UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~September 30~~, ~~2021~~March 31, 2022

☐ 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: ~~001-40060~~001-38295

Longeveron Inc.

(Exact name of registrant as specified in its charter)

Delaware

001-40060

47-2174146

(State or Other Jurisdiction

of Incorporation)

(Commission File Number)

(IRS Employer

Identification No.)

1951 NW 7^thAvenue, Suite 520, Miami, Florida 33136

(Address of Principal Executive Offices)

Registrant’s Telephone Number, Including Area Code: (305) 909-0840

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

Title of each class		Trading Symbol		Name of each exchange on which registered
~~Class A~~ Common Stock, par value $0.001 per share		LGVN		The NASDAQ Capital Market

Indicate 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 has 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 ~~November~~May 12, ~~2021,~~2022, the registrant had ~~3,417,796~~5,372,442 shares of Class A common stock, $0.001 par value per shares, and ~~15,702,834~~15,565,062 shares of Class B common stock, $0.001 par value per share, outstanding.

LONGEVERON INC.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

ITEM 1.	Condensed Financial Statements	1
	Condensed Balance Sheets as of ~~September 30, 2021~~March 31, 2022 (unaudited) and December 31, ~~2020~~2021	1
	Condensed Statements of Operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ (unaudited)	2
	Condensed Statements of Members’ Equity and Stockholders’ Equity for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 ~~and three and nine months ended September 30, 2020~~ (unaudited)	3
	Condensed Statements of Cash Flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ (unaudited)	5
	Notes to Condensed Financial Statements (unaudited)	6
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2320
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	3432
ITEM 4.	Controls and Procedures	3432

PART II. OTHER INFORMATION

ITEM 1A.	Risk Factors	3533
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3633
ITEM 6.	Exhibits	3634

SIGNATURES		3735

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Longeveron Inc.

Condensed Balance Sheets

(In thousands, except share and per share data)

	September 30, 2021			December 31, 2020		March 31, 2022			December 31, 2021
	(Unaudited)					(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	9,738		$	816	$	22,132		$	25,658
Short-term investments		9,232			-
Short-term investments at fair value (cost of $8,449 and $9,471 at March 31, 2022 and December 31, 2021, respectively)							8,449			9,333
Prepaid expenses and other current assets		524			52		1,190			282
Deferred offering costs		-			561
Accounts and grants receivable		171			420		96			55
Total current assets		19,665			1,849		31,867			35,328
Property and equipment, net		3,070			3,597		2,966			3,062
Intangible assets, net		2,358			1,547		2,361			2,334
Right-of-use (ROU) asset		1,880			2,070		1,745			1,813
Other assets		177			177		234			229
Total assets	$	27,150		$	9,240	$	39,173		$	42,766
Liabilities, members’ equity and stockholders’ equity
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	361		$	1,590	$	561		$	645
Accrued expenses		834			1,542		791			1,327
Current portion of lease liability		530			511		543			537
Short-term note payable		-			38
Current portion of loans		5			139
Deferred revenue		202			10		505			199
Total current liabilities		1,932			3,830		2,400			2,708
Long-term liabilities:
Long-term loans		143			311
Lease liability		2,742			3,142		2,467			2,605
Total long-term liabilities		2,885			3,453		2,467			2,605
Total liabilities		4,817			7,283		4,867			5,313
Commitments and contingencies (Note 9)
Members’ equity and stockholders’ equity:
Members’ equity		-			1,957
Preferred stock, $0.001 par value per share, 5,000,000 shares authorized, 0 shares issued and outstanding at September 30, 2021; 0 shares authorized, issued and outstanding, at December 31, 2020		-			-
Class A common stock, $0.001 par value per share, 84,295,000 shares authorized, 3,417,796 shares issued and outstanding at September 30, 2021; no shares authorized, issued and outstanding, at December 31, 2020		3			-
Class B common stock, $0.001 par value per share, 15,705,000 shares authorized, 15,702,834 shares issued and outstanding at September 30, 2021; no shares authorized, issued and outstanding, at December 31, 2020		16			-
Stockholders’ equity:
Preferred stock, $0.001 par value per share, 5,000,000 shares authorized, no shares issued and outstanding at March 31, 2022 and December 31, 2021.							-			-
Class A Common Stock, $0.001 par value per share, 84,295,000 shares authorized, 5,326,512 shares issued and outstanding at March 31, 2022; 5,175,361 issued and outstanding, at December 31, 2021							5			5
Class B Common Stock, $0.001 par value per share, 15,705,000 shares authorized, 15,585,062 shares issued and outstanding at March 31, 2022; 15,702,834 issued and outstanding, at December 31, 2021							16			16
Additional paid-in capital		62,283			-		81,833			81,470
Stock subscription receivable		(100	)		-		(100	)		(100	)
Accumulated deficit		(39,869	)		-		(47,448	)		(43,938	)
Total members’ equity and stockholders’ equity		22,333			1,957
Total liabilities, members’ equity and stockholders’ equity	$	27,150		$	9,240
Total stockholders’ equity							34,306			37,453
Total liabilities and stockholders’ equity						$	39,173		$	42,766

See accompanying notes to unaudited condensed financial statements.

Longeveron Inc.

Condensed Statements of Operations

(In thousands, except per share data)

(Unaudited)

	Three months ended September 30,						Nine months ended September 30,						Three months ended March 31,
	2021			2020			2021			2020			2022			2021
Revenues
Grant revenue	$	68		$	1,788		$	554		$	3,602		$	60		$	211
Clinical trial revenue		164			30			543			792			310			165
Contract revenue		-			47			-			55
Total revenues		232			1,865			1,097			4,449			370			376
Cost of revenues		68			1,492			576			3,152			70			227
Gross profit		164			373			521			1,297			300			149

Operating expenses
General and administrative		2,996			702			8,454			2,029			1,980			1,707
Research and development		2,048			585			5,359			1,523			1,427			1,350
Selling and marketing		25			44			132			140			287			550
Total operating expenses		5,069			1,331			13,945			3,692			3,694			3,607
Loss from operations		(4,905	)		(958	)		(13,424	)		(2,395	)		(3,394	)		(3,458	)
Other income and (expenses)
Other (expense) and income
Forgiveness of Paycheck Protection Program loan		-			-			300			-			-			300
Interest expense		(1	)		(4	)		(3	)		(4	)
Other income, net		51			24			151			34
Total other income and (expenses), net		50			20			448			30
Other (expense) income, net														(116	)		47
Total other (expense) and income, net														(116	)		347
Net loss	$	(4,855	)	$	(938	)	$	(12,976	)	$	(2,365	)	$	(3,510	)	$	(3,111	)
Basic and diluted net loss per share	$	(0.25	)	$	(0.06	)	$	(0.70	)	$	(0.15	)	$	(0.17	)	$	(0.18	)
Basic and diluted weighted average common shares outstanding		19,115,152			16,040,864			18,543,024			16,017,469			20,911,203			17,491,066

See accompanying notes to unaudited condensed financial statements.

Longeveron Inc.

Condensed Statements of Stockholders’ Equity

(In Thousands, Except Share Amounts)

(Unaudited)

	Series A Units				Series B Units				Series C Units				Class A Common Stock					Class B Common Stock								Additional
	Number of Units		Amount		Number of Units		Amount		Number of Units		Amount		Number			Amount		Number			Amount		Subscription Receivable			Paid-In Capital			Accumulated Deficit			Total Equity
Balance at December 31, 2021		-	$	-		-	$	-		-	$	-		5,175,361		$	5		15,702,834		$	16	$	(100	)	$	81,470		$	(43,938	)	$	37,453
Conversion of Class B common stock for Class A common stock		-		-		-		-		-		-		117,772			-		(117,772	)		-		-			-			-			-
Class A Common Stock, issued for RSUs vested		-		-		-		-		-		-		44,006			-		-			-		-			-			-			-
Class A Common Stock, held for taxes on RSUs vested consulting		-		-		-		-		-		-		(10,626	)		-		-			-		-			(128	)		-			(128	)
Equity-based compensation		-		-		-		-		-		-		-			-		-			-		-			491			-			491
Net loss		-		-		-		-		-		-		-			-		-			-		-			-			(3,510	)		(3,510	)

Balance at March 31, 2022		-	$	-		-	$	-		-	$	-		5,326,512		$	5		15,585,062		$	16	$	(100	)	$	81,833		$	(47,448	)	$	34,306

See accompanying notes to unaudited condensed financial statements.

Longeveron Inc.

Condensed Statements of ~~Members’~~Stockholders’ Equity ~~and Stockholders’ Equity~~(Continued)

~~For the Nine Months Ended September 30, 2021 and 2020~~
(In Thousands, Except Share Amounts)

(Unaudited)

Series A Units Series B Units Series C Units Class A
Common Stock Class B
Common Stock Additional
Number
of Units Amount Number
of Units Amount Number
of Units Amount Number Amount Number Amount Subscription
Receivable Paid-In
Capital Accumulated
Deficit Total
Equity
Balance at December 31, 2019 1,000,000 $ 250 1,000,000 $ 1,832 43,695 $ 2,513 - - - - (150 ) - - 4.445
Series C units issued for cash - - - - 18,335 1,100 - - - - - - - 1,100
Issuance of Series C units as payment for amounts accrued - - - - 734 44 - - - - - - - 44
Equity-based compensation - - - - - 36 - - - - - - - 36
Cash received pursuant to subscription receivable - - - - - - - - - - 50 - - 50
Net loss - - - (2,341 ) - (24 ) - - - - - - - (2,365 )

Balance at September 30, 2020 1,000,000 $ 250 1,000,000 $ (509 ) 62,764 $ 3,669 - $ - - $ - $ (100 ) - - $ 3,310

	Series A Units						Series B Units						Series C Units						Class A Common Stock				Class B Common Stock							Additional								Series A Units					Series B Units						Series C Units						Class A Common Stock				Class B Common Stock							Additional
	Number of Units			Amount			Number of Units			Amount			Number of Units			Amount			Number		Amount		Number		Amount		Subscription Receivable			Paid-In Capital		Accumulated Deficit			Total Equity			Number of Units		Amount			Number of Units			Amount			Number of Units			Amount			Number		Amount		Number		Amount		Subscription Receivable			Paid-In Capital		Accumulated Deficit			Total Equity
Balance at December 31, 2020		1,000,000		$	250			1,000,000		$	(1,777	)		62,764		$	3,584			-		-		-		-		(100	)		-		-			1,957			1,000,000	$	250			1,000,000		$	(1,777	)		62,764		$	3,584			-	$	-		-	$	-	$	(100	)	$	-	$	-		$	1.957
Conversion of Units into Class A and B common stock		(1,000,000	)		(250	)		(1,000,000	)		1,777			(62,764	)		(3,584	)		338,030		-		15,702,834		16		-			28,934		(26,893	)		-			(1,000,000)		(250	)		(1,000,000	)		1,777			(62,764	)		(3,584	)		338,030		-		15,702,834		16		-			28,934		(26,893	)		-
Initial public offering and overallotment of Class A common stock, net of $2,969 in issuance costs		-			-			-			-			-			-			2,910,000		3		-		-		-			26,131		-			26,134
Class A common stock, issued for consulting		-			-			-			-			-			-			169,766		-		-		-		-			1,239		-			1,239
Initial public offering and overallotment of Class A Common Stock, net of $2,969 in issuance costs																																							-		-			-			-			-			-			2,910,000		3		-		-		-			26,131		-			26,134
Class A Common Stock, issued for consulting																																							-		-			-			-			-			-			32,713		-		-		-		-			250		-			250
Equity-based compensation		-			-			-			-			-			-			-		-		-		-		-			5,979		-			5,979			-		-			-			-			-			-			-		-		-		-		-			1,265		-			1,265
Net loss		-			-			-			-			-			-			-		-		-		-		-			-		(12,976	)		(12,976	)		-		-			-			-			-			-			-		-		-		-		-			-		(3,111	)		(3,111	)
Balance at September 30, 2021		-			-			-			-			-			-			3,417,796		3		15,702,834		16		(100	)		62,283		(39,869	)		22,333

Balance at March 31, 2021																																							-	$	-			-		$	-			-		$	-			3,280,743	$	5		15,702,834	$	16	$	(100	)	$	56,580	$	(30,004	)	$	26,495

See ~~notes to unaudited condensed financial statements.~~

~~Longeveron Inc.~~

~~Condensed Statements of Members’ Equity and Stockholders’ Equity~~

~~For the Three Months Ended September 30, 2021 and 2020~~
~~(In Thousands, Except Share Amounts) (Unaudited)~~

Series A Units Series B Units Series C Units Class A
Common Stock Class B
Common Stock Additional

Number
of Units Amount Number
of Units Amount Number
of Units Amount Number Amount Number Amount Subscription
Receivable Paid-In
Capital Accumulated
Deficit Total
Equity
Balance at June 30, 2020 1,000,000 $ 250 1,000,000 $ 418 62,764 $ 3,667 - - - - (100 ) - - 4,235
Equity-based compensation - - - - - 13 - - - - - - - 13
Net loss - - - (927 ) - (11 ) - - - - - - - (938 )

Balance at September 30, 2020 1,000,000 $ 250 1,000,000 $ (509 ) 62,764 $ 3,669 - $ - - $ - $ (100 ) $ - $ - $ 3,310

Series A Units Series B Units Series C Units Class A
Common Stock Class B
Common Stock Additional
Number of Units Amount Number
of Units Amount Number
of Units Amount Number Amount Number Amount Subscription
Receivable Paid-In
Capital Accumulated
Deficit Total
Equity
Balance at June 30, 2021 - $ - - $ - $ - 3,411,796 $ 3 15,702,834 $ 16 $ (100 ) 59,745 (35,014 ) $ 24,650
Class A common stock, issued for consulting - - - - - - 6,000 - - - - 42 - 42
Equity-based compensation - - - - - - - - - - - 2,496 - 2,496
Net loss - - - - - - - - - - - - (4,855 ) (4,855 )
Balance at September 30, 2021 - - - - - - 3,417,796 3 15,702,834 16 (100 ) 62,283 (39,869 ) 22,333

~~See notes to unaudited condensed financial statements.~~

~~Longeveron Inc.~~

~~Condensed Statements of Cash Flows~~

~~(In thousands) (Unaudited)~~

Nine months ended
September 30,
2021 2020
Cash flows from operating activities
Net loss $ (12,976 ) $ (2,365 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 682 590
Forgiveness of Paycheck Protection Program loan (303 ) -
Change in fair value of short-term investments (8 ) -
Non-cash stock payments to employees and consultants 299 44
Equity-based compensation 5,978 36
Changes in operating assets and liabilities:
Accounts and grants receivable 250 (214 )
Prepaid expenses and other current assets (472 ) (37 )
Other assets - 24
Accounts payable (1,177 ) 366
Deferred revenue 192 (300 )
Accrued expenses (629 ) 154
ROU asset and lease liability (191 ) (157 )
Net cash used in operating activities (8,355 ) (1,859 )
Cash flows from investing activities
Short-term investments (9,224 ) -
Acquisition of intangible assets (139 ) (77 )
Acquisition of property and equipment (18 ) (144 )
Net cash used in investing activities (9,381 ) (221 )
Cash flows from financing activities
Proceeds from initial public offering of common stock, net of commissions and expenses 26,696 -
Proceeds from issuance of Series C units - 1,100
Repayments of short-term note payable (38 ) 58
Proceeds of long-term notes payables - 450
Proceeds from subscription agreement - 50
Prepaid financing fees (50 )
Net cash provided by financing activities 26,658 1,608
Increase in cash and cash equivalents 8,922 (472 )
Cash and cash equivalents at beginning of the period 816 1,866
Cash and cash equivalents at end of the period $ 9,738 $ 1,394
Supplement Disclosure of Non-cash Investing and Financing Activities:
Conversion of Series A, B and C units into Class A and B common stock $ (2,057 ) $ -

~~See~~accompanying notes to unaudited condensed financial statements.

Longeveron Inc.

Condensed Statements of Cash Flows

(In thousands)

(Unaudited)

	Three months ended March 31,
	2022			2021
Cash flows from operating activities
Net loss	$	(3,510	)	$	(3,111	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		188			195
Forgiveness of Paycheck Protection Program loan					(300	)
Change in fair value of short-term investments		54			-
Equity issued for consulting services		-			119
Equity based compensation		491			1,265
Changes in operating assets and liabilities:
Accounts and grants receivable		(41	)		420
Prepaid expenses and other current assets		(908	)		(785	)
Other assets		(57	)		-
Accounts payable		(7	)		(644	)
Deferred revenue		306			375
Accrued expenses		(604	)		(503	)
ROU asset and lease liability		(64	)		(63	)
Net cash used in operating activities		(4,152	)		(3,032	)
Cash flows from investing activities
Proceeds from the sale of short-term investments		885			-
Acquisition of property and equipment		(47	)		-
Acquisition of intangible assets		(71	)		-
Net cash provided by investing activities		767			-
Cash flows from financing activities
Proceeds from initial public offering of common stock, net of commissions and expenses		-			26,696
Payments for taxes on RSUs vested		(141	)		-
Repayments of short-term note payable		-			(19	)
Net cash (used in) provided by financing activities		(141	)		26,677
Change in cash and cash equivalents		(3,526	)		23,645
Cash and cash equivalents at beginning of the period		25,658			816
Cash and cash equivalents at end of the period	$	22,132		$	24,461
Supplement Disclosure of Non-cash Investing and Financing Activities:
Conversion of Series A, B and C units into Class A and B common stock	$	-		$	(2,057	)
Vesting of RSUs into Class A Common Stock	$	(379	)	$	-

See accompanying notes to unaudited condensed financial statements.

Longeveron Inc.

Notes to the Condensed Financial Statements (Unaudited)

Three ~~and Nine~~ Month Periods Ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~

1. Nature of Business, Basis of Presentation, and Liquidity

Nature of business:

On February 12, 2021, Longeveron, LLC converted its corporate form (the “Corporate Conversion”) from a Delaware limited liability company (Longeveron, LLC) to a Delaware corporation, Longeveron Inc. (the “Company,” “Longeveron” or “we,” “us,” or “our”). Longeveron, LLC was formed as a Delaware limited liability company on October 9, 2014 and was authorized on December 15, 2014 to transact business in ~~Florida on December 15, 2014.~~Florida. The Company is a clinical stage biotechnology company developing cellular therapies for specific aging-related and life-threatening conditions. The Company operates out of its leased facilities in Miami, Florida.

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, dependence on licenses, protection of proprietary technology, dependence on key personnel, compliance with government regulations and the need to obtain additional financing to fund operations. Product candidates currently under development will require significant additional research and development efforts, including extensive pre-clinical studies and clinical trials and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel infrastructure and extensive compliance and reporting capabilities.

The Company’s product candidates are currently in development. There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be obtained, that any products developed will obtain necessary government regulatory approval or that any approved products will be commercially viable. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will generate significant revenue from product sales. The Company operates in an environment of rapid technological change and substantial competition from, among others, existing pharmaceutical and biotechnology companies. In addition, the Company is dependent upon the services of its employees, partners and consultants.

Initial Public Offering (“IPO”):

The Corporate Conversion undertaken immediately prior to the Company’s IPO caused all existing Series A and B units to convert into Class B Common Stock, par value $0.001 per share (the “Class B Common Stock”) and all existing Series C units to convert into Class A Common Stock, par value $0.001 per share (the “Class A Common Stock”). The purpose of the Corporate Conversion was to reorganize the Company structure so that the entity that offered the Company’s Class A Common Stock to the public was a Delaware corporation rather than a Delaware limited liability company, and so that the Company’s existing investors own the Company’s Class A Common Stock or Class B Common Stock rather than equity interests in a limited liability company.

On February 12, 2021 our Class A ~~common stock~~Common Stock, par value $0.001 per share (the “Class A Common Stock”) began to trade on NASDAQ under the stock symbol “LGVN”. Pursuant to the IPO, the Company sold 2,660,000 shares of Class A ~~common stock~~Common Stock at a public offering price of $10.00 per share for aggregate gross proceeds of $26.6 million prior to deducting underwriting discounts, commissions, and other offering expenses. In addition, the Company granted the underwriters a 30-day option to purchase up to an additional 399,000 shares at the public offering price less the underwriting discounts and commissions.

On March 15, 2021, the Company’s underwriters partially exercised ~~its~~the over-allotment option, resulting in the Company selling an additional 250,000 shares of Class A ~~common stock~~Common Stock at a public offering price of $10.00 per share for aggregate gross proceeds of $2.5 million prior to deducting underwriting discounts, commissions, and other offering expenses.

~~Basis of presentation:~~Private Placement

~~The unaudited Condensed Financial Statements have been prepared~~On December 3, 2021, the Company completed a private placement with several investors, wherein a total of 1,169,288 shares of the Company’s Class A Common Stock were issued at a purchase price of $17.50 per share, with each investor also receiving a warrant to purchase up to a number of shares of Class A Common Stock equal to the number of shares of Class A Common Stock purchased by such investor in ~~accordance with~~ the ~~requirements~~Offering, at an exercise price of ~~Article 8 of Regulation S-X promulgated under the Exchange Act and, therefore, do not include all information and footnotes necessary~~$17.50 per share (the “Purchaser Warrants”), for a ~~fair presentation~~total purchase price of ~~financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”~~approximately $20.5 million (the “Offering”). These unaudited Condensed Financial Statements should be read in conjunction with our Financial Statements and related notes, included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC. Unless otherwise stated, references to particularThe Purchaser Warrants are immediately exercisable, expire five years ~~or quarters refer to our fiscal years ended December 31 and the associated quarters of those fiscal years.~~

The Condensed Financial Statements are unaudited, but include all adjustments, including normal recurring adjustments, which, in the opinion of management, are necessary to present fairly our financial position, results of operations and cash flows for the interim periods presented. The Condensed Balance Sheet as of December 31, 2020 has been derived from the ~~audited financial statements~~date of issuance and have certain downward pricing adjustment mechanisms, subject to a floor, as set forth in greater detail therein. In addition, the Company granted the underwriters warrants, under similar terms, to purchase 46,722 shares of Class A Common Stock at ~~that date but does not include all~~an exercise price of the information and notes required by U.S. GAAP for complete financial statements. Results of operations for interim periods are not necessarily indicative of the results that may be expected for the year as a whole.$17.50 per share.

Liquidity:

Since inception, the Company has primarily been engaged in organizational activities, including raising capital, and research and development activities. The Company does not yet have a product that has been approved by the U.S. Food and Drug Administration (“FDA”), and has only generated revenues from grants, clinical trials and contract manufacturing. The Company has not yet achieved profitable operations or generated positive cash flows from operations. The Company intends to continue its efforts to raise additional equity financing, develop its intellectual property, and secure regulatory approvals to commercialize its products. There is no assurance that profitable operations, if achieved, could be sustained on a continuing basis. Further, the Company’s future operations are dependent on the success of the Company’s efforts to raise additional capital, its research and commercialization efforts, regulatory approval, and, ultimately, the market acceptance of the Company’s ~~products.~~approved products, if any. These financial statements do not include adjustments that might result from the outcome of these uncertainties.

The Company has incurred recurring losses from operations since its inception, including a net loss of ~~$13.0~~$3.5 million and ~~$2.4~~$3.1 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. In addition, as of ~~September 30, 2021,~~March 31, 2022, the Company had an accumulated deficit of ~~$39.9~~$47.4 million. The Company expects to continue to generate operating losses for the foreseeable future.

As of ~~September 30, 2021,~~March 31, 2022, the Company had cash, and cash equivalents of ~~$9.7~~$22.1 million and short-term investments of ~~$9.2~~$8.5 million. The Company believes that its cash and cash equivalents and investments as of ~~September 30, 2021~~March 31, 2022 will enable it to fund its operating expenses and capital expenditure requirements through at least the next 12 months from the date of issuance of these financial statements.

2. Summary of Significant Accounting Policies

Basis of presentation:

The financial statements of the Company were prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”).

Certain reclassifications have been made to prior year financial statements to conform to classifications used in the current year. These reclassifications had no impact on net loss, shareholders’ equity or cash flows as previously reported.

Use of estimates:

The presentation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Accounting Standard Updates

In December 2019, the ~~Financial Accounting Standards Board~~FASB issued ~~Accounting Standards Update~~ASU 2019-12, “Income Taxes (Topic 740)”. The amendments in this ASU simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and by clarifying and amending other areas of Topic 740. The amendments in this ASU are effective for annual and interim periods beginning after December 15, 2020. We adopted this ASU on January 1, 2021 with no material impact on our ~~consolidated~~ financial statements.

A variety of proposed or otherwise potential accounting standards are currently under consideration by standard-setting organizations and certain regulatory agencies. Because of the tentative and preliminary nature of such proposed standards, management has not yet determined the effect, if any, that the implementation of such proposed standards would have on the Company’s financial statements.

Cash and cash equivalents:

The Company considers cash to consist of cash on hand and temporary investments having an original maturity of 90 days or less that are readily convertible into cash.

Short-term investments:

Short-term investments at ~~September 30,~~March 31, 2022 and December 31, 2021 consisted of marketable fixed income securities, primarily corporate bonds, as well as U.S. Government and agency obligations which are categorized as ~~available-for-sale~~trading securities and are thus marked to market and stated at fair value in accordance with ASC 820 Fair Value Measurement. These investments are considered Level 1 and Level 2 investments within the ASC 820 fair value hierarchy. The fair value of Level 1 investments, including cash equivalents, money funds and U.S. government securities, are substantially based on quoted market prices. The fair value of corporate bonds is determined using standard market valuation methodologies, including discounted cash flows, matrix pricing ~~and /~~ and/or other similar techniques. The inputs to these valuation techniques include but are not limited to market interest rates, credit rating of the issuer or counterparty, industry sector of the issuer, coupon rate, call provisions, maturity, estimated duration and assumptions regarding liquidity and estimated future cash flows. In addition to bond characteristics, the valuation methodologies incorporate market data, such as actual trades completed, bids and actual dealer quotes, where such information is available. Accordingly, the estimated fair values are based on available market information and judgments about financial instruments categorized within Level 1 and Level 2 of the fair value hierarchy. Interest and dividends are recorded when earned. Realized gains and losses on investments are determined by specific identification and are recognized as incurred in the statement of operations. Changes in net unrealized gains and losses are reported in the statement of operations within other income and losses, in the current period and represent the change in the fair value of investment holdings during the reporting period. Changes in net unrealized gains and losses were not significant for the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022 and ~~there were no such changes for the three and nine months ended September 30, 2020.~~

~~Inventory:~~

The Company will begin carrying inventory of its biological products on its balance sheets following commercial launch of such products. Inventory will consist of raw materials, biological products in process, and finished goods available for sale. The Company will determine its inventory values using the average cost method. Inventory will be valued at the lower of cost or net realizable value and will exclude units that the Company anticipates distributing for clinical evaluation. As of each of September 30, 2021 and December 31, 2020, all of the Company’s biological products were anticipated to be distributed for clinical evaluation.

The Company does not currently carry any inventory for its biological products, as it has yet to launch a product for commercial distribution. Historically the Company’s operations have focused on clinical trials and discovery efforts, and accordingly, costs of manufactured clinical doses of biological product candidates were expensed as incurred, consistent with the accounting for all other research and development costs. Once the Company begins commercial distribution, costs of all newly manufactured biological products will be allocated either for use in commercial distribution, which will be carried as inventory and not expensed, or for research and development efforts, which will continue to be expensed as incurred.2021.

Accounts and grants receivable:

Accounts and grants receivable include amounts due from customers, granting institutions and others. The amounts as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 are ~~deemed~~certain to be ~~collectible~~collected, and no amount has been recognized for doubtful accounts. ~~MSCRF-TEDCO~~Maryland-TEDCO generally advance grant funds and therefore a receivable is not usually recognized. In addition, for the Clinical trial revenue, most participants pay in advance of treatment. Advanced grant funds and prepayments for the Clinical trial revenue are recorded to deferred revenue.

Accounts and grants receivable by source, as of (in thousands):

	March 31, 2022		December 31, 2021
National Institutes of Health – Grant	$	96	$	55
Total	$	96	$	55

September 30,
2021 December 31,
2020
Alzheimer’s Association – Grant $ - $ 339
National Institutes of Health – Grant 171 66
Clinical Trial receivable - 15
Total $ 171 $ 420

Deferred offering costs:

The Company recorded certain legal, professional and other third-party fees that were directly associated with in-process equity financings as deferred offering costs until the applicable equity financing was consummated. After consummation of an equity financing, these costs are recorded in stockholders’ equity as a reduction of proceeds generated as a result of the offering. ~~At September 30, 2021 the deferred offering costs accrued as of December 31, 2020 of $0.6 million were recorded to stockholders’ equity.~~

Property and equipment:

Property and equipment, including improvements that extend useful lives of related assets, are ~~valued~~recorded at cost, while maintenance and repairs are charged to operations as incurred. Depreciation is calculated using the straight-line method based on the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of the estimated useful life of the asset or the original term of the lease. Depreciation expense is recorded in the research and development line of the Statement of Operations as the assets are primarily related to the Company’s clinical programs.

Intangible assets:

Intangible assets include payments on license agreements with the Company’s co-founder and chief scientific officer (“CSO”) and the University of Miami (“UM”) (see Note 9) and legal costs incurred related to patents and trademarks. License agreements have been recorded at the value of cash consideration, common stock and membership units transferred to the respective parties when acquired.

Payments onfor license agreements are amortized using the straight-line method over the estimated term of the agreements, which range from 5-20 years. Patents are amortized over their estimated useful life, once issued. The Company considers trademarks to have an indefinite useful life and evaluates them for impairment on an annual basis. Amortization expense is recorded in the research and development line of the Statement of Operations as the assets are primarily related to the Company’s clinical programs.

Impairment of Long-Lived Assets:

The Company evaluates long-lived assets for impairment, including property and equipment and intangible assets, when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Upon the occurrence of a triggering event, the asset is reviewed to assess whether the estimated undiscounted cash flows expected from the use of the asset plus the residual value from the ultimate disposal exceeds the carrying value of the asset. If the carrying value exceeds the estimated recoverable amounts, the asset is written down to the estimated fair value. Any resulting impairment loss is reflected on the statements of operations. Upon evaluation, management determined that there was no impairment of long-lived assets ~~as of September 30, 2021~~during the three months ended March 31, 2022 and ~~December 31, 2020.~~2021.

Deferred revenue:

The unearned portion of advanced grant funds and prepayments for Clinical trial revenue, which will be recognized as revenue when the Company meets the respective performance obligations, has been presented as deferred revenue in the accompanying balance sheets. For the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the Company recognized $19,000 and nil ~~and $0.3 million, respectively,~~ of funds that were previously classified as deferred revenue, ~~(of which~~ ~~nil~~ ~~and $0.2 million was attributable to each of the three-month periods ended September 30, 2021 and 2020).~~respectively.

Revenue recognition:

The Company recognizes revenue when performance obligations related to respective revenue streams are met. For Grant revenue, the Company considers the performance obligation met when the grant related expenses are incurred, or supplies and materials are received. The Company is paid in tranches pursuant to terms of the related grant agreements, and then applies payments based on regular expense reimbursement submissions to grantors. There are no remaining performance obligations or variable consideration once grant expense reporting to the grantor is complete. For Clinical trial revenue, the Company considers the performance obligation met when the participant has received the treatment. The Company usually receives prepayment for these services or receives payment at the time the treatment is provided, and there are no remaining performance obligations or variable consideration once the participant received the treatment. For Contract manufacturing revenue, the Company considers the performance obligation met when the contractual obligation ~~and /~~ and/or statement of work has been satisfied. Payment terms may vary depending on specific contract terms. There are no significant judgments affecting the determination of the amount and timing of revenue recognition.

Revenue by source (in thousands):

Three months ended
September 30,
Nine months ended
September 30,

2021 2020 2021 2020
National Institute of Health - grant $ 41 $ 1,195 $ 171 $ 2,538
Clinical trial revenue 164 30 543 792
Alzheimer’s Association grant 10 598 271 1,038
MSCRF – TEDCO¹ - grant 17 (5 ) 112 26
Contract manufacturing revenue - 47 - 55
Total $ 232 $ 1,865 $ 1,097 $ 4,449

	Three months ended March 31,
	2022		2021
National Institutes of Health – Grant	$	41	$	-
Clinical trial revenue		310		165
Alzheimer’s Association – Grant		-		170
Maryland – TEDCO – Grant¹		19		41
Total	$	370	$	376

Maryland Stem Cell Research Fund (MSCRF) - Maryland Technology Development Corporation (TEDCO)

The Company records cost of revenues based on expenses directly related to revenue. For Grants, the Company records allocated expenses for Research and development costs to a grant as a cost of revenues. For the Clinical trial revenue directly related expenses for that program are ~~allocated and~~ expensed as incurred. These expenses are similar to those described under “Research and development expense” below.

Research and development expense:

Research and development costs are charged to expense when incurred in accordance with ASC ~~730.~~730 Research and Development. ASC 730 addresses the proper accounting and reporting for research and development costs. It identifies: 1) those activities that should be identified as research and development; 2) the elements of costs that should be identified with research and development activities, and the accounting for these costs; and 3) the financial statement disclosures related to them. Research and development costs include costs such as clinical trial expenses, contracted research and license agreement fees with no alternative future use, supplies and materials, salaries, share-based compensation, employee benefits, property and equipment depreciation and allocation of various corporate costs. The Company accrues for costs incurred by external service providers, including contract research organizations and clinical investigators, based on its estimates of service performed and costs incurred. These estimates include the level of services performed by the third parties, patient enrollment in clinical trials, administrative costs incurred by the third parties, and other indicators of the services completed. Based on the timing of amounts invoiced by service providers, the Company may also record payments made to those providers as prepaid expenses that will be recognized as expense in future periods as the related services are rendered.

Concentrations of credit risk:

Financial instruments which potentially subject the Company to credit risk consist principally of cash and cash equivalents, short-term investments and accounts and grants receivable. Cash and cash equivalents are held in ~~United States~~U.S. financial institutions. At times, the Company may maintain balances in excess of the federally insured amounts.

Income taxes:

Prior to its Corporate Conversion, the Company was treated as a partnership for U.S. federal and state income tax purposes. Consequently, the Company passed its earnings and losses through to its members based on the terms of the Company’s Operating Agreement. Accordingly, no provision for income taxes is recorded in the financial statements for periods prior to the conversion.

Following the Corporate Conversion, the Company's tax provision consists of taxes currently payable or receivable, plus any change during the period in deferred tax assets and liabilities. The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. In addition, a valuation allowance is established to reduce any deferred tax asset for which it is determined that it is more likely than not that some portion of the deferred tax asset will not be realized. The Company's tax provision was ~~nil~~$0 for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021 due to net operating losses. The Company has not recorded any tax benefit for the net operating losses incurred due to the uncertainty of realizing a benefit in the future.

The Company recognizes the tax benefits from uncertain tax positions that the Company has taken or expects to take on a tax return. In the unlikely event an uncertain tax position exists in which the Company could incur income taxes, the Company would evaluate whether there is a probability that the uncertain tax position taken would be sustained upon examination by a taxing authority. Reserves for uncertain tax positions would then be recorded if the Company determined it is probable that either a position would not be sustained upon examination or a payment would have to be made to a taxing authority and the amount was reasonably estimable. As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Company does not believe it has any uncertain tax positions that would result in the Company having a liability to the taxing authority. It is the Company’s policy to expense any interest and penalties associated with its tax obligations when they are probable and estimable.

Equity-based compensation:

The Company accounts for equity-based compensation expense by the measurement and recognition of compensation expense for stock-based awards based on estimated fair values on the date of grant. The fair value of the options is estimated at the date of the grant using the Black-Scholes option-pricing model.

The Black-Scholes option-pricing model requires the input of highly subjective assumptions, the most significant of which are the expected share price volatility, the expected life of the option award, the risk-free rate of return, and dividends during the expected term. Because the option-pricing model is sensitive to changes in the input assumptions, different determinations of the required inputs may result in different fair value estimates of the options.

Neither the Company’s stock options nor its restricted stock units (“RSUs”) trade on an active market. Volatility is a measure of the amount by which a financial variable, such as a stock price, has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. Given the Company’s limited historical data, the Company utilizes the average historical volatility of similar publicly traded companies that are in the same industry. The risk-free interest rate is the average U.S. treasury rate (having a term that most closely approximates the expected life of the option) for the period in which the option was granted. The expected life is the period of time that the options granted are expected to remain outstanding. Options granted have a maximum term of ten years. The Company had insufficient historical data to utilize in determining its expected life assumptions and, therefore, uses the simplified method for determining expected life.

Comprehensive Loss

Comprehensive loss was equal to net loss for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021.

3. Short-term investments

~~Short-term~~The following is summary of short-term investments ~~consisted of~~that the ~~following (in thousands):~~Company measures at fair value:

	September 30, 2021								Fair Value at March 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Level 1		Level 2		Level 3		Total
Fixed income bond funds	$	9,224		8		-		9,232

U.S. Treasury obligations										398,039		-		-		398,039
U.S. government agencies										-		1,207,746		-		1,207,746
Corporate and foreign bonds										-		6,842,936		-		6,842,936
Money market funds⁽¹⁾										1,334,906		-		-		1,334,906
Total short-term investments	$	9,224		8		-	$	9,232	$	1,732,945	$	8,050,682	$	-	$	9,783,627

⁽¹⁾	Money market funds are included in cash and cash equivalents in the balance sheet.

	Fair Value at December 31, 2021
	Level 1		Level 2		Level 3		Total

U.S. Treasury obligations		401,290		-		-		401,290
U.S. government agencies		-		1,424,477		-		1,424,477
Corporate and foreign bonds		-		7,507,705		-		7,507,705
Money market funds²		576,742		-		-		576,742
Total short-term investments	$	978,032	$	8,932,182	$	-	$	9,910,214

⁽²⁾	Money market funds are included in cash and cash equivalents in the balance sheet.

As of March 31, 2022 and December 31, ~~2020,~~2021, the Company ~~did~~reported accrued interest receivable related to short-term investments of $57,064 and $52,484, respectively. These amounts are recorded in other assets on the Balance Sheets and are not ~~have any~~included in the carrying value of the short-term investments.

4. Property and equipment, net

Major components of property and equipment are as follows (in thousands):

	Useful Lives	September 30, 2021		December 31, 2020		Useful Lives	March 31, 2022		December 31, 2021
Leasehold improvements	10 years	$	4,310	$	4,310	10 years	$	4,318	$	4,318
Furniture/Lab equipment	7 years		2,071		2,059	7 years		1,770		1,724
Computer equipment	5 years		20		14	5 years		28		28
Software/Website	3 years		38		38	3 years		38		38
Total property and equipment			6,439		6,421			6,154		6,108
Less accumulated depreciation and amortization			3,369		2,824			3,188		3,046
Property and equipment, net		$	3,070	$	3,597		$	2,966	$	3,062

Depreciation and amortization expense amounted to approximately ~~$0.2~~$0.1 million and ~~$0.5~~$0.2 million for ~~each of~~ the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively.

5. Intangible assets, net

Major components of intangible assets as of ~~September 30, 2021~~March 31, 2022 are as follows (in thousands):

	Useful Lives	Cost		Accumulated Amortization			Total		Useful Lives	Cost		Accumulated Amortization			Total
License agreements	5-20 years	$	2,043	$	(417	)	$	1,626	20 years	$	2,043	$	(517	)	$	1,526
Patent Costs			584		-			584			686		-			686
Trademark costs			148		-			148			149		-			149
Total		$	2,775	$	(417	)	$	2,358		$	2,878	$	(517	)	$	2,361

Major components of intangible assets as of December 31, ~~2020~~2021 are as follows:

	Useful Lives	Cost		Accumulated Amortization			Total		Useful Lives	Cost		Accumulated Amortization			Total
License agreements	20 years	$	1,233	$	(279	)	$	954	20 years	$	2,043	$	(473	)	$	1,570
Patent Costs			466		-			466			615		-			615
Trademark costs			127		-			127			149		-			149
Total		$	1,826	$	(279	)	$	1,547		$	2,807	$	(473	)	$	2,334

Amortization expense related to intangible assets totaled less than $0.1 million for each of the ~~three-~~three months ended March 31, 2022 and ~~nine-month periods ended September 30, 2021 and 2020.~~2021.

Future amortization expense for intangible assets as of ~~September 30, 2021~~March 31, 2022 is approximately as follows (in thousands):

Year Ending December 31,	Amount		Amount
2021	$	58
2022		224
2022 (remaining 9 months)			$	168
2023		224		224
2024		224		224
2025		224		224
2026				224
Thereafter		672		462
Total	$	1,626	$	1,526

6. Leases

~~In accordance with Accounting Standards Update 2016-02, “Leases (Topic 842)”, the~~The Company records a Right-of-use (ROU) asset and a lease liability related to its operating leases (there are no finance leases). The Company’s corporate office lease expires in March 2027. As of ~~September 30,~~March 31, 2022, the ROU asset and lease liability were approximately $1.7 million and $3.0 million, respectively. As of December 31, 2021, the ROU asset and lease liability were approximately ~~$1.9~~$1.8 million and ~~$3.3 million, respectively. As of December 31, 2020, the ROU asset and lease liability were approximately $2.1 million and $3.7~~$3.1 million, respectively.

Future minimum payments under the operating leases as of ~~September 30, 2021~~March 31, 2022 are as follows (in thousands):

Year Ending December 31,	Amount		Amount
2021 (remaining three months)	$	165
2022		671
2022 (remaining nine months)			$	506
2023		687		687
2024		702		702
2025		718		718
2026				735
Thereafter		920		185
Total		3,863		3,533
Less: Interest		591		523
Present Value of Lease Liability	$	3,272	$	3,010

During ~~the three- and nine-month periods ended September 30, in~~ each of ~~2021~~the three months ended March 31, 2022 and ~~2020,~~2021, the Company incurred approximately ~~$0.2 million and $0.5~~$0.3 million of total lease costs, respectively that are included in the general and administrative expenses in the statements of operations.

On July 1, 2020, the Company entered into a sublease agreement for a portion of its leased space for a one-year period ending ~~September~~June 30, 2021, with three optional one-year renewal periods, and $10,000 in monthly ~~payments to~~payments. For the Company. This sublease agreement was amended on July 29, 2021, effective August 1, 2021. The amendment to the sublease increased the number of cleanrooms occupied by the lessee, changed the expiration date to Julythree months ended March 31, 2022, ~~increased the base rent to $22,500, beginning on September 1, 2021, and increased the security deposit to $22,500. For the nine months ended September 30, 2021, $102,500~~$30,000 was recognized as sublease income, and is included in other income in the accompanying statements of operations.

7. ~~Members’ Equity and~~ Stockholders’ Equity

~~IPO~~

The Corporate Conversion undertaken immediately prior to the Company’s IPO caused all existing Series A and B units to convert into Class B common stock and all existing Series C units to convert into Class A common stock. The purpose of the Corporate Conversion was to reorganize the Company structure so that the entity that offered the Company’s Class A common stock to the public was a Delaware corporation rather than a Delaware limited liability company, and so that the Company’s existing investors own the Company’s Class A common stock or Class B common stock rather than equity interests in a limited liability company.

Pursuant to the IPO, the Company sold 2,660,000 shares of Class A common stock at a public offering price of $10.00 per share for aggregate gross proceeds of $26.6 million prior to deducting underwriting discounts, commissions, and other offering expenses. Thereafter, on March 15, 2021, the Company sold an additional 250,000 shares of Class A common stock at a public offering price of $10.00 per share for additional aggregate gross proceeds of $2,500,000 prior to deducting underwriting discounts, commissions, and other offering expenses, pursuant to a partial exercise of the over-allotment option held by the underwriters.

Class A Common Stock

On February 12, 2022, a total of 8,750 RSUs vested that were previously granted to members of the Company’s Board of Directors upon the completion of the IPO vested.

On January 3, 2022, a total of 35,246 RSUs vested that previously had been granted in connection with the Company’s IPO vested, of which 29,614 were held by Company employees. RSUs are taxable upon vesting based on the market value on the date of vesting. The Company is required to make mandatory tax withholding for the payment and satisfaction of income tax, social security tax, payroll tax, or payment on account of other tax related to withholding obligations that arise by reason of vesting of an RSU. The taxable income is calculated by multiplying the number of vested RSUs for each individual by the $12.09 closing price as of the vesting date (January 3, 2022) and a tax liability is calculated based on each individual’s tax bracket. As a result, on January 5, 2022, the Company recorded a tax liability of $92,000 for the employees and a corresponding tax liability for the Company of $14,000. In total, the Company paid $106,000 for employee and employer taxes that resulted from the vesting of RSUs. In order to cover the employee tax liability, the Company withheld 10,627 shares of Class A Common Stock shares owned by the Company’s employees upon vesting. The shares received have been transferred into the 2021 Incentive Plan.

During the ~~nine months~~year ended ~~September 30,~~December 31, 2021 and prior to the Corporate Conversion, the Company issued 1,130 Series C Common Membership Units (“Series C Units”), as payment for existing consulting agreements, with an aggregate value of $0.1 million. As part of the Corporate Conversion, ~~63,893~~62,764 outstanding Series C units (which includes the units referenced in the prior sentence) converted into ~~344,077~~338,030 shares of Class A ~~common stock.~~Common Stock.

Also, during the ~~three and nine months~~year ended ~~September 30,~~December 31, 2021, the Company issued ~~6,000~~61,379 and ~~163,719~~110,387 unregistered shares of Class A ~~common stock shares,~~Common Stock, with an aggregate value of less than ~~$0.1~~$0.5 million and ~~$1.2~~$0.8 million, respectively, as payment under consulting and license agreements.

During the ~~nine months~~year ended ~~September 30, 2020,~~December 31, 2021, 1,812 stock options were exercised for Class A Common Stock shares at an average exercise price of $5.73 for $10,383. Also, during the year ended December 31, 2021, 51,061 warrants were exercised for Class A Common Stock shares at an exercise price of $12.00 for $612,732.

On October 1, 2021, a total of 35,256 RSUs granted to employees and directors vested, of which 33,022 were held by Company employees. RSUs are taxable upon vesting based on the market value on the date of vesting. The Company is required to make mandatory tax withholding for the payment and satisfaction of income tax, social security tax, payroll tax, or payment on account of other tax related to withholding obligations that arise by reason of vesting of an RSU. The taxable income is calculated by multiplying the number of vested RSUs for each individual by the $3.65 closing price as of the vesting date (October 1, 2021) and a tax liability is calculated based on each individual’s tax bracket. As a result, on October 5, 2021, the Company ~~issued 18,335 Series C Units~~recorded a tax liability of $452,000 for ~~$1.1 million in cash (none during~~ the ~~three months ended September 30, 2020).~~employees and a corresponding tax liability for the Company of $38,000. In total, the Company paid $489,000 for employee and employer taxes that resulted from the vesting of RSUs. In order to cover the employee tax liability, the Company withheld 123,662 Class A Common Stock shares owned by the Company’s employees upon vesting. The ~~Company also issued 734 Series C Units with an aggregate value of $0.1 million as payment under consulting agreements.~~shares withheld have been transferred into the 2021 Incentive Plan.

Class B Common Stock

In connection with the Corporate Conversion, 2,000,000 outstanding Series A and B units were converted into 15,702,834 shares of our unregistered Class B ~~common stock.~~Common Stock.

Holders of Class A ~~common stock~~Common Stock generally have rights identical to holders of Class B ~~common stock,~~Common Stock, except that holders of Class A ~~common stock~~Common Stock are entitled to one vote per share and holders of Class B ~~common stock~~Common Stock are entitled to five (5) votes per share. The holders of Class B ~~common stock~~Common Stock may convert each share of Class B ~~common stock~~Common Stock into one share of Class A ~~common stock~~Common Stock at any time at the holder’s option. Class B ~~common shares are~~Common Stock is not publicly tradable.

During the three months ended March 31, 2022, shareholders exchanged 117,772 shares of Class B common stock for 117,772 shares of Class A common stock.

Warrants

As part of the IPO, the underwriter received warrants to purchase 106,400 shares of Class A ~~common stock.~~Common Stock. The warrants are exercisable at any time and from time to time, in whole or in part, during the four and a half-year period commencing August 12, 2021, at a price of $12.00 per ~~Class A common stock~~ share. Total grant date fair value of warrants as of ~~September 30,~~December 31, 2021, ~~estimated using the Black-Scholes pricing model,~~ was approximately $0.5 million. During 2021, the underwriters assigned 95,760 of the warrants to its employees. As of December 31, 2021, 51,061 warrants have been exercised for Class A Common Stock shares at an exercise price of $12.00 for $612,732.

As part of the November 2021 private placement, the Company issued 1,169,288 warrants to investors to purchase up to a number of shares of Class A Common Stock equal to the number of shares of Class A Common Stock purchased by such investor in the offering, at an exercise price of $17.50 per share. The Purchaser Warrants are immediately exercisable, expire five years from the date of issuance and have certain downward pricing adjustment mechanisms, subject to a floor, as set forth in greater detail therein. In addition, the Company granted the underwriters warrants, under similar terms, to purchase 46,722 shares of Class A Common Stock, at an exercise price of $17.50 per share.

8. Equity Incentive Plan

~~RSUs~~

As part of the Company’s IPO, the Company adopted and approved the 2021 Incentive Award Plan (“2021 Incentive Plan”). Under the 2021 Incentive Plan, the Company may grant cash and equity incentive awards to eligible service providers in order to attract, motivate and retain the talent for which the Company competes. The material terms of the 2021 Incentive Plan are summarized below.

Prior to the IPO, on January 29, 2021, the Board approved the granting of 159,817 Series C RSUs under the Company’s existing 2017 Longeveron LLC Incentive Plan (the “2017 Incentive Plan”), which, as part of the Corporate Conversion, converted into 855,247 RSUs exercisable for Class A ~~common stock.~~Common Stock. Based upon a ~~third party~~third-party valuation, the calculated fair value of each January 2021 RSU was $9.00.

One employee resigned from the Company in February 2021, forfeiting 16,113 RSUs. In May and June 2021, annual grants of 5,000 RSUs each were made to each of the Company’s Directors, based on a fair market value at the time of grant of $0.1 million.

Generally, the RSUs vest upon attainment of a time-vesting event, by which the RSUs vest in 25% increments per year, on each of the first, second, third and fourth anniversaries of the date of grant, assuming continued service. Such yearly vesting will vest pro-rata per quarter at the end of each quarter. The RSUs granted in January of 2021 included accelerated time-based vesting (as having been earned for prior years of service, and hence were treated as earned “catch-up” awards), and an additional vesting requirement whereby the holder must remain employed by the Company as of the IPO settlement date, which was the third quarterly settlement date following the Company’s IPO (October 1, 2021).

The fair value of each RSU grant made during 2021 will be recognized as stock-based compensation ratably over the related vesting periods, which approximates the service period, except for May 2021 grants to the Company’s Directors, which vest over two years with 50% of the RSUs vesting on grant date and the remaining RSUs vesting 25% on each of the first and second anniversaries of the grant date.

On July 20, 2021, the Company granted a bonus for the completion of the IPO to Mr. Green, Mr. Lehr and Dr. Hare of $100,000, $75,000 and $75,000. The bonus ~~would be~~was paid out in cash and ~~RSUs. With~~RSUs with Mr. Green, Mr. Lehr and Dr. Hare ~~received~~receiving 8,223, 6,167 and 12,335 RSUs ~~each.~~each, respectively. The RSU were issued based on a fair market value at the time of grant, July 20, 2021, of $6.08.

As of ~~September 30,~~March 31, 2022 and December 31, 2021, the Company had ~~897,564~~205,051 and 196,751, respectively RSUs ~~granted and outstanding.~~outstanding (unvested).

RSU activity for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 was as follows:

	Number of RSUs
Outstanding at December 31, ~~2020~~2021		-196,751
RSU granted		~~921,972~~-
RSUs vested		44,006
RSUs converted to Class A common stock		(35,256	)
RSU ~~exercised~~expired/forfeited		-
~~RSU expired/forfeited~~Outstanding at March 31, 2022		~~(24,408~~	)
~~Outstanding at September 30, 2021~~		~~897,564~~205,501

Stock Options

Stock options may be granted under the 2021 Incentive Plan. The exercise price of options is equal to the fair market value of the Company’s Class A ~~common stock~~Common Stock as of the grant date. Options historically granted have generally become exercisable over four years and expire ten years from the date of grant. The 2021 Incentive Plan provides for equity grants to be granted up to 5% of the outstanding common stock shares.

The fair value of the options issued are estimated using the Black-Scholes option-pricing model and have the following assumptions: a dividend yield of 0%; an expected life of 10 years; volatility of 95%; and risk-free interest rate based on the grant date ranging from of 1.23% to ~~1.62%~~2.14%. Each option grant made during 2021 will be expensed ratably over the option vesting periods, which approximates the service period.

As of ~~September 30,~~March 31, 2022, the Company has recorded, issued and outstanding options to purchase a total of 410,075 shares of Class A Common Stock pursuant to the 2021 Incentive Plan, at a weighted average exercise price of $6.51 per share. Also, as of December 31, 2021, the Company has recorded issued and outstanding options to purchase a total of ~~321,000~~304,449 shares of Class A ~~common stock~~Common Stock pursuant to the 2021 Incentive Plan, at a weighted average exercise price of ~~$5.95~~$5.96 per share.

For the ~~nine~~three months ended ~~September 30, 2021:~~March 31, 2022:

	Number of Stock ~~Stock~~ Options
Stock options vested (based on ratable vesting)		~~40,894~~56,762
Stock options unvested		~~280,106~~353,313
Total stock options ~~granted~~outstanding at ~~September 30,~~March 31, 2022		410,075

For the year ended December 31, 2021:

	Number of Stock Options
Stock options vested (based on ratable vesting)		59,773
Stock options unvested		244,676
Total stock options outstanding at December 31, 2021		~~321,000~~304,449

Stock Option activity for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 was as follows:

	Number of Stock Options		Weighted Average Exercise Price		Number of Stock Options			Weighted Average Exercise Price
Outstanding at December 31, 2020		-		-
Outstanding at December 31, 2021						304,449		$	5.96
Options granted		334,125	$	5.95		106,825		$	8.05
Options exercised		-		-		-			-
Options expired/forfeited		13,125	$	5.84		(1,199	)	$	5.79
Outstanding at September 30, 2021		321,000	$	5.95
Outstanding at March 31, 2022						410,075		$	6.51

On ~~April 22, 2021,~~January 6, 2022, the Company granted awards of ~~64,125~~84,825 Class A ~~common stock~~Common Stock options to employees. The stock option awards have four-year vesting periods, vesting 25% per year, and have an exercise price of ~~$5.73.~~$10.00. Based upon a Black-Scholes calculation, the price per share to be expensed was ~~$5.03~~$8.78 and a total cost of ~~$0.3~~$0.7 million would be expensed ratably over 48 months.

On ~~May 5, 2021,~~March 14, 2022, the Company granted an award of ~~10,000~~22,000 Class A ~~common stock~~Common Stock options to ~~an employee.~~employees. The stock option award has a four-year vesting period, vesting 25% per year, and has an exercise price of ~~$5.89.~~$5.94. Based upon a Black-Scholes calculation, the price per share to be expensed was ~~$5.17~~$5.23 and a total cost of less than $0.1 million would be expensed ratably over 48 months.

On May 17, 2021, the Company granted an award of 30,000 Class A common stock options to an employee. The stock option award has a four-year vesting period, vesting 25% per year, and has an exercise price of $5.29. Based upon a Black-Scholes calculation, the price per share to be expensed was $4.64 and a total cost of approximately $0.1 million would be expensed ratably over 48 months.

On June 1, 2021, the Company granted an award of 5,000 Class A common stock options to an employee. The stock option award has a four-year vesting period, vesting 25% per year, and has an exercise price of $6.77. Based upon a Black-Scholes calculation, the price per share to be expensed was $5.94 and a total cost of less than $0.1 million would be expensed ratably over 48 months.

On July 20, 2021, the Company granted 225,000 Class A common stock options to executives. Mr. Green was granted 75,000 Class A common stock options and Mr. Lehr, Dr. Hare and Mr. Clavijo were each granted 50,000 Class A common stock options. The stock options have four-year vesting periods, vesting 12.5% on July 22, 2021 and the remaining vesting equally over the remaining four years, with an exercise price of $6.08. Based upon a Black-Scholes calculation, the price per share to be expensed was $5.32 and a total cost of $1.2 million would be expensed ratably over 48 months.

For the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the equity-based compensation expense amounted to approximately ~~$6.0~~$0.5 million ~~($2.5~~and $1.3 million, ~~for the three months ended September 30, 2021) and $36,000 ($12,000 for the three months ended September 30, 2020),~~ respectively, which is included in the research and development and general and administrative expenses in the statements of operations for ~~the nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020.~~ respectively.

As of ~~September 30, 2021,~~March 31, 2022, the remaining unrecognized equity-based compensation (which includes RSUs and stock options) of approximately ~~$3.7~~$3.6 million will be recognized over approximately ~~3.8~~3.75 years.

9. Commitments and Contingencies

Master Services Agreements:

As of ~~September 30, 2021,~~March 31, 2022, the Company had ~~two~~three active master services agreements with third parties to conduct its clinical trials and manage clinical research programs and clinical development services on behalf of the Company. The Company expects these agreements or amended current agreements to have total expenditures of ~~less than $1.0~~approximately $3.6 million ~~for 2021.~~over the next two years.

As of December 31, 2021, the Company had two active master services agreements with third parties to conduct its clinical trials and manage clinical research programs and clinical development services on behalf of the Company. The Company entered into a clinical studies agreement with a third party in conjunction with an upcoming clinical trial in Japan. The agreement provides for payments totaling $1.0 million over the course of two years.

Consulting Services Agreement:

On November 20, 2014, the Company entered into a ten-year consulting services agreement with Dr. Joshua Hare, its CSO. Under the agreement, the Company has agreed to pay the CSO ~~$270,000~~$265,000 annually. The compensation payments are for scientific knowledge, medical research, technical knowledge, skills, and abilities to be provided by the CSO to further develop the intellectual property rights assigned by the CSO to the Company. This agreement requires the CSO to also assign to the Company the exclusive right, title, and interest in any work product developed from his efforts ~~on behalf of the Company~~ during the term of this agreement. ~~During the three months ended September 30, 2021, the Company paid $0.2 million towards the $0.3 million outstanding balance.~~ As of ~~September 30,~~March 31, 2022 and December 31, 2021, the Company had an accrued balance due to the CSO of ~~$0.1 million~~$0.2 million.

On February 16, 2022, the Company entered into a ten-month extension to a consulting arrangement with GVC Strategies a Company owned by Neil Hare, a member of the Board of Directors and asbrother of Dr. Joshua Hare, to provide public relations services. Under the terms of this agreement GVC Strategies receives a $10,000 per month advance retainer. As of March 31, 2022 and December 31, ~~2020 had a balance due of $0.3 million.~~2021, the Company did not have an outstanding balance.

Technology Services Agreement:

On March 27, 2015, the Company entered into a technology services agreement with Optimal Networks, Inc. (a related company owned by a ~~board member’s~~Dr. Joshua Hare’s brother-in-law) for use of information technology services. The Company agreed to issue the related party equity incentive units in the amount equal to 50% of the charges for invoiced services, with such equity to be issued annually on or about the anniversary date of the agreement. During 2017, the Company issued 1,901 Series C Units, and on November 22, 2019 and January 29, 2021, the Company issued 820 and 410 Series C Units, respectively, as payment for an aggregate of $0.2 million of accrued technology services. The Series C units were converted to 16,755 Class A common stock ~~shares as part of the Corporate Conversion.~~shares. As of ~~September 30, 2021,~~March 31, 2022, and December 31, ~~2020,~~2021, the Company owed less than $0.1 million, pursuant to this agreement, which is included in accounts payable in the ~~September 30, 2021~~accompanying March 31, 2022 and December 31, ~~2020~~2021 balance sheets.

Exclusive Licensing Agreements:

UM Agreement

On November 20, 2014, the Company entered into an exclusive license agreement with UM for the use of certain stem cell aging-related frailty technology rights developed by the CSO while employed at UM. The Company recorded the value of the membership units issued to obtain this license agreement as an intangible asset. The Company is required to pay UM up to 3% of net sales on products or services developed from the technology. The agreement extends for up to 20 years from the last date a product or process is commercialized from the technology. Under the agreement, the Company is required to pay an annual fee to UM. On December 11, 2017, the November 20, 2014 agreement with UM was amended. The amendment provided that for a $5,000 fee the dates of the milestone completions were amended and replaced as follows: (a) by December 31, 2021, to have completed Phase II clinical trials for the products; and (b) by September 1, 2025, to have completed Phase III clinical trials for products. In addition, one-year extensions may be granted on these milestone dates by making a payment of $5,000. Upon completion of the Phase II clinical trials, a milestone payment of $250,000 is due. Upon completion of the Phase III clinical trials, a milestone payment of $750,000 is due. As of ~~September 30, 2020,~~March 31, 2022, the Company had accrued ~~$50,000~~$46,667 based on the terms of the agreement. In addition, on November 14, 2014, as required by the license agreement the Company issued 20,000 series C membership units valued at $0.5 million to UM. The Company recorded this ~~$0.5 million~~$500,000 as an intangible asset that is amortized over the life of the license agreement which was defined as 20 years. ~~As of September 30, 2021, the Company had accrued less than $0.1 million in milestone fees payable to UM based on the estimated progress to date.~~

The UM agreement was amended on March 3, 2021 to increase the license fee due to UM. The Company agreed to pay UM an additional fee, ~~of $0.1 million,~~ which will be recorded as legal costs, of $0.1 million, to defray patent costs, with $70,000 due within thirty (30) days of the effective date of the amendment, and the remainder to be paid in equal installments of $7,500 on the 2^nd, 3^rd, and 5^th year anniversaries of the effective date. The Company also agreed to issue an additional 110,387 unregistered shares of Class A common stock shares to UM. The Company ~~recorded this $0.8 million as an intangible asset that is amortized over the life of the license agreement which was defined as 5 years. The Company~~ and UM agreed to the following modification of the milestone payments: (a) No payment will be due upon the completion of Phase 2 clinical trials for the product; (b) a one-time payment of $0.5 million, payable within ~~nine~~six months of the completion of the first Phase 3 clinical trial of the products (based upon the final data unblinding); (c) a one-time payment of $0.5 million payable within ~~nine~~six months of the receipt by the Company of approval for the first new drug application (“NDA”), biologics application (“BLA”), or other marketing or licensing application for the product; and (d) a one-time payment of $0.5 million payable within ~~nine~~six months of the first sale following product approval. “Approval” refers to Product approval, licensure, or other marketing authorization by the U.S. Food and Drug Administration, or any successor agency. The amendment also provided for the Company’s license of additional technology, to the extent not previously included in the UM License, and granted the Company an exclusive option to obtain an exclusive license for (a) the HLHS IND with ckit+ cells; and (b) UMP-438 titled “Method of Determining Responsiveness to Cell Therapy in Dilated Cardiomyopathy.”

CD271

On December 22, 2016, the Company entered into an exclusive license agreement with ~~JMHMD Holdings, LLC,~~ an affiliated entity of ~~the CSO~~Dr. Joshua Hare for the use of CD271 cellular therapy technology. The Company recorded the value of the cash consideration and membership units issued to obtain this license agreement as an intangible asset. The Company is required to pay as royalty, 1% of the annual net sales of the licensed product(s) used, leased, or sold by or for licensee or its sub-licensees. If the Company sublicenses the technology, it is also required to pay an amount equal to 10% of the net sales of the sub-licensees. In addition, on December 23, 2016, as required by the license agreement, the Company paid an initial fee of $250,000 to JMHMD, and issued to it 10,000 Series C Units, valued at $250,000. The $0.5 million of value provided to JMHMD for the license agreement, along with professional fees of approximately $27,000, were recorded as an intangible asset that is amortized over the life of the license agreement which was defined as 20 years. Further, expenses related to the furtherance of the CD271+ technology is being capitalized and amortized as incurred over 20 years. There were no license fees due during the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 or year ended December 31, ~~2020~~2021 pertaining to this agreement.

Other Royalty

Under the grant award agreement with the Alzheimer’s Association, the Company may be required to make revenue sharing or distribution of revenue payments for products or inventions generated or resulting from this clinical trial program. The potential payments, although not currently defined, could result in a maximum payment of five times (5x) the award amount.

Contingencies – Legal

On September 13, 2021, the Company and certain of our directors and officers were named as defendants in a securities lawsuit filed in the ~~United States~~U.S. District Court for the Southern District of Florida and brought on behalf of a purported class. The suit alleges there were materially false and misleading statements made (or omissions of required information) in the Company’s initial public offering materials and in other disclosures during the period from our initial public offering on February 12, 2021, through August 12, 2021, in violation of the federal securities laws. The action seeks damages on behalf of a proposed class of purchasers of our ~~common stock~~Common Stock during said period. The Company believes, that these allegations are without merit and intends to vigorously defend against them. The Company has not determined losses resulting from this lawsuit as it is in the early stages and the ultimate outcome or range of losses, if any, cannot currently be determined.

Contingencies – COVID-19 Pandemic

The COVID-19 outbreak has adversely impacted, and could continue to adversely impact the Company’s ability to conduct ~~business.~~business in the future. In December 2019, it was first reported that there had been an outbreak of a novel strain of coronavirus, SARS-CoV-2, COVID-19, in China. As the COVID-19 ~~continues~~pandemic evolved, national and local governments enacted various measures, including travel restrictions or bans, restrictions on events or gatherings, temporary closure of non-essential businesses, “social distancing” requirements, vaccine and mask mandates, and various other requirements designed to slow the spread ~~globally,~~of COVID-19. While many of these measures have been eased, the extent, severity, and overall duration of the pandemic, including ~~throughout~~its phases of resurgence and the ~~United States,~~introduction of new variants, some of which may be more transmissible or virulent, are unknown. The impacts and potential impacts from the ~~Company may experience disruptions~~COVID-19 pandemic and associated protective measures that have had, continue to have, or could ~~severely impact its~~directly or indirectly have, a material adverse effect on our business ~~including:~~include:

●

impact to the financial markets;

●

disruption in the ability to provide ~~our~~ product in foreign markets;

●

disruption on the ability to source materials;

●

disruption in the ability to manufacture our product;

●

delays or difficulties in completing the Company’s regulatory work;

●

limitations on the Company’s ~~employees’~~employee resources ability to work, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people; and

●

additional repercussions on the Company’s ability to operate its business.

The global outbreak of COVID-19 continues to rapidly evolve. The extent to which COVID-19 ~~impacts~~will continue to impact the Company’s results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19, the duration and severity of ongoing outbreaks, continued travel restrictions imposed by countries in which the Company conducts business, business closures or other business disruption in the world, including with respect to the Company’s supply chains, a reduction in time spent out of home and the actions taken throughout the world, including in the Company’s markets, to contain COVID-19 or mitigate its impact. The future impact of the outbreak remains highly uncertain and cannot be predicted, and the Company cannot provide any assurance that the ~~outbreak~~ongoing pandemic will not have a material adverse impact on the Company’s operations or future results, or filings with regulatory health authorities. ~~The extent of the pandemic’s ultimate impact on the Company will depend on future developments, including actions taken to contain COVID-19.~~

The Company continues to monitor how the COVID-19 pandemic is affecting the Company’s employees, business, and clinical trials. In response to the spread of COVID-19, the Company instructed all employees who ~~can~~could perform their essential employment duties from home ~~may continue~~ to do ~~so at their choice. Some of these employees are using a hybrid approach, with some days in the office and some days working remotely.~~so. The Company’s laboratory scientists, cell processing scientists and other manufacturing personnel ~~continue~~continued to work from the ~~Company’s~~Company GMP facility on a day-to-day basis, and as such cell production ~~has been~~was minimally impacted. When the pandemic began to emerge in the U.S., most of the Company’s ongoing clinical trials had completed enrollment, however a few subjects that were currently on study and in follow-up experienced some difficulties in adhering to the protocol schedule. Because the Company primarily enrolls elderly subjects in the trials, who ~~remain~~are at particular risk for poor outcomes related to COVID-19 infection, the Company ~~has~~ experienced some disruption in executing the follow-up visits in Company ~~protocols.~~protocols and the Company may continue to experience difficulty in enrolling elderly subjects in upcoming trials due to ongoing risk. While the Company believes the number of instances where a visit was missed completely is small, the Company cannot predict whether this will have a material impact on the Company clinical results in the future. If too many subjects drop-out or the protocol is no longer effective, the Company may have to restart the clinical trial entirely.

10.~~Short-term Note Payable~~

On September 27, 2020, the Company entered into a premium finance agreement to finance its insurance policies for approximately $63,000. The note required a down payment of $6,334, ratable monthly payments of $6,499, including interest at 5.353% and matured in September 2021. As of September 30, 2021, the outstanding balance was paid in full.

~~11.~~ ~~Long-term Loan~~

On April 16, 2020, the Company received a loan from the Small Business Administration (“SBA”) pursuant to the Paycheck Protection Program (“PPP”) as part of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) in the amount of $300,390. The loan had interest at a rate of 1.00%, and initial maturity in 24 months. It was anticipated that not more than 25% of the forgiven amount may be for non-payroll costs. The Company also received $10,000 from the SBA for the Economic Relief Fund; this amount does not need to be repaid and was recorded as Other Income for the year ended December 31, 2020. As of December 31, 2020, the outstanding balance of the PPP loan was $300,390. On March 4, 2021, the full balance due for the PPP loan was forgiven by the SBA.

On May 12, 2020, the Company received a loan from the SBA pursuant to the Disaster Recovery Plan as part of the CARES Act in the amount of $150,000. The Company began repayment on July 20, 2021 of $731 per month. The note will mature in 30 years and bears an interest rate of 3.75%. Due to part of the notes being due within one year, the Company recorded $5,000 and $139,000 in the current portion of loans line on the Balance Sheet as of September 30, 2021 and December 31, 2020, respectively.

~~Future debt obligations at September 30, 2020 for Long-term loans are as follows (in thousands):~~

Year Ending December 31, Amount
2021 (remaining three months) $ 1
2022 3
2023 3
2024 3
2025 3
Thereafter 135
Total $ 148

~~12.~~ Employee Benefits Plan

The Company sponsors a defined contribution employee benefit plan (the “Plan”) under the provisions of Section 401(k) of the Internal Revenue Code. The Plan covers substantially all full-time employees of the Company who have completed one year of service. Contributions to the Plan by the Company are at the discretion of the Board of Directors.

The Company contributed approximately ~~$49,000~~$32,000 and ~~$34,000~~$16,000 to the Plan during the ~~nine months~~year ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020, respectively and $18,000 and $13,000 for the three months ended September 30, 2021 and 2020,~~ respectively.

~~13.~~11. Loss Per Share

Basic and diluted net loss per share have been computed using the weighted-average number of shares of common stock outstanding during the period. We have outstanding stock-based awards that are not used in the calculation of diluted net loss per share because to do so would be anti-dilutive. ~~These common share equivalents were as follows at September 30, 2021 and 2020:~~

September 30,
2021 2020

RSUs 898 -
Stock options 321 -
Warrants 106 -
Total 1,325 -

The following instruments (in thousands) were excluded from the calculation of diluted net loss per share because their effects would be antidilutive:

	Three months ended March 31,
	2022		2021
Equity awards		610		869
Warrants		1,271		106
Total		1,881		975

~~14.~~12. Subsequent Events

On ~~October 1, 2021, previously disclosed~~April 4, 2022, the Company appointed K. Chris Min, M.D., Ph.D. as its Chief Medical Officer. Dr. Min’s employment agreement provides annual base salary of $350,000, and he will be eligible to receive a performance bonus equal to 30% of his base salary, prorated for his first year of employment. Dr. Min received a $60,000 signing bonus, with 50% of this amount paid in RSUs ~~granted to employees~~ and ~~directors vested. A total~~50% in stock options. Dr. Min also received two equity incentive awards; 150,000 RSUs and a stock option award exercisable for 50,000 shares. Each award will vest 25% upon the first year anniversary of ~~657,062 RSUs vested~~his first day of ~~which 355,495 were held by Company employees. RSUs are taxable upon~~employment with Longeveron, with 25% vesting ~~based~~thereafter on the ~~market value on the date~~second, third and fourth anniversaries of vesting. The Company is required to make mandatory tax withholding for the payment and satisfaction of income tax, social security tax, payroll tax, or payment on account of other tax related to withholding obligations that arise by reason of vesting of an RSU. The taxable income is calculated by multiplying the number of vested RSUs forhis employment. In each individual by the $3.65 closing price as of the vesting date (October 1, 2021) and a tax liability is calculated based on each individual’s tax bracket. As a result, on October 5, 2021, the Company recorded a tax liability of $451,000 for the employees and a corresponding tax liability for the Company of $38,000. In total, the Company paid $489,000 for employee and employer taxes that resulted fromcase, the vesting of ~~RSUs. In order~~the equity awards will be subject to ~~cover~~Dr. Min’s continued service through the ~~employee tax liability,~~applicable vesting dates. RSUs shall be expensed on a quarterly basis at the ~~Company withheld 123,659 Class A common stock shares owned by~~rate of $0.1 million for the quarterly vesting amount of 9,375 RSUs, with a price per share of $12.85 (the closing price of the Company’s ~~employees~~stock on April 4, 2022). Stock options shall be expensed based upon ~~vesting. The shares received have~~a Black-Scholes calculation, the price per share to be expensed was $11.34 and a total cost of $0.6 million would be expensed ratably over 48 months.

On May 3, 2022, Geoff Green, the Company’s Chief Executive Officer (“CEO”) provided notice of his intention to step down from his position, effective June 1, 2022. In connection with Mr. Green’s departure, the Board of Directors has unanimously appointed Dr. Min to serve as interim CEO beginning June 1, 2022, until such time as a permanent successor has been ~~transferred into the 2021 Incentive Plan.~~identified.

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

In this document, the terms “Longeveron,” “Company,” “we,” “us,” and “our” refer to Longeveron Inc. We have no subsidiaries.

This Quarterly Report on Form 10-Q (this “10-Q”) contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that reflect our current expectations about our future results, performance, prospects and opportunities. This 10-Q contains forward-looking statements that can involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this ~~10-Q,~~report, including statements regarding our future results of operations and financial position, business strategy, prospective products, product approvals, research and development costs, future revenue, timing and likelihood of success, plans and objectives of management for future operations, future results of anticipated products and prospects, plans and objectives of management are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. ~~Forward-looking~~Factors that could cause actual results to differ materially from those expressed or implied in any forward-looking statements contained in this report include, but are not limited to, statements about:

●

the ability of our clinical trials to demonstrate safety and efficacy of our product candidates, and other positive results;

●

the timing and focus of our ongoing and future preclinical studies and clinical trials, and the reporting of data from those studies and trials;

●

the size of the market opportunity for our product candidates, including our estimates of the number of patients who suffer from the diseases we are targeting;

●

the success of competing therapies that are or may become available;


	●	the beneficial characteristics, safety, efficacy and therapeutic effects of our product candidates;


	●	our ability to obtain and maintain regulatory approval of our product candidates;


	●	our plans relating to the further development of our product candidates, including additional disease states or indications we may pursue;


	●	existing regulations and regulatory developments in the United States, Japan and other jurisdictions;


	●	our plans and ability to obtain or protect intellectual property rights, including extensions of existing patent terms where available and our ability to avoid infringing the intellectual property rights of others;


	●	the need to hire additional personnel and our ability to attract and retain such personnel;


	●	our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;


	●	the effect that global pathogens could have on financial markets, materials sourcing, patients, governments and population (e.g., COVID-19);


	●	our need to raise additional capital, the difficulties we may face in obtaining access to capital, and the dilutive impact it may have on our investors;

	●	our financial performance; and

●

the period over which we estimate our existing cash and cash equivalents will be sufficient to fund our future operating expenses and capital expenditure requirements.

The forward-looking statements contained in this 10-Q are made on the basis of the views and assumptions of management regarding future events and business performance as of the date this 10-Q is filed with the Securities and Exchange Commission (the “SEC”). In addition, we operate in a highly competitive and rapidly changing environment; therefore, new risk factors can arise, and it is not possible for management to predict all such risk factors, nor to assess the impact of all such risk factors on our business or the extent to which any individual risk factor, or combination of risk factors, may cause results to differ materially from those contained in any forward-looking statement. We do not undertake any obligation to update these statements to reflect events or circumstances occurring after the date this 10-Q is ~~filed, except as may be required by law.~~filed. In addition, this discussion and analysis should be read in conjunction with our unaudited financial statements and notes thereto included in this 10-Q and the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, filed with the SEC on March ~~30,~~ 11, 2022 (“2021 ~~(“2020~~ 10-K”). Operating results are not necessarily indicative of results that may occur in future periods.

Overview and Recent Developments

Overview

We are a clinical stage biotechnology company developing cellular therapies for specific aging-related and life-threatening conditions. Our lead investigational product is ~~Lomecel-B,~~the LOMECEL-B™ cell-based therapy product (“Lomecel-B”), which is derived from culture-expanded ~~Medicinal Signaling Cells~~medicinal signaling cells (MSCs) that are sourced from bone marrow of young healthy adult donors. ~~As a company in the regenerative medicine field, we~~We believe that by using ~~allogeneic MSCs~~the same cells that promote tissue repair, organ maintenance, and immune system function, we can develop safe and effective therapies for some of the most difficult disorders associated with the aging process ~~in addition to~~and other ~~life-threatening diseases.~~conditions.

We are currently sponsoring or have sponsored Phase 1 and 2 clinical ~~research programs~~trials in the following ~~diseases or conditions:~~indications: Aging Frailty, Alzheimer’s disease (AD), the Metabolic Syndrome, Acute Respiratory Distress Syndrome (ARDS) ~~due to either COVID-19 or influenza infection,~~, and ~~Hypoplastic Left Heart Syndrome~~hypoplastic left heart syndrome (HLHS). Our mission is to advance ~~either independently, or with an industry partner,~~ Lomecel-B and other cell-based product candidates into pivotal Phase 3 ~~(i.e. pivotal)~~ trials, ~~for multiple indications,~~ with the goal of achieving regulatory approvals, subsequent commercialization and broad use by the healthcare community.

~~Strategy~~Our philosophy is that healthy aging can be improved through regenerative medicine approaches. Life expectancy has substantially increased over the past century as a result of medical and public health advancements. However, this increase in longevity has not been paralleled by the number of years a person is expected to live in relatively good health, with limited chronic disease and disabilities of aging – a period known as healthspan. As we age, we experience: a decline in our own stem cells; a decrease in immune system function, known as immunosenescence; diminished blood vessel functioning; chronic inflammation, known as “inflammaging”; and other aging-related declines. Our preliminary clinical data suggest that Lomecel-B can potentially address these problems through multiple mechanisms of action, or MOAs, that simultaneously target key aging-related processes.

Since our founding in 2014, we have focused the majority of our time and resources on organizing and staffing our company, building, staffing and equipping a GMP manufacturing facility with research and development labs, business planning, raising capital, establishing our intellectual property portfolio, generating clinical safety and efficacy data in our selected disease conditions and indications, and developing and expanding our manufacturing processes and capabilities.

~~We manufacture our own product candidates~~Improving healthspan is an imperative for clinical trials. In 2017 we opened a manufacturing facility, a portion of which is currently subleased, comprised of eight clean rooms, two research and development laboratories, and warehouse and storage space. We have supply contracts with two third party suppliers for fresh bone marrow, which we use to produce our product candidate for clinical testing and research and development. From time to time, we enter into contract development and manufacturing contracts or arrangements with third parties who seek to utilize our product development capabilities, which generated third-party revenue.

When appropriate funding opportunities arise, we routinely apply for grant funding to support our ongoing research, and since 2016 we have received approximately $16.0 million in grant awards ($11.9 million of which has been directly awarded to us and is recognized as revenue when the performance obligations are met) from thegovernmental health agencies. The National Institute on Aging (NIA), an institute of the National Institutes of Health (NIH), ~~National Heart Lung~~has promoted the concept of geroscience – the idea that aging itself is the biggest risk factor for aging-related human diseases and ~~Blood Institute (NHLBI)~~that aging can be approached as a treatable disease to improve healthspan. The geroscience hypothesis provides a strong rationale for the approach of treating underlying biological processes contributing to aging as a way to reduce disease burden and advance global human health. Our investments into developing and testing product candidates are aimed at reducing aging-related disease burden and improving healthspan.

Our Strategy

Our core business strategy is to become a world leading regenerative medicine company through the ~~NIH, the Alzheimer’s Association,~~development and ~~the Maryland Stem Cell Research Fund (MSCRF)~~commercialization of ~~the Maryland Technology Development Corporation (TEDCO). During the nine months ended September 30, 2021,~~novel cell therapy products for unmet medical needs, with emphasis on aging-related indications. Key elements of our business strategy are grant award revenues were lower than in prior years, this was principally due to the ending of long-term grant awards at the beginning of 2021. Unless we are awarded new grants for our ongoing research our grant award revenues will be lower than in prior years. We cannot predict whether we will be awarded new grants for our ongoing research.as follows.

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Advance Lomecel-B and other regenerative medicine products to market. We are advancing Lomecel-B into later stage clinical trials for the purpose of achieving commercialization in one or more indications. Our studies throughout the clinical development process are intended to generate safety and efficacy data needed to advance these programs, and establish foundations for subsequent development and expansion into new areas. We will continue to leverage our technical and clinical expertise, and relationships with clinical investigators, treatment centers, and other key stakeholders, to explore new opportunities.

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Expand our manufacturing capabilities to commercial-scale production. We operate a good manufacturing practice (GMP) – compliant manufacturing facility and produce our own product candidates for testing. We continue to improve and expand our capabilities with the goal of achieving cost-effective manufacturing that may potentially satisfy future commercial demand should Lomecel-B achieve commercialization.

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Non-dilutive funding. Our clinical programs have received over $16.0 million in competitive extramural grant awards ($11.9 million which has been directly awarded to us and which are recognized as revenue when the performance obligations are met) from the NIH, Alzheimer’s Association, and Maryland Stem Cell Research Fund (MSCRF). These prestigious funding awards are non-dilutive and allow us to collaborate with state and federal partners in pursuing safe and effective therapeutics for disorders that have few, if any, available approved treatments.

●

Continue to develop our existing international programs. We have selected Japan as our first non-U.S. territory for a randomized, double-blinded, placebo-controlled clinical trial to evaluate Lomecel-B for Aging Frailty. We may explore other indications in Japan, and potentially pursue Aging Frailty and other indications in additional international locations for further development and commercialization.

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Collaboration arrangements and out-licensing opportunities. We will be opportunistic and consider entering into co-development, out-licensing, commercialization or other collaboration agreements for the purpose of commercializing Lomecel-B and other products domestically and internationally.

●

Product candidate development pipeline through internal research and development, and in-licensing. Through our research and development program, and through strategic in-licensing agreements, or other business development arrangements, we continue to actively explore promising potential additions to our pipeline of product candidates.

●

Continue to expand our intellectual property portfolio. Our intellectual property is vitally important to our business strategy, and we take significant steps to develop this property and protect its value. Results from our ongoing research and development efforts are intended to add to our existing intellectual property portfolio.

~~Impact of COVID-19 Pandemic~~

Impact of COVID-19 Pandemic

We continue to monitor how the COVID-19 pandemic is affecting our employees, business, and clinical trials. ~~In response to~~During the initial stages associated with the spread of COVID-19, we instructed all employees who ~~can~~could perform their essential employment duties from home ~~may continue~~ to do ~~so at their choice. Some of these employees are using a hybrid approach, with some days in the office and some days working remotely.~~so. Our laboratory scientists, cell processing scientists and other manufacturing personnel ~~continue~~continued to work from our GMP facility and headquarters on a day-to-day basis, and as such cell production has been minimally impacted. When the pandemic began to emerge in the U.S., ~~some~~most of our ongoing clinical trials had completed enrollment. However, a few subjects that were currently on study and in follow-up experienced some difficulties in adhering to the protocol schedule. Because we primarily enroll elderly subjects in our trials, who are at particular risk for poor outcomes related to COVID-19 infection, we ~~have~~ experienced some disruption in executing the follow-up visits in our protocols. These disruptions were due to a number of reasons that include an unwillingness of the subject to leave their residence to visit the hospital or clinic, the inability to leave their residence due to regional “stay-at-home” orders, and temporary clinical site closures. We have attempted to mitigate this disruption by conducting remote visits where feasible (telemedicine), arranging for in-home visits for phlebotomy in order to collect blood samples and perform protocol-specific assessments if feasible, and amending protocols to increase the window of time for follow-up visits. In spite of these efforts, several subjects either missed their scheduled follow up visit, had their follow up visit outside of the protocol-defined window of time, or dropped out of the trial prior to completing. While we believe the number of instances where a visit was missed completely is small, we cannot predict whether this will have a material impact on our clinical results until the data from the trials are analyzed. If too many subjects drop-out or the protocol is no longer effective, we may have to restart the clinical trial entirely. For ongoing studies, and studies we intend to initiate, at this time we cannot predict the impact of the COVID pandemic on enrollment rates and the ability to fully enroll trials or to complete other trial-related tasks or activities, and therefore our study completion timelines may be subject to change as a result.

In July 2020 the Bahamian government halted travel from the U.S. into The Bahamas, which resulted in the temporary cessation of participation in The Bahamas Registry Trial. While this travel restriction has now been lifted, ~~there still exists at this time a Level 4 Do Not Travel Advisory from the Bahamian government to travelers from the United States due to increased COVID infection rates, so~~ participation in the Registry Trial remains lower than anticipated, due in part to pandemic-related effects on international travel.

Presently, several Longeveron employees continue to work from home either full time, or through a hybrid schedule, and we anticipate that this will continue for the foreseeable future. We expect that the COVID-19 pandemic ~~will~~may continue to impact our business, results of operations, clinical development timelines and financial condition. At this time, there is significant uncertainty relating to the trajectory of the COVID-19 pandemic and impact of related responses. The impact of COVID-19 on our future results will largely depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic concentration and continued spread of the disease, the duration of the pandemic, travel restrictions to and social distancing within the United States and other countries, business closures or business disruptions, the continued impact on financial markets and the global economy, and the effectiveness of the global response to contain and treat the disease.

Recent Developments

Lomecel-B for Alzheimer’s Disease:

●

In January 2022, we initiated enrollment of a 48-patient, 4-arm, parallel design, randomized (1:1:1:1) Phase 2a clinical trial of Lomecel-B infusion in patients with mild Alzheimer’s disease. This study is intended to evaluate the safety of single and multiple administrations of Lomecel-B compared to placebo according to the following treatment groups:

Group 1 (n=12): Placebo infusion (zero cells) on day 0, weeks 4, 8 and 12

Group 2 (n=12): Lomecel-B infusion (25 million cells) on day 0, followed by placebo infusions at Weeks 4, 8 and 12

Group 3 (n=12): Lomecel-B infusion (25 million cells) on day 0, weeks 4, 8, and 12

Group 4 (n=12): Lomecel-B infusion (100 million cells) on day 0, weeks 4, 8, and 12

●

Other endpoints in the Phase 2a trial include brain volumetry by MRI, biomarkers relevant to inflammation and endothelial/vascular systems, and measures of cognitive function. We currently plan to activate up to 12 clinical sites to facilitate enrollment, and intend to provide updates on anticipated enrollment rates as additional sites are activated, as well as trial completion guidance at a later date. Further details about the trial design can be found on clinicaltrials.gov by entering trial identifier NCT05233774.

●

On March 31, 2022, we announced the publication of a manuscript in Alzheimer’s & Dementia: The Journal of the Alzheimer’s Association^® detailing the previously completed and announced Phase 1 Alzheimer’s disease trial results.

Lomecel-B for Hypoplastic Left Heart Syndrome (HLHS):

●

The ELPIS II trial (Phase 2a) continues to enroll infants in the 38-patient, 2-arm, parallel design, randomized (1:1), blinded controlled trial intended to evaluate the safety and efficacy of Lomecel-B injection into the right ventricle of children born with HLHS who are undergoing Stage II reconstructive cardiac surgery. All seven planned clinical sites have now been activated for screening and enrollment and additional sites are being considered.

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We anticipate that a manuscript detailing the full Phase 1 (“ELPIS I”) trial results (the top-line data having been previously announced on September 9, 2021), to be submitted to a peer-reviewed journal, with acceptance and publication currently anticipated in 2022.

~~Recent Developments~~Lomecel-B for Aging Frailty:

~~Clinical Research Developments~~

~~Hypoplastic Left Heart Syndrome~~

~~On July 6~~^th, 2021, we announced the first subject enrolled into the Phase 2 randomized, double-blind, controlled clinical trial (“ELPIS II”) evaluating Lomecel-B intraventricular injection in infants with HLHS. With a target enrollment of 38 infants, we expect ELPIS II to enroll in approximately 7 children’s hospitals in major metropolitan centers located throughout the United States. ELPIS II is being funded in part by a grant from the National Institute of Health’s National Heart, Lung, and Blood Institute (NHLBI; Grant number 1UG3HL148318), in collaboration with Longeveron, and is led by Principal Investigator Sunjay Kaushal, MD, PhD, Division Head, Cardiovascular-Thoracic Surgery, Ann and Robert H. Lurie Children’s Hospital of Chicago.

~~On September 9, 2021, we announced additional results from the Company’s Phase I clinical study of Lomecel-B in HLHS, a rare and life-threatening congenital heart disease.~~

The Phase I, open-label single arm study was designed to assess safety and tolerability of intramyocardial injection of Lomecel-B administered to 10 infants with HLHS during Stage 2 bidirectional cavopulmonary anastomosis (BDCPA, or “Glenn procedure”) surgeries. HLHS is a rare congenital heart defect that affects approximately 1,000 babies per year in the U.S. Babies with HLHS are born with an underdeveloped left ventricle, which impairs the heart’s ability to pump blood throughout the body. HLHS is fatal without surgical intervention, in which 3 surgical procedures must be performed to allow the right ventricle to be configured to pump blood to the body. Even with this surgery, HLHS is still associated with a very high mortality rate and need for heart transplantation. The trial was partially funded by a grant from the MSCRF.

The primary safety endpoint was the incidence of the following treatment-emergent Serious Adverse Events (TE-SAEs): i) major adverse cardiac events (MACE), including sustained/symptomatic ventricular tachycardia requiring intervention with inotropic support, aggravation of heart failure, myocardial infarction, unplanned cardiovascular operation for cardiac tamponade, and death through one-year post-treatment; and ii) infections during the first month post-treatment. Intramyocardial injection of Lomecel-B at 2.5 × 106 cells/kg of body weight was well-tolerated, with no MACE, and no infections reported that were considered to be related to investigational treatment.

~~Aging Frailty~~

~~On August 13~~^th, 2021 we announced the top line results of the Phase 2b US Aging Frailty trial. One hundred and forty-eight (148) subjects were randomized and received a single peripheral intravenous infusion of Lomecel-B (25 million cells, 50 million cells, 100 million cells or 200 million cells), or placebo, followed by a 52-week observation period to evaluate safety and efficacy. The Phase 2b trial was conducted at eight hospitals and clinics, primarily in South Florida, including the Miami VA Healthcare System, and was funded by a Small Business Administration Grant (SBIR) grant from the NIH’s National Institute on Aging (NIA).

The pre-specified statistical analysis plan for the primary efficacy endpoint, change in six-minute walk test (6MWT) distance at 180 days post-infusion, involved a primary analysis and a secondary analysis:

●

~~Primary analysis~~The planned Japanese Aging Frailty Phase 2 trial is currently on track to initiate in the first half of ~~the primary efficacy endpoint~~~~: Despite showing a statistically significant increase in 6MWT for the highest 3~~2022. This is an investigator-initiated 3-arm, parallel design, randomized (1:1:1), placebo-controlled, double-blind single infusion study of two different dose levels of Lomecel-B ~~compared to baseline~~being conducted by our clinical partners at ~~Day 180 (25 million=7.8 meters, p=0.5040; 50 million=35.8 meters, p=0.0053; 100 million=24.9 meters p=0.0443; 200 million=49.3 meters, p=0.0065; placebo=8.0 meters, p=0.5371)~~the National Center for Geriatrics & Gerontology (NCGG; Nagoya), Lomecel-B cohorts did not demonstrate a significant difference compared to the placebo group at Day 180. However, significant differences from placebo were observed 90 days later at Day 270, which was a pre-specified exploratory endpoint (25 million Δ=27.5, p=0.1530; 50 million Δ=49.2, p=0.0122; 100 million Δ=31.0, p=0.1071; 200 million Δ=63.4, p=0.0077)and Juntendo University Hospital (Tokyo). ~~When pooling all Lomecel-B-treated subjects together, the mean change from baseline compared to placebo at Day 270 was statistically significant (all Lomecel-B Δ=42.8, p=0.0079).~~

●

~~Secondary analysis~~Top-line results from the Phase 1/2 “HERA” Aging Frailty trial are currently expected to be disclosed in the first half of 2022. The HERA Trial is a small multicenter, randomized, placebo-controlled study intended primarily to evaluate safety, and to explore the effect Lomecel-B may have on specific biomarkers of immune system function in older individuals with mild to moderate Aging Frailty who received the high dose influenza vaccine, as well as evaluate potential effects of Lomecel-B on other signs and symptoms of Aging Frailty.

●

On January 12, 2022 Longeveron announced publication of the ~~primary efficacy endpoint:~~Lomecel-B Phase 2b Aging Frailty trial design in The ~~secondary analysis was~~Journal of Aging and Frailty titled: “The Design and Rationale of a Phase 2b, Randomized, Double-Blinded, and Placebo-Controlled Trial to ~~determine whether a dose-response relationship exists using~~Evaluate the ~~multiple comparisons~~Safety and ~~modeling approach by Bretz et. al (2003). The results showed a clear, statistically significant dose-response curve at day 180. Among the various dose-response curves evaluated (E~~_max~~, Linear, Exponential, Quadratic, and Sigmoid E~~_max~~), all had p-values~~Efficacy of ~~less than 0.05,~~Lomecel-B in Older Adults with ~~the Sigmoid E~~_max~~model having the most significant dose-response relationship (p=0.0170).~~Frailty.”

The study’s key secondary endpoints were day 180 change in the patient reported outcome questionnaire PROMIS--Physical Function—Short Form 20a (SF-20a) total score and day 180 change in serum levels of tumor necrosis factor alpha (TNF-α), an inflammatory cytokine. Lomecel-B ~~cohorts did not show a statistically significant difference compared to the placebo cohort in the SF-20a score~~for Acute Respiratory Distress Syndrome (ARDS) caused by either Covid-19 or ~~TNF-α. The remainder of the endpoints are considered exploratory.~~Influenza Infection:

●

InThe two-cohort, 70 patient (35 patients per cohort) Phase 1 trial continues to screen subjects at three participating centers in the ~~second quarter of 2021 we announced completion of our Aging Frailty influenza vaccine trial (“HERA” trial). Top-line data from~~U.S. Screening and enrollment for this ~~trial are~~study has been slower than expected due mainly to fewer hospitalizations related to ARDS. It is anticipated ~~by the 1~~^st ~~quarter of~~that screening will continue through 2022. The two-phase, multicenter, randomized, double-blinded, placebo-controlled study was conducted at seven hospitals and clinics throughout Florida and Maryland, and was supported in part by a grant from a Maryland Stem Cell Research Fund and the NIA. The primary objectives of the study were to assess safety, and explore the effect of Lomecel-B on the frail immune system in response to influenza vaccine. This trial is considered exploratory and therefore does not have formal hypothesis testing for efficacy. Additional efficacy evaluations include assessments of physical strength and endurance, quality-of-life and activities of daily living assessments, cognitive function, and blood-based biomarkers.

●

We entered into an agreement with Kinesiometrics Inc. to provide a digital data-driven solution for objective real-time measurement of functional capacity and quality of life in Longeveron’s clinical studies. The data is accessible to Longeveron and recipients of Lomecel-B via an application downloadable on the subjects’ mobile phones. Kinesiometrics will provide a patented Software as a Solution (SaaS), mobile-phone based platform that can collect not only years of historical data regarding a subject’s activity levels via steps, distance walked, flights climbed and energy expenditure, but also real-time response information for comparison of activity level changes pre- and post-Lomecel-B infusion. This data may be used to understand and gauge outcomes of treatment regimens. Activity levels can be provided continuously, rather than relying solely on single time points throughout the follow-up period. This could provide rapid understanding of the effect of Lomecel-B, and has the potential to reduce the number of protocol-specific visits a research subject needs to make to the clinic.

~~Alzheimer’s Disease~~

We presented previously announced data from our Phase 1 Alzheimer’s disease clinical data as a poster presentation at the 2021 Annual Alzheimer’s Association International Conference (AAIC) Annual Meeting in July. The trial, funded in part by an Alzheimer’s Association Part the Cloud Challenge on Neuroinflammation grant, used a randomized, placebo-controlled double-blind design testing single i.v. infusion of Lomecel-B 20 million cells (“low-dose”; (n=15)), Lomecel-B 100 million cells (“high-dose”; n=10)), or placebo (n=8). Key results from this trial include demonstrating safety and tolerability in the target patient population, and a statistically significantly slower reduction in Mini Mental State Exam score for the low dose Lomecel-B group (20 million cells) compared to placebo.

~~Bahamas Treatment Registry Trial~~

Since 2017 we have sponsored a registry in The Bahamas under the approval and authority of the Ministry of Health’s National Stem Cell Ethics Committee (NSCEC). The Bahamas Registry Trial administers Lomecel-B to eligible participants at two private clinics in Nassau for a variety of indications. While Lomecel-B is considered an investigational product in The Bahamas, under the approval terms from the NSCEC, we are permitted to charge a fee to participate and receive Lomecel-B. Please refer to Impact of COVID 19 Pandemic above for additional information related to the Treatment Registry.

Components of Our Results of Operations

Revenue

We have ~~historically~~ generated revenue from three sources:

●

Grant ~~awards~~.awards. Extramural grant award funding, which is non-dilutive, has been a core strategy for supporting our ongoing clinical research. Since 2016 we have been directly awarded approximately $11.9 million in grants, with details of these awards provided under the heading “Grant Awards” below.


	●	The Bahamas Registry ~~Trial~~.Trial. Participants in The Bahamas Registry Trial pay us a fee to receive Lomecel-B, imported by us into The Bahamas, and administered at one of two private medical clinics in Nassau. While Lomecel-B is considered an investigational product in The Bahamas, ~~and not licensed for commercial sale,~~ under the approval terms received from the National Stem Cell Ethics Committee, we are permitted to charge a fee for participation in the Registry Trial. The fee is recognized as revenue, and is used to pay for the costs associated with manufacturing and testing of Lomecel-B, administration, shipping and importation fees, data collection and management, biological sample collection and sample processing for biomarkers and other data, and overall management of the Registry, including personnel costs. Lomecel-B is considered an investigational treatment in The Bahamas and not licensed for commercial sale.


	●	Contract development and manufacturing ~~services~~.services. From time to time, we enter into fee-for-service agreements with third parties for our product development and manufacturing capabilities.

CostCost of ~~revenues~~Revenues

We record cost of revenues based on expenses directly related to revenue. For ~~Grants,~~grants we record allocated expenses for Research and development costs to a grant as a cost of revenues. For the ~~Clinical~~clinical trial revenue directly related expenses for that program are allocated and accrued as incurred. These expenses are similar to those described under “Research and development ~~expenses”~~expense” below.

Selling and Marketing Expenses

Selling and marketing expenses consist primarily of royalty and license fees associated with our agreements with the ~~UM,~~University of Miami (“UM”), as well as attending and sponsoring industry, investment, organization and medical conferences and events.

Research and Development Expenses

Research and development costs are charged to expense when incurred in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 730 Research and ~~Development.~~Development, ASC 730 addresses the proper accounting and reporting for research and development costs. It identifies: 1)1. those activities that should be identified as research and development; 2)2. the elements of costs that should be identified with research and development activities, and the accounting for these costs; and 3)3. the financial statement disclosures related to them. Research and development include costs such as clinical trial expenses, contracted research and license agreement fees with no alternative future use, supplies and materials, salaries, share-based compensation, employee benefits, property and equipment depreciation and allocation of various corporate costs. We accrue for costs incurred by external service providers, including CROs and clinical investigators, based on estimates of service performed and costs incurred. These estimates include the level of services performed by the third parties, subject enrollment in clinical trials, administrative costs incurred by the third parties, and other indicators of the services completed. Based on the timing of amounts invoiced by service providers, we may also record payments made to those providers as prepaid expenses that will be recognized as expense in future periods as the related services are rendered.

We currently do not carry any inventory for our product candidates, as we have yet to launch a product for commercial distribution. Historically our operations have focused on conducting clinical trials, product research and development efforts, and improving and refining our manufacturing processes, and accordingly, manufactured clinical doses of product candidates were expensed as incurred, consistent with the accounting for all other research and development costs. Once we begin commercial distribution, all newly manufactured approved products will be allocated either for use in commercial distribution, which will be carried as inventory and not expensed, or for research and development efforts, which will continue to be expensed as incurred.

We expect that our research and development expenses will increase in the future as we increase our headcount to support increased research and development activities relating to our clinical programs, as well as incur additional expenses related to our clinical trials.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in our executive, finance, business development and administrative functions. General and administrative expenses also include public company related expenses; legal fees relating to corporate matters; insurance costs; professional fees for accounting, auditing, tax and consulting services; travel expenses; and facility-related expenses, which include direct depreciation costs and allocated expenses for rent and maintenance of facilities and other operating costs. We capitalized certain legal, professional and other third-party fees that were directly associated with in-process equity financings as deferred offering costs until the applicable equity financing was consummated. After consummation of an equity financing, these costs will be recorded in shareholders’ equity as a reduction of proceeds generated as a result of the offering.

We expect that our general and administrative expenses will increase in the future as we increase our headcount to support increased administrative activities relating to our becoming a public company. We also expect to incur additional expenses associated with being a public company, including costs of accounting, audit, legal, regulatory and tax-related services associated with maintaining compliance with Nasdaq and SEC requirements, director and officer insurance costs, and investor and public relations costs.

Other Income and Expenses

Interest income consists of interest earned on cash ~~equivalents.~~equivalents and short-term investments. We expect our interest income to increase due to the ~~$27.1 million in net proceeds from our IPO.~~current cash and short-term investment balances. Other income consists of funds earned that are not part of our normal operations. In past years they have been primarily a result of tax refunds received for social security taxes as part of a research and development tax credit program.

Income Taxes

As of ~~September 30,~~December 31, 2021, we are treated as a C corporation for federal and state income tax purposes. Prior to February 12, 2021, we were treated as a partnership for federal and state income tax purposes, whereby we passed our earnings and losses through to our members based on the terms of our Operating Agreement. No provision for income taxes has been recorded for the ~~nine months~~years ended ~~September 30,~~December 31, 2021 and 2020. ~~As we converted from an LLC to a C corporation during the year ending December 31, 2021, we~~We may incur income taxes in the future if we have ~~earnings in 2021.~~earnings. At this time the Company has not evaluated the ~~tax~~ impact of any future profits.

RESULTS OF OPERATIONS

COMPARISON OF THE THREE MONTHS ENDED ~~SEPTEMBER 30,~~MARCH 31, 2022 AND 2021 ~~AND 2020~~

The following table summarizes our results of operations for the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ together with the changes in those items in dollars (in thousands):

	Three months Ended September 30,						Increase			Three Months Ended March 31,						Increase
	2021			2020			(Decrease)			2022			2021			(Decrease)
Revenues	$	232		$	1,865		$	(1,633	)	$	370		$	376		$	(6	)
Cost of revenues		68			1,492			(1,424	)		70			227			157
Gross profit		164			373			(209	)		300			149			151
Expenses
General and administrative		2,996			702			2,294			1,980			1,707			273
Research and development		2,048			585			1,463			1,427			1,350			77
Selling and marketing		25			44			(19	)		287			550			(263	)
Total operating expenses		5,069			1,331			3,738			3,694			3,607			87

Loss from operations		(4,905	)		(958	)		(3,947	)		(3,394	)		(3,458	)		64
Interest expense		(1	)		(4	)		3
Other income		51			24			27
Forgiveness of Paycheck Protection Program loan											-			300			(300	)
Other (expense) income											(116	)		47			(162	)
Net loss	$	(4,855	)	$	(938	)	$	(3,917	)	$	(3,510	)	$	(3,111	)	$	(399	)

Revenues, Cost of Revenues and Gross Profit: Revenues for each of the three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ were ~~$0.2 million and $1.8 million, respectively. The $1.6 million, or 88%, decrease~~approximately $0.4 million. Revenues for the three months ended March 31, 2022 were approximately the same when compared to the same period in ~~2020, was primarily due to a decrease in grant revenue year-over-year.~~2021. Grant revenue for the three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ was $0.1 million and ~~$1.8~~$0.2 million, respectively. ~~The $1.7~~Grant revenue for the three months ended March 31, 2022 was approximately $0.1 million, or ~~96% decrease~~72% lower when compared to the same period in 2020, was primarily due to a reduction in grant funds available due to the completion of the grant-funded clinical trials and corresponding completion of the grant. Clinical trial revenue, which derives from the Bahamas Registry Trial, for the three months ended September 30, 2021, and 2020 was $0.2 million and $0, respectively. Clinical trial revenue for the three months ended September 30, 2021 was $0.2 million, or 100%, higher when compared to the same period in 2020. COVID-19 related travel concerns continue to negatively impact clinical trial revenue.

Related cost of revenues was $0.1 million and $1.5 million for the three months ended September 30, 2021 and 2020, respectively. The $1.4 million, or 95%, decrease when compared to the same period in 2020, was primarily due to lower cost of revenues for grants incurred in 2021. This resulted in a gross profit of $0.2 million for the three months ended September 30, 2021, a decrease of $0.2 million, or 56%, when compared with a gross profit of $0.4 million for the same period in 2020.

~~General and Administrative Expense:~~ General and administrative expenses for the three months ended September 30, 2021 increased to $3.0 million, compared to $0.7 million for the same period in 2020. The increase of $2.3 million, or 327%, was primarily related to an increase for compensation, insurance and professional expenses incurred during the current period; including $1.6 million of equity-based compensation expense recorded for the RSUs and stock options granted. For 2021, general and administrative expenses consisted primarily of rent, professional fees, insurance, and paid and accrued compensation costs.

~~Research and Development Expenses:~~ Research and development expenses for the three months ended September 30, 2021 increased to $2.0 million, from $0.6 million for the same period in 2020. The increase of $1.4 million, or 250%, was primarily due to an increase in research and development expenses that were not reimbursable by grants; including $0.9 million of equity-based compensation expense recorded for the RSUs and stock options granted. Research and development expenses consisted primarily of the following items (less those expenses allocated to the cost of revenues for the grants) (in thousands):

Three months Ended September 30,
2021 2020
Clinical trial expenses-statistics, monitoring, labs, sites, etc. $ 455 $ 255
Supplies and costs to manufacture Lomecel-B 100 36
Employee compensation and benefits 360 95
Equity-based compensation 878 5
Depreciation 182 182
Amortization 55 15
Travel 18 (5 )
Other activities - 2
$ 2,048 $ 585

~~Selling and Marketing Expenses:~~ Selling and marketing expenses for the three months ended September 30, 2021 and 2020 was $0.1 million. Selling and marketing expenses consists primarily of marketing fees recorded for our clinical programs.

~~Interest Expense:~~ ~~Interest expenses for the three months ended September 30, 2021 was less than $0.1 million. The increase was due to interest expenses accrued for our SBA loan.~~

~~Other Income:~~ Other income for the three months ended September 30, 2021 was less than $0.1 million. Other income was primarily the result of $42,000 received in rental payments recorded from a sublease, and $22,000 from federal research tax credits.

~~Net Loss:~~ Net loss increased to approximately $4.9 million for the three months ended September 30, 2021, from a net loss of $0.9 million for the same period in 2020. The increase in the net loss of $4.0 million, or 418%, was for reasons outlined above.

~~COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020~~

~~The following table summarizes our results of operations for the nine months ended September 30, 2021 and 2020, together with the changes in those items in dollars (in thousands):~~

Nine months Ended
September 30, Increase
2021 2020 (Decrease)
Revenues $ 1,097 $ 4,449 $ (3,352 )
Cost of revenues 576 3,152 (2,576 )
Gross profit 521 1,297 (776 )
Expenses
General and administrative 8,454 2,037 6,417
Research and development 5,359 1,515 3,844
Selling and marketing 132 140 (7 )
Total operating expenses 13,945 3,692 10,254
Loss from operations (13,424 ) (2,395 ) (11,030 )
Forgiveness of Paycheck Protection Program loan 300 - 300
Interest expense (3 ) (4 ) 1
Other income 151 34 117
Net loss $ (12,976 ) $ (2,365 ) $ (10,612 )

~~Revenues, Cost of Revenues and Gross Profit:~~ Revenues for the nine months ended September 30, 2021 and 2020 were $1.1 million and $4.4 million, respectively. The $3.3 million, or 75%, decrease when compared to the same period in 2020, was primarily due to a decrease in clinical trial and grant revenue year-over-year. Grant revenue for the nine months ended September 30, 2021 and 2020 was $0.6 million and $3.6 million, respectively. The $3.0 million, or 85% decrease when compared to the same period in 2020, was primarily due to a reduction in grant funds available due to the completion of the grant-funded clinical trials. Clinical trial revenue, which comes from the Bahamas Registry Trial, for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ was ~~$0.5~~$0.3 million and ~~$0.8,~~$0.2 million, respectively. Clinical trial revenue for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 was ~~$0.3~~approximately $0.1 million, or ~~31%~~88%, higher when compared to the same period in 2021. During the first quarter of 2022, clinical trial revenue increased as a result of reduced COVID-19 travel restrictions, which were more prevalent in the first quarter of 2021.

Related cost of revenues was approximately $0.1 million and $0.2 million for the three months ended March 31, 2022 and 2021, respectively. Cost of revenues for the three months ended March 31, 2022 was approximately $0.1 million, or 69%, lower when compared to the same period in ~~2020. During the nine months ended September 30,~~ 2021, ~~clinical trial revenue was negatively impacted by COVID-19 travel restrictions, as participants continued to have concerns with respect to international travel.~~

Related cost of revenues was $0.6 million and $3.1 million for the nine months ended September 30, 2021 and 2020, respectively. The $2.5 million, or 82%, decrease when compared to the same period in 2020, was primarily due to lower cost of revenues for grants incurred in 2021 and lower costs related to the Bahamas Registry Trial. This resulted in a gross profit of approximately ~~$0.5~~$0.3 million for the ~~nine~~three months ended ~~September 30, 2021, a decrease~~March 31, 2022, an increase of ~~$0.8~~approximately $0.2 million, or ~~60%~~102%, when compared with a gross profit of approximately ~~$1.3~~$0.1 million for the same period in ~~2020.~~2021.

General and Administrative Expense: General and administrative expenses for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 increased to ~~$8.4~~approximately $2.0 million, compared to ~~$2.0~~$1.7 million for the same period in ~~2020.~~2021. The increase of ~~6.4~~approximately $0.3 million, or ~~317%~~16%, was primarily related to an increase in compensation and insurance costs. During the three months ended March 31, 2022 expenses for compensation, insurance and professional ~~expenses incurred during~~services increased by $0.8 million when compared to the ~~current period; including $3.9 million of equity-based~~same period in 2021. Equity based compensation ~~recorded for the RSUs and stock options granted. The increase was also due~~allocated to ~~an increase in insurance costs of $0.5 million and investor relation costs of $0.6 million. For 2021,~~ general and administrative expenses ~~consisted primarily of rent, professional fees, insurance, and paid and accrued compensation costs.~~decreased from $0.9 million for the three months ended March 31, 2021 to $0.4 million for the same period in 2022.

Research and Development Expenses: Research and development expenses for the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, increased to ~~$5.3~~approximately $1.4 million, from ~~$1.5~~approximately $1.3 million for the same period in ~~2020.~~2021. The increase of ~~$3.8~~$0.1 million, or ~~252%~~6%, was primarily due to an increase in research and development expenses that were not reimbursable by ~~grants; including $2.1~~grants, Equity based compensation allocated to research and development expenses decreased from $0.4 million ~~of equity-based compensation recorded~~ for the ~~RSUs and stock options granted.~~three months ended March 31, 2021 compared to $0.1 million for the same period in 2022. Research and development expenses consisted primarily of the following items (less those expenses allocated to the cost of revenues for the grants) (in thousands):

	Nine months Ended September 30,				Three Months Ended March 31,
	2021		2020		2022		2021
Clinical trial expenses-statistics, monitoring, labs, sites, etc.	$	1,214	$	421	$	441	$	376
Supplies and costs to manufacture Lomecel-B		362		152		87		111
Employee compensation and benefits		860		335		510		171
Equity-based compensation		2,097		15		98		443
Depreciation		545		542		143		179
Amortization		138		47		44		14
Travel		46		9		6		7
Other activities		97		2		98		49
	$	5,359	$	1,523	$	1,427	$	1,350

Selling and Marketing Expenses: Selling and marketing expenses for ~~each of~~ the ~~nine-month periods~~three months ended ~~September 30,~~March 31, 2022 and 2021 were approximately $0.3 million and ~~2020 was $0.1 million.~~$0.5 million, respectively. Selling and marketing expenses ~~consists~~consist primarily of ~~marketing fees recorded for our clinical programs.~~investor and public relations expenses.

Forgiveness of Paycheck Protection Program loan: Forgiveness of the Paycheck Protection Program loan for the ~~nine~~three months ended ~~September 30, 2021, increased~~March 31, 2022, decreased to ~~$0.3~~approximately $0 million, compared to $0$0.3 million for the same period in ~~2020.~~2021. The ~~increase~~decrease of $0.3 million, or 100% was due to the non-recurring nature of the forgiveness of the PPP loan.

Other (Expense) Income: Other ~~income~~expense for the ~~nine~~three months ended ~~September 30, 2021, increased to $0.2 million, compared to less than~~March 31, 2022 was $0.1 million. Other expense consisted of an unrealized loss of $0.1 million infrom short-term investments. For the ~~prior year period. Other~~three months ended March 31, 2021 other income was primarily the result of ~~$102,000~~$30,000 received in rental payments recorded from a sublease ~~$8,000 from recorded investment income, $24,000 from federal research tax credits~~ and $17,000 from a gain resulting from an equity exchange.

Net Loss: Net loss increased to ~~$13.0~~approximately $3.5 million for the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, from a net loss of ~~$2.4~~3.1 million for the same period in ~~2020.~~2021. The increase in the net loss of ~~$10.6~~$0.4 million, or ~~449%~~13%, was for reasons outlined above.

Cash Flows

The following table summarizes our sources and uses of cash for the period presented (in thousands):

Nine months Ended
September 30,
2021 2020
Net cash used in operating activities $ (8,355 ) $ (1,859 )
Net cash used in investing activities (9,381 ) (221 )
Net cash provided by financing activities 26,658 1,608
Net increase in cash and cash equivalents $ 8,922 $ (472 )

	Three Months Ended March 31,
	2022			2021
Net cash used in operating activities	$	(4,152	)	$	(3,032	)
Net cash provided by investing activities		767			-
Net cash (used in) provided by financing activities		(141	)		26,677
Change in cash and cash equivalents	$	(3,526	)	$	23,645

Operating Activities. We have incurred losses since inception. Net cash used in operating activities for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 was ~~$8.4~~$4.2 million, consisting primarily of our net loss of ~~$13.0~~$3.5 million as we incurred expenses associated with research activities for our lead product candidates and incurred general and administrative ~~expenses; including $6.0~~expenses and $0.9 million ~~of equity-based compensation recorded for RSUs and stock options granted.~~in prepaid insurance expenses. Net cash used in operating activities for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 was ~~$1.9~~$3.0 million, consisting primarily of our net loss of ~~$2.4~~$3.1 million as we incurred expenses associated with research activities for our lead product candidates and incurred general and administrative expenses. including $1.3 million of equity based compensation recorded for the RSUs granted.

Investing Activities. Net cash ~~used in~~provided by investing activities for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 was ~~$9.4~~$0.8 million consisting primarily of an increase ~~of $9.2 million~~ in short-term investments. Net cash used in investing activities for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 was ~~$0.2 million, consisting of~~nil because there were no purchases of property and equipment and capitalized intangible costs.

Financing Activities. Net cash used in financing activities for the three months ended March 31, 2022 was $0.1 million for the payment of taxes upon vesting of RSUs. For the three months ended March 31, 2021, cash provided by financing activities ~~for the nine months ended September 30, 2021~~ was $26.7 million consisting ~~primarily~~ of: $26.1 million in net proceeds received from our IPO. Net cash provided by financing activities for the nine months ended September 30, 2020 was $1.6 million consisting primarily of $1.1 million in net proceeds received from subscription of our Series C membership units issued prior to Corporate Conversion and proceeds from the SBA’s PPP loan of $0.3 million and Disaster Recovery Plan loan of $0.1 million.

LIQUIDITY AND CAPITAL RESOURCES

Since our inception, we have incurred significant operating losses. We expect to incur significant expenses and operating losses as we advance the preclinical and clinical development of our programs. We expect that our sales, research and development and general and administrative costs will increase in connection with conducting additional preclinical studies and clinical trials for our current and future programs and product candidates, contracting with CROs to support preclinical studies and clinical trials, expanding our intellectual property portfolio, and providing general and administrative support for our operations. As a result, we will need additional capital to fund our operations, which we may obtain from additional equity or debt financings, collaborations, licensing arrangements, or other sources.

To date, we have financed our operations primarily through our IPO, private equity financings, grant awards, and fees generated from the Bahamas Registry Trial and contract manufacturing services. Since we were formed, we have raised approximately ~~$56.1~~$77.2 million in gross proceeds from the issuance of equity. As of ~~September 30, 2021,~~March 31, 2022, the Company had cash, and cash equivalents of ~~$9.7~~$22.1 million, short-term investments of ~~$9.2~~$8.5 million and working capital of approximately ~~$17.7~~$29.5 million. We have $0.1 million of indebtedness as of September 30, 2021 from loans provided by the Small Business Administration (SBA). Revenue from our Bahamas Registry Trial, after the Bahamas lifted its COVID-19 travel restrictions, has been slowed due to continued concerns with respect to international travel.

Capital ~~in 2020~~Raising Efforts

~~During 2020,~~In our IPO, we ~~received $1.1 million from investors in exchange for 18,335 Series C membership units. These units were subsequently converted into~~sold 2,910,000 shares of Class A Common Stock ~~as part of our Corporate Conversion, as discussed in greater detail in the notes to the unaudited financial statements included in this Quarterly Report on Form 10-Q.~~

~~On September 15, 2020, we were awarded a $0.7 million grant from the MSCRF - TEDCO for the use of our cell-based technology for ARDS due to COVID-19 and the Flu.~~

~~Capital in 2021~~

~~Pursuant to our IPO, we sold 2,660,000 shares of Class A common stock~~ at a public offering price of $10.00 per share for aggregate gross proceeds of ~~$26.6~~$29.1 million, inclusive of the underwriter’s partial exercise of its over-allotment option, prior to deducting underwriting discounts, commissions, and other offering expenses. On March 15, 2021, our underwriters partially exercised its over-allotment option, resulting in the sale of 250,000 shares of Class A common stock at a public offering price of $10.00 per share for aggregate gross proceeds of $2.5 million prior to deducting underwriting discounts, commissions, and other offering expenses.

The underwriter ~~also~~ received warrants to purchase 106,400 Class A ~~common stock~~Common Stock shares. The warrants are exercisable at any time and from time to time, in whole or in part, during the four and a half-year period commencing August 12, 2021, at a price of $12.00 per Class A ~~common stock~~Common Stock share. During 2021, the underwriters assigned 95,760 of the warrants to its employees. As of December 31, 2021, 51,061 warrants have been exercised, that provided net proceeds to the Company of $0.6 million.

On December 3, 2021, we closed our 2021 private investment in public equity (PIPE) Offering, whereby we undertook a private purchase and sale to certain accredited investors of an aggregate of 1,169,288 shares of our Class A Common Stock and Purchase Warrants to purchase 1,169,288 shares of Class A Common Stock at an initial exercise price of $17.50 per share, resulting in aggregate gross proceeds of $20.5 million prior to deducting fees and offering expenses. We also issued Representative Warrants, exercisable for 46,772 shares of Class A Common Stock to affiliates of Placement Agent with an exercise price of $17.50 per share. The shares of Class A Common Stock issued pursuant to the 2021 PIPE Offering and underlying the warrants were subsequently registered by us on a Form S-1 Registration Statement, which was declared effective on December 22, 2021.

~~Grant Awards~~

Grant Awards

From inception through ~~September 30, 2021,~~March 31, 2022, we have been awarded approximately $11.9 million in governmental and non-profit association grants, which have been used to fund our clinical trials, research and development, production and overhead. Grant awards are recognized as revenue, and depending on the funding mechanism, are deposited directly in our accounts as lump sums, which are staggered over a predetermined period, or drawn down from a federal payment management system account for reimbursement of expenses incurred. Revenue recognition occurs when the grant related expenses are incurred, or supplies and materials are received. As of ~~September 30, 2021,~~March 31, 2022, and December 31, ~~2020,~~2021, the amount of unused grant funds that were available for us to draw was approximately $0.7 million and $0.8 million, ~~and $1.4 million,~~ respectively. ~~The following table summarizes the grants awarded (in thousands).~~

~~Longeveron Project~~	~~Funding Agency~~⁽¹⁾	Total Amount ($)		Status of Award
~~Aging Frailty Phase 2b Trial~~	~~SBIR (DHHS) NIA~~		~~3,957,813~~	~~Ongoing~~
~~Aging Frailty Phase 2b Trial~~	~~SBIR (DHHS) NIA~~		~~283,040~~	~~Complete~~
~~Alzheimer’s Disease Phase 1 Trial~~⁽²⁾	~~Alzheimer’s Association~~		~~3,000,000~~	~~Ongoing~~
~~Alzheimer’s Disease Phase 1 Trial~~	~~Alzheimer’s Association~~		~~1,000,000~~	~~Complete~~
~~The Metabolic Syndrome Sub-Study~~	~~STTR (DHHS) NIA~~		~~150,000~~	~~Complete~~
~~The Metabolic Syndrome Sub-Study~~	~~STTR (DHHS) NIA~~		~~901,486~~	~~Ongoing~~
~~Aging Frailty Influenza Vaccine Trial (“HERA”)~~	~~MSCRF - TEDCO~~		~~750,000~~	~~Complete~~
~~HLHS Phase 1 Trial~~	~~MSCRF - TEDCO~~		~~750,000~~	~~Complete~~
~~HLHS Phase 2 Trial~~⁽³⁾	~~UG3 (DHHS) NHLBI~~		~~477,566~~	~~Ongoing~~
~~ARDS Phase 1~~⁽⁴⁾	~~MSCRF - TEDCO~~		~~650,000~~	~~Ongoing~~
~~Total~~			~~11,919,905~~

~~(1)~~

SBIR=Small Business Innovation Research programs; STTR=Small Business Technology Transfer programs; DHHS=Department of Health and Human Services; NIA = National Institute on Aging; NHLBI=National Heart, Lung, and Blood Institute.

~~(2)~~	Under the grant award agreement with the Alzheimer’s Association, we may be required to make revenue sharing or distribution of revenue payments for products or inventions generated or resulting from this clinical trial program. The potential payments, although not currently defined, could result in a maximum payment of five times (5x) the award amount.

~~(3)~~	The HLHS Phase 2b clinical trial grant was awarded to the University of Maryland, and the trial will be conducted under our IND and will test Lomecel-B. The total award was $4.6 million, and we will receive approximately $0.5 million directly.

~~(4)~~

~~MSCRF - TEDCO has sent the first tranche of $325,000.~~

Terms and Conditions of Grant Awards

Grant projects are typically divided into periods (e.g., a three-year grant may have three one-year periods), and the total amount awarded is divided according to the number of periods. At pre-specified time points, which are detailed in the grant award notifications, we are required to submit interim financial and scientific reports to the granting agency totaling funds spent, and in some cases, detailing use of proceeds and progress made during the reporting period. After funding the initial period, receipt of additional grant funds is contingent upon satisfactory submission of our interim reports to the granting agency.

Grant awards arise from submitting detailed research proposals to granting agencies, and winning a highly competitive and rigorous application review and process that is judged on the merits of the proposal. There are typically multiple applicants applying and competing for a finite amount of funds. As such we cannot be sure that we will be awarded grant funds in the future despite our past success in receiving such awards.

Funding Requirements

Our operating costs will continue to increase substantially for the foreseeable future in connection with our ongoing activities. In past years we have been able to fund a large portion of our clinical programs and our administrative overhead with the use of grant funding.

Specifically, our expenses will increase as we:

●

advance the clinical development of Lomecel-B for the treatment of several disease states and indications;


	●	pursue the preclinical and clinical development of other current and future research programs and product candidates;


	●	in-license or acquire the rights to other products, product candidates or technologies;


	●	maintain, expand and protect our intellectual property portfolio;


	●	hire additional personnel in research, manufacturing and regulatory and clinical development as well as management personnel;


	●	seek regulatory approval for any product candidates that successfully complete clinical development; and


	●	expand our operational, financial and management systems and increase personnel, including personnel to support our operations as a public company.

We believe that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements ~~into~~through the ~~second~~first half of ~~2022.~~

2024. We have based these estimates on assumptions that may prove to be imprecise, and we could utilize our available capital resources sooner than we expect.

Because of the numerous risks and uncertainties associated with research, development and commercialization of our product candidates, it is difficult to estimate with certainty the amount of our working capital requirements. Our future funding requirements will depend on many factors, including:

●

the progress, costs and results of our clinical trials for our programs for our cell-based therapies;


	●	the progress, costs and results of additional research and preclinical studies in other research programs we initiate in the future;


	●	the costs and timing of process development and manufacturing scale-up activities associated with our product candidates and other programs we advance through preclinical and clinical development;


	●	our ability to establish and maintain strategic collaborations, licensing or other agreements and the financial terms of such agreements;


	●	the extent to which we in-license or acquire rights to other products, product candidates or technologies; and


	●	the costs and timing of preparing, filing and prosecuting patent applications, maintaining and protecting our intellectual property rights and defending against any intellectual property-related claims.

Further, our operating results may change in the future, and we may need additional funds to meet operational needs and capital requirements associated with such operating plans.

Until such time, if ever, that we can generate product revenue sufficient to achieve profitability, we expect to finance our cash needs through a combination of equity offerings, debt financings, grant awards, collaboration agreements, other third-party funding, strategic alliances, licensing arrangements and marketing and distribution arrangements.

We currently have no credit facility or committed sources of capital. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through other third-party funding, collaboration agreements, strategic alliances, licensing arrangements or marketing and distribution arrangements, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our biologic drug development or future commercialization efforts or grant rights to develop and market products or product candidates that we would otherwise prefer to develop and market ourselves.

In order to meet our operational goals, we will need to obtain additional capital, which we will likely obtain through a variety of means, including through public or private equity, debt financings or other sources, including up-front payments and milestone payments from strategic collaborations. To the extent that we raise additional capital through the sale of convertible debt or equity securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a stockholder. Such financing ~~may~~will likely result in dilution to stockholders, and may result in imposition of debt covenants, increased fixed payment obligations or other restrictions that may affect our business. If we raise additional funds through up-front payments or milestone payments pursuant to strategic collaborations with third parties, we may have to relinquish valuable rights to our product candidates, or grant licenses on terms that are not favorable to us. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans.

Contractual Obligations and Commitments

As of ~~September 30, 2021,~~March 31, 2022, we have ~~$3.9~~$3.0 million in operating lease obligations and $3.6 million in contract research organization obligations. We enter into contracts in the normal course of business with third-party contract organizations for clinical trials, preclinical studies, manufacturing and other services and products for operating purposes. These contracts generally provide for termination following a certain period after notice and therefore we believe that our non-cancelable obligations under these agreements are not material.

We have not included milestone or royalty payments or other contractual payment obligations if the timing and amount of such obligations are unknown or uncertain.

Critical Accounting Policies and Use of Estimates

Our management’s discussion and analysis of financial condition, results of operations and liquidity are based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the ~~United States.~~U.S. (“U.S. GAAP”). The preparation of our financial statements and related disclosures requires us to make estimates, ~~judgments~~judgements and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may materially differ from these estimates under different assumptions or conditions. On an on-going basis, we review our estimates to ensure that they appropriately reflect changes in our business or new information as it becomes available.

While our significant accounting policies are described in more detail in the notes to our financial statements included in the 2021 10-K, we believe that the following accounting policies are those most critical due to the judgments and estimates used in the preparation of our financial statements.

Intangible assets. Intangible assets include payments on license agreements with our co-founder and CSO and UM and legal costs incurred related to patents and trademarks. License agreements have been recorded at the value of cash consideration and/or estimated value of membership units transferred to the respective parties when acquired. Payments on license agreements are amortized using the straight-line method over the estimated useful life of 20 years. Patents are amortized over their estimated useful life, once issued. We consider trademarks to have an indefinite useful life and evaluate them for impairment on an annual basis. Amortization expense is recorded in the research and development line of the Statement of Operations as the assets are primarily related to our clinical programs.

Impairment of Long-Lived Assets. We evaluate long-lived assets for impairment, including property and equipment and intangible assets, when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Upon the occurrence of a triggering event, the asset is reviewed to assess whether the estimated undiscounted cash flows expected from the use of the asset plus the residual value from the ultimate disposal exceeds the carrying value of the asset. If the carrying value exceeds the estimated recoverable amounts, the asset is written down to the estimated fair value. Any resulting impairment loss is reflected on the statements of operations. Management determined that there was no impairment of long-lived assets during the three months ended March 31, 2022 and 2021.

Deferred revenue. The unearned portion of advanced grant funds and prepayments for Clinical trial revenue, which will be recognized as revenue when the Company meets the respective performance obligations, has been presented as deferred revenue in the accompanying balance sheets. For the three months ended March 31, 2022 and 2021, the Company recognized $19,000 and nil of funds that were previously classified as deferred revenue, respectively.

Revenue recognition. Effective January 1, 2018, we adopted ASC Topic 606, Revenue from Contracts with Customers, which establishes a single and comprehensive framework on how much revenue is to be recognized, and when. The core principle is that a vendor should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the vendor expects to be entitled in exchange for those goods or services. Revenue will be recognized by a vendor when control over the goods or services is transferred to the customer.

We ~~believe there have~~recognize revenue when performance obligations related to respective revenue streams are met. For Grant Revenue, we consider the performance obligation met when the grant related expenses are incurred, or supplies and materials are received. For clinical trial revenue, we consider the performance obligation met when the participant has received the therapy. For Contract Manufacturing Revenue, we consider the performance obligation met when the contractual obligation and/or statement of work has been no significant changes in our critical accounting policies and significant judgments and estimates as discussed in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2020 10-K.satisfied.

~~Off-Balance Sheet Arrangements~~Cost of revenues. We record cost of revenues based on expenses directly related to revenue. For grant revenue, we record allocated expenses for research and development costs to a grant as a cost of revenues. Expenses directly related to clinical trial revenue are allocated and accrued as incurred. These expenses are similar to as described in the Research and development expense note.

Research and development expense. Research and development costs are charged to expense when incurred in accordance with FASB ASC 730, Research and Development. Research and development include costs such as clinical trial expenses, contracted research and license agreement fees with no alternative future use, supplies and materials, salaries, share-based compensation, employee benefits, property and equipment depreciation and allocation of various corporate costs. We accrue for costs incurred by external service providers, including contract research organizations and clinical investigators, based on estimates of service performed and costs incurred. These estimates include the level of services performed by the third parties, subject enrollment in clinical trials, administrative costs incurred by the third parties, and other indicators of the services completed. Based on the timing of amounts invoiced by service providers, we may also record payments made to those providers as prepaid expenses that will be recognized as expense in future periods as the related services are rendered.

Equity-based compensation. We account for equity-based compensation expense by the measurement and recognition of compensation expense for unit-based awards based on estimated fair values on the date of grant. The fair value of incentive awards are estimated at the date of the grant using a Black-Scholes option-pricing model.

The Black-Scholes option-pricing model requires the input of highly subjective assumptions, the most significant of which are the expected unit price volatility, the expected life of the option award, the risk-free rate of return, and dividends during the expected term. Because the option-pricing model is sensitive to changes in the input assumptions, different determinations of the required inputs may result in different fair value estimates for the incentive awards.

The Company estimates the fair value of its units by using the Black-Scholes option-pricing model. Volatility is a measure of the amount by which a financial variable, such as a unit price, has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. Given the Company’s limited historical data, the Company utilizes the average historical volatility of publicly traded companies that are similar in the same industry. The risk-free interest rate is the average U.S. treasury rate (having a term that most closely approximates the expected life of the option) for the period in which the option was granted. The expected life is the period of time that the options granted are expected to remain outstanding. Incentive awards have a maximum term of ten years. The Company had insufficient historical data to utilize in determining its expected life assumptions and, therefore, uses the simplified method for determining expected life.

Emerging Growth Company Status

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act, or JOBS Act, which is a law intended to encourage funding of small businesses in the U.S. by easing many of the country’s securities regulations, and we may take advantage of reduced reporting requirements that are otherwise applicable to public companies. Section 107 of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with those standards. We have ~~no off-balance sheet arrangements.~~elected to take advantage of the extended transition period for complying with new or revised accounting standards, and as a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates. The JOBS Act also exempts us from having to provide an auditor attestation of internal control over financial reporting under Sarbanes-Oxley Act Section 404(b).

We will remain an “emerging growth company” until the earliest of (1) the last day of the fiscal year in which we have total annual gross revenues of $1.07 billion or more, (2) the last day of the fiscal year following the fifth anniversary of the completion of our IPO, (3) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years or (4) the date on which we are deemed to be a large accelerated filer under the rules of the SEC, which generally is when a company has more than $700 million in market value of its reported class of stock held by non-affiliates and has been a public company for at least 12 months and has filed at least one Annual Report on Form 10-K.

Recent Accounting Pronouncements

A description of recent accounting pronouncements that may potentially impact our financial position, results of operations or cash flows is disclosed in Note 2 to our audited financial statements included in Item 1 of this 10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There were no material changes in our exposure to market risk since the disclosure included in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our ~~2020~~2021 10-K.

Item 4. Controls and Procedures.

Disclosure controls and procedures

Our management, under the supervision of and with the participation of our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective.

There are inherent limitations in the effectiveness of any control system, including the potential for human error and the circumvention or overriding of the controls and procedures. Additionally, judgments in decision making can be faulty and breakdowns can occur because of simple errors or mistakes. An effective control system can provide only reasonable, not absolute, assurance that the control objectives of the system are adequately met. Accordingly, our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our control system can prevent or detect all errors or fraud. Finally, projections of any evaluation or assessment of effectiveness of a control system to future periods are subject to the risks that, over time, controls may become inadequate because of changes in an entity’s operating environment or deterioration in the degree of compliance with policies and procedures.

Changes in internal control over financial reporting

In response to the COVID-19 pandemic, most of our corporate employees, including all those involved in the operation of our internal controls over financial report, have been working remotely in some capacity since mid-March 2020, with certain employees using a hybrid approach, with some days in the office and some days working remotely. Despite this change, thereThere were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended ~~September 30, 2021~~March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We are continuously monitoring and assessing the impact of COVID-19 on our internal controls to minimize any impact it may have on their design and operating effectiveness.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, the Company could become involved in disputes and various litigation matters that arise in the normal course of business. These may include disputes and lawsuits related to intellectual property, licensing, contract law and employee relations matters.

OnAs previously disclosed in our 10-Q filed with the SEC on November 12, 2021, a securities class action lawsuit was filed on September 13, 2021 against the Company and certain of our directors and officers ~~were named as defendants in a securities lawsuit filed~~ in the United States District Court for the Southern District of ~~Florida and brought on behalf of a purported class.~~Florida. On April 26, 2022, plaintiff filed an amended complaint with substantially similar allegations. The ~~suit~~complaint, as amended, alleges that there were materially false and misleading statements made (or omissions of ~~required~~material information) in the Company’s initial public offering ~~materials~~documents and in other disclosures during the period from our initial public offering on February 12, 2021, through August 12, 2021, in violation of ~~the~~ federal securities laws. The ~~action~~complaint seeks unspecified damages on behalf of a ~~proposed~~purported class of purchasers of our common stock during said period.

~~We believe that these allegations are without merit and we intend to vigorously defend against them.~~

Item 1A. Risk Factors.

The following disclosure supplements the discussion of certain risks and uncertainties previously disclosed in our ~~2020~~2021 10-K. These risks and uncertainties, along with those previously disclosed, could materially adversely affect our business, results of operations, financial position or cash flows.

~~We face risks related to the current COVID-19 pandemic and other health epidemics and outbreaks.~~

The global outbreak of COVID-19 is currently impacting countries, communities, supply chains and markets. As of the date of this Quarterly Report on Form 10-Q, the COVID-19 pandemic has impacted our Bahamas Registry Trial business. It is also possible that the COVID-19 pandemic could adversely affect our business, results of operations, financial condition or liquidity in the future. For example, it could impact the timing and enrollment of our collaborators’ planned or ongoing clinical trials, delaying clinical site initiation, regulatory review and the potential receipt of regulatory approvals, payment of milestones under our license agreements and commercialization of one or more of our product candidates, if approved. The COVID-19 pandemic could also disrupt the production capabilities of our contract manufacturing facility. Further, the outbreak of COVID-19 has heightened the risk that a significant portion of our workforce will suffer illness or otherwise be unable to work. The impact of the COVID-19 pandemic is fluid and continues to evolve, and therefore, we cannot currently predict the extent to which our business, clinical trials, results of operations, financial condition or liquidity will ultimately be impacted. In addition, COVID-19 could materially and adversely impact our operations due to, among other factors:

	●	~~a general decline in business activity;~~

	●	difficulty accessing the capital and credit markets on favorable terms, or at all, and a severe disruption and instability in the global financial markets, or deteriorations in credit and financing conditions which could affect our access to capital necessary to fund business operations;

	●	the potential negative impact on the health of our employees, especially if a significant number of them or any of their family members are impacted or if any of our senior leaders are impacted for an extended period of time;

	●	the potential negative impact on our ability to monitor the investigative sites participating in our clinical studies in person or even remotely, which could result in a deviation from pre-pandemic protocols and/or site monitoring and data management plans, and delays in our ability to perform data-related tasks dependent on communications with personnel at the investigative sites, such as resolution of open data queries, the cumulative effects of which could lead to delayed or missed identification of non-compliance with good clinical practice (GCP), and/or unrecognized data errors.

	●	potential delays in the preparation and submission of applications for regulatory approval of our products, as well as potential delays in FDA’s ability to review applications in a timely manner consistent with past practices;

	●	~~potential difficulty in adequately overseeing and/or evaluating the manufacturing process at the facilities that will manufacture future commercial;~~

●

~~a deterioration in our ability to ensure business continuity during a disruption.~~

To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in the “Risk Factors” section of our 2020 10-K, such as those relating to our significant operating losses, our need for substantial additional funding to develop our products and support our operations, delays or difficulties in developing and commercializing our product candidates, and delays in clinical trials and regulatory approvals relating to our products.

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

~~During the nine months ended September 30, 2021, we issued a total of 163,719 unregistered shares of Class~~ISSUER PURCHASES OF EQUITY SECURITIES

Period	(a) Total Number of Shares (or Units) Purchased		(b) Average Price Paid per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs		(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
January 2022		10,626	$	12.09		10,626		165,417
February 2022		-		-		-		-
March 2022		-		-		-		-
Total		10,626	$	12.09	$	12.09		165,417

On January 3, 2022, The Company net withheld 10,626 class A common stock ~~with an aggregate value~~shares from employees that had vested to cover taxes as a result of ~~$1.2 million, as consideration under various pre-existing consulting and license agreements. More specifically, of the amount noted in the prior sentence, 110,387 shares were issued~~RSUs vesting. The Company does not have a formal plan to ~~UM (for further information see Note 9~~net withhold but has decided at each vesting date to ~~the unaudited financial statements included in this Quarterly Report on Form 10-Q) and 53,332 shares were issued~~determine if such strategy is feasible to the Company’s investor relations consultants. The issuance of securities in the transactions described above were each exempt from registration under Section 4(a)(2) of the Securities Act and/or Rule 506 promulgated thereunder.execute.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

~~None.~~

Item 6. Exhibits.

Exhibit No.		Description
10.1		Employment Agreement between Longeveron Inc. and K. Chris Min, M.D., Ph.D., incorporated by reference to Exhibit 10.1 to the Company’s current report on Form 8-K filed April 5, 2022.

31.1		Certification of principal executive officer, pursuant to SEC Rules 13a-14(a) and 15d-14(a) adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of principal financial officer, pursuant to SEC Rules 13a-14(a) and 15d-14(a) adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of principal executive officer, and principal financial officer, pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Inline XBRL Instance 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.

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

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 thereunto duly authorized.

	LONGEVERON INC.

Date: ~~November 12, 2021~~May 13, 2022	/s/ Geoff Green
	Geoff Green
	Chief Executive Officer
	(principal executive officer)

Date: ~~November 12, 2021~~May 13, 2022	/s/ James Clavijo
	James Clavijo
	Chief Financial Officer
	(principal financial and accounting officer)

iso4217:USD xbrli:shares

	September 30,
	2021		2020

RSUs		898		-
Stock options		321		-
Warrants		106		-
Total		1,325		-

	Three months Ended September 30,
	2021		2020
Clinical trial expenses-statistics, monitoring, labs, sites, etc.	$	455	$	255
Supplies and costs to manufacture Lomecel-B		100		36
Employee compensation and benefits		360		95
Equity-based compensation		878		5
Depreciation		182		182
Amortization		55		15
Travel		18		(5	)
Other activities		-		2
	$	2,048	$	585