International Stem Cell CORP 8-K, filed Sep 8, 2026
International Stem Cell CORP (ISCO)
About this 8-K
International Stem Cell CORP filed this 8-K on September 8, 2026, reporting on events of September 1, 2026.
Items reported
- Item 2.01: Completed an acquisition or sale of assets
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
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| Item 2.01 | Completion of Acquisition or Disposition of Assets. |
As previously disclosed, on July 10, 2026, International Stem Cell Corporation, a Delaware corporation (the “Company” or “Parent”), International Stem Cell Corporation, a California corporation (“Intermediate” and, together with Parent, “Seller”), Lifeline Cell Technology, LLC, a California limited liability company (“LCT”), and American Type Culture Collection, Inc., a District of Columbia corporation (“Purchaser”), entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”). Pursuant to the Purchase Agreement, Seller agreed to sell, assign, transfer, convey and deliver to Purchaser, or its designated affiliate, 100% of the issued and outstanding limited liability company interests of LCT, free and clear of all liens other than restrictions under applicable securities laws, and Purchaser agreed to acquire such interests, in each case on the terms and subject to the conditions set forth in the Purchase Agreement (the “Disposition”). Notwithstanding the Company’s determination that stockholder approval was not required for the Disposition, the Company voluntarily submitted the Disposition to stockholders and obtained stockholder approval on July 10, 2026 and filed an information statement on August 4, 2026, disclosing the action by written consent of the stockholders.
On September 1, 2026, the Company completed the Disposition.
The foregoing summary of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the agreement, which was filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 16, 2026.
| Item 9.01 | Financial Statements and Exhibits. |
(b) Exhibits
An unaudited pro forma condensed consolidated balance sheet of the registrant as of June 30, 2026 giving effect to the transaction as if it had occurred as of that date, and unaudited pro forma condensed consolidated statements of operations of the registrant for the years ended December 31, 2025 and 2024, and the six months ended June 30, 2026, giving effect to the transaction as if it had occurred on January 1, 2024, are attached to this report as Exhibit 99.1.
(d) Exhibits
|
Exhibit Number |
Description | |
| 2.1† | Membership Interest Purchase Agreement, dated July 10, 2026, by and among International Stem Cell Corporation, International Stem Cell Corporation, Lifeline Cell Technology, LLC, a California limited liability company, and American Type Culture Collection, Inc. (incorporated herein by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 16, 2026). | |
| 99.1 | Unaudited Pro Forma Condensed Consolidated Financial Information. | |
|
104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document) | |
| † | Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company hereby undertakes to furnish supplemental copies of any of the omitted schedules upon request by the SEC; provided, that the Company may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any schedules so furnished | |
| 2 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| INTERNATIONAL STEM CELL CORPORATION | ||
| By: | /s/ Russell Kern | |
| Russell Kern | ||
|
Executive Vice President, Chief Scientific Officer and Principal Financial Officer | ||
Dated: September 8, 2026
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Exhibit 99.1
INTERNATIONAL STEM CELL CORPORATION
Unaudited Pro Forma Financial Statements
On September 1, 2026, International Stem Cell Corporation (the “Company”) completed the sale of 100% of the membership interests of its wholly-owned subsidiary, Lifeline Cell Technology, LLC (“LCT”), to American Type Culture Collection, Inc. (“ATCC”) pursuant to the Membership Interest Purchase Agreement (the “MIPA”) dated July 10, 2026, for an adjusted purchase price of $25,250,000 (base purchase price of $25,000,000 plus a fixed cash add-back of $250,000), subject to a post-closing working capital true-up.
The unaudited pro forma condensed consolidated financial statements were derived from the Company’s historical financial statements and are being presented to give effect to the disposition of LCT. The unaudited pro forma condensed consolidated financial statements are prepared in accordance with Article 11 of Regulation S-X. The pro forma adjustments are described in the accompanying notes and are based upon information and assumptions available at the time of the filing of this report on Form 8-K.
Included herein are the following unaudited pro forma financial statements:
1. Unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2026
2. Unaudited Pro Forma Condensed Consolidated Statement of Operations – Six Months Ended June 30, 2026
3. Unaudited Pro Forma Condensed Consolidated Statement of Operations – Year Ended December 31, 2025
4. Unaudited Pro Forma Condensed Consolidated Statement of Operations – Year Ended December 31, 2024
The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the historical financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission (“SEC”) on March 30, 2026 and the Company’s Quarterly Report on Form 10-Q for the six months ended June 30, 2026 filed with the SEC on August 13, 2026. The unaudited pro forma financial information is not necessarily indicative of the financial position or results of operations that would have actually occurred had the disposition occurred on the dates indicated. In addition, these unaudited pro forma condensed consolidated financial statements should not be considered to be indicative of the future financial performance and results of operations of the Company.
| 1 |
INTERNATIONAL STEM CELL CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of June 30, 2026
| International Stem Cell Corporation Historical | Transaction Accounting Adjustments (Note 2) | Pro Forma | ||||||||||
| (in thousands) | ||||||||||||
| ASSETS | ||||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ | 1,089 | $ | 21,688 | (a)(e) | $ | 22,777 | |||||
| Escrow receivable, current | – | 2,600 | (a) | 2,600 | ||||||||
| Accounts receivable, net | 959 | (949 | ) | (b) | 10 | |||||||
| Inventories | 1,685 | (1,538 | ) | (b) | 147 | |||||||
| Prepaid expenses and other current assets | 186 | (15 | ) | (b) | 171 | |||||||
| Total current assets | 3,919 | 21,786 | 25,705 | |||||||||
| Property, plant and equipment, net | 160 | (134 | ) | (b) | 26 | |||||||
| Operating lease right-of-use assets | 174 | (98 | ) | (b) | 76 | |||||||
| Intangible assets, net | 515 | (13 | ) | (b) | 502 | |||||||
| Inventories, non-current | 257 | (234 | ) | (b) | 23 | |||||||
| Deposits and other assets | 31 | (17 | ) | (b) | 14 | |||||||
| Total assets | $ | 5,056 | $ | 21,290 | $ | 26,346 | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
| Current liabilities: | ||||||||||||
| Accounts payable | $ | 310 | $ | (191 | ) | (b) | $ | 119 | ||||
| Accrued liabilities | 968 | (576 | ) | (b) | 392 | |||||||
| Operating lease liabilities, current | 199 | (117 | ) | (b) | 82 | |||||||
| Advances – BioTime | 250 | – | 250 | |||||||||
| Income tax payable on gain on sale | – | 258 | (d) | 258 | ||||||||
| Related party note payable | 3,257 | – | 3,257 | |||||||||
| Total current liabilities | 4,984 | (626 | ) | 4,358 | ||||||||
| Total liabilities | 4,984 | (614 | ) | 4,370 | ||||||||
| Commitments and contingencies | – | – | – | |||||||||
| Temporary equity – Series D redeemable convertible preferred stock | 4,300 | – | 4,300 | |||||||||
| Stockholders’ equity (deficit): | ||||||||||||
| Non-redeemable convertible preferred stock | 5 | – | 5 | |||||||||
| Common stock | 8 | – | 8 | |||||||||
| Additional paid-in capital | 107,153 | – | 107,153 | |||||||||
| Accumulated deficit | (111,394 | ) | 21,916 | (d) | (89,478 | ) | ||||||
| Accumulated other comprehensive income (loss) | – | – | – | |||||||||
| Total stockholders’ equity (deficit) | (4,228 | ) | 21,916 | (d) | 17,688 | |||||||
| Total liabilities and stockholders’ equity | $ | 5,056 | $ | 21,290 | $ | 26,346 | ||||||
See accompanying notes to the unaudited pro forma condensed consolidated financial statements.
| 2 |
INTERNATIONAL STEM CELL CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Six Months Ended June 30, 2026
| International Stem Cell Corporation Historical | Transaction Accounting Adjustments (Note 2) | Pro Forma | ||||||||||
| (in thousands, except per share and share data) | ||||||||||||
| REVENUES | ||||||||||||
| Product sales | $ | 4,990 | $ | (4,694 | ) | (c) | $ | 296 | ||||
| Other income | – | – | – | |||||||||
| Total revenues | 4,990 | (4,694 | ) | 296 | ||||||||
| COSTS AND EXPENSES | ||||||||||||
| Cost of sales | 2,171 | (2,100 | ) | (c)(f) | 71 | |||||||
| Gross profit | 2,819 | (2,594 | ) | 225 | ||||||||
| Operating expenses: | ||||||||||||
| Research and development | 311 | (147 | ) | (c) | 164 | |||||||
| General and administrative | 2,184 | (760 | ) | (c) | 1,424 | |||||||
| Selling and marketing | 549 | (362 | ) | (c) | 187 | |||||||
| Total operating expenses | 3,044 | (1,269 | ) | 1,775 | ||||||||
| Loss from operations | (225 | ) | (1,325 | ) | (1,550 | ) | ||||||
| Interest expense | (3 | ) | – | (3 | ) | |||||||
| Interest expense – related party | (66 | ) | – | (66 | ) | |||||||
| Other income (expense), net | 3 | – | 3 | |||||||||
| Net loss before income taxes | (291 | ) | (1,325 | ) | (1,616 | ) | ||||||
| Income tax expense | – | – | – | |||||||||
| Net loss from continuing operations | $ | (291 | ) | $ | (1,325 | ) | $ | (1,616 | ) | |||
| Net loss per share: | ||||||||||||
| Basic and diluted | $ | (0.04 | ) | $ | (0.20 | ) | ||||||
| Weighted average common shares outstanding: | ||||||||||||
| Basic and diluted | 8,004,389 | 8,004,389 | ||||||||||
See accompanying notes to the unaudited pro forma condensed consolidated financial statements.
| 3 |
INTERNATIONAL STEM CELL CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 2025
| International Stem Cell Corporation Historical | Transaction Accounting Adjustments (Note 2) | Pro Forma | ||||||||||
| (in thousands, except per share and share data) | ||||||||||||
| REVENUES | ||||||||||||
| Product sales | $ | 9,100 | $ | (8,502 | ) | (c) | $ | 598 | ||||
| Total revenues | 9,100 | (8,502 | ) | 598 | ||||||||
| COSTS AND EXPENSES | ||||||||||||
| Cost of sales | 4,033 | (3,844 | ) | (c)(f) | 189 | |||||||
| Gross profit | 5,067 | (4,658 | ) | 409 | ||||||||
| Operating expenses: | ||||||||||||
| Research and development | 684 | (289 | ) | (c) | 395 | |||||||
| General and administrative | 3,532 | (868 | ) | (c) | 2,664 | |||||||
| Selling and marketing | 1,118 | (724 | ) | (c) | 394 | |||||||
| Total operating expenses | 5,334 | (1,881 | ) | 3,453 | ||||||||
| Loss from operations | (267 | ) | (2,777 | ) | (3,044 | ) | ||||||
| Interest expense | (8 | ) | – | (8 | ) | |||||||
| Interest expense – related party | (143 | ) | – | (143 | ) | |||||||
| Net loss before income taxes | (418 | ) | (2,777 | ) | (3,195 | ) | ||||||
| Income tax expense | – | – | – | |||||||||
| Net loss from continuing operations | $ | (418 | ) | $ | (2,777 | ) | $ | (3,195 | ) | |||
| Net loss per share: | ||||||||||||
| Basic and diluted | $ | (0.05 | ) | $ | (0.40 | ) | ||||||
| Weighted average common shares outstanding: | ||||||||||||
| Basic and diluted | 8,004,389 | 8,004,389 | ||||||||||
See accompanying notes to the unaudited pro forma condensed consolidated financial statements.
| 4 |
INTERNATIONAL STEM CELL CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 2024
| International Stem Cell Corporation Historical | Transaction Accounting Adjustments (Note 2) | Pro Forma | ||||||||||
| (in thousands, except per share and share data) | ||||||||||||
| REVENUES | ||||||||||||
| Product sales | $ | 9,085 | $ | (8,290 | ) | (c) | $ | 795 | ||||
| Total revenues | 9,085 | (8,290 | ) | 795 | ||||||||
| COSTS AND EXPENSES | ||||||||||||
| Cost of sales | 3,764 | (3,450 | ) | (c)(f) | 314 | |||||||
| Gross profit | 5,321 | (4,840 | ) | 481 | ||||||||
| Operating expenses: | ||||||||||||
| Research and development | 657 | (283 | ) | (c) | 374 | |||||||
| General and administrative | 3,516 | (855 | ) | (c) | 2,661 | |||||||
| Selling and marketing | 1,216 | (712 | ) | (c) | 504 | |||||||
| Total operating expenses | 5,389 | (1,850 | ) | 3,539 | ||||||||
| Loss from operations | (68 | ) | (2,990 | ) | (3,058 | ) | ||||||
| Interest expense | (12 | ) | – | (12 | ) | |||||||
| Interest expense – related party | (133 | ) | – | (133 | ) | |||||||
| Other income (expense), net | 4 | – | 4 | |||||||||
| Net loss before income taxes | (209 | ) | (2,990 | ) | (3,199 | ) | ||||||
| Income tax expense | – | – | – | |||||||||
| Net loss from continuing operations | $ | (209 | ) | $ | (2,990 | ) | $ | (3,199 | ) | |||
| Net loss per share: | ||||||||||||
| Basic and diluted | $ | (0.03 | ) | $ | (0.40 | ) | ||||||
| Weighted average common shares outstanding: | ||||||||||||
| Basic and diluted | 8,004,389 | 8,004,389 | ||||||||||
See accompanying notes to the unaudited pro forma condensed consolidated financial statements.
| 5 |
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – Description of Transaction and Basis of Presentation
On July 10, 2026, International Stem Cell Corporation (“ISCO” or the “Company”) entered into a Membership Interest Purchase Agreement (the “MIPA”) with American Type Culture Collection, Inc. (“ATCC”), providing for the sale of 100% of the membership interests of its wholly-owned subsidiary Lifeline Cell Technology, LLC (“LCT”). The purchase price is $25,000,000, subject to adjustment based on estimated net working capital, estimated closing date cash and estimated closing date indebtedness. The cash consideration payable to ISCO at closing will equal the purchase price, less the escrow amount required to be deposited with the escrow agent. The escrow amount consists of a $100,000 adjustment escrow amount and a $2,500,000 indemnity escrow amount. The transaction closed on September 1, 2026. ISCO’s other wholly-owned subsidiary, Lifeline Skin Care, Inc. (“LSC”), is not part of this transaction.
After the close of the transaction, the historical financial results of LCT, for all periods presented, will be reflected in the Company’s condensed consolidated financial statements as discontinued operations in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP).
The MIPA contains customary representations and warranties by ISCO, LCT and ATCC. In addition, the MIPA contains customary covenants, including covenants requiring ISCO and LCT to use commercially reasonable efforts to conduct the business in the ordinary course, preserve the business organization and preserve material relationships, subject to specified exceptions. The MIPA also contains customary restrictive covenants, restricting ISCO and LCT from taking certain actions during the pre-closing period without ATCC’s consent. ISCO is also subject to a non-solicitation covenant prohibiting solicitation of competing strategic transactions during the period from signing until closing or termination of the MIPA, subject to limited exceptions.
The MIPA includes restrictive covenants applicable for five years after closing, including covenants prohibiting ISCO and its affiliates from soliciting specified business employees or consultants, interfering with specified business relationships of LCT, and engaging in LCT’s business within the applicable geographic area, subject to a customary passive investment exception. The MIPA also includes mutual non-disparagement provisions subject to customary exceptions.
The obligations of the parties to consummate the transaction are subject to customary mutual closing conditions, including the absence of any governmental order prohibiting the transaction and the absence of any governmental litigation challenging the transaction. The agreement contains customary indemnification obligations.
ISCO’s other wholly-owned subsidiary, Lifeline Skin Care, Inc. (“LSC”), is not part of this transaction and will remain with ISCO following the closing, along with ISCO’s therapeutic research and development operations.
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Basis of Presentation
The following unaudited pro forma condensed consolidated financial statements have been prepared in accordance with Article 11 of Regulation S-X and give effect to the disposition of LCT as described in Note 1. The pro forma adjustments reflect only Transaction Accounting Adjustments as defined in Rule 11-02(a)(6)(i) of Regulation S-X. No Autonomous Entity Adjustments are applicable, and Management’s Adjustments have not been presented.
The unaudited pro forma condensed consolidated balance sheet is presented as of June 30, 2026 as if the Transaction had been consummated on that date. The unaudited pro forma condensed consolidated statements of operations for the six months ended June 30, 2026 and the years ended December 31, 2025 and 2024, are presented as if the Transaction had been consummated on January 1, 2024, the beginning of the earliest annual period presented.
Two annual periods (FY2025 and FY2024) are presented pursuant to the Smaller Reporting Company accommodation under CFR Rule 11-02(c)(2)(ii).
The pro forma financial statements are based upon available information and assumptions that management believes to be reasonable. They are not necessarily indicative of the financial position or results of operations that would have occurred had the Transaction been consummated on the dates indicated, nor are they indicative of ISCO’s future financial performance.
Note 2 – Transaction Accounting Adjustments
The following describes each Transaction Accounting Adjustment reflected in Column B of the financial statements. All adjustments are directly attributable to the Transaction and are factually supportable.
(a) Purchase Price, Cash Proceeds and Escrow Receivable
Reflects (i) receipt of net cash proceeds of $21,688,000 at closing and (ii) recognition of an escrow receivable (current asset) of $2,600,000 as follows (in thousands):
| Gross purchase price | $ | 25,000 | ||
| Fixed cash add-back | 250 | |||
| Estimated Working Capital Adjustment | 438 | |||
| Adjusted purchase price | 25,688 | |||
| Less: LCT actual cash holdings retained by ISCO | (373 | ) | ||
| Less: Estimated Transaction Costs (Note 2(e) and Note 5) | (1,027 | ) | ||
| Less: total escrow withheld at closing | (2,600 | ) | ||
| Net cash received at closing | $ | 21,688 |
The escrow of $2,600,000 is classified as a current asset (escrow receivable) and comprises three tranches: (i) $100,000 working capital holdback released approximately 90 days post-closing (subject to working capital true-up – see Note 4); (ii) $1,500,000 indemnification holdback released approximately 6 months post-closing; and (iii) $1,000,000 indemnification holdback released approximately 9 months post-closing. Tranches (ii) and (iii) are subject to indemnification claims. All three tranches are classified as current given expected release within 12 months of the balance sheet date.
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(b) Removal of LCT Historical Assets and Liabilities
Reflects the elimination of LCT’s assets and liabilities from the pro forma condensed consolidated balance sheet as of June 30, 2026. LCT’s net assets on a post-intercompany basis are $2,487,000, as follows (in thousands):
| LCT assets transferred to ATCC at closing | $ | 2,998 | ||
| LCT cash not transferred to ATCC at closing (Note 2(a)) | 373 | |||
| Less: LCT liabilities assumed by ATCC | (884 | ) | ||
| Net book value of LCT | $ | 2,487 |
The intercompany receivable of $9,445,000 owed by ISCO parent to LCT is eliminated in ISCO’s consolidated financial statements was forgiven on LCT’s standalone books on August 31, 2026 (the day before the closing), with no impact on ISCO’s consolidated balance sheet. See also Note 8.
(c) Removal of Historical Operations
Reflects the elimination of LCT’s historical revenues, cost of sales, and operating expenses (research and development, general and administrative, and selling and marketing) for each period presented. These eliminations are based on LCT’s standalone financial statements derived from ISCO’s internal segment reporting.
LCT had no debt obligations; accordingly, no adjustment is made to interest expense or interest expense — related party, both of which remain with ISCO parent. Certain corporate overhead and shared service costs historically allocated to LCT have not been removed from the pro forma statements of operations because they are expected to continue to be incurred by ISCO following the disposition. See Note 2(f) and Note 6.
(d) After-Tax Gain on Sale and Tax Effect
The estimated pre-tax gain on sale of LCT of $22,174,000 (which consists of the pre-tax gain of $19,574,000 plus the $2,600,000 escrow holdback) is excluded from the pro forma statements of operations as a nonrecurring item directly attributable to the Transaction. The escrow payment is treated as an adjustment to the purchase price for tax purposes. The after-tax gain of $19,316,000 plus the escrow of $2,600,000 are credited directly to accumulated deficit on the pro forma balance sheet. An estimated income tax payable of $258,000 is recognized as a current liability on the pro forma balance sheet. The gain is calculated as follows (in thousands):
| Adjusted purchase price (Note 2(a)) | $ | 25,688 | ||
| Less: Estimated Transaction Costs | (1,027 | ) | ||
| Net proceeds | 24,661 | |||
| Less: net book value of LCT transferred | (2,487 | ) | ||
| Pre-tax gain on sale | $ | 22,174 | ||
| Less: estimated income tax (see Note 3) | (258 | ) | ||
| Estimated after-tax gain – credited to accumulated deficit | $ | 21,916 | ||
| Less: escrow holdback | (2,600 | ) | ||
| Estimated after-tax gain – excluding escrow holdback | $ | 19,316 |
For further detail on the tax rate assumptions, see Note 3.
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(e) Estimated Transaction Costs
Estimated Transaction costs of $1,027,000 directly attributable to the Transaction are nonrecurring and are excluded from the pro forma statements of operations. These costs are reflected solely as a reduction of net cash proceeds on the pro forma balance sheet. See Note 5 for further detail.
(f) Stranded and Shared Costs
Certain corporate overhead and shared service costs that were historically allocated to LCT consisted of only those that related directly to production and overhead allocations and these have been removed from the pro forma statements of operations through the adjustment already reflected. Other costs including portions of general and administrative expenses related to public company infrastructure, executive management, finance, legal, related party note interest as well as human resource activities – supported both LCT and ISCO’s continuing operations and are expected to continue to be incurred by ISCO following the disposition and were never allocated. See Note 6 for further detail.
Note 3 – Tax Rate Assumptions
The total statutory rate is comprised of the federal statutory rate of 21% plus California franchise tax rate of 8.84% plus Arizona income tax of 4.9% plus Maryland income tax of 8.25%.
The Transaction is structured as a membership interest sale, which is treated as an asset sale for income tax purposes.
The effective tax rate of 1.164% was calculated as the tax on the gain with reference to the pre-tax book gain on sale of LCT of $22,174,000 (see Note 2(d)). The effective tax rate and calculated tax liability differs from the statutory tax rate as a result of the following items:
(i) After considering IRC 382 & 383 limitations, there were approximately $16,000,000 in net operating losses and $192,000 of R&D credits available to offset a portion of the taxable gain from the transaction. For state purposes, there was approximately $126,000 of California R&D tax credits available for utilization.
(ii) For the 2026 tax year, California suspended the use of California net operating losses.
(iii) The effect of state apportionment resulted in a reduction from the statutory state tax rates.
Note 4 – Working Capital Adjustment
The MIPA provides for a post-closing working capital true-up. Based on the preliminary closing balance sheet, the working capital adjustment is estimated at $438,000, which has been included in the net proceeds calculation. A working capital escrow holdback of $100,000 has been established and will be released within 30 days following the determination of the closing working capital, which is expected to occur approximately 90 days after the closing date. The pro forma financial statements reflect a $438,000 working capital adjustment which is reflected in the cash line on the pro-forma balance sheet (see Note 2(a)). This will be modified, if necessary, when the closing balance sheet is prepared. The actual working capital adjustment may increase or decrease the gain on sale and the net cash received.
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Note 5 – Estimated Transaction Costs
Transaction costs directly attributable to the Transaction total $1,027,000 and are comprised of the following (in thousands):
| Estimated Legal fees | $ | 550 | ||
| Estimated Accounting fees | 187 | |||
| Estimated Other | 290 | |||
| Total transaction costs | $ | 1,027 |
These costs are nonrecurring and are excluded from the pro forma statements of operations. They are reflected as a reduction of net cash proceeds on the pro forma balance sheet only.
Note 6 – Stranded and Shared Costs
Certain costs of ISCO that were historically allocated to LCT will continue to be incurred following the disposition. These stranded costs relate only to labor overhead allocation for production purposes for employees not directly employed by LCT. Costs that were never allocated include the corporate overhead expenses related to ISCO’s public company obligations (SEC reporting, audit fees, legal fees, directors’ and officers’ insurance), executive management, finance and accounting, human resource activities and information technology infrastructure that supported both LCT and ISCO’s continuing therapeutic research and development and LSC operations.
These costs are not considered stranded costs as they were never allocated and therefore have not been removed from the pro forma statements of operations because they represent ongoing costs of ISCO’s continuing operations and will not be eliminated as a result of the Transaction.
Note 7 – Transition Services Agreement
The Company and ATCC have entered into a Transition Services Agreement (“TSA”) pursuant to which ISCO will provide certain transition services to ATCC for a defined period following the closing of the Transaction. No TSA income has been reflected in the pro forma statements of operations as management has determined that any fees payable under the TSA are not material to ISCO’s continuing operations and do not represent a component of ISCO’s ongoing business.
Note 8 – Intercompany Transactions
As of June 30, 2026, ISCO parent had an intercompany payable to LCT of $9,445,000, representing amounts advanced to ISCO parent by LCT in the ordinary course of business. This intercompany balance is eliminated in ISCO’s consolidated financial statements and therefore does not appear on the historical consolidated balance sheet.
Pursuant to the MIPA, this intercompany receivable was forgiven and eliminated on LCT’s standalone books on August 31, 2026 (the day before closing). This forgiveness had no impact on ISCO’s consolidated financial statements, as the receivable and payable are eliminated in consolidation. The forgiveness entry was a necessary pre-closing step to ensure LCT’s net assets transferred to ATCC reflect only third-party assets and liabilities.
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