The Company has incurred losses since its inception. The Company’s net loss was $5.4 million for the three months ended March 31, 2023, and it used $2.4 million of cash for operating activities for the three months ended March 31, 2023. The Company’s primary sources of liquidity are its cash and cash equivalents and funding from Cibus pursuant to the Interim Funding (as defined below), with additional liquidity accessible, subject to market conditions and other factors, including limitations that may apply to the Company under applicable SEC and Nasdaq Capital Market (Nasdaq) regulations, from the capital markets, including under the Open Market Sale Agreement with Jefferies LLC (as amended, the ATM Facility).

As of March 31, 2023, the Company had $2.1 million of cash and cash equivalents. As of March 31, 2023, current liabilities were $4.2 million.

Pursuant to the Agreement and Plan of Merger (the Merger Agreement) among the Company, Cibus and certain other parties thereto, the Company and Cibus agreed that beginning at the earlier of March 15, 2023, and the date Calyxt’s unrestricted cash balance first drops below $ million, Calyxt could request, and Cibus agreed to provide, an unsecured, interest-free revolving line of credit of up to $ million in cash, which amount may be increased to $ million if Cibus elects to extend the outside date (as defined in the Merger Agreement) to June 30, 2023 (the Interim Funding). Funds can be drawn by Calyxt in $ million increments and may only be used to fund operating expenses incurred in the ordinary course of business consistent with past practice and consistent with the negative covenants in the Merger Agreement. The full outstanding balance of the Interim Funding will be reduced to zero in connection with the closing of the Transactions, if consummated. The full outstanding balance of the Interim Funding will be forgiven by Cibus if the Merger Agreement is terminated for any reason other than under certain conditions, as detailed in the Merger Agreement. The Interim Funding is subject to acceleration in connection with certain bankruptcy events. As of March 31, 2023, the Company had received $ million of Interim Funding from Cibus.

 

On October 3, 2022, the Company entered into an amendment to the Open Market Sale Agreement with Jefferies for the ATM Facility that enables it, subject to the applicable baby shelf rules described below, to offer and sell up to 1,566,100 shares of its common stock. At its discretion, the Company determines the timing and number of shares to be issued under the ATM Facility. From January 1, 2023, through the date of this report, the Company has not issued any shares under the ATM Facility.

During the February 2022 Offering, the Company issued 388,000 shares of its common stock, Warrants to purchase up to 388,000 shares of its common stock, and Common Warrants to purchase up to 776,000 shares of its common stock in the Offering. In the aggregate, the Company received net proceeds of $10.0 million, after deducting approximately $0.9 million of underwriting discounts and estimated other offering expenses.

Although the Company has access to the ATM Facility, based on the Company’s public float as of the date of the filing of its Annual Report on Form the Company is only permitted to utilize a “shelf” registration statement for primary offerings, including the registration statement under which the ATM Facility is operated, subject to Instruction I.B.6 to Form which is referred to as the “baby shelf” rules. For so long as the Company’s public float is less than $75,000,000, it may not sell more than the equivalent of of its public float during any 12 consecutive months pursuant to the baby shelf rules. While alternative public and private transaction structures may be available, these may require additional time and cost, may result in substantial dilution to existing stockholders, particularly in light of the Company’s current stock price, may impose operational restrictions on the Company, and may not be available on attractive terms or at all. Accordingly, the Company continuously assesses market conditions and available financing alternatives.

The Company’s ability to continue as a going concern will depend on its ability to obtain additional public or private equity or debt financing, obtain government or private grants and other similar types of funding, to consummate the Transactions or an alternative strategic transaction, attain further operating efficiencies, reduce or contain expenditures, and, ultimately, to generate revenue.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above.

Management has implemented various cost reductions and other cash-focused measures to manage liquidity. If the Company is unable to raise additional capital in a sufficient amount or on acceptable terms or to consummate the Transactions or an alternative strategic transaction, the Company may have to implement increasingly stringent cost saving measures and significantly delay, scale back, or cease operations, in part or in full. If the Company raises additional funds through the issuance of additional debt or equity securities, including as part of a strategic alternative, it could result in substantial dilution to its existing stockholders and increased fixed payment obligations, and these securities may have rights senior to those of the Company’s shares of common stock. Any of these events could significantly harm the Company’s business, financial condition, and prospects.