Selected Balance Sheet Components

12 Months Ended

Dec. 31, 2020

Balance Sheet Related Disclosures [Abstract]

Selected Balance Sheet Components

3. Selected Balance Sheet Components

Property and equipment, net

At December 31, 2020 and 2019, property and equipment was comprised of the following (in thousands):

	December 31,
	2020			2019
Equipment, furniture and fixtures	$	381		$	954
Right-of-use assets (1)		-			726
Accumulated depreciation and amortization		(381	)		(554	)
Property and equipment, net	$	-		$	1,126

(1) AgeX adopted ASC 842 on January 1, 2019. For additional information on this standard and right-of-use assets and liabilities, see Notes 2 and 8.

Depreciation and amortization expense amounted to $1,123,000 and $393,000 for the years ended December 31, 2020 and 2019, respectively. Accumulated depreciation and amortization also reflects a $21,000 adjustment upon the sale of laboratory equipment; write off of right-of-use assets in the amount of $726,000 and leasehold improvements of $436,000 which were fully amortized as of December 31, 2020 following termination of the facility lease agreement on that date; and also write off of other fixed asset in the amount of approximately $112,000 primarily comprised of $89,000 for the write off of office furniture and equipment with the shutdown of our subsidiary’s office in Israel. Furthermore, depreciation expense in 2020 included $210,000 of accelerated depreciation expense primarily of laboratory equipment given the uncertainty of reinstitution of research and development work in-house. As a result of the layoffs of mostly research personnel in April 2020 and the expiration of the AgeX laboratory facility lease on December 31, 2020, research and development work have been scaled back and contracted out to third party service providers.

Intangible assets, net

Intangible assets, net are primarily comprised of acquired licenses and other rights by LifeMap Sciences from a third party for certain databases it commercializes.

On August 13, 2018, AgeX entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Escape Therapeutics, Inc. (“Escape”) pursuant to which AgeX acquired certain patents and patent applications related primarily to methods of modifying cells and tissues and certain pluripotent stem cell lines so as to reduce their risk of being rejected when transplanted. This technology is called “UniverCyte™”. AgeX paid Escape $1,072,436 in cash and issued 80,000 shares of AgeX common stock, with an approximate value of $240,000, for aggregate acquisition cost of $1.3 million for the UniverCyte™ assets. The Purchase Agreement was considered an asset acquisition rather than a business combination in accordance with ASC 805-50, Business Combinations.

ASC 730-10-25(c), Research and Development – Intangible Assets Purchased from Others, provides guidance for acquisition and capitalization of the cost of intangible assets purchased from others in an asset acquisition that have alternative future uses in other research and development projects. These intangible assets are referred to as acquired in-process research and development with alternative future uses and are accounted for as intangible assets and amortized to research and development over their useful life. Acquired IPR&D in an asset acquisition that does not have any alternative future uses is expensed under the same guidance. As an initial focus, AgeX intends to use the UniverCyte™ technology in the development of its two lead products, AGEX-BAT1 and AGEX-VASC1 for the treatment of Type II diabetes and cardiovascular aging, respectively. Accordingly, AgeX recorded the UniverCyte™ technology acquired from Escape as IPR&D intangible assets with alternative future uses in accordance with ASC 730-10-25(c) and is amortizing those assets to research and development expense over their estimated 10 year useful life.

In addition to the purchase price, AgeX will pay Escape a royalty of less than 1% on net sales of products, processes and services under the acquired patents, if the assets are commercialized. Additional shares of AgeX common stock totaling up to $4.3 million of market value will also be issued to Escape upon the attainment of development and regulatory approval milestones by AgeX for each product covered by the acquired patents. Contingent consideration in an asset acquisition is generally recorded when probable and estimable in accordance with ASC 450, Contingencies. Accordingly, none of the milestone payments have been accrued since the attainment of any milestone in the Purchase Agreement was not probable as of December 31, 2020.

AgeX has also agreed to engage Escape’s chief executive officer as a consultant for a period of up to three years to assist AgeX in utilizing the acquired patents. AgeX pays $200,000 per year in consulting fees as services are performed included in research and development expenses.

At December 31, 2020 and 2019, intangible assets, primarily consisting of acquired in-process research and development and patents, and accumulated amortization were as follows (in thousands):

	December 31,
	2020			2019
Intangible assets	$	5,586		$	5,586
Accumulated amortization		(3,994	)		(3,435	)
Intangible assets, net	$	1,592		$	2,151

AgeX recognized $559,000 and $558,000 in amortization expense of intangible assets, included in research and development expenses, for the years ended December 31, 2020 and 2019, respectively.

Accounts payable and accrued liabilities

At December 31, 2020 and 2019, accounts payable and accrued liabilities were comprised of the following (in thousands):

	December 31,
	2020		2019
Accounts payable	$	761	$	420
Accrued compensation		228		263
Accrued vendors and other expenses		667		899
Accounts payable and accrued liabilities	$	1,656	$	1,582