Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes and other financial information included elsewhere herein. This information should also be read in conjunction with our audited historical consolidated financial statements which are included in our Form 10-K for the fiscal year ended December 31, 2025 ("Form 10-K"). The discussion contains forward-looking statements, such as our plans, expectations and intentions (including those related to clinical trials and business and expense trends), that are based upon current expectations and that involve risks and uncertainties. Our actual results may differ significantly from management's expectations. The factors that could affect these forward-looking statements are discussed in the Risk Factors included in our Form 10-K. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any expectations expressed herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best assessment by our management.

Business Overview

We are a clinical stage biotechnology company focused on therapeutic product development with two revenue-generating businesses offering potential for increased future revenue. We have generated aggregate product revenues from our two commercial businesses of $2.7 million and $2.4 million for the three months ended June 30, 2026 and 2025, respectively, and $5.0 million and $4.6 million for the six months ended June 30, 2026 and 2025, respectively. We currently have no revenue generated from our principal operations in therapeutic product development.

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

Market Opportunity and Growth Strategy

Therapeutic Market - Clinical Applications of hpSCs for Disease Treatments

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

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

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

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

Stroke: In August 2014, we announced the launch of a stroke program, evaluating the use of ISC-hpNSC® transplantation for the treatment of ischemic stroke using a rodent model of the disease. The Company has a considerable amount of safety data on ISC-hpNSC® from the Parkinson's disease program and, as there is evidence that transplantation of ISC-hpNSC® may improve patient

outcomes as an adjunctive therapeutic strategy in stroke, having a second program that can use this safety dataset is therefore a logical extension. In 2015, the Company together with Tulane University demonstrated that NSC can significantly reduce neurological dysfunction after a stroke in animal models.

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

Anti-Aging Cosmetic Market - Skin Care Products

Our wholly owned subsidiary Lifeline Skin Care, Inc. ("LSC") develops, manufactures, and sells skin care products based on two core technologies: encapsulated peptides derived from hpSC and specially discovered small molecules. LSC's products include:

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

Biomedical Market - Primary Human Cell Research Products

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

Results of Operations

Comparison of the Three Months Ended June 30, 2026 and 2025

The following table summarizes our results of operations for the three months ended June 30, 2026 and 2025 (in thousands, except percentages):

Product sales, net

Product sales for the three months ended June 30, 2026 were $2,675 thousand compared to $2,447 thousand for the three months ended June 30, 2025. This increase was driven by an increase in product sales from our biomedical market segment, including an increase of $410 thousand from our media product sales partially offset by a decrease in cells and other product sales of $189 thousand. The net increase in product sales from our biomedical market segment was augmented by a small increase in product sales from our skin care product line of approximately $7 thousand.

Cost of sales

Cost of sales for the three months ended June 30, 2026 were $1,217 thousand, compared to $927 thousand for the three months ended June 30, 2025. The increase of $290 thousand, or 31%, was primarily attributable to an increase of approximately $258 thousand in cost of sales from our biomedical market segment driven by an increase in product sales, combined with approximately $7 thousand net increase in manufacturing variances partially offset by decreased shipping costs. In addition, our skin care line saw a net increase of approximately $31 thousand in cost of sales. For the three months ended June 30, 2025, the LSC segment reported negative cost of sales of $1 thousand. This was primarily due to a $43 thousand decrease in inventory reserves, which exceeded other cost of sales components totaling $42 thousand. For the three months ended June 30, 2026, these inventory adjustments were only $13 thousand. The other cost of sales components were primarily related to costs of items sold and shipping.

Profit margins as a percentage of revenue have decreased approximately 7% for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. The net decrease in gross margins was a result of the normalization in profit margins related to our skin care market segment as compared to prior year. In addition, our biomedical market segment saw a decrease in gross margin of approximately 7% as a result of a change in the sales mix.

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

General and administrative expenses

General and administrative expenses for the three months ended June 30, 2026 were $1,062 thousand, compared to $905 thousand for the three months ended June 30, 2025. The increase of $157 thousand, or 17%, was primarily attributable to an increase in legal and consulting costs of approximately $159 thousand related to strategic activities (refer to Note 10 - Subsequent Events for further discussion) combined with an impairment charge of $111 thousand related to certain abandoned patents. These increases were partially offset by a decrease of approximately $36 thousand in insurance and filing fees, $63 thousand in audit and accounting costs, $6 thousand in personnel related costs, $4 thousand in depreciation and amortization, and $5 thousand in foreign currency adjustments.

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

Selling and marketing expenses

Selling and marketing expenses for the three months ended June 30, 2026 were $276 thousand, compared to $286 thousand for the three months ended June 30, 2025. The decrease of $10 thousand, or 3%, was primarily attributable to a decrease of approximately $20 thousand in personnel and consulting related costs partially offset by increases in bank fees of $4 thousand, dues and subscriptions and licenses of $3 thousand and website and advertising expense of $1 thousand.

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

Research and development expenses

Research and development expenses for the three months ended June 30, 2026 were $155 thousand, compared to $162 thousand for the three months ended June 30, 2025. The decrease of $7 thousand, or 4%, was primarily a result of a decrease of $28 thousand in consulting expenses, $32 thousand in personnel-related costs, and $4 thousand in material and supplies. These decreases were partially offset by a $52 thousand decrease in the Australian research and development tax credit and an increase in costs being paid for rent, lab expenses, and cell storage costs of approximately $4 thousand.

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

Other expense, net

Other expense for the three months ended June 30, 2026 and 2025 was $36 thousand and $38 thousand, respectively. Other expenses in both periods primarily relate to interest expense on our related party note payable. This decreased as a result of the paydown on principal in 2026.

Comparison of the Six Months Ended June 30, 2026 and 2025

The following table summarizes our results of operations for the six months ended June 30, 2026 and 2025 (in thousands, except percentages):

Product sales, net

Product sales for the six months ended June 30, 2026 were $4,990 thousand compared to $4,576 thousand for the six months ended June 30, 2025. This increase was driven by an increase in product sales from our biomedical market segment, including an increase of $445 thousand from our media product sales partially offset by a decrease in cells and other product sales of $49 thousand. The net increase in product sales from our biomedical market segment was augmented by a small increase in product sales from our skin care product line of approximately $18 thousand.

Cost of sales

Cost of sales for the six months ended June 30, 2026 were $2,171 thousand, compared to $1,919 thousand for the six months ended June 30, 2025. The increase of $252 thousand, or 13%, was due to an overall increase in product sales from our biomedical market segment slightly offset by a decrease in costs of sales in our skin care line despite the slight increase in sales for the period driven primarily by decreased inventory charges year over year.

Profit margins as a percentage of revenue have decreased approximately 2% for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. The net decrease in gross margins was as a result of an approximately 3% decrease from our biomedical market segment as a result of a change in the sales mix slightly offset by an increase in profit margins related to our skin care market segment due to less reserve and inventory adjustments.

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

General and administrative expenses

General and administrative expenses for the six months ended June 30, 2026 were $2,184 thousand, compared to $1,797 thousand for the six months ended June 30, 2025. The increase of $387 thousand, or 22%, was primarily attributable to increases in legal and consulting costs of approximately $384 thousand related to strategic activities (refer to Note 10 - Subsequent Events for further discussion) and $111 thousand related to the write off of certain abandoned patents. These increases were offset by decreases in audit and accounting fees of approximately $44 thousand, D&O insurance and filing fees of $59 thousand, foreign currency adjustments of $4 thousand, and personnel-related costs of $7 thousand.

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

Selling and marketing expenses

Selling and marketing expenses for the six months ended June 30, 2026 were $549 thousand, compared to $559 thousand for the six months ended June 30, 2025. The decrease of $10 thousand, or 2%, was primarily attributable to a decrease in temporary services of approximately $11 thousand and $6 thousand in consulting costs. These decreases were partially offset by a $6 thousand increase in bank fees.

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

Research and development expenses

Research and development expenses for the six months ended June 30, 2026 were $311 thousand, compared to $349 thousand for the six months ended June 30, 2025. The decrease of $38 thousand, or 11%, was a result of a decrease of $60 thousand in consulting fees combined with a $36 thousand decrease in personnel-related costs. These decreases were partially offset by increases in rent, general lab expenses, and cell storage fees of approximately $5 thousand combined with a change in the Australian research and development credit of $52 thousand.

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

Other expense, net

Other expense for the six months ended June 30, 2026 and 2025 was $66 thousand and $79 thousand, respectively. Other expenses in both periods primarily relate to interest expense on our related party note payable. This decrease is as a result of the principal pay down of $150 thousand on our related party note payable in February 2026 and $200 thousand in June of 2025.

Liquidity and Capital Resources

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

As of June 30, 2026, we had an accumulated deficit of approximately $111.4 million and have historically incurred net losses and negative operating cash flows. Substantially all of our operating losses have resulted from the funding of our research and development programs and general and administrative expenses associated with our operations. We incurred net losses of $291 thousand and $127 thousand for the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, we had cash of approximately $1.1 million, compared to $1.0 million as of December 31, 2025. Our primary use of cash is to continue to fund our research and development programs, while maintaining and growing our revenue generating businesses.

Cash Flows

Comparison of the Six Months Ended June 30, 2026 and 2025

The following table provides information regarding our cash flows for the six months ended June 30, 2026 and 2025 (in thousands):

Operating Cash Flows

For the six months ended June 30, 2026, net cash provided by operating activities was $288 thousand, resulting primarily from our net loss of $291 thousand and net changes in operating assets and liabilities of $26 thousand, consisting of increases in accounts payable of $142 thousand and accrued liabilities of $541 thousand. These increases were offset by an increase in accounts receivable of $236 thousand, inventories of $221 thousand, prepaid expenses and other current assets of $6 thousand and a decrease in operating lease liabilities of $194 thousand. In addition, there was a $553 thousand increase pertaining to non-cash adjustments consisting of recurring non-cash expenses, such as stock-based compensation, depreciation and amortization expense, non-cash operating lease expense, changes in inventory reserve and interest expense on our related party note payable.

For the six months ended June 30, 2025, net cash used in operating activities was $73 thousand, attributable to our net loss of $127 thousand and net changes in operating assets and liabilities of $496 thousand, offset by net recurring non-cash adjustments of $550 thousand.

Investing Cash Flows

Net cash used in investing activities for the six months ended June 30, 2026 was $42 thousand, compared to $37 thousand for the six months ended June 30, 2025. The increase was attributable to payments for patent licenses slightly offset by less purchases of property and equipment during the current period.

Financing Cash Flows

Net cash used in financing activities for the six months ended June 30, 2026 was $150 thousand, compared to $200 thousand for the six months ended June 30, 2025. The decrease was attributable to the paydown on the related party note in February 2026 versus June 2025.

Funding Requirements

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

Our failure to raise capital or enter into applicable arrangements when needed would have a negative impact on our financial condition. Additional debt financing may be expensive and require us to pledge all or a substantial portion of its assets. Further, if additional funds are obtained through arrangements with collaborative partners, these arrangements may require us to relinquish rights

to some of our technologies, product candidates, or products that we would otherwise seek to develop and commercialize on our own. If sufficient capital is not available, we may be required to delay, reduce the scope of, or eliminate one or more of our product initiatives.

We currently have no revenue generated from our principal operations in therapeutic product development through research and development efforts. There can be no assurance that we will be successful in maintaining our normal operating cash flow and obtaining additional funds and that the timing of our capital raising or future financing will result in cash flow sufficient to sustain our operations at least through one year after the issuance date.

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

Critical Accounting Estimates

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

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

There have been no material changes to our critical accounting policies and estimates during the six months ended June 30, 2026 from those disclosed in "Part II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K.

Recently Issued Accounting Pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 1 - Description of Business, Basis of Presentation, and Summary of Significant Accounting Policies to our condensed consolidated financial statements of this Quarterly Report on Form 10-Q.

Contractual Obligations and Commitments

There have been no material changes to our contractual obligations and commitments outside the ordinary course of business during the six months ended June 30, 2026 from those disclosed in "Part II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K.