International Stem Cell CORP 10-K for FY2021

International Stem Cell CORP (ISCO)

10-K 2022-03-29 For: 2021-12-31

Added on April 06, 2026

About this 10-K

International Stem Cell CORP filed this 10-K on March 29, 2022, covering the fiscal year ended December 31, 2021 (FY2021).

Headline figures

Fiscal year ended December 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $7.18M; up 0.7% from $7.13M a year earlier
Net loss: $899K; compared with a net loss of $2.72M a year earlier

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Title of each class		Name of each exchange on which registered
None		None

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

		Emerging growth company	☐

		Page

Cautionary Note Regarding Forward-Looking Statements		i

PART I

Item 1.	Business	1

Item 1A.	Risk Factors	12

Item 1B.	Unresolved Staff Comments	26

Item 2.	Properties	26

Item 3.	Legal Proceedings	26

Item 4.	Mine Safety Disclosures	26

PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	27

Item 6.	(Reserved)	27

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28

Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	35

Item 8.	Financial Statements and Supplementary Data	35

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	35

Item 9A.	Controls and Procedures	35

Item 9B.	Other Information	36

Item 9C.	Disclosures Regarding Foreign Jurisdictions that Prevent Inspections	36

PART III

Item 10.	Directors, Executive Officers and Corporate Governance	37

Item 11.	Executive Compensation	37

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	37

Item 13.	Certain Relationships and Related Transactions, and Director Independence	38

Item 14.	Principal Accounting Fees and Services	38

PART IV

Item 15.	Exhibits, Financial Statement Schedules	39

Item 16.	Form 10-K Summary	41

SIGNATURES		42
	Exhibit 10.12
	Exhibit 10.13
	Exhibit 10.14
	Exhibit 23.1
	Exhibit 31.1
	Exhibit 31.2
	Exhibit 32.1
	Exhibit 32.2

	Years Ended December 31,
	2021			2020			$ Change			% Change
Product sales	$	7,176		$	7,128		$	48			1	%
Cost of sales		2,935			2,781			154			6	%
As a % of revenues		41	%		39	%
General and administrative		4,084			4,422			(338	)		-8	%
Selling and marketing		1,383			1,755			(372	)		-21	%
Research and development		695			988			(293	)		-30	%
Other income (expense), net		1,022			94			928			987	%
Net loss	$	(899	)	$	(2,724	)	$	1,825			-67	%
As a % of revenues		-13	%		-38	%

	Years Ended December 31,
	2021			2020
Net cash used in operating activities	$	(1,297	)	$	(341	)
Net cash used in investing activities		(45	)		(108	)
Net cash provided by financing activities		824			654
Net increase (decrease) in cash	$	(518	)	$	205

Name	Position	Age
Andrey Semechkin	Co-Chairman and Chief Executive Officer	62
Russell Kern	Executive Vice President and Chief Scientific Officer	36
Sophia Garnette	Vice President, Legal Affairs & Operations and Principal Financial Officer	38

Exhibit Number		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 to Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Registrant’s Form 8-K filed on December 5, 2014).

3.5		Certificate of Amendment to 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 to Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Registrant’s Form 8-K filed on May 19, 2017).

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).

4.6		Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to Exhibit 4.7 of the Registrant’s Form 10-K filed March 30, 2021).

10.1		2010 Equity Participation Plan (incorporated by reference to Exhibit 10.1 of the Registrant’s Form 10-Q filed on August 12, 2020).

Exhibit Number		Exhibit Description

10.2		Amended and Restated Investors Rights Agreement dated March 9, 2012 (incorporated by reference to Exhibit 10.2 of the Registrant’s Form 8-K filed on March 15, 2012).

10.3		Management Rights Letter dated March 9, 2012 (incorporated by reference to Exhibit 10.3 of the Registrant’s Form 8-K filed on March 15, 2012).

10.4		Dividend Waiver Agreement dated October 12, 2012 (incorporated by reference to Exhibit 10.29 of the Registrant’s Form S-1 filed on October 18, 2012).

10.5		Amended and Restated License Agreement with Advanced Cell Technology, Inc. dated February 7, 2013 (ACT IP) (incorporated by reference to Exhibit 10.1 of the Registrant’s Amendment to Form 8-K filed on February 14, 2013)

10.6		Amended and Restated License Agreement with Advanced Cell Technology, Inc. (UMass IP) (incorporated by reference to Exhibit 10.3 of the Registrant’s Amendment to Form 8-K filed on February 14, 2013).

10.7		Amended and Restated License Agreement dated February 7, 2013 with Advanced Cell Technology, Inc. (Infigen IP) (incorporated by reference to Exhibit 10.2 of the Registrant’s Amendment to Form 8-K filed on February 14, 2013).

10.8		Amendment dated November 13, 2014 to Amended and Restated Investor Rights Agreement dated as of March 9, 2012 (incorporated by reference to Exhibit 10.1 of the Registrant’s Form 8-K filed on November 18, 2014).

10.9		Waiver Agreement dated December 31, 2014 with holders of Series G Preferred Stock (incorporated by reference by Exhibit 10.32 of the Registrant’s Form 10-K filed March 30, 2015).

10.10		Registration Rights Agreement, dated January 8, 2016, by and between International Stem Cell Corporation and Andrey Semechkin (incorporated by reference to Exhibit 10.3 of the Registrant’s Form 8-K filed on January 12, 2016).

10.11		Form of Registration Rights Agreement (incorporated by reference to Exhibit 10.2 of the Registrant’s Form 8-K filed on March 10, 2016).

10.12*		Lease Agreement dated October 26, 2021

10.13*		Lease Agreement dated November 30, 2021

10.14*		Co-Tenant Agreement dated December 15, 2021

10.15		Form of Note issued on March 1, 2022 (incorporated by reference to Exhibit 10.1 of the Registrant’s Form 8-K filed on March 3, 2022).

21.1		Subsidiaries of the Registrant (incorporated by reference to Exhibit 21.1 of the Registrant’s Form 10-K filed on March 30, 2016).

23.1*		Consent of BDO USA, LLP

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

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INTERNATIONAL STEM CELL CORPORATION

By:		/s/ ANDREY SEMECHKIN
Name:		Andrey Semechkin
Title:		Chief Executive Officer

Signature:	Capacity:	Date:

/ S / ANDREY SEMECHKIN	Co-Chairman of the Board and Chief Executive Officer (Principal Executive Officer)	March 29, 2022
Andrey Semechkin

/ S / SOPHIA GARNETTE	Vice President Legal Affairs and Operations (Principal Financial Officer)	March 29, 2022
Sophia Garnette

/ S / RUSSELL KERN	Executive VP and Chief Scientific Officer and Director	March 29, 2022
Russell Kern

/ S / DONALD A. WRIGHT	Co-Chairman of the Board	March 29, 2022
Donald A. Wright

/ S / PAUL V. MAIER	Director	March 29, 2022
Paul V. Maier

		Page
Report of Independent Registered Public Accounting Firm (BDO USA, LLP; San Diego, California; PCAOB ID No. 243)		F-2
Consolidated Balance Sheets		F-4
Consolidated Statements of Operations		F-5
Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Deficit		F-6
Consolidated Statements of Cash Flows		F-7
Notes to Consolidated Financial Statements		F-8

	December 31,			December 31,
	2021			2020
Assets
Current assets:
Cash	$	171		$	689
Accounts receivable, net		844			403
Inventory, net		1,184			917
Prepaid expenses and other current assets		135			174
Total current assets		2,334			2,183
Non-current inventory, net		372			371
Property and equipment, net		384			534
Intangible assets, net		949			1,262
Right-of-use assets		868			874
Deposits and other assets		39			63
Total assets	$	4,946		$	5,287
Liabilities, Redeemable Convertible Preferred Stock and Stockholders' Deficit
Current liabilities:
Accounts payable	$	508		$	360
Accrued liabilities		404			386
Operating lease liabilities, current		179			346
Advances		250			250
Related party note payable		2,943			—
Paycheck Protection Program loan, current		—			141
Total current liabilities		4,284			1,483
Related party note payable		—			2,475
Paycheck Protection Program loan, net of current portion		—			517
Operating lease liabilities, net of current portion		950			845
Total liabilities		5,234			5,320
Commitments and contingencies (Note 11)
Series D redeemable convertible preferred stock, $0.001 par value; 50 shares authorized; 43 shares issued and outstanding; liquidation preference of $4,300 at December 31, 2021 and 2020		4,300			4,300
Stockholders' Deficit:
Non-redeemable convertible preferred stock, $0.001 par value; 10,004,310 and 10,006,310 shares authorized, 5,254,310 and 5,255,124 shares issued and outstanding, liquidation preference of $9,766 and $10,565 at December 31, 2021 and December 31, 2020, respectively		5			5
Common stock, $0.001 par value; 120,000,000 shares authorized; 8,004,389 and 7,539,089 shares issued and outstanding at December 30, 2021 and 2020, respectively		8			8
Additional paid-in capital		105,413			104,769
Accumulated deficit		(110,014	)		(109,115	)
Total stockholders' deficit		(4,588	)		(4,333	)
Total liabilities, redeemable convertible preferred stock and stockholders' deficit	$	4,946		$	5,287


	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, 2019		—	$	4,300		5,255		$	5		7,539	$	8	$	103,490	$	(106,391	)	$	(2,888	)
Stock-based compensation		—		—		—			—		—		—		1,279		—			1,279
Net loss		—		—	—				—	—			—		—		(2,724	)		(2,724	)
Balance at December 31, 2020		—		4,300		5,255			5		7,539		8		104,769		(109,115	)		(4,333	)
Conversion of Series I-1 preferred stock		—		—		(1	)		—		465		—		—		—			-
Stock-based compensation		—		—		—			—		—		—		644		—			644
Net loss		—		—		—			—		—		—		—		(899	)		(899	)
Balance at December 31, 2021		—	$	4,300		5,254		$	5		8,004	$	8	$	105,413	$	(110,014	)	$	(4,588	)

	Year Ended December 31, 2021
					Total		% of Total
	Domestic		International		Revenues		Revenues
Biomedical products
Cells	$	801	$	546	$	1,347		23	%
Media		3,935		654		4,589		77	%
Total	$	4,736	$	1,200	$	5,936		100	%

	Year Ended December 31, 2020
					Total		% of Total
	Domestic		International		Revenues		Revenues
Biomedical products
Cells	$	838	$	389	$	1,227		22	%
Media		3,903		447		4,350		78	%
Other		17		—		17		—
Total	$	4,758	$	836	$	5,594		100	%

	Year Ended December 31,
	2021					2020
	Total		% of Total			Total		% of Total
	Revenues		Revenues			Revenues		Revenues
Skin care sales channels
Ecommerce	$	913		74	%	$	1,050		68	%
Professional		327		26	%		484		32	%
Total	$	1,240		100	%	$	1,534		100	%

	As of December 31,
	2021			2020
Raw materials	$	592		$	427
Work in process		507			481
Finished goods		983			991
		2,082			1,899
Less: allowance for inventory excess and obsolescence		(526	)		(611	)
Total current and non-current inventory, net	$	1,556		$	1,288

Inventory, net	$	1,184		$	917
Non-current inventory		372			371
Total current and non-current inventory, net	$	1,556		$	1,288

Years ending December 31,
2022		78
2023		78
2024		78
2025		75
2026		72
Thereafter		493
Total	$	874

	Shares		Shares Issued		Liquidation		Carrying
	Authorized		and Outstanding		Preference		Value
					(in thousands)
Series B		5,000,000		250,000	$	456	$	—
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	$	9,766	$	5

	Initial		Current		Conversion
	Conversion		Conversion		Ratio to
	Price		Price		Common Stock
Series B	$	75.00	$	1.08		0.9259260
Series D	$	37.50	$	1.75		57,142.8571
Series G	$	60.00	$	9.69		0.103099
Series I-2	$	1.75	$	1.75		571.428571

Options outstanding			5,373,203
Common stock available for issuance under the 2010 Plan			4,161,189
Redeemable convertible preferred stock			2,457,143
Non-redeemable convertible preferred stock			3,209,835
Total			15,201,370

						Weighted-
						Average
						Remaining
	Number of			Weighted-		Contractual		Aggregate
	Outstanding			Average		Term		Intrinsic Value
	Options			Exercise		(in years)		(in thousands)
Outstanding at December 31, 2020		4,255,371		$	3.41
Granted		1,761,962		$	0.39
Forfeited or canceled		(622,088	)	$	2.14
Expired		(22,042	)	$	284.00
Outstanding at December 31, 2021		5,373,203		$	1.42		7.31	$	146
Vested and expected to vest at December 31, 2021		5,187,332		$	1.46		7.23	$	131
Exercisable at December 31, 2021		3,980,138		$	1.77		6.58	$	34

	Years Ended
	2021			2020
Operating lease costs	$	456		$	464
Short-term lease costs		1			7
Variable lease costs		225			211
Total lease costs	$	682		$	682
Operating cash used for operating leases		508			509
Right-of-use asset obtained in exchange for operating lease liability		479			421
Weighted-average remaining lease term (years)		4.42			3.90
Weighted-average discount rate		13.48	%		17.05	%