Quarterly Report (10-q)

Date : 08/27/2019 @ 10:01AM
Source : Edgar (US Regulatory)
Stock : International Stem Cell Corp. (QB) (ISCO)
Quote : 0.53  0.0 (0.00%) @ 3:11PM

Quarterly Report (10-q)

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

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

For the quarterly period ended June 30, 2019  

or

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

For the transition period from                      to                     

Commission File Number: 0-51891

 

INTERNATIONAL STEM CELL CORPORATION

(Exact name of Registrant as specified in its charter)

 

 

Delaware

 

20-4494098

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

5950 Priestly Drive

Carlsbad, CA

 

92008

(Address of Principal Executive Offices)

 

(Zip Code)

(760) 940-6383

(Registrant’s telephone number)

 

Securities registered pursuant to Section 12(b) of the Act: None

Indicated 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 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  

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of August 22, 2019 the Registrant had 7,533,083 shares of Common Stock outstanding.

 

 

 

 

 


 

International Stem Cell Corporation and Subsidiaries

INDEX TO FORM 10-Q

 

 

  

Page Numbers

PART I—FINANCIAL INFORMATION

  

 

Item 1.

Financial Statements (unaudited)

  

3

 

Condensed Consolidated Balance Sheets

 

3

 

Condensed Consolidated Statements of Operations

 

4

 

Condensed Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

 

5

 

Condensed Consolidated Statements of Cash Flows

 

8

 

Notes to Condensed Consolidated Financial Statements

 

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

  

23

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

  

27

Item 4.

Controls and Procedures

  

28

 

PART II—OTHER INFORMATION

  

 

Item 1.

Legal Proceedings

  

29

Item 1A.

Risk Factors

  

29

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

  

42

Item 3.

Defaults Upon Senior Securities

  

42

Item 4.

Mine Safety Disclosures

  

42

Item 5.

Other Information

  

43

Item 6.

Exhibits

  

44

Exhibit 31.1

  

 

Exhibit 31.2

  

 

Exhibit 32.1

  

 

Exhibit 32.2

  

 

Exhibit 101 INSTANCE DOCUMENT

  

 

Exhibit 101 SCHEMA DOCUMENT

  

 

Exhibit 101 CALCULATION LINKBASE DOCUMENT

  

 

Exhibit 101 DEFINITION LINKBASE DOCUMENT

  

 

Exhibit 101 LABELS LINKBASE DOCUMENT

  

 

Exhibit 101 PRESENTATION LINKBASE DOCUMENT

  

 

 

 

 

2


 

PART I—FINANCIAL INFORMATION

 

Item 1. Financial Statements

International Stem Cell Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share data and par value)

(Unaudited)

 

 

June 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

Assets

 

 

 

 

 

 

 

 

Cash

 

$

595

 

 

$

1,075

 

Accounts receivable, net

 

 

976

 

 

 

651

 

Inventory, net

 

 

1,317

 

 

 

1,501

 

Prepaid expenses and other current assets

 

 

440

 

 

 

543

 

Total current assets

 

 

3,328

 

 

 

3,770

 

Non-current inventory

 

 

784

 

 

 

805

 

Property and equipment, net

 

 

697

 

 

 

469

 

Intangible assets, net

 

 

2,790

 

 

 

2,674

 

Right-of-use asset

 

 

849

 

 

 

 

Deposits and other assets

 

 

93

 

 

 

78

 

Total assets

 

$

8,541

 

 

$

7,796

 

Liabilities, Redeemable Convertible Preferred Stock, and Stockholders' Equity (Deficit)

 

 

 

 

 

 

 

 

Accounts payable

 

$

731

 

 

$

458

 

Accrued liabilities

 

 

548

 

 

 

579

 

Operating lease liability, current

 

 

265

 

 

 

 

Related party payable

 

 

1,827

 

 

 

2,045

 

Advances

 

 

250

 

 

 

250

 

Warrant liability

 

 

837

 

 

 

1,745

 

Total current liabilities

 

 

4,458

 

 

 

5,077

 

Long-term deferred rent

 

 

 

 

 

182

 

Operating lease liability, net of current portion

 

 

974

 

 

 

 

Total liabilities

 

 

5,432

 

 

 

5,259

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

Series D Redeemable Convertible Preferred stock, $0.001 par value, 50 shares authorized, 43 issued and

   outstanding, with liquidation preference of $4,300 at June 30, 2019

 

 

4,300

 

 

 

 

Stockholders' Equity (Deficit)

 

 

 

 

 

 

 

 

Series B Convertible Preferred stock, $0.001 par value, 5,000,000 shares authorized, 250,000

   issued and outstanding, with liquidation preferences of $420 and $411 at June 30, 2019 and

   December 31, 2018

 

 

 

 

 

 

Series D Convertible Preferred stock, $0.001 par value, 50 shares authorized, 43 issued and

   outstanding, with liquidation preference of $4,320 at December 31, 2018

 

 

 

 

 

 

Series G Convertible Preferred stock, $0.001 par value, 5,000,000 shares authorized,

   issued and outstanding, with liquidation preference of $5,000 at June 30, 2019 and December 31, 2018

 

 

5

 

 

 

5

 

Series I-1 Convertible Preferred stock, $0.001 par value, 2,000 shares authorized, 814 issued and

   outstanding, with liquidation preferences of $814 at June 30, 2019 and December 31, 2018

 

 

 

 

 

 

Series I-2 Convertible Preferred stock, $0.001 par value, 4,310 shares authorized,

   issued and outstanding with liquidation preference of $4,310 at June 30, 2019 and December 31, 2018

 

 

 

 

 

 

Common stock, $0.001 par value, 120,000,000 shares authorized, 7,533,083 and 6,933,861 shares

   issued and outstanding at June 30, 2019 and December 31, 2018

 

 

8

 

 

 

7

 

Additional paid-in capital

 

 

102,476

 

 

 

109,188

 

Accumulated deficit

 

 

(103,680

)

 

 

(106,663

)

Total stockholders' equity (deficit)

 

 

(1,191

)

 

 

2,537

 

Total liabilities, redeemable convertible preferred stock and stockholders' equity (deficit)

 

$

8,541

 

 

$

7,796

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

3


 

International Stem Cell Corporation and Subsidiaries

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(Unaudited)

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

 

 

June 30,

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product sales

$

2,321

 

 

$

3,038

 

 

$

4,539

 

 

$

5,671

 

Total revenues

 

2,321

 

 

 

3,038

 

 

 

4,539

 

 

 

5,671

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

857

 

 

 

1,095

 

 

 

1,698

 

 

 

1,920

 

Research and development

 

268

 

 

 

452

 

 

 

921

 

 

 

1,263

 

Selling and marketing

 

739

 

 

 

624

 

 

 

1,430

 

 

 

1,332

 

General and administrative

 

1,398

 

 

 

1,234

 

 

 

2,920

 

 

 

2,707

 

Total expenses

 

3,262

 

 

 

3,405

 

 

 

6,969

 

 

 

7,222

 

Loss from operations

 

(941

)

 

 

(367

)

 

 

(2,430

)

 

 

(1,551

)

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in fair value of warrant liability

 

311

 

 

 

(21

)

 

 

908

 

 

 

334

 

Interest expense

 

(20

)

 

 

(7

)

 

 

(34

)

 

 

(9

)

Miscellaneous income

 

2

 

 

 

1

 

 

 

2

 

 

 

2

 

Total other income (expense), net

 

293

 

 

 

(27

)

 

 

876

 

 

 

327

 

Net loss

$

(648

)

 

$

(394

)

 

$

(1,554

)

 

$

(1,224

)

Net loss applicable to common stockholders

$

(648

)

 

$

(394

)

 

$

(1,554

)

 

$

(1,224

)

Net loss per common share-basic

$

(0.09

)

 

$

(0.06

)

 

$

(0.21

)

 

$

(0.20

)

Net loss per common share-diluted

$

(0.09

)

 

$

(0.06

)

 

$

(0.21

)

 

$

(0.20

)

Weighted average shares-basic

 

7,533

 

 

 

6,225

 

 

 

7,467

 

 

 

6,181

 

Weighted average shares-diluted

 

7,533

 

 

 

6,225

 

 

 

7,467

 

 

 

6,181

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

 

 

4


 

International Stem Cell Corporation and Subsidiaries

Condensed Consolidated Statements of Changes in Redeemable Convertible Preferred Stock Stockholders’ Equity (Deficit)

(in thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Redeemable Convertible Preferred Stock

 

 

 

Convertible Preferred Stock

 

 

Series D

 

 

 

Series B

 

 

Series D

 

Series G

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

Shares

 

 

Amount

 

Balance at December 31, 2018

 

 

 

 

 

 

 

 

 

 

250

 

 

$

 

 

 

 

 

$

 

 

5,000

 

 

$

5

 

Out of period correction (Note 2)

 

 

 

 

4,300

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion of debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2019 (As revised)

 

 

 

$

4,300

 

 

 

 

250

 

 

$

 

 

 

 

 

$

 

 

5,000

 

 

$

5

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2019

 

 

 

$

4,300

 

 

 

 

250

 

 

$

 

 

 

 

 

$

 

 

5,000

 

 

$

5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible Preferred Stock

 

 

 

 

Common

 

 

Additional

 

 

 

 

 

 

Total

 

 

 

Series I-1

 

 

Series I-2

 

 

 

 

Stock

 

 

Paid-In

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

 

 

Shares

 

 

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Equity (Deficit)

 

Balance at December 31, 2018

 

 

1

 

 

$

 

 

 

4

 

 

$

 

 

 

 

$

6,934

 

 

 

 

$

7

 

 

$

109,188

 

 

$

(106,663

)

 

$

2,537

 

Out of period correction (Note 2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,837

)

 

 

4,537

 

 

 

(4,300

)

Conversion of debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

599

 

 

 

 

 

1

 

 

 

1,048

 

 

 

 

 

 

1,049

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

506

 

 

 

 

 

 

506

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(906

)

 

 

(906

)

Balance at March 31, 2019 (As revised)

 

 

1

 

 

$

 

 

 

4

 

 

$

 

 

 

 

$

7,533

 

 

 

 

$

8

 

 

$

101,905

 

 

$

(103,032

)

 

$

(1,114

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

571

 

 

 

 

 

 

571

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(648

)

 

 

(648

)

Balance at June 30, 2019

 

 

1

 

 

$

 

 

 

4

 

 

$

 

 

 

 

$

7,533

 

 

 

 

$

8

 

 

$

102,476

 

 

$

(103,680

)

 

$

(1,191

)

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

 

 

5


 

International Stem Cell Corporation and Subsidiaries

Condensed Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(in thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible Preferred Stock

 

 

Series B

 

 

Series D

 

Series G

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

Shares

 

 

Amount

 

Balance at December 31, 2017

 

250

 

 

$

 

 

 

 

 

$

 

 

5,000

 

 

$

5

 

Issuance of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

for services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

from exercise of options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion of preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2018

 

250

 

 

$

 

 

 

 

 

$

 

 

5,000

 

 

$

5

 

Issuance of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

for services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

from exercise of options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion of preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2018

 

250

 

 

$

 

 

 

 

 

$

 

 

5,000

 

 

$

5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible Preferred Stock

 

 

 

 

Common

 

 

Additional

 

 

 

 

 

 

Total

 

 

 

Series I-1

 

 

Series I-2

 

 

 

 

Stock

 

 

Paid-In

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

 

 

Shares

 

 

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2017

 

 

1

 

 

$

 

 

 

4

 

 

$

 

 

 

 

 

6,057

 

 

 

 

$

6

 

 

$

106,585

 

 

$

(104,532

)

 

$

2,064

 

Issuance of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

for services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

 

 

 

 

 

 

 

 

8

 

 

 

 

 

 

8

 

from exercise of options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

82

 

 

 

 

 

 

 

 

90

 

 

 

 

 

 

90

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

307

 

 

 

 

 

 

307

 

Net loss