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 March 31, 2023

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.)
9745 Businesspark Ave San Diego, CA	92131
(Address of Principal Executive Offices)	(Zip Code)

(760) 940-6383

(Registrant’s telephone number)

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	None	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 ☒

As of May 10, 2023, the Registrant had 8,004,389 shares of Common Stock outstanding.

International Stem Cell Corporation and Subsidiaries

Form 10-Q

Table of Contents

		Page Numbers
PART I—FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets as of March 31, 2023 (Unaudited) and December 31, 2022	3
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022 (Unaudited)	4
	Condensed Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Deficit for the three months ended March 31, 2023 and 2022 (Unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022 (Unaudited)	6
	Notes to Condensed Consolidated Financial Statements (Unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	24
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3.	Defaults Upon Senior Securities	26
Item 4.	Mine Safety Disclosures	26
Item 5.	Other Information	26
Item 6.	Exhibits	27
	Signatures	29

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PART I – FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

International Stem Cell Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, except share and par value data)

(Unaudited)

	March 31,			December 31,
	2023			2022
Assets
Current assets:
Cash	$	943		$	742
Accounts receivable, net		688			747
Inventory, net		1,294			1,384
Prepaid expenses and other current assets		311			90
Total current assets		3,236			2,963
Non-current inventory, net		295			286
Property and equipment, net		232			248
Intangible assets, net		858			878
Right-of-use assets		687			727
Deposits and other assets		33			33
Total assets	$	5,341		$	5,135
Liabilities, Redeemable Convertible Preferred Stock and Stockholders' Deficit
Current liabilities:
Accounts payable	$	351		$	322
Accrued liabilities		632			508
Operating lease liabilities, current		241			230
Advances		250			250
Related party note payable		3,357			3,325
Total current liabilities		4,831			4,635
Operating lease liabilities, net of current portion		656			720
Total liabilities		5,487			5,355
Commitments and contingencies (Note 8)
Series D redeemable convertible preferred stock, $0.001 par value; 50 shares authorized;    43 shares issued and outstanding; liquidation preference of $4,300 at March 31, 2023    and December 31, 2022		4,300			4,300
Stockholders' Deficit:
Non-redeemable convertible preferred stock, $0.001 par value; 10,004,310 and   10,004,310 shares authorized; 5,254,310 and 5,254,310 shares issued and outstanding;    liquidation preference of $9,785 and $9,781 at March 31, 2023 and    December 31, 2022, respectively		5			5
Common stock, $0.001 par value; 120,000,000 shares authorized; 8,004,389    shares issued and outstanding at March 31, 2023 and December 31, 2022		8			8
Additional paid-in capital		105,920			105,812
Accumulated deficit		(110,379	)		(110,345	)
Total stockholders' deficit		(4,446	)		(4,520	)
Total liabilities, redeemable convertible preferred stock    and stockholders' deficit	$	5,341		$	5,135

See accompanying notes to the unaudited condensed consolidated financial statements.

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International Stem Cell Corporation and Subsidiaries

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

	Three Months Ended March 31,
	2023			2022
Product sales	$	2,086		$	2,020
Operating expenses:
Cost of sales		824			725
General and administrative		800			832
Selling and marketing		315			301
Research and development		145			137
Total operating expenses		2,084			1,995
Income from operations		2			25
Other income (expense):
Interest expense		(36	)		(34	)
Total other income (expense), net		(36	)		(34	)
Net loss	$	(34	)	$	(9	)
Net loss per common share, basic and diluted	$	(0.00	)	$	(0.00	)
Weighted-average common shares used to compute    net loss per share, basic and diluted		8,004			8,004

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 and Stockholders’ Deficit

(In thousands)

(Unaudited)

	Three Months Ended March 31, 2023
	Series D Redeemable				Non-redeemable
	Convertible				Convertible				Common				Additional					Total
	Preferred Stock				Preferred Stock				Stock				Paid-in		Accumulated			Stockholders'
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Deficit
Balance at December 31, 2022		—	$	4,300		5,254	$	5		8,004	$	8	$	105,812	$	(110,345	)	$	(4,520	)
Stock-based compensation		—		—		—		—		—		—		108		—			108
Net loss		—		—		—		—		—		—		—		(34	)		(34	)
Balance at March 31, 2023		—	$	4,300		5,254	$	5		8,004	$	8	$	105,920	$	(110,379	)	$	(4,446	)

	Three Months Ended March 31, 2022
	Series D Redeemable				Non-redeemable
	Convertible				Convertible				Common				Additional					Total
	Preferred Stock				Preferred Stock				Stock				Paid-in		Accumulated			Stockholders'
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Deficit
Balance at December 31, 2021		—	$	4,300		5,254	$	5		8,004	$	8	$	105,413	$	(110,014	)	$	(4,588	)
Stock-based compensation		—		—		—		—		—		—		91		—			91
Net loss		—		—		—		—		—		—		—		(9	)		(9	)
Balance at March 31, 2022		—	$	4,300		5,254	$	5		8,004	$	8	$	105,504	$	(110,023	)	$	(4,506	)

See accompanying notes to the unaudited condensed consolidated financial statements.

5

International Stem Cell Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2023			2022
Cash flows from operating activities
Net loss	$	(34	)	$	(9	)
Adjustments to reconcile net loss to net cash used in operating    activities:
Depreciation and amortization		51			56
Non-cash operating lease expense		40			33
Stock-based compensation		108			91
Interest expense on related party note payable		32			32
Changes in operating assets and liabilities:
Accounts receivable		59			(58	)
Inventory, net		81			(156	)
Prepaid expenses and other current assets		(221	)		(203	)
Deposits and other assets		—			4
Accounts payable		29			125
Accrued liabilities		124			99
Operating lease liabilities		(53	)		(37	)
Net cash provided by (used in) operating activities		216			(23	)
Cash flows from investing activities
Purchases of property and equipment		(15	)		—
Net cash used in investing activities		(15	)		—
Cash flows from financing activities
Proceeds from note payable from a related party		—			250
Net cash provided by financing activities		—			250
Net increase in cash		201			227
Cash, beginning of period		742			171
Cash, end of period	$	943		$	398
Supplemental disclosure of cash flow information:
Cash paid for interest	$	3		$	—

See accompanying notes to the unaudited condensed consolidated financial statements.

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International Stem Cell Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Description of Business, Basis of Presentation and Summary of Significant Accounting Policies

Description of Business

International Stem Cell Corporation (the “Company”) was organized in Delaware in June 2005 and is headquartered in San Diego, California. The Company is primarily a research and development company for the therapeutic market, which has focused on advancing potential clinical applications of human parthenogenetic stem cells (“hpSCs”) for the treatment of various diseases of the central nervous system and liver. The Company has the following wholly owned subsidiaries:

•Lifeline Cell Technology, LLC (“LCT”) – for the biomedical market, develops, manufactures and commercializes primary human cell research products, including over 200 human cell culture products such as frozen human “primary” cells and the reagents (called “media”) needed to grow, maintain and differentiate the cells;

•Lifeline Skin Care, Inc. (“LSC”) – for the anti-aging market, develops, manufactures and markets a category of anti-aging skin care products based on the Company’s proprietary parthenogenetic stem cell technology and small molecule technology;

•Cyto Therapeutics Pty. Ltd. (“Cyto Therapeutics”) – performs research and development (“R&D”) for the therapeutic market and is currently conducting clinical trials in Australia for the use of ISC-hpNSC® in the treatment of Parkinson’s disease.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) applicable to interim financial statements. Certain information and notes normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations. The unaudited interim condensed consolidated financial statements reflect all adjustments consisting of normal recurring adjustments which, in the opinion of management, are necessary for a fair statement of the Company’s condensed consolidated financial statements. The operating results For the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2023. The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2022 included in the Company’s annual report on Form 10-K filed with the SEC on March 30, 2023.

Liquidity and Going Concern

The Company had an accumulated deficit of approximately $110.4 million as of March 31, 2023 and has incurred net losses and negative operating cash flows annually, since inception. The Company has generated no revenue from its therapeutic product candidates. Unless the Company obtains additional financing, the Company does not have sufficient cash on hand to sustain operations for at least twelve months from the issuance date of these condensed consolidated financial statements.

There can be no assurance that the Company will be successful in maintaining normal operating cash flow or obtaining additional funding. These circumstances raise substantial doubt about the Company’s ability to continue as a going concern. For the foreseeable future, the Company’s ability to continue its operations is dependent upon its ability to obtain additional financing. The accompanying condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of the uncertainty concerning the Company’s ability to continue as a going concern.

The Company continues to evaluate various financing sources and options to raise working capital to help fund current research and development programs and operations. The Company plans to obtain significant additional funding from sources, including through

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debt and equity financing, license arrangements, grants and/or collaborative research arrangements to sustain its operations and develop products.

The timing and degree of any future capital requirements will depend on several factors, including:

•the accuracy of the assumptions underlying the estimates for capital needs;

•the extent that revenues from sales of LSC and LCT products cover the related costs and provide capital;

•scientific progress in research and development programs;

•the magnitude and scope of the Company’s research and development programs and its ability to establish, enforce and maintain strategic arrangements for research, development, clinical testing, manufacturing and marketing;

•the progress with preclinical development and clinical trials;

•the time and costs involved in obtaining regulatory approvals;

•the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims;

•the number and type of product candidates that the Company decides to pursue; and

•demand from the Company’s largest original equipment manufacturer customers.

Additional debt financing may be expensive and require the Company to pledge all or a substantial portion of its assets. If additional funds are obtained through arrangements with collaborative partners, these arrangements may require the Company to relinquish the rights to some of its technologies, product candidates, or products that the Company would otherwise seek to develop and commercialize on its own. Furthermore, if sufficient capital is not available, the Company may be required to delay, reduce the scope of, or eliminate one or more of its product initiatives. The Company’s failure to raise capital or enter into related arrangements when needed would have a negative impact on its financial condition.

Principles of Consolidation and Foreign Currency Transactions

The condensed consolidated financial statements include the accounts of International Stem Cell Corporation and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The functional currency of the Company and its wholly owned subsidiaries is the U.S. dollar. Monetary assets and liabilities that are not denominated in the functional currency are remeasured each reporting period into U.S. dollars at foreign currency exchange rates in effect at the respective balance sheet date. Non-monetary assets and liabilities and equity are remeasured at the historical exchange rates. Revenue and expenses are remeasured at the average rate in effect on the date of the transaction. Net realized and unrealized gains and losses from foreign currency transactions and remeasurement are reported in general and administrative expense in the accompanying condensed consolidated statements of operations and were not material for the periods presented.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Significant estimates include patent life (remaining legal life versus remaining useful life), inventory carrying values, and the fair value of stock option grants using the Black-Scholes option valuation model. By their nature, estimates are subject to an inherent degree of uncertainty and actual results could differ from these estimates.

Segments

The Company’s chief operating decision-maker reviews financial information presented on a consolidated basis, accompanied by disaggregated information for each reportable company’s statement of operations. The Company operates the business on the basis of three reporting segments: ISCO – therapeutic market; LCT – biomedical market, and; LSC – anti-aging market.

Inventory, net

Inventory is accounted for using the average cost and first-in, first-out (“FIFO”) methods for LCT cell culture media and reagents, average cost and specific identification methods for LSC products, and specific identification method for other LCT products. Inventory balances are stated at the lower of cost or net realizable value. Laboratory supplies used in the research and development process are expensed as consumed. LCT’s inventory has a long product life cycle, does not have a shelf life when frozen, and future demand is

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uncertain. At each reporting period, the Company estimates its reserve allowance for excess and obsolete inventory using historical sales data and inventory turnover rates. The establishment of a reserve for excess and obsolete inventory establishes a new cost basis in inventory. If the Company is able to sell previously reserved inventory, the related reserves and inventory balances would be reduced in the period of sale. The value of the inventory that is not expected to be sold within twelve months of the current reporting period is classified as non-current inventory on the accompanying condensed consolidated balance sheets.

Accounts Receivable, net

Trade accounts receivable are recorded at the invoice value, net of discounts, and are not interest bearing. Accounts receivable primarily consist of trade accounts receivable from the sales of LCT’s products as well as LSC trade receivable amounts related to spa and distributor sales. The Company considers receivables past due based on the contractual payment terms. The Company measures expected credit losses for financial instruments at each reporting date based on historical experience, current conditions and reasonable forecasts. The allowance for doubtful accounts represents the Company’s estimate of expected credit losses relating to these factors. Amounts are written off against the allowances for doubtful accounts when the Company determines that a customer account is uncollectible. As of March 31, 2023 and December 31, 2022, the Company’s allowance for doubtful accounts was immaterial.

Intangible Assets

Intangible assets consist of acquired patent licenses and capitalized legal fees related to the acquisition, filing, maintenance, and defense of patents and trademarks. Amortization begins once the patent is issued by the appropriate authoritative bodies. In the period in which a patent application is rejected or efforts to pursue the patent are abandoned, all the related accumulated capitalized costs are expensed. Patents and other intangible assets are amortized on a straight-line basis over the useful life of the underlying patent, which is generally 15 years. All amortization expense related to intangible assets is included in general and administrative expenses in the accompanying condensed consolidated statements of operations.

Leases

The Company determines if an arrangement is a lease at inception. Operating leases are included in right-of-use assets, operating lease obligations, current, and operating lease obligations, net of current portion, on the Company’s consolidated balance sheets.

Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the present value of future minimum lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company uses a discount rate based on its estimated incremental borrowing rate to determine the right-of-use asset and operating lease liabilities to be recognized. The Company determines its incremental borrowing rate based on the terms and lease payments of its operating leases and what it would normally pay to borrow, on a collateralized basis, over similar terms for an amount equal to the lease payments. Operating lease expense is recognized on a straight-line basis over the lease term. In addition, the Company does not separate lease components from non-lease components.

Long-Lived Asset Impairment

The Company reviews long-lived assets for impairment when events or changes in circumstances (“triggering event”) indicate that the carrying value of an asset or group of assets may not be recovered. If a triggering event is determined to have occurred, the carrying value of an asset or group of assets is compared to the future undiscounted cash flows expected to be generated by the asset or group of assets. If the carrying value exceeds the undiscounted cash flows of the asset or group of assets, then an impairment exists, which is measured as the excess of fair value over the asset or asset group’s carrying value. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable.

Revenue Recognition

The Company's revenue consists primarily of sales of products from its two revenue-generating operating segments, the biomedical market (LCT) and anti-aging market (LSC). The anti-aging market sells products solely through the ecommerce channel. The biomedical market sells primary human cell research products with two product categories, cells and media, which are sold both domestically and internationally. The biomedical market also offers performance of quality control (QC) testing services. No revenue from services was earned during the three months ended March 31, 2023 and 2022.

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The following table presents the Company's revenue disaggregated by segment, product group, and geography (in thousands, except percentages):

Biomedical market:

	Three Months Ended March 31, 2023
					Total		% of Total
	Domestic		International		Revenues		Revenues
Biomedical products
Cells	$	530	$	192	$	722		39	%
Media		984		162		1,146		61	%
Total	$	1,514	$	354	$	1,868		100	%

	Three Months Ended March 31, 2022
					Total		% of Total
	Domestic		International		Revenues		Revenues
Biomedical products
Cells	$	337	$	109	$	446		25	%
Media		1,213		112		1,325		75	%
Total	$	1,550	$	221	$	1,771		100	%

Anti-aging market:

	Three Months Ended March 31,
	2023		2022
Skin care sales channels	$	218	$	249

Contract terms for the unit price, quantity, shipping and payment are governed by sales agreements, invoices or online order forms, which the Company considers to be a customer's contract. The unit price is considered the observable stand-alone selling price for the performance obligation(s) within the arrangements. Any promotional or volume sales discounts are applied evenly to the units sold for purposes of calculating standalone selling price.

The Company recognizes revenue when its customer obtains control of the promised goods or services in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. Product sales generally consist of a single performance obligation that the Company satisfies at a point in time (i.e., upon delivery of the product).

For LSC products, ecommerce sales are primarily paid through credit card charges. The anti-aging and biomedical products' standard payment terms for its customers are generally 30 days after the Company satisfies the performance obligation(s).

The Company elects to account for shipping and handling costs, recognized as cost of sales, as activities to fulfill the promise to transfer the goods to a customer. As a result, no consideration is allocated to shipping and handling costs. Rather, the Company accrues the cost of shipping and handling upon shipment of the product, and all contract revenue (i.e., the transaction price) is recognized at the same time.

Variable Consideration

The Company records revenue from customers in an amount that reflects the consideration it expects to be entitled to after transferring control of those goods or services to a customer. From time to time, the Company offers sales promotions on its products such as discounts and free product offers. Variable consideration is estimated at contract inception only to the extent that it is probable that a significant reversal of revenue will not occur and is updated at the end of each reporting period as additional information becomes available.

Contract Balances

The Company records a receivable when it has an unconditional right to receive consideration after a performance obligation is satisfied. As of March 31, 2023 and December 31, 2022, accounts receivable, net, totaled $688 thousand and $747 thousand,

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respectively. During the three months ended March 31, 2023 and 2022, the Company did not incur material write-offs of its accounts receivable.

Practical Expedients

The Company has elected the practical expedient to not determine whether contracts with customers contain significant financing components. The Company pays commissions on certain sales for its biomedical and anti-aging product markets once the customer payment has been received, which are accrued at the time of sale. The Company generally expenses sales commissions when incurred because the amortization period would be one year or less. These costs are recorded within selling and marketing expenses. In addition, the Company has elected to exclude sales taxes consideration from the determined transaction price.

Cost of Sales

Cost of sales consists primarily of salaries and benefits associated with employee efforts expended directly on the production of the Company’s products as well as related direct materials, shipping costs, general laboratory supplies and an allocation of overhead.

Research and Development Costs

Research and development costs, which are expensed as incurred, primarily consist of salaries and benefits associated with research and development personnel, overhead and occupancy costs, contract services costs, and amortization of license costs for technology used in research and development with alternative future uses, offset by the research and development tax credit provided by the Australian Taxation Office for qualified expenditures.

Australian Research and Development Tax Credit

The Company’s wholly owned subsidiary, Cyto Therapeutics, conducts various research and development activities on the Company’s product candidates in Australia. Under Australian tax law, the Australian Taxation Office provides for a refundable tax credit in the form of a cash refund equal to 43.5% of qualified research and development expenditures, not to exceed established thresholds. The Australian R&D tax incentive program is a self-assessment process and the Australian Government has the right to review the Company’s qualifying programs and related expenditures for a period of four years. If such a review were to occur and, as a result of the review and failure of a related appeal, the qualified program and related expenditures were disqualified, the respective research and development refunds could be recalled with penalties and interest.

The refundable tax credit does not depend on the Company’s generation of future taxable income or ongoing tax status or position. Accordingly, the credit is not considered an element of income tax accounting under ASC 740 “Income Taxes”. The Company uses the grant accounting model by analogy to International Accounting Standards (IAS) 20 to account for the refundable tax credit from the Australian government. The Company recognizes the research and development tax credit as a reduction to research and development expense when there is reasonable assurance that the tax credit will be received, the relevant expenses have been incurred, and the amount can be reliably measured. For the three months ended March 31, 2023 and 2022, no tax credits were provided.

Stock-Based Compensation

The cost of a stock-based award is measured at the grant date based on the estimated fair value of the award. Stock-based compensation is recognized as expense on a straight-line basis, net of forfeitures, which are recognized as incurred, over the requisite service period of the award. The fair value of stock options is estimated using the Black-Scholes option valuation model, which requires the input of subjective assumptions, including price volatility of the underlying stock, risk-free interest rate, dividend yield, and expected life of the option.

Net Loss Per Share

Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common stock equivalents outstanding for the period determined using the treasury-stock and if-converted methods. Potentially dilutive common stock equivalents are comprised of stock options and convertible preferred stock. For the three months ended March 31, 2023 and 2022, there was no difference in the number of shares used to calculate basic and diluted shares outstanding.

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For the three months ended March 31, 2023 and 2022, the following common stock options and convertible preferred stock were not included in the diluted net loss per share calculation because the effect would be anti-dilutive:

	March 31,		March 31,
	2023		2022
Options outstanding		6,858,492		5,372,535
Redeemable convertible preferred stock		2,457,143		2,457,143
Non-redeemable convertible preferred stock		3,619,379		3,619,379
Total		12,935,014		11,449,057

Customer Concentrations

For the three months ended March 31, 2023 and 2022, one customer accounted for approximately 47% and 45% of consolidated revenues, respectively. As of March 31, 2023 and December 31, 2022, the customer accounted for approximately 47% and 73%, respectively, of accounts receivable, net. No other single customer accounted for more than 10% of revenues for the periods then ended for any segment.

Recently Issued Accounting Pronouncements

In August 2020, the FASB issued ASU No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for convertible debt instruments by reducing the number of accounting models and the number of embedded features that could be recognized separately from the host contract. Consequently, more convertible debt instruments will be accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. ASU 2020-06 also requires use of the if-converted method in the diluted earnings per share calculation for convertible instruments. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years for smaller reporting companies, with early adoption permitted. The new standard will be effective for the Company on January 1, 2024 or at such earlier time where it is no longer a smaller reporting company. The Company is currently evaluating the potential impact that this standard may have on its consolidated financial statements and related disclosures.

Recently Adopted Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments— Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The ASU introduced a new credit loss methodology, the Current Expected Credit Losses (“CECL”) methodology, which requires earlier recognition of credit losses, while also providing additional transparency about credit risk. The CECL methodology utilizes a lifetime “expected credit loss” measurement objective for the recognition of credit losses for loans, held-to maturity debt securities, trade receivables and other receivables measured at amortized cost at the time the financial asset is originated or acquired. Subsequent to the issuance of ASU 2016-13, the FASB issued several additional ASUs to clarify implementation guidance, provide narrow-scope improvements and provide additional disclosure guidance. In November 2019, the FASB issued an amendment making this ASU effective for fiscal years beginning after December 15, 2022 for smaller reporting companies. The Company adopted ASC 2016-13 on January 1, 2023. The adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements.

In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation – Stock Compensation (Topic 718), and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the FASB Emerging Issues Task Force) (“ASU 2021-04”), which clarifies and reduces the diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification or exchange. ASU 2021-04 is effective for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years, with early adoption permitted. The Company adopted ASU 2021-04 on January 1, 2022. The adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements.

In November 2021, the FASB issued ASU No. 2021-10, Government Assistance (Topic 832): Disclosure by Business Entities about Government Assistance (“ASU 2021-10”), which improves the transparency of government assistance received by certain business entities by requiring the disclosure of (1) the types of government assistance received; (2) the accounting for such assistance, and (3) the effect of the assistance on the business entity’s financial statements. ASU 2021-10 is effective for fiscal years beginning after

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December 15, 2021, with early adoption permitted. The Company adopted ASU 2021-10 on January 1, 2022. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements.

2. Inventory

The components of inventory are as follows (in thousands):

	March 31,			December 31,
	2023			2022
Raw materials	$	579		$	615
Work in process		557			498
Finished goods		1,121			1,194
		2,257			2,307
Less: allowance for inventory excess and obsolescence		(668	)		(637	)
Total current and non-current inventory, net	$	1,589		$	1,670
Inventory, net	$	1,294		$	1,384
Non-current inventory		295			286
Total current and non-current inventory, net	$	1,589		$	1,670

3. Prepaid Expenses and Other Current Assets

The components of prepaid and other current assets are as follows (in thousands):

	March 31,		December 31,
	2023		2022
Prepaid expenses	$	285	$	64
Other current assets		26		26
Total prepaid expenses and other current assets	$	311	$	90

4. Property and Equipment

Property and equipment consist of the following (in thousands):

	March 31,			December 31,
	2023			2022
Machinery and equipment	$	1,600		$	1,603
Computer equipment and software		221			217
Office equipment		88			89
Leasehold improvements		569			558
		2,478			2,467
Less: accumulated depreciation and amortization		(2,246	)		(2,219	)
Property and equipment, net	$	232		$	248

Depreciation and amortization expense for the three months ended March 31, 2023 and 2022 was $31 thousand and $37 thousand, respectively.

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5. Intangible Assets

Intangible Assets consist of the following (in thousands):

	March 31,			December 31,
	2023			2022
Patents	$	1,286		$	1,286
Less: accumulated amortization		(503	)		(483	)
		783			803
Indefinite life logos and trademarks		75			75
Intangible assets, net	$	858		$	878

Amortization expense for the three months ended March 31, 2023 and 2022 was $20 thousand and $19 thousand, respectively.

6. Convertible Preferred Stock and Stockholders’ Deficit

Convertible Preferred Stock

As of March 31, 2023 and December 31, 2022, the Company was authorized to issue 20,000,000 shares of preferred stock, $0.001 par value per share. The Company designated 50 shares of Series D redeemable convertible preferred stock and 10,004,310 shares of Series B, Series G, and Series I-2 non-redeemable convertible preferred stock.

Non-Redeemable Convertible Preferred Stock

The Company’s Series B, Series G, and Series I-2 non-redeemable convertible preferred stock has been classified as equity on the accompanying condensed consolidated balance sheets.

The authorized, issued, and outstanding shares of non-redeemable convertible preferred stock as of March 31, 2023 consist of the following:

			Shares
	Shares		Issued and		Liquidation		Carrying
	Authorized		Outstanding		Preference		Value
					(in thousands)
Series B		5,000,000		250,000	$	475	$	—
Series G		5,000,000		5,000,000		5,000		5
Series I-2		4,310		4,310		4,310		—
Total		10,004,310		5,254,310	$	9,785	$	5

The authorized, issued and outstanding shares of non-redeemable convertible preferred stock as of December 31, 2022 consisted of the following:

			Shares
	Shares		Issued and		Liquidation		Carrying
	Authorized		Outstanding		Preference		Value
					(in thousands)
Series B		5,000,000		250,000	$	471	$	—
Series G		5,000,000		5,000,000		5,000		5
Series I-2		4,310		4,310		4,310		—
Total		10,004,310		5,254,310	$	9,781	$	5

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Series D Preferred Stock Redemption

The Company’s Series D redeemable convertible preferred stock contains a contingent redemption feature that is not solely within the Company’s control. Accordingly, the Series D redeemable convertible preferred stock is classified in temporary equity (outside of permanent equity) on the accompanying consolidated balance sheets.

Dividends

Holders of the Company’s convertible preferred stock are entitled to participating dividends with common stock when and if declared by the Company’s board of directors. No dividends have been declared during the three months ended March 31, 2023.

Liquidation

Liquidation preference among classes of preferred shares is first with Series D with priority followed by Series G, Series B and Series I-2 on the proceeds from any sale or liquidation of the Company in an amount equal to the purchase price of shares plus (in the case of the Series B) an amount equal to 1% of the Series B original issue price for every two calendar months from February 1, 2008. Following the satisfaction of the liquidation preferences, all shares of common stock participate in any remaining distribution.

Conversion

The shares of convertible preferred stock are convertible into one share of common stock at any time, at the option of the holder. The conversion rates of the Series B, Series D, and Series I-2 are subject to anti-dilution adjustments whereby, subject to specified exceptions, if the Company issues equity securities or securities convertible into equity at a price below the applicable conversion price of the Series B, Series D, and Series I-2, the conversion price of each such series shall be adjusted downward to equal the price of the new securities. The conversion rate of the Series G is subject to a weighted-average adjustment in the event of the issuance of additional shares of common stock below the conversion price, subject to specified exceptions. The conversion price of the Series I-2 are also subject to certain resets as set forth in the Certificates of Designation, including a reverse stock split.

The following table summarizes the number of shares of common stock into which each share of convertible preferred stock can be converted as of March 31, 2023:

					Conversion
	Initial		Current		Ratio to
	Conversion		Conversion		Common
	Price		Price		Stock
Series B	$	75.00	$	0.39		2.56
Series D	$	37.50	$	1.75		57,142.86
Series G	$	60.00	$	9.69		0.10
Series I-2	$	1.75	$	1.75		571.43

Common Stock

As of March 31, 2023 and December 31, 2022, the Company was authorized to issue 120,000,000 shares of common stock, $0.001 par value per share.

Equity Incentive Plans

The Company adopted the 2006 Equity Participation Plan (as amended the “2006 Plan”), which provides for the grant of stock options, restricted stock and other equity-based awards. Awards for up to 100,000 shares may be granted to employees, directors and consultants under this Plan. The options granted under the 2006 Plan may be either qualified or non-qualified options. Options may be granted with different vesting terms and expire no later than 10 years from the date of grant. The 2006 Plan expired on November 16, 2016. Options and other equity-based awards granted prior to the expiration of the 2006 Plan will continue in effect until the option or award is exercised or terminates pursuant to its terms. No new awards may be granted under the 2006 Plan following its expiration.

The Company adopted the 2010 Equity Participation Plan, as amended (the “2010 Plan”), which provides for the grant of stock options, restricted stock and other equity-based awards. Awards for up to 9,700,000 shares may be granted to employees, directors and

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consultants under the 2010 Plan. The options granted under the 2010 Plan may be either qualified or non-qualified options and the 2010 Plan is set to terminate in March 2030. Options may be granted with different vesting terms and expire no later than 10 years from the date of grant.

Stock Options

The Company's stock option activity, involving stock options issued to employees, directors and consultants under the 2006 Plan and the 2010 Plan, for the three months ended March 31, 2023 is summarized below:

					Weighted-
					Average
			Weighted-		Remaining		Aggregate
	Number of		Average		Contractual		Intrinsic
	Outstanding		Exercise		Term		Value
	Options		Price		(in years)		(in thousands)
Outstanding at December 31, 2022		6,858,492	$	1.02
Outstanding at March 31, 2023		6,858,492	$	1.02		7.13	$	—
Vested and expected to vest at March 31, 2023		6,624,476	$	1.04		7.06	$	—
Exercisable at March 31, 2023		4,887,890	$	1.25		6.42	$	—

Total stock-based compensation expense recorded in the condensed statements of operations is as follows (in thousands):

	Three Months Ended March 31,
	2023		2022
Cost of sales	$	1	$	2
Research and development		21		6
Selling and marketing		1		3
General and administrative		85		80
Total	$	108	$	91

Unrecognized compensation expense related to stock options as of March 31, 2023 was $522 thousand, which is expected to be recognized over a weighted-average period of 1.81 years.

Common Stock Reserved for Future Issuance

As of March 31, 2023, the Company had shares of common stock reserved for future issuance as follows:

Options outstanding	6,858,492
Common stock available for issuance under the 2010 Plan	2,674,566
Redeemable convertible preferred stock	2,457,143
Non-redeemable convertible preferred stock	3,619,379
Total	15,609,580

7. Related Party Transactions

Related party lease arrangements

On October 26, 2021, the Company and S Real Estate Holdings, LLC, a related party, entered jointly into a lease agreement with Rehco Holdings, LLC (the “Lease”), for the purpose of establishing a new corporate headquarters, including corporate, R&D, and manufacturing operations. The lease commenced on November 1, 2021 and expires on December 31, 2026 with no options to extend or renew. The lease was personally guaranteed by Dr. Russell Kern, the Company’s Executive Vice President and Chief Scientific Officer.

On December 15, 2021, the Company and S Real Estate Holdings LLC entered into a co-tenant agreement, whereby the Company and S Real Estate Holdings LLC agreed to allocate portions of the base rent and variable charges, including insurance, maintenance costs, taxes and operating expenses, between the parties. During the term of the Lease, the Company will be liable for 40% of all costs incurred in connection with the lease, while S Real Estate Holdings LLC will be liable for the remaining 60%.

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Related party note payable

As of December 31, 2021, the Company had an unsecured, non-convertible promissory note, with a principal outstanding amount of $2.7 million (the “Note”) and accrued interest of approximately $300 thousand with Dr. Andrey Semechkin, the Company’s Chief Executive Office and Co-Chairman of the Board of Directors. The outstanding principal amount under the Note accrued interest at a rate of 4.5% per annum. The outstanding principal and accrued interest on the Note was due and payable on January 15, 2022 and could be pre-paid without penalty at any time.

On January 13, 2022, to obtain funding for working capital purposes, the Company issued an unsecured, non-convertible promissory note in the principal amount of $2.9 million (the "Modified Note”) to Dr. Semechkin. In exchange, Dr. Semechkin surrendered the Note and provided an additional $250 thousand to the Company. The Modified Note, including outstanding amounts of principal and accrued interest, was due and payable on March 15, 2022.

On March 1, 2022, the Company and Dr. Andrey Semechkin restructured the Modified Note and agreed to extend the maturity date for an additional six-month period to September 15, 2022. On September 15, 2022, the Company and Dr. Andrey Semechkin extended the Modified Note for an additional six-month period to March 15, 2023. No other terms of the Modified Note were modified.

On September 15, 2022, the Noteholder surrendered the March 2022 Note, and the Company issued a new promissory note (“September 2022 Note”), which featured all the same terms as the previously outstanding note, with the exception of an extension of the maturity date from September 15, 2022 to March 15, 2023. The September 2022 Note has a principal balance of $2.9 million, an interest rate of 4.5%, and features optional prepayment terms. There were no debt issuance fees associated with this issuance.

On March 14, 2023, the Noteholder surrendered the September 2022 Note, and the Company issued a new promissory note (“March 2023 Note”), which featured all the same terms as the previously outstanding note, with the exception of an extension of the maturity date from March 15, 2023 to September 15, 2023. The March 2023 Note has a principal balance of $2.9 million, an interest rate of 4.5%, and features optional prepayment terms. There were no debt issuance fees associated with this issuance. The amendments qualify as a troubled debt restructuring which did not result in a gain as the carrying amount of the debt was less than the total future cash payments of the restructured debt.

8. Commitments and Contingencies

Leases

The Company has three operating leases for real estate in California and Maryland:

•San Diego, California – corporate headquarters, including corporate, R&D, and manufacturing operations, with a termination date of December 2026, jointly leased with a related party (refer to Note 7 – Related Party Transactions, for further information) (“headquarter lease”). This lease contains no renewal or term extension options;

•San Diego, California – supplemental office space adjacent to the Company’s corporate headquarters with a termination date of December 2026. This lease contains no renewal or term extension options; and

•Frederick, Maryland – mixed laboratory and administrative space with a term date of December 2025. The lease contains one renewal option for an additional three-year term through November 2028. The Company is reasonably certain it will not exercise this renewal option.

The headquarter lease commenced on November 1, 2021 and expires on December 31, 2026. At commencement, base rent due under the lease was approximately $11 thousand and increases approximately 3.5% per annum over the lease term. The lease is subject to additional variable charges, including insurance, maintenance costs, taxes and operating expenses. Base rent and additional variable charges are shared between the Company and S Real Estate Holdings LLC, a related party, pursuant to a co-tenant agreement between the parties (refer to Note 7 – Related Party Transactions, for further information). In addition, base rent for months two through five of the lease term were abated by 50%.

In November 2021, the Company entered into an operating lease for supplemental office space adjacent to its new corporate headquarters with the same landlord. The lease commenced on December 1, 2021 and expires on December 31, 2026 and is not subject to the co-tenant agreement with S Real Estate Holdings, LLC. At commencement, base rent due under the supplemental office lease was approximately $4 thousand per month and increases at a fixed amount per annum over the lease term.

The Company’s operating leases for real estate are subject to additional variable charges for common area maintenance and other variable costs. Variable costs for the three months ended March 31, 2023 and 2022 were immaterial. All operating lease expense is

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recognized on a straight-line basis over the lease term. For the three months ended March 31, 2023 and 2022, lease expense totaled $71 thousand and $73 thousand, respectively. As of March 31, 2023 and December 31, 2022, the Company had no finance leases.

Maturities of lease liabilities are as follows (in thousands):

Years ending December 31,
2023 (remaining nine months)	$	254
2024		349
2025		360
2026		119
Total minimum lease payments		1,082
Less: imputed interest		(185	)
Total future minimum lease payments		897
Less: operating lease liabilities, current		(241	)
Operating lease liabilities, net of current portion	$	656

9. Segments

The Company operates the business on the basis of three reporting segments, the parent company and two business units: ISCO – therapeutic market; LCT – biomedical market; LSC – anti-aging market.

The Company does not measure the performance of its segments on any asset-based metrics. Therefore, segment information is presented only for operating loss. Revenues, expenses and operating loss for the three months ended March 31, 2023 and 2022 by reporting segment were as follows (in thousands):

	Three Months Ended March 31,
	2023			2022
Revenues:
Biomedical market	$	1,868		$	1,771
Anti-aging market		218			249
Total revenues		2,086			2,020
Operating expenses:
Therapeutic market		577			624
Biomedical market		1,093			999
Anti-aging market		414			372
Total operating expenses		2,084			1,995
Operating income (loss):
Therapeutic market		(577	)		(624	)
Biomedical market		775			772
Anti-aging market		(196	)		(123	)
Total operating loss		2			25
Other income (expense), net:
Therapeutic market		(36	)		(34	)
Total other income (expense), net		(36	)		(34	)
Net loss:
Therapeutic market		(613	)		(658	)
Biomedical market		775			772
Anti-aging market		(196	)		(123	)
Total net loss	$	(34	)	$	(9	)

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

The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes and other financial information included elsewhere herein. This information should also be read in conjunction with our audited historical consolidated financial statements which are included in our Form 10-K for the fiscal year ended December 31, 2022 (“Form 10-K”). The discussion contains forward-looking statements, such as our plans, expectations and intentions (including those related to clinical trials and business and expense trends), that are based upon current expectations and that involve risks and uncertainties. Our actual results may differ significantly from management’s expectations. The factors that could affect these forward-looking statements are discussed in the Risk Factors included in our Form 10-K. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any expectations expressed herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best assessment by our management.

Business Overview

We have generated aggregate product revenues from our two commercial businesses of $2.1 million and $2.0 million for the three months ended March 31, 2023 and 2022, respectively. We currently have no revenue generated from our principal operations in therapeutic and clinical product development.

Our products are based on multi-decade experience with human cell culture and a proprietary type of pluripotent stem cells, human parthenogenetic stem cells (“hpSCs”). Our hpSCs are comparable to human embryonic stem cells (“hESCs”) in that they have the potential to be differentiated into many different cells in the human body. However, the derivation of hpSCs does not require the use of fertilized eggs or the destruction of viable human embryos and also offers the potential for the creation of immune-matched cells and tissues that are less likely to be rejected following transplantation. Our collection of hpSCs, known as UniStemCell™, currently consists of 15 stem cell lines. We have facilities and manufacturing protocols that comply with the requirements of Good Manufacturing Practice (GMP) standards as promulgated by the U.S. Code of Federal Regulations and enforced by the United States Food and Drug Administration (“FDA”).

Market Opportunity and Growth Strategy

Therapeutic Market – Clinical Applications of hpSCs for Disease Treatments

We are developing different cell types from our stem cells that may result in therapeutic products. We focus on applications where cell and tissue therapy is already proven but where there is an insufficient supply of functional cells or tissue.

We believe that the most promising potential clinical applications of our technology are Parkinson’s disease ("PD”), traumatic brain injury ("TBI”), and stroke. Using our proprietary technologies and know-how, we are creating neural stem cells from hpSCs as a potential treatment of PD, TBI, and stroke.

PD: Our most advanced project is the neural stem cell program for the treatment of Parkinson’s disease. In 2013, we published in Nature Scientific Reports the basis for our patent on a new method of manufacturing neural stem cells, which is used to produce the clinical-grade cells necessary for future clinical studies and commercialization. In 2014, we completed the majority of the preclinical research, establishing the safety profile of NSC in various animal species, including non-human primates. In June 2016, we published the results of a 12-month pre-clinical non-human primate study, which demonstrated the safety, efficacy and mechanism of action of the ISC- hpNSC®. In 2017, we dosed four patients in our Phase I trial of ISC-hpNSC®, human parthenogenetic stem cell-derived neural stem cells for the treatment of Parkinson’s disease. We reported 12-month results from the first cohort and 6-month interim results of the second cohort at the Society for Neuroscience annual meeting (Neuroscience 2018) in November 2018. In April 2019, we announced the completion of subject enrollment, with the 12th subject receiving a transplantation of the highest dose of cells. There have been no safety signals or serious adverse effects seen to date as related to the transplanted ISC-hpNSC® cells.

We announced a successful completion of the dose escalating phase 1 clinical trial in June 2021. In terms of preliminary efficacy, where scores are compared against baseline before transplantation, we observed a potential dose-dependent response with an apparent peak effectiveness at our middle dose. The % OFF-Time, which is the time during the day when levodopa medication is not performing optimally and PD symptoms return, decreased an average 47% from the baseline at 12 months post transplantation in cohort 2. This trend continued through 24 months where the % OFF-Time in the second cohort dropped by 55% from the initial reading. The same was true for % ON-Time without dyskinesia, which is the time during the day when levodopa medication is performing optimally without dyskinesia. The % ON-Time increased an average of 42% above the initial evaluation at 12 months post-transplantation in the second cohort.

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Stroke: In August 2014, we announced the launch of a stroke program, evaluating the use of ISC-hpNSC® transplantation for the treatment of ischemic stroke using a rodent model of the disease. The Company has a considerable amount of safety data on ISC-hpNSC® from the Parkinson’s disease program and, as there is evidence that transplantation of ISC-hpNSC® may improve patient outcomes as an adjunctive therapeutic strategy in stroke, having a second program that can use this safety dataset is therefore a logical extension. In 2015, the Company together with Tulane University demonstrated that NSC can significantly reduce neurological dysfunction after a stroke in animal models.

TBI: In October 2016, we announced the results of the pre-clinical rodent study, evaluating the use of ISC-hpNSC® transplantation for the treatment of TBI. The study was conducted at the University of South Florida Morsani College of Medicine. We demonstrated that animals receiving injections of ISC-hpNSC® displayed the highest levels of improvements in cognitive performance and motor coordination compared to vehicle control treated animals. In February 2019, we published the results of the pre-clinical study in Theranostics, a prestigious peer-reviewed medical journal. The publication titled, "Human parthenogenetic neural stem cell grafts promote multiple regenerative processes in a traumatic brain injury model,” demonstrated that the clinical-grade neural stem cells used in our Parkinson’s disease clinical trial, ISC-hpNSC®, significantly improved TBI-associated motor, neurological, and cognitive deficits without any safety issues.

Anti-Aging Cosmetic Market – Skin Care Products

Our wholly owned subsidiary Lifeline Skin Care, Inc. (“LSC”) develops, manufactures and sells anti-aging skin care products based on two core technologies: encapsulated extract derived from hpSC and specially selected targeted small molecules. LSC’s products include:

•ProPlus Advanced Defense Complex

•ProPlus Advanced Recovery Complex

•ProPlus Eye Firming Complex

•ProPlus Neck Firming Complex

•ProPlus Advanced Aquoues Treatment

•ProPlus Collagen Booster (Advanced Molecular Serum)

•ProPlus Elastin Booster

•ProPlus Brightening Toner

LSC’s products are regulated as cosmetics. LSC’s products are sold domestically through a branded website, Amazon, and ecommerce partners.

Biomedical Market – Primary Human Cell Research Products

Our wholly owned subsidiary Lifeline Cell Technology, LLC (“LCT”) develops, manufactures and commercializes approximately 200 human cell culture products, including frozen human “primary” cells and reagents (called “media”), which are needed to grow, maintain, and differentiate the cells. LCT’s scientists have used a standardized, methodical, scientific approach to basal medium optimization to systematically produce optimized products designed to culture specific human cell types and to elicit specific cellular behaviors. These techniques can also be used to produce products that do not contain non-human animal proteins, a feature desirable to the research and therapeutic markets. Each LCT cell product is quality tested for the expression of specific markers (to assure the cells are the correct type), proliferation rate, viability, morphology and absence of pathogens. Each cell system also contains associated donor information and all informed consent requirements are strictly followed. LCT’s research products are marketed and sold by its internal sales force, OEM partners and LCT brand distributors in Europe and Asia.

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Results of Operations

Comparison of the Three Months Ended March 31, 2023 and 2022

The following table summarizes our results of operations for the three months ended March 31, 2023 and 2022:

	Three Months Ended March 31,
	2023			2022			$ Change			% Change
Product sales	$	2,086		$	2,020		$	66			3	%
Cost of sales		824			725			99			14	%
As a % of revenues		40	%		36	%
General and administrative		800			832			(32	)		-4	%
Selling and marketing		315			301			14			5	%
Research and development		145			137			8			6	%
Other income (expense), net		(36	)		(34	)		(2	)		6	%
Net loss	$	(34	)	$	(9	)	$	(25	)		278	%
As a % of revenues		-2	%		0	%

Product sales, net

Product sales for the three months ended March 31, 2023 was $2,086 thousand compared to $2,020 thousand for the three months ended March 31, 2022. The increase of $66 thousand, or 3%, was primarily attributable to an increase of $276 thousand in our Cells product sales, partially offset by a $179 thousand decrease in our Media and other product sales in our Biomedical market segment. This net increase was further offset by a decrease in our skin care product sales of approximately $31 thousand as a result of the discontinuation of our professional line of anti-aging products, resulting in only one product line and less demand.

Cost of sales

Cost of sales for the three months ended March 31, 2023 was $824 thousand, compared to $725 thousand for the three months ended March 31, 2022. The increase of $99 thousand, or 14%, was from our Biomedical line, approximately $69 thousand unfavorable manufacturing variances, partially offset by the sale of 100% reserved inventory of $30 thousand and from our Skin care line, a decrease in anti-aging product sales of approximately $6 thousand.

Profit margins have decreased approximately 4% for the three months ended March 31, 2023, as compared to the three months ended March 31, 2022, which is primarily attributable to an overall increase in cost of sales.

Cost of sales consists primarily of salaries and benefits associated with employee efforts expended directly on the production of the Company’s products, as well as related direct materials, general laboratory supplies and the allocation of overhead. We aim to continue to refine our manufacturing processes and supply chain management to improve the cost of sales as a percentage of revenue for both our LCT and LSC segments.

Research and development income

Research and development expense for the three months ended March 31, 2023 was $145 thousand, compared to $137 thousand for the three months ended March 31, 2022. The increase of $8 thousand, or 6%, was a result of an increase in personnel and stock compensation costs, including consultant costs, of approximately $34 thousand. This was partially offset by a decrease of approximately $19 thousand in other patent related costs quarter-over-quarter, as well as a net decrease in supplies, facilities and licensing expense of approximately $7 thousand.

Our research and development efforts are primarily focused on the development of treatments for Parkinson’s disease, traumatic brain injury, and stroke. These projects are long-term investments that involve developing both new stem cell lines and new differentiation techniques that can provide higher purity populations of functional cells. Research and development expenses are expensed as incurred and are accounted for on a project-by-project basis. However, much of our research has potential applicability to each of our projects.

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Selling and marketing expenses

Selling and marketing expenses for the three months ended March 31, 2023 was $315 thousand, compared to $301 thousand for the three months ended March 31, 2022. The increase of $14 thousand, or 5%, was primarily attributable to an increase in advertising expense partially offset by a decrease in shipping costs resulting from the reclassification to cost of sales in the current year versus the prior year.

Our sales and marketing expenses consist primarily of employee-related expenses including salaries, bonuses, benefits, and share-based compensation for our Biomedical and Anti-aging cosmetic businesses. Other significant costs include facility costs not otherwise included in or allocated to other departments, as well as marketing material costs, permits and licenses for ecommerce, and other advertising expenses.

General and administrative expenses

General and administrative expenses for the three months ended March 31, 2023 was $800 thousand, compared to $832 thousand for the three months ended March 31, 2022. The decrease of $32 thousand, or 4%, was primarily attributable to decreases in personnel-related costs, including relocation costs, of approximately $34 thousand, and insurance and licensing fees of approximately $22 thousand, which were partially offset by increases in consulting fees, legal fees and other logistics and general fees of approximately $24 thousand.

Our general and administrative expenses consist primarily of employee-related expenses including salaries, bonuses, benefits, and share-based compensation. Other significant costs include facility costs not otherwise included in or allocated to other departments, legal fees not relating to patents and corporate matters, and fees for accounting and consulting services.

Other income (expense), net

Other expense, net for the three months ended March 31, 2023 was $36 thousand, compared to other expense, net of $34 thousand for the three months ended March 31, 2022. The increase was attributable to interest on our related party note payable.

Liquidity and Capital Resources

The Company enters into contracts in the normal course of business with various third-party consultants and contract research organizations (“CRO”) for preclinical research, clinical trials and manufacturing activities. These contracts generally provide for termination upon notice. Actual expenses associated with these arrangements may be higher or lower due to various reasons, including but not limited to, progress of our development products, enrollment in clinical trials, and product and personnel delays due to COVID. Other short-term and long terms commitments that would affect liquidity include lease obligations as well as related party debt repayments.

As of March 31, 2023, we had an accumulated deficit of approximately $110.4 million and have historically incurred net losses and negative operating cash flows. Substantially all of our operating losses have resulted from the funding of our research and development programs and general and administrative expenses associated with our operations. We incurred net losses of $34 thousand and $9 thousand for the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023, we had cash of approximately $943 thousand, compared to $742 thousand as of December 31, 2022. Our primary use of cash is to continue to fund our research and development programs while maintaining and growing our revenue generating businesses.

Cash Flows

Comparison of the Three Months Ended March 31, 2023 and 2022

The following table provides information regarding our cash flows for the three months ended March 31, 2023 and 2022 (in thousands):

	Three Months Ended March 31,
	2023			2022
Net cash provided by (used in) operating activities	$	216		$	(23	)
Net cash used in investing activities		(15	)		—
Net cash provided by financing activities		—			250
Net increase (decrease) in cash	$	201		$	227

22

Operating Cash Flows

For the three months ended March 31, 2023, net cash provided by operating activities was $216 thousand, resulting primarily from our net loss of $34 thousand and net changes in operating assets and liabilities of $19 thousand, consisting of decreases in operating lease liabilities of $53 thousand, accounts receivable, net of $59 thousand and inventory, net of $81 thousand partially offset by increases in accounts payable of $29 thousand, accrued liabilities of $124 thousand and prepaid expenses and other current assets of $221 thousand. The decrease in cash was partially offset by net noncash adjustments of $231 thousand, pertaining to recurring non-cash expenses, such as stock-based compensation, depreciation and amortization expense, non-cash operating lease expense, and interest expense on our related party note payable.

For the three months ended March 31, 2022, net cash used in operating activities was $23 thousand, resulting primarily from our net loss of $9 thousand and net changes in operating assets and liabilities of $226 thousand, partially offset by net recurring non-cash adjustments of $212 thousand.

Investing Cash Flows

Net cash used in investing activities for the three months ended March 31, 2023 was $15 thousand, compared to none for the three months ended March 31, 2022. The increase was attributable to the purchase of property and equipment during the current period.

Financing Cash Flows

For the three months ended March 31, 2023, no net cash was provided by financing activities compared to $250 thousand net cash provided for the three months ended March 31, 2022. Net cash provided for the three months ended March 31, 2022 was wholly attributable to proceeds from our related party note payable of $250 thousand.

Funding Requirements

Management continues to evaluate various financing sources and options to raise working capital to help fund our current research and development programs and operations. We will need to obtain significant additional capital from equity and/or debt financings, license arrangements, grants and/or collaborative research arrangements to sustain our operations and develop products. Unless we obtain additional financing, we do not have sufficient cash on hand to sustain our operations at least through one year after the issuance date. The timing and degree of any future capital requirements will depend on many factors, including:

•the accuracy of the assumptions underlying our estimates for capital needs;

•the extent that revenues from sales of LSC and LCT products cover the related costs and provide capital;

•scientific progress in our research and development programs;

•the magnitude and scope of our research and development programs and our ability to establish, enforce and maintain strategic arrangements for research, development, clinical testing, manufacturing and marketing;

•our progress with preclinical development and clinical trials;

•the extent to which third party interest in Company’s research and commercial products can be realized through effective partnerships;

•the time and costs involved in obtaining regulatory approvals;

•the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims; and

•the number and type of product candidates that we pursue.

Our failure to raise capital or enter into applicable arrangements when needed would have a negative impact on our financial condition. Additional debt financing may be expensive and require us to pledge all or a substantial portion of its assets. Further, if additional funds are obtained through arrangements with collaborative partners, these arrangements may require us to relinquish rights to some of its technologies, product candidates or products that we would otherwise seek to develop and commercialize on its own. If sufficient capital is not available, we may be required to delay, reduce the scope of or eliminate one or more of its product initiatives.

We currently have no revenue generated from our principal operations in therapeutic and clinical product development through research and development efforts. There can be no assurance that we will be successful in maintaining our normal operating cash flow

23

and obtaining additional funds and that the timing of our capital raising or future financing will result in cash flow sufficient to sustain our operations at least through one year after the issuance date.

Based on the factors above, there is substantial doubt about our ability to continue as a going concern. The consolidated financial statements were prepared assuming that we will continue to operate as a going concern. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty. Management’s plans in regard to these matters are focused on managing our cash flow, the proper timing of our capital expenditures, and raising additional capital or financing in the future.

Critical Accounting Estimates

Our management’s discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America and the rules and regulations of the Securities and Exchange Commission. The preparation of these condensed consolidated financial statements requires us to make judgements and estimates that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statement, and the reported amounts of revenues, costs and expenses during the reporting periods.

Our estimates are based on our historical experience, known trends and events, and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities and amount of expense recognized that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We evaluate our estimates and assumptions on an ongoing basis. The effects of material revisions in estimates, if any, will be reflected in the consolidated financial statements prospectively from the date of the change in estimates.

There have been no material changes to our critical accounting policies and estimates during the three months ended March 31, 2023 from those disclosed in “Part II – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K.

Recently Issued Accounting Pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 1 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

Contractual Obligations and Commitments

There have been no material changes to our contractual obligations and commitments outside the ordinary course of business during the three months ended March 31, 2023 from those disclosed in “Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act, and are not required to provide the information required under this item.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(e) and 15d-15(e) under the Exchange Act, the Company, with the participation of management, including our Chief Executive Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in such rules) as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Principal Financial Officer concluded that, at December 31, 2022, our disclosure controls and procedures were not effective

24

as of such date due to a material weakness over financial reporting that was disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Principal Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Remediation

As previously described in "Part II - Item 9A.Controls and Procedures" of our Annual Report on Form 10-K for the year ended December 31, 2022, we began implementing a remediation plan to address the material weakness mentioned above. The weakness will not be considered remediated, until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. We expect that the remediation of this material weakness will be completed no later than December 31, 2023.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal controls during the three months ended March 31, 2023 that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

25

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

There have been no material changes to the risk factors disclosed in “Part I – Item 1A. Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 30, 2023.

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

26

Item 6. Exhibits

Exhibit Index

Exhibit	Description
3.1	Certificate of Incorporation (incorporated by reference to Exhibit 3.4 of the Registrant’s Form 10-SB filed on April 4, 2006).
3.2	Certificate of Amendment of Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Registrant’s Preliminary Information Statement on Form 14C filed on December 29, 2006).
3.3	Certificate of Amendment of Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Registrant’s Form 8-K filed on June 4, 2012).
3.4	Certificate of Amendment of Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Registrant’s Form 8-K filed on May 14, 2014).
3.5	Certificate of Amendment of Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Registrant’s Form 8-K filed on July 28, 2015).
3.6	Certificate of Amendment of Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Registrant’s Form 8-K filed on May 19, 2016).
3.7	Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.1 of the Registrant’s Form 8-K filed on May 6, 2011).
4.1	Form of Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 of the Registrant’s Form 10-KSB filed on April 9, 2007).
4.2	Certification of Designation of Series B Preferred Stock (incorporated by reference to Exhibit 4.1 of the Registrant’s Form 8-K filed on May 12, 2008).
4.3	Certification of Designation of Series D Preferred Stock (incorporated by reference to Exhibit 10.2 of the Registrant’s Form 8-K filed on January 5, 2009).
4.4	Certificate of Designation of Series G Preferred Stock (incorporated by reference to Exhibit 3.1 of the Registrant’s Form 8-K filed on March 14, 2012).
4.5	Certificate of Preferences, Rights and Limitations of Series I-2 Convertible Preferred Stock (incorporated by reference to Exhibit 3.2 of the Registrant’s Form 8-K filed on March 10, 2016).
10.1	Form of Note issued on September 15, 2022 (incorporated by reference to Exhibit 10.1 of the Registrant’s Form 8-K filed September 16, 2022).
10.2	Form of Note issued on March 15, 2023 (incorporated by reference to Exhibit 10.1 of the Registrant’s Form 8-K filed on March 16, 2023).
24.1	Power of attorney (included on signature page hereto)
31.1*	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
31.2*	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
32.1*	Section 1350 Certification of Chief Executive Officer.
32.2*	Section 1350 Certification of Chief Financial Officer.
101.INS*	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH*	Inline XBRL Taxonomy Extension Schema Document
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document

27

Exhibit	Description
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*	Cover Page Interactive Data File (embedded within the Inline XBRL document)
* Filed herewith.

28

SIGNATURES

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

	INTERNATIONAL STEM CELL CORPORATION
Dated: May 12, 2023
	By:	/s/ ANDREY SEMECHKIN
	Name:	Andrey Semechkin
	Title:	Chief Executive Officer (Principal Executive Officer)
	By:	/s/ RUSSELL KERN
	Name:	Russell Kern
	Title:	Executive Vice President, Chief Scientific Officer and Director (Principal Financial Officer)

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Andrey Semechkin and Russell Kern, jointly and severally, his attorneys-in-fact, each with the power of substitution, for him or her in any and all capacities, to sign any amendments to this Report on Form 10-Q, and to file the same, with exhibits thereto and other documents in connection therewith with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed on behalf of the registrant and in the capacities and on the dates indicated.

29

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Andrey Semechkin, Chief Executive Officer of International Stem Cell Corporation, certify that:

1. I have reviewed this quarterly report on Form 10-Q of International Stem Cell Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 12, 2023

By:	/s/ ANDREY SEMECHKIN
	Andrey Semechkin
	Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Russell Kern, EVP, and Chief Scientific Officer of International Stem Cell Corporation, certify that:

1. I have reviewed this quarterly report on Form 10-Q of International Stem Cell Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 12, 2023

By:	/s/ RUSSELL KERN
	Russell Kern
	Executive Vice President and Chief Scientific
	Officer (Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of International Stem Cell Corporation (the “Company”) for the quarter ended March 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Andrey Semechkin, Chief Executive Officer of the Company, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 12, 2023

By:	/s/ ANDREY SEMECHKIN
	Andrey Semechkin
	Chief Executive Officer
	(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of International Stem Cell Corporation (the “Company”) for the quarter ended March 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Russell Kern, EVP, and Chief Scientific Officer of the Company, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 12, 2023

By:	/s/ RUSSELL KERN
	Russell Kern
	Executive Vice President and Chief Scientific
	Officer (Principal Financial Officer)

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Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2023	May 10, 2023
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2023
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
Entity Registrant Name	INTERNATIONAL STEM CELL CORPORATION
Entity Central Index Key	0001355790
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Shell Company	false
Entity Small Business	true
Entity Emerging Growth Company	false
Entity File Number	0-51891
Entity Tax Identification Number	20-4494098
Entity Address, Address Line One	9745 Businesspark Ave
Entity Address, City or Town	San Diego
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92131
City Area Code	760
Local Phone Number	940-6383
Entity Common Stock, Shares Outstanding		8,004,389
Entity Incorporation, State or Country Code	DE
Entity Interactive Data Current	Yes
Document Quarterly Report	true
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Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Current assets:
Cash	$ 943	$ 742
Accounts receivable, net	688	747
Inventory, net	1,294	1,384
Prepaid expenses and other current assets	311	90
Total current assets	3,236	2,963
Non-current inventory, net	295	286
Property and equipment, net	232	248
Intangible assets, net	858	878
Operating lease right-of-use assets	687	727
Deposits and other assets	33	33
Total assets	5,341	5,135
Current liabilities:
Accounts payable	351	322
Accrued liabilities	632	508
Operating lease liabilities, current	241	230
Advances	250	250
Related party note payable	3,357	3,325
Total current liabilities	4,831	4,635
Operating lease liabilities, net of current portion	656	720
Total liabilities	5,487	5,355
Commitments and contingencies (Note 8)
Stockholders' deficit:
Common stock, $0.001 par value; 120,000,000 shares authorized; 8,004,389 shares issued and outstanding at March 31, 2023 and December 31, 2022	8	8
Additional paid-in capital	105,920	105,812
Accumulated deficit	(110,379)	(110,345)
Total stockholders' deficit	(4,446)	(4,520)
Total liabilities, redeemable convertible preferred stock and stockholders' deficit	5,341	5,135
Series D Redeemable Convertible Preferred Stock [Member]
Current liabilities:
Series D redeemable convertible preferred stock, $0.001 par value; 50 shares authorized; 43 shares issued and outstanding; liquidation preference of $4,310 at March 31, 2023 and December 31, 2022	4,300	4,300
Nonredeemable Convertible Preferred Stock [Member]
Stockholders' deficit:
Non-redeemable convertible preferred stock, $0.001 par value; 10,004,310 and 10,004,310 shares authorized; 5,254,310 and 5,254,310 shares issued and outstanding; liquidation preference of $9,785 and $9,781 at March 31, 2023 and December 31, 2022, respectively	$ 5	$ 5

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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Non-redeemable convertible preferred stock, par value	$ 0.001	$ 0.001
Non-redeemable convertible preferred stock, shares authorized	20,000,000	20,000,000
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	120,000,000	120,000,000
Common stock, shares issued	8,004,389	8,004,389
Common stock, shares outstanding	8,004,389	8,004,389
Series D Redeemable Convertible Preferred Stock [Member]
Temporary equity, par value	$ 0.001	$ 0.001
Temporary equity, shares authorized	50	50
Temporary equity, shares issued	43	43
Temporary equity, shares outstanding	43	43
Temporary equity, liquidation preference	$ 4,300	$ 4,300
Nonredeemable Convertible Preferred Stock [Member]
Non-redeemable convertible preferred stock, par value	$ 0.001	$ 0.001
Non-redeemable convertible preferred stock, shares authorized	10,004,310	10,004,310
Non-redeemable convertible preferred stock, shares issued	5,254,310	5,254,310
Non-redeemable convertible preferred stock, shares outstanding	5,254,310	5,254,310
Liquidation preference	$ 9,785	$ 9,781

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Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Income Statement [Abstract]
Product sales	$ 2,086	$ 2,020
Revenue, Product and Service [Extensible Enumeration]	us-gaap:ProductMember	us-gaap:ProductMember
Operating expenses:
Cost of sales	$ 824	$ 725
General and administrative	800	832
Selling and marketing	315	301
Research and development	145	137
Total operating expenses	2,084	1,995
Income from operations	2	25
Other income (expense):
Interest expense	(36)	(34)
Total other income (expense), net	(36)	(34)
Net loss	$ (34)	$ (9)
Net loss per common share, basic	$ (0.00)	$ (0.00)
Weighted-average common shares used to compute net loss per share, basic	8,004	8,004
Net loss per common share, diluted	$ (0.00)	$ (0.00)
Weighted-average common shares used to compute net loss per share, diluted	8,004	8,004

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Condensed Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders' Deficit (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Total	Series D Redeemable Convertible Preferred Stock [Member]	Non-redeemable Convertible Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Deficit [Member]
Beginning balance at Dec. 31, 2021	$ (4,588)		$ 5	$ 8	$ 105,413	$ (110,014)
Beginning balance at Dec. 31, 2021		$ 4,300
Beginning balance, shares at Dec. 31, 2021			5,254	8,004
Stock-based compensation	91				91
Net loss	(9)					(9)
Ending balance at Mar. 31, 2022	(4,506)		$ 5	$ 8	105,504	(110,023)
Ending balance at Mar. 31, 2022		4,300
Ending balance, shares at Mar. 31, 2022			5,254	8,004
Beginning balance at Dec. 31, 2022	(4,520)		$ 5	$ 8	105,812	(110,345)
Beginning balance at Dec. 31, 2022		4,300
Beginning balance, shares at Dec. 31, 2022			5,254	8,004
Stock-based compensation	108				108
Net loss	(34)					(34)
Ending balance at Mar. 31, 2023	$ (4,446)		$ 5	$ 8	$ 105,920	$ (110,379)
Ending balance at Mar. 31, 2023		$ 4,300
Ending balance, shares at Mar. 31, 2023			5,254	8,004

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Cash flows from operating activities
Net loss	$ (34)	$ (9)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	51	56
Non-cash operating lease expense	40	33
Stock-based compensation	108	91
Interest expense on related party note payable	32	32
Changes in operating assets and liabilities:
Accounts receivable	59	(58)
Inventory, net	81	(156)
Prepaid expenses and other current assets	(221)	(203)
Deposits and other assets		4
Accounts payable	29	125
Accrued liabilities	124	99
Operating lease liabilities	(53)	(37)
Net cash provided by (used in) operating activities	216	(23)
Cash flows from investing activities
Purchases of property and equipment	(15)
Net cash used in investing activities	(15)
Cash flows from financing activities
Proceeds from note payable from a related party		250
Net cash provided by financing activities		250
Net increase in cash	201	227
Cash, beginning of period	742	171
Cash, end of period	943	$ 398
Supplemental disclosure of cash flow information:
Cash paid for interest	$ 3

XML

Description of Business, Basis of Presentation and Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2023

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Description of Business, Basis of Presentation and Summary of Significant Accounting Policies

1. Description of Business, Basis of Presentation and Summary of Significant Accounting Policies

Description of Business

International Stem Cell Corporation (the “Company”) was organized in Delaware in June 2005 and is headquartered in San Diego, California. The Company is primarily a research and development company for the therapeutic market, which has focused on advancing potential clinical applications of human parthenogenetic stem cells (“hpSCs”) for the treatment of various diseases of the central nervous system and liver. The Company has the following wholly owned subsidiaries:

•Lifeline Cell Technology, LLC (“LCT”) – for the biomedical market, develops, manufactures and commercializes primary human cell research products, including over 200 human cell culture products such as frozen human “primary” cells and the reagents (called “media”) needed to grow, maintain and differentiate the cells;

•Lifeline Skin Care, Inc. (“LSC”) – for the anti-aging market, develops, manufactures and markets a category of anti-aging skin care products based on the Company’s proprietary parthenogenetic stem cell technology and small molecule technology;

•Cyto Therapeutics Pty. Ltd. (“Cyto Therapeutics”) – performs research and development (“R&D”) for the therapeutic market and is currently conducting clinical trials in Australia for the use of ISC-hpNSC® in the treatment of Parkinson’s disease.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) applicable to interim financial statements. Certain information and notes normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations. The unaudited interim condensed consolidated financial statements reflect all adjustments consisting of normal recurring adjustments which, in the opinion of management, are necessary for a fair statement of the Company’s condensed consolidated financial statements. The operating results For the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2023. The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2022 included in the Company’s annual report on Form 10-K filed with the SEC on March 30, 2023.

Liquidity and Going Concern

The Company had an accumulated deficit of approximately $110.4 million as of March 31, 2023 and has incurred net losses and negative operating cash flows annually, since inception. The Company has generated no revenue from its therapeutic product candidates. Unless the Company obtains additional financing, the Company does not have sufficient cash on hand to sustain operations for at least twelve months from the issuance date of these condensed consolidated financial statements.

There can be no assurance that the Company will be successful in maintaining normal operating cash flow or obtaining additional funding. These circumstances raise substantial doubt about the Company’s ability to continue as a going concern. For the foreseeable future, the Company’s ability to continue its operations is dependent upon its ability to obtain additional financing. The accompanying condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of the uncertainty concerning the Company’s ability to continue as a going concern.

The Company continues to evaluate various financing sources and options to raise working capital to help fund current research and development programs and operations. The Company plans to obtain significant additional funding from sources, including through

debt and equity financing, license arrangements, grants and/or collaborative research arrangements to sustain its operations and develop products.

The timing and degree of any future capital requirements will depend on several factors, including:

•the accuracy of the assumptions underlying the estimates for capital needs;

•the extent that revenues from sales of LSC and LCT products cover the related costs and provide capital;

•scientific progress in research and development programs;

•the magnitude and scope of the Company’s research and development programs and its ability to establish, enforce and maintain strategic arrangements for research, development, clinical testing, manufacturing and marketing;

•the progress with preclinical development and clinical trials;

•the time and costs involved in obtaining regulatory approvals;

•the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims;

•the number and type of product candidates that the Company decides to pursue; and

•demand from the Company’s largest original equipment manufacturer customers.

Additional debt financing may be expensive and require the Company to pledge all or a substantial portion of its assets. If additional funds are obtained through arrangements with collaborative partners, these arrangements may require the Company to relinquish the rights to some of its technologies, product candidates, or products that the Company would otherwise seek to develop and commercialize on its own. Furthermore, if sufficient capital is not available, the Company may be required to delay, reduce the scope of, or eliminate one or more of its product initiatives. The Company’s failure to raise capital or enter into related arrangements when needed would have a negative impact on its financial condition.

Principles of Consolidation and Foreign Currency Transactions

The condensed consolidated financial statements include the accounts of International Stem Cell Corporation and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The functional currency of the Company and its wholly owned subsidiaries is the U.S. dollar. Monetary assets and liabilities that are not denominated in the functional currency are remeasured each reporting period into U.S. dollars at foreign currency exchange rates in effect at the respective balance sheet date. Non-monetary assets and liabilities and equity are remeasured at the historical exchange rates. Revenue and expenses are remeasured at the average rate in effect on the date of the transaction. Net realized and unrealized gains and losses from foreign currency transactions and remeasurement are reported in general and administrative expense in the accompanying condensed consolidated statements of operations and were not material for the periods presented.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Significant estimates include patent life (remaining legal life versus remaining useful life), inventory carrying values, and the fair value of stock option grants using the Black-Scholes option valuation model. By their nature, estimates are subject to an inherent degree of uncertainty and actual results could differ from these estimates.

Segments

The Company’s chief operating decision-maker reviews financial information presented on a consolidated basis, accompanied by disaggregated information for each reportable company’s statement of operations. The Company operates the business on the basis of three reporting segments: ISCO – therapeutic market; LCT – biomedical market, and; LSC – anti-aging market.

Inventory, net

Inventory is accounted for using the average cost and first-in, first-out (“FIFO”) methods for LCT cell culture media and reagents, average cost and specific identification methods for LSC products, and specific identification method for other LCT products. Inventory balances are stated at the lower of cost or net realizable value. Laboratory supplies used in the research and development process are expensed as consumed. LCT’s inventory has a long product life cycle, does not have a shelf life when frozen, and future demand is

uncertain. At each reporting period, the Company estimates its reserve allowance for excess and obsolete inventory using historical sales data and inventory turnover rates. The establishment of a reserve for excess and obsolete inventory establishes a new cost basis in inventory. If the Company is able to sell previously reserved inventory, the related reserves and inventory balances would be reduced in the period of sale. The value of the inventory that is not expected to be sold within twelve months of the current reporting period is classified as non-current inventory on the accompanying condensed consolidated balance sheets.

Accounts Receivable, net

Trade accounts receivable are recorded at the invoice value, net of discounts, and are not interest bearing. Accounts receivable primarily consist of trade accounts receivable from the sales of LCT’s products as well as LSC trade receivable amounts related to spa and distributor sales. The Company considers receivables past due based on the contractual payment terms. The Company measures expected credit losses for financial instruments at each reporting date based on historical experience, current conditions and reasonable forecasts. The allowance for doubtful accounts represents the Company’s estimate of expected credit losses relating to these factors. Amounts are written off against the allowances for doubtful accounts when the Company determines that a customer account is uncollectible. As of March 31, 2023 and December 31, 2022, the Company’s allowance for doubtful accounts was immaterial.

Intangible Assets

Intangible assets consist of acquired patent licenses and capitalized legal fees related to the acquisition, filing, maintenance, and defense of patents and trademarks. Amortization begins once the patent is issued by the appropriate authoritative bodies. In the period in which a patent application is rejected or efforts to pursue the patent are abandoned, all the related accumulated capitalized costs are expensed. Patents and other intangible assets are amortized on a straight-line basis over the useful life of the underlying patent, which is generally 15 years. All amortization expense related to intangible assets is included in general and administrative expenses in the accompanying condensed consolidated statements of operations.

Leases

The Company determines if an arrangement is a lease at inception. Operating leases are included in right-of-use assets, operating lease obligations, current, and operating lease obligations, net of current portion, on the Company’s consolidated balance sheets.

Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the present value of future minimum lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company uses a discount rate based on its estimated incremental borrowing rate to determine the right-of-use asset and operating lease liabilities to be recognized. The Company determines its incremental borrowing rate based on the terms and lease payments of its operating leases and what it would normally pay to borrow, on a collateralized basis, over similar terms for an amount equal to the lease payments. Operating lease expense is recognized on a straight-line basis over the lease term. In addition, the Company does not separate lease components from non-lease components.

Long-Lived Asset Impairment

The Company reviews long-lived assets for impairment when events or changes in circumstances (“triggering event”) indicate that the carrying value of an asset or group of assets may not be recovered. If a triggering event is determined to have occurred, the carrying value of an asset or group of assets is compared to the future undiscounted cash flows expected to be generated by the asset or group of assets. If the carrying value exceeds the undiscounted cash flows of the asset or group of assets, then an impairment exists, which is measured as the excess of fair value over the asset or asset group’s carrying value. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable.

Revenue Recognition

The Company's revenue consists primarily of sales of products from its two revenue-generating operating segments, the biomedical market (LCT) and anti-aging market (LSC). The anti-aging market sells products solely through the ecommerce channel. The biomedical market sells primary human cell research products with two product categories, cells and media, which are sold both domestically and internationally. The biomedical market also offers performance of quality control (QC) testing services. No revenue from services was earned during the three months ended March 31, 2023 and 2022.

The following table presents the Company's revenue disaggregated by segment, product group, and geography (in thousands, except percentages):

Biomedical market:

	Three Months Ended March 31, 2023
					Total		% of Total
	Domestic		International		Revenues		Revenues
Biomedical products
Cells	$	530	$	192	$	722		39	%
Media		984		162		1,146		61	%
Total	$	1,514	$	354	$	1,868		100	%

	Three Months Ended March 31, 2022
					Total		% of Total
	Domestic		International		Revenues		Revenues
Biomedical products
Cells	$	337	$	109	$	446		25	%
Media		1,213		112		1,325		75	%
Total	$	1,550	$	221	$	1,771		100	%

Anti-aging market:

	Three Months Ended March 31,
	2023		2022
Skin care sales channels	$	218	$	249

Contract terms for the unit price, quantity, shipping and payment are governed by sales agreements, invoices or online order forms, which the Company considers to be a customer's contract. The unit price is considered the observable stand-alone selling price for the performance obligation(s) within the arrangements. Any promotional or volume sales discounts are applied evenly to the units sold for purposes of calculating standalone selling price.

The Company recognizes revenue when its customer obtains control of the promised goods or services in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. Product sales generally consist of a single performance obligation that the Company satisfies at a point in time (i.e., upon delivery of the product).

For LSC products, ecommerce sales are primarily paid through credit card charges. The anti-aging and biomedical products' standard payment terms for its customers are generally 30 days after the Company satisfies the performance obligation(s).

The Company elects to account for shipping and handling costs, recognized as cost of sales, as activities to fulfill the promise to transfer the goods to a customer. As a result, no consideration is allocated to shipping and handling costs. Rather, the Company accrues the cost of shipping and handling upon shipment of the product, and all contract revenue (i.e., the transaction price) is recognized at the same time.

Variable Consideration

The Company records revenue from customers in an amount that reflects the consideration it expects to be entitled to after transferring control of those goods or services to a customer. From time to time, the Company offers sales promotions on its products such as discounts and free product offers. Variable consideration is estimated at contract inception only to the extent that it is probable that a significant reversal of revenue will not occur and is updated at the end of each reporting period as additional information becomes available.

Contract Balances

The Company records a receivable when it has an unconditional right to receive consideration after a performance obligation is satisfied. As of March 31, 2023 and December 31, 2022, accounts receivable, net, totaled $688 thousand and $747 thousand,

respectively. During the three months ended March 31, 2023 and 2022, the Company did not incur material write-offs of its accounts receivable.

Practical Expedients

The Company has elected the practical expedient to not determine whether contracts with customers contain significant financing components. The Company pays commissions on certain sales for its biomedical and anti-aging product markets once the customer payment has been received, which are accrued at the time of sale. The Company generally expenses sales commissions when incurred because the amortization period would be one year or less. These costs are recorded within selling and marketing expenses. In addition, the Company has elected to exclude sales taxes consideration from the determined transaction price.

Cost of Sales

Cost of sales consists primarily of salaries and benefits associated with employee efforts expended directly on the production of the Company’s products as well as related direct materials, shipping costs, general laboratory supplies and an allocation of overhead.

Research and Development Costs

Research and development costs, which are expensed as incurred, primarily consist of salaries and benefits associated with research and development personnel, overhead and occupancy costs, contract services costs, and amortization of license costs for technology used in research and development with alternative future uses, offset by the research and development tax credit provided by the Australian Taxation Office for qualified expenditures.

Australian Research and Development Tax Credit

The Company’s wholly owned subsidiary, Cyto Therapeutics, conducts various research and development activities on the Company’s product candidates in Australia. Under Australian tax law, the Australian Taxation Office provides for a refundable tax credit in the form of a cash refund equal to 43.5% of qualified research and development expenditures, not to exceed established thresholds. The Australian R&D tax incentive program is a self-assessment process and the Australian Government has the right to review the Company’s qualifying programs and related expenditures for a period of four years. If such a review were to occur and, as a result of the review and failure of a related appeal, the qualified program and related expenditures were disqualified, the respective research and development refunds could be recalled with penalties and interest.

The refundable tax credit does not depend on the Company’s generation of future taxable income or ongoing tax status or position. Accordingly, the credit is not considered an element of income tax accounting under ASC 740 “Income Taxes”. The Company uses the grant accounting model by analogy to International Accounting Standards (IAS) 20 to account for the refundable tax credit from the Australian government. The Company recognizes the research and development tax credit as a reduction to research and development expense when there is reasonable assurance that the tax credit will be received, the relevant expenses have been incurred, and the amount can be reliably measured. For the three months ended March 31, 2023 and 2022, no tax credits were provided.

Stock-Based Compensation

The cost of a stock-based award is measured at the grant date based on the estimated fair value of the award. Stock-based compensation is recognized as expense on a straight-line basis, net of forfeitures, which are recognized as incurred, over the requisite service period of the award. The fair value of stock options is estimated using the Black-Scholes option valuation model, which requires the input of subjective assumptions, including price volatility of the underlying stock, risk-free interest rate, dividend yield, and expected life of the option.

Net Loss Per Share

Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common stock equivalents outstanding for the period determined using the treasury-stock and if-converted methods. Potentially dilutive common stock equivalents are comprised of stock options and convertible preferred stock. For the three months ended March 31, 2023 and 2022, there was no difference in the number of shares used to calculate basic and diluted shares outstanding.

For the three months ended March 31, 2023 and 2022, the following common stock options and convertible preferred stock were not included in the diluted net loss per share calculation because the effect would be anti-dilutive:

	March 31,		March 31,
	2023		2022
Options outstanding		6,858,492		5,372,535
Redeemable convertible preferred stock		2,457,143		2,457,143
Non-redeemable convertible preferred stock		3,619,379		3,619,379
Total		12,935,014		11,449,057

Customer Concentrations

For the three months ended March 31, 2023 and 2022, one customer accounted for approximately 47% and 45% of consolidated revenues, respectively. As of March 31, 2023 and December 31, 2022, the customer accounted for approximately 47% and 73%, respectively, of accounts receivable, net. No other single customer accounted for more than 10% of revenues for the periods then ended for any segment.

Recently Issued Accounting Pronouncements

In August 2020, the FASB issued ASU No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for convertible debt instruments by reducing the number of accounting models and the number of embedded features that could be recognized separately from the host contract. Consequently, more convertible debt instruments will be accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. ASU 2020-06 also requires use of the if-converted method in the diluted earnings per share calculation for convertible instruments. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years for smaller reporting companies, with early adoption permitted. The new standard will be effective for the Company on January 1, 2024 or at such earlier time where it is no longer a smaller reporting company. The Company is currently evaluating the potential impact that this standard may have on its consolidated financial statements and related disclosures.

Recently Adopted Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments— Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The ASU introduced a new credit loss methodology, the Current Expected Credit Losses (“CECL”) methodology, which requires earlier recognition of credit losses, while also providing additional transparency about credit risk. The CECL methodology utilizes a lifetime “expected credit loss” measurement objective for the recognition of credit losses for loans, held-to maturity debt securities, trade receivables and other receivables measured at amortized cost at the time the financial asset is originated or acquired. Subsequent to the issuance of ASU 2016-13, the FASB issued several additional ASUs to clarify implementation guidance, provide narrow-scope improvements and provide additional disclosure guidance. In November 2019, the FASB issued an amendment making this ASU effective for fiscal years beginning after December 15, 2022 for smaller reporting companies. The Company adopted ASC 2016-13 on January 1, 2023. The adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements.

In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation – Stock Compensation (Topic 718), and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the FASB Emerging Issues Task Force) (“ASU 2021-04”), which clarifies and reduces the diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification or exchange. ASU 2021-04 is effective for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years, with early adoption permitted. The Company adopted ASU 2021-04 on January 1, 2022. The adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements.

In November 2021, the FASB issued ASU No. 2021-10, Government Assistance (Topic 832): Disclosure by Business Entities about Government Assistance (“ASU 2021-10”), which improves the transparency of government assistance received by certain business entities by requiring the disclosure of (1) the types of government assistance received; (2) the accounting for such assistance, and (3) the effect of the assistance on the business entity’s financial statements. ASU 2021-10 is effective for fiscal years beginning after

December 15, 2021, with early adoption permitted. The Company adopted ASU 2021-10 on January 1, 2022. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements.

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Inventory

3 Months Ended

Mar. 31, 2023

Inventory Disclosure [Abstract]

Inventory

2. Inventory

The components of inventory are as follows (in thousands):

	March 31,			December 31,
	2023			2022
Raw materials	$	579		$	615
Work in process		557			498
Finished goods		1,121			1,194
		2,257			2,307
Less: allowance for inventory excess and obsolescence		(668	)		(637	)
Total current and non-current inventory, net	$	1,589		$	1,670
Inventory, net	$	1,294		$	1,384
Non-current inventory		295			286
Total current and non-current inventory, net	$	1,589		$	1,670

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Prepaid Expenses And Other Current Assets

3 Months Ended

Mar. 31, 2023

Prepaid Expense And Other Assets Current [Abstract]

Prepaid Expenses and Other Current Assets

3. Prepaid Expenses and Other Current Assets

The components of prepaid and other current assets are as follows (in thousands):

	March 31,		December 31,
	2023		2022
Prepaid expenses	$	285	$	64
Other current assets		26		26
Total prepaid expenses and other current assets	$	311	$	90

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Property and Equipment

3 Months Ended

Mar. 31, 2023

Property Plant And Equipment [Abstract]

Property and Equipment

4. Property and Equipment

Property and equipment consist of the following (in thousands):

	March 31,			December 31,
	2023			2022
Machinery and equipment	$	1,600		$	1,603
Computer equipment and software		221			217
Office equipment		88			89
Leasehold improvements		569			558
		2,478			2,467
Less: accumulated depreciation and amortization		(2,246	)		(2,219	)
Property and equipment, net	$	232		$	248

Depreciation and amortization expense for the three months ended March 31, 2023 and 2022 was $31 thousand and $37 thousand, respectively.

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Intangible Assets

3 Months Ended

Mar. 31, 2023

Goodwill And Intangible Assets Disclosure [Abstract]

Intangible Assets

5. Intangible Assets

Intangible Assets consist of the following (in thousands):

	March 31,			December 31,
	2023			2022
Patents	$	1,286		$	1,286
Less: accumulated amortization		(503	)		(483	)
		783			803
Indefinite life logos and trademarks		75			75
Intangible assets, net	$	858		$	878

Amortization expense for the three months ended March 31, 2023 and 2022 was $20 thousand and $19 thousand, respectively.

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Convertible Preferred Stock and Stockholders' Deficit

3 Months Ended

Mar. 31, 2023

Equity [Abstract]

Convertible Preferred Stock and Stockholders' Deficit

6. Convertible Preferred Stock and Stockholders’ Deficit

Convertible Preferred Stock

As of March 31, 2023 and December 31, 2022, the Company was authorized to issue 20,000,000 shares of preferred stock, $0.001 par value per share. The Company designated 50 shares of Series D redeemable convertible preferred stock and 10,004,310 shares of Series B, Series G, and Series I-2 non-redeemable convertible preferred stock.

Non-Redeemable Convertible Preferred Stock

The Company’s Series B, Series G, and Series I-2 non-redeemable convertible preferred stock has been classified as equity on the accompanying condensed consolidated balance sheets.

The authorized, issued, and outstanding shares of non-redeemable convertible preferred stock as of March 31, 2023 consist of the following:

			Shares
	Shares		Issued and		Liquidation		Carrying
	Authorized		Outstanding		Preference		Value
					(in thousands)
Series B		5,000,000		250,000	$	475	$	—
Series G		5,000,000		5,000,000		5,000		5
Series I-2		4,310		4,310		4,310		—
Total		10,004,310		5,254,310	$	9,785	$	5

The authorized, issued and outstanding shares of non-redeemable convertible preferred stock as of December 31, 2022 consisted of the following:

			Shares
	Shares		Issued and		Liquidation		Carrying
	Authorized		Outstanding		Preference		Value
					(in thousands)
Series B		5,000,000		250,000	$	471	$	—
Series G		5,000,000		5,000,000		5,000		5
Series I-2		4,310		4,310		4,310		—
Total		10,004,310		5,254,310	$	9,781	$	5

Series D Preferred Stock Redemption

The Company’s Series D redeemable convertible preferred stock contains a contingent redemption feature that is not solely within the Company’s control. Accordingly, the Series D redeemable convertible preferred stock is classified in temporary equity (outside of permanent equity) on the accompanying consolidated balance sheets.

Dividends

Holders of the Company’s convertible preferred stock are entitled to participating dividends with common stock when and if declared by the Company’s board of directors. No dividends have been declared during the three months ended March 31, 2023.

Liquidation

Liquidation preference among classes of preferred shares is first with Series D with priority followed by Series G, Series B and Series I-2 on the proceeds from any sale or liquidation of the Company in an amount equal to the purchase price of shares plus (in the case of the Series B) an amount equal to 1% of the Series B original issue price for every two calendar months from February 1, 2008. Following the satisfaction of the liquidation preferences, all shares of common stock participate in any remaining distribution.

Conversion

The shares of convertible preferred stock are convertible into one share of common stock at any time, at the option of the holder. The conversion rates of the Series B, Series D, and Series I-2 are subject to anti-dilution adjustments whereby, subject to specified exceptions, if the Company issues equity securities or securities convertible into equity at a price below the applicable conversion price of the Series B, Series D, and Series I-2, the conversion price of each such series shall be adjusted downward to equal the price of the new securities. The conversion rate of the Series G is subject to a weighted-average adjustment in the event of the issuance of additional shares of common stock below the conversion price, subject to specified exceptions. The conversion price of the Series I-2 are also subject to certain resets as set forth in the Certificates of Designation, including a reverse stock split.

The following table summarizes the number of shares of common stock into which each share of convertible preferred stock can be converted as of March 31, 2023:

					Conversion
	Initial		Current		Ratio to
	Conversion		Conversion		Common
	Price		Price		Stock
Series B	$	75.00	$	0.39		2.56
Series D	$	37.50	$	1.75		57,142.86
Series G	$	60.00	$	9.69		0.10
Series I-2	$	1.75	$	1.75		571.43

Common Stock

As of March 31, 2023 and December 31, 2022, the Company was authorized to issue 120,000,000 shares of common stock, $0.001 par value per share.

Equity Incentive Plans

The Company adopted the 2006 Equity Participation Plan (as amended the “2006 Plan”), which provides for the grant of stock options, restricted stock and other equity-based awards. Awards for up to 100,000 shares may be granted to employees, directors and consultants under this Plan. The options granted under the 2006 Plan may be either qualified or non-qualified options. Options may be granted with different vesting terms and expire no later than 10 years from the date of grant. The 2006 Plan expired on November 16, 2016. Options and other equity-based awards granted prior to the expiration of the 2006 Plan will continue in effect until the option or award is exercised or terminates pursuant to its terms. No new awards may be granted under the 2006 Plan following its expiration.

The Company adopted the 2010 Equity Participation Plan, as amended (the “2010 Plan”), which provides for the grant of stock options, restricted stock and other equity-based awards. Awards for up to 9,700,000 shares may be granted to employees, directors and

consultants under the 2010 Plan. The options granted under the 2010 Plan may be either qualified or non-qualified options and the 2010 Plan is set to terminate in March 2030. Options may be granted with different vesting terms and expire no later than 10 years from the date of grant.

Stock Options

The Company's stock option activity, involving stock options issued to employees, directors and consultants under the 2006 Plan and the 2010 Plan, for the three months ended March 31, 2023 is summarized below:

					Weighted-
					Average
			Weighted-		Remaining		Aggregate
	Number of		Average		Contractual		Intrinsic
	Outstanding		Exercise		Term		Value
	Options		Price		(in years)		(in thousands)
Outstanding at December 31, 2022		6,858,492	$	1.02
Outstanding at March 31, 2023		6,858,492	$	1.02		7.13	$	—
Vested and expected to vest at March 31, 2023		6,624,476	$	1.04		7.06	$	—
Exercisable at March 31, 2023		4,887,890	$	1.25		6.42	$	—

Total stock-based compensation expense recorded in the condensed statements of operations is as follows (in thousands):

	Three Months Ended March 31,
	2023		2022
Cost of sales	$	1	$	2
Research and development		21		6
Selling and marketing		1		3
General and administrative		85		80
Total	$	108	$	91

Unrecognized compensation expense related to stock options as of March 31, 2023 was $522 thousand, which is expected to be recognized over a weighted-average period of 1.81 years.

Common Stock Reserved for Future Issuance

As of March 31, 2023, the Company had shares of common stock reserved for future issuance as follows:

Options outstanding	6,858,492
Common stock available for issuance under the 2010 Plan	2,674,566
Redeemable convertible preferred stock	2,457,143
Non-redeemable convertible preferred stock	3,619,379
Total	15,609,580

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Related Party Transactions

3 Months Ended

Mar. 31, 2023

Related Party Transactions [Abstract]

Related Party Transactions

7. Related Party Transactions

Related party lease arrangements

On October 26, 2021, the Company and S Real Estate Holdings, LLC, a related party, entered jointly into a lease agreement with Rehco Holdings, LLC (the “Lease”), for the purpose of establishing a new corporate headquarters, including corporate, R&D, and manufacturing operations. The lease commenced on November 1, 2021 and expires on December 31, 2026 with no options to extend or renew. The lease was personally guaranteed by Dr. Russell Kern, the Company’s Executive Vice President and Chief Scientific Officer.

On December 15, 2021, the Company and S Real Estate Holdings LLC entered into a co-tenant agreement, whereby the Company and S Real Estate Holdings LLC agreed to allocate portions of the base rent and variable charges, including insurance, maintenance costs, taxes and operating expenses, between the parties. During the term of the Lease, the Company will be liable for 40% of all costs incurred in connection with the lease, while S Real Estate Holdings LLC will be liable for the remaining 60%.

Related party note payable

As of December 31, 2021, the Company had an unsecured, non-convertible promissory note, with a principal outstanding amount of $2.7 million (the “Note”) and accrued interest of approximately $300 thousand with Dr. Andrey Semechkin, the Company’s Chief Executive Office and Co-Chairman of the Board of Directors. The outstanding principal amount under the Note accrued interest at a rate of 4.5% per annum. The outstanding principal and accrued interest on the Note was due and payable on January 15, 2022 and could be pre-paid without penalty at any time.

On January 13, 2022, to obtain funding for working capital purposes, the Company issued an unsecured, non-convertible promissory note in the principal amount of $2.9 million (the "Modified Note”) to Dr. Semechkin. In exchange, Dr. Semechkin surrendered the Note and provided an additional $250 thousand to the Company. The Modified Note, including outstanding amounts of principal and accrued interest, was due and payable on March 15, 2022.

On March 1, 2022, the Company and Dr. Andrey Semechkin restructured the Modified Note and agreed to extend the maturity date for an additional six-month period to September 15, 2022. On September 15, 2022, the Company and Dr. Andrey Semechkin extended the Modified Note for an additional six-month period to March 15, 2023. No other terms of the Modified Note were modified.

On September 15, 2022, the Noteholder surrendered the March 2022 Note, and the Company issued a new promissory note (“September 2022 Note”), which featured all the same terms as the previously outstanding note, with the exception of an extension of the maturity date from September 15, 2022 to March 15, 2023. The September 2022 Note has a principal balance of $2.9 million, an interest rate of 4.5%, and features optional prepayment terms. There were no debt issuance fees associated with this issuance.

On March 14, 2023, the Noteholder surrendered the September 2022 Note, and the Company issued a new promissory note (“March 2023 Note”), which featured all the same terms as the previously outstanding note, with the exception of an extension of the maturity date from March 15, 2023 to September 15, 2023. The March 2023 Note has a principal balance of $2.9 million, an interest rate of 4.5%, and features optional prepayment terms. There were no debt issuance fees associated with this issuance. The amendments qualify as a troubled debt restructuring which did not result in a gain as the carrying amount of the debt was less than the total future cash payments of the restructured debt.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2023

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

8. Commitments and Contingencies

Leases

The Company has three operating leases for real estate in California and Maryland:

•San Diego, California – corporate headquarters, including corporate, R&D, and manufacturing operations, with a termination date of December 2026, jointly leased with a related party (refer to Note 7 – Related Party Transactions, for further information) (“headquarter lease”). This lease contains no renewal or term extension options;

•San Diego, California – supplemental office space adjacent to the Company’s corporate headquarters with a termination date of December 2026. This lease contains no renewal or term extension options; and

•Frederick, Maryland – mixed laboratory and administrative space with a term date of December 2025. The lease contains one renewal option for an additional three-year term through November 2028. The Company is reasonably certain it will not exercise this renewal option.

The headquarter lease commenced on November 1, 2021 and expires on December 31, 2026. At commencement, base rent due under the lease was approximately $11 thousand and increases approximately 3.5% per annum over the lease term. The lease is subject to additional variable charges, including insurance, maintenance costs, taxes and operating expenses. Base rent and additional variable charges are shared between the Company and S Real Estate Holdings LLC, a related party, pursuant to a co-tenant agreement between the parties (refer to Note 7 – Related Party Transactions, for further information). In addition, base rent for months two through five of the lease term were abated by 50%.

In November 2021, the Company entered into an operating lease for supplemental office space adjacent to its new corporate headquarters with the same landlord. The lease commenced on December 1, 2021 and expires on December 31, 2026 and is not subject to the co-tenant agreement with S Real Estate Holdings, LLC. At commencement, base rent due under the supplemental office lease was approximately $4 thousand per month and increases at a fixed amount per annum over the lease term.

The Company’s operating leases for real estate are subject to additional variable charges for common area maintenance and other variable costs. Variable costs for the three months ended March 31, 2023 and 2022 were immaterial. All operating lease expense is

recognized on a straight-line basis over the lease term. For the three months ended March 31, 2023 and 2022, lease expense totaled $71 thousand and $73 thousand, respectively. As of March 31, 2023 and December 31, 2022, the Company had no finance leases.

Maturities of lease liabilities are as follows (in thousands):

Years ending December 31,
2023 (remaining nine months)	$	254
2024		349
2025		360
2026		119
Total minimum lease payments		1,082
Less: imputed interest		(185	)
Total future minimum lease payments		897
Less: operating lease liabilities, current		(241	)
Operating lease liabilities, net of current portion	$	656

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Segments

3 Months Ended

Mar. 31, 2023

Segment Reporting [Abstract]

Segments

9. Segments

The Company operates the business on the basis of three reporting segments, the parent company and two business units: ISCO – therapeutic market; LCT – biomedical market; LSC – anti-aging market.

The Company does not measure the performance of its segments on any asset-based metrics. Therefore, segment information is presented only for operating loss. Revenues, expenses and operating loss for the three months ended March 31, 2023 and 2022 by reporting segment were as follows (in thousands):

	Three Months Ended March 31,
	2023			2022
Revenues:
Biomedical market	$	1,868		$	1,771
Anti-aging market		218			249
Total revenues		2,086			2,020
Operating expenses:
Therapeutic market		577			624
Biomedical market		1,093			999
Anti-aging market		414			372
Total operating expenses		2,084			1,995
Operating income (loss):
Therapeutic market		(577	)		(624	)
Biomedical market		775			772
Anti-aging market		(196	)		(123	)
Total operating loss		2			25
Other income (expense), net:
Therapeutic market		(36	)		(34	)
Total other income (expense), net		(36	)		(34	)
Net loss:
Therapeutic market		(613	)		(658	)
Biomedical market		775			772
Anti-aging market		(196	)		(123	)
Total net loss	$	(34	)	$	(9	)

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Description of Business, Basis of Presentation and Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2023

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Description of Business

Description of Business

International Stem Cell Corporation (the “Company”) was organized in Delaware in June 2005 and is headquartered in San Diego, California. The Company is primarily a research and development company for the therapeutic market, which has focused on advancing potential clinical applications of human parthenogenetic stem cells (“hpSCs”) for the treatment of various diseases of the central nervous system and liver. The Company has the following wholly owned subsidiaries:

•Lifeline Cell Technology, LLC (“LCT”) – for the biomedical market, develops, manufactures and commercializes primary human cell research products, including over 200 human cell culture products such as frozen human “primary” cells and the reagents (called “media”) needed to grow, maintain and differentiate the cells;

•Lifeline Skin Care, Inc. (“LSC”) – for the anti-aging market, develops, manufactures and markets a category of anti-aging skin care products based on the Company’s proprietary parthenogenetic stem cell technology and small molecule technology;

•Cyto Therapeutics Pty. Ltd. (“Cyto Therapeutics”) – performs research and development (“R&D”) for the therapeutic market and is currently conducting clinical trials in Australia for the use of ISC-hpNSC® in the treatment of Parkinson’s disease.

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) applicable to interim financial statements. Certain information and notes normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations. The unaudited interim condensed consolidated financial statements reflect all adjustments consisting of normal recurring adjustments which, in the opinion of management, are necessary for a fair statement of the Company’s condensed consolidated financial statements. The operating results For the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2023. The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2022 included in the Company’s annual report on Form 10-K filed with the SEC on March 30, 2023.

Liquidity and Going Concern

Liquidity and Going Concern

The Company had an accumulated deficit of approximately $110.4 million as of March 31, 2023 and has incurred net losses and negative operating cash flows annually, since inception. The Company has generated no revenue from its therapeutic product candidates. Unless the Company obtains additional financing, the Company does not have sufficient cash on hand to sustain operations for at least twelve months from the issuance date of these condensed consolidated financial statements.

There can be no assurance that the Company will be successful in maintaining normal operating cash flow or obtaining additional funding. These circumstances raise substantial doubt about the Company’s ability to continue as a going concern. For the foreseeable future, the Company’s ability to continue its operations is dependent upon its ability to obtain additional financing. The accompanying condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of the uncertainty concerning the Company’s ability to continue as a going concern.

The Company continues to evaluate various financing sources and options to raise working capital to help fund current research and development programs and operations. The Company plans to obtain significant additional funding from sources, including through

debt and equity financing, license arrangements, grants and/or collaborative research arrangements to sustain its operations and develop products.

The timing and degree of any future capital requirements will depend on several factors, including:

•the accuracy of the assumptions underlying the estimates for capital needs;

•the extent that revenues from sales of LSC and LCT products cover the related costs and provide capital;

•scientific progress in research and development programs;

•the magnitude and scope of the Company’s research and development programs and its ability to establish, enforce and maintain strategic arrangements for research, development, clinical testing, manufacturing and marketing;

•the progress with preclinical development and clinical trials;

•the time and costs involved in obtaining regulatory approvals;

•the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims;

•the number and type of product candidates that the Company decides to pursue; and

•demand from the Company’s largest original equipment manufacturer customers.

Additional debt financing may be expensive and require the Company to pledge all or a substantial portion of its assets. If additional funds are obtained through arrangements with collaborative partners, these arrangements may require the Company to relinquish the rights to some of its technologies, product candidates, or products that the Company would otherwise seek to develop and commercialize on its own. Furthermore, if sufficient capital is not available, the Company may be required to delay, reduce the scope of, or eliminate one or more of its product initiatives. The Company’s failure to raise capital or enter into related arrangements when needed would have a negative impact on its financial condition.

Principles of Consolidation and Foreign Currency Transactions

Principles of Consolidation and Foreign Currency Transactions

The condensed consolidated financial statements include the accounts of International Stem Cell Corporation and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The functional currency of the Company and its wholly owned subsidiaries is the U.S. dollar. Monetary assets and liabilities that are not denominated in the functional currency are remeasured each reporting period into U.S. dollars at foreign currency exchange rates in effect at the respective balance sheet date. Non-monetary assets and liabilities and equity are remeasured at the historical exchange rates. Revenue and expenses are remeasured at the average rate in effect on the date of the transaction. Net realized and unrealized gains and losses from foreign currency transactions and remeasurement are reported in general and administrative expense in the accompanying condensed consolidated statements of operations and were not material for the periods presented.

Use of Estimates

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Significant estimates include patent life (remaining legal life versus remaining useful life), inventory carrying values, and the fair value of stock option grants using the Black-Scholes option valuation model. By their nature, estimates are subject to an inherent degree of uncertainty and actual results could differ from these estimates.

Segments

Segments

The Company’s chief operating decision-maker reviews financial information presented on a consolidated basis, accompanied by disaggregated information for each reportable company’s statement of operations. The Company operates the business on the basis of three reporting segments: ISCO – therapeutic market; LCT – biomedical market, and; LSC – anti-aging market.

Inventory, net

Inventory, net

Inventory is accounted for using the average cost and first-in, first-out (“FIFO”) methods for LCT cell culture media and reagents, average cost and specific identification methods for LSC products, and specific identification method for other LCT products. Inventory balances are stated at the lower of cost or net realizable value. Laboratory supplies used in the research and development process are expensed as consumed. LCT’s inventory has a long product life cycle, does not have a shelf life when frozen, and future demand is

uncertain. At each reporting period, the Company estimates its reserve allowance for excess and obsolete inventory using historical sales data and inventory turnover rates. The establishment of a reserve for excess and obsolete inventory establishes a new cost basis in inventory. If the Company is able to sell previously reserved inventory, the related reserves and inventory balances would be reduced in the period of sale. The value of the inventory that is not expected to be sold within twelve months of the current reporting period is classified as non-current inventory on the accompanying condensed consolidated balance sheets.

Accounts Receivable, net

Accounts Receivable, net

Trade accounts receivable are recorded at the invoice value, net of discounts, and are not interest bearing. Accounts receivable primarily consist of trade accounts receivable from the sales of LCT’s products as well as LSC trade receivable amounts related to spa and distributor sales. The Company considers receivables past due based on the contractual payment terms. The Company measures expected credit losses for financial instruments at each reporting date based on historical experience, current conditions and reasonable forecasts. The allowance for doubtful accounts represents the Company’s estimate of expected credit losses relating to these factors. Amounts are written off against the allowances for doubtful accounts when the Company determines that a customer account is uncollectible. As of March 31, 2023 and December 31, 2022, the Company’s allowance for doubtful accounts was immaterial.

Intangible Assets

Intangible Assets

Intangible assets consist of acquired patent licenses and capitalized legal fees related to the acquisition, filing, maintenance, and defense of patents and trademarks. Amortization begins once the patent is issued by the appropriate authoritative bodies. In the period in which a patent application is rejected or efforts to pursue the patent are abandoned, all the related accumulated capitalized costs are expensed. Patents and other intangible assets are amortized on a straight-line basis over the useful life of the underlying patent, which is generally 15 years. All amortization expense related to intangible assets is included in general and administrative expenses in the accompanying condensed consolidated statements of operations.

Leases

The Company determines if an arrangement is a lease at inception. Operating leases are included in right-of-use assets, operating lease obligations, current, and operating lease obligations, net of current portion, on the Company’s consolidated balance sheets.

Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the present value of future minimum lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company uses a discount rate based on its estimated incremental borrowing rate to determine the right-of-use asset and operating lease liabilities to be recognized. The Company determines its incremental borrowing rate based on the terms and lease payments of its operating leases and what it would normally pay to borrow, on a collateralized basis, over similar terms for an amount equal to the lease payments. Operating lease expense is recognized on a straight-line basis over the lease term. In addition, the Company does not separate lease components from non-lease components.

Leases

Leases

The Company determines if an arrangement is a lease at inception. Operating leases are included in right-of-use assets, operating lease obligations, current, and operating lease obligations, net of current portion, on the Company’s consolidated balance sheets.

Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the present value of future minimum lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company uses a discount rate based on its estimated incremental borrowing rate to determine the right-of-use asset and operating lease liabilities to be recognized. The Company determines its incremental borrowing rate based on the terms and lease payments of its operating leases and what it would normally pay to borrow, on a collateralized basis, over similar terms for an amount equal to the lease payments. Operating lease expense is recognized on a straight-line basis over the lease term. In addition, the Company does not separate lease components from non-lease components.

Long-Lived Asset Impairment

Long-Lived Asset Impairment

The Company reviews long-lived assets for impairment when events or changes in circumstances (“triggering event”) indicate that the carrying value of an asset or group of assets may not be recovered. If a triggering event is determined to have occurred, the carrying value of an asset or group of assets is compared to the future undiscounted cash flows expected to be generated by the asset or group of assets. If the carrying value exceeds the undiscounted cash flows of the asset or group of assets, then an impairment exists, which is measured as the excess of fair value over the asset or asset group’s carrying value. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable.

Revenue Recognition

Revenue Recognition

The Company's revenue consists primarily of sales of products from its two revenue-generating operating segments, the biomedical market (LCT) and anti-aging market (LSC). The anti-aging market sells products solely through the ecommerce channel. The biomedical market sells primary human cell research products with two product categories, cells and media, which are sold both domestically and internationally. The biomedical market also offers performance of quality control (QC) testing services. No revenue from services was earned during the three months ended March 31, 2023 and 2022.

The following table presents the Company's revenue disaggregated by segment, product group, and geography (in thousands, except percentages):

Biomedical market:

	Three Months Ended March 31, 2023
					Total		% of Total
	Domestic		International		Revenues		Revenues
Biomedical products
Cells	$	530	$	192	$	722		39	%
Media		984		162		1,146		61	%
Total	$	1,514	$	354	$	1,868		100	%

	Three Months Ended March 31, 2022
					Total		% of Total
	Domestic		International		Revenues		Revenues
Biomedical products
Cells	$	337	$	109	$	446		25	%
Media		1,213		112		1,325		75	%
Total	$	1,550	$	221	$	1,771		100	%

Anti-aging market:

	Three Months Ended March 31,
	2023		2022
Skin care sales channels	$	218	$	249

Contract terms for the unit price, quantity, shipping and payment are governed by sales agreements, invoices or online order forms, which the Company considers to be a customer's contract. The unit price is considered the observable stand-alone selling price for the performance obligation(s) within the arrangements. Any promotional or volume sales discounts are applied evenly to the units sold for purposes of calculating standalone selling price.

The Company recognizes revenue when its customer obtains control of the promised goods or services in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. Product sales generally consist of a single performance obligation that the Company satisfies at a point in time (i.e., upon delivery of the product).

For LSC products, ecommerce sales are primarily paid through credit card charges. The anti-aging and biomedical products' standard payment terms for its customers are generally 30 days after the Company satisfies the performance obligation(s).

The Company elects to account for shipping and handling costs, recognized as cost of sales, as activities to fulfill the promise to transfer the goods to a customer. As a result, no consideration is allocated to shipping and handling costs. Rather, the Company accrues the cost of shipping and handling upon shipment of the product, and all contract revenue (i.e., the transaction price) is recognized at the same time.

Variable Consideration

The Company records revenue from customers in an amount that reflects the consideration it expects to be entitled to after transferring control of those goods or services to a customer. From time to time, the Company offers sales promotions on its products such as discounts and free product offers. Variable consideration is estimated at contract inception only to the extent that it is probable that a significant reversal of revenue will not occur and is updated at the end of each reporting period as additional information becomes available.

Contract Balances

The Company records a receivable when it has an unconditional right to receive consideration after a performance obligation is satisfied. As of March 31, 2023 and December 31, 2022, accounts receivable, net, totaled $688 thousand and $747 thousand,

respectively. During the three months ended March 31, 2023 and 2022, the Company did not incur material write-offs of its accounts receivable.

Practical Expedients

The Company has elected the practical expedient to not determine whether contracts with customers contain significant financing components. The Company pays commissions on certain sales for its biomedical and anti-aging product markets once the customer payment has been received, which are accrued at the time of sale. The Company generally expenses sales commissions when incurred because the amortization period would be one year or less. These costs are recorded within selling and marketing expenses. In addition, the Company has elected to exclude sales taxes consideration from the determined transaction price.

Cost of Sales

Cost of Sales

Cost of sales consists primarily of salaries and benefits associated with employee efforts expended directly on the production of the Company’s products as well as related direct materials, shipping costs, general laboratory supplies and an allocation of overhead.

Research and Development Costs

Research and Development Costs

Research and development costs, which are expensed as incurred, primarily consist of salaries and benefits associated with research and development personnel, overhead and occupancy costs, contract services costs, and amortization of license costs for technology used in research and development with alternative future uses, offset by the research and development tax credit provided by the Australian Taxation Office for qualified expenditures.

Australian Research and Development Tax Credit

The Company’s wholly owned subsidiary, Cyto Therapeutics, conducts various research and development activities on the Company’s product candidates in Australia. Under Australian tax law, the Australian Taxation Office provides for a refundable tax credit in the form of a cash refund equal to 43.5% of qualified research and development expenditures, not to exceed established thresholds. The Australian R&D tax incentive program is a self-assessment process and the Australian Government has the right to review the Company’s qualifying programs and related expenditures for a period of four years. If such a review were to occur and, as a result of the review and failure of a related appeal, the qualified program and related expenditures were disqualified, the respective research and development refunds could be recalled with penalties and interest.

The refundable tax credit does not depend on the Company’s generation of future taxable income or ongoing tax status or position. Accordingly, the credit is not considered an element of income tax accounting under ASC 740 “Income Taxes”. The Company uses the grant accounting model by analogy to International Accounting Standards (IAS) 20 to account for the refundable tax credit from the Australian government. The Company recognizes the research and development tax credit as a reduction to research and development expense when there is reasonable assurance that the tax credit will be received, the relevant expenses have been incurred, and the amount can be reliably measured. For the three months ended March 31, 2023 and 2022, no tax credits were provided.

Stock-Based Compensation

Stock-Based Compensation

The cost of a stock-based award is measured at the grant date based on the estimated fair value of the award. Stock-based compensation is recognized as expense on a straight-line basis, net of forfeitures, which are recognized as incurred, over the requisite service period of the award. The fair value of stock options is estimated using the Black-Scholes option valuation model, which requires the input of subjective assumptions, including price volatility of the underlying stock, risk-free interest rate, dividend yield, and expected life of the option.

Net Loss Per Share

Net Loss Per Share

Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common stock equivalents outstanding for the period determined using the treasury-stock and if-converted methods. Potentially dilutive common stock equivalents are comprised of stock options and convertible preferred stock. For the three months ended March 31, 2023 and 2022, there was no difference in the number of shares used to calculate basic and diluted shares outstanding.

For the three months ended March 31, 2023 and 2022, the following common stock options and convertible preferred stock were not included in the diluted net loss per share calculation because the effect would be anti-dilutive:

	March 31,		March 31,
	2023		2022
Options outstanding		6,858,492		5,372,535
Redeemable convertible preferred stock		2,457,143		2,457,143
Non-redeemable convertible preferred stock		3,619,379		3,619,379
Total		12,935,014		11,449,057

Customer Concentrations

Customer Concentrations

For the three months ended March 31, 2023 and 2022, one customer accounted for approximately 47% and 45% of consolidated revenues, respectively. As of March 31, 2023 and December 31, 2022, the customer accounted for approximately 47% and 73%, respectively, of accounts receivable, net. No other single customer accounted for more than 10% of revenues for the periods then ended for any segment.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

In August 2020, the FASB issued ASU No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for convertible debt instruments by reducing the number of accounting models and the number of embedded features that could be recognized separately from the host contract. Consequently, more convertible debt instruments will be accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. ASU 2020-06 also requires use of the if-converted method in the diluted earnings per share calculation for convertible instruments. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years for smaller reporting companies, with early adoption permitted. The new standard will be effective for the Company on January 1, 2024 or at such earlier time where it is no longer a smaller reporting company. The Company is currently evaluating the potential impact that this standard may have on its consolidated financial statements and related disclosures.

Recently Adopted Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments— Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The ASU introduced a new credit loss methodology, the Current Expected Credit Losses (“CECL”) methodology, which requires earlier recognition of credit losses, while also providing additional transparency about credit risk. The CECL methodology utilizes a lifetime “expected credit loss” measurement objective for the recognition of credit losses for loans, held-to maturity debt securities, trade receivables and other receivables measured at amortized cost at the time the financial asset is originated or acquired. Subsequent to the issuance of ASU 2016-13, the FASB issued several additional ASUs to clarify implementation guidance, provide narrow-scope improvements and provide additional disclosure guidance. In November 2019, the FASB issued an amendment making this ASU effective for fiscal years beginning after December 15, 2022 for smaller reporting companies. The Company adopted ASC 2016-13 on January 1, 2023. The adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements.

In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation – Stock Compensation (Topic 718), and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the FASB Emerging Issues Task Force) (“ASU 2021-04”), which clarifies and reduces the diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification or exchange. ASU 2021-04 is effective for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years, with early adoption permitted. The Company adopted ASU 2021-04 on January 1, 2022. The adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements.

In November 2021, the FASB issued ASU No. 2021-10, Government Assistance (Topic 832): Disclosure by Business Entities about Government Assistance (“ASU 2021-10”), which improves the transparency of government assistance received by certain business entities by requiring the disclosure of (1) the types of government assistance received; (2) the accounting for such assistance, and (3) the effect of the assistance on the business entity’s financial statements. ASU 2021-10 is effective for fiscal years beginning after

December 15, 2021, with early adoption permitted. The Company adopted ASU 2021-10 on January 1, 2022. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements.

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Description of Business, Basis of Presentation and Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2023

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Summary of Revenue Disaggregated by Segment, Product Group and Geography

The following table presents the Company's revenue disaggregated by segment, product group, and geography (in thousands, except percentages):

Biomedical market:

	Three Months Ended March 31, 2023
					Total		% of Total
	Domestic		International		Revenues		Revenues
Biomedical products
Cells	$	530	$	192	$	722		39	%
Media		984		162		1,146		61	%
Total	$	1,514	$	354	$	1,868		100	%

	Three Months Ended March 31, 2022
					Total		% of Total
	Domestic		International		Revenues		Revenues
Biomedical products
Cells	$	337	$	109	$	446		25	%
Media		1,213		112		1,325		75	%
Total	$	1,550	$	221	$	1,771		100	%

Anti-aging market:

	Three Months Ended March 31,
	2023		2022
Skin care sales channels	$	218	$	249

Summary of Antidilutive Securities not Included in Diluted Net Loss Per Share Calculation

For the three months ended March 31, 2023 and 2022, the following common stock options and convertible preferred stock were not included in the diluted net loss per share calculation because the effect would be anti-dilutive:

	March 31,		March 31,
	2023		2022
Options outstanding		6,858,492		5,372,535
Redeemable convertible preferred stock		2,457,143		2,457,143
Non-redeemable convertible preferred stock		3,619,379		3,619,379
Total		12,935,014		11,449,057

XML

Inventory (Tables)

3 Months Ended

Mar. 31, 2023

Inventory Disclosure [Abstract]

Summary of the Components of Inventory

The components of inventory are as follows (in thousands):

	March 31,			December 31,
	2023			2022
Raw materials	$	579		$	615
Work in process		557			498
Finished goods		1,121			1,194
		2,257			2,307
Less: allowance for inventory excess and obsolescence		(668	)		(637	)
Total current and non-current inventory, net	$	1,589		$	1,670
Inventory, net	$	1,294		$	1,384
Non-current inventory		295			286
Total current and non-current inventory, net	$	1,589		$	1,670

XML

Prepaid Expenses And Other Current Assets (Tables)

3 Months Ended

Mar. 31, 2023

Prepaid Expense And Other Assets Current [Abstract]

Schedule Of Prepaid And Other Current Assets

The components of prepaid and other current assets are as follows (in thousands):

	March 31,		December 31,
	2023		2022
Prepaid expenses	$	285	$	64
Other current assets		26		26
Total prepaid expenses and other current assets	$	311	$	90

XML

Property and Equipment (Tables)

3 Months Ended

Mar. 31, 2023

Property Plant And Equipment [Abstract]

Summary of Property and Equipment

Property and equipment consist of the following (in thousands):

	March 31,			December 31,
	2023			2022
Machinery and equipment	$	1,600		$	1,603
Computer equipment and software		221			217
Office equipment		88			89
Leasehold improvements		569			558
		2,478			2,467
Less: accumulated depreciation and amortization		(2,246	)		(2,219	)
Property and equipment, net	$	232		$	248

XML

Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2023

Goodwill And Intangible Assets Disclosure [Abstract]

Summary of Intangible Assets

Intangible Assets consist of the following (in thousands):

	March 31,			December 31,
	2023			2022
Patents	$	1,286		$	1,286
Less: accumulated amortization		(503	)		(483	)
		783			803
Indefinite life logos and trademarks		75			75
Intangible assets, net	$	858		$	878

XML

Convertible Preferred Stock and Stockholders' Deficit (Tables)

3 Months Ended

Mar. 31, 2023

Equity [Abstract]

Schedule of Authorized, Issued and Outstanding Shares of Non-redeemable Convertible Preferred Stock

The authorized, issued, and outstanding shares of non-redeemable convertible preferred stock as of March 31, 2023 consist of the following:

			Shares
	Shares		Issued and		Liquidation		Carrying
	Authorized		Outstanding		Preference		Value
					(in thousands)
Series B		5,000,000		250,000	$	475	$	—
Series G		5,000,000		5,000,000		5,000		5
Series I-2		4,310		4,310		4,310		—
Total		10,004,310		5,254,310	$	9,785	$	5

The authorized, issued and outstanding shares of non-redeemable convertible preferred stock as of December 31, 2022 consisted of the following:

			Shares
	Shares		Issued and		Liquidation		Carrying
	Authorized		Outstanding		Preference		Value
					(in thousands)
Series B		5,000,000		250,000	$	471	$	—
Series G		5,000,000		5,000,000		5,000		5
Series I-2		4,310		4,310		4,310		—
Total		10,004,310		5,254,310	$	9,781	$	5

Summary of Number of Shares of Common Stock into Each Share of Preferred Stock Converted

The following table summarizes the number of shares of common stock into which each share of convertible preferred stock can be converted as of March 31, 2023:

					Conversion
	Initial		Current		Ratio to
	Conversion		Conversion		Common
	Price		Price		Stock
Series B	$	75.00	$	0.39		2.56
Series D	$	37.50	$	1.75		57,142.86
Series G	$	60.00	$	9.69		0.10
Series I-2	$	1.75	$	1.75		571.43

Summary of Stock Option Activity

The Company's stock option activity, involving stock options issued to employees, directors and consultants under the 2006 Plan and the 2010 Plan, for the three months ended March 31, 2023 is summarized below:

					Weighted-
					Average
			Weighted-		Remaining		Aggregate
	Number of		Average		Contractual		Intrinsic
	Outstanding		Exercise		Term		Value
	Options		Price		(in years)		(in thousands)
Outstanding at December 31, 2022		6,858,492	$	1.02
Outstanding at March 31, 2023		6,858,492	$	1.02		7.13	$	—
Vested and expected to vest at March 31, 2023		6,624,476	$	1.04		7.06	$	—
Exercisable at March 31, 2023		4,887,890	$	1.25		6.42	$	—

Schedule of Total Stock-Based Compensation Expense

Total stock-based compensation expense recorded in the condensed statements of operations is as follows (in thousands):

	Three Months Ended March 31,
	2023		2022
Cost of sales	$	1	$	2
Research and development		21		6
Selling and marketing		1		3
General and administrative		85		80
Total	$	108	$	91

Summary of Shares of Common Stock Reserved for Future Issuance

As of March 31, 2023, the Company had shares of common stock reserved for future issuance as follows:

Options outstanding	6,858,492
Common stock available for issuance under the 2010 Plan	2,674,566
Redeemable convertible preferred stock	2,457,143
Non-redeemable convertible preferred stock	3,619,379
Total	15,609,580

XML

Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2023

Commitments And Contingencies Disclosure [Abstract]

Schedule of Maturities of Lease Liabilities

Maturities of lease liabilities are as follows (in thousands):

Years ending December 31,
2023 (remaining nine months)	$	254
2024		349
2025		360
2026		119
Total minimum lease payments		1,082
Less: imputed interest		(185	)
Total future minimum lease payments		897
Less: operating lease liabilities, current		(241	)
Operating lease liabilities, net of current portion	$	656

XML

Segments (Tables)

3 Months Ended

Mar. 31, 2023

Segment Reporting [Abstract]

Revenues, Expenses and Operating Loss by Market Segment

Revenues, expenses and operating loss for the three months ended March 31, 2023 and 2022 by reporting segment were as follows (in thousands):

	Three Months Ended March 31,
	2023			2022
Revenues:
Biomedical market	$	1,868		$	1,771
Anti-aging market		218			249
Total revenues		2,086			2,020
Operating expenses:
Therapeutic market		577			624
Biomedical market		1,093			999
Anti-aging market		414			372
Total operating expenses		2,084			1,995
Operating income (loss):
Therapeutic market		(577	)		(624	)
Biomedical market		775			772
Anti-aging market		(196	)		(123	)
Total operating loss		2			25
Other income (expense), net:
Therapeutic market		(36	)		(34	)
Total other income (expense), net		(36	)		(34	)
Net loss:
Therapeutic market		(613	)		(658	)
Biomedical market		775			772
Anti-aging market		(196	)		(123	)
Total net loss	$	(34	)	$	(9	)

XML

Description of Business, Basis of Presentation and Summary of Significant Accounting Policies - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2023 USD ($) Segment Customer ProductCategory	Mar. 31, 2022 USD ($) Customer	Dec. 31, 2022 USD ($)
Description Of Business Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Accumulated deficit	$ 110,379,000		$ 110,345,000
Number of reporting segments | Segment	3
Intangible assets useful life	15 years
Number of revenue-generating operating segments | Segment	2
Number of product categories | ProductCategory	2
Revenue	$ 2,086,000	$ 2,020,000
Description of payment terms	The Company's revenue consists primarily of sales of products from its two revenue-generating operating segments, the biomedical market (LCT) and anti-aging market (LSC). The anti-aging market sells products solely through the ecommerce channel. The biomedical market sells primary human cell research products with two product categories, cells and media, which are sold both domestically and internationally. The biomedical market also offers performance of quality control (QC) testing services. No revenue from services was earned during the three months ended March 31, 2023 and 2022.
Accounts receivable, net	$ 688,000		$ 747,000
Write-off of accounts receivable	$ 0	$ 0
ASU 2021-04 [Member]
Description Of Business Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Change in Accounting Principle, Accounting Standards Update, Adopted [true false]	true
Change in Accounting Principle, Accounting Standards Update, Adoption Date	Jan. 01, 2022
Change in Accounting Principle, Accounting Standards Update, Immaterial Effect [true false]	true
ASU 2021-10 [Member]
Description Of Business Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Change in Accounting Principle, Accounting Standards Update, Adopted [true false]	true
Change in Accounting Principle, Accounting Standards Update, Adoption Date	Jan. 01, 2022
Change in Accounting Principle, Accounting Standards Update, Immaterial Effect [true false]	true
ASU 2016-13 [Member]
Description Of Business Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Change in Accounting Principle, Accounting Standards Update, Adopted [true false]	true
Change in Accounting Principle, Accounting Standards Update, Adoption Date	Jan. 01, 2023
Change in Accounting Principle, Accounting Standards Update, Immaterial Effect [true false]	true
Customer Concentration Risk [Member] | Major customer [Member] | Accounts Receivable, Net [Member]
Description Of Business Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Concentration risk percentage	47.00%	73.00%
Australian Taxation Office [Member]
Description Of Business Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Percentage of refundable tax credit on qualified research and development	43.50%
Australian Taxation Office [Member] | Research Tax Credit Carryforward [Member]
Description Of Business Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Tax credits provided	$ 0	$ 0
Maximum [Member]
Description Of Business Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Sales commissions amortization period	1 year
Biomedical Market [Member]
Description Of Business Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Revenue	$ 1,868,000	$ 1,771,000
Biomedical Market [Member] | Customer Concentration Risk [Member] | Revenue, Segment Benchmark
Description Of Business Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Number of customers more than ten percentage of revenue | Customer	1	1
Biomedical Market [Member] | Customer Concentration Risk [Member] | Major customer [Member] | Revenue, Segment Benchmark
Description Of Business Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Concentration risk percentage	47.00%	45.00%
Biomedical Market [Member] | Quality Control Testing Services [Member]
Description Of Business Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Revenue	$ 0	$ 0
Anti-Aging Skincare Market [Member]
Description Of Business Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Revenue	$ 218,000	$ 249,000

XML

Description of Business, Basis of Presentation and Summary of Significant Accounting Policies - Summary of Revenue Disaggregated by Segment, Product Group and Geography (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Disaggregation Of Revenue [Line Items]
Total Revenues	$ 2,086	$ 2,020
Biomedical Market [Member]
Disaggregation Of Revenue [Line Items]
Total Revenues	$ 1,868	$ 1,771
% of Total Revenues	100.00%	100.00%
Biomedical Market [Member] | U.S. [Member]
Disaggregation Of Revenue [Line Items]
Total Revenues	$ 1,514	$ 1,550
Biomedical Market [Member] | International [Member]
Disaggregation Of Revenue [Line Items]
Total Revenues	354	221
Biomedical Market [Member] | Cells [Member]
Disaggregation Of Revenue [Line Items]
Total Revenues	$ 722	$ 446
% of Total Revenues	39.00%	25.00%
Biomedical Market [Member] | Cells [Member] | U.S. [Member]
Disaggregation Of Revenue [Line Items]
Total Revenues	$ 530	$ 337
Biomedical Market [Member] | Cells [Member] | International [Member]
Disaggregation Of Revenue [Line Items]
Total Revenues	192	109
Biomedical Market [Member] | Media [Member]
Disaggregation Of Revenue [Line Items]
Total Revenues	$ 1,146	$ 1,325
% of Total Revenues	61.00%	75.00%
Biomedical Market [Member] | Media [Member] | U.S. [Member]
Disaggregation Of Revenue [Line Items]
Total Revenues	$ 984	$ 1,213
Biomedical Market [Member] | Media [Member] | International [Member]
Disaggregation Of Revenue [Line Items]
Total Revenues	162	112
Anti-Aging Skincare Market [Member]
Disaggregation Of Revenue [Line Items]
Total Revenues	$ 218	$ 249

XML

Description of Business, Basis of Presentation and Summary of Significant Accounting Policies - Summary of Antidilutive Securities not Included in Diluted Net Loss Per Share Calculation (Detail) - shares	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	12,935,014	11,449,057
Options [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	6,858,492	5,372,535
Redeemable Convertible Preferred Stock [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	2,457,143	2,457,143
Non-redeemable Convertible Preferred Stock [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	3,619,379	3,619,379

XML

Inventory - Summary of the Components of Inventory (Detail) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Inventory Disclosure [Abstract]
Raw materials	$ 579	$ 615
Work in process	557	498
Finished goods	1,121	1,194
Total current and non-current inventory, gross	2,257	2,307
Less: allowance for inventory excess and obsolescence	(668)	(637)
Total current and non-current inventory, net	1,589	1,670
Inventory, net	1,294	1,384
Non-current inventory, net	$ 295	$ 286

XML

Prepaid Expenses and Other Current Assets - Summary of Schedule of Prepaid and Other Current Assets (Detail) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Prepaid Expense And Other Assets Current [Abstract]
Prepaid expenses	$ 285	$ 64
Other current assets	26	26
Total prepaid expenses and other current assets	$ 311	$ 90

XML

Property and Equipment - Summary of Property and Equipment (Detail) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Property Plant And Equipment [Line Items]
Property and equipment, gross	$ 2,478	$ 2,467
Less: accumulated depreciation and amortization	(2,246)	(2,219)
Property and equipment, net	232	248
Machinery and Equipment [Member]
Property Plant And Equipment [Line Items]
Property and equipment, gross	1,600	1,603
Computer Equipment and Software [Member]
Property Plant And Equipment [Line Items]
Property and equipment, gross	221	217
Office Equipment [Member]
Property Plant And Equipment [Line Items]
Property and equipment, gross	88	89
Leasehold Improvements [Member]
Property Plant And Equipment [Line Items]
Property and equipment, gross	$ 569	$ 558

XML

Property and Equipment - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Property Plant And Equipment [Abstract]
Depreciation and amortization expense	$ 31	$ 37

XML

Intangible Assets - Summary of Intangible Assets (Detail) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Goodwill And Intangible Assets Disclosure [Abstract]
Patents	$ 1,286	$ 1,286
Less: accumulated amortization	(503)	(483)
Total	783	803
Indefinite life logos and trademarks	75	75
Intangible assets, net	$ 858	$ 878

XML

Intangible Assets - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Goodwill And Intangible Assets Disclosure [Abstract]
Amortization expense	$ 20	$ 19

XML

Convertible Preferred Stock and Stockholders' Deficit - Convertible Preferred Stock - Additional Information (Detail) - $ / shares	Mar. 31, 2023	Dec. 31, 2022
Class Of Stock [Line Items]
Preferred stock, shares authorized	20,000,000	20,000,000
Non-redeemable convertible preferred stock, par value	$ 0.001	$ 0.001
Series D Redeemable Convertible Preferred Stock [Member]
Class Of Stock [Line Items]
Redeemable convertible preferred stock shares authorized	50	50
Series B, Series G, Series I-1 and Series I-2 Non-redeemable Convertible Preferred Stock [Member]
Class Of Stock [Line Items]
Preferred stock, shares authorized	10,004,310
Redeemable convertible preferred stock shares authorized	50

XML

Convertible Preferred Stock and Stockholders' Deficit - Schedule of Authorized, Issued and Outstanding Shares of Non-redeemable Convertible Preferred Stock (Detail) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Class Of Stock [Line Items]
Shares Authorized	20,000,000	20,000,000
Series B [Member]
Class Of Stock [Line Items]
Shares Authorized	5,000,000	5,000,000
Shares Issued	250,000	250,000
Shares Outstanding	250,000	250,000
Liquidation Preference	$ 475	$ 471
Series G [Member]
Class Of Stock [Line Items]
Shares Authorized	5,000,000	5,000,000
Shares Issued	5,000,000	5,000,000
Shares Outstanding	5,000,000	5,000,000
Liquidation Preference	$ 5,000	$ 5,000
Carrying Value	$ 5	$ 5
Series I-2 [Member]
Class Of Stock [Line Items]
Shares Authorized	4,310	4,310
Shares Issued	4,310	4,310
Shares Outstanding	4,310	4,310
Liquidation Preference	$ 4,310	$ 4,310
Series B, Series G and Series I-2 Non-redeemable Convertible Preferred Stock [Member]
Class Of Stock [Line Items]
Shares Authorized	10,004,310	10,004,310
Shares Issued	5,254,310	5,254,310
Shares Outstanding	5,254,310	5,254,310
Liquidation Preference	$ 9,785	$ 9,781
Carrying Value	$ 5	$ 5

XML

Convertible Preferred Stock and Stockholders' Deficit - Dividends - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2023 USD ($)
Stockholders Equity Note [Abstract]
Dividends declared	$ 0

XML

Convertible Preferred Stock and Stockholders' Deficit - Liquidation - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2023
Series I-2 Preferred stock [Member]
Class Of Stock [Line Items]
Percentage of share liquidation premium	1.00%

XML

Convertible Preferred Stock and Stockholders' Deficit - Conversion - Additional Information (Detail)	Mar. 31, 2023
Stockholders Equity Note [Abstract]
Preferred stock convertible conversion ratio	1

XML

Convertible Preferred Stock - Summary of Number of Shares of Common Stock into Each Share of Convertible Preferred Stock Converted (Detail)	Mar. 31, 2023 $ / shares shares
Series B [Member]
Class Of Stock [Line Items]
Initial Conversion Price	$ 75.00
Conversion Price	$ 0.39
Conversion Ratio to Common Stock | shares	2.56
Series D [Member]
Class Of Stock [Line Items]
Initial Conversion Price	$ 37.50
Conversion Price	$ 1.75
Conversion Ratio to Common Stock | shares	57,142.86
Series G [Member]
Class Of Stock [Line Items]
Initial Conversion Price	$ 60.00
Conversion Price	$ 9.69
Conversion Ratio to Common Stock | shares	0.10
Series I-2 [Member]
Class Of Stock [Line Items]
Initial Conversion Price	$ 1.75
Conversion Price	$ 1.75
Conversion Ratio to Common Stock | shares	571.43

XML

Convertible Preferred Stock and Stockholders' Deficit - Common Stock - Additional Information (Detail) - $ / shares	Mar. 31, 2023	Dec. 31, 2022	Sep. 30, 2022	Dec. 31, 2021
Stockholders Equity Note [Abstract]
Common stock, shares authorized	120,000,000	120,000,000	120,000,000	120,000,000
Common stock, par value	$ 0.001	$ 0.001	$ 0.001	$ 0.001

XML

Convertible Preferred Stock and Stockholders' Deficit - Equity Incentive Plans - Additional Information (Detail) - shares	3 Months Ended
	Mar. 31, 2023	Dec. 31, 2006
2006 Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expiry of options	10 years
Stock options expiration date	Nov. 16, 2016
Options granted to employees, directors and consultants	0
2006 Plan [Member] | Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of options that may be granted		100,000
2010 Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expiry of options	10 years
2010 Plan [Member] | Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of options that may be granted	9,700,000

XML

Convertible Preferred Stock and Stockholders' Deficit - Summary of Stock Option Activity (Detail) - 2006 Plan and 2010 Plan [Member]	3 Months Ended
	Mar. 31, 2023 $ / shares shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of Outstanding Options, Outstanding, Beginning balance | shares	6,858,492
Number of Outstanding Options, Outstanding, Ending balance | shares	6,858,492
Number of Outstanding Options, Vested and expected to vest at March 31, 2023 | shares	6,624,476
Number of Outstanding Options, Exercisable at March 31, 2023 | shares	4,887,890
Weighted Average Exercise, Outstanding, Beginning balance | $ / shares	$ 1.02
Weighted Average Exercise, Outstanding, Ending balance | $ / shares	1.02
Weighted Average Exercise, Vested and expected to vest at March 31, 2023 | $ / shares	1.04
Weighted Average Exercise, Exercisable at March 31, 2023 | $ / shares	$ 1.25
Weighted Average Remaining Contractual Term (in years), Options Outstanding Ending Balance	7 years 1 month 17 days
Weighted Average Remaining Contractual Term (in years), Vested and expected to vest at March 31, 2023	7 years 21 days
Weighted Average Remaining Contractual Term (in years), Exercisable at March 31, 2023	6 years 5 months 1 day

XML

Convertible Preferred Stock and Stockholders' Deficit - Schedule of Total Stock-Based Compensation Expense (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 108	$ 91
Cost of Sales [Member]
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	1	2
Research and Development [Member]
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	21	6
Selling and Marketing [Member]
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	1	3
General and Administrative [Member]
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 85	$ 80

XML

Convertible Preferred Stock and Stockholders' Deficit - Stock-Based Compensation - Additional Information (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($)
Stockholders Equity Note [Abstract]
Unrecognized compensation expense related to stock options	$ 522
Unrecognized compensation cost related to unvested shares expected to be recognized, weighted-average period	1 year 9 months 21 days

XML

Convertible Preferred Stock and Stockholders' Deficit - Summary of Shares of Common Stock Reserved for Future Issuance (Detail)	Mar. 31, 2023 shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares of common stock reserved for future issuance net	15,609,580
Options Outstanding [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares of common stock reserved for future issuance net	6,858,492
Redeemable Convertible Preferred Stock [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares of common stock reserved for future issuance net	2,457,143
Non-redeemable Convertible Preferred Stock [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares of common stock reserved for future issuance net	3,619,379
Common Stock [Member] | 2010 Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares of common stock reserved for future issuance net	2,674,566

XML

Related Party Transactions - Additional Information (Detail) - USD ($)							1 Months Ended	3 Months Ended	12 Months Ended
	Mar. 14, 2023	Sep. 15, 2022	Mar. 01, 2022	Jan. 13, 2022	Dec. 15, 2021	Nov. 01, 2021	Nov. 30, 2021	Mar. 31, 2023	Dec. 31, 2021
Related Party Transaction [Line Items]
Expiry of lease						Dec. 31, 2026	Dec. 31, 2026
Lease costs incurred percentage					40.00%
Unsecured Non-convertible Promissory Note [Member]
Related Party Transaction [Line Items]
Non-convertible promissory note, principal amount	$ 2,900,000	$ 2,900,000		$ 2,900,000
Annual interest rate	4.50%	4.50%
Conversion note surrendered				$ 250,000					$ 300,000
Maturity date				Mar. 15, 2022
Related party transaction, description								The Modified Note, including outstanding amounts of principal and accrued interest, was due and payable on March 15, 2022.
Debt issuance fees	$ 0	$ 0
Unsecured Non-convertible Promissory Note [Member] | Chief Executive Officer and Co-Chairman [Member]
Related Party Transaction [Line Items]
Non-convertible promissory note, principal amount									$ 2,700,000
Annual interest rate									4.50%
Maturity date	Mar. 15, 2023	Sep. 15, 2022	Sep. 15, 2022						Jan. 15, 2022
Extended maturity date	Sep. 15, 2023	Mar. 15, 2023
S Real Estate Holding LLC [Member]
Related Party Transaction [Line Items]
Expiry of lease								Dec. 31, 2026
Lease costs incurred remaining percentage					60.00%

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Commitments and Contingencies - Additional Information (Detail) $ in Thousands		1 Months Ended		3 Months Ended
	Nov. 01, 2021	Nov. 30, 2021 USD ($)	Oct. 31, 2021 USD ($)	Mar. 31, 2023 USD ($) Lease	Mar. 31, 2022 USD ($)	Dec. 31, 2022 USD ($)
Commitments And Contingencies [Line Items]
Number of operating leases for real estate | Lease				3
Expiry of lease	Dec. 31, 2026	Dec. 31, 2026
Base rent due under lease		$ 4	$ 11
Percentage of increase rent per annum over lease term	3.50%
Percentage of base rent abated of lease term	50.00%
Lease expense				$ 71	$ 73
Finance leases				$ 0		$ 0
San Diego | Corporate Headquarters [Member]
Commitments And Contingencies [Line Items]
Operating leases with term date				2026-12
San Diego | Supplemental Office Space [Member]
Commitments And Contingencies [Line Items]
Operating leases with term date				2026-12
Frederick, Maryland [Member]
Commitments And Contingencies [Line Items]
Operating leases with term date				2025-12

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Commitments and Contingencies - Schedule of Maturities of Lease Liabilities (Detail) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Operating Leases Future Minimum Payments Due [Abstract]
2023 (remaining nine months)	$ 254
2024	349
2025	360
2026	119
Total minimum lease payments	1,082
Less: imputed interest	(185)
Total future minimum lease payments	897
Less: operating lease liabilities, current	(241)	$ (230)
Operating lease liabilities, net of current portion	$ 656	$ 720

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Segments - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2023 Segment Units
Segment Reporting [Abstract]
Number of reporting segments | Segment	3
Number of business units | Units	2

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Segments - Revenues, Expenses and Operating Loss by Market Segment (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Revenues:
Total Revenues	$ 2,086	$ 2,020
Operating expenses:
Total operating expenses	2,084	1,995
Operating income (loss):
Income from operations	2	25
Other income (expense), net:
Total other income (expense), net	(36)	(34)
Net loss:
Net loss	(34)	(9)
Anti-aging Market [Member]
Revenues:
Total Revenues	218	249
Operating expenses:
Total operating expenses	414	372
Operating income (loss):
Income from operations	(196)	(123)
Net loss:
Net loss	(196)	(123)
Therapeutic Market [Member]
Operating expenses:
Total operating expenses	577	624
Operating income (loss):
Income from operations	(577)	(624)
Other income (expense), net:
Total other income (expense), net	(36)	(34)
Net loss:
Net loss	(613)	(658)
Biomedical Market [Member]
Revenues:
Total Revenues	1,868	1,771
Operating expenses:
Total operating expenses	1,093	999
Operating income (loss):
Income from operations	775	772
Net loss:
Net loss	$ 775	$ 772