UNITEDSTATES
SECURITIESAND EXCHANGE COMMISSION
Washington,D.C. 20549
FORM
(MarkOne)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Forthe quarterly period ended
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Forthe transition period from to
CommissionFile Number:
(Exactname of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
(Registrant’stelephone number, including area code)
Securitiesregistered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common Stock at an exercise price of $115 per share |
Indicateby check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities ExchangeAct 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.
Indicateby check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrantwas required to submit such files).
Indicateby check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company,or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smallerreporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
| ☒ | Smaller reporting company | |||||
| Emerging growth company |
Ifan emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complyingwith any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicateby check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Asof August 30, 2025, the registrant had shares of Class A common stock, $ par value per share, outstanding.
Tableof Contents
Unlessthe context indicates otherwise, references in this quarterly report to the “Company,” “Celularity,” “we,”“us,” “our” and similar terms refer to Celularity Inc. and its consolidated subsidiaries.
TheCelularity logo, Celularity IMPACT, Biovance, Interfyl, Lifebank, CentaFlex and other trademarks or service marks of Celularity Inc.appearing in this quarterly report are the property of Celularity Inc. This quarterly report on Form 10-Q also contains registered marks,trademarks and trade names of other companies. All other trademarks, registered marks and trade names appearing herein are the propertyof their respective holders.
| i |
SPECIALNOTE REGARDING FORWARD-LOOKING STATEMENTS
Someof the statements contained in this quarterly report on Form 10-Q, including the section entitled “Management’s Discussionand Analysis of Financial Condition and Results of Operations,” constitute forward-looking statements within the meaning of Section27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, or theExchange Act. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated eventsor trends and similar expressions concerning matters that are not historical facts. These statements relate to our future events, includingour anticipated operations, research, development and commercialization activities, clinical trials, operating results and financialcondition. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actualresults, performance or achievements, to be materially different from any future results, performances or achievements expressed or impliedby the forward-looking statements. Forward-looking statements may include, but are not limited to, express or implied statements about:
| ● | the success, cost, timing and potential indications of our cellular therapy candidate development activities and clinical trials, as well as our ability to expand our biomaterials business and leverage our core expertise in cellular therapeutic development and manufacturing to generate revenues by providing contract manufacturing and development services to third parties; |
| ● | the size of the markets for our therapeutic candidates and biomaterials products, and our ability to serve those markets; |
| ● | timing of the initiation, enrollment and completion of any potential clinical trials in the United States and foreign countries; |
| ● | our ability to obtain and maintain regulatory approval of our therapeutic candidates in any of the indications for which we plan to develop them, and any related restrictions, limitations, and/or warnings in the label of any approved therapeutic; |
| ● | our ability to regain compliance with Nasdaq’s continued listing standards; |
| ● | our ability to obtain funding for our operations, including funding necessary to complete the clinical trials of any of our therapeutic candidates; |
| ● | our ability and plans to research, develop, manufacture and commercialize our therapeutic candidates, as well as our degenerative disease products; |
| ● | our ability to attract and retain collaborators with development, regulatory and commercialization expertise; |
| ● | our ability to successfully commercialize our therapeutic candidates and biomaterials products; |
| ● | our ability to develop and maintain sales and marketing capabilities, whether alone or with potential future collaborators; |
| ● | our expenses, future revenues, capital requirements and needs for additional financing; |
| ● | our use of cash and other resources; and |
| ● | our expectations regarding our ability to obtain and maintain intellectual property protection for our therapeutic candidates, degenerative disease products, and our ability to operate our business without infringing on the intellectual property rights of others. |
Theseforward-looking statements are based on information available as of the date of this quarterly report, and current expectations, forecastsand assumptions, and involve a number of risks and uncertainties that could cause our actual results, performance or achievements tobe materially different from any future results, performances or achievements expressed or implied by the forward-looking statements.Some factors that could cause actual results to differ include:
| ● | We have incurred net losses in every period since our inception, have no cellular therapeutic candidates approved for commercial sale and we anticipate that we will incur substantial net losses in the future. There is substantial doubt about our ability to continue as a going concern, which may affect our ability to obtain future financing and may require us to curtail our operations. We will need to raise additional capital to support our operations. This additional funding may not be available on acceptable terms or at all. Failure to obtain this necessary capital or address our liquidity needs may force us to delay, limit or terminate our operations, make further reductions in our workforce, discontinue our commercialization efforts for our biomaterials products as well as other clinical trial programs, liquidate all or a portion of our assets or pursue other strategic alternatives, and/or seek protection under the provisions of the U.S. Bankruptcy Code. |
| ● | If sales of our currently commercialized biomaterial products decline significantly and we do not have alternative products to market, our business would be significantly harmed. |
| ● | Our placental-derived cellular therapy candidates represent a novel approach to cancer, infectious and degenerative disease treatments that create significant challenges. |
| ii |
| ● | If we are unable to obtain regulatory approval for our lead candidates and effectively commercialize our lead therapeutic candidates for the treatment of patients in approved indications, our business would be significantly harmed. |
| ● | We rely on distribution arrangements for the sale of our biomaterials products. We may incur costs to meet demand forecasts that do not materialize, or we may be unable to meet demand if our distribution partners do not provide adequate forecasts. |
| ● | Our commercial biomaterials business may be impacted if regulatory authorities determine that certain of our products that are, or are derived from, human cells or tissues do not qualify for reimbursement. For example, during 2022, the Center for Medicare & Medicaid Services, or CMS, began rejecting claims for Interfyl submitted by one of our distribution partners which has not yet been resolved. |
| ● | We will continue to rely on third parties to conduct potential future clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may not be able to obtain regulatory approval of, or commercialize, our therapeutic candidates. |
| ● | The U.S. Food and Drug Administration, or FDA, regulatory approval process is lengthy and time-consuming, and we may experience significant delays in the clinical development and regulatory processes of our therapeutic candidates. |
| ● | We may not be able to file Investigational New Drug, or IND, applications to commence additional clinical trials on the timelines we expect, and even if we are able to, the FDA may not permit us to proceed without additional information or at all, and if so, we may encounter substantial delays in our clinical trials or may not be able to conduct our trials on the timelines we expect. |
| ● | We operate our own manufacturing and storage facility, which requires significant resources; manufacturing or other failures could adversely affect our clinical trials and the commercial viability of our therapeutic candidates and our biobanking and degenerative diseases businesses. We may not be successful in our plan to leverage our core expertise in cellular therapeutic development and manufacturing to generate revenues by providing contract manufacturing and development services to third parties. |
| ● | We rely on donors of healthy human full-term post-partum placentas to manufacture our therapeutic candidates and biomaterials products, and if we do not obtain an adequate supply of such placentas from qualified donors, development of our placental-derived allogeneic cells may be adversely impacted. |
| ● | Our potential future clinical trials may fail to demonstrate the safety and/or efficacy of any of our therapeutic candidates, which would prevent or delay regulatory approval and commercialization. |
| ● | If our efforts to protect the proprietary nature of the intellectual property related to our technologies are inadequate, we may not be able to compete effectively in our market. |
| ● | We are, and in the future may be, party to agreements with third parties. Disputes may arise with such third parties regarding the terms of such agreements, including terms governing payment obligations, contractual interpretation, or related intellectual property ownership or use rights, which could materially adversely impact us, including by requiring the payment of additional amounts, or requiring us to invest time and money in litigation or arbitration. |
| ● | Our therapeutic candidates may cause undesirable side effects or have other properties that could halt their clinical development, prevent their regulatory approval, limit their commercial potential or result in significant negative consequences. |
| ● | We face significant competition from other biotechnology and pharmaceutical companies, and our operating results will suffer if we fail to compete effectively. |
| ● | Our relationship with customers, physicians, and third-party payors are subject to numerous laws and regulations. If we or our employees, independent contractors, consultants, commercial partners and vendors violate these laws, we could face substantial penalties. |
| ● | Our business could be materially adversely affected by the effects of health pandemics or epidemics, as well as geopolitical conflicts, inflation, bank failures and recessions, in regions where we or third parties on which we rely have concentrations of clinical trial sites or other business operations. |
| ● | We will continue to incur significant costs as a result of operating as a public company, and our management will be required to devote substantial time to various compliance initiatives. |
Fora further discussion of these and other factors that could cause our future results, performance or transactions to differ significantlyfrom those expressed in any forward-looking statement, please see the section titled “Risk Factors” in our annual reporton Form 10-K filed with the Securities and Exchange Commission on May 9, 2025, or the “2024 Form 10-K.” Given these risks,you should not place undue reliance on any forward-looking statements, which are based only on information currently available to us(or to third parties making the forward-looking statements). While forward-looking statements reflect our good faith beliefs, they arenot guarantees of future performance. Except to the extent required by applicable law, we are under no obligation (and expressly disclaimany such obligation) to update or revise their forward-looking statements whether as a result of new information, future events, or otherwise.
| iii |
PARTI—FINANCIAL INFORMATION
Item1. Financial Statements.
CelularityInc.
UnauditedCondensed Consolidated Balance Sheets
(Inthousands, except share and per share amounts)
| March 31, 2025 | December 31, 2024 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net of allowance of $ | ||||||||
| Inventory | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Noncurrent assets: | ||||||||
| Property and equipment, net | ||||||||
| Goodwill | ||||||||
| Intangible assets, net | ||||||||
| Right-of-use assets - operating leases | ||||||||
| Restricted cash | ||||||||
| Inventory, net of current portion | ||||||||
| Other noncurrent assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ (Deficit) Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses and other current liabilities | ||||||||
| Acquisition-related contingent consideration | ||||||||
| Short-term debt - unaffiliated | ||||||||
| Short-term debt - related parties | ||||||||
| Deferred revenue | ||||||||
| Total current liabilities | ||||||||
| Noncurrent liabilities: | ||||||||
| Deferred revenue, net of current portion | ||||||||
| Acquisition-related contingent consideration, net of current portion | ||||||||
| Long-term debt - related parties | ||||||||
| Long-term lease liabilities | ||||||||
| Warrant liabilities | ||||||||
| Deferred income tax liabilities | ||||||||
| Other liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and Contingencies (Note 12) | ||||||||
| Stockholders’ (deficit) equity: | ||||||||
| Preferred stock, $ par value, shares authorized, issued and outstanding as of March 31, 2025 and December 31, 2024, respectively | ||||||||
| Common stock, $ par value, shares authorized, and issued and outstanding as of March 31, 2025 and December 31, 2024, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ||||||
| Total stockholders’ (deficit) equity | ( | ) | ||||||
| Total liabilities and stockholders’ (deficit) equity | $ | $ | ||||||
Theaccompanying notes are an integral part of these condensed consolidated financial statements.
| 1 |
CelularityInc.
CondensedConsolidated Statements of Operations and Comprehensive Loss (Unaudited)
(Inthousands, except share and per share amounts)
| March 31, 2025 | March 31, 2024 | |||||||
| Net revenues | ||||||||
| Product sales | $ | $ | ||||||
| Services | ||||||||
| License, royalty and other | ||||||||
| Total revenues | ||||||||
| Operating expenses | ||||||||
| Cost of revenues (excluding amortization of acquired intangible assets) | ||||||||
| Product sales | ||||||||
| Services | ||||||||
| License, royalty and other | ||||||||
| Research and development | ||||||||
| Selling, general and administrative | ||||||||
| Amortization of acquired intangible assets | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | $ | ( | ) | $ | ( | ) | ||
| Other income (expense): | ||||||||
| Interest income | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Change in fair value of warrant liabilities | ( | ) | ||||||
| Change in fair value of debt | ( | ) | ||||||
| Loss on debt extinguishment | ( | ) | ( | ) | ||||
| Other expense, net | ( | ) | ( | ) | ||||
| Total other expense | ( | ) | ( | ) | ||||
| Loss before income taxes | ( | ) | ( | ) | ||||
| Income tax expense (benefit) | ||||||||
| Net loss | $ | ( | ) | ( | ) | |||
| Other comprehensive loss | ||||||||
| Change in fair value of debt due to change in credit risk, net of tax | ||||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | ||
| Deemed dividend relating to inducement of Dragasac warrants | ( | ) | ||||||
| Net loss attributable to common shareholders | ( | ) | ( | ) | ||||
| Per share information: | ||||||||
| Net loss per share – basic and diluted | $ | ) | $ | ) | ||||
| Weighted average shares outstanding – basic and diluted | ||||||||
Theaccompanying notes are an integral part of these condensed consolidated financial statements.
| 2 |
CelularityInc.
CondensedConsolidated Statements of Changes In Stockholders’ (Deficit) Equity (Unaudited)
(Inthousands, except share amounts)
| Common Stock | Additional Paid—in | Accumulated | Accumulated Other Comprehensive | Total (Deficit) | ||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Income (Loss) | Equity | |||||||||||||||||||
| Balances at January 1, 2024 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Issuance of common stock to Yorkville for debt extension and SEPA commitment fee | ||||||||||||||||||||||||
| Issuance and modification of warrants to RWI and C.V. Starr | — | |||||||||||||||||||||||
| Issuance of common stock and warrants in PIPE Offering, net of offering expenses | ||||||||||||||||||||||||
| Vesting of restricted stock units | ||||||||||||||||||||||||
| Tax withholding on vesting of restricted stock units | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Issuance of common stock to Palantir as consideration for settlement agreement | ||||||||||||||||||||||||
| Retirement of shares in connection with reverse stock split | ( | ) | ||||||||||||||||||||||
| Stock-based compensation expense | — | |||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||
| Balances at March 31, 2024 | ( | ) | ||||||||||||||||||||||
| Balances at January 1, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Tax withholding on vesting of restricted stock units | — | ( | ) | ( | ) | |||||||||||||||||||
| Vesting of restricted stock units | ||||||||||||||||||||||||
| Issuance of common stock to Dragasac in connection with warrant repricing | ||||||||||||||||||||||||
| Dragasac warrant inducement | — | ( | ) | |||||||||||||||||||||
| Issuance of common stock consideration shares to Yorkville in connection with Side Letter | ||||||||||||||||||||||||
| Issuance of common stock in connection with settlement of debt | ||||||||||||||||||||||||
| Issuance and modification of warrants to C. V. Starr | — | |||||||||||||||||||||||
| Changes in fair value of debt | — | |||||||||||||||||||||||
| Stock-based compensation expense | — | |||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||
| Balances at March 31, 2025 | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||
Theaccompanying notes are an integral part of these condensed consolidated financial statements.
| 3 |
CelularityInc.
CondensedConsolidated Statements of Cash Flows (Unaudited)
(inthousands)
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash flow from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operations: | ||||||||
| Depreciation and amortization | ||||||||
| Non cash lease expense | ||||||||
| Provision for inventory obsolescence | ( | ) | ( | ) | ||||
| Provision for credit losses | ( | ) | ||||||
| Change in fair value of warrant liabilities | ( | ) | ||||||
| Loss on issuance of common stock to Yorkville in connection with the Side Letter | ||||||||
| Loss on issuance of common stock in connection with the settlement of debt | ||||||||
| Stock-based compensation expense | ||||||||
| Issuance of common stock to Palantir as consideration for settlement agreement | ||||||||
| Issuance of common stock relating to Yorkville for debt extension and SEPA commitment fee | ||||||||
| Loss on extinguishment of debt | ||||||||
| Change in fair value of debt | ( | ) | ||||||
| Non cash interest expense | ||||||||
| Other, net | ||||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Inventory | ||||||||
| Prepaid expenses and other assets | ||||||||
| Accounts payable | ( | ) | ||||||
| Accrued expenses and other liabilities | ||||||||
| Accrued R&D software | ( | ) | ||||||
| Lease liabilities — operating | ||||||||
| Deferred revenue | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flow from investing activities: | ||||||||
| Capital expenditures | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| Cash flow from financing activities: | ||||||||
| Proceeds from warrants and short-term debt — related parties | ||||||||
| Proceeds from issuance of common stock in connection with a warrant inducement | ||||||||
| Repayments of short-term debt — unaffiliated | ( | ) | ||||||
| Proceeds from issuance of short-term debt — unaffiliated | ||||||||
| Payment of SEPA commitment fee | ( | ) | ||||||
| Repayments of short-term debt — related parties | ( | ) | ( | ) | ||||
| Proceeds from PIPE Offering, net of offering costs | ||||||||
| Tax withholding on vesting of restricted stock units | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
| Net (decrease) increase in cash, cash equivalents and restricted cash | ( | ) | ||||||
| Cash, cash equivalents and restricted cash at beginning of period | ||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| Supplemental non-cash investing and financing activities: | ||||||||
| Property and equipment included in accounts payable and accrued expenses | $ | $ | ( | ) | ||||
| Contingent consideration reclassified to accrued expenses and other current liabilities | $ | $ | ||||||
| Deemed dividend relating to inducement of Dragasac warrants | $ | $ | ||||||
| Issuance and modification of C.V. Starr warrants in connection with forbearance | $ | $ | ||||||
| Issuance of RWI warrants in connection with forbearance | $ | $ | ||||||
Theaccompanying notes are an integral part of these condensed consolidated financial statements.
| 4 |
CelularityInc.
Notesto Unaudited Condensed Consolidated Financial Statements
(inthousands, except share and per share amounts)
1.Nature of Business
CelularityInc., (“Celularity” or the “Company”), formerly known as GX Acquisition Corp. (“GX”), was a blank checkcompany incorporated in Delaware on
OnJuly 16, 2021 (the “Closing Date”), the Company consummated the previously announced merger pursuant to the MergerAgreement and Plan of Reorganization, dated January 8, 2021 (the “Merger Agreement”), by and among GX, Alpha FirstMerger Sub, Inc., a Delaware corporation and a direct, wholly owned subsidiary of GX, various merger entities, and the entityformerly known as Celularity Inc., incorporated under the laws of the state of Delaware on August 29, 2016 (“LegacyCelularity”). Upon completion of the merger transaction, GX changed its name to Celularity Inc.
Descriptionof Business
Celularityis a cell therapy and regenerative medicine company focused on addressing aging related diseases including cancer and degenerative diseases.Celularity is headquartered in Florham Park, NJ. Legacy Celularity acquired Anthrogenesis Corporation (“Anthrogenesis”) inAugust 2017 from Celgene Corporation (“Celgene”), a global biotechnology company that merged with Bristol Myers Squibb Company.Previously, Anthrogenesis operated as Celgene Cellular Therapeutics, Celgene’s cell therapy division.
TheCompany is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limitedto, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliancewith governmental regulations and the ability to secure additional capital to fund operations. Drug candidates currently under developmentwill require significant additional approval prior to commercialization, including extensive preclinical and clinical testing and regulatoryapproval. These efforts require significant amounts of additional capital, adequate personnel, and infrastructure and extensive compliance-reportingcapabilities. Even if the Company’s drug development efforts are successful, it is uncertain when, if ever, the Company will realizesignificant revenue from cellular therapy product sales.
GoingConcern
TheCompany has evaluated whether there are certain conditions and events, considered in the aggregate, which raise substantial doubt aboutthe Company’s ability to continue as a going concern within one year after the date that the condensed consolidated financial statementsare issued.
Asan emerging clinical-stage biotechnology company, Celularity is subject to certain inherent risks and uncertainties associated with thedevelopment of an enterprise. In this regard, since the Company’s inception, substantially all of management’s efforts havebeen devoted to making investments in research and development including basic scientific research into placentally-derived allogeneiccells, pre-clinical studies to support its current and future clinical programs in cellular therapeutics, and clinical development ofits cell programs as well as facilities and selling, general and administrative expenses that support its core business operations (collectively,the “investments”), all at the expense of the Company’s short-term profitability. The Company has historically fundedthese investments through limited revenues generated from its biobanking and degenerative disease businesses and issuances of equityand debt securities to public and private investors (these issuances are collectively referred to as “outside capital”). Notwithstandingthese efforts, management can provide no assurance that the Company’s research and development and commercialization efforts willbe successfully completed, or that adequate protection of the Company’s intellectual property will be adequately maintained. Evenif these efforts are successful, it is uncertain when, if ever, the Company will generate significant sales or operate in a profitablemanner to sustain the Company’s operations without needing to continue to rely on outside capital.
Asof the date the accompanying condensed consolidated financial statements were issued, or the issuance date, management evaluated thesignificance of the following adverse conditions and events in considering its ability to continue as a going concern:
| ● | Sinceits inception, the Company has incurred significant operating losses and net cash used in operating activities. For the three monthsended March 31, 2025, the Company incurred an operating loss of $ | |
| ● | The Company expects to incur substantial expenditures to fund its investments for the foreseeable future. In order to fund these investments, the Company will need to secure additional sources of outside capital. While the Company is actively seeking to secure additional outside capital (and has historically been able to successfully secure such capital), as of the issuance date, additional outside capital sufficient to fund operations for the next 12 months has not been secured or was deemed probable of being secured. In addition, management can provide no assurance that the Company will be able to secure additional outside capital in the future or on terms that are acceptable to the Company. Absent the ability to secure additional outside capital in the very near term, the Company will be unable to meet its obligations as they become due over the next 12 months beyond the issuance date. |
| 5 |
| ● | Asof the issuance date, the Company had approximately $ |
| ● | On May 28, 2025, the Company received notice from the Listing Qualifications Staff of Nasdaq (the “Notice’) that as a result of the Company’s failure to timely file this quarterly report on Form 10-Q, it no longer complied with the continued listing requirements under the timely filing criteria outlined in Nasdaq Listing Rule 5250(c)(1). Pursuant to Listing Rule 5810(d)(2), this delinquency serves as basis for delisting the Company’s common stock from trading. On August 1, 2025, the Company submitted its plan to Nasdaq to regain compliance with Nasdaq Listing Rule 5250(c)(1). Under its plan, the Company requested an extension of 180 days from the date of the Notice to implement the plan. On August 11, 2025, Nasdaq notified us of its decision to grant the Company an exception to enable it to regain compliance with Nasdaq Listing Rule 5250(c)(1). Under the terms of the exception, the Company has until August 31, 2025, to file the Form 10-Q for the periods ended March 31, 2025, and June 30, 2025. In the event the Company does not satisfy the terms of the exception, Nasdaq will provide written notification that the Company’s securities will be delisted. At that time, the Company may appeal Nasdaq’s determination to a Hearings Panel. There can be no assurance that the Company will maintain compliance with the Nasdaq listing requirements. If the Company is unable to regain compliance, the Company’s securities will be delisted from Nasdaq, which such delisting could have a materially adverse effect on the Company’s ability to continue as a going concern. |
| ● | In the event the Company is unable to secure additional outside capital to fund the Company’s obligations when they become due over the next 12 months beyond the issuance date, which includes the funds needed to repay the Company’s outstanding debt, management will be required to seek other strategic alternatives, which may include, among others, a significant curtailment of the Company’s operations, a sale of certain of the Company’s assets, a sale of the entire Company to strategic or financial investors, and/or allowing the Company to become insolvent by filing for bankruptcy protection under the provisions of the U.S. Bankruptcy Code. |
Theseuncertainties raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying condensed consolidatedfinancial statements have been prepared on the basis that the Company will continue to operate as a going concern, which contemplatesthat the Company will be able to realize assets and settle liabilities and commitments in the normal course of business for the foreseeablefuture. Accordingly, the accompanying condensed consolidated financial statements do not include any adjustments that may result fromthe outcome of these uncertainties.
2.Summary of Significant Accounting Policies
Basisof Presentation
TheCompany’s unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generallyaccepted in the United States (“GAAP”). The unaudited condensed consolidated financial statements include the accounts ofwholly owned subsidiaries, after elimination of intercompany accounts and transactions. The unaudited condensed consolidated financialinformation presented herein reflects all financial information that, in the opinion of management, is necessary for a fair statementof consolidated financial position, results of operations and cash flows for the periods presented.
TheCompany’s condensed consolidated financial statements are prepared in accordance with the U.S. Securities and Exchange Commission’s(“SEC”) rules for the presentation of interim financial statements, which permit certain disclosures to be condensed or omitted.These financial statements should be read in conjunction with the Company’s annual financial statements as of and for the yearended December 31, 2024 included in the Annual Report on Form 10-K filed with the SEC on May 8, 2025, (the “2024 Form 10-K”).
Inthe opinion of management, the accompanying interim financial statements include all normal and recurring adjustments (which consistprimarily of accruals, estimates and assumptions that impact the financial statements) considered necessary to present fairly the Company’sconsolidated financial position as of March 31, 2025, and its consolidated results of operations and cash flows for the three monthsended March 31, 2025 and 2024. Operating results for the three ended March 31, 2025, are not necessarily indicative of theresults that may be expected for the year ending December 31, 2025.
Useof Estimates
Thepreparation of the Company’s condensed consolidated financial statements in accordance with GAAP requires management to make estimatesand assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at thedate of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period.Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to,assumptions related to the Company’s goodwill and intangible asset impairment assessments, determination of incremental borrowingrates, accrual of research and development expenses, and the valuations of inventory, contingent consideration, short-term debt, stockoptions and stock warrants. The Company based its estimates on historical experience, known trends and other market-specific or otherrelevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates whenthere are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known.Actual results could differ from those estimates.
| 6 |
FairValue Measurements
Certainassets and liabilities of the Company are carried at fair value under GAAP. Fair value is defined as the exchange price that would bereceived for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liabilityin an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximizethe use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value areto be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are consideredobservable and the last is considered unobservable:
| ● | Level 1 —Quoted prices in active markets for identical assets or liabilities. |
| ● | Level 2 —Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quotedprices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroboratedby observable market data. |
| ● | Level 3 —Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assetsor liabilities, including pricing models, discounted cash flow methodologies and similar techniques. |
ComprehensiveIncome (Loss)
Comprehensiveincome (loss) refers to revenues, expenses, gains and losses that under GAAP are included in comprehensive income (loss) but are excludedfrom net income (loss) as these amounts are recorded directly as an adjustment to accumulated other comprehensive income (loss). TheCompany’s only component of other comprehensive income (loss) is comprised of the portion of the total change in fair value ofindebtedness accounted for under the fair value option that is attributable to changes in instrument-specific credit risk. During thethree months ended March 31, 2025, the Company recorded instrument-specific credit risk loss of $
IncomeTaxes
TheCompany accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilitiesfor the expected future tax consequences of events that have been recognized in the condensed consolidated financial statements or inthe Company’s tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statementand tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood thatits deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of availableevidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowanceis established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by estimating the futuretaxable profits expected and considering prudent and feasible tax planning strategies. Income tax expense was $ during the three monthsended March 31, 2025 and 2024.
Basicnet income (loss) per share of common stock is computed by dividing net income (loss) by the weighted-average number of shares of commonstock outstanding during each period. Diluted net income (loss) per share of common stock includes the effect, if any, from the potentialexercise or conversion of securities, such as redeemable convertible preferred stock, convertible debt, stock options, restricted stockunits and warrants, which would result in the issuance of incremental shares of common stock. However, potential common shares are excludedif their effect is anti-dilutive. For diluted net loss per share when the Company has a net loss, the weighted-average number of sharesof common stock is the same for basic net loss per share due to the fact that when a net loss exists, dilutive securities are not includedin the calculation as the impact is anti-dilutive. All warrants are participating securities, as they participate on a one-for-one basiswith Class A common stock in the distribution of dividends, if and when declared by the Board of Directors. For the purposes of computingearnings per share, the warrants are considered to participate with Class A common stock in earnings of the Company. Therefore, the Companycomputes earnings per share using the two-class method, an earnings allocation method that determines net income (loss) per share (whenthere are earnings) for common stock and participating securities. No loss was allocated to the warrants for the three months endingMarch 31, 2025 and 2024, as results of operations were a loss for both periods.
| 7 |
| For the Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Stock options | ||||||||
| Restricted stock units | ||||||||
| Warrants | ||||||||
| Convertible debt | ||||||||
SegmentInformation
Operatingsegments are defined as components of an enterprise about which separate discrete financial information is available for evaluation bythe chief operating decision maker, or decision-making group, in deciding how to allocate resources in assessing performance. The Companymanages its operations through an evaluation of three distinct businesses segments: Cell Therapy, Degenerative Disease and BioBanking.These segments are presented for the three months ended March 31, 2025 and 2024 in Note 17.
Allowancefor Credit Losses
TheCompany recognizes credit losses based on forward-looking current expected credit losses. The Company makes estimates of expected creditlosses based upon its assessment of various factors, including historical collection experience, the age of accounts receivable balances,credit quality of its customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, andother factors that may affect its ability to collect from customers.
Concentrationsof Credit Risk and Significant Customers
Financialinstruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents and restrictedcash, and accounts receivable. The Company generally maintains balances in various operating accounts at financial institutions thatmanagement believes to be of high credit quality, in amounts that may exceed federally insured limits. The Company has not experiencedany losses related to its cash and cash equivalents or restricted cash and does not believe that it is subject to unusual credit riskbeyond the normal credit risk associated with commercial banking relationships.
TheCompany is subject to credit risk from trade accounts receivable related to both degenerative disease product sales and biobanking services.All trade accounts receivables are a result from product sales and services performed in the United States. As of March 31, 2025, threeof the Company’s customers, each of which individually comprised at least 10%, represented an aggregate
RecentlyIssued Accounting Pronouncements
InDecember 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands the disclosuresrequired for income taxes. This ASU is effective for fiscal years beginning after December 15, 2024. The amendment should be appliedon a prospective basis while retrospective application is permitted. The Company is currently evaluating the effect of this pronouncementon its consolidated financial statement disclosures.
InNovember 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures(Subtopic 220-40): Disaggregation of Income Statement Expenses, as subsequently amended by ASU 2025-01 to clarify the effective date,which is intended to provide more detailed information about specified categories of expenses (purchases of inventory, employee compensation,depreciation and amortization) included in certain expense captions presented on the consolidated statement of operations and comprehensiveloss. The guidance in this ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal yearsbeginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either (1) prospectively to financial statementsissued for periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the consolidated financialstatements. The Company is currently evaluating the effect of this pronouncement on its consolidated financial statements and footnotedisclosures.
| 8 |
OnJuly 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (“OBBBA”). The legislation has multipleeffective dates, with certain provisions effective in 2025 and others implemented through 2027. The OBBBA makes permanent key elementsof the Tax Cuts and Jobs Act, including 100% bonus depreciation, immediate expensing of research & development expenditures, andthe business interest expense limitation. ASC 740, “Income Taxes”, requires the effects of changes in tax rates andlaws on deferred tax balances to be recognized in the period in which the legislation is enacted. Consequently, as of the dateof enactment, and during the nine-months ended September 30, 2025, the Company will evaluate all deferred tax balances under the newlyenacted tax law and identify any other changes required to its financial statements as a result of the OBBBA. The Company is stillevaluating the impact of the OBBBA and the results of such evaluations will be reflected on the Company’s Form 10-Q for the quarterended September 30, 2025.
3.Asset Acquisition
OnOctober 9, 2024, the Company entered into an asset purchase agreement with Sequence LifeScience, Inc. (“Sequence”) to acquireSequence’s Rebound™ full thickness placental-derived allograft matrix product and certain related intangible assets. Reboundadds to the Company’s portfolio of placental-derived advanced biomaterial products. The Company will pay aggregate considerationfor the assets of up to $
Concurrentlywith the execution of the asset purchase agreement, the Company entered into an exclusive supply agreement with Sequence for the manufactureand supply of Rebound for a minimum period of six months. The Company retains the right to manufacture Rebound internally and intendsto commence a technology transfer as soon as practicable.
TheCompany determined that this transaction represented an asset acquisition in accordance with ASC 805, Business Combinations, becausethe acquired assets did not meet the definition of a business. As noted above, the purchase price consists of $
Thepurchase price was allocated to the acquired assets as follows:
| Consideration: | ||||
| Cash payment | $ | |||
| Contingent consideration | ||||
| Total consideration | $ | |||
| Assets acquired: | ||||
| Inventory | $ | |||
| Total assets acquired | $ |
4.Fair Value of Financial Assets and Liabilities
Thefollowing tables present information about the Company’s financial assets and liabilities measured at fair value on a recurringbasis and indicate the level of the fair value hierarchy used to determine such fair values:
| Fair Value Measurements as of March 31, 2025 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Liabilities: | ||||||||||||||||
| Acquisition-related contingent consideration obligations | $ | $ | $ | $ | ||||||||||||
| Contingent stock consideration | ||||||||||||||||
| Short-term debt - Yorkville convertible note | ||||||||||||||||
| Short-term debt - unsecured senior convertible notes | ||||||||||||||||
| Warrant liability – Purchaser | ||||||||||||||||
| Warrant liability – Purchase Agent | ||||||||||||||||
| Warrant liability – RWI Bridge Warrants | ||||||||||||||||
| Warrant liability - July 2023 Registered Direct Warrants | ||||||||||||||||
| Warrant liability - April 2023 Registered Direct Warrants | ||||||||||||||||
| Warrant liability - May 2022 PIPE Warrants | ||||||||||||||||
| Warrant liability - Sponsor Warrants | ||||||||||||||||
| Warrant liability - Public Warrants | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| 9 |
| Fair Value Measurements as of December 31, 2024 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Liabilities: | ||||||||||||||||
| Acquisition-related contingent consideration obligations | $ | $ | $ | $ | ||||||||||||
| Contingent stock consideration | ||||||||||||||||
| Short-term debt – Yorkville convertible note | ||||||||||||||||
| Short-term debt - unsecured senior convertible notes | ||||||||||||||||
| Warrant liability - July 2023 Registered Direct Warrants | ||||||||||||||||
| Warrant liability - April 2023 Registered Direct Warrants | ||||||||||||||||
| Warrant liability - May 2022 PIPE Warrants | ||||||||||||||||
| Warrant liability - November 2024 Purchaser Warrants | ||||||||||||||||
| Warrant liability - November 2024 Placement Agent Warrants | ||||||||||||||||
| Warrant liability - Sponsor Warrants | ||||||||||||||||
| Warrant liability - Public Warrants | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
Duringthe three months ending March 31, 2025, and 2024, there were no transfers between Level 1, Level 2 and Level 3.
Thecarrying values of other current liabilities approximate fair value in the accompanying condensed consolidated financial statements dueto the short-term nature of those instruments.
Valuationof Contingent Consideration
Thefair value measurement of the contingent consideration obligations is determined using Level 3 inputs and is based on a probability-weightedincome approach. The measurement is based upon unobservable inputs supported by little or no market activity based on the Company’sown assumptions.
Thefollowing table presents a reconciliation of contingent consideration obligations measured on a recurring basis using Level 3 inputsfor the periods ended March 31, 2025 and December 31, 2024:
| Balance as of January 1, 2025 | Net transfers in to (out of) Level 3 | Purchases, settlements and other net | Fair value adjustments | Balance as of March 31, 2025 | ||||||||||||||||
| Liabilities: | ||||||||||||||||||||
| Acquisition-related contingent consideration obligations | $ | $ | $ | $ | $ | |||||||||||||||
Balance as of January 1, 2024 | Net transfers in to (out of) Level 3 | Purchases, settlements and other net | Fair value adjustments | Balance as of December 31, 2024 | ||||||||||||||||
| Liabilities: | ||||||||||||||||||||
| Acquisition-related contingent consideration obligations | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
Thefair value of the liability to make potential future milestone and earn-out payments was estimated by the Company at each reporting datebased, in part, on the results of a third-party valuation using a discounted cash flow analysis based on various assumptions, includingthe probability of achieving specified events, discount rates, and the period of time until earn-out payments are payable and the conditionstriggering the milestone payments are met. The actual settlement of contingent consideration could differ from current estimates basedon the actual occurrence of these specified events.
| 10 |
Ateach reporting date, the Company revalues the contingent consideration obligation to estimated fair value and records changes in fairvalue as income or expense in the Company’s consolidated statements of operations and comprehensive loss. Changes in the fair valueof the contingent consideration obligations may result from changes in discount periods and rates, changes in the timing and amount ofrevenue estimates and changes in probability assumptions with respect to the likelihood of achieving the various contingent considerationobligations. The Company has classified the contingent consideration as a long-term liability in the condensed consolidated balance sheetsas of March 31, 2025 and December 31, 2024.
Valuationof Contingent Stock Consideration
Thecontingent stock consideration liability at March 31, 2025, is comprised of the fair value of potential future issuance of Class A commonstock to CariCord participating shareholders pursuant to a settlement agreement signed during the year ended December 31, 2021. The fairvalue measurement of the contingent stock consideration obligation is determined using Level 3 inputs and is based on a probability weightedexpected return methodology (“PWERM”). The measurement is largely based upon unobservable inputs supported by little or nomarket activity based on the Company’s own assumptions.
Thefollowing table presents a reconciliation of the contingent stock consideration obligation measured on a recurring basis using Level3 inputs for the periods ended March 31, 2025 and December 31, 2024:
| Balance as of January 1, 2025 | Net transfers in to (out of) Level 3 | Purchases, settlements and other net | Fair value adjustments | Balance as of March 31, 2025 | ||||||||||||||||
| Liabilities: | ||||||||||||||||||||
| Contingent stock consideration | $ | $ | $ | $ | $ | |||||||||||||||
| Balance as of January 1, 2024 | Net transfers in to (out of) Level 3 | Purchases, settlements and other net | Fair value adjustments | Balance as of December 31, 2024 | ||||||||||||||||
| Liabilities: | ||||||||||||||||||||
| Contingent stock consideration | $ | $ | $ | $ | $ | |||||||||||||||
Thefair value of the liability to issue future shares of Class A common stock was estimated by the Company at each reporting date usinga PWERM based on various inputs and assumptions, including the Company’s common share price, discount rates, and the probabilityof achieving specified future operational targets. The actual settlement of contingent stock consideration could differ from currentestimates based on the actual achievement of these specified targets and movements in the Company’s common share price.
Ateach reporting date, the Company revalues the contingent stock consideration obligation to estimated fair value and records changes infair value as income or expense in the Company’s condensed consolidated statements of operations and comprehensive loss. Changesin the fair value of the contingent stock consideration obligation may result from changes in discount rates, changes in the Company’scommon share price, and changes in probability assumptions with respect to the likelihood of achieving specified operational targets.The change in the fair value of the contingent stock consideration obligation during the three months ended March 31, 2025 was deminimis. The Company has classified all of the contingent stock consideration in the condensed consolidated balance sheets as a componentof accrued expenses and other current liabilities as of March 31, 2025 and December 31, 2024.
Valuationof Short-Term Debt - Yorkville
TheCompany elected the fair value option to account for the Yorkville PPA signed on September 15, 2022 (see Note 10). As of December 31,2023, due to the short-term nature of the debt, the fair value of the Yorkville PPA approximated the settlement amount, which was fullypaid on January 17, 2024. The Company also elected the fair value option to account for the Yorkville convertible promissory note signedon March 13, 2024 (see Note 10) and the unsecured senior convertible notes issued pursuant to the securities purchase agreement signedon November 25, 2024 (see Note 10). The fair value measurement of the debt is determined using Level 3 inputs and assumptions unobservablein the market. Changes in the fair value of debt that is accounted for at fair value, inclusive of related accrued interest expense,are presented as gains or losses in the accompanying condensed consolidated statements of operations and comprehensive loss under changein fair value of debt. The portion of total changes in fair value of debt attributable to changes in instrument-specific credit riskare determined through specific measurement of periodic changes in the discount rate assumption exclusive of base market changes andare presented as a component of comprehensive loss in the accompanying condensed consolidated statements of operations and comprehensiveloss. The actual settlement of the short-term debt could differ from current estimates based on the timing of when and if the investorselect to convert amounts into common shares, potential cash repayment by the Company prior to maturity, and movements in the Company’scommon share price.
| 11 |
Thefollowing table presents a reconciliation of short-term debt obligations measured on a recurring basis using Level 3 inputs for the threemonths ending March 31, 2025:
| Liabilities: | ||||
| Balance as of January 1, 2025 | $ | |||
| Fair value adjustment through earnings | ||||
| Fair value adjustment through accumulated other comprehensive income | ( | ) | ||
| Balance as of March 31, 2025 | $ | |||
Thefair values of the Yorkville convertible promissory note and the unsecured senior convertible notes are based on valuations which employa Monte Carlo model and a credit default model. The Company utilized Level 3 inputs in a probability weighted model based on outcomesof a default, repayment and conversion of the notes. The measurements are based upon unobservable inputs supported by little or no marketactivity based on the Company’s own assumptions. The fair value of the Yorkville convertible promissory note on March 13, 2024,the date of issuance, was $
Significantinputs for the Yorkville convertible promissory note valuation model were as follows:
| March 31, 2025 | December 31, 2024 | |||||||
| Common share price | $ | $ | ||||||
| Credit spread | % | % | ||||||
| Dividend yield | % | % | ||||||
| Term (years) | ||||||||
| Risk-free interest rate | % | % | ||||||
| Volatility | % | % | ||||||
Significantinputs for the unsecured senior convertible notes valuation model were as follows:
| March 31, 2025 | December 31, 2024 | |||||||
| Common share price | $ | $ | ||||||
| Credit spread | % | % | ||||||
| Dividend yield | % | % | ||||||
| Term (years) | ||||||||
| Risk-free interest rate | % | % | ||||||
| Volatility | % | % | ||||||
Valuationof Warrant Liability
Thewarrant liability at March 31, 2025, is comprised of the fair value of warrants to purchase shares of Class A common stock. The PublicWarrants are recorded at fair value based on the period-end publicly stated close price, which is a Level 1 input. The January 2024 BridgeLoan - Tranche #2 Warrants (prior to reclassification to equity classified) and November 2024 Purchaser Warrants and Placement AgentWarrants were recorded at fair value based on a Monte Carlo simulation model and the Registered Direct, PIPE and Sponsor Warrants arerecorded at their respective closing date fair values based on a Black-Scholes option pricing model that utilizes inputs for: (i) thevalue of the underlying asset, (ii) the exercise price, (iii) the risk-free rate, (iv) the volatility of the underlying asset, (v) thedividend yield of the underlying asset and (vi) maturity, which are Level 3 inputs. The Black-Scholes option pricing model’s primaryunobservable input utilized in determining the fair values of the warrant liabilities is the expected volatility of the Class A commonstock. Prior to the merger, Legacy Celularity was a private company and lacked company-specific historical and implied volatility informationfor its stock. Therefore, the expected stock price volatility was previously estimated using the historical volatilities of a peer groupof comparable public companies. Beginning with the current period, the Company estimates expected volatility based solely on the historicalvolatility of its common stock. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve for time periodsapproximately equal to the estimated remaining term of the warrants. Inputs to the Monte Carlo and Black-Scholes option pricing modelsfor the warrants are updated each reporting period to reflect fair value.
| 12 |
Thefollowing table presents a reconciliation of the warrant liabilities measured on a recurring basis using Level 3 inputs for the threemonths ended March 31, 2025:
| Balance as of January 1, 2025 | $ | |||
| Issuance of RWI Bridge Warrants in connection with RWI binding term sheet | ||||
| Loss recognized in earnings from change in fair value | ( | ) | ||
| Balance as of March 31, 2025 | $ |
Significantinputs for the May 2022 PIPE Warrants and the 2023 Registered Direct Warrants were as follows:
| March 31, 2025 | December 31, 2024 | |||||||
| Common share price | $ | $ | ||||||
| Exercise price | $ | $ | ||||||
| Dividend yield | % | % | ||||||
| Term (years) | ||||||||
| Risk-free interest rate | % | % | ||||||
| Volatility | % | % | ||||||
Significantinputs for the RWI Bridge Warrants are as follows:
| March 31, 2025 | February 12, 2025 (issuance) | |||||||
| Common share price | $ | $ | ||||||
| Exercise price (1) | $ | (1 | ) | $ | (1 | ) | ||
| Equity volatility | % | % | ||||||
| Term (years) | ||||||||
| Risk-free interest rate | % | % | ||||||
| Volatility | % | % | ||||||
| (1) |
Significantinputs for the November 2024 Purchaser and Placement Agent Warrants were as follows:
| March 31, 2025 | December 31, 2024 | |||||||
| Common share price | $ | $ | ||||||
| Exercise price (2) | $ | (2 | ) | $ | (2 | ) | ||
| Dividend yield | % | % | ||||||
| Term (years) | ||||||||
| Risk-free interest rate | % | % | ||||||
| Volatility | % | % | ||||||
| (2) |
Significantinputs for the Sponsor Warrants are as follows:
| March 31, 2025 | December 31, 2024 | |||||||
| Common share price | $ | $ | ||||||
| Exercise price | $ | $ | ||||||
| Dividend yield | % | % | ||||||
| Term (years) | ||||||||
| Risk-free interest rate | % | % | ||||||
| Volatility | % | % | ||||||
| 13 |
5.Inventory
TheCompany’s major classes of inventory were as follows:
| March 31, 2025 | December 31, 2024 | |||||||
| Raw materials | $ | $ | ||||||
| Work in progress | ||||||||
| Finished goods | ||||||||
| Inventory, gross | ||||||||
| Less: inventory reserves | ( | ) | ( | ) | ||||
| Inventory, net | $ | $ | ||||||
| Balance Sheet Classification: | ||||||||
| Inventory | $ | $ | ||||||
| Inventory, net of current portion | ||||||||
| $ | $ | |||||||
Inventory,net of current portion includes inventory expected to remain on-hand beyond one year from each balance sheet date presented. The Companydid not recognize any inventory impairment during the three months ended March 31, 2025 and 2024.
Aschedule of the activity in the inventory reserves is as follows:
| Balance at December 31, 2023 | ||||
| Provision for obsolete inventory | ( | ) | ||
| Balance at December 31, 2024 | $ | |||
| Provision for obsolete inventory | ( | ) | ||
| Balance at March 31, 2025 | $ |
6.Prepaid Expenses and Other Current Assets
Prepaidexpenses and other current assets consisted of the following:
| March 31, 2025 | December 31, 2024 | |||||||
| Prepaid clinical expenses | $ | $ | ||||||
| Prepaid insurance expense | ||||||||
| Other | ||||||||
| Total | $ | $ | ||||||
7.Property and Equipment, Net
Propertyand equipment, net consisted of the following:
| March 31, 2025 | December 31, 2024 | |||||||
| Leasehold improvements | $ | $ | ||||||
| Laboratory and production equipment | ||||||||
| Machinery, equipment and fixtures | ||||||||
| Property and equipment | ||||||||
| Less: Accumulated depreciation and amortization | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Depreciationand amortization expense was $
| 14 |
8.Goodwill and Intangible Assets, Net
Goodwill
Therewere
IntangibleAssets, Net
Intangibleassets, net consisted of the following:
| March 31, 2025 | December 31, 2024 | Estimated Useful Lives | ||||||||
| Amortizable intangible assets: | ||||||||||
| Developed technology | $ | $ | ||||||||
| Customer relationships | ||||||||||
| Trade names & trademarks | ||||||||||
| Reacquired rights | ||||||||||
| Less accumulated amortization: | ||||||||||
| Developed technology | ( | ) | ( | ) | ||||||
| Customer relationships | ( | ) | ( | ) | ||||||
| Trade names & trademarks | ( | ) | ( | ) | ||||||
| Reacquired rights | ( | ) | ( | ) | ||||||
| ( | ) | ( | ) | |||||||
| Amortizable intangible assets, net | ||||||||||
| Non-amortized intangible assets | ||||||||||
| Acquired IPR&D product rights | ||||||||||
| $ | $ | |||||||||
Forthe three months ending March 31, 2025 and 2024, amortization expense for intangible assets was $
9. Accrued Expenses and Other Current Liabilities
Accruedexpenses and other current liabilities consisted of the following:
| March 31, 2025 | December 31, 2024 | |||||||
| Accrued clinical trial expense | $ | $ | ||||||
| Accrued professional fees | ||||||||
| Accrued wages, bonuses, commissions, and vacation | ||||||||
| Accruals for construction in progress | ||||||||
| Accrued interest | ||||||||
| Accrued compliance fee | ||||||||
| Other | ||||||||
| Total | $ | $ | ||||||
10. Debt
Debtconsisted of the following:
| March 31, 2025 | December 31, 2024 | |||||||
| Debt - unaffiliated: | ||||||||
| Yorkville - convertible promissory note (measured at fair value) | | |||||||
| Unsecured senior convertible notes (measured at fair value) | ||||||||
| Total debt - unaffiliated | ||||||||
| Debt - related parties: | ||||||||
| C.V. Starr Bridge Loan, net of discount | ||||||||
| RWI Bridge Loan, net of discount | ||||||||
| CEO promissory note | ||||||||
| Total debt - related parties | ||||||||
| Total debt | $ | $ | ||||||
| Balance sheet classification: | ||||||||
| Short-term debt - unaffiliated | $ | $ | ||||||
| Short-term debt - related parties | ||||||||
| Long-term debt - related parties | ||||||||
| $ | $ | |||||||
| 15 |
YorkvilleConvertible Promissory Note
Uponentry into the SEPA, the Company issued Yorkville a $
TheCompany determined that the convertible note included embedded derivatives that would otherwise require bifurcation as derivative liabilities,and neither the debt instrument nor the embedded features are required to be classified as equity. Therefore, at inception, the Companyelected to carry the convertible promissory note comprised of the debt host and the embedded derivative liabilities at fair value ona recurring basis as permitted under ASC 825, Financial Instruments. Changes in fair value caused by changes in the instrument-specificcredit risk are reported in other comprehensive income, and the remaining change in fair value is reported in earnings (i.e., as a componentof other income/expense). Interest expense is a component of the change in fair value of the notes and, therefore, is not separatelyrecorded. As a result of the fair value election, the original issue discount of $
OnMarch 17, 2025, the Company entered into a letter agreement with Yorkville to extend the maturity date of the convertible promissorynote from
OnMay 20, 2025, the Company and Yorkville entered into a second letter agreement (the “Second Amendment”), pursuant towhich the maturity date of the Note and Forbearance was further extended from
Management evaluated the Second Amendment under ASC 470 and determined that it resulted in a substantial modification,meeting the criteria for debt extinguishment accounting. Accordingly, the Company recognized a loss on extinguishment of debt of $
OnAugust 5, 2025, Yorkville agreed to further extend the maturity date to October 15, 2025, provided, among other things, the Company filesits March 31, 2025 and June 30, 2025 Form 10-Q on or before August 25, 2025.
UnsecuredSenior Convertible Notes
OnNovember 25, 2024, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with an accreditedinvestor, pursuant to which the Company agreed to sell and issue, in one or more closings, to the investor and other purchasers in aprivate placement transaction, unsecured senior convertible notes and warrants for an aggregate original principal amount of up to $
| 16 |
Theunsecured senior convertible notes bear interest at an annual rate of
TheNovember 2024 Purchaser Warrants entitle the investors to purchase shares of common stock equal to each purchaser’s subscriptionamount divided by the exercise price of $
Inconnection with the transaction, the Company agreed to issue a
TheCompany determined that the unsecured senior convertible notes included embedded derivatives that would otherwise require bifurcationas derivative liabilities, and neither the debt instrument nor the embedded features are required to be classified as equity. Therefore,at inception, the Company elected to carry the unsecured senior convertible notes comprised of the debt host and the embedded derivativeliabilities at fair value on a recurring basis as permitted under ASC 825, Financial Instruments. Changes in fair value causedby changes in the instrument-specific credit risk are reported in other comprehensive income, and the remaining change in fair valueis reported in earnings (i.e., as a component of other income/expense). Interest expense is a component of the change in fair value ofthe unsecured senior convertible notes and, therefore, is not separately recorded. The November 2024 Purchaser and Placement Agent Warrantsare classified as liabilities since the exercise price was not determined at issuance and may be subsequently adjusted in connectionwith Subsequent Financing. The fair value of the November 2024 Placement Agent Warrants has been treated as a transaction cost and wasreduced from the cash proceeds to arrive at the net proceeds from the transaction. As a result of the fair value election, a charge of$
OnJune 25, 2025, the Company entered into a letter agreement and the holders of the unsecured senior convertible notes wherein the Companyagreed to amend the conversion price to $
Short-TermDebt - Other and CEO Promissory Note
OnAugust 21, 2023, the Company entered into a loan agreement with its Chairman and Chief Executive Officer, Dr. Robert Hariri, and twounaffiliated lenders, providing for a loan in the aggregate principal amount of $
OnOctober 12, 2023, in order to further address the Company’s immediate working capital requirements, Dr. Robert Hariri and the Companysigned a promissory note for $
OnJanuary 29, 2025, the Company executed amendments to two outstanding debt instruments with the CEO, including a loan dated August 21,2023 (as previously amended), and a note agreement dated October 12, 2023 (collectively, the “CEO Loans”). The modificationsin each amendment were an extension of the maturity date and PIK interest period to December 31, 2025 (“the Amendments”).The Amendments also included a limited forbearance by the lender, who agreed not to exercise remedies for any potential existing defaults,provided no new default occurs before the revised maturity date. All other terms, including principal, interest, and covenants, remainedunchanged and were reaffirmed by both parties.
| 17 |
TheCompany evaluated the terms of the Amendments in accordance with ASC 470-60, Troubled Debt Restructurings, and ASC 470-50, Debt Modificationsand Extinguishments. The Company determined that the lender granted a concession to the Company based on the decrease of the effectiveborrowing rate for each Amendment. Accordingly, the Company accounted for the Amendments as troubled debt restructurings, calculatinga new effective interest rate for the Amendments based on the carrying amount of the debts and the present value of the revised futurecash flow payment streams. The troubled debt restructurings did not result in recognition of gains or losses in the condensed consolidatedstatement of operations but does impact interest expense recognized in the future. As of March 31, 2025, there was no other short-termdebt – related parties and the carrying value of the CEO promissory note inclusive of accrued interest was $
Short-TermDebt – Related Parties - C.V. Starr and RWI
C.V.Starr & Co., Inc
OnMarch 17, 2023, the Company entered into a loan agreement (the “Starr Bridge Loan”) with C.V. Starr & Co., Inc. (“C.V.Starr”), a stockholder of the Company, for an aggregate principal amount of $
InJune 2023, in connection with the Amended RWI Loan (as defined below), the Company granted C.V. Starr additional warrants to acquireup to an aggregate
Underthe terms of the Starr Bridge Loan, the Company agreed to customary negative covenants restricting its ability to repay indebtedness,pay dividends to stockholders, repay or incur other indebtedness other than as permitted, grant or suffer to exist a security interestin any of the Company’s assets, other than as permitted, or hold cash and cash equivalents less than $
OnJanuary 12, 2024, the Company entered into an amendment which terminated the minimum $
OnMarch 13, 2024, the Company and C.V. Starr entered into a forbearance agreement (“Starr Forbearance Agreement”) with respectto the Starr Bridge Loan. Under the Starr Forbearance Agreement, (i) C.V. Starr agreed not to exercise its rights and remedies upon theoccurrence of any default under the Starr Bridge Loan until the Company’s obligations in respect of the Yorkville convertible promissorynote have been indefeasibly paid in full, (ii) C.V. Starr consented to the Company’s incurrence of indebtedness under the Yorkvilleconvertible promissory note, (iii) C.V. Starr consented to cash payments required to be made under the SEPA and the Yorkville convertiblepromissory note, (iv) the Company agreed to increase the interest rate on the loan outstanding under the Starr Bridge Loan by
OnFebruary 12, 2025, the Company entered into a binding term sheet with C.V. Starr, pursuant to which C.V. Starr agreed to, among otherthings, an extension of the Starr Forbearance Agreement whereby C.V. Starr agreed not to exercise its rights and remedies upon the occurrenceof any default under the Starr Bridge Loan and whereby the maturity date of the Starr Bridge Loan has been extended to
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Asof March 31, 2025 and December 31, 2024, the carrying value of Starr Bridge Loan, inclusive of accrued interest and net of discount,was $
ResortsWorld Inc Pte Ltd
OnMay 16, 2023, with written consent provided by Yorkville, the Company entered into a senior secured loan agreement (“RWI BridgeLoan”) with Resorts World Inc Pte Ltd, (“RWI”) providing for an initial loan in the aggregate principal amount of $
OnJune 21, 2023, the Company closed on an amended and restated senior secured loan agreement (“Amended RWI Loan”), to amendand restate the previous senior secured loan agreement, in its entirety. The Amended RWI Loan provided for an additional loan in theaggregate principal amount of $
Pursuantto the terms of the Amended RWI Loan, the Company was required to apply the net proceeds to the trigger payments due to Yorkville pursuantto the PPA. In addition, the Company agreed to customary negative covenants restricting its ability to repay indebtedness, pay dividendsto stockholders, repay or incur other indebtedness other than as permitted, grant or suffer to exist a security interest in any of itsassets, other than as permitted, or hold cash and cash equivalents less than $
TheCompany accounted for the Amended RWI Loan in accordance with ASC 470-20, Debt with Conversion and Other Options and ASC 815,Derivatives and Hedging. The Amended RWI Loan and RWI Warrant were recorded at fair value, which resulted in a total discountof $
OnJanuary 12, 2024, the Company entered into a second amended and restated senior secured loan agreement (“RWI Second Amended BridgeLoan”), to amend and restate the previously announced senior secured loan agreement with RWI dated as of May 16, 2023, as amendedon June 20, 2023, in its entirety. The RWI Second Amended Bridge Loan provided for an additional loan in the aggregate principal amountof $
Pursuantto the terms of the RWI Second Amended Bridge Loan, the Company was required to apply the proceeds of the additional loan (i) to thepayment in full of all outstanding amounts owed to Yorkville under the PPA, (ii) to the payment of invoices of certain critical vendors,(iii) to the first settlement payment owed to Palantir (see Note 12), and (iv) for working capital and other purposes pre-approved byRWI. Pursuant to the terms of the RWI Second Amended Bridge Loan, the Company agreed to customary negative covenants restricting itsability to pay dividends to stockholders, repay or incur other indebtedness other than as permitted, or grant or suffer to exist a securityinterest in any of the Company’s assets, other than as permitted. In addition, the Company agreed to apply net revenues receivedthrough the sale of its products/provision of services in connection with or related to its distribution and manufacturing agreementwith Genting Innovation Pte Ltd (“Genting Innovation”), a related party, as a prepayment towards the loan.
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TheRWI Second Amended Bridge Loan resulted in an extinguishment of the Amended RWI Loan, since the change in cash flows exceeds 10%. Asa result, the Company recorded a loss on extinguishment equal to the difference between (i) the fair values of the new loan and Tranche#1 and Tranche #2 Warrants and (ii) the previous carrying amount of the Amended RWI Loan, or $
TheCompany and RWI also entered into an investor rights agreement dated as of January 12, 2024. The investor rights agreement provides RWIcertain information and audit rights, as well as registration rights with respect to the shares underlying the Tranche #1 Warrant andTranche #2 Warrant, including both the undertaking to file a registration statement within 45 days of filing of the 2023 Form 10-K, “piggyback”registration rights, as well as the right to request up to three demand rights for underwritten offerings per year; in each case subjectto customary “underwriter cutback” language as well as any objections raised by the Securities and Exchange Commission toinclusion of securities. If the initial registration statement was not filed on or prior to May 15, 2024, the investor rights agreementprovided for partial liquidating damages equal to
OnMarch 13, 2024, the Company and RWI entered into a second forbearance agreement (“RWI 2nd Forbearance Agreement”). Underthe RWI 2nd Forbearance Agreement, (i) RWI agreed not to exercise its rights and remedies upon the occurrence of any default under theRWI Second Amended Bridge Loan until the Company’s obligations in respect of the Yorkville convertible promissory note have beenindefeasibly paid in full or March 13, 2025, whichever occurs first, (ii) RWI consented to the Company’s incurrence of indebtednessunder the Yorkville convertible promissory note, (iii) RWI consented to cash payments required to be made under the SEPA and the Yorkvilleconvertible promissory note, (iv) the Company agreed to increase the interest rate on the loan outstanding under the RWI Loan Agreementby
OnFebruary 12, 2025, the Company entered into a binding term sheet with RWI, pursuant to which RWI agreed to, among other things, anextension of the RWI 2nd Forbearance Agreement whereby RWI has agreed not to exercise its rights and remedies upon the occurrence ofany default under certain loans owed to RWI and whereby the maturity date of the foregoing loans is extended to
The Companyrecorded a $
Asof March 31, 2025 and December 31, 2024, the carrying value of the RWI Second Amended Bridge Loan and Amended RWI Loan, inclusive ofinterest and net of discount was $
11. Leases
LeaseAgreements
ROUassets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent theCompany’s obligation to make lease payments arising from the lease. The Company’s lease ROU assets and liabilities arerecognized at the lease commencement date based on the present value of lease payments over the lease term. In determining thepresent value of lease payments, the Company uses its incremental borrowing rate based on the information available at the leasecommencement date to determine the appropriate discount rate by multiple asset classes. Variable lease payments that are not basedon an index or that result from changes to an index subsequent to the initial measurement of the corresponding lease liability arenot included in the measurement of lease ROU assets or liabilities and instead are recognized in earnings in the period in which theobligation for those payments is incurred. Lease terms may include options to extend or terminate the lease when it is reasonablycertain that the Company will exercise any such options. Lease expense is recognized on a straight-line basis over the expectedlease term. Rent expense, including related property taxes, was $
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OnMarch 13, 2019, Legacy Celularity entered into a lease agreement for a
OnSeptember 14, 2023, the Company entered into a lease amendment on the Company’s Florham Park, New Jersey facility to reduce theletter of credit by approximately $
Thecomponents of the Company’s lease costs are classified on its condensed consolidated statements of operations and comprehensiveloss as follows:
| Three Months Ended | Three Months Ended | |||||||
| March 31, 2025 | March 31, 2024 | |||||||
| Operating lease cost | $ | $ | ||||||
| Variable lease cost | ||||||||
| Total operating lease cost | $ | $ | ||||||
Thetable below shows the cash and non-cash activity related to the Company’s lease liabilities during the period:
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash paid related to lease liabilities: | ||||||||
| Operating cash flows from operating leases | $ | $ | ||||||
Asof March 31, 2025, the maturities of the Company’s operating lease liabilities were as follows:
| Year ending December 31, | ||||
| 2025 (remaining 9 months) | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| Total lease payments | ||||
| Less imputed interest | ( | ) | ||
| Total | $ | |||
As of March 31, 2025, the weighted average remaining lease term of the Company’s operating lease was
12. Commitments and Contingencies
ContingentConsideration Related to Business Combinations
Inconnection with Legacy Celularity’s acquisition in 2017 of HLI Cellular Therapeutics, LLC and Anthrogenesis, the Company has agreedto pay future consideration to the sellers upon the achievement of certain regulatory and commercial milestones. As a result, the Companyrecorded $
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IndemnificationAgreements
Inthe ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partnersand other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or fromintellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreementswith members of its board of directors and its executive officers that will require the Company, among other things, to indemnify themagainst certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential numberof future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date,the Company has not incurred any material costs as a result of such indemnifications. The Company is not currently aware of any indemnificationclaims and has not accrued any liabilities related to such obligations in its condensed consolidated financial statements as of March31, 2025 or December 31, 2024. The Company will continue to assess the probability and estimability of any potential indemnificationpayments at each reporting date and will record a liability if and when such payment becomes probable and reasonably estimable.
Agreementwith Palantir Technologies Inc.
OnMay 5, 2021, Legacy Celularity executed a Master Subscription Agreement (the “Palantir MSA”) with Palantir under which itagreed to pay $
SirionLicense Agreement
InDecember 2021, the Company entered into a license agreement (“Sirion License”) with Sirion Biotech GmbH (“Sirion”).Under the Sirion License, Sirion granted the Company a license related to patent rights and know-how associated with poloxamers (“LicensedProduct”). As part of the Sirion License, the Company paid Sirion $
LegalProceedings
Ateach reporting date, the Company evaluates whether or not a potential loss or a potential range of loss is probable and reasonably estimableunder the provisions of the authoritative guidance that addresses accounting for contingencies. The Company expenses as incurred thecosts related to such legal proceedings.
CivilInvestigative Demand
TheCompany received a Civil Investigative Demand (the “Demand”) under the False Claims Act, 31 U.S.C. § 3729, dated August14, 2022, from the U.S. Attorney’s Office for the Eastern District of Pennsylvania. The Demand requests documents and informationrelating to claims submitted to Medicare, Medicaid, or other federal insurers for services or procedures involving injectable human tissuetherapy products derived from amniotic fluid or birth tissue and includes Interfyl, a biomaterials product. The Company is cooperatingwith the request and is engaged in an ongoing dialogue with the Assistant U.S. Attorneys handling the Demand. The matter is still inpreliminary stages and there is uncertainty as to whether the Demand will result in any liability.
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CelularityInc. v. Evolution Biologyx, LLC, et al.
OnApril 17, 2023, the Company filed a complaint against Evolution Biologyx, LLC, Saleem S. Saab, individually, and Encyte, LLC (collectively,“Evolution”) in the United States District Court for the District of New Jersey to recover unpaid invoice amounts for thesale of its biomaterial products in the amount of approximately $
TargetCWv. Celularity Inc.
OnMarch 27, 2024, WMBE Payrolling, Inc., dba TCWGlobal, filed a complaint in the United States District Court for the Southern Districtof California alleging a breach of contract and account stated claims relating to a Master Services Agreement dated May 4, 2020, or theTCWGlobal MSA, for the provision of certain leased workers to perform services on the Company’s behalf. The complaint alleges thatthe Company breached the TCWGlobal MSA by failing to make payments on certain invoices for the services of the leased workers. On May7, 2024, the Company entered into a settlement agreement and mutual release with TCWGlobal whereupon the Company agreed to pay $
HackensackMeridian v. Celularity Inc.
OnMarch 27, 2025, Hackensack Meridian Health (“HUMC”) filed a complaint in the Superior Court of New Jersey seeking $
ClinicalResource Network v. Celularity Inc.
OnMay 28, 2025, Clinical Resource Network (“CRN”) filed a complaint in the Manhattan Supreme Court, New York, seeking damagesof $
13. Equity
CommonStock
Asof March 31, 2025 and December 31, 2024, the Company’s certificate of incorporation, as amended and restated, authorized the Companyto issue shares of $ par value Class A common stock. As of March 31, 2025 and December 31, 2024, shares of Class Acommon stock issued and outstanding were and , respectively.
VotingPower
Exceptas otherwise required by law or as otherwise provided in any certificate of designation for any series of preferred stock, the holdersof common stock possess all voting power for the election of the Company’s directors and all other matters requiring stockholderaction. Holders of
Dividends
Holdersof Class A common stock will be entitled to receive such dividends, if any, as may be declared from time to time by the Company’sboard of directors in its discretion out of funds legally available, therefore. In no event will any stock dividends or stock splitsor combinations of stock be declared or made on common stock unless the shares of common stock at the time outstanding are treated equallyand identically.
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Liquidation,Dissolution and Winding Up
Inthe event of the Company’s voluntary or involuntary liquidation, dissolution, distribution of assets or winding-up, the holdersof the common stock will be entitled to receive an equal amount per share of all of the Company’s assets of whatever kind availablefor distribution to stockholders, after the rights of the holders of the preferred stock have been satisfied.
Preemptiveor Other Rights
TheCompany’s stockholders have no preemptive or other subscription rights and there are no sinking fund or redemption provisions applicableto common stock.
Electionof Directors
TheCompany’s board of directors is divided into three classes, Class I, Class II and Class III, with only one class of directors beingelected in each year and each class serving a three-year term, except with respect to the election of directors at the special meetingheld in connection with the merger with GX, Class I directors are elected to an initial one-year term (and three-year terms subsequently),the Class II directors are elected to an initial two-year term (and three-year terms subsequently) and the Class III directors are electedto an initial three-year term (and three-year terms subsequently). There is no cumulative voting with respect to the election of directors,with the result that the holders of more than % of the shares voted for the election of directors can elect all of the directors.
PreferredStock
TheCompany’s Certificate of Incorporation authorized shares of preferred stock and provides that shares of preferred stockmay be issued from time to time in one or more series. The Company’s board of directors is authorized to fix the voting rights,if any, designations, powers and preferences, the relative, participating, optional or other special rights, and any qualifications,limitations and restrictions thereof, applicable to the shares of each series of preferred stock. The Company’s board of directorsis able to, without stockholder approval, issue preferred stock with voting and other rights that could adversely affect the voting powerand other rights of the holders of common stock and could have anti-takeover effects. The ability of the Company’s board of directorsto issue preferred stock without stockholder approval could have the effect of delaying, deferring or preventing a change of controlof Celularity or the removal of existing management. As of March 31, 2025 and December 31, 2024, the Company did t have any outstandingpreferred stock.
ATMAgreement
OnSeptember 8, 2022, the Company entered into an At-the-Market Sales Agreement (the “ATM Agreement”) with BTIG, LLC, Oppenheimer& Co. Inc. and B. Riley Securities, Inc., acting as sales agents and/or principals, pursuant to which the Company may offer and sell,from time to time in its sole discretion, shares of its common stock, having an aggregate offering price of up to $
Anyshares offered and sold in the at-the-market offering will be issued pursuant to the Company’s shelf registration statement onForm S-3 and the related prospectus supplement. Under the ATM Agreement, the sales agents may sell shares of common stock by any methodpermitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) of the Securities Act of 1933. TheCompany will pay the sales agents a commission rate of up to
Duringthe three months ending March 31, 2025, no shares were issued under the ATM Agreement, which remains in effect and available for futureissuances at the Company’s discretion.
RegisteredDirect Offerings
OnApril 10, 2023, the Company closed on a registered direct offering of shares of its Class A common stock together with warrants(“Registered Direct Warrants”) to purchase up to
Uponthe closing of the registered direct offering on April 10, 2023, the Company amended the existing May 2022 PIPE Warrants, to reduce theexercise price from $ to $ per share and extended the expiration
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OnJuly 31, 2023, the Company closed on a registered direct offering of shares of its Class A common stock together with warrants(“July 2023 Registered Direct Warrants”) to purchase up to
Inconnection with the July 31, 2023 registered direct offering described above, the Company also entered into an amendment to certain existingwarrants to purchase up to an aggregate of
May2023 PIPE
OnMay 18, 2023, the Company closed on a securities purchase agreement with a group of accredited investors, providing for the private placementof an aggregate (i) shares of its Class A common stock and (ii) accompanying warrants to purchase up to
January2024 PIPE
OnJanuary 12, 2024, the Company entered into a securities purchase agreement with an existing investor, Dragasac Limited (“Dragasac”),providing for the private placement of (i) shares of its Class A common stock, par value $ per share, or the Class Acommon stock, and (ii) accompanying warrants to purchase up to
TheCompany accounted for the January 2024 PIPE Warrant and common stock as a single non-arm’s length transaction recognized in equity.The Company applied guidance for this transaction in accordance with ASU 2020-06, (Subtopic 470-20): Debt - Debt with Conversion andOther Options, ASC 815 Derivatives and Hedging, and ASC 480 Distinguishing Liabilities from Equity. Accordingly, the net proceedswere allocated between common stock and the January 2024 PIPE Warrant at their respective fair values, which resulted in proceeds of$
| 25 |
Inconnection with the execution of the securities purchase agreement, the Company also entered into an investor rights agreement with Dragasacdated as of January 12, 2024. The investor rights agreement provides Dragasac certain information and audit rights, as well as registrationrights with respect to the shares (and shares underlying the January 2024 PIPE Warrant), including both the undertaking to file a registrationstatement within 45 days of filing of the 2023 Form 10-K, “piggyback” registration rights, as well as the right to requestup to three demand rights for underwritten offerings per year; in each case subject to customary “underwriter cutback” languageas well as any objections raised by the SEC to inclusion of securities. If the initial registration statement was not filed on or priorto May 15, 2024, the investor rights agreement provides for partial liquidating damages equal to
OnJanuary 24, 2025, Celularity Inc. (the “Company”) agreed with the holder of warrants dated January 16, 2024 to purchase shares of Class A common stock (the “2024 Warrant” referred to as PIPE Warrants above) and warrants dated January 9, 2020,as amended, to purchase shares of Class A common stock (the “2020 Warrant” referred to as A&R Warrants above,and together with the 2024 Warrants, the “Warrants”) to amend the exercise price of the Warrants to $ per share from$ per share and the holder agreed to exercise the Warrants for gross proceeds to the Company of approximately $
TheCompany evaluated the accounting for the modification and concluded that the transaction constituted an inducement. In the absence ofspecific authoritative guidance for inducements of equity-classified warrants, the Company applied the guidance in ASC 260-10-S99 andASC 470-20-40-13 through 40-17 by analogy, which addresses similar inducement transactions for equity-classified convertible preferredstock.
Inaccordance with this guidance, the Company recognized an inducement equal to the incremental fair value conveyed to the warrant holders,measured as the difference between the fair value of the modified warrants and the fair value of the original warrants immediately priorto the modification. The inducement was recorded as an adjustment to net loss to arrive at loss available to common stockholders in theCompany’s condensed consolidated statement of operations for the three months ended March 31, 2025 in the amount of $
WarrantModifications
OnJanuary 12, 2024, in connection with the January 2024 PIPE, the Company agreed to amend the exercise price of legacy warrants held byDragasac to purchase
OnFebruary 12, 2025, the Company entered into binding term sheets with (i) RWI and (ii) C.V. Starr & Co., Inc. in connection with amendmentsto existing loan arrangements and extensions of forbearance agreements.
Underthe RWI agreement, the maturity date of the Company’s senior secured loans aggregating $
Underthe Starr agreement, the maturity date of Starr’s $
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StandbyEquity Purchase Agreement
OnMarch 13, 2024, the Company and Yorkville entered into a SEPA. Under the SEPA, the Company has the right to sell to Yorkville up to $
Uponthe satisfaction of the conditions precedent in the SEPA, which include having a resale shelf for shares of common stock issued to Yorkvilledeclared effective, the Company has the right to direct Yorkville to purchase a specified number of shares of common stock by deliveringwritten notice (“Advance”). An Advance may not exceed
Yorkvillewill generally purchase shares pursuant to an Advance at a price per share equal to
TheSEPA will automatically terminate on the earliest to occur of (i) the first day of the month next following the 36-month anniversaryof the date of the SEPA or (ii) the date on which Yorkville shall have made payment for shares of common stock equal to $
Asconsideration for Yorkville’s commitment to purchase the shares of common stock pursuant to the SEPA, the Company paid Yorkvillea $
Inconnection with the entry into the SEPA, on March 13, 2024, the Company entered into a registration rights agreement with Yorkville,pursuant to which the Company agreed to file with the SEC no later than May 3, 2024, a registration statement for the resale by Yorkvilleof the shares of common stock issued under the SEPA (including the commitment fee shares). The Company agreed to use commercially reasonableefforts to have such registration statement declared effective within 45 days of such filing and to maintain the effectiveness of suchregistration statement during the 36-month commitment period. The Company will not have the ability to request any Advances under theSEPA (nor may Yorkville convert the Initial Advance into common stock) until such resale registration statement is declared effectiveby the SEC. The Company has not yet filed a registration statement with the SEC for the resale by Yorkville of the shares of common stockissued under the SEPA, which is deemed an event of default under the SEPA and as a result, the interest rate on the on the Yorkvilleconvertible promissory note (see Note 10) increased to
TheCompany determined that the SEPA should be accounted for as a derivative measured at fair value, with changes in the fair value recognizedin earnings. Because the Company has not yet filed a registration statement and no shares can currently be issued under the SEPA, theSEPA is deemed to have no value as of the issuance date and as of March 31, 2025.
On March 17, 2025, the Company entered into a letter agreement with Yorkville to extend the maturity date of the convertible promissory note from
Warrants
Asof March 31, 2025, the Company had
| Number of shares | Exercise price | Expiration date | ||||||||
| Public Warrants (1) | $ | |||||||||
| Sponsor Warrants (1) | $ | |||||||||
| May 2022 PIPE Warrants | $ | |||||||||
| March 2023 PIPE Warrants | $ | |||||||||
| March 2023 PIPE Warrants | $ | |||||||||
| March 2023 Loan Warrants | $ | |||||||||
| April 2023 Registered Direct Warrants | $ | |||||||||
| April 2023 Registered Direct Warrants | $ | |||||||||
| May 2023 PIPE Warrants | $ | |||||||||
| June 2023 Warrants (2) | $ | |||||||||
| June 2023 Loan Warrants | $ | |||||||||
| July 2023 Registered Direct Warrants | $ | |||||||||
| January 2024 Bridge Loan - Tranche #1 Warrants | $ | |||||||||
| January 2024 Bridge Loan - Tranche #2 Warrants | $ | |||||||||
| March 2024 RWI Forbearance Warrants | $ | |||||||||
| November 2024 Purchaser Warrants | $ | |||||||||
| November 2024 Placement Agent Warrants | $ | |||||||||
| February 2025 Binding Term Sheet | $ | |||||||||
| (1) | ||
| (2) |
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2021Equity Incentive Plan
InJuly 2021, the Company’s board of directors adopted, and the Company’s stockholders approved the 2021 Equity Incentive Plan(the “2021 Plan”). The 2021 Plan provides for the grant of incentive stock options (“ISOs”) to employees andfor the grant of non-statutory stock options (“NSOs”), stock appreciation rights, restricted stock awards, restricted stockunit awards, performance awards and other forms of stock awards to employees, directors and consultants.
Thenumber of shares of Class A Common Stock initially reserved for issuance under the 2021 Plan is . As of March 31, 2025, shares remain available for future grant under the 2021 Plan. The number of shares reserved for issuance will automatically increaseon January 1 of each year, for a period of years, from January 1, 2022 through January 1, 2031, by % of the total number of sharesof Celularity common stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares as may be determinedby the Company’s board of directors. Shares subject to stock awards granted under the 2021 Plan that expire or terminate withoutbeing exercised in full, or that are paid out in cash rather than in shares, will not reduce the number of shares available for issuanceunder the 2021 Plan. Additionally, shares issued pursuant to stock awards under the 2021 Plan that are repurchased or forfeited, as wellas shares that are reacquired as consideration for the exercise or purchase price of a stock award or to satisfy tax withholding obligationsrelated to a stock award, will become available for future grant under the 2021 Plan.
The2021 Plan is administered by the Company’s board of directors. The Company’s board of directors, or a duly authorized committeethereof, may delegate to one or more officers the authority to (i) designate employees other than officers to receive specified stockawards and (ii) determine the number of shares to be subject to such stock awards. Subject to the terms of the 2021 Plan, the plan administratorhas the authority to determine the terms of awards, including recipients, the exercise price or strike price of stock awards, if any,the number of shares subject to each stock award, the fair market value of a share, the vesting schedule applicable to the awards, togetherwith any vesting acceleration, the form of consideration, if any, payable upon exercise or settlement of the stock award and the termsand conditions of the award agreements for use under the 2021 Plan. The plan administrator has the power to modify outstanding awardsunder the 2021 Plan. Subject to the terms of the 2021 Plan and in connection with a corporate transaction or capitalization adjustment,the plan administrator may not reprice or cancel and regrant any award at a lower exercise price, strike price or purchase price or cancelany award with an exercise price, strike price or purchase price in exchange for cash, property or other awards without first obtainingthe approval of the Company’s stockholders.
2017Equity Incentive Plan
The2017 Equity Incentive Plan (the “2017 Plan”) adopted by Legacy Celularity’s board of directors and approved by LegacyCelularity’s stockholders provided for Legacy Celularity to grant stock options to employees, directors and consultants of LegacyCelularity. In connection with the closing of the merger and effectiveness of the 2021 Plan, no further grants will be made under the2017 Plan.
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Thetotal number of stock options that could have been issued under the 2017 Plan was . Shares that expired, forfeited, canceledor otherwise terminated without having been fully exercised were available for future grant under the 2017 Plan.
The2017 Plan is administered by the Company’s board of directors or, at the discretion of the Company’s board of directors,by a committee of the board of directors. The exercise prices, vesting and other restrictions were determined at the discretion of LegacyCelularity’s board of directors, or its committee if so delegated, except that the exercise price per share of stock options couldnot be less than % of the fair market value of the share of common stock on the date of grant and the term of stock option could notbe greater than . Stock options granted to employees, officers, members of the board of directors and consultants typicallyvested over a three- or four-year period.
StockOption Valuation
Awardswith Service Conditions
Thefair value of each option is estimated on the date of grant using a Black-Scholes option pricing model that takes into account inputssuch as the exercise price, the estimated fair value of the underlying common stock at grant date, expected term, expected stock pricevolatility, risk-free interest rate, and dividend yield. The fair value of each grant of stock options was determined by the Companyusing the methods and assumptions discussed below. Certain of these inputs are subjective and generally require judgment to determine.
| ● | The expected term of employee stock options with service-based vesting is determined using the “simplified” method, whereby the expected life equals the arithmetic average of the vesting term and the original contractual term of the option due to the Company’s lack of sufficient historical data. The expected term of non-employee options is equal to the contractual term, or its estimated term based on the underlying agreement. |
| ● | The expected stock price volatility was previously estimated using the historical volatilities of a peer group of comparable public companies. Beginning with the current period, the Company estimates expected volatility based solely on the historical volatility of its common stock. |
| ● | The risk-free interest rate is based on the interest rate payable on U.S. Treasury securities in effect at the time of grant for a period that is commensurate with the respective expected term or contractual term. |
| ● | The expected dividend yield is % because the Company has not historically paid, and does not expect, for the foreseeable future, to pay a dividend on its common stock. |
ThreeMonths Ended March 31, 2025 | ThreeMonths Ended March 31, 2024 | |||||||
| Risk-free interest rate | % | |||||||
| Expected term (in years) | — | |||||||
| Expected volatility | % | |||||||
| Expected dividend yield | % | |||||||
Theweighted average grant-date fair value per share of stock options granted during the three months ending March 31, 2025 and 2024 were$ and $, respectively.
| Options | Weighted Average Exercise Price | Weighted Average Contract Term (years) | Aggregate Intrinsic Value | |||||||||||||
| Outstanding at January 1, 2025 | $ | |||||||||||||||
| Granted | — | — | ||||||||||||||
| Exercised | — | — | ||||||||||||||
| Forfeited | ( | ) | — | — | ||||||||||||
| Outstanding at March 31, 2025* | $ | $ | ||||||||||||||
| Exercisable at March 31, 2025 | $ | $ | ||||||||||||||
| * |
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Theaggregate intrinsic value of options is calculated as the difference between the exercise price of the stock options and the fair valueof the Company’s Class A common stock for those options that had exercise prices lower than the fair value of Class A common stock.
TheCompany recorded stock-based compensation expense relating to option awards with service conditions of $ and $ for the threemonths ending March 31, 2025, and 2024 respectively. As of March 31, 2025, unrecognized compensation cost for options issued with serviceconditions was $ and will be recognized over an estimated weighted-average amortization period of years.
Awardswith Performance Conditions
Inconnection with the advisory agreement signed with Robin L. Smith, MD, the Company awarded options under the 2021 Plan to acquire a totalof shares with an exercise price of $ to Dr. Smith, a former member of the Company’s board of directors. The initialtranche of stock options vested upon execution of the advisory agreement on August 16, 2022. The remaining stock optionsare subject to vesting upon achievement of certain predefined milestones in relation to the expansion of the degenerative disease business.On November 1, 2022, the second tranche of stock options vested upon achievement of the first milestone. The remaining stock options were forfeited on August 16, 2023, upon termination of the advisory agreement.
StrategicAdvisory Agreement
OnMay 19, 2025, the Company entered into a twelve-month strategic advisory agreement with a consulting firm (the “Consultant”),under which the Consultant was engaged to provide business development and strategic advisory services. The Consultant is an independentcontractor and may be terminated by the Company upon 30 days’ notice.
Asconsideration for the services, the Company issued shares of common stock upon execution of the agreement. These shares carry piggyback registration rights in connection with anyfuture registration of Company securities. In addition, the Company issued warrants to purchase an aggregate of shares of the Company’s common stock, subject to the following terms and vesting conditions:
| Tranche | Shares | Exercise Price | Vesting Conditions | |||||||
| 1 | $ | |||||||||
| 2 | $ | |||||||||
| 3 | $ | |||||||||
| 4 | $ | |||||||||
TheCompany accounts for share-based compensation in accordance with ASC 718. The fair value of the restricted shares issued upon executionwas measured using the market price of the Company’s common stock on the grant date. For warrants subject only to the passage oftime (Tranches 1 and 4), compensation expense is recognized over the applicable vesting periods. For Tranches 2 and 3, vesting is contingentupon the successful closing of a strategic transaction. As of the filing date, management has determined that the closing of such a transactionis not yet probable. Therefore, no compensation expense has been recognized for Tranches 2 and 3. The Company will begin recognizingthe expense for these tranches once achievement of the vesting condition becomes probable, measured at the grant-date fair value whenthat determination is made.
Themeasurement of fair value of the warrants were determined utilizing a Black-Scholes model considering all relevant assumptions currentat the date of issuance (i.e., share price of $, exercise price of $, term of , volatility of %, risk-free rateof %, and expected dividend rate of %). The grant date fair value of the warrants was estimated to be $
Inaddition, the Consultant is entitled to receive a success fee payable in cash (unless mutually agreed for all or part to be paid in shares)based on the net proceeds from the closing of a strategic transaction. As of the filing date, the transaction has not closed, and managementhas concluded it is not probable that the strategic transaction will occur. Accordingly, no liability or expense has been recorded forthis contingent success fee under ASC 450. The Company will recognize the fee when the closing becomes probable, and the amount can bereasonably estimated.
RestrictedStock Units
TheCompany issues restricted stock units (“RSUs”) to employees that generally vest over a four-year period, with % vestingon the anniversary of the grant date, and the remainder vesting in equal annual installments thereafter so that the RSUs are vested infull on the four-year anniversary of the grant date. At times, the board of directors may approve exceptions to the standard RSU vestingterms. Any unvested shares will be forfeited upon termination of services. The fair value of an RSU is equal to the fair market valueprice of the Company’s common stock on the date of grant. RSU expense is amortized straight-line over the vesting period. Thereare no RSUs outstanding under the 2017 Plan.
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| Number of Shares | Weighted Average Grant Date Fair Value | |||||||
| Outstanding at January 1, 2025 | $ | |||||||
| Granted | $ | |||||||
| Released | ( | ) | $ | |||||
| Forfeited/Expired | ( | ) | $ | |||||
| Outstanding at March 31, 2025 | $ | |||||||
TheCompany recorded stock-based compensation expense of $and $for the three months ended March 31, 2025, and 2024, respectively,related to RSUs. During the three months ended March 31, 2025 and 2024, the total of and RSUs were vested, respectively, with $and $recorded as tax withholding on vesting of restricted stockunits. As of March 31, 2025, the total unrecognized expense related to all RSUs was $,which the Company expects to recognize over a weighted-average period of years.
StockUnits with Market Condition Vesting
InJuly 2023, the Company granted market condition stock unit awards (“MCUs”) under the 2021 Plan to certain membersof management. . As of March 31, 2025, of the MCUswere forfeited as a result of the participant’s termination of continuous service. Stock-based compensation expense for the remaining
Stock-BasedCompensation Expense
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Cost of revenues | $ | $ | ||||||
| Research and development | ||||||||
| Selling, general and administrative | ||||||||
| $ | $ | |||||||
15. Revenue Recognition
Thefollowing table provides information about disaggregated revenue by product and services:
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Product sales, net | $ | $ | ||||||
| Processing and storage fees, net | ||||||||
| License, royalty and other | ||||||||
| Net revenues | $ | $ | ||||||
Netrevenues include: (i) sales of biomaterial products, including Biovance, Biovance 3L, ReboundTM, Interfyl, and CentaFlex,of which our direct sales are included in Product Sales while sales through our network of distribution partners are included in License,royalty and other; and (ii) the collection, processing and storage of umbilical cord and placental blood and tissue after full-term pregnancies,collectively, Services.
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Thefollowing table provides changes in deferred revenue from contract liabilities:
| March 31, 2025 | ||||
| Balance at January 1 | $ | |||
| Deferral of revenue* | ||||
| Recognition of unearned revenue | ( | ) | ||
| Balance at March 31 | $ | |||
| * |
| (1) | Deferral of revenue includes $ | |
| (2) | Recognition of unearned revenue includes $ |
16.License and Distribution Agreements
SequenceLifeScience, Inc. Independent Distribution Agreement
OnAugust 23, 2024, the Company entered into an Independent Distributor Agreement (the “Distribution Agreement”) with SequenceLifeScience, Inc. (“Sequence”), which provides the Company exclusive rights to market, sell and distribute ReboundTM,a full thickness placental-derived allograft matrix product, in the U.S. for a period of ninety (90) days. Under the terms of the DistributionAgreement, Sequence will make Rebound available for purchase to the Company at a fixed price consistent with market terms. The DistributionAgreement is intended to be a bridge to allow the parties to cooperatively market the product prior to consummating the Asset PurchaseAgreement. The Company acquired Rebound on October 9, 2024, through an asset purchase agreement with Sequence.
RegeneronResearch Collaboration Services Agreement
OnAugust 25, 2023, the Company entered into a multi-year research collaboration services agreement with Regeneron Pharmaceuticals, Inc.(“Regeneron”), pursuant to which the Company will support the research effort of Regeneron’s allogeneic cell therapycandidates (the “Regeneron Services Agreement”). The Regeneron Services Agreement’s initial focus is research on atargeted allogeneic gamma delta chimeric antigen receptor (CAR) T-cell therapy owned by Regeneron designed to enhance proliferation andpotency against solid tumors. Payments to the Company under the Regeneron Services Agreement included non-refundable up-front paymentand payments based upon the achievement of defined milestones according to written statements of work. The Regeneron Services Agreementwill expire
TheRegeneron Services Agreement grants Regeneron a royalty-free, fully paid up, worldwide, non-exclusive license, with the right to grantsublicenses, to the Company’s intellectual property (“IP”) to the extent that any such license is necessary for Regeneronto fully use the Company’s research services. The Company determined that the (1) research licenses and (2) the research activitiesperformed by the Company represent a single combined performance obligation under the Regeneron Services Agreement. The Company determinedthat Regeneron cannot benefit from the licenses separately from the research activities because these services are specialized and relyon the Company’s expertise such that these activities are highly interrelated and therefore not distinct. Accordingly, the promisedgoods and services represent one combined performance obligation, and the entire transaction price was allocated to that single combinedperformance obligation. The performance obligation will be satisfied over the research term as the Company performs the research activities.
Asof March 31, 2025, the Company received payments totaling $
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SorrentoTherapeutics, Inc. License and Transfer Agreement
TheCompany and Sorrento Therapeutics, Inc. (“Sorrento”), a related party through March 31, 2025, are party to a License andTransfer Agreement for the exclusive worldwide license to CD19 CAR-T constructs for use in placenta-derived cells and/or cord blood-derivedcells for the treatment of any disease or disorder (the “2020 Sorrento License Agreement”). The Company retains the rightto sublicense the rights granted under the agreement with Sorrento’s prior written consent. As consideration for the license, theCompany is obligated to pay Sorrento a royalty equal to low single-digit percentage of net sales (as defined within the agreement) anda royalty equal to low double-digit percentage of all sublicensing revenues (as defined within the agreement). The 2020 Sorrento LicenseAgreement will remain in effect until terminated by either the Company or Sorrento for uncured material breach upon 90 days’ writtennotice or, after the first anniversary of the effective date of the 2020 Sorrento License Agreement, by the Company for convenience uponsix months’ written notice to Sorrento. On October 19, 2023, Sorrento filed a Plan of Reorganization under Chapter 11 of the U.S.Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas which plan contemplates a liquidation of the debtor.If the Plan is confirmed by the Bankruptcy Court, the Company believes that Sorrento will not be able to perform under the license andthat any rights the Company might have under the license would be unenforceable. After assessing the status of the IND to determine anoptional path forward for the program, the Company elected to terminate development of CYCART-19 for B-cell malignancies during the thirdquarter of 2023. The Company may continue pre-clinical development of other T-cell candidates.
GentingInnovation PTE LTD Distribution Agreement
OnMay 4, 2018, concurrently with Dragasac’s equity investment in Legacy Celularity, Legacy Celularity entered into a distributionagreement with Genting Innovation pursuant to which Genting Innovation was granted supply and distribution rights to certain Companyproducts in select Asia markets (the “Genting Agreement”). The Genting Agreement grants Genting Innovation limited distributionrights to the Company’s then-current portfolio of degenerative disease products and provides for the automatic rights to futureproducts developed by or on behalf of the Company.
Theterm of the Genting Agreement was renewed on January 31, 2023, and automatically renews for successive 12-month terms unless: Gentingprovides written notice of its intention not to renew at least three months prior to a renewal term or the Genting Agreement is otherwiseterminated by either party for cause.
GentingInnovation and Dragasac are both direct subsidiaries of Genting Berhad, a public limited liability company incorporated and domiciledin Malaysia.
OnJune 14, 2023, the Genting Agreement was amended and restated to include manufacturing rights in the territories covered under the agreement,expanded to include two new countries, and a commitment by the Company to provide technology transfer pursuant to the plan establishedby a Joint Steering Committee. On January 17, 2024, the Company further amended the Genting Agreement to include distribution and manufacturingrights to certain of the Company’s cell therapy products, including PSC-100, PDA-001, PDA-002, pEXO-001, APPL-001 and CYNK-001.As of March 31, 2025, the Company has not recognized any revenue under the Genting Agreement.
CelgeneCorporation License Agreement
TheCompany is party to a license agreement with Celgene (the “Celgene Agreement”) pursuant to which the Company granted Celgenetwo separate licenses to certain intellectual property. The Celgene Agreement grants Celgene a royalty-free, fully-paid up, worldwide,non-exclusive license to the certain intellectual property (“IP”) for pre-clinical research purposes in all fields and aroyalty-free, fully-paid up, worldwide license, with the right to grant sublicenses, for the development, manufacture, commercializationand exploitation of products in the field of the construction of any CAR, the modification of any T-lymphocyte or NK cell to expresssuch a CAR, and/or the use of such CARs or T-lymphocytes or NK cells for any purpose, including prophylactic, diagnostic, and/or therapeuticuses thereof. The Celgene Agreement will remain in effect until its termination by either party for cause.
Pulthera,LLC Binding Term Sheet
Concurrentwith the entry into the securities purchase agreement for the March 2023 private placement, the Company executeda binding term sheet to negotiate and enter into a sublicense agreement of certain assets from an affiliate of Pulthera, LLC (the “sublicensor”). Pursuant to the binding term sheet, the Company paid the sub licensor a $
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LicenseAgreement with BioCellgraft, Inc.
OnDecember 11, 2023, the Company and BioCellgraft, Inc. (“BioCellgraft”) entered into a license agreement whereby the Companygranted an exclusive license to BioCellgraft, with the right to sublicense, to develop and commercialize certain licensed products tothe dental market in the United States over an initial four year term and it will automatically renew for an additional two years unlesseither party provides written notice of termination. BioCellgraft will pay the Company total license fees of $
17. Segment Information
TheCompany regularly reviews its segments and the approach used by management to evaluate performance and allocate resources. The Companymanages its operations through an evaluation of
Thereportable segments were determined based on the distinct nature of the activities performed by each segment. Cell Therapy broadly refersto therapies the Company is researching and developing. Therapies being researched are unproven and in various phases of development.Degenerative Disease produces, sells and licenses products used in surgical and wound care markets. BioBanking collects stem cells fromumbilical cords and placentas and provides storage of such cells on behalf of individuals for future use.
TheCompany manages its assets on a total company basis, not by operating segment. Therefore, the chief operating decision maker does notregularly review any asset information or related income statement effects by operating segment and, accordingly, asset information isnot reported by operating segment. Total assets were $
Financialinformation by segment for the three months ended March 31, 2025 and 2024 is as follows:
| Three Months Ended March 31, 2025 | ||||||||||||||||||||
| Cell Therapy | BioBanking | Degenerative Disease | Other | Total | ||||||||||||||||
| Net revenues | $ | |||||||||||||||||||
| Cost of revenues (excluding amortization of acquired intangible assets) | ||||||||||||||||||||
| Direct expenses | ||||||||||||||||||||
| Segment contribution | $ | ( | ) | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||
| Indirect expenses | (a) | |||||||||||||||||||
| Loss from operations | ( | ) | ||||||||||||||||||
| (a) Components of other | ||||||||||||||||||||
| Amortization | ||||||||||||||||||||
| Total other | $ | |||||||||||||||||||
| Three Months Ended March 31, 2024 | ||||||||||||||||||||
| Cell Therapy | BioBanking | Degenerative Disease | Other | Total | ||||||||||||||||
| Net revenues | $ | $ | $ | $ | $ | |||||||||||||||
| Cost of revenues (excluding amortization of acquired intangible assets) | ||||||||||||||||||||
| Direct expenses | ||||||||||||||||||||
| Segment contribution | $ | ( | ) | $ | $ | ( | ) | ( | ) | |||||||||||
| Indirect expenses | (a) | |||||||||||||||||||
| Loss from operations | $ | ( | ) | |||||||||||||||||
| (a) Components of other | ||||||||||||||||||||
| Amortization | ||||||||||||||||||||
| Total other | $ | |||||||||||||||||||
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18. Related Party Transactions
Amendedand Restated Employment Agreement with Dr. Robert Hariri
OnJanuary 25, 2023, in order to address the Company’s current working capital requirements, Robert Hariri, M.D., Ph.D., the Company’sChairman and Chief Executive Officer, agreed to temporarily reduce payment of his salary pursuant to his employment agreement to minimumwage level with the remaining salary deferred until December 31, 2023. As of March 31, 2025, $
Inorder to comply with the Securities Purchase Agreement dated
LoanAgreement with Dr. Robert Hariri
OnAugust 21, 2023, the Company entered into a $
OnOctober 12, 2023, in order to further address the Company’s immediate working capital requirements, Robert Hariri, M.D., Ph.D.,the Company’s Chairman and Chief Executive Officer, and the Company signed a promissory note for $
C.V.Starr Loan
OnMarch 17, 2023, the Company entered into a $
Employmentof an Immediate Family Member
AlexandraHariri, the daughter of Robert J. Hariri, M.D., Ph.D., Celularity’s Chairman and Chief Executive Officer, is employed by Celularityas an Executive Director, Corporate Strategy & Business Development. Ms. Hariri’s annual base salary for 2025 and 2024 was$
FountainLife Management LLC
OnNovember 7, 2024, the Company entered into a Technology Services Agreement with Fountain Life Management LLC (“Fountain Life”)under which the Company agreed to process and store mononuclear cells isolated from blood samples collected by Fountain Life or its authorizedrepresentatives in accordance with the Company’s adult banking enrollment processes. In consideration of the services, FountainLife will pay the Company a one-time fee of two thousand five hundred dollars per sample collected and stored. The initial term of theagreement is one year and automatically extends for one-year periods unless earlier terminated by either party. The Company’s Chairmanand Chief Executive Officer, Dr. Robert Hariri, M.D, Ph.D., and director, Peter Diamandis, M.D., are founding partners of Fountain Life.
19. Subsequent Events
OnApril 30, 2025 and May 7, 2025, the Company entered into multiple merchant cash advance (“MCA”) agreements with GenesisEquity Group Funding LLC (“GEG”) under which it transferred the rights to specified future receivables of an aggregatePurchase Amount of $
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OnJune 23, 2025, the Company entered into a Securities Purchase Agreement for a private placement of shares of Class A common stockat $ per share, resulting in proceeds of approximately $
OnJune 25, 2025, the Company entered into a letter agreement and the holders of the unsecured senior convertible notes wherein the Companyagreed to amend the conversion price to $
OnJuly 14, 2025, the Company entered into a Securities Purchase Agreement with an institutional investor for the private placement of shares of Class A common stock and accompanying warrants to purchase an equal number of shares. The purchase price was $ per shareand warrant, with gross proceeds of approximately $
OnJuly 21, 2025, the Company issued a promissory note in the aggregate principal amount of $
OnAugust 5, 2025, the Company entered into a Series Seed Preferred Stock Purchase Agreement with Defeye, Inc. (“Issuer”) forthe issuance of shares of the Issuer’s Series Seed-2 Preferred Stock (“Preferred Stock”), in exchange for$
Pursuantto the License Agreement, the Company has the option (the “Option”) to purchase from Celeniv all (and not any part) of Celeniv’sright, title and interest in the Licensed Technology (as defined in the License Agreement) and Licensed Marks (“Asset Purchase”).The Option shall be in effect for a period of five years from the Effective Date (the “Option Period”). The purchase pricefor the Asset Purchase shall be as follows: (i) if the Option is exercised on or prior to the one year anniversary of the Effective Date,the purchase price shall be a mid-eight digit amount (the “Option Purchase Price”) and (ii) if the Option is exercised afterthe one year anniversary of the Effective Date, the purchase price shall be the Option Purchase Price, plus an amount equal to a lowdouble digit percentage of the Purchase Price, plus the amount of any Quarterly Payments (and penalty interest if any) accrued but unpaidthrough the date of the closing. If the Company does not exercise the Option before the end of the Option Period, the Option shall lapse,and the Term of the License Agreement shall automatically extend for 90 days (the “Negotiation Period”). If the Option isexercised during the Option Period, the Term of the License Agreement shall be extended through the closing of the Asset Purchase.
Unlessterminated earlier or otherwise extended pursuant to the terms of the License Agreement, the License Agreement shall terminate on thefifth anniversary of the Effective Date (the “Term”). Celeniv may terminate the License Agreement (i) if the Company breachesthe terms thereof, unless such breach is cured within 60 days of the receipt of written notice of the breach from Celeniv or (ii) immediatelyin the event that any action is taken by the Company or its creditors to effectuate the Company’s liquidation, dissolution or winding-up.The License Agreement will automatically terminate upon the closing of the Asset Purchase or may be terminated upon mutual agreementof the parties.
On August 15, the Company entered into an additional merchant cash advance (“MCA”) agreement with GenesisEquity Group Funding LLC (“GEG”) under which it transferred the rights to specified future receivables of an aggregate $
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Item2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Youshould read the following discussion of our financial condition and results of operations together with the unaudited interim condensedconsolidated financial statements and the notes thereto included elsewhere in this report and other financial information included inthis report. The following discussion may contain predictions, estimates and other forward-looking statements. See “Special NoteRegarding Forward-Looking Statements.” These forward-looking statements involve a number of risks and uncertainties, includingthose discussed in this report and under “Part I — Item 1A. Risk Factors” in the 2024 Form 10-K. These risks couldcause our actual results to differ materially from any future performance suggested below.
Overview
Weare a regenerative and cellular medicines company focused on addressing aging related diseases including cancer and degenerative diseases.Our goal is to ensure all individuals have the opportunity to live healthier longer. We develop and market off-the-shelf placental-derivedallogeneic advanced biomaterial products including allografts and connective tissue matrices for soft tissue repair and reconstructiveprocedures in the treatment of degenerative disorders and diseases including those associated with aging. We believe that by harnessingthe placenta’s unique biology and ready availability, we will be able to develop therapeutic solutions that address a significantunmet global need for effective, accessible and affordable therapeutics. Our advanced biomaterials business today is comprised primarilyof the sale of our Biovance 3L products, directly or through our distribution network. Biovance 3L is a tri-layer decellularized, dehydratedhuman amniotic membrane derived from the placenta of a healthy, full-term pregnancy. It is an intact, natural extracellular matrix thatprovides a foundation for the wound regeneration process and acts as a scaffold for restoration of functional tissue. We are developingnew placental biomaterial products to deepen the biomaterials commercial pipeline. We also plan to leverage our core expertise in cellulartherapeutic development and manufacturing to generate revenues by providing contract manufacturing and development services to thirdparties. The initial focus of this new service offering will be to assist development stage cell therapy companies with the developmentand manufacturing of their therapeutic candidates for clinical trials.
Weare working toward a set of milestones with respect to off-the-shelf placental-derived allogeneic biomaterial product candidates andcell therapy product candidates, respectively. With respect to our biomaterial product candidate pipeline, we expect to submit a 510(k)application for our Celularity Tendon Wrap, or CTW, in the second half of 2025. We expect to advance the development of our FUSE BoneVoid Filler, or FUSE, with the objective of a 510(k) filing in the second half of 2026, and to advance the development of our CelularityPlacental Matrix, or CPM, with the objective of a 510(k) filing in the second half of 2027. Recently, a number of states have enactedlegislation to expand access to stem cell and other cell therapies which have not yet received FDA approval, including a new Floridalaw that went into effect on July 1, 2025, allowing Florida physicians to administer stem cell treatments for wound care, pain managementand orthopedics purposes, subject to certain requirements and limitations. We are actively assessing opportunities in Florida and elsewhereto supply our MLASCs cell therapy product candidates PDA 001 and PDA 002 to physicians for use in accordance with state law. Additionally,when we are sufficiently capitalized, we plan to complete our safety and efficacy assessment to determine progress to a Phase III clinicaltrial of, respectively, our MLASCs cell therapy product candidate PDA 001 in Crohn’s disease and our MLASCs cell therapy productcandidate PDA 002 in DFU.
OurCelularity IMPACT manufacturing platform is a seamless, fully integrated process designed to optimize speed and scalability from thesourcing of placentas from full-term healthy informed consent donors through the use of proprietary processing methods, cell selection,product-specific chemistry, manufacturing and controls, or CMC, advanced cell manufacturing and cryopreservation. The result is a suiteof allogeneic inventory-ready, on demand placental-derived cell therapy products. We also operate and manage a commercial biobankingbusiness that includes the collection, processing and cryogenic storage of certain birth byproducts for third parties. A biobank is anorganized collection of biological human material, and its associated information stored for future retrieval and use in research, regenerativemedicine, and innovation. We provide a fee-based biobanking service to expectant parents who contract with us to collect, process, cryogenicallypreserve and store certain biomaterial, including umbilical cord blood and placenta derived cells and tissue. We receive a one-time feefor the collection, processing, and cryogenic preservation of the biomaterials, and a storage fee to maintain the biomaterials in ourbiobank payable annually generally over a period of 18 to 25 years. We intend to explore opportunities to diversify our biobanking business,including adult cell banking.
Ourcurrent science is the product of the cumulative background and effort over two decades of our seasoned and experienced management team.We have our roots in Anthrogenesis Corporation, or Anthrogenesis, a company founded under the name Lifebank in 1998 by Robert J. Hariri,M.D., Ph.D., our founder and Chief Executive Officer, and acquired in 2002 by Celgene Corporation, or Celgene. The team continued tohone their expertise in the field of placental-derived technology at Celgene through August 2017, when we acquired Anthrogenesis. Wehave a robust global intellectual property portfolio comprised of over 290 patents and patent applications protecting our CelularityIMPACT platform, our processes, technologies and cell therapy programs that we are actively developing on our own or seeking to out-licenseor to find a collaboration partner to develop. We believe this know-how, expertise and intellectual property will drive the rapid developmentand, if approved, the commercialization of these potentially lifesaving therapies for patients with unmet medical needs.
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RecentDevelopments
OnApril 30, 2025 and May 7, 2025, the Company entered into multiple merchant cash advance (“MCA”) agreements with Genesis EquityGroup Funding LLC under which it transferred the rights to specified future receivables of an aggregate Purchase Amount of $1,485 inexchange for aggregate upfront cash proceeds of $891, until the Purchased Amount is fully collected.
OnMay 20, 2025, we entered into a letter agreement with YA II PN, Ltd. pursuant to which, among other things, the maturity date of theConvertible Promissory Note dated as of March 13, 2024 was extended to August 15, 2025 from May 12, 2025 in exchange for the issuanceto YA of 100,000 shares of our restricted common stock with such shares having piggy back registration rights such that the resale ofsuch shares by YA shall be included in any registration statement filed by us after the date of the letter agreement. On August 5, 2025,Yorkville agreed to further extend the maturity date to October 15, 2025, provided, among other things, we file our March 31, 2025, andJune 30, 2025, Form 10-Q on or before August 25, 2025.
OnMay 28, 2025, we received notice from the Listing Qualifications Staff of Nasdaq (the “Notice’) that as a result of ourfailure to timely file this quarterly report on Form 10-Q, we no longer complied with the continued listing requirements under thetimely filing criteria outlined in Nasdaq Listing Rule 5250(c)(1). Pursuant to Listing Rule 5810(d)(2), this delinquency serves asbasis for delisting our common stock from trading. On August 1, 2025, we submitted our plan to Nasdaq to regain compliance withNasdaq Listing Rule 5250(c)(1). Under our plan, we requested an extension of 180 days from the date of the Notice to implement theplan. On August 11, 2025, Nasdaq notified us of its decision to grant us an exception to enable us to regain compliance with NasdaqListing Rule 5250(c)(1). Under the terms of the exception, we have until August 31, 2025, to file the Form 10-Q for the periodsended March 31, 2025, and June 30, 2025. In the event we do not satisfy the terms of the exception, Nasdaq will provide writtennotification that our securities will be delisted. At that time, we may appeal Nasdaq’s determination to a Hearings Panel.There can be no assurance that we will maintain compliance with the Nasdaq listing requirements. If we are unable to regaincompliance, our securities will be delisted from the Nasdaq, which such delisting could have a materially adverse effect on ourability to continue as a going concern.
OnJune 23, 2025, we entered into a Securities Purchase Agreement for a private placement of 739,286 shares of Class A common stock at $1.40per share, resulting in expected gross proceeds of approximately $1.035 million. In conjunction with the offering, we agreed to modifycertain existing warrants held by the investors, reducing the exercise price to $2.50 and extending the expiration date to June 30, 2030.Proceeds are intended for working capital and general corporate purposes. Following the June 23, 2025, Security Purchase Agreement, theconversion price on the Yorkville convertible promissory note was further reset to 1.40 pursuant to the terms of the convertible promissorynote.
OnJuly 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States. The OBBBA includes significant provisions,such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, and the restoration of favorable tax treatmentfor certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implementedthrough 2027. We are currently assessing its impact on our condensed consolidated financial statements.
OnJuly 14, 2025, the Company entered into a Securities Purchase Agreement with an institutional investor for the private placement of 1,230,769shares of Class A common stock and accompanying warrants to purchase an equal number of shares. The purchase price was $1.63 per shareand warrant, with gross proceeds of approximately $2,000. The warrants are exercisable at $1.50 per share for a term of two years.Net proceeds are expected to be used for working capital and general corporate purposes.
OnJuly 21, 2025, the Company issued a promissory note in the aggregate principal amount of $6,812 to Lim Kok Thay. In addition, Mr. Thayreceived a warrant to purchase 3,700,000 shares of Class A common stock. The warrant is exercisable at $2.53 per share for five yearsfrom the date of issuance. The July 21, 2025 promissory note bears interest at 2% per annum and has a maturity date of March 21, 2026. The promissory note was subsequently assigned by Mr. Thay to Celeniv Pte. Ltd. (“Celeniv”). The Companyhas agreedwith Mr. Thay that a portion of the net proceeds from the issuance of the Note will be used to fully settle the principal and allaccrued interest of the loan from C.V. Starr & Co. pursuant to the loan agreement between the Company and Starr dated March 17, 2023.
OnAugust 5, 2025, the Company entered into a Series Seed Preferred Stock Purchase Agreement with Defeye, Inc. (“Issuer”) forthe issuance of 7,198,630 shares of the Issuer’s Series Seed-2 Preferred Stock (“Preferred Stock”), in exchange for$2.89 million of product purchase credits pursuant to a supply and distribution agreement between the Company and the Issuer.
OnAugust 13, 2025, the Company entered into an Asset Purchase Agreement (APA) with Celeniv Pte. Ltd. to sell certain intellectual propertyfor $33,812. The Company will use the proceeds to satisfy, in full, the following obligations: (i) the RWI Bridge Loan and the RWI SecondAmended Bridge in the aggregate principal amount of $27,000 outstanding and (ii) the July 21, 2025, promissory note in the principalamount of $6,812 issued by the Company to Lim Kok Thay, and subsequently assigned by Mr. Thay to Celeniv. In connection with the APA,the Company entered into a License Agreement with Celeniv, granting the Company an exclusive, worldwide, royalty-bearing license undercertain intellectual property. The Company will pay Celeniv a royalty in an amount equal to a low double digit percentage of the purchaseprice payable in quarterly installments commencing on the one year anniversary through the earlier of (A) the closing of the Asset Purchaseand (B) the fifth anniversary of the License Agreement (including the Negotiation Period).
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Pursuantto the License Agreement, the Company has the option (the “Option”) to purchase from Celeniv all (and not any part) of Celeniv’sright, title and interest in the Licensed Technology (as defined in the License Agreement) and Licensed Marks (“Asset Purchase”).The Option shall be in effect for a period of five years from the Effective Date (the “Option Period”). The purchase pricefor the Asset Purchase shall be as follows: (i) if the Option is exercised on or prior to the one year anniversary of the Effective Date,the purchase price shall be a mid-eight digit amount (the “Option Purchase Price”) and (ii) if the Option is exercised afterthe one year anniversary of the Effective Date, the purchase price shall be the Option Purchase Price, plus an amount equal to a lowdouble digit percentage of the Purchase Price, plus the amount of any Quarterly Payments (and penalty interest if any) accrued but unpaidthrough the date of the closing. If the Company does not exercise the Option before the end of the Option Period, the Option shall lapseand the Term of the License Agreement shall automatically extend for 90 days (the “Negotiation Period”). If the Option isexercised during the Option Period, the Term of the License Agreement shall be extended through the closing of the Asset Purchase.
Unlessterminated earlier or otherwise extended pursuant to the terms of the License Agreement, the License Agreement shall terminate on thefifth anniversary of the Effective Date (the “Term”). Celeniv may terminate the License Agreement (i) if the Company breachesthe terms thereof, unless such breach is cured within 60 days of the receipt of written notice of the breach from Celeniv or (ii) immediatelyin the event that any action is taken by the Company or its creditors to effectuate the Company’s liquidation, dissolution or winding-up.The License Agreement will automatically terminate upon the closing of the Asset Purchase or may be terminated upon mutual agreementof the parties.
GoingConcern
Inaccordance with Generally Accepted Accounting Principles, “GAAP,” we evaluated whether there are certain conditions and events,considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after thedate that the unaudited condensed consolidated financial statements are issued.
Asan emerging clinical-stage biotechnology company, we are subject to certain inherent risks and uncertainties associated with the developmentof an enterprise. In this regard, since our inception, substantially all of management’s efforts have been devoted to making investmentsin research and development including basic scientific research into placentally-derived allogeneic cells, pre-clinical studies to supportour current and future clinical programs in cellular therapeutics, and clinical development of our cell programs as well as facilitiesand selling, general and administrative expenses that support our core business operations (collectively the “investments”),all at the expense of our short-term profitability. We have historically funded these investments through limited revenues generatedfrom our biobanking and degenerative disease businesses and issuances of equity and debt securities to public and private investors (theseissuances are collectively referred to as “outside capital”). Notwithstanding these efforts, management can provide no assurancethat our research and development and commercialization efforts will be successfully completed, or that adequate protection of our intellectualproperty will be adequately maintained. Even if these efforts are successful, it is uncertain when, if ever, we will generate significantsales or operate in a profitable manner to sustain our operations without needing to continue to rely on outside capital. Continued declinein our share price could result in impairment of goodwill or long-lived assets in a future period.
Asof the date the unaudited condensed accompanying consolidated financial statements were issued, or the issuance date, management evaluatedthe significance of the following adverse conditions and events in accordance with ASU 205-40:
| ● | Since inception, we have incurred significant operating losses and used net cash from operations. For the three months ending March 31, 2025, we incurred an operating loss of $10.5 million and used net cash outflows in operations of $2.9 million. As of March 31, 2025, we had an accumulated deficit of $919.5 million. We expect to continue to incur significant operating losses and use net cash in operations for the foreseeable future. | |
| ● | We expect to incur substantial expenditures to fund our investments for the foreseeable future. In order to fund these investments, we will need to secure additional sources of outside capital. While we are actively seeking to secure additional outside capital (and have historically been able to successfully secure such capital), as of the issuance date, no additional outside capital has been secured or was deemed probable of being secured. In addition, management can provide no assurance that we will be able to secure additional outside capital in the future or on terms that are acceptable to us. Absent the ability to secure additional outside capital in the very near term, we will be unable to meet our obligations as they become due over the next 12 months beyond the issuance date. | |
| ● | As of the issuance date, we had approximately $6.3 million of principal debt outstanding, all of which is currently due or due within one year of the issuance date. As disclosed in Note 10, substantially all of our outstanding debt is subject to a forbearance agreement. In the event the terms of the forbearance agreements are not met and/or the outstanding borrowings are not repaid, the lenders may, at their discretion, exercise all of their rights and remedies under the loan agreements which may include, among other things, seizing our assets and/or forcing us into liquidation. | |
| ● | On May 28, 2025,we received notice from the Listing Qualifications Staff of Nasdaq (the “Notice’) that as a result of our failure to timely file this quarterly report on Form 10-Q, we no longer complied with the continued listing requirements under the timely filing criteria outlined in Nasdaq Listing Rule 5250(c)(1). Pursuant to Listing Rule 5810(d)(2), this delinquency serves as basis for delisting our common stock from trading. On August 1, 2025, we submitted our plan to Nasdaq to regain compliance with Nasdaq Listing Rule 5250(c)(1). Under our plan, we requested an extension of 180 days from the date of the Notice to implement the plan. On August 11, 2025, Nasdaq notified us of its decision to grant us an exception to enable us to regain compliance with Nasdaq Listing Rule 5250(c)(1). Under the terms of the exception, we have until August 31, 2025, to file the Form 10-Q for the periods ending March 31, 2025, and June 30, 2025. In the event we do not satisfy the terms of the exception, Nasdaq will provide written notification that our securities will be delisted. At that time, we may appeal Nasdaq’s determination to a Hearings Panel. There can be no assurance that we will maintain compliance with the Nasdaq listing requirements. If we are unable to regain compliance, our securities will be delisted from Nasdaq, which such delisting could have a materially adverse effect on our ability to continue as a going concern. | |
| ● | In the event we are unable to secure additional outside capital to fund our obligations when they become due, including repayment of our outstanding debt, over the next 12 months beyond the issuance date, management will be required to seek other strategic alternatives, which may include, among others, a significant curtailment of our operations, a sale of certain of our assets, a sale of our entire company to strategic or financial investors, and/or allowing us to become insolvent by filing for bankruptcy protection under the provisions of the U.S. Bankruptcy Code. |
Theseuncertainties raise substantial doubt about our ability to continue as a going concern. The accompanying unaudited condensed consolidatedfinancial statements have been prepared on the basis that we will continue to operate as a going concern, which contemplates that wewill be able to realize assets and settle liabilities and commitments in the normal course of business for the foreseeable future. Accordingly,the accompanying unaudited condensed consolidated financial statements do not include any adjustments that may result from the outcomeof these uncertainties.
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BusinessSegments
Wemanage our operations through an evaluation of three distinct business segments: Cell Therapy, Degenerative Disease, and BioBanking.The reportable segments were determined based on the distinct nature of the activities performed by each segment. Cell Therapy broadlyrefers to cellular therapies we are researching and developing, which are unproven and in various phases of development. All of the celltherapy programs fall into the Cell Therapy segment. We have no approved cell therapy product and have not generated revenue from thesale of cellular therapies to date. Degenerative Disease produces, sells and licenses products used in surgical and wound care markets,such as Biovance, Biovance 3L, Interfyl and CentaFlex. We sell products in this segment using independent sales representatives as wellas distributors. We are developing additional tissue-based products for the Degenerative Disease segment. BioBanking collects stem cellsfrom umbilical cords and placentas and provides storage of such cells on behalf of individuals for future use. We operate in the biobankingbusiness primarily under the LifebankUSA brand. For more information about our reportable business segments refer to Note 17, “SegmentInformation” of our accompanying unaudited condensed consolidated financial statements included elsewhere in this quarterly reporton Form 10-Q.
Acquisitionsand Divestitures
Ourcurrent operations reflect the following strategic acquisitions that we have made since formation.
InMay 2017, we acquired HLI Cellular Therapeutics, LLC, or HLI CT, from Human Longevity Inc. HLI CT operated LifebankUSA, a private umbilicalcord blood stem cell and cord tissue bank that offers parents the option to collect, process and cryogenically preserve newborn umbilicalcord blood stem cells and cord tissue units. The HLI CT acquisition also provided us with rights to a portfolio of biomaterial assets,including Biovance and Interfyl. At the time of the HLI CT acquisition, Biovance and Interfyl were subject to an exclusive distributionarrangement with Alliqua Biomedical, Inc., or Alliqua. In May 2018, we acquired certain assets from Alliqua, including Alliqua’sbiologic wound care business, which included the marketing and distribution rights to Biovance and Interfyl.
InAugust 2017, we acquired Anthrogenesis, a wholly owned subsidiary of Celgene. The Anthrogenesis acquisition included a portfolio of pre-clinicaland clinical stage assets, including key cellular therapeutic assets that we continue to develop. The Anthrogenesis acquisition givesus access to Anthrogenesis’ proprietary technologies and processes for the recovery of large quantities of high-potential stemcells and cellular therapeutic products derived from postpartum human placentas, each an Anthrogenesis Product. As part of the Anthrogenesisacquisition, some of the inventors of the Anthrogenesis Products and other key members of the Anthrogenesis Product development teamjoined us.
OnOctober 9, 2024, we entered into an asset purchase agreement with Sequence LifeScience, Inc. (“Sequence”) to acquire Sequence’sRebound™ full thickness placental-derived allograft matrix product and certain related intangible assets. Rebound adds to our portfolioof placental-derived advanced biomaterial products. We will pay aggregate consideration for the assets of up to $5.5 million, which consistsof (i) an upfront cash payment of $1.0 million (ii) an aggregate of up to $4.0 million in monthly milestone payments, and (iii) a creditof $0.5 million for the previous payment made by us to Sequence pursuant to a letter of intent between us and Sequence dated August 16,2024. Pursuant to the terms of the asset purchase agreement, the milestones are calculated based on 20% of net sales collected by usfrom our customers during the preceding calendar month, commencing the first full month after the closing of the transaction. Transactioncosts incurred with in connection with the Rebound asset acquisition were de minimis. As of March 31, 2025, we have accrued a total of$1.0 million for milestone payments due Sequence based on cumulative net sales collected from customers.
LicensingAgreements
Inthe ordinary course of business, we license intellectual property and other rights from third parties and have also outlicensed our intellectualproperty and other rights, including in connection with our acquisitions and divestitures, described above. Additional details regardingour licensing agreements can be found in Note 16, “License and Distribution Agreements” to our unaudited condensed consolidatedfinancial statements included elsewhere in this quarterly report on Form 10-Q.
InAugust 2017, in connection with the Anthrogenesis acquisition, we entered into a license agreement, or the Celgene License, with Celgene,which has since been acquired by Bristol Meyers Squibb. Pursuant to the Celgene License, we granted Celgene a worldwide, royalty-free,fully-paid up, non-exclusive license, without the right to grant sublicenses (other than to its affiliates), under Anthrogenesis’intellectual property in existence as of the date of the Celgene License or as developed by Celgene in connection with any transitionservices activities related to the merger for non-commercial pre-clinical research purposes, as well as to develop, manufacture, commercializeand fully exploit products and services that relate to the construction of any CAR, the modification of any T-cell or NK cell to expresssuch a CAR, and/or the use of such CARs or T-cells or NK cells for any purpose, which commercial license is sublicensable. Either partymay terminate the Celgene License upon an uncured material breach of the agreement by the other party or insolvency of the other party.
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InAugust 2017, Legacy Celularity also issued shares of its Series X Preferred Stock to Celgene as merger consideration and entered intoa contingent value rights agreement, or the CVR Agreement, with Celgene pursuant to which Legacy Celularity issued one contingent valueright or CVR, in respect of each share of Legacy Celularity Series X Preferred Stock issued to Celgene in connection with the Anthrogenesisacquisition. The CVR Agreement entitles the holders of the CVRs to an aggregate amount, on a per program basis, of $50.0 million in regulatorymilestones and an aggregate $125.0 million in commercial milestone payments with respect to certain of our investigational therapeuticprograms. In addition, with respect to each such program and calendar year, the CVR holders will be entitled to receive a royalty equalto a mid-teen percentage of the annual net sales for such program’s therapeutics from the date of the first commercial sale ofsuch program’s therapeutic in a particular country until the latest to occur of the expiration of the last to expire of any validpatent claim covering such program therapeutic in such country, the expiration of marketing exclusivity with respect to such therapeuticin such country, and August 2027 (i.e., the tenth anniversary of the closing of the acquisition of Anthrogenesis). No payments underthe CVR Agreement have been made to date. We estimate the liability associated with the CVR quarterly. Changes to that liability includebut are not limited to changes in our clinical programs, assumptions about the commercial value of those programs and the time valueof money.
OnAugust 25, 2023, we entered into a multi-year research collaboration services agreement with Regeneron Pharmaceuticals, Inc. (“Regeneron”),pursuant to which we support the research effort of Regeneron’s allogeneic cell therapy candidates (the “Regeneron ServicesAgreement”). We received payments totaling $1.3 million under the Regeneron Services Agreement, of which $688 was recognized inrevenue during the fourth quarter of 2024 based on achievement of defined milestones. As of March 31, 2025, the remaining $637 was recordedas deferred revenue to be recognized based on satisfaction of future performance obligations. On August 6, 2025, Regeneron provided uswith notice of termination of the agreement. Accordingly, the remaining $637 will be recognized in revenue during the third quarter of2025. For additional information about the Regeneron Service Agreement, refer to Note 16, of the Notes to the Condensed ConsolidatedFinancial Statements included elsewhere in this report.
OnDecember 11, 2023, we entered into a license agreement with BioCellgraft, Inc. whereby we granted an exclusive license to BioCellgraft,with the right to sublicense, to develop and commercialize certain licensed products to the dental market in the United States over aninitial four year term, which license agreement will automatically renew for an additional two years unless either party provides writtennotice of termination. BioCellgraft agreed to pay us total license fees of $5.0 million over a two-year period. Upon execution of theagreement, we received an initial $0.3 million payment towards the first year of the two-year period.
Componentsof Operating Results
Netrevenues
Netrevenues include: (i) sales of biomaterial products, including Biovance, Biovance 3L, ReboundTM, Interfyl, and CentaFlex ofwhich our direct sales are included in Product Sales while sales through our network of distribution partners are included in License,royalty and other; and (ii) the collection, processing and storage of umbilical cord and placental blood and tissue after full-term pregnancies,collectively, Services.
Costof revenues
Costof revenues consists of labor, material and overhead costs associated with our two existing commercial business segments, biobankingand degenerative disease. Biobanking costs include the cost of storage and transportation kits for newly banked materials as well astank and facility overhead costs for cord blood and other units in storage. Degenerative disease costs include costs associated withprocuring placentas, qualifying the placental material and processing the placental tissue into a marketable product. Costs in the degenerativedisease segment include labor and overhead costs associated with the production of the Biovance, Biovance 3L, Interfyl and CentaFlexproduct lines. Cost of revenues associated with direct sales are part of Product Sales while cost of revenues associated with sales throughour network of distribution partners are included in License, royalty and other.
Researchand development expense
Ourresearch and development expenses primarily relate to basic scientific research into placentally derived allogeneic cells, pre-clinicalstudies to support our current and future clinical programs in cellular medicine, clinical development of our NK cell programs and facilities,depreciation and other direct and allocated expenses incurred as a result of research and development activities. We incur expenses forpersonnel expenses for research scientists, specialized chemicals and reagents used to conduct biologic research, expense for third partytesting and validation and various overhead expenses including rent and facility maintenance expense. Basic research, research collaborationsinvolving partners and research designed to enable successful regulatory submissions is critical to our current and future success incell therapy. The amount of our research and development expenditures will depend on numerous factors, including the timing of clinicaltrials, preliminary evidence of efficacy in clinical trials and the number of indications that we choose to pursue.
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Generaland administrative expense
Selling,general and administrative expense consists primarily of personnel costs including salaries, bonuses, stock compensation and benefitsfor specialized staff that support our core business operations. Executive management, finance, legal, human resources and informationtechnology are key components of selling, general and administrative expense and those expenses are recognized when incurred. We expectthat as a result of our reprioritization efforts, we will see a decrease in our selling, general and administrative costs in the nearterm. The magnitude and timing of our selling, general and administrative costs will depend on the progress of clinical trials, commercializationefforts for any approved therapies including the release of new products within the degenerative disease portfolio, changes in the regulatoryenvironment or staffing needs to support our business strategy.
Changein fair value of contingent consideration liability
Becausethe acquisitions of Anthrogenesis from Celgene and HLI CT were accounted for as business combinations, we recognized acquisition-relatedcontingent consideration on the balance sheets in accordance with the acquisition method of accounting. See Note 12, “Commitments and Contingencies” for more information. The fair value of contingent consideration liability is determinedbased on a probability-weighted income approach derived from revenue estimates and a probability assessment with respect to the likelihoodof achieving regulatory and commercial milestone obligations and royalty obligations. The fair value of acquisition related contingentconsideration is remeasured each reporting period with changes in fair value recorded in the condensed consolidated statements of operations.Changes in contingent consideration fair value estimates result in an increase or decrease in our contingent consideration obligationand a corresponding charge or reduction to operating results. Key elements of the contingent consideration are regulatory milestone payments,sales milestone payments and royalty payments. Regulatory payments are due on regulatory approval of certain cell types in the UnitedStates and the European Union. Regulatory milestone payments are one time but are due prior to any potential commercial success of acell type in a specific indication. Royalty payments are a percentage of net sales. Sales milestone payments are due when certain aggregatesales thresholds have been met. Management must use substantial judgment in evaluating the value of the contingent consideration. Estimatesused by management include but are not limited to: (i) the number and type of clinical programs that we are likely to pursue based onthe quality of our preclinical data, (ii) the time required to conduct clinical trials, (iii) the odds of regulatory success in thosetrials, (iv) the potential number of patients treatable for the indications in which we are successful and (v) the pricing of treatmentsthat achieve commercial status. All of these areas involve substantial judgment on the part of management and are inherently uncertain.
Resultsof Operations
Comparisonof Three Months Ended March 31, 2025 to March 31, 2024
| Three Months Ended March 31, | Increase | Percent Increase | ||||||||||||||
| 2025 | 2024 | (Decrease) | (Decrease) | |||||||||||||
| Net revenues: | ||||||||||||||||
| Product sales | $ | 9,018 | $ | 12,843 | (3,825 | ) | (29.8 | )% | ||||||||
| Services | 1,408 | 1,287 | 121 | 9.4 | % | |||||||||||
| License, royalty and other | 1,000 | 551 | 449 | 81.5 | % | |||||||||||
| Total revenues | 11,426 | 14,681 | (3,255 | ) | (22.2 | )% | ||||||||||
| Operating expenses: | ||||||||||||||||
| Cost of revenues (excluding amortization of acquired intangible assets) | ||||||||||||||||
| Product sales | 2,506 | 1,222 | 1,284 | 105.1 | % | |||||||||||
| Services | 209 | 177 | 32 | 18.1 | % | |||||||||||
| License, royalty and other | 839 | 241 | 598 | 248.1 | % | |||||||||||
| Research and development | 3,728 | 5,843 | (2,115 | ) | (36.2 | )% | ||||||||||
| Selling, general and administrative | 14,262 | 14,028 | 234 | 1.7 | % | |||||||||||
| Amortization of acquired intangible assets | 368 | 546 | (178 | ) | (32.6 | )% | ||||||||||
| Total operating expense | 21,912 | 22,057 | (145 | ) | (0.7 | )% | ||||||||||
| Loss from operations | $ | (10,486 | ) | $ | (7,376 | ) | $ | (3,110 | ) | 42.2 | % | |||||
NetRevenues and Cost of Revenues
Netrevenues for the three months ended March 31, 2025, were $11.4 million, a decrease of $3.3 million, or 22.2%, compared to the prior yearperiod. The decrease was primarily due to a $3.8 million decrease in product sales driven mainly by lower Biovance 3L sales partiallyoffset by higher Rebound sales.
Costof revenues for the three months ended March 31, 2025, was $3.6 million, an increase of $1.9 million, or 117%, compared to the prioryear period. Included in product sales costs was $0.7 million write-off of capitalized bulk material costs used in the production ofInterfyl and higher costs due to product mix.
Researchand Development Expenses
Researchand development expenses for the three months ended March 31, 2025, were $3.7 million, a decrease of $2.1 million, or 36.2%, comparedto the prior year period. The decrease was primarily due to a $1.9 million decrease in lab supplies expense and a $0.5 million decreasein personnel costs.
Selling,General and Administrative Expenses
Selling,general and administrative expenses for the three months ending March 31, 2025, were $14.3 million, an increase of less than $0.2 million,or 1.7%, compared to the prior year period.
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OtherIncome (Expense)
| For the Three Months Ended March 31, | Percent | |||||||||||||||
| 2025 | 2024 | Change | Change | |||||||||||||
| Interest income | $ | 76 | $ | 110 | $ | (34 | ) | (30.9 | )% | |||||||
| Interest expense | (2,437 | ) | (1,148 | ) | (1,289 | ) | 112.3 | % | ||||||||
| Change in fair value of warrant liabilities | 242 | (8,875 | ) | 9,117 | (102.7 | )% | ||||||||||
| Change in fair value of debt | (12 | ) | 81 | (93 | ) | (114.8 | )% | |||||||||
| Loss on debt extinguishment | (5,736 | ) | (3,908 | ) | (1,828 | ) | 46.8 | % | ||||||||
| Other expenses, net | (1,401 | ) | (897 | ) | (504 | ) | 56.2 | % | ||||||||
| Total other expense | $ | (9,268 | ) | $ | (14,637 | ) | $ | 5,369 | (36.7 | )% | ||||||
Forthe three months ended March 31, 2025, total other expense was $9.3 million compared to $14.6 million in the prior year period. The decreasewas primarily due to changes in the fair value of warrant liabilities of $9.1 million, partially offset by a $1.8 million increase inloss on debt extinguishment in connection with the January 12, 2025 RWI Fourth Amended Bridge Loan and an increase in interest expenseof $1.3 million.
Liquidityand Capital Resources
Asof March 31, 2025, we had $0.3 million of unrestricted cash and cash equivalents and an accumulated deficit of $919.5 million. Our primarysources of cash are revenues generated through our biomaterials and biobanking commercial businesses, as well as financing activities.Our capital resources are primarily used to fund our operating expenses, including: selling, general and administrative costs to operateour commercial businesses; costs to maintain our GMP manufacturing and research and development facility; and, costs related to developmentof our advanced biomaterial and cell therapy product candidates, along with cash used for debt repayment.
OnJanuary 24, 2025, we agreed with the holder of warrants dated January 16, 2024 to purchase 535,274 shares of Class A common stock (the“2024 Warrant”) and warrants dated January 9, 2020, as amended, to purchase 652,981 shares of Class A common stock (the “2020Warrant” and together with the 2024 Warrants, the “Warrants”) to amend the exercise price of the Warrants to $2.07per share from $2.49 per share. The holder agreed to exercise the Warrants for gross proceeds to us of approximately $2.46 million.
OnJanuary 29, 2025, Dr. Robert Hariri, our CEO, extended the maturity date of his outstanding loans from December 31, 2024, to December31, 2025.
Asof the issuance date, we had insufficient unrestricted cash and cash equivalents available to fund our operations and no available additionalsources of outside capital to sustain our operations for a period of 12 months beyond the issuance date. These uncertainties raise substantialdoubt about our ability to continue as a going concern. Refer to the Going Concern section above for further details.
Todate, we have not had any cellular therapeutics approved for sale and have not generated any revenues from the sale of our cellular therapeuticsand we are not actively developing any cellular therapeutics in our pipeline given our liquidity. We do not expect to generate any revenuefrom cellular therapeutic product sales unless and until we successfully complete development and obtain regulatory approval for oneor more of our therapeutic candidates, which we expect will take a number of years. If we obtain regulatory approval for any of our therapeuticcandidates, we expect to incur significant commercialization expenses related to therapeutic sales, marketing, manufacturing and distributionas our current commercialization efforts are limited to our biobanking and degenerative disease businesses. As a result, until such time,if ever, as we can generate sufficient revenues to fund operations, we expect to finance our cash needs through equity offerings, debtfinancings or other capital sources, including commercial sales of our biomaterials products, as well as potentially collaborations,licenses and other similar arrangements for our cellular therapeutic candidates. We continue to explore licensing and collaboration arrangementsfor our cellular therapeutics as well as distribution arrangements for our degenerative disease business. However, we may be unable toraise additional funds or enter into such other arrangements when needed on favorable terms or at all. Any failure to raise capital asand when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies.Failure to obtain this necessary capital or address our liquidity needs may force us to delay, limit or terminate our operations, makefurther reductions in our workforce, discontinue our commercialization efforts for our biomaterials products as well as other clinicaltrial programs, liquidate all or a portion of our assets or pursue other strategic alternatives, and/or seek protection under the provisionsof the U.S. Bankruptcy Code.
Weexpect to incur substantial expenses in the foreseeable future for the expansion of our degenerative disease business and ongoing internalresearch and development programs. We will require substantial additional funding in the future to build the sales, marketing and distributioninfrastructure that will be necessary to commercialize our biomaterials products.
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Todate, inflation has not had a significant impact on our business. However, any significant increase in inflation and interest rates couldhave a significant effect on the economy in general and, thereby, could affect our future operating results.
CashFlows
Thefollowing table summarizes our cash flows for the three months ended March 31, 2025, and 2024:
| For the Three Months Ended March 31, | ||||||||||||
| 2025 | 2024 | Change | ||||||||||
| Cash (used in)/provided by: | ||||||||||||
| Operating activities | $ | (2,993 | ) | $ | (4,403 | ) | $ | 1,410 | ||||
| Investing activities | — | (39 | ) | 39 | ||||||||
| Financing activities | 2,320 | 6,227 | (3,907 | ) | ||||||||
| Net change in cash, cash equivalents and restricted cash | $ | (673 | ) | $ | 1,785 | $ | (2,458 | ) | ||||
OperatingActivities
Weused $3.0 million of net cash in operations for the three months ending March 31, 2025, compared to $4.4 million for the three monthsending March 31, 2024. The decrease was primarily due to lower research and development costs and higher working capital.
InvestingActivities
Netcash provided by investing activities was $0 during the three months ending March 31, 2025, compared to net cash used in investing activitiesof $0.4 million during the three months ending March 31, 2024.
FinancingActivities
Netcash provided by financing activities was $2.3 million for the three ended March 31, 2025, compared to $6.2 million for the three months ended March 31, 2024. The decrease is primarily a result of the $15.0million decrease in proceeds from warrants and related party short term debt, the $6.0 million decrease in proceeds from PIPE Offerings,net of offering costs, and the $3.0 million decrease in the proceeds from the issuance of unaffiliated short-term debt, offset primarilyby a $17.4 million decrease in repayments of unaffiliated short term debt and a $2.5 million increase in proceeds from the issuance ofcommon stock in connection with a warrant inducement.
CriticalAccounting Policies
Oursignificant accounting policies are summarized in Note 2, “Summary of Significant Accounting Policies” included within theNotes to our unaudited condensed consolidated financial statements included elsewhere in this quarterly report on Form 10-Q and in Note2 to our audited annual financial statements included in the 2024 Form 10-K.
Therehave been no significant changes in our critical accounting policies during the three months ending March 31, 2025 as compared with thosepreviously disclosed in the 2024 Form 10-K.
RecentAccounting Pronouncements
SeeNote 2 to our unaudited condensed consolidated financial statements included herein and Note 2 to our audited annual financial statementsfor the year ended December 31, 2024 included in the 2024 Form 10-K for information about recent accounting pronouncements, the timingof their adoption, and our assessment, to the extent we have made one, of their potential impact on our financial condition and resultsof operations.
Item3. Quantitative and Qualitative Disclosures About Market Risk.
Notapplicable.
Item4. Controls and Procedures.
Evaluationof Disclosure Controls and Procedures
Theterm “disclosure controls and procedures,” as defined under Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controlsand other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports thatit files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in theSEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensurethat information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulatedand communicated to the company’s management, including its principal executive and principal financial officer, as appropriateto allow timely decisions regarding required disclosure. Because there are inherent limitations in all control systems, a control system,no matter how well conceived and operated, can provide only reasonable, as opposed to absolute, assurance that the objectives of thecontrol system are met. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdownscan occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusionof two or more people, or by management override of the control. Further, the design of a control system must reflect the fact that thereare resource constraints, and the benefits of controls must be considered relative to their costs.
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Ourmanagement, with the participation of our Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness ofour disclosure controls and procedures as of the end of the period covered in this quarterly report on Form 10-Q. Based on that evaluation,management concluded that the disclosure controls and procedures were not effective, at the reasonable assurance level, as of the endof the period covered by this quarterly report on Form 10-Q, as a result of the material weaknesses in internal control over financialreporting discussed below as well as our inability to timely file this quarterly report on Form 10-Q, as well as our annual report onForm 10-K for the year ended December 31, 2024, which had not been filed until May 8, 2025.
Wepreviously identified the following material weaknesses in our internal control over financial reporting:
| i. | Control Environment: We failed to demonstrate a commitment to attract, develop and retain competent and sufficient qualified resources with an appropriate level of knowledge, experience, and training in certain areas around our financial reporting process. |
| ii. | Risk Assessment: We failed to design and implement certain risk assessment activities related to identifying and analyzing risks to achieve objectives and identifying and assessing changes in the business that could impact our system of internal controls. |
| iii. | Control Activities: We failed to design and implement certain control activities that address relevant risks and retain sufficient evidence of the performance of control activities. |
| iv. | Information and Communication: We failed to design and implement certain information and communication activities related to obtaining or generating and using relevant quality information to support the functioning of internal control. |
| v. | Monitoring: We failed to design and implement certain monitoring activities to ascertain whether the components of internal control are present and functioning. |
Weare currently implementing our remediation plan to address the material weaknesses identified above. Such measures include:
| ● | Hiring additional accounting personnel to ensure timely reporting of significant matters. |
| ● | Designing and implementing controls to formalize roles and review responsibilities to align with our team’s skills and experience and designing and implementing formalized controls to operate at a level of precision to identify all potentially material errors. |
| ● | Designing and implementing procedures to identify and evaluate changes in our business and the impact on our internal controls in order to plan and perform more timely and thorough monitoring activities and risk assessment analyses. |
| ● | Designing and implementing formal processes, policies and procedures supporting our financial close process. |
| ● | Engaging an outside firm to assist with the documentation, design and implementation of our internal control environment. |
Remediationof the identified material weaknesses and strengthening our internal control environment will require a substantial effort throughout2025 and beyond, as necessary. We will test the ongoing operating effectiveness of the new and existing controls in future periods. Thematerial weaknesses cannot be considered completely remediated until the applicable controls have operated for a sufficient period oftime and management has concluded, through testing, that these controls are operating effectively.
Changesin Internal Control over Financial Reporting
Otherthan in connection with executing upon the continued implementation of the remediation measures referenced above, there were no changesin our internal controls over financial reporting that occurred during our fiscal quarter ended March 31, 2025 that materially affected,or are reasonably likely to materially affect, our internal control over financial reporting.
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PARTII—OTHER INFORMATION
Item1. Legal Proceedings.
Ateach reporting date, the Company evaluates whether or not a potential loss or a potential range of loss is probable and reasonably estimableunder the provisions of the authoritative guidance that addresses accounting for contingencies. The Company expenses as incurred thecosts related to such legal proceedings.
CivilInvestigative Demand
The Company received a Civil Investigative Demand (the “Demand”) under the False Claims Act, 31 U.S.C.§ 3729, dated August 14, 2022, from the U.S. Attorney’s Office for the Eastern District of Pennsylvania. The Demand requestsdocuments and information relating to claims submitted to Medicare, Medicaid, or other federal insurers for services or procedures involvinginjectable human tissue therapy products derived from amniotic fluid or birth tissue and includes Interfyl, a biomaterials product. TheCompany is cooperating with the request and is engaged in an ongoing dialogue with the Assistant U.S. Attorneys handling the Demand. Thematter is still in preliminary stages and there is uncertainty as to whether the Demand will result in any liability.
Celularity Inc. v. Evolution Biologyx, LLC, et al.
On April 17, 2023, the Company filed a complaint against Evolution Biologyx, LLC, Saleem S. Saab, individually, andEncyte, LLC (collectively, “Evolution”) in the United States District Court for the District of New Jersey to recover unpaidinvoice amounts for the sale of its biomaterial products in the amount of approximately $2,350, plus interest. In September 2021, theCompany executed a distribution agreement with Evolution, whereupon Evolution purchased biomaterial products from the Company for salethrough Evolution’s distribution channels. The Company fulfilled Evolution’s orders and otherwise fulfilled each of its obligationsunder the distribution agreement. Despite attempts to recover the outstanding invoices and Evolution’s promise to pay, Evolutionhas refused to pay any of the invoices and has materially breached its obligations under the distribution agreement. The Company’scomplaint asserts claims of breach of contract and fraudulent inducement, amongst others. On April 4, 2024, Evolution filed a counterclaim alleging damages in an amount to be determined resulting from alleged breach of contract, breach of warranty, quasi contract andfraud. The Company believes Evolution’s counter claims are without any merit, and the Company intends to vigorously pursue the matterto recover the outstanding payments owed by Evolution, including interest and associated attorney’s fees, as well as defend againstEvolution’s counterclaims.
TargetCWv. Celularity Inc.
On March 27, 2024, WMBE Payrolling, Inc., dba TCWGlobal, filed a complaint in the United States District Court forthe Southern District of California alleging a breach of contract and account stated claims relating to a Master Services Agreement datedMay 4, 2020, or the TCWGlobal MSA, for the provision of certain leased workers to perform services on the Company’s behalf. Thecomplaint alleges that the Company breached the TCWGlobal MSA by failing to make payments on certain invoices for the services of theleased workers. On May 7, 2024, the Company entered into a settlement agreement and mutual release with TCWGlobal whereupon the Companyagreed to pay $516 in tiered monthly installments, with the last payment due and payable on May 1, 2025, in exchange for a dismissal ofthe complaint and full release of all claims. The Company defaulted on the payments in November 2024. On April 21, 2025, the Company wasserved with a motion by TCWGlobal to enforce the settlement and enter judgment against the Company in the amount of $350, for which theCompany has accrued within accounts payable on the condensed consolidated balance sheet. The Court granted the motion and entered judgmenton June 3, 2025.
HackensackMeridian v. Celularity Inc.
On March 27, 2025, Hackensack Meridian Health (“HUMC”) filed a complaint in the Superior Court of NewJersey seeking $946 allegedly owed by Celularity for costs associated with clinical trials. The amounts claimed were part of a three-partyarrangement with a contract research organization (CRO), for which the Company engaged to make payments on behalf of the Company to HUMC.The Company has asserted that it believes there are improper charges in the claim. The amount owed to HUMC has been determined to be $668,which the Company has accrued within other current liabilities on the condensed consolidated balance sheet. As of the issuance date, theCompany has not answered the complaint and HUMC has moved for entry of default.
ClinicalResource Network v. Celularity Inc.
On May 28, 2025, Clinical Resource Network (“CRN”) filed a complaint in the Manhattan Supreme Court,New York, seeking damages of $176, plus interest for unpaid invoices for payrolling services provided to the Company. The Company haduntil June 30, 2025, to answer the complaint. The Company defaulted, and on July 23, 2025, CRN moved for entry of default. The Companyhas accrued in full for the damages within accounts payable on the condensed consolidated balance sheet.
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Item1A. Risk Factors.
Our operations and financial results are subject to various risks and uncertainties, including those described inPart I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SECon May 8, 2025.
Item2. Unregistered Sales of Equity Securities and Use of Proceeds.
OnJanuary 3, 2025, we issued 21,739 shares of our Class A common stock to a former employee pursuant to an Amended Confidential Settlementand Release Agreement by and among us and the former employee with an effective date of January 3, 2025.
On May 19, 2025, we issued 50,000 shares of our Class A common stock to a consultant in connection with the executionof a consulting agreement under which the Consultant was engaged to provide business development and strategic advisory services. Theshares of Class A common stock were issued with piggyback registration rights in connection with any future registration of Company securities.
On June 20, 2025, we issued 12,000 shares of our Class A common stock to a consultant in connection with servicesperformed.
On June 25, 2025, we issued 490,632 shares of our Class A common stock to the holders of unsecured senior convertiblenotes in connection with a letter agreement between the Company and the note holders wherein the Company agreed to amend the conversionprice to $1.60. In exchange for the Company agreeing to amend the conversion price of the notes, all holder’s agreed to an automaticconversion of the notes into shares of the Company’s Class A common stock.
Item3. Defaults Upon Senior Securities.
None.
Item4. Mine Safety Disclosures.
Notapplicable.
Item5. Other Information.
Noneof our directors or “officers,” as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934,
Item6. Exhibits.
* The certifications attached asExhibits 32.1 and 32.2 accompanying this report are not deemed filed with the Securities and Exchange Commission and are not to be incorporatedby reference into any filing of Celularity Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,as amended, whether made before or after the date of this report, irrespective of any general incorporation language contained in suchfiling.
| 47 |
SIGNATURES
Pursuantto the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf bythe undersigned thereunto duly authorized.
| CELULARITY INC. | |||
| Date: August 29, 2025 | By: | /s/ Robert J. Hariri | |
| Robert J. Hariri, M.D., Ph.D. | |||
| Chief Executive Officer | |||
| (Principal Executive Officer) | |||
| Date: August 29, 2025 | By: | /s/ Joseph C. DosSantos | |
| Joseph C. DosSantos | |||
| Acting Chief Financial Officer | |||
| (Principal Financial and Accounting Officer) | |||
| 48 |
Exhibit31.1
CERTIFICATIONPURSUANT TO
RULES13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
ASADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I,Robert J. Hariri, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Celularity Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: August 29, 2025 | By: | /s/ Robert J. Hariri | |
| Robert J. Hariri, M.D., Ph.D. | |||
Chief Executive Officer (Principal Executive Officer) |
Exhibit31.2
CERTIFICATIONPURSUANT TO
RULES13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
ASADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I,Joseph C. DosSantos, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Celularity Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: August 29, 2025 | By: | /s/ Joseph C. DosSantos | |
| Joseph C. DosSantos | |||
Acting Chief Financial Officer (Principal Financial and Accounting Officer) |
Exhibit32.1
CERTIFICATIONPURSUANT TO
18U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION906 OF THE SARBANES-OXLEY ACT OF 2002
Inconnection with the Quarterly Report of Celularity Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2025,as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C.Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: August 29, 2025 | By: | /s/ Robert J. Hariri | |
| Robert J. Hariri, M.D., Ph.D. | |||
Chief Executive Officer (Principal Executive Officer) |
Thiscertification accompanies the Quarterly Report on Form 10-Q to which it relates, is not deemed filed with the Securities and ExchangeCommission and is not to be incorporated by reference into any filing of Celularity Inc. under the Securities Act of 1933, as amended,or the Exchange Act (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language containedin such filing. A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been providedto Celularity Inc. and will be retained by Celularity Inc. and furnished to the Securities and Exchange Commission or its staff uponrequest.
Exhibit32.2
CERTIFICATIONPURSUANT TO
18U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION906 OF THE SARBANES-OXLEY ACT OF 2002
Inconnection with the Quarterly Report of Celularity Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2025,as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C.Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: August 29, 2025 | By: | /s/ Joseph C. DosSantos | |
Joseph C. DosSantos Acting Chief Financial Officer | |||
| (Principal Financial and Accounting Officer) |
Thiscertification accompanies the Quarterly Report on Form 10-Q to which it relates, is not deemed filed with the Securities and ExchangeCommission and is not to be incorporated by reference into any filing of Celularity Inc. under the Securities Act of 1933, as amended,or the Exchange Act (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language containedin such filing. A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been providedto Celularity Inc. and will be retained by Celularity Inc. and furnished to the Securities and Exchange Commission or its staff uponrequest.