| Basis of Presentation and Summary of Significant Accounting Policies | 2.
Basis of Presentation and Summary of Significant Accounting Policies The
unaudited condensed consolidated interim financial statements presented herein, and discussed below, have been prepared in accordance
with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information
and with the instructions to Form 10-Q and Article 8 of Regulation S-X promulgated by the Securities and Exchange Commission (the “SEC”).
In accordance with those rules and regulations certain information and footnote disclosures normally included in comprehensive consolidated
financial statements have been condensed or omitted. The condensed consolidated balance sheet as of December 31, 2023 was derived from
the audited consolidated financial statements at that date but does not include all the information and footnotes required by U.S. GAAP.
These condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements
and notes thereto included in the Company’s audited consolidated financial statements and related notes for the years ended December
31, 2023 and 2022 attached as Exhibit 99.2 to the Company’s Current Report on Form 8-K filed on April 1, 2024 . The
accompanying condensed consolidated interim financial statements, in the opinion of management, include all adjustments, consisting only
of normal recurring adjustments, necessary for a fair presentation of the Company’s financial condition and results of operations.
The condensed consolidated results of operations are not necessarily indicative of the results to be expected for any other interim period
or for the entire year. Principles
of consolidation The
consolidated financial statements include the accounts of the Company and its subsidiaries in which the Company has a controlling financial
interest. For consolidated entities where the Company has less than 100 The
Company assesses whether it is the primary beneficiary of a variable interest entity (“VIE”) at the inception of the arrangement
and at each reporting date. This assessment is based on its power to direct the activities of the VIE that most significantly impact
the VIE’s economic performance and the Company’s obligation to absorb losses or the right to receive benefits from the VIE
that could potentially be significant to the VIE. If the entity is within the scope of the variable interest model and meets the definition
of a VIE, the Company considers whether it must consolidate the VIE or provide additional disclosures regarding its involvement with
the VIE. If the Company determines that it is the primary beneficiary of the VIE, the Company will consolidate the VIE. This analysis
is performed at the initial investment in the entity or upon any reconsideration event. For entities the Company holds as an equity investment
that are not consolidated under the VIE model, the Company will consider whether its investment constitutes a controlling financial interest
in the entity and therefore should be considered for consolidation under the voting interest model. The
Company has five subsidiaries: Legacy Serina and UniverXome, which are wholly-owned subsidiaries, and ReCyte Therapeutics, Inc. (“ReCyte”),
Reverse Bioengineering, Inc. (“Reverse Bio”), and NeuroAirmid Therapeutics, Inc. (“NeuroAirmid”). Following the
Merger, the Company is primarily focused on developing Legacy Serina’s product candidates which are described elsewhere in this
Report. Prior to the Merger, on March 26, 2024, pursuant the Merger Agreement, the Company contributed all of its stock in Reverse Bio
and ReCyte, along with substantially all of the assets (other than the stock of NeuroAirmid) of the Company to UniverXome. In exchange
for the contribution of those assets, UniverXome assumed certain liabilities, including all of the Company’s indebtedness to Juvenescence.
UniverXome owns 94.8 %
of the outstanding capital stock of ReCyte. ReCyte owns certain pre-clinical research and development assets involving stem cell-derived
endothelial and cardiovascular related progenitor cells for the treatment of vascular disorders and ischemic conditions. The Company
owns 100 %
of the outstanding capital of Reverse Bio through UniverXome. Reverse Bio owns assets involved in partial cellular reprogramming using
its iTR™ technology with the intent to revert aged or diseased cells to a healthy and functional state. NeuroAirmid
is jointly owned by the Company and certain researchers from the University of California and was organized to pursue certain cell therapies,
focusing initially on Huntington’s Disease. The Company owns 50 %
of the outstanding capital stock of NeuroAirmid. The Company consolidates NeuroAirmid despite not having majority ownership interest
as it has the ability to influence decision making and financial results through contractual rights and obligations as per Accounting
Standards Codification (“ASC”) 810, Consolidation Use
of estimates The
preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that
affect (i) the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated
financial statements, and (ii) the reported amounts of revenues and expenses during the reporting period, in each case with consideration
given to materiality. Significant estimates and assumptions which are subject to significant judgment include those related to going
concern assessment of consolidated financial statements, useful lives associated with long-lived assets, including evaluation of asset
impairment, allowances for uncollectible accounts receivables, loss contingencies, deferred income taxes and tax reserves, including
valuation allowances related to deferred income taxes, determining the fair value of the Company’s embedded derivatives in the
convertible notes payable and receivable, and assumptions used to value stock-based awards or other equity instruments and liability
classified warrants. Actual results could differ materially from those estimates. To the extent there are material differences between
the estimates and actual results, the Company’s future results of operations will be affected. Concentration
of credit risk and other risks and uncertainties Financial
instruments that potentially subject the Company to concentrations of risk consist principally of cash equivalents. The Company maintains
its cash deposits in Federal Deposit Insurance Corporation (“FDIC”) insured financial institutions and may at times hold
investments at Securities Investor Protection Corporation (“SIPC”) insured broker-dealers. At
times, the balances in these accounts may be in excess of FDIC and SIPC insured limits. At March 31, 2024 and December 31, 2023, cash
and cash equivalents deposits in excess of FDIC limits were approximately $ 2.6 0 5.4 7.3 For
the periods ended March 31, 2024 and 2023, 100 %
of the Company’s revenue for the periods presented are related to a single grant from U.S. Government agency. See Note 4, Grant
Revenues, Product
candidates developed by the Company and its subsidiaries will require approvals or clearances from the United States Food and Drug Administration
(“FDA”) or foreign regulatory agencies prior to commercial sales. There can be no assurance that any of the product candidates
being developed or planned to be developed by the Company or its subsidiaries will receive any of the required approvals or clearances.
If regulatory approval or clearance were to be denied or any such approval or clearance was to be delayed, it would have a material adverse
impact on the Company. Fair
value measurements of financial instruments The
Company has adopted ASC Topic 820, Fair Value Measurement The
hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements)
and the lowest priority to unobservable inputs (level 3 measurements). The
three levels of inputs that may be used to measure fair value are as follows:
● Level
1: Quoted prices in active markets for identical assets or liabilities.
● Level
2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets
or liabilities, quoted prices in markets with insufficient volume or infrequent transactions
(less active markets), or model-derived valuations in which all significant inputs are observable
or can be derived principally from or corroborated with observable market data for substantially
the full term of the assets or liabilities. Level 2 inputs also include non-binding market
consensus prices that can be corroborated with observable market data, as well as quoted
prices that were adjusted for security-specific restrictions.
● Level
3: Unobservable inputs to the valuation methodology are significant to the measurement of
the fair value of assets or liabilities. Level 3 inputs also include non-binding market consensus
prices or non-binding broker quotes that we were unable to corroborate with observable market
data. Accounting
for warrants The
Company determines the accounting classification of warrants it issues, as either liability or equity, by first assessing whether the
warrants meet liability classification in accordance with ASC 480-10, Accounting for Certain Financial Instruments with Characteristics
of both Liabilities and Equity Accounting for Derivative Financial Instruments Indexed to,
and Potentially Settled in, a Company’s Own Stock Related
Party Transactions Fair Value Measurements Redeemable
convertible preferred stock The
Company recorded redeemable convertible preferred stock at fair value upon issuance, net of any issuance costs. As of December 31, 2023,
the Company classified stock that was redeemable in circumstances outside of the Company’s control outside of permanent equity.
The redeemable preferred stock were converted to common stock on March 26, 2024 upon consummation of the Merger. Cash,
cash equivalents, and restricted cash In
accordance with Accounting Standards Update (“ASU”) 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash Schedule of Cash, Cash Equivalents and Restricted Cash
March 31, 2024 December 31, 2023
Cash and cash equivalents $ 8,706 $ 7,619
Restricted cash (1) 50 -
Cash, cash equivalents, and restricted cash as shown in the condensed consolidated statements of cash flows $ 8,756 $ 7,619
(1) Restricted
cash entirely represents the deposit required to maintain the Company’s corporate credit card program. Property
and equipment, net Property
and equipment are carried at cost less accumulated depreciation. The costs of additions and betterments are capitalized and expenditures
for repairs and maintenance are expensed as incurred. When items of property and equipment are sold or retired, the related costs and
accumulated depreciation are removed from the accounts and any gain or loss is included in the statements of operations. Depreciation
of property and equipment is provided utilizing the straight-line method over the range of lives used of the respective assets, which
is 3 10 Leases The
Company accounts for leases in accordance with ASU 2016-02, Leases Codification Improvements to Topic 842, Leases, Leases (Topic
842): Targeted Improvements, (i) 75% or greater to
determine whether the lease term is a major part of the remaining economic life of the underlying asset and (ii) 90% or greater to determine
whether the present value of the sum of lease payments is substantially all of the fair value of the underlying asset. ROU
assets represent an entity’s right to use an underlying asset during the lease term and lease liabilities represent an entity’s
obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date
based on the present value of lease payments over the lease term. If the lease agreement does not provide an implicit rate in the contract,
the lessee uses its incremental borrowing rate based on the information available at commencement date in determining the present value
of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. For such purposes,
the lease term applied may include options to extend or terminate the lease when it is reasonably certain that the Company or a subsidiary
will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company does
not capitalize leases that have terms of twelve months or less. The
Company entered into five long-term, non-cancelable operating leases, of which four are related to laboratory and office facilities located
in Huntsville, Alabama and one for a laboratory equipment. The leases expire on various dates from September 2024 through January 2028.
In the normal course of business, it is expected that these leases will be renewed or replaced by leases on other properties. The Company
also leases two pieces of equipment for various terms under long-term, non-cancelable finance lease agreements which expire in September
2024 and February 2025. The Company has elected to combine lease and non lease components as a single component. As required under ASC
842, operating leases are recognized on the consolidated balance sheet as ROU lease assets, current lease liabilities, and non-current
lease liabilities. Fixed rents are included in the calculation of the lease balances, while variable costs paid for certain operating
and pass through costs are excluded. Lease expense is recognized over the expected term on a straight-line basis. Intangible
assets, net Intangible
assets, consisting primarily of acquired in-process
research and development (“IPR&D”) with alternative future use and patents, is stated at acquired cost, less accumulated
amortization. Amortization expense is computed using the straight-line method over the estimated useful life of 10
years. See Note 3, Selected Balance Sheet
Components Impairment
of long-lived assets The
Company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that such assets might be impaired
and the carrying value may not be recoverable. The Company’s long-lived assets consists entirely of intangible assets. If events
or changes in circumstances indicate that the carrying amount of an asset may not be recoverable and the expected undiscounted future
cash flows attributable to the asset are less than the carrying amount of the asset, an impairment loss, equal to the excess of the carrying
value of the asset over its fair value, is recorded. There has been no impairment of long-lived assets for the accounting periods presented. Revenue
recognition The
Company recognizes revenue in a manner that depicts the transfer of control of a product or a service to a customer and reflects the
amount of the consideration it expects to receive in exchange for such product or service. In doing so, the Company follows a five-step
approach: (i) identify the contract with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction
price, (iv) allocate the transaction price to the performance obligations, and (v) recognize revenue when (or as) the customer obtains
control of the product or service. The Company considers the terms of a contract and all relevant facts and circumstances when applying
the revenue recognition standard. The Company applies the revenue recognition standard, including the use of any practical expedients,
consistently to contracts with similar characteristics and in similar circumstances. Grant
revenues – Research and Development Arrangements. In
applying the provisions of Topic 606, the Company has determined that government grants are out of the scope of Topic 606 because the
government entities do not meet the definition of a “customer”, as defined by Topic 606, as there is not considered to be
a transfer of control of good or services to the government entities funding the grant. In the absence of applicable guidance under U.S.
GAAP, our policy is to recognize grant revenue when the related costs are incurred, provided that the applicable conditions under the
government contracts have been met. Only costs that are allowable under the grant award, certain government regulations and the National
Institutes of Health’s supplemental policy and procedure manual may be claimed for reimbursement, and the reimbursements are subject
to routine audits from governmental agencies from time to time. Costs incurred are recorded in research and development expenses on the
accompanying consolidated statements of operations. The
Company believes the recognition of revenue as costs are incurred and amounts become realizable is analogous to the concept of transfer
of control of a service over time under ASC 606. License
revenues - The
Company accounts for a contract after it has been approved by all parties to the arrangement, the rights of the parties are identified,
payment terms are identified, the contract has commercial substance, and collection is probable. Each
contract is assessed at inception to determine whether it should be combined with other contracts. When making this determination, factors
such as whether two or more contracts were negotiated or executed at or near the same time or were negotiated with an overall profit
objective. If combined, the Company treats the combined contracts as a single contract for revenue recognition purposes. The
Company evaluates the services promised in each contract at inception to determine whether the contract should be accounted for as having
one or more performance obligations. The services in the contracts are typically not distinct from one another due to the requirements
to perform under the contract. Accordingly, the contracts are typically accounted for as one performance obligation. However, if a contract
has multiple distinct performance obligations, the transaction price is allocated to each performance obligation based on the estimated
standalone selling price of the service underlying each performance obligation. Revenue is recognized as performance obligations are
satisfied and the customer obtains control of the service. For performance obligations in which control does not continuously transfer
to the customer, revenue is recognized at the point in time that each performance obligation is fully satisfied. The
Company determines the transaction price for each contract based on the consideration expected to be received for the services being
provided under the contract. For contracts where a portion of the price may vary, the Company estimates variable consideration at the
most likely amount, which is included in the transaction price to the extent it is probable that a significant reversal of cumulative
revenue recognized will not occur. The Company analyzes the risk of a significant reversal and, if necessary, constrains the amount of
variable consideration recognized in order to mitigate the risk. At inception of a contract, the transaction price is estimated based
on current rights, and does not contemplate future modifications (including unexercised options) or follow-on contracts until they become
legally enforceable. Depending on the nature of the modification, the Company considers whether to account for the modification as an
adjustment to the existing contract or as a separate contract. Milestone
payments are recognized as licensing revenue upon the achievement of specified milestones if (i) the milestone is substantive in nature
and the achievement of the milestone was not probable at the inception of the agreement; and (ii) the Company has a right to payment.
Any milestone payments received prior to satisfying these revenue recognition criteria are recorded as deferred revenue. Research
and development Research
and development costs are expensed as they are incurred and include compensation for scientists, support personnel, outside contracted
services, and material costs associated with product development. The Company continually evaluates new product opportunities and engages
in intensive research and product development efforts. Research and development expenses include both direct costs tied to a specific
contract or grant, and indirect costs. Research and development expenses incurred and reimbursed by grants from third parties or governmental
agencies, if any and as applicable, approximate the respective revenues recognized in the condensed consolidated statements of operations. General
and administrative General
and administrative expenses consist primarily of compensation and related benefits, including stock-based compensation, for executive
and corporate personnel, and professional and consulting fees. Income
taxes Income
taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred
taxes related primarily to differences between the basis of loss carryovers and depreciation differences for financial and income tax
reporting. Deferred taxes represent the future tax return consequences of those differences, which will either be taxable or deductible
when the assets and liabilities are recovered or settled. Deferred tax assets and liabilities are measured using enacted tax rates expected
to apply to taxable income in the years in which the differences are expected to be recovered or settled. The
Company only recognizes tax benefits from an uncertain tax position if it is more likely than not that the tax position will be sustained
on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial
statement from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized
upon ultimate resolution. To date, the Company has not recognized such tax benefits in its financial statements. Basic
and diluted net earnings (loss) per share attributable to common stockholders Basic
earnings (loss) per share (“EPS”) of common stock is computed by dividing net income (loss) available to common stockholders
(numerator) by the weighted average number of shares of common stock outstanding (denominator) during the period. Diluted
EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method for stock options
and warrants and the if-converted method for redeemable, convertible preferred stock and convertible promissory notes. In computing diluted
EPS, the average stock price for the period is used to determine the number of shares assumed to be purchased from the exercise of stock
options and/or warrants. Diluted EPS excluded all dilutive potential shares if their effect is anti-dilutive. Segment
reporting Operating
segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation
by the chief operating decision maker, the Chief Executive Officer, in making decisions regarding resource allocation and assessing performance.
The Company views its operations and manages its business as one operating segment in the United States of America. Reclassifications Certain
reclassifications have been made to the prior period condensed consolidated interim financial statements to conform to current year presentation
of the Accounts payable and accrued liabilities Recently
adopted accounting pronouncements In
August 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-05,
Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement In
December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to income Tax Disclosures Recently
Issued Accounting Pronouncements Not Yet Adopted In
March 2024, the FASB issued ASU 2024-02, Codification Improvements—Amendments to Remove References to the Concepts Statements (ASU
2024-02). ASU 2024-02 removes various references to the FASB’s Concepts Statements from the FASB’s Accounting Standards Codification
(Codification or GAAP). The Concepts Statements are non-authoritative guidance issued by the FASB that provide the objectives, qualitative
characteristics and other concepts that govern the development of accounting principles by the FASB. The ASU indicates that the goal
of the amendments is to simplify the Codification and distinguish between nonauthoritative and authoritative guidance (since, unlike
the Codification, the concepts statements are nonauthoritative). This ASU is effective for the Company beginning January 1, 2025 and
is not expected to have a material impact on the condensed consolidated interim financial statements. |
