2021~~2022 (unaudited)		56
	Notes to Unaudited Condensed Financial Statements (unaudited)		67
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		2022
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk		3235
ITEM 4.	Controls and Procedures		32
			35
PART II. OTHER INFORMATION
ITEM 1.	Legal Proceedings	36
ITEM 1A.	Risk Factors		3336
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds		3337
ITEM 6.	Exhibits		34
			37
SIGNATURES				3538

PART I. FINANCIAL INFORMATION

Item 1. Condensed Financial Statements.

Longeveron Inc.

Condensed Balance Sheets

(In thousands, except share and per share data)

	March 31, 2022			December 31, 2021			March 31, 2023			December 31, 2022
	(Unaudited)						(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	22,132		$	25,658		$	4,984		$	10,503
Short-term investments at fair value (cost of $8,449 and $9,471 at March 31, 2022 and December 31, 2021, respectively)		8,449			9,333
Marketable securities								8,693			9,155
Prepaid expenses and other current assets		1,190			282			1,097			404
Accounts and grants receivable		96			55			96			218
Total current assets		31,867			35,328			14,870			20,280
Property and equipment, net		2,966			3,062			2,810			2,949
Intangible assets, net		2,361			2,334			2,425			2,409
Right-of-use (ROU) asset		1,745			1,813			1,456			1,531
Other assets		234			229			247			244
Total assets	$	39,173		$	42,766		$	21,808		$	27,413
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	561		$	645		$	457		$	1,751
Accrued expenses		791			1,327			613			650
Current portion of lease liability		543			537			571			564
Estimated lawsuit liability								1,398			1,398
Deferred revenue		505			199			556			506
Total current liabilities		2,400			2,708			3,595			4,869
Long-term liabilities:
Lease liability		2,467			2,605			1,895			2,041
Total long-term liabilities		2,467			2,605			1,895			2,041
Total liabilities		4,867			5,313			5,490			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 March 31, 2022 and December 31, 2021.		-			-
Class A Common Stock, $0.001 par value per share, 84,295,000 shares authorized, 5,326,512 shares issued and outstanding at March 31, 2022; 5,175,361 issued and outstanding, at December 31, 2021		5			5
Class B Common Stock, $0.001 par value per share, 15,705,000 shares authorized, 15,585,062 shares issued and outstanding at March 31, 2022; 15,702,834 issued and outstanding, at December 31, 2021		16			16
Preferred stock, $0.001 par value per share, 5,000,000 shares authorized, no shares issued and outstanding at March 31, 2023, and December 31, 2022.								-			-
Class A Common Stock, $0.001 par value per share, 84,295,000 shares authorized, 6,163,050 shares issued and outstanding at March 31, 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, 14,871,085 shares issued and outstanding at March 31, 2023: 14,891,085 issued and outstanding, at December 31, 2022								15			15
Additional paid-in capital		81,833			81,470			84,116			83,712
Stock subscription receivable		(100	)		(100	)		(100	)		(100	)
Accumulated deficit		(47,448	)		(43,938	)		(67,420	)		(62,773	)
Accumulated other comprehensive loss								(299	)		(357	)
Total stockholders’ equity		34,306			37,453			16,318			20,503
Total liabilities and stockholders’ equity	$	39,173		$	42,766		$	21,808		$	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,
	2023			2022
Revenues
Clinical trial revenue	$	238		$	310
Grant revenue		41			60
Total revenues		279			370
Cost of revenues		203			205
Gross profit		76			165

Operating expenses
General and administrative		1,855			1,980
Research and development		2,780			1,292
Selling and marketing		157			287
Total operating expenses		4,792			3,559
Loss from operations		(4,716	)		(3,394	)
Other income and (expenses)
Other income (expenses), net		69			(116	)
Total other income and (expenses), net		69			(116	)
Net loss	$	(4,647	)	$	(3,510	)
Basic and diluted net loss per share	$	(0.22	)	$	(0.17	)
Basic and diluted weighted average common shares outstanding		21,033,610			20,911,203

See accompanying notes to unaudited condensed financial statements.

Longeveron Inc.

Condensed Statements of ~~Operations~~Comprehensive Loss

(In thousands, except per share data)

(Unaudited)

Three months ended
March 31,
2022 2021
Revenues
Grant revenue $ 60 $ 211
Clinical trial revenue 310 165
Total revenues 370 376
Cost of revenues 70 227
Gross profit 300 149

Operating expenses
General and administrative 1,980 1,707
Research and development 1,427 1,350
Selling and marketing 287 550
Total operating expenses 3,694 3,607
Loss from operations (3,394 ) (3,458 )
Other (expense) and income
Forgiveness of Paycheck Protection Program loan - 300
Other (expense) income, net (116 ) 47
Total other (expense) and income, net (116 ) 347
Net loss $ (3,510 ) $ (3,111 )
Basic and diluted net loss per share $ (0.17 ) $ (0.18 )
Basic and diluted weighted average common shares outstanding 20,911,203 17,491,066

	Three months ended March 31,
	2023			2022
Net loss	$	(4,647	)	$	(3,510	)
Other comprehensive loss:
Net unrealized gains on available-for-sale securities	$	58		$	-
Total comprehensive loss	$	(4,589	)	$	(3,510	)

See ~~accompanying~~ notes to unaudited condensed financial statements.

Longeveron Inc.

Condensed Statements of Stockholders’ Equity

(In thousands, except share amounts)

(Unaudited)

	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		20,000			-		(20,000	)		-		-			-			-			-			-
Class A Common Stock, issued for RSUs vested		20,161			-		-			-		-			-			-			-			-
Class A Common Stock, held for taxes on RSUs vested		(4,431	)		-		-			-		-			(17	)		-			-			(17	)
Equity-based compensation		-			-		-			-		-			421			-			-			421
Unrealized loss attributable to change in market value of available for sale investments		-			-		-			-		-			-			-			58			58
Net loss		-			-		-			-		-			-			(4,647	)		-			(4,647	)
Balance at March 31, 2023		6,163,050		$	6		14,871,085		$	15	$	(100	)	$	84,116		$	(67,420	)	$	(299	)	$	16,318

See 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									Class A Common Stock					Class B Common Stock					Subscription			Additional Paid-In			Accumulated			Accumulated Other Comprehensive		Total Stockholder’s
	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			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			5,175,361		$	5		15,702,834		$	16	$	(100	)	$	81,470		$	(43,938	)	$	-	$	37,453
Conversion of Class B common stock for Class A common stock		-		-		-		-		-		-		117,772			-		(117,772	)		-		-			-			-			-
Conversion of Units into Class A and B common stock																																				117,772			-		(117,772	)		-		-			-			-			-		-
Class A Common Stock, issued for RSUs vested		-		-		-		-		-		-		44,006			-		-			-		-			-			-			-			44,006			-		-			-		-			-			-			-		-
Class A Common Stock, held for taxes on RSUs vested consulting		-		-		-		-		-		-		(10,626	)		-		-			-		-			(128	)		-			(128	)
Class A Common Stock, held for taxes on RSUs vested																																				(10,626	)		-		-			-		-			(128	)		-			-		(128	)
Equity-based compensation		-		-		-		-		-		-		-			-		-			-		-			491			-			491			-			-		-			-		-			491			-			-		491
Net loss		-		-		-		-		-		-		-			-		-			-		-			-			(3,510	)		(3,510	)		-			-		-			-		-			-			(3,510	)		-		(3,510	)

Balance at March 31, 2022		-	$	-		-	$	-		-	$	-		5,326,512		$	5		15,585,062		$	16	$	(100	)	$	81,833		$	(47,448	)	$	34,306			5,326,512		$	5		15,585,062		$	16	$	(100	)	$	81,833		$	(47,448	)	$	-	$	34,306

See notes to unaudited condensed financial statements.

Longeveron Inc.

Condensed Statements of Cash Flows

(In thousands)

(Unaudited)

	Three months ended March 31,
	2023			2022
Cash flows from operating activities
Net loss	$	(4,647	)	$	(3,510	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		238			188
Interest earned on marketable securities		72			54
Equity-based compensation		421			491
Changes in operating assets and liabilities:
Accounts and grants receivable		122			(41	)
Prepaid expenses and other current assets		(694	)		(908	)
Other assets		(2	)		(57	)
Accounts payable		(1,294	)		(7	)
Deferred revenue		50			306
Accrued expenses		(38	)		(604	)
ROU asset and lease liability		(76	)		(64	)
Net cash used in operating activities		(5,848	)		(4,152	)
Cash flows from investing activities
Proceeds from the sale of Marketable securities		461			885
Acquisition of property and equipment		(42	)		(47	)
Acquisition of intangible assets		(73	)		(71	)
Net cash provided by investing activities		346			767
Cash flows from financing activities
Payments for taxes on RSUs vested		(17	)		(141	)
Net cash used in financing activities		(17	)		(141	)
Change in cash and cash equivalents		(5,519	)		(3,526	)
Cash and cash equivalents at beginning of the period		10,503			25,658
Cash and cash equivalents at end of the period	$	4,984		$	22,132
Supplement Disclosure of Non-cash Investing and Financing Activities:
Vesting of RSUs into Class A Common Stock	$	(68	)	$	(379	)

See accompanying notes to unaudited condensed financial statements.

Longeveron Inc.

~~Condensed Statements of Stockholders’ Equity (Continued)~~

~~(In 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, 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 $ 5 15,702,834 $ 16 $ (100 ) $ 56,580 $ (30,004 ) $ 26,495

~~See accompanying notes to unaudited condensed financial statements.~~

~~Longeveron Inc.~~

~~Condensed Statements of Cash Flows~~

~~(In thousands)~~

~~(Unaudited)~~

Three months ended
March 31,
2022 2021
Cash flows from operating activities
Net loss $ (3,510 ) $ (3,111 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 188 195
Forgiveness of Paycheck Protection Program loan (300 )
Change in fair value of short-term investments 54 -
Equity issued for consulting services - 119
Equity based compensation 491 1,265
Changes in operating assets and liabilities:
Accounts and grants receivable (41 ) 420
Prepaid expenses and other current assets (908 ) (785 )
Other assets (57 ) -
Accounts payable (7 ) (644 )
Deferred revenue 306 375
Accrued expenses (604 ) (503 )
ROU asset and lease liability (64 ) (63 )
Net cash used in operating activities (4,152 ) (3,032 )
Cash flows from investing activities
Proceeds from the sale of short-term investments 885 -
Acquisition of property and equipment (47 ) -
Acquisition of intangible assets (71 ) -
Net cash provided by investing activities 767 -
Cash flows from financing activities
Proceeds from initial public offering of common stock, net of commissions and expenses - 26,696
Payments for taxes on RSUs vested (141 ) -
Repayments of short-term note payable
-
(19 )
Net cash (used in) provided by financing activities (141 ) 26,677
Change in cash and cash equivalents (3,526 ) 23,645
Cash and cash equivalents at beginning of the period 25,658 816
Cash and cash equivalents at end of the period $ 22,132 $ 24,461
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 )
Vesting of RSUs into Class A Common Stock $ (379 ) $ -

~~See accompanying notes to unaudited condensed financial statements.~~

~~Longeveron Inc.~~

Notes to ~~the~~Unaudited Condensed Financial Statements ~~(Unaudited)~~

Three Month Periods Ended March 31, ~~2022~~2023 and ~~2021~~2022

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

Nature of business:

Longeveron, LLC 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 was authorized on December 15, 2014 to transact business in Florida.~~ The Company is a clinical stage biotechnology company developing cellular therapies for specific aging-related and life-threatening conditions. The Company operates out of its leased facilities in Miami, Florida.

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

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

~~Initial Public Offering (“IPO”):~~

The ~~Corporate Conversion undertaken immediately prior~~accompanying interim condensed balance sheet as of March 31, 2023, and the condensed statements of operations, statement of comprehensive loss, stockholders’ equity, and cash flows for the three months ended March 31, 2023 and 2022, are unaudited. The unaudited condensed financial statements have been prepared according to the ~~Company’s IPO caused all existing Series A~~rules and ~~B units to convert into Class B Common Stock, par value $0.001 per share (the “Class B Common Stock”~~regulations of the Securities and Exchange Commission (“SEC”) and, therefore, certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been omitted. In the opinion of management, the accompanying unaudited condensed financial statements for the periods presented reflect all ~~existing Series C units~~adjustments which are normal and recurring, and necessary to ~~convert into Class A Common Stock, par value $0.001 per share (the “Class A Common Stock”). The purpose~~fairly state the financial position, results of operations, and cash flows of the ~~Corporate Conversion was to reorganize~~Company. These unaudited condensed financial statements and notes should be read in conjunction with the ~~Company structure so that the entity that offered~~audited financial statements and notes thereto in the Company’s ~~Class A Common Stock to~~2022 Annual Report on Form 10-K filed with the public was 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.Securities & Exchange Commission (SEC) on March 14, 2023.

On February 12, 2021 our Class A Common Stock, par value $0.001 per share (the “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 the over-allotment option, resulting in the Company selling an additional 250,000 shares of Class A Common Stock at a public offering price of $10.00 per share for aggregate gross proceeds of $2.5 million prior to deducting underwriting discounts, commissions, and other offering expenses.

~~Private Placement~~

On December 3, 2021, the Company completed a private placement with several investors, wherein a total of 1,169,288 shares of the Company’s Class A Common Stock were issued at a purchase price of $17.50 per share, with each investor also receiving a warrant 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”), for a total purchase price of approximately $20.5 million (the “Offering”). The Purchaser Warrants are 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.

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 approved products, if any. These condensed 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 ~~$3.5~~$4.6 million and ~~$3.1~~$3.5 million for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively. In addition, as of March 31, ~~2022,~~2023, the Company had an accumulated deficit of ~~$47.4~~$67.4 million. The Company expects to continue to generate operating losses for the foreseeable future.

As of March 31, ~~2022,~~2023, the Company had cash, and cash equivalents of ~~$22.1~~$5.0 million and ~~short-term investments~~marketable securities of ~~$8.5~~$8.7 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 and investments as of March 31, 2022 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 these condensed financial 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:

●

the Company may seek additional capital in the private and/or public equity markets, to continue its operations, respond to competitive pressures, develop new products and services, and to support new strategic partnerships. The Company is evaluating additional equity/debt financing opportunities on an ongoing basis and may execute them when appropriate. However, there can be no assurances that the Company can consummate such a transaction or consummate a transaction at favorable pricing;

●

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 ~~issuance of these financial statements.~~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 condensed financial statements of the Company were prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”).

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

Use of estimates:

The presentation of condensed 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 condensed 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 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 a net unrealized loss in the statement of comprehensive loss for the three month period ended March 31, 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.

~~Short-term investments:~~Marketable securities:

~~Short-term investments~~Marketable securities at March 31, ~~2022~~2023 and December 31, ~~2021~~2022 consisted of marketable fixed income securities, primarily corporate bonds, as well as U.S. Government and agency obligations which are categorized as ~~trading~~available for sale securities and are thus marked to market and stated at fair value in accordance with ASC 820 Fair Value Measurement. These investments are considered Level 1 and Level 2 investments within the ASC 820 fair value hierarchy. The fair value of Level 1 investments, including cash equivalents, money funds and U.S. government securities, are substantially based on 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 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 the fair value hierarchy. Interest and dividends are recorded when earned. Realized gains and losses on investments are determined by specific identification and are recognized as incurred in the condensed statement of operations. Changes in net unrealized gains and losses are reported in ~~the statement of operations within~~ other ~~income and losses, in the current period~~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 ~~not significant~~$0.3 million and $0 for the three months ended March 31, 2023 and 2022, ~~and 2021.~~respectively.

Accounts and grants receivable:

Accounts and grants receivable include amounts due from customers, granting institutions and others. The amounts as of March 31, ~~2022~~2023, and December 31, ~~2021~~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,
2022 December 31,
2021
National Institutes of Health – Grant $ 96 $ 55
Total $ 96 $ 55

	March 31, 2023		December 31, 2022
National Institutes of Health – Grant	$	96	$	218
Total	$	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 are recorded in stockholders’ equity as a reduction of proceeds generated as a result of the offering.

Property and equipment:

Property and equipment, including improvements that extend useful lives of related assets, are 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 9) and legal costs incurred related to patents and trademarks. License agreements have been recorded at the value of cash consideration, common stock and membership units transferred to the respective parties when acquired.

Payments for license agreements are amortized using the straight-line method over the estimated term of the 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 during the three months ended March 31, ~~2022~~2023 and ~~2021.~~2022.

Deferred revenue:

The unearned portion of advanced grant funds and prepayments for Clinical trial revenue, which will be recognized as revenue when the Company meets the respective performance obligations, has been presented as deferred revenue in the accompanying condensed balance sheets. For the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, the Company recognized ~~$19,000~~$0 and ~~nil~~$19,000 of funds that were previously classified as deferred revenue ~~respectively.~~($0.1 million and $0 million, respectively for the three months ended March 31, 2023 and 2022, respectively). Due to the MSCRF – Technology Development Corporation (TEDCO) – grant Accute Respiratory Distress Syndrome (ARDS) program being discontinued, the $0.4 million recorded as deferred revenue will be reversed when the funds are returned to MSCRF – TEDCO.

Revenue recognition:

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

Revenue by source (in thousands):

Three months ended
March 31,
2022 2021
National Institutes of Health – Grant $ 41 $ -
Clinical trial revenue 310 165
Alzheimer’s Association – Grant - 170
Maryland – TEDCO – Grant¹ 19 41
Total $ 370 $ 376

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

	Three months ended March 31,
	2023		2022
NIH - grant	$	41	$	41
Clinical trial revenue		238		310
MSCRF – TEDCO - grant		-		19
Total	$	279	$	370

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 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 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~~marketable securities and accounts and grants receivable. Cash and cash equivalents are held in 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 condensed financial statements for periods prior 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 $0 for the three months ended March 31, ~~2022~~2023 and ~~2021~~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~~offset created by the ~~future.~~Company’s valuation allowance.

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, ~~2022~~2023 and December 31, ~~2021,~~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 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.

Neither the Company’s stock options nor its restricted stock units (“RSUs”) 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.

~~Comprehensive Loss~~

~~Comprehensive loss was equal to net loss for the three months ended March 31, 2022 and 2021.~~

3. ~~Short-term investments~~Marketable securities

The following is summary of ~~short-term investments~~Marketable securities that the Company measures at fair value:

	Fair Value at March 31, 2022								Fair Value at March 31, 2023
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total

U.S. Treasury obligations		398,039		-		-		398,039	$	98,133	$	-	$	-	$	98,133
U.S. government agencies		-		1,207,746		-		1,207,746		-		1,064,992		-		1,064,992
Corporate and foreign bonds		-		6,842,936		-		6,842,936		-		7,530,053		-		7,530,053
Money market funds⁽¹⁾		1,334,906		-		-		1,334,906		1,190,450		-		-		1,190,450
Total short-term investments	$	1,732,945	$	8,050,682	$	-	$	9,783,627
Accrued income										66,862		-		-		66,862
Total Marketable securities									$	1,355,445	$	8,595,045	$	-	$	9,950,490

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

	Fair Value at December 31, 2021								Fair Value at December 31, 2022
	Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total

U.S. Treasury obligations		401,290		-		-		401,290	$	96,981	$	-	$	-	$	96,981
U.S. government agencies		-		1,424,477		-		1,424,477		-		1,250,003		-		1,250,003
Corporate and foreign bonds		-		7,507,705		-		7,507,705		-		7,807,655		-		7,807,655
Money market funds²		576,742		-		-		576,742
Total short-term investments	$	978,032	$	8,932,182	$	-	$	9,910,214
Money market funds⁽¹⁾										607,263		-		-		607,263
Accrued income										64,815		-		-		64,815
Total Marketable securities									$	769,059	$	9,057,658	$	-	$	9,826,717

⁽²⁾	Money market funds are included in cash and cash equivalents in the condensed balance sheet.

As of March 31, ~~2022~~2023, and December 31, ~~2021,~~2022, the Company reported accrued interest receivable related to ~~short-term investments~~Marketable securities of ~~$57,064~~$66,862 and ~~$52,484,~~$64,815, respectively. These amounts are recorded in other assets on the ~~Balance Sheets~~condensed balance sheets and are not included in the carrying value of the ~~short-term investments.~~Marketable securities.

4. Property and equipment, net

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

	Useful Lives	March 31, 2022		December 31, 2021		Useful Lives	March 31, 2023		December 31, 2022
Leasehold improvements	10 years	$	4,318	$	4,318	10 years	$	4,328	$	4,328
Furniture/Lab equipment	7 years		1,770		1,724	7 years		2,303		2,264
Computer equipment	5 years		28		28	5 years		49		46
Software/Website	3 years		38		38	3 years		38		38
Total property and equipment			6,154		6,108			6,718		6,676
Less accumulated depreciation and amortization			3,188		3,046			3,908		3,727
Property and equipment, net		$	2,966	$	3,062		$	2,810	$	2,949

Depreciation and amortization expense amounted to approximately ~~$0.1~~$0.2 million and ~~$0.2~~$0.1 million for the ~~three months~~three-month periods ended March 31, ~~2022~~2023 and ~~2021, respectively.~~2022.

5. Intangible assets, net

Major components of intangible assets as of March 31, ~~2022~~2023, are as follows (in thousands):

	Useful Lives	Cost		Accumulated Amortization			Total		Useful Lives	Cost		Accumulated Amortization			Total
License agreements	20 years	$	2,043	$	(517	)	$	1,526	20 years	$	2,044	$	(742	)	$	1,302
Patent Costs			686		-			686			951		-			951
Trademark costs			149		-			149			172		-			172
Total		$	2,878	$	(517	)	$	2,361		$	3,167	$	(742	)	$	2,425

Major components of intangible assets as of December 31, ~~2021~~2022, are as follows:

	Useful Lives	Cost		Accumulated Amortization			Total		Useful Lives	Cost		Accumulated Amortization			Total
License agreements	20 years	$	2,043	$	(473	)	$	1,570	20 years	$	2,043	$	(685	)	$	1,358
Patent Costs			615		-			615			887		-			887
Trademark costs			149		-			149			164		-			164
Total		$	2,807	$	(473	)	$	2,334		$	3,094	$	(685	)	$	2,409

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

Future amortization expense for intangible assets as of March 31, ~~2022~~2023, is approximately as follows (in thousands):

Year Ending December 31,	Amount		Amount
2022 (remaining 9 months)	$	168
2023		224
2023 (remaining nine months)			$	168
2024		224		224
2025		224		224
2026		224		224
2027				224
Thereafter		462		238
Total	$	1,526	$	1,302

6. Leases

The Company records a Right-of-use (ROU) asset and a lease liability related to its operating leases (there are no finance leases). The Company’s corporate office lease expires in March 2027. As of March 31, 2023, the ROU asset and lease liability were approximately $1.5 million and $2.5 million, respectively. As of December 31, 2022, the ROU asset and lease liability were approximately ~~$1.7~~$1.5 million and ~~$3.0 million, respectively. As of December 31, 2021, the ROU asset and lease liability were approximately $1.8 million and $3.1~~$2.6 million, respectively.

Future minimum payments under the operating leases as of March 31, ~~2022~~2023, are as follows (in thousands):

Year Ending December 31,	Amount		Amount
2022 (remaining nine months)	$	506
2023		687
2023 (remaining nine months)			$	518
2024		702		702
2025		718		718
2026		735		735
Thereafter		185
2027				185
Total		3,533		2,858
Less: Interest		523		392
Present Value of Lease Liability	$	3,010	$	2,466

During each of the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, the Company incurred approximately $0.3 million of total lease costs, ~~respectively~~ that are included in the general and administrative expenses in the condensed statements of operations.

On July 1, 2020, the Company entered into a sublease agreement for a portion of its leased space for a one-year period ending June 30, 2021, with ~~three~~ optional one-year renewal periods, and $10,000 in monthly payments. The sublease was terminated in the second quarter of 2022. For the three months ended March 31, ~~2022, $30,000~~2023, $0 was recognized as sublease income as compared to $30,000 for the same period in 2022. For the year ended December 31, 2022, $27,000 was recognized as sublease income, due to the Company receiving $17,000 of equipment and ~~is included in other income in the accompanying statements~~$10,000 of ~~operations.~~security deposit forfeited.

7. Stockholders’ Equity

Class A Common Stock

On ~~February 12, 2022,~~January 3, 2023, a total of ~~8,750~~20,161 RSUs ~~vested that were previously granted to members of the Company’s Board of Directors upon the completion of the IPO vested.~~

~~On January 3, 2022, a total of 35,246 RSUs vested that previously had been~~ granted in connection with the Company’s IPO vested, of which ~~29,614~~18,005 were held by Company employees. ~~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 ~~$12.09~~ closing share price as of the vesting date ~~(January~~($3.37 on January 3, ~~2022)~~2023) and a tax liability is calculated based on each individual’s tax bracket. As a result, on January 5,3, 2023, the Company recorded a tax liability of $15,000 for the employees and a corresponding tax liability for the Company of $2,000. In total, the Company paid $17,000 for employee and employer taxes that resulted from the vesting of RSUs. In order to cover the employee tax liability, the Company withheld 4,431 shares of Class A Common Stock owned by the employees upon vesting. The shares withheld are available for reissuance pursuant to the 2021 Incentive Plan.

On November 16, 2022, the Company accounted for but had not issued 48,140 RSUs convertible to unregistered shares of Class A Common Stock, with an aggregate value of $207,000 as payment for accrued expenses under a consulting agreement with Dr. Hare.

On October 3, 2022, a total of 20,157 RSUs granted in connection with the Company’s IPO vested, of which 18,001 were held by Company employees. Based on the closing price of $3.75 on October 3, 2022, the Company recorded a tax liability of $16,000 for the employees and a corresponding tax liability for the Company of $2,000. In total, the Company paid $18,000 for employee and employer taxes that resulted from the vesting of RSUs. In order to cover the employee tax liability, the Company withheld 4,204 shares of Class A Common Stock owned by the Company’s employees upon vesting. The shares withheld are available for reissuance pursuant to the 2021 Incentive Plan.

On July 1, 2022, a total of 20,158 RSUs granted in connection with the Company’s IPO vested, of which 18,002 were held by Company employees. Based on the closing price of $5.94 on July 1, 2022, the Company recorded a tax liability of $26,000 for the employees and a corresponding tax liability for the Company of $2,000. In total, the Company paid $28,000 for employee and employer taxes that resulted from the vesting of RSUs. In order to cover the employee tax liability, the Company withheld 4,726 shares of Class A Common Stock owned by the Company’s employees upon vesting. The shares withheld are available for reissuance pursuant to the 2021 Incentive Plan.

On June 22, 2022, a total of 27,854 RSUs were granted to the Company’s former Chief Executive Officer, Geoff Green, in exchange for $170,000 of compensation, as agreed upon in connection with his separation.

On June 3, 2022, a total of 26,666 RSUs that previously had been granted to our Chief Financial Officer and General Counsel vested. RSUs are taxable upon vesting based on the market value on the date of vesting. Based on a closing price of $8.73 on June 3, 2022, the Company recorded a tax liability of $55,000 for the employees and a corresponding tax liability for the Company of $2,000. In total, the Company paid $57,000 for employee and employer taxes resulting from the vesting of RSUs. In order to cover the employee tax liability, the Company withheld 6,254 shares of Class A Common Stock owned by the employees upon vesting. The shares withheld are available for reissuance pursuant to the 2021 Incentive Plan.

On April 4, 2022, a total of 1,167 RSUs that previously had been granted to our Chief Medical Officer vested. Based on the closing price of $12.85 on April 3, 2022, the Company recorded a tax liability of $5,000 for the employee and a corresponding tax liability for the Company of $1,000. In total, the Company paid $6,000 for employee and employer taxes that resulted from the vesting of RSUs. In order to cover the employee tax liability, the Company withheld 357 shares of Class A Common Stock owned by the Chief Medical Officer upon vesting. The shares withheld are available for reissuance pursuant to the 2021 Incentive Plan.

On April 1, 2022, a total of 31,016 RSUs granted in connection with the Company’s IPO vested, of which 26,360 were held by Company employees. Based on the closing price of $15.61 on April 1, 2022, the Company recorded a tax liability of $105,000 for the employees and a corresponding tax liability for the Company of $14,000. In total, the Company paid $119,000 for employee and employer taxes that resulted from the vesting of RSUs. In order to cover the employee tax liability, the Company withheld 6,222 shares of Class A Common Stock owned by the Company’s employees upon vesting. The shares withheld are available for reissuance pursuant to the 2021 Incentive Plan.

On April 1, 2022, a total of 2,500 RSUs that were previously granted to a member of the Company’s Board of Directors vested.

On February 12, 2022, a total of 8,750 RSUs that were previously granted to members of the Company’s Board of Directors upon the completion of the IPO vested.

On January 3, 2022, a total of 35,246 RSUs granted in connection with the Company’s IPO vested, of which 29,614 were held by Company employees. Based on the closing price of $12.09 on January 3, 2022, the Company recorded a tax liability of $92,000 for the employees and a corresponding tax liability for the Company of $14,000. In total, the Company paid $106,000 for employee and employer taxes that resulted from the vesting of RSUs. In order to cover the employee tax liability, the Company withheld 10,627 shares of Class A Common Stock ~~shares owned by the Company’s employees upon vesting. The shares received have been transferred into the 2021 Incentive Plan.~~

During the year ended December 31, 2021 and prior to the Corporate Conversion, the Company issued 1,130 Series C Common Membership Units (“Series C Units”), as payment for existing consulting agreements, with an aggregate value of $0.1 million. As part of the Corporate Conversion, 62,764 outstanding Series C units (which includes the units referenced in the prior sentence) converted into 338,030 shares of Class A Common Stock.

Also, during the year ended December 31, 2021, the Company issued 61,379 and 110,387 unregistered shares of Class A Common Stock, with an aggregate value of less than $0.5 million and $0.8 million, respectively, as payment under consulting and license agreements.

During the year ended December 31, 2021, 1,812 stock options were exercised for Class A Common Stock shares at an average exercise price of $5.73 for $10,383. Also, during the year ended December 31, 2021, 51,061 warrants were exercised for Class A Common Stock shares at an exercise price of $12.00 for $612,732.

On October 1, 2021, a total of 35,256 RSUs granted to employees and directors vested, of which 33,022 were held by Company employees. 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 $3.65 closing price as of the vesting date (October 1, 2021) and a tax liability is calculated based on each individual’s tax bracket. As a result, on October 5, 2021, the Company recorded a tax liability of $452,000 for the employees and a corresponding tax liability for the Company of $38,000. In total, the Company paid $489,000 for employee and employer taxes that resulted from the vesting of RSUs. In order to cover the employee tax liability, the Company withheld 123,662 Class A Common Stock shares owned by the Company’s employees upon vesting. The shares withheld ~~have been transferred into~~are available for reissuance pursuant to the 2021 Incentive Plan.

Class B Common Stock

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 each share of Class B Common Stock into one share of Class A Common Stock at any time at the holder’s option. Class B Common Stock is not publicly tradable.

During the three months ended March 31, ~~2022,~~2023, shareholders exchanged ~~117,772~~20,000 shares of Class B ~~common stock~~Common Stock for ~~117,772~~20,000 shares of Class A ~~common stock.~~Common Stock. During the year ended December 31, 2022, shareholders exchanged 811,749 shares of Class B Common Stock for 811,749 shares of Class A Common Stock.

Warrants

As part of the IPO, the underwriter received warrants to purchase 106,400 shares of Class A Common Stock. The warrants are exercisable at any time and from time to time, in whole or in part, during the four and a half-year period commencing August 12, 2021, at a price of $12.00 per ~~share. Total grant date~~share and the fair value of 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, 2021, 51,061 warrants have been exercised for Class A Common Stock shares at an exercise price of $12.00 for $612,732.

As part of the ~~November~~ 2021 ~~private placement,~~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~~purchaser warrants are 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 the purchase warrants. 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.

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, the Company may grant cash and equity incentive awards to eligible service providers in order to attract, motivate and retain the talent for which the Company competes. ~~The material terms of the 2021 Incentive Plan are summarized below.~~

~~Prior~~On March 1, 2023, the company granted Mr. Hashad a signing bonus of 50,000 Restricted Stock Units, which shall vest in quarterly installments on each of April 1, 2023, July 1, 2023, September 1, 2023, and December 31, 2023. Mr. Hashad will also be eligible to 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, in accordance with the ~~IPO, on January 29, 2021, the Board approved the granting of 159,817 Series C RSUs under the Company’s existing 2017 Longeveron LLC Incentive Plan (the “2017 Incentive Plan”), which, as part~~terms of the ~~Corporate Conversion, converted into 855,247~~Longeveron 2021 Incentive Award Plan.

On November 16, 2022, the Company accounted for but had not issued 48,140 RSUs ~~exercisable for~~convertible to unregistered shares of Class A Common ~~Stock. Based~~Stock, with an aggregate value of $207,000 as payment for accrued expenses under a consulting agreement with Dr. Hare.

On September 6, 2022, the Company granted Mr. Bailey received an equity incentive award of 20,000 RSUs. The RSUs will vest 25% upon the first-year anniversary of his first day of employment with Longeveron, with 25% vesting thereafter on the second, third and fourth anniversaries of his employment. In each case, the vesting of the equity awards will be subject to Mr. Bailey’s continued service through the applicable vesting dates. RSUs shall be expensed on a quarterly basis at the rate of $5,838 for the quarterly vesting amount of 1,250 RSUs, with a price per share of $4.67 (the closing price of the Company’s stock on September 6, 2022).

On June 22, 2022, the Company granted $170,000 of separation compensation to Mr. Green (Mr. Green resigned as CEO effective June 1, 2022), which were converted into 27,854 RSUs. The RSU were issued based on the three-day average of the fair market value prior to the time of grant, June 22, 2022, of $6.10.

On June 3, 2022, the Company granted a bonus to Mr. Clavijo and Mr. Lehr in the form of RSUs. Mr. Clavijo and Mr. Lehr were granted 40,000 RSUs each that vested one-third at the grant date, with the remaining two thirds vesting on each anniversary of the grant date. The RSU were issued based on a fair market value at the time of grant, June 3, 2022, of $8.73.

On April 4, 2022, the Company appointed K. Chris Min, M.D., Ph.D. as its Chief Medical Officer. Dr. Min’s employment agreement provides annual base salary of $350,000, and he will be eligible to receive a performance bonus equal to 30% of his base salary, prorated for his first year of employment. Dr. Min received a $60,000 signing bonus, with 50% of this amount paid in RSUs and 50% in stock options. Dr. Min also received two equity incentive awards: 150,000 RSUs and a stock option award exercisable for 50,000 shares. Each award will vest 25% upon the first-year anniversary of his first day of employment with Longeveron, with 25% vesting thereafter on the second, third and fourth anniversaries of his employment. In each case, the vesting of the equity awards will be subject to Dr. Min’s continued service through the applicable vesting dates. RSUs shall be expensed on a quarterly basis at the rate of $0.1 million for the quarterly vesting amount of 9,375 RSUs, with a price per share of $12.85 (the closing price of the Company’s stock on April 4, 2022). Stock options shall be expensed based upon a ~~third-party valuation,~~Black-Scholes calculation, the ~~calculated fair value~~price per share to be expensed was $11.34 and a total cost of ~~each January 2021 RSU was $9.00.~~$0.6 million would be expensed ratably over 48 months.

Generally, the RSUs vest upon attainment of a time-vesting event, by which the RSUs vest in 25% increments per year, on each of the first, second, third and fourth anniversaries of the date of grant, assuming continued service. Such yearly vesting will vest pro-rata per quarter at the end of each quarter. The RSUs granted in January of 2021 included accelerated time-based vesting (as having been earned for prior years of service, and hence were treated as earned “catch-up” awards), and an additional vesting requirement whereby the holder must remain employed by the Company as of the IPO settlement date, which was the third quarterly settlement date following the Company’s IPO (October 1, 2021).

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

On July 20, 2021, the Company granted a bonus for the completion of the IPO to Mr. Green, Mr. Lehr and Dr. Hare of $100,000, $75,000 and $75,000. The bonus was paid out in cash and RSUs with Mr. Green, Mr. Lehr and Dr. Hare receiving 8,223, 6,167 and 12,335 RSUs each, respectively. The RSU were issued based on a fair market value at the time of grant, July 20, 2021, of $6.08.

As of March 31, ~~2022~~2023, and December 31, ~~2021,~~2022, the Company had ~~205,051~~356,297 and ~~196,751,~~329,746, respectively RSUs outstanding (unvested).

RSU activity for the three months ended March 31, ~~2022~~2023, was as follows:

	Number of RSUs
Outstanding (unvested) at December 31, ~~2021~~2022		~~196,751~~329,746
RSU granted		-50,000
RSUs vested		~~44,006~~
~~RSUs converted to Class A common stock~~		(~~35,256~~23,149	)
RSU expired/forfeited		-
Outstanding (unvested) at March 31, ~~2022~~2023		~~205,501~~356,597

Stock Options

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

The fair value of the options issued are estimated using the Black-Scholes option-pricing model and have the following assumptions: a dividend yield of 0%; an expected life of 10 years; volatility of 95%; and risk-free interest rate based on the grant date ranging from of 1.23% to ~~2.14%~~3.68%. Each option grant made during ~~2021~~2023 and 2022, will be expensed ratably over the option vesting periods, which approximates the service period.

As of March 31, 2023 and December 31, 2022, the Company has recorded issued and outstanding options to purchase a total of ~~410,075~~470,191 shares of Class A Common Stock pursuant to the 2021 Incentive Plan, at a weighted average exercise price of $6.51 per share. Also, as of December 31, 2021, the Company has recorded issued and outstanding options to purchase a total of 304,449 shares of Class A Common Stock pursuant to the 2021 Incentive Plan, at a weighted average exercise price of $5.96$7.07 per share.

For the three months ended March 31, ~~2022:~~2023:

	Number of Stock Options
Stock options vested (based on ratable vesting)		~~56,762~~194,120
Stock options unvested		~~353,313~~276,071
Total stock options outstanding at March 31, ~~2022~~2023		~~410,075~~470,191

For the year ended December 31, ~~2021:~~2022:

	Number of Stock Options
Stock options vested (based on ratable vesting)		~~59,773~~151,258
Stock options unvested		~~244,676~~318,933
Total stock options outstanding at December 31, ~~2021~~2022		~~304,449~~470,191

Stock Option activity for the three months ended March 31, ~~2022~~2023, was as follows:

	Number of Stock Options			Weighted Average Exercise Price		Number of Stock Options		Weighted Average Exercise Price
Outstanding at December 31, 2021		304,449		$	5.96
Outstanding at December 31, 2022							470,191	$	7.07
Options granted		106,825		$	8.05		-		-
Options exercised		-			-		-		-
Options expired/forfeited		(1,199	)	$	5.79		-		-
Outstanding at March 31, 2022		410,075		$	6.51
Outstanding at March 31, 2023							470,191	$	7.07

On ~~January 6,~~December 21, 2022, the Company granted ~~awards~~an award of ~~84,825~~5,000 Class A Common Stock options to ~~employees.~~each of its directors (a total of 45,000). The stock option ~~awards have~~award has a four-year vesting ~~periods,~~period, vesting 25% per year, and ~~have~~has an exercise price of ~~$10.00.~~$3.00. Based upon a Black-Scholes calculation, the price per share to be expensed was ~~$8.78~~$2.67 and a total cost of ~~$0.7~~$135,000 that would be expensed ratably over 48 months.

On November 16, 2022, the Company granted an award of 22,843 Class A Common Stock options to Mr. Lehr. The stock option award has a four-year vesting period, vesting 25% per year, and has an exercise price of $4.30. Based upon a Black-Scholes calculation, the price per share to be expensed was $2.94 and a total cost of less than $0.1 million would be expensed ratably over 48 months.

On September 6, 2022, the Company granted an award of 10,000 Class A Common Stock options to an employee. The stock option award has a four-year vesting period, vesting 25% per year, and has an exercise price of $4.67. Based upon a Black-Scholes calculation, the price per share to be expensed was $4.15 and a total cost of less than $0.1 million would be expensed ratably over 48 months.

On June 3, 2022, the Company granted an award of 5,000 Class A Common Stock options to Mr. Lehr. The stock option award vested upon the grant date and has an exercise price of $8.73. Based upon a Black-Scholes calculation, the price per share to be expensed was $7.73 and a total cost of less than $0.1 million was expensed on the grant date.

On March 14, 2022, the Company granted an award of 22,000 Class A Common Stock options to employees. The stock option award has a four-year vesting period, vesting 25% per year, and has an exercise price of $5.94. Based upon a Black-Scholes calculation, the price per share to be expensed was $5.23 and a total cost of less than $0.1 million would be expensed ratably over 48 months.

On January 6, 2022, the Company granted awards of 84,825 Class A Common Stock options to employees. The stock option awards have four-year vesting periods, vesting 25% per year, and have an exercise price of $10.00. Based upon a Black-Scholes calculation, the price per share to be expensed was $8.78 and a total cost of $0.7 million would be expensed ratably over 48 months.

For the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, the equity-based compensation expense amounted to approximately ~~$0.5~~$0.4 million and ~~$1.3~~$0.5 million, respectively, which is included in the research and development and general and administrative expenses in the condensed statements of operations for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively.

As of March 31, ~~2022,~~2023, the remaining unrecognized equity-based compensation (which includes RSUs and stock options) of approximately ~~$3.6~~$3.2 million will be recognized over approximately ~~3.75~~3.9 years.

9. Commitments and Contingencies

Master Services Agreements:

As of March 31, 2023, the Company had three active master services agreements with third parties to conduct its clinical trials and manage clinical research programs and clinical development services. The Company expects these agreements or amended current agreements to have total expenditures of approximately $3.5 million over the next two years.

As of December 31, 2022, the Company had ~~three~~two 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 approximately ~~$3.6~~$2.9 million over the next two years.

~~As of December 31, 2021,~~ On March 10, 2022, the Company had two 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 entered into a clinical studies agreement with a third party in conjunction with an upcoming clinical trial in Japan. The agreement provides for payments totaling $1.0 million over the course of two years.

Consulting Services Agreement:

On November 20, 2014, the Company entered into a ten-year consulting services agreement with Dr. Joshua Hare, its CSO. Under the agreement, the Company has agreed to pay the CSO $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 convertible to unregistered shares of Class A Common Stock, with an aggregate value of $0.2 million as payment for accrued expenses under the consulting agreement with the CSO. As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company had an accrued balance due to the CSO of ~~$0.2~~less than $0.1 million.

On February 16, 2022, the Company entered into a ten-month extension to a consulting arrangement with GVC Strategies a Company owned by Neil Hare, a member of the Board of Directors and brother of Dr. Joshua Hare, to provide public relations services. Under the terms of this agreement GVC Strategies receives a $10,000 per month advance retainer. As of March 31, 2022 and December 31, 2021, the Company did not have an outstanding balance.

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 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% 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. As of March 31, ~~2022,~~2023 and December 31, ~~2021,~~2022, the Company owed less than $0.1 million, pursuant to this agreement, which is included in accounts payable in the ~~accompanying~~ March 31, ~~2022~~2023 and December 31, ~~2021~~2022 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-related 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 IMSCs, all SOPs 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 fifty thousand dollars, 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, 2022, the Company had accrued $46,667 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.

~~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~~Common Stock 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 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 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. To date, the Company has made payments totaling $140,000 to UM, and as of March 31, 2023 and December 31, 2022, we had accrued $92,000 and $50,000 in milestone fees payable to UM, respectively and $100,000 for patent related reimbursements based on the estimated progress to date.

CD271

On December 22, 2016, the Company entered into an exclusive license agreement with an affiliated entity of 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+ technology is being capitalized and amortized as incurred over 20 years. There were no license fees due ~~during the three months ended~~for March 31, ~~2022 or year ended~~2023 and December 31, ~~2021~~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.

Contingencies – Legal

On September 13, 2021, the Company and certain of our directors and officers were named as defendants in a securities lawsuit filed in the U.S. District Court for the Southern District of Florida and brought on behalf of a purported class. The suit alleges there were materially false and misleading statements made (or omissions of required information) in the Company’s 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 federal securities laws. The action seeks damages on behalf of a proposed 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 March 31, 2023, and included in accrued expenses on the March 31, 2023 condensed balance sheet. The ~~Company believes, that these allegations~~parties are ~~without merit and intends to vigorously defend against them. The Company has not determined losses resulting from this lawsuit as it is~~ in the ~~early stages~~process of documenting the settlement and ~~the ultimate outcome or range of losses, if any, cannot currently~~full release, which will be ~~determined.~~subject to Court approval. Legal expenses incurred in ordinary business activities are reported within general and administrative expenses.

~~Contingencies – COVID-19 Pandemic~~

The COVID-19 outbreak has adversely impacted, and could continue to adversely impact the Company’s ability to conduct business in the future. In December 2019, it was first reported that there had been an outbreak of a novel strain of coronavirus, SARS-CoV-2, COVID-19, in China. As the COVID-19 pandemic evolved, national and local governments enacted various measures, including travel restrictions or bans, restrictions on events or gatherings, temporary closure of non-essential businesses, “social distancing” requirements, vaccine and mask mandates, and various other requirements designed to slow the spread of COVID-19. While many of these measures have been eased, the extent, severity, and overall duration of the pandemic, including its phases of resurgence and the introduction of new variants, some of which may be more transmissible or virulent, are unknown. The impacts and potential impacts from the COVID-19 pandemic and associated protective measures that have had, continue to have, or could directly or indirectly have, a material adverse effect on our business include:

●

~~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 will continue to impact the Company’s results will depend on future developments, which are highly uncertain and cannot be predicted, and the Company cannot provide any assurance that the ongoing pandemic will not have a material adverse impact on the Company’s operations or future results, or filings with regulatory health authorities.

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 instructed all employees who could perform their essential employment duties from home to do so. The Company’s laboratory scientists, cell processing scientists and other manufacturing personnel continued to work from the Company GMP facility on a day-to-day basis, and as such cell production was minimally impacted. When the pandemic began to emerge in the U.S., most of the Company’s ongoing clinical 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 the Company primarily enrolls elderly subjects in the trials, who are at particular risk for poor outcomes related to COVID-19 infection, the Company experienced some disruption in executing the follow-up visits in Company protocols and the Company may continue to experience difficulty in enrolling elderly subjects in upcoming trials due to ongoing risk. While the Company believes the number of instances where a visit was missed completely is small, the Company cannot predict whether this 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.

10. 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 of service. Contributions to the Plan by the Company are at the discretion of the Board of Directors.

The Company contributed approximately ~~$32,000~~$38,000 and ~~$16,000~~$32,000 to the Plan during the ~~year~~three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively.

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:

	Three months ended March 31,				Three months ended March 31,
	2022		2021		2023		2022
Equity awards		610		869
RSUs						356		306
Stock options						470		304
Warrants		1,271		106		1,271		1,271
Total		1,881		975		2,097		1,881

12. Subsequent Events

On April ~~4, 2022,~~3, 2023, a total of 10,648 RSUs granted in connection with the Company’s IPO vested, of which 9,570 were held by Company employees. Based on the closing price of $2.61 on April 3, 2023, the Company ~~appointed K. Chris Min, M.D., Ph.D. as its Chief Medical Officer. Dr. Min’s employment agreement provides annual base salary~~recorded a tax liability of ~~$350,000, and he will be eligible to receive a performance bonus equal to 30% of his base salary, prorated~~$7,000 for ~~his first year of employment. Dr. Min received a $60,000 signing bonus, with 50% of this amount paid in RSUs and 50% in stock options. Dr. Min also received two equity incentive awards; 150,000 RSUs~~the employees and a ~~stock option award exercisable~~corresponding tax liability for ~~50,000 shares. Each award will vest 25% upon~~ the ~~first year anniversary~~Company of ~~his first day of employment with Longeveron, with 25% vesting thereafter on~~$2,000. In total, the ~~second, third~~Company paid $9,000 for employee and ~~fourth anniversaries of his employment. In each case,~~employer taxes that resulted from the vesting of RSUs. In order to cover the ~~equity awards will be subject to Dr. Min’s continued service through~~employee tax liability, the ~~applicable vesting dates. RSUs shall be expensed on a quarterly basis at the rate~~Company withheld 2,514 shares of ~~$0.1 million for the quarterly vesting amount of 9,375 RSUs, with a price per share of $12.85 (the closing price of~~Class A Common Stock owned by the Company’s ~~stock on April 4, 2022). Stock options shall be expensed based~~employees upon ~~a Black-Scholes calculation,~~vesting. The shares withheld are available for reissuance pursuant to the ~~price per share to be expensed was $11.34 and a total cost of $0.6 million would be expensed ratably over 48 months.~~2021 Incentive Plan.

On ~~May 3, 2022, Geoff Green,~~April 18, 2023, the ~~Company’s~~Company finalized the Separation Agreement dated March 31, 2023, for Dr. Min (Company’s Chief ~~Executive Officer (“CEO”) provided notice~~Medical Officer). In part for his agreement to a general release the Company agreed to pay Dr. Min: $112,000 as severance compensation and the immediate acceleration and vesting of ~~his intention to step down from his position,~~40,000 RSUs that were previously granted.

On April 19, 2023, the Company finalized the Separation Agreement effective June ~~1, 2022.~~9, 2023, for Mr. Clavijo (Company’s Chief Financial Officer). In ~~connection with~~part for his agreement to a general release the Company agreed to pay Mr. ~~Green’s departure,~~Clavijo $275,000 as severance compensation, three months of payment for COBRA insurance coverage and the ~~Board~~immediate acceleration and vesting of ~~Directors has unanimously appointed Dr. Min to serve as interim CEO beginning June 1, 2022, until such time as a permanent successor has been identified.~~6,690 RSUs that were previously granted.

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. 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;~~candidates in the U.S., Japan and other jurisdictions;

	●	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;

	●	~~the effect that global pathogens could have on financial markets, materials sourcing, patients, governments and population (e.g., COVID-19);~~

	●	our need to raise additional capital, the difficulties we may face in obtaining access to capital, and the dilutive impact it may have on our investors;

	●	our financial performance; 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, ~~2021,~~2022, filed with the SEC on March ~~11,~~ 14, 2023 (“2022 ~~(“2021~~ 10-K”). Operating results are not necessarily indicative of results that may occur in future periods.

Overview and Recent Developments

Overview

We are a clinical stage biotechnology company developing ~~cellular therapies for specific aging-related and life-threatening conditions. Our~~regenerative medicines to address unmet medical needs. The Company’s lead investigational product is ~~the LOMECEL-B™ cell-based~~Lomecel-B™ brand MSCs, an allogeneic medicinal signaling cell (MSC) therapy product ~~(“Lomecel-B”), which is derived~~isolated from ~~culture-expanded medicinal signaling cells (MSCs) that are sourced from~~the bone marrow of young, healthy adult donors. ~~We believe~~Lomecel-B™ has multiple modes of action that ~~by using the same cells that promote~~include pro-vascular, pro-regenerative, and anti-inflammatory mechanisms, promoting tissue repair ~~organ maintenance,~~ and ~~immune system function, we can develop safe and effective therapies for some~~healing with broad potential applications across a spectrum of ~~the most difficult disorders associated with the aging process and other conditions.~~disease areas.

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

With respect to HLHS, we are exploring the possibility that Lomecel-B™, when administered directly to the myocardium of affected infants, can improve outcomes in this devastating rare pediatric disease. The standard of care in HLHS is a series of three reconstructive surgeries, typically at 10 days, 4 months, and approximately 4 years of life. Despite these life-saving surgical interventions, it is estimated that only 50 to 60 percent of affected individuals survive until adolescence. The pro-vascular, pro-regenerative and anti-inflammatory properties of Lomecel-B™ may improve the function of the right ventricle in these infants. A previously published Longeveron Phase 1 open-label study (ELPIS I)¹ indicated that such a benefit may exist when outcomes were compared to historical controls. Longeveron is currently conducting a controlled study to determine the actual benefit of Lomecel-B™ in these patients.

Our philosophy is that healthy aging can be improved through regenerative medicine approaches. Life expectancy has substantially increased over the past century as a result of medical and public health advancements. However, this increase in longevity has not been paralleled by the number of years a person is expected to live in relatively good health, with limited chronic disease and disabilities of aging – a period known as healthspan. As we age, we ~~experience:~~experience a decline in our own stem cells; a decrease in immune system function, known as immunosenescence; diminished blood vessel functioning; chronic inflammation, known as “inflammaging”; and other aging-related declines. Our preliminary clinical data suggest that ~~Lomecel-B~~Lomecel-B™ can potentially address these problems through multiple mechanisms of action, or MOAs, that simultaneously target key aging-related processes.

Improving healthspan is an imperative for governmental health agencies. The National Institute on Aging (NIA), an institute of the National Institutes of Health (NIH), has promoted the concept of geroscience – the idea that aging itself is the biggest risk factor for aging-related human diseases and that aging can be approached as a treatable disease to improve healthspan. The geroscience hypothesis provides a strong rationale for the approach of treating underlying biological processes contributing to aging as a way to reduce disease burden and advance global human health. Our investments into developing and testing product candidates are aimed at reducing aging-related disease burden and improving healthspan.

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, European Heart Journal Open, 2023.

~~Our Strategy~~

Summary of Clinical Development Strategy

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

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~~Advance Lomecel-B~~Focus on the 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 ~~other regenerative medicine products to market. We are advancing Lomecel-B into later stage clinical trials for~~is being conducted in collaboration with the ~~purpose of achieving commercialization in one or more indications. Our studies throughout~~National Heart, Lung, and Blood Institute through grants from the clinical development process are intended to generate safety and efficacy data needed to advance these programs, and establish foundations for subsequent development and expansion into new areas. We will continue to leverage our technical and clinical expertise, and relationships with clinical investigators, treatment centers, and other key stakeholders, to explore new opportunities.NIH.

●

Continue to develop our existing international programs. We have selected Japan as our first non-U.S. territory for a randomized, double-blinded, placebo-controlled clinical trial to evaluate Lomecel-B™ for Aging-related frailty with the aim of receiving approval under the Act on the Safety of Regenerative Medicine (ASRM) based on previous clinical data from non-Japanese as well as this Phase 2 study in Japan. We may explore conditional or full approval in Japan of Lomecel-B under the Pharmaceuticals and Medical Devices Act (PMDA) for the treatment of Aging-Related Frailty in the future. 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.

●

Continue to pursue the therapeutic potential of Lomecel-B™ in Alzheimer’s disease (AD). We have previously conducted a small Phase 1b study in which it appeared that a single dose of Lomecel-B™ may preserve cognition in patients with mild AD as compared to those who received placebo treatment. We are now conducting a small multiple-dose Phase 2 randomized placebo-controlled study in mild AD patients to determine the safety of administering up to four doses of Lomecel-B™ in this aged population. In addition to establishing safety for further investigation, we will endeavor to measure any positive effects of Lomecel-B™ in mild AD patients through a combination of cognitive and imaging endpoints as well as to determine the extent of target engagement by Lomecel-B™ in this patient population.

●

Expand our manufacturing capabilities to commercial-scale production. We operate a current good manufacturing practice ~~(GMP) – compliant~~(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 should ~~Lomecel-B~~Lomecel-B™ achieve commercialization.

●

Non-dilutive funding. Our clinical programs have received over $16.0 million in competitive extramural grant awards ($11.9 million which has been directly awarded to us and which are recognized as revenue when the performance obligations are met) from the NIH, Alzheimer’s Association, and Maryland Stem Cell Research Fund (MSCRF). These prestigious funding awards are non-dilutive and allow us to collaborate with state and federal partners in pursuing safe and effective therapeutics for disorders that have few, if any, available approved treatments.

●

Continue to develop our existing international programs. We have selected Japan as our first non-U.S. territory for a randomized, double-blinded, placebo-controlled clinical trial to evaluate Lomecel-B for Aging Frailty. We may explore other indications in Japan, and potentially pursue Aging Frailty and other indications in additional international locations for further development and commercialization.

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~~Collaboration~~Collaborative arrangements and out-licensing opportunities. We will be opportunistic and consider entering into co-development, out-licensing, ~~commercialization~~ or other collaboration agreements for the purpose of eventually commercializing ~~Lomecel-B~~Lomecel-B™ and other products domestically and ~~internationally.~~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 ~~continue~~intend to actively explore promising potential additions to our ~~pipeline of product candidates.~~pipeline.

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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.

~~Impact of COVID-19 Pandemic~~Clinical Development Pipeline in 2023

We ~~continue to monitor how the COVID-19 pandemic is affecting our employees, business, and~~are currently in clinical ~~trials. During the initial stages associated with the spread~~development of COVID-19, we instructed all employees who could perform their essential employment duties from home to do so. Our laboratory scientists, cell processing scientists and other manufacturing personnel continued to work from our GMP facility and headquarters 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., most of our ongoing clinical 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 risksingle product, Lomecel-B™ for poor outcomes related to COVID-19 infection, we 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.three potential indications (See Figure 1).

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 in the Registry Trial remains lower than anticipated, due in part to pandemic-related effects on international travel.

Presently, several Longeveron employees continue to work from home either full time, or through a hybrid schedule, and we anticipate that this will continue for the foreseeable future. We expect that the COVID-19 pandemic may continue to impact our business, results of operations,Figure 1: Lomecel-B™ 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.pipeline

~~Recent Developments~~

~~Lomecel-B for Alzheimer’s Disease:~~

●

In January 2022, we initiated enrollment of a 48-patient, 4-arm, parallel design, randomized (1:1:1:1) Phase 2a clinical trial of Lomecel-B infusion in patients with mild Alzheimer’s disease. This study is intended to evaluate the safety of single and multiple administrations of Lomecel-B compared to placebo according to the following treatment groups:

~~Group 1 (n=12): Placebo infusion (zero cells) on day 0, weeks 4, 8~~

Hypoplastic Left Heart Syndrome (HLHS). Lomecel-B™ is being investigated in an ongoing Phase 2 clinical trial (ELPIS II) under FDA IND 017677. ELPIS II is a 38-subject, randomized, double-blind, controlled clinical trial designed to evaluate safety and 12

~~Group 2 (n=12): Lomecel-B infusion (25 million cells) on day 0, followed~~efficacy of Lomecel-B™ in conjunction with reconstructive surgery compared to surgery alone. The trial is funded in part by ~~placebo infusions at Weeks 4, 8~~the National Heart, Lung, and 12

~~Group 3 (n=12): Lomecel-B infusion (25 million cells) on day 0, weeks 4, 8, and 12~~

~~Group 4 (n=12): Lomecel-B infusion (100 million cells) on day 0, weeks 4, 8, and 12~~

●

~~Other endpoints~~Blood Institute (NHLBI, part of the NIH). The trial is continuing to enroll patients in the ~~Phase 2a trial include brain volumetry~~study and is being conducted as an investigator-initiated study led by ~~MRI, biomarkers relevant~~Dr. Sunjay Kaushal through the auspices of the NHLBI at seven academic sites. This year it is anticipated that an eighth site will be added to ~~inflammation and endothelial/vascular systems, and measures~~enhance the enrollment rate. We have not provided a projection for the date of ~~cognitive function. We currently plan~~completion of this study as enrollment to ~~activate up to 12 clinical sites to facilitate enrollment, and intend~~date has not been sufficient to provide ~~updates on anticipated enrollment rates as additional sites are activated, as well as trial completion guidance at~~such a ~~later date. Further details about the trial design can be found on clinicaltrials.gov by entering trial identifier NCT05233774.~~

●

~~On March 31, 2022,~~projection.

Previously, we ~~announced the publication of~~completed a ~~manuscript in~~ ~~Alzheimer’s & Dementia: The Journal of the Alzheimer’s Association~~^® ~~detailing the previously completed and announced~~ Phase 1 ~~Alzheimer’s disease trial results.~~

~~Lomecel-B for Hypoplastic Left Heart Syndrome (HLHS):~~

●

~~The ELPIS II trial (Phase 2a) continues to enroll infants in the 38-patient, 2-arm, parallel design, randomized (1:1), blinded controlled trial intended~~study under FDA investigational new drug application (IND) 017677 to evaluate the safety, tolerability and ~~efficacy~~preliminary evidence of ~~Lomecel-B injection~~Lomecel-B™ as a combinatorial therapy to surgery for this ultra-rare congenital heart defect. Babies born with this condition have an underdeveloped left ventricle and undergo a series of three surgeries to prevent certain death. Despite these life-saving surgeries, HLHS patients still have a high early mortality rate. We are investigating whether Lomecel-B™, directly injected into the ~~right ventricle~~heart during the second stage HLHS open-heart surgery, is safe and can improve short- and long-term outcomes in these vulnerable patients. These outcomes include heart function, and heart-transplant-free survival. The Phase 1 study met the primary safety endpoint: no major adverse cardiac events (MACE) nor any treatment-related infections during the first month post-treatment. In addition to the 12-month evaluation of outcomes from the original study, we have continued to follow these 10 patients. On May 9^th we announced that all the children ~~born~~enrolled in ELPIS I remain alive without the need for a heart transplant for 3.5 to 5.0 years since the time of treatment with Lomecel-B. Of these patients, five have already undergone their stage III palliation surgery. Based on historical data, approximately 20% of patients who undergo stage II palliation surgery either require a heart transplant or die from HLHS ~~who are undergoing Stage II reconstructive cardiac~~within 12 months after their surgery. ~~All seven planned~~Lomecel-B has received Rare Pediatric Disease (RPD) Designation and Orphan Drug Designation (ODD) and on August 24, 2022, the FDA granted Fast Track Designation for the potential treatment of HLHS with Lomecel-B™.

Aging-related Frailty. Aging-related Frailty is a life-threatening geriatric condition that disproportionately increases some patients’ risk for poor clinical ~~sites have now been activated~~outcomes from disease and injury. It is believed by geriatricians to be treatable, although no approved pharmaceutical or biologic treatments currently exist for ~~screening~~the condition. The definition of Aging-related Frailty lacks consensus and ~~enrollment~~would be a new indication from a regulatory standpoint. As such, any approval of Lomecel-B™ for Aging-related Frailty will therefore require additional clinical data and ~~additional sites are being considered.~~continued discussion with the U.S. FDA and Japan’s PMDA.

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We anticipate that a manuscript detailing the full Phase 1 (“ELPIS I”) trial results (the top-line data having been previously announced on September 9, 2021), to be submitted to a peer-reviewed journal, with acceptance and publication currently anticipated in 2022.

~~Lomecel-B for Aging Frailty:~~

	●○	We have previously completed two U.S. clinical trials under FDA IND 016644: (1) a multicenter, randomized, placebo-controlled Phase 2b trial (“Phase 2b Trial”), which showed that a single infusion of Lomecel-B™ 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; and (2) a multicenter, randomized, placebo-controlled Phase 1/2 trial (“HERA Trial”) that showed that Lomecel-B™ was generally safe and well tolerated in this patient population. The ~~planned~~results showed that hemagglutinin inhibition (HAI) responses in the Lomecel-B™™ and placebo groups to influenza were not statistically different.

	○	Japan Clinical Trial: The Japanese ~~Aging Frailty~~PMDA has approved a Clinical Trial Notification (CTN), which is equivalent to a U.S. IND, allowing an Investigator-sponsored Phase 2 clinical study 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 of Lomecel-B™ in Japanese patients with Aging-related Frailty. The trial sites began screening patients at the end of 2022 and the first patient is ~~currently on track~~expected to ~~initiate~~receive Lomecel-B in the first ~~half~~quarter of ~~2022. This~~2023. The goal of this study is ~~an investigator-initiated 3-arm, parallel design, randomized (1:1:1), placebo-controlled, double-blind single infusion study of two different dose levels of Lomecel-B being conducted by our~~to enable ASRM approval when combined with previous clinical ~~partners~~results in non-Japanese patients.

	○	The Bahamas Registry Trial: We sponsor and operate a Registry Trial in Nassau, The Bahamas, where participants may receive Lomecel-B™ for Aging-related frailty and other indications, at the ~~National Center for Geriatrics & Gerontology (NCGG; Nagoya), and Juntendo University Hospital (Tokyo).~~

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~~Top-line results from the Phase 1/2 “HERA” Aging Frailty trial are currently expected to be disclosed~~participant’s own expense. Lomecel-B™ is designated as an investigational product in ~~the first half of 2022.~~ The HERA Trial is a small multicenter, randomized, placebo-controlled study intended primarily to evaluate safety, and to explore the effect Lomecel-B may have on specific biomarkers of immune system function in older individuals with mild to moderate Aging Frailty who received the high dose influenza vaccine, as well as evaluate potential effects of Lomecel-B on other signs and symptoms of Aging Frailty.

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~~On January 12, 2022 Longeveron announced publication of the Lomecel-B Phase 2b Aging Frailty trial design in~~ ~~The Journal of Aging and Frailty~~ ~~titled: “The Design and Rationale of a Phase 2b, Randomized, Double-Blinded, and Placebo-Controlled Trial to Evaluate the Safety and Efficacy of Lomecel-B in Older Adults with Frailty.”~~Bahamas.

~~Lomecel-B for Acute Respiratory Distress Syndrome (ARDS) caused by either Covid-19 or Influenza Infection:~~Impact of Macroeconomic Conditions

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The two-cohort, 70 patient (35 patients per cohort) Phase 1 trial continues to screen subjects at three participating centers in the U.S. Screening and enrollment for this study has been slower than expected due mainly to fewer hospitalizations related to ARDS. It is anticipated that screening will continue through 2022.

We have not to date been directly adversely impacted by the current banking sector volatility, and specifically the volatility being experienced within the regional banking sector volatility. However, we have maintained deposits and marketable securities with a regional bank, and have made the determination, in light of the ongoing volatility and uncertainty, to transfer our deposits and marketable securities to a larger bank, so as to mitigate the likelihood of our experiencing a direct adverse impact from the ongoing volatility.

In addition, although we have experienced some supply constraints and marginal price increases, 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 operations.

Components of Our Results of Operations

Revenue

We have generated revenue from three sources:

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Grant 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).

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The Bahamas Registry Trial. Participants in The Bahamas Registry Trial pay us a fee to receive Lomecel-B, imported ~~by us~~ into The Bahamas, and administered at one of two private medical clinics in Nassau. While 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, 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 is considered an investigational treatment in The Bahamas and is not licensed for commercial sale.

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

Cost of Revenues

We record cost of revenues based on expenses directly related to revenue. For grants we record 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 accrued as incurred. These expenses are similar to those described under “Research and development expense” below.

Selling and Marketing Expenses

Selling and marketing expenses consist primarily of royalty and license fees associated with our agreements with the University of Miami ~~(“UM”),~~ 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~~Those activities that should be identified as research and development; 2. ~~the~~The elements of costs that should be identified with research and development activities, and the accounting for these costs; and 3. ~~the~~The financial statement disclosures related to them. 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 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 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 expect that our general and administrative expenses will increase in the future as we increase our headcount to support increased administrative activities relating 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, director and officer insurance costs, and investor and public relations costs.

Other Income and Expenses

Interest income consists of interest earned on cash equivalents and ~~short-term investments.~~Marketable securities. We expect our interest income to increase due to the current cash and ~~short-term investment~~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 December 31, ~~2021,~~2022, we are 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 passed 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 years ended December 31, ~~2021~~2022, and ~~2020.~~2021. We may incur income taxes in the future if we have earnings. At this time the Company has not evaluated the impact of any future profits.

RESULTS OF OPERATIONS

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

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

	Three Months Ended March 31,						Increase			Three Months Ended March 31,						Increase
	2022			2021			(Decrease)			2023			2022			(Decrease)
Revenues	$	370		$	376		$	(6	)	$	279		$	370		$	(91	)
Cost of revenues		70			227			157			203			205			(2	)
Gross profit		300			149			151			76			165			(89	)
Expenses
General and administrative		1,980			1,707			273			1,855			1,980			(125	)
Research and development		1,427			1,350			77			2,780			1,292			1,488
Selling and marketing		287			550			(263	)		157			287			(130	)
Total operating expenses		3,694			3,607			87			4,792			3,559			1,233

Loss from operations		(3,394	)		(3,458	)		64			(4,716	)		(3,394	)		(1,322	)
Forgiveness of Paycheck Protection Program loan		-			300			(300	)
Other (expense) income		(116	)		47			(162	)
Other income (expenses)											69			(116	)		185
Net loss	$	(3,510	)	$	(3,111	)	$	(399	)	$	(4,647	)	$	(3,510	)	$	(1,137	)

Revenues, Cost of Revenues and Gross Profit: Revenues for the three months ended March 31, 2023 and 2022 was $0.3 million and $0.4 million, respectively. Grant revenue for each of the three months ended March 31, 2023 and 2022 was $41,000 and 2021 were approximately $0.4 million. Revenues for the three months ended March 31, 2022 were approximately the same when compared to the same period in 2021. Grant revenue for the three months ended March 31, 2022 and 2021 was $0.1 million and $0.2 million,$60,000, respectively. Grant revenue for the three months ended March 31, ~~2022~~2023, was approximately ~~$0.1 million,~~$19,000, or ~~72%~~32% lower when compared to the same period in ~~2021,~~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 ~~comes~~derives from the Bahamas Registry Trial, for each of the three months ended March 31, 2023 and 2022 was $238,000 and ~~2021 was $0.3 million and $0.2 million,~~$310,000, respectively. Clinical trial revenue for the three months ended March 31, ~~2022~~2023, was approximately ~~$0.1 million,~~$72,000, or ~~88%~~23%, ~~higher~~lower when compared to the same period in ~~2021.~~2022. During the first quarter of ~~2022, clinical trial~~2023, despite demand increasing from last year, the Company provided more discounts and one time price adjustments which reduced the overall revenue ~~increased as a result of reduced COVID-19 travel restrictions, which were more prevalent~~ in the first quarter of ~~2021.~~2023 for the Bahamas Registry Trial.

Related cost of revenues was approximately $0.2 million for each of the three months ended March 31, 2023 and 2022. Cost of revenues for the three months ended March 31, 2023, was approximately $0.1 million, or 1%, lower when compared to the same period in 2022, primarily due to increased cost of revenues for the Bahamas Registry Trial. This resulted in a gross profit of approximately $0.1 million and $0.2 million for the three months ended March 31, 2023 and 2022, ~~and 2021,~~ respectively. ~~Cost of revenues~~Gross profit for the three months ended ~~March 31,~~June 20, 2022, was ~~approximately~~less than $0.1 million, or ~~69%,~~54% lower when compared to the same period in 2021, primarily due to lower cost of revenues for grants incurred in 2021 and lower costs related to the Bahamas Registry Trial. This resulted in a gross profit of approximately $0.3 million for the three months ended March 31, 2022, an increase of approximately $0.2 million, or 102%, when compared with a gross profit of approximately $0.1 million for the same period in 2021.2022.

General and Administrative Expense: General and administrative expenses for the three months ended March 31, ~~2022 increased~~2023, decreased to approximately ~~$2.0~~$1.9 million, compared to ~~$1.7~~$2.0 million for the same period in ~~2021.~~2022. The ~~increase~~decrease of approximately ~~$0.3~~$0.1 million, or ~~16%~~6%, was primarily related to ~~an increase in~~a decrease of equity-based compensation ~~and insurance costs. During the three months ended March 31, 2022~~ expenses ~~for compensation, insurance and professional services increased by $0.8 million when compared to the same period in 2021. Equity based compensation~~ allocated to general and administrative expenses ~~decreased from $0.9 million for the three months ended March 31, 2021~~and expenses related to ~~$0.4 million for the same period in 2022.~~professional fees.

Research and Development Expenses: Research and development expenses for the three months ended March 31, ~~2022,~~2023, increased to approximately ~~$1.4~~$2.8 million, from approximately $1.3 million for the same period in ~~2021.~~2022. The increase of ~~$0.1~~$1.5 million, or 6%115%, was primarily due to an increase of $1.2 million in research and development expenses ~~that were not reimbursable by grants, Equity based~~related to the completion of enrollment and clinical trial milestone payments being incurred for the Alzheimer’s clinical trial and setup costs for the aging frailty clinical trial in Japan and an increase of $0.2 million in equity-based compensation expenses allocated to research and development ~~expenses decreased from $0.4 million for the three months ended March 31, 2021 compared to $0.1 million for the same period in 2022.~~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,				Three Months Ended March 31,
	2022		2021		2023		2022
Clinical trial expenses-statistics, monitoring, labs, sites, etc.	$	441	$	376	$	1,353	$	306
Supplies and costs to manufacture Lomecel-B		87		111		285		87
Employee compensation and benefits		510		171		543		510
Equity-based compensation		98		443		273		98
Depreciation		143		179		182		143
Amortization		44		14		56		44
Travel		6		7		82		7
Other activities		98		49		6		97
	$	1,427	$	1,350	$	2,780	$	1,292

Selling and Marketing Expenses: Selling and marketing expenses for the three months ended March 31, 2023 and 2022 ~~and 2021~~ were ~~approximately $0.3~~$0.2 million and ~~$0.5~~$0.3 million, respectively. Selling and marketing expenses consist primarily of investor and public relations expenses.

~~Forgiveness of Paycheck Protection Program loan:~~Other Income (Expense): ~~Forgiveness of the Paycheck Protection Program loan~~Other income for the three months ended March 31, ~~2022, decreased to approximately $0~~2023, was less than $0.1 million. Other expense consisted of an unrealized gain of less than $0.1 million ~~compared to $0.3 million for the same period in 2021. The decrease of $0.3 million, or 100% was due to the non-recurring nature of the forgiveness of the PPP loan.~~

from Marketable securities. Other ~~(Expense) Income:~~ ~~Other expense~~expenses for the three months ended March 31, 2022, was $0.1 ~~million. Other expense consisted~~million as result of an unrealized loss ~~of $0.1 million~~ from short-term investments. For the three months ended March 31, 2021 other income was primarily the result of $30,000 received in rental payments recorded from a sublease and $17,000 from a gain resulting from an equity exchange.Marketable securities.

Net Loss: Net loss increased to approximately ~~$3.5~~$4.6 million for the three months ended March 31, ~~2022,~~2023, from a net loss of ~~3.1~~$3.5 million for the same period in ~~2021.~~2022. The increase in the net loss of ~~$0.4~~$1.1 million, or ~~13%~~32%, was for reasons outlined above.

~~Cash Flows~~

Cash Flows

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

	Three Months Ended March 31,						Three months ended March 31,
	2022			2021			2023			2022
Net cash used in operating activities	$	(4,152	)	$	(3,032	)	$	(5,848	)	$	(4,152	)
Net cash provided by investing activities		767			-			346			767
Net cash (used in) provided by financing activities		(141	)		26,677
Net cash used in provided by financing activities								(17	)		(141	)
Change in cash and cash equivalents	$	(3,526	)	$	23,645		$	(5,519	)	$	(3,526	)

Operating Activities. We have incurred losses since inception. Net cash used in operating activities for the three months ended March 31, 2023, was $5.8 million, consisting primarily of our net loss of $4.6 million, payments made to outstanding accounts payable of $1.2 million and $0.7 million in prepaid insurance expenses. Net cash used in operating activities for the three months ended March 31, 2022 was $4.2 million, consisting primarily of our net loss of $3.5 million as we incurred expenses associated with research activities for our lead product candidates and incurred general and administrative expenses and $0.9 million in prepaid insurance expenses.

Investing Activities. Net cash ~~used in operating~~provided by investing activities for the three months ended March 31, ~~2021~~2023, was ~~$3.0~~$0.3 million consisting primarily of ~~our net loss~~an increase in Marketable securities and purchase of ~~$3.1 million as we incurred expenses associated with research activities for our lead product candidates~~property and ~~incurred general and administrative expenses. including $1.3 million of equity based compensation recorded for the RSUs granted.~~

~~Investing Activities~~. equipment. Net cash provided by investing activities for the three months ended March 31, 2022 was $0.8 million consisting primarily of an increase in ~~short-term investments.~~ Marketable securities.

Financing Activities. Net cash used in ~~investing~~financing activities for the three months ended March 31, ~~2021~~2023, was ~~nil because there were no purchases~~less than $0.1 million for the payment of ~~property and equipment and capitalized intangible costs.~~

~~Financing Activities~~taxes upon vesting of restricted stock units (“RSUs”). Net cash used in financing activities for the three months ended March 31, 2022 was $0.1 million for the payment of taxes upon vesting of RSUs. ~~For the three months ended March 31, 2021, cash provided by financing activities was $26.7 million consisting of: $26.1 million in net proceeds received from our IPO.~~

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2023, the Company had cash, and cash equivalents of $5.0 million and marketable securities of $8.7 million. The Company has prepared a cash flow forecast which indicates that it does not have sufficient cash to meet its minimum expenditure commitments for one year from the date these condensed financial 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.

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 equity financings, grant awards, and fees generated from the Bahamas Registry Trial and contract manufacturing services. Since we were formed, we have raised approximately $77.2 million in gross proceeds from the issuance of equity. ~~As of March 31, 2022, the Company had cash, and cash equivalents of $22.1 million, short-term investments of $8.5 million and working capital of approximately $29.5 million.~~

Capital Raising Efforts

In our IPO, we sold 2,910,000 shares of Class A Common Stock at a public offering price of $10.00 per share for aggregate gross proceeds of $29.1 million, inclusive of the underwriter’s partial exercise of its over-allotment option, prior to deducting underwriting discounts, commissions, and other offering expenses.

The underwriter received warrants to purchase 106,400 Class A Common Stock shares. 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 August 12, 2021, at a price of $12.00 per Class A Common Stock share. During 2021, the underwriters assigned 95,760 of the warrants to its employees. As of December 31, ~~2021,~~2022, 51,061 warrants have been exercised, ~~that~~which provided net proceeds to the Company of $0.6 million.

On December 3, 2021, we closed our 2021 ~~private investment in public equity (PIPE)~~PIPE Offering, whereby we undertook a private purchase and sale to certain accredited investors of an aggregate of 1,169,288 shares of our Class A Common Stock and Purchase Warrants to purchase 1,169,288 shares of Class A Common Stock at an initial exercise price of $17.50 per share, resulting in aggregate gross proceeds of $20.5 million prior to deducting fees and offering expenses. We also issued Representative Warrants exercisable for 46,772 shares of Class A Common Stock to affiliates of Placement Agent with an initial exercise price of $17.50 per share. The shares of Class A Common Stock issued pursuant to the 2021 PIPE Offering and underlying the warrants were subsequently registered by us on a Form S-1 Registration Statement, which was declared effective on December 22, 2021.

Grant Awards

~~Grant Awards~~

From inception through ~~March~~December 31, 2022, we have been awarded approximately $11.9 million in governmental and non-profit association grants, which have 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, ~~2022,~~2023, and December 31, ~~2021,~~2022, the amount of unused grant funds that were available for us to draw was approximately ~~$0.7~~$0.1 million and $0.8 million, respectively.

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~~

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 ~~through~~into the first half of 2024. 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, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a stockholder. Such financing ~~will likely~~may 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, ~~2022,~~2023, we have ~~$3.0~~$2.5 million in operating lease obligations and ~~$3.6~~$3.5 million in contract research organization 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.

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 of Estimates

Our management’s discussion and analysis of financial condition, results of operations and liquidity are based on our condensed financial statements, which have been prepared in accordance with generally accepted accounting principles in the U.S. (“U.S. GAAP”). The preparation of our condensed 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 condensed 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.

While our significant accounting policies are described in more detail in the notes to our condensed financial statements included in ~~the 2021~~our 2022 10-K, we believe that the following accounting policies are those most critical due to the judgments and estimates used in the preparation of our condensed financial statements.

~~Intangible assets~~. Intangible assets include payments on license agreements with our co-founder and CSO and UM and legal costs incurred related to patents and trademarks. License agreements have been recorded at the value of cash consideration and/or estimated value of membership units transferred to the respective parties when acquired. Payments on license agreements are amortized using the straight-line method over the estimated useful life of 20 years. Patents are amortized over their estimated useful life, once issued. We consider trademarks to have an indefinite useful life and evaluate them for impairment on an annual basis. Amortization expense is recorded in the research and development line of the Statement of Operations as the assets are primarily related to our clinical programs.

Impairment of Long-Lived Assets. We evaluate 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. Management determined that there was no impairment of long-lived assets during the three months ended March 31, ~~2022~~2023 and ~~2021.~~2022.

~~Deferred revenue.~~ The unearned portion of advanced grant funds and prepayments for Clinical trial revenue, which will be recognized as revenue when the Company meets the respective performance obligations, has been presented as deferred revenue in the accompanying balance sheets. For the three months ended March 31, 2022 and 2021, the Company recognized $19,000 and nil of funds that were previously classified as deferred revenue, respectively.

Revenue recognition. Effective January 1, 2018, we adopted ASC Topic 606, Revenue from Contracts with Customers, which establishes a single and comprehensive framework on how much revenue is to be recognized, and when. The core principle is that a vendor should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the vendor expects to be entitled in exchange for those goods or services. Revenue will be recognized by a vendor when control over the goods or services is transferred to the customer.

We recognize revenue when performance obligations related to respective revenue streams are met. For ~~Grant Revenue,~~grant revenue, we consider the performance obligation met when the grant related expenses are incurred or supplies and materials are received. For clinical trial revenue, we consider the performance obligation met when the participant has received the therapy. For ~~Contract Manufacturing Revenue,~~contract manufacturing revenue, we consider the performance obligation met when the contractual obligation and/or statement of work has been satisfied.

~~Cost of revenues.~~ We record cost of revenues based on expenses directly related to revenue. For grant revenue, we record allocated expenses for research and development costs to a grant as a cost of revenues. Expenses directly related to clinical trial revenue are allocated and accrued as incurred. These expenses are similar to as described in the Research and development expense note.

Research and development expense. Research and development costs are charged to expense when incurred in accordance with FASB ASC 730, 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 contract research organizations 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.

~~Equity-based compensation.~~ We account for equity-based compensation expense by the measurement and recognition of compensation expense for unit-based awards based on estimated fair values on the date of grant. The fair value of incentive awards are estimated at the date of the grant using a 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 unit 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 for the incentive awards.

The Company estimates the fair value of its units by using the Black-Scholes option-pricing model. Volatility is a measure of the amount by which a financial variable, such as a unit 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 publicly traded companies that are similar 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. Incentive awards have a maximum term of ten years. The Company had insufficient historical data to utilize in determining its expected life assumptions and, therefore, uses the simplified method for determining expected life.

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 elected to take advantage of the extended transition period for complying with new or revised accounting ~~standards,~~standards; and as a result of this election, our condensed 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~~have 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 ~~audited~~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 ~~2021~~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)~~13a-15€ 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

There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended March 31, ~~2022~~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 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 April 26, 2022, plaintiff filed an amended complaint with ~~substantially similar~~related allegations. The complaint, as amended, alleges 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 seeks 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 March 31, 2023, and included in accrued expenses on the accompanying unaudited March 31, 2023 condensed balance sheet. The parties are in the process of documenting the settlement and full release, which will be subject to Court approval.

Item 1A. Risk Factors.

~~The following disclosure supplements~~Adverse developments affecting the ~~discussion of certain risks and uncertainties previously disclosed in our 2021 10-K. These risks and uncertainties, along with those previously disclosed,~~financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by financial institutions or transactional counterparties, could ~~materially~~ adversely affect ~~our business,~~the Company’s financial condition and results of ~~operations, financial position or cash flows.~~operations.

Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the 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, on March 10, 2023, Silicon Valley Bank (“SVB”) was closed by the California Department of Financial Protection and 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 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 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 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 ability to meet our operating demands or continue to develop our product candidates, or result in breaches of our financial and/or contractual obligations. Any of these impacts, or any other impacts resulting from the factors described above or other related or similar factors not described above, could have material adverse impacts on our liquidity and our current and/or projected business operations and financial condition and results of operations.

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

ISSUER PURCHASES OF EQUITY SECURITIES

Period (a)
Total Number of Shares
(or Units) Purchased (b)
Average Price Paid per
Share (or Unit) (c)
Total Number of Shares (or
Units) Purchased as Part of
Publicly Announced Plans or
Programs (d)
Maximum Number (or
Approximate Dollar
Value) of Shares (or
Units) that May Yet Be
Purchased Under the
Plans or Programs
January 2022 10,626 $ 12.09 10,626 165,417
February 2022 - - - -
March 2022 - - - -
Total 10,626 $ 12.09 $ 12.09 165,417

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
January 1-31, 2023		4,431	$	3.37		-		-
February 1-28, 2023		-		-		-		-
March 1-31, 2023		-		-		-		-
Total		4,431	$	3.37		-		-

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

On January 3, 2022, The Company net withheld 10,626 class A common stock shares from employees that had vested to cover taxes as a result of RSUs vesting. The Company does not have a formal plan to net withhold but has decided at each vesting date to determine if such strategy is feasible to execute.

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
	~~Description~~
10.1		~~Employment~~ Agreement, ~~between Longeveron Inc. and K. Chris Min, M.D., Ph.D.,~~dated February 22, 2023, incorporated by reference to Exhibit 10.1 toof the ~~Company’s current report~~Registrant’s Current Report on Form 8-K filed ~~April 5, 2022.~~February 28, 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.~~Document

101.SCH		Inline XBRL Taxonomy Extension Schema ~~Document.~~Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase ~~Document.~~Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase ~~Document.~~Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase ~~Document.~~Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase ~~Document.~~Document

104		Inline 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 ~~13, 2022~~12, 2023	/s/ ~~Geoff Green~~Mohamed Wa’el Ahmed Hashad
	~~Geoff Green~~Mohamed Wa’el Ahmed Hashad
	Chief Executive Officer
	(principal executive officer)

Date: May ~~13, 2022~~12, 2023	/s/ James Clavijo
	James Clavijo
	Chief Financial Officer
	(principal financial and accounting officer)

35 38

iso4217:USD xbrli:shares

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

Period	(a) Total Number of Shares (or Units) Purchased		(b) Average Price Paid per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs		(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
January 2022		10,626	$	12.09		10,626		165,417
February 2022		-		-		-		-
March 2022		-		-		-		-
Total		10,626	$	12.09	$	12.09		165,417