Celularity (US:CELU)2025-08-29 21:17PART I. FINANCIAL INFORMATION This part presents the company's unaudited financial statements, management's analysis, and an evaluation of internal controls for the period Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for Q1 2025, highlighting a going concern doubt due to significant operating losses - Celularity Inc is a cell therapy and regenerative medicine company focused on aging-related diseases, including cancer and degenerative diseases[27][28] - The company's ability to continue as a going concern is in substantial doubt due to significant operating losses, net cash used in operations, and an accumulated deficit of $919.5 million as of March 31, 2025[31][32][33] Key Financial Highlights (Three Months Ended March 31) | Metric | March 31, 2025 (in thousands) | March 31, 2024 (in thousands) | Change (in thousands) | % Change | | :----------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | :------- | | Net Revenues | $11,426 | $14,681 | $(3,255) | (22.2)% | | 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% | | Operating Expenses | $21,912 | $22,057 | $(145) | (0.7)% | | Cost of revenues (excl. amortization)| $3,554 | $1,640 | $1,914 | 116.7% | | 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 intangibles | $368 | $546 | $(178) | (32.6)% | | Loss from operations | $(10,486) | $(7,376) | $(3,110) | 42.2% | | Net Loss | $(19,754) | $(22,013) | $2,259 | (10.3)% | | Net loss per share – basic and diluted | $(0.84) | $(1.03) | $0.19 | (18.4)% | | Weighted average shares outstanding | 23,530,877 | 21,440,980 | 2,089,897 | 9.7% | Condensed Consolidated Balance Sheet Highlights (as of) | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :----------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | :------- | | Total Assets | $128,876 | $132,682 | $(3,806) | (2.9)% | | Cash and cash equivalents | $293 | $738 | $(445) | (60.3)% | | Accounts receivable, net | $14,968 | $13,557 | $1,411 | 10.4% | | Inventory, net | $15,569 | $17,996 | $(2,427) | (13.5)% | | Property and equipment, net | $60,134 | $61,600 | $(1,466) | (2.4)% | | Total Liabilities | $134,382 | $123,845 | $10,537 | 8.5% | | Accounts payable | $23,313 | $23,296 | $17 | 0.1% | | Accrued expenses and other current liabilities | $25,248 | $19,842 | $5,406 | 27.2% | | Total debt | $43,144 | $42,288 | $856 | 2.0% | | Warrant liabilities | $8,067 | $3,264 | $4,803 | 147.2% | | Total Stockholders' (Deficit) Equity | $(5,506) | $8,837 | $(14,343) | (162.3)% | | Accumulated deficit | $(919,501) | $(899,683) | $(19,818) | 2.2% | Condensed Consolidated Statements of Cash Flows Highlights (Three Months Ended March 31) | Cash Flow Activity | March 31, 2025 (in thousands) | March 31, 2024 (in thousands) | Change (in thousands) | | :----------------- | :----------------------------- | :----------------------------- | :-------------------- | | Operating activities | $(2,993) | $(4,403) | $1,410 | | Investing activities | $0 | $(39) | $39 | | Financing activities | $2,320 | $6,227 | $(3,907) | | Net change in cash, cash equivalents and restricted cash | $(673) | $1,785 | $(2,458) | | Cash, cash equivalents and restricted cash at end of period | $10,304 | $11,948 | $(1,644) | Unaudited Condensed Consolidated Balance Sheets Details the company's assets, liabilities, and stockholders' deficit as of March 31, 2025, compared to December 31, 2024 Condensed Consolidated Balance Sheets (in thousands) | Assets | March 31, 2025 | December 31, 2024 | | :----------------------------------- | :------------- | :---------------- | | Cash and cash equivalents | $293 | $738 | | Accounts receivable, net | $14,968 | $13,557 | | Inventory | $6,197 | $5,409 | | Prepaid expenses and other current assets | $622 | $857 | | Total current assets | $22,080 | $20,561 | | Property and equipment, net | $60,134 | $61,600 | | Goodwill | $7,347 | $7,347 | | Intangible assets, net | $8,880 | $9,248 | | Right-of-use assets - operating leases | $10,798 | $10,830 | | Restricted cash | $10,011 | $10,239 | | Inventory, net of current portion | $9,372 | $12,587 | | Other noncurrent assets | $254 | $270 | | Total assets | $128,876 | $132,682 | | Liabilities and Stockholders' (Deficit) Equity | | | | Accounts payable | $23,313 | $23,296 | | Accrued expenses and other current liabilities | $25,248 | $19,842 | | Acquisition-related contingent consideration | $0 | $650 | | Short-term debt - unaffiliated | $2,492 | $2,485 | | Short-term debt - related parties | $4,161 | $3,876 | | Deferred revenue | $3,476 | $3,531 | | Total current liabilities | $58,690 | $53,680 | | Deferred revenue, net of current portion | $2,804 | $2,724 | | Acquisition-related contingent consideration, net of current portion | $1,413 | $1,413 | | Long-term debt - related parties | $36,492 | $35,927 | | Long-term lease liabilities | $26,631 | $26,548 | | Warrant liabilities | $8,067 | $3,264 | | Deferred income tax liabilities | $9 | $9 | | Other liabilities | $276 | $280 | | Total liabilities | $134,382 | $123,845 | | Stockholders' (deficit) equity | | | | Common stock | $2 | $2 | | Additional paid-in capital | $913,993 | $908,523 | | Accumulated deficit | $(919,501) | $(899,683) | | Accumulated other comprehensive loss | $0 | $(5) | | Total stockholders' (deficit) equity | $(5,506) | $8,837 | | Total liabilities and stockholders' (deficit) equity | $128,876 | $132,682 | Condensed Consolidated Statements of Operations and Comprehensive Loss Reports revenues, expenses, and net loss for the three months ended March 31, 2025, compared to the same period in 2024 Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands, except per share amounts) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Net revenues | $11,426 | $14,681 | | Operating expenses | $21,912 | $22,057 | | Loss from operations | $(10,486) | $(7,376) | | Total other expense | $(9,268) | $(14,637) | | Loss before income taxes | $(19,754) | $(22,013) | | Net loss | $(19,754) | $(22,013) | | Comprehensive loss | $(19,749) | $(22,013) | | Net loss attributable to common shareholders | $(19,813) | $(22,013) | | Net loss per share – basic and diluted | $(0.84) | $(1.03) | | Weighted average shares outstanding – basic and diluted | 23,530,877 | 21,440,980 | Condensed Consolidated Statements of Changes In Stockholders' (Deficit) Equity Details the changes in stockholders' deficit equity for the three months ended March 31, 2025 Condensed Consolidated Statements of Changes In Stockholders' (Deficit) Equity (in thousands, except share amounts) | Metric | Common Stock Shares (thousands) | Common Stock Amount (thousands) | Additional Paid-in Capital (thousands) | Accumulated Deficit (thousands) | Accumulated Other Comprehensive Income (Loss) (thousands) | Total Stockholders' (Deficit) Equity (thousands) | | :----------------------------------- | :------------------------------ | :------------------------------ | :------------------------------------- | :------------------------------ | :---------------------------------------- | :----------------------------------------------- | | Balances at January 1, 2025 | 22,546,671 | $2 | $908,523 | $(899,683) | $(5) | $8,837 | | Tax withholding on vesting of restricted stock units | — | — | $(98) | — | — | $(98) | | Vesting of restricted stock units | 87,419 | — | — | — | — | — | | Issuance of common stock to Dragasac in connection with warrant repricing | 1,188,255 | — | $2,460 | — | — | $2,460 | | Dragasac warrant inducement | — | — | $64 | $(64) | — | — | | Issuance of common stock consideration shares to Yorkville in connection with Side Letter | 100,000 | — | $149 | — | — | $149 | | Issuance of common stock in connection with settlement of debt | 21,739 | — | $51 | — | — | $51 | | Issuance and modification of warrants to C. V. Starr | — | — | $207 | — | — | $207 | | Changes in fair value of debt | — | — | — | — | $5 | $5 | | Stock-based compensation expense | — | — | $2,637 | — | — | $2,637 | | Net loss | — | — | — | $(19,754) | — | $(19,754) | | Balances at March 31, 2025 | 23,944,084 | $2 | $913,993 | $(919,501) | $0 | $(5,506) | Condensed Consolidated Statements of Cash Flows Summarizes cash inflows and outflows from operating, investing, and financing activities for the first quarter of 2025 Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :----------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(2,993) | $(4,403) | | Net cash used in investing activities | $0 | $(39) | | Net cash provided by financing activities | $2,320 | $6,227 | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(673) | $1,785 | | Cash, cash equivalents and restricted cash at beginning of period | $10,977 | $10,163 | | Cash, cash equivalents and restricted cash at end of period | $10,304 | $11,948 | Notes to Unaudited Condensed Consolidated Financial Statements Provides detailed explanations of the company's accounting policies and financial statement line items 1. Nature of Business Describes the company's focus on cell therapy and regenerative medicine, its history, and significant financial challenges - Celularity Inc is a cell therapy and regenerative medicine company focused on aging-related diseases, including cancer and degenerative diseases, headquartered in Florham Park, NJ[26][27] - The company faces substantial doubt about its ability to continue as a going concern due to significant operating losses ($10.486 million for Q1 2025), net cash used in operating activities ($2.993 million for Q1 2025), and an accumulated deficit of $919.501 million as of March 31, 2025[31][32][33] - The company is at risk of delisting from Nasdaq due to failure to timely file its Form 10-Q, with an exception granted until August 31, 2025, to regain compliance[38] 2. Summary of Significant Accounting Policies Outlines the basis of preparation for the financial statements and key accounting estimates and policies - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP and SEC rules for interim financial statements[34][35][36] - Significant estimates are made for goodwill and intangible asset impairment, R&D expense accruals, and valuations of inventory, contingent consideration, debt, and warrants[37][39] - The company operates through three segments: Cell Therapy, Degenerative Disease, and BioBanking, with significant customer concentration risk[46][48][49] 3. Asset Acquisition Details the acquisition of the Rebound™ product and related assets from Sequence LifeScience, Inc - On October 9, 2024, Celularity acquired Sequence LifeScience, Inc's Rebound™ product and related assets for up to $5.5 million[53] - The transaction was accounted for as an asset acquisition, with contingent consideration recorded when resolved[55] Rebound Asset Acquisition Consideration and Assets Acquired (in thousands) | Category | Amount | | :--------------- | :----- | | Cash payment | $1,500 | | Contingent consideration | $650 | | Total consideration | $2,150 | | Inventory acquired | $2,150 | | Total assets acquired | $2,150 | 4. Fair Value of Financial Assets and Liabilities Presents the fair value measurements of the company's financial assets and liabilities, categorized by valuation methodology Fair Value Measurements of Liabilities (as of March 31, 2025, in thousands) | Liabilities | Level 1 | Level 2 | Level 3 | Total | | :----------------------------------- | :------ | :------ | :------ | :------ | | Acquisition-related contingent consideration obligations | $— | $— | $1,413 | $1,413 | | Contingent stock consideration | $— | $— | $27 | $27 | | Short-term debt - Yorkville convertible note | $— | $— | $1,792 | $1,792 | | Short-term debt - unsecured senior convertible notes | $— | $— | $700 | $700 | | Warrant liability – Purchaser | $— | $— | $301 | $301 | | Warrant liability – Purchase Agent | $— | $— | $58 | $58 | | Warrant liability – RWI Bridge Warrants | $— | $— | $4,672 | $4,672 | | Warrant liability - July 2023 Registered Direct Warrants | $— | $— | $1,016 | $1,016 | | Warrant liability - April 2023 Registered Direct Warrants | $— | $— | $971 | $971 | | Warrant liability - May 2022 PIPE Warrants | $— | $— | $466 | $466 | | Warrant liability - Sponsor Warrants | $— | $— | $8 | $8 | | Warrant liability - Public Warrants | $575 | $— | $— | $575 | | Total | $575| $— | $11,424 | $11,999 | - The fair value of contingent consideration obligations is determined using Level 3 inputs based on a probability-weighted income approach, with the liability remaining at $1.413 million as of March 31, 2025[61][62][63] - Warrant liabilities are valued using Level 1 inputs for Public Warrants and Level 3 inputs (Monte Carlo or Black-Scholes models) for other warrants[70] 5. Inventory Provides a breakdown of the company's inventory components and changes from the previous period Inventory Composition (in thousands) | Category | March 31, 2025 | December 31, 2024 | | :--------------- | :------------- | :---------------- | | Raw materials | $42 | $42 | | Work in progress | $5,810 | $8,093 | | Finished goods | $11,697 | $11,964 | | Inventory, gross | $17,549 | $20,099 | | Less: inventory reserves | $(1,980) | $(2,103) | | Inventory, net | $15,569 | $17,996 | | Current portion | $6,197 | $5,409 | | Non-current portion | $9,372 | $12,587 | - Net inventory decreased by $2.427 million from December 31, 2024, to March 31, 2025, primarily due to decreases in work in progress and finished goods[74][75] 6. Prepaid Expenses and Other Current Assets Details the composition of prepaid expenses and other current assets Prepaid Expenses and Other Current Assets (in thousands) | Category | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Prepaid clinical expenses | $221 | $221 | | Prepaid insurance expense | $232 | $375 | | Other | $169 | $261 | | Total | $622 | $857 | - Total prepaid expenses and other current assets decreased by $235 thousand, primarily due to a decrease in prepaid insurance expense and other prepaid assets[76] 7. Property and Equipment, Net Shows the breakdown and changes in the company's net property and equipment Property and Equipment, Net (in thousands) | Category | March 31, 2025 | December 31, 2024 | | :----------------------------------- | :------------- | :---------------- | | Leasehold improvements | $73,211 | $73,211 | | Laboratory and production equipment | $14,093 | $14,093 | | Machinery, equipment and fixtures | $7,163 | $7,163 | | Property and equipment | $94,467 | $94,467 | | Less: Accumulated depreciation and amortization | $(34,333) | $(32,867) | | Property and equipment, net | $60,134 | $61,600 | - Net property and equipment decreased by $1.466 million, primarily due to accumulated depreciation and amortization[77] 8. Goodwill and Intangible Assets, Net Details the company's goodwill and net intangible assets, including amortization and impairment information - Goodwill remained unchanged at $7.347 million as of March 31, 2025, with no impairment recognized[78] Intangible Assets, Net (in thousands) | Category | March 31, 2025 | December 31, 2024 | Estimated Useful Lives | | :----------------------------------- | :------------- | :---------------- | :--------------------- | | Developed technology | $16,810 | $16,810 | 11 – 16 years | | Customer relationships | $2,413 | $2,413 | 10 years | | Trade names & trademarks | $570 | $570 | 10 – 13 years | | Reacquired rights | $4,200 | $4,200 | 6 years | | Less accumulated amortization | $(15,813) | $(15,445) | | | Amortizable intangible assets, net | $8,180 | $8,548 | | | Acquired IPR&D product rights | $700 | $700 | indefinite | | Total intangible assets, net | $8,880 | $9,248 | | - Net intangible assets decreased by $368 thousand due to amortization expense, with no impairment charges recorded[79][80] 9. Accrued Expenses and Other Current Liabilities Provides a breakdown of accrued expenses and other current liabilities Accrued Expenses and Other Current Liabilities (in thousands) | Category | March 31, 2025 | December 31, 2024 | | :----------------------------------- | :------------- | :---------------- | | Accrued clinical trial expense | $189 | $189 | | Accrued professional fees | $691 | $691 | | Accrued wages, bonuses, commissions, and vacation | $6,845 | $5,797 | | Accruals for construction in progress | $150 | $135 | | Accrued interest | $3,151 | $1,798 | | Accrued compliance fee | $13,048 | $10,277 | | Other | $1,174 | $955 | | Total | $25,248 | $19,842 | - Total accrued expenses and other current liabilities increased by $5.406 million, driven by increases in accrued compliance fees and accrued interest[81] 10. Debt Details the composition of the company's debt, including terms, maturity dates, and recent modifications Debt Composition (in thousands) | Category | March 31, 2025 | December 31, 2024 | | :----------------------------------- | :------------- | :---------------- | | Debt - unaffiliated: | | | | Yorkville - convertible promissory note | $1,792 | $1,865 | | Unsecured senior convertible notes | $700 | $620 | | Total debt - unaffiliated | $2,492 | $2,485 | | Debt - related parties: | | | | C.V. Starr Bridge Loan, net of discount | $5,665 | $5,652 | | RWI Bridge Loan, net of discount | $30,826 | $30,275 | | CEO promissory note | $4,161 | $3,876 | | Total debt - related parties | $40,652 | $39,803 | | Total debt | $43,144 | $42,288 | | Balance sheet classification: | | | | Short-term debt - unaffiliated | $2,492 | $2,485 | | Short-term debt - related parties | $4,161 | $3,876 | | Long-term debt - related parties | $36,492 | $35,927 | - Total debt increased by $856 thousand to $43.144 million as of March 31, 2025, with a significant portion related to bridge loans subject to forbearance agreements[82][83][106][120] - The Yorkville Convertible Promissory Note's maturity was extended to October 15, 2025, resulting in a $233 thousand loss on debt extinguishment[86][87][88][89] - The RWI Second Amended Bridge Loan and Amended RWI Loan, totaling $30.826 million, were fully satisfied on August 13, 2025, through an Asset Purchase Agreement with Celeniv Pte Ltd[118][119][120] 11. Leases Describes the company's operating lease agreements, costs, and related liabilities - The company leases a 147,215 square foot facility in Florham Park, NJ, expiring in 2036[123] - A lease amendment in September 2023 reduced the letter of credit by $4.9 million in exchange for higher base rental payments[124] Operating Lease Costs (in thousands) | Lease Cost Category | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------ | :-------------------------------- | :-------------------------------- | | Operating lease cost | $978 | $978 | | Variable lease cost | $461 | $365 | | Total operating lease cost | $1,439 | $1,343 | - As of March 31, 2025, the weighted average remaining lease term was 21 years, with total lease liabilities of $26.631 million[125] 12. Commitments and Contingencies Outlines the company's commitments, contingent considerations, and ongoing legal proceedings - Contingent consideration related to the Anthrogenesis and HLI CT acquisitions remained at $1.413 million as of March 31, 2025[126] - The company is involved in several legal proceedings, including a Civil Investigative Demand under the False Claims Act and lawsuits for unpaid invoices and services[132][133][134][135] - The company settled an agreement with Palantir Technologies Inc for $3.5 million, terminating the Master Subscription Agreement[129] 13. Equity Details the company's equity structure, including common stock, preferred stock, warrants, and recent equity transactions - As of March 31, 2025, the company had 23,944,084 shares of Class A common stock outstanding[137][144] - The company has an At-the-Market Sales Agreement for up to $150 million of Class A common stock, but no shares were issued under it in Q1 2025[145][147] - The company engaged in several registered direct offerings and PIPE transactions, issuing common stock and warrants with repricing and inducement events[148][150][153][156][158] Outstanding Warrants (as of March 31, 2025) | Warrant Type | Number of Shares | Exercise Price | Expiration Date | | :----------------------------------- | :--------------- | :------------- | :-------------- | | Public Warrants | 1,437,447 | $115.00 | July 16, 2026 | | Sponsor Warrants | 849,999 | $115.00 | July 16, 2026 | | May 2022 PIPE Warrants | 405,405 | $3.50 | Oct 10, 2028 | | March 2023 PIPE Warrants | 208,485 | $30.00 | Mar 27, 2028 | | March 2023 PIPE Warrants | 729,698 | $10.00 | Mar 27, 2028 | | March 2023 Loan Warrants | 75,000 | $1.69 | Mar 17, 2028 | | April 2023 Registered Direct Warrants | 435,625 | $7.50 | Oct 10, 2028 | | April 2023 Registered Direct Warrants | 487,451 | $3.50 | Oct 10, 2028 | | May 2023 PIPE Warrants | 581,394 | $10.00 | May 17, 2028 | | June 2023 Warrants | 50,000 | $1.69 | June 20, 2028 | | June 2023 Loan Warrants | 300,000 | $8.10 | June 20, 2028 | | July 2023 Registered Direct Warrants | 857,142 | $3.50 | Jan 31, 2029 | | January 2024 Bridge Loan - Tranche 1 Warrants | 1,650,000 | $2.49 | Jan 16, 2029 | | January 2024 Bridge Loan - Tranche 2 Warrants | 1,350,000 | $2.99 | July 15, 2029 | | March 2024 RWI Forbearance Warrants | 300,000 | $5.90 | June 20, 2028 | | November 2024 Purchaser Warrants | 263,156 | $2.85 | Nov 25, 2029 - Dec 3, 2029 | | November 2024 Placement Agent Warrants | 52,500 | $3.56 | Nov 25, 2029 - Dec 3, 2029 | | February 2025 Binding Term Sheet | 100,000 | $1.69 | Feb 11, 2030 | | Total Outstanding Warrants | 10,133,302 | | | 14. Stock-Based Compensation Discusses the company's equity incentive plans and stock-based compensation expenses - The 2021 Equity Incentive Plan has 1,232,176 shares available for future grants as of March 31, 2025[175][177] - Stock-based compensation expense for Q1 2025 was $2.637 million, a decrease from $2.966 million in the prior year[196] - Unrecognized compensation cost for options was $5.299 million, and for RSUs was $3.205 million[186][194] - A strategic advisory agreement in May 2025 resulted in the issuance of 50,000 common shares and warrants to purchase 1,500,000 shares[189][190][191] 15. Revenue Recognition Provides a disaggregation of revenue by product and service type and discusses deferred revenue Disaggregated Revenue by Product and Services (in thousands) | Revenue Category | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Product sales, net | $9,018 | $12,843 | | Processing and storage fees, net | $1,408 | $1,287 | | License, royalty and other | $1,000 | $551 | | Net revenues | $11,426 | $14,681 | - Net revenues decreased by $3.255 million (22.2%) to $11.426 million for Q1 2025, primarily due to a $3.825 million decrease in product sales[197][269] - Deferred revenue from contract liabilities increased slightly to $6.280 million at March 31, 2025[198] 16. License and Distribution Agreements Summarizes key license and distribution agreements, including recent terminations and amendments - The Regeneron Services Agreement was terminated by Regeneron on August 6, 2025, with the remaining $637 thousand in deferred revenue to be recognized in Q3 2025[202] - The Genting Agreement was amended in January 2024 to include cell therapy products, with no revenue recognized to date[207] - The company granted BioCellgraft, Inc an exclusive license for dental market products for a total fee of $5.0 million[210] 17. Segment Information Presents financial information for the company's three operating segments: Cell Therapy, Degenerative Disease, and BioBanking - The company operates through three distinct business segments: Cell Therapy, Degenerative Disease, and BioBanking[211][212] Segment Net Revenues (Three Months Ended March 31, 2025, in thousands) | Segment | Net Revenues | | :----------------- | :----------- | | Cell Therapy | $264 | | BioBanking | $1,408 | | Degenerative Disease | $9,754 | | Other | $0 | | Total | $11,426 | Segment Contribution (Three Months Ended March 31, 2025, in thousands) | Segment | Segment Contribution | | :----------------- | :------------------- | | Cell Therapy | $(2,993) | | BioBanking | $830 | | Degenerative Disease | $1,662 | | Other | $(9,617) | | Total | $(10,118) | 18. Related Party Transactions Discloses transactions with related parties, including the CEO and affiliated companies - Dr Robert Hariri, CEO, temporarily reduced his salary to minimum wage, with $1.439 million accrued as of March 31, 2025[215][216] - Dr Hariri provided two loans to the company totaling $1.285 million, both bearing 15% interest[217][218] - The company entered into a Technology Services Agreement with Fountain Life Management LLC, a related party[221] 19. Subsequent Events Describes significant events that occurred after the balance sheet date but before the financial statements were issued - The company entered into multiple merchant cash advance agreements with Genesis Equity Group Funding LLC, totaling $3.96 million in purchased receivables[222][231] - On August 13, 2025, the company sold certain intellectual property to Celeniv Pte Ltd for $33.812 million to satisfy the RWI Bridge Loan[228] - The company completed two private placements in June and July 2025, raising a combined $3.035 million[224][226] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Provides management's perspective on the company's financial condition and results of operations for Q1 2025 - Celularity is a regenerative and cellular medicines company focused on aging-related diseases, developing off-the-shelf placental-derived products and cell therapy candidates[233] - The company plans to submit a 510(k) application for Celularity Tendon Wrap (CTW) in H2 2025 and is assessing opportunities for its MLASCs cell therapy candidates[234] - Net revenues for Q1 2025 decreased by 22.2% to $11.4 million, primarily due to a 29.8% decrease in product sales[269][270] - Research and development expenses decreased by 36.2% to $3.7 million, while selling, general and administrative expenses increased slightly by 1.7% to $14.3 million[271][272] - The company used $3.0 million in operating cash flows in Q1 2025, an improvement from $4.4 million used in Q1 2024[282][284] Overview Summarizes the company's business, product pipeline, and commercial operations - Celularity is a regenerative and cellular medicines company focused on aging-related diseases, including cancer and degenerative diseases[233] - The company's biomaterial product pipeline includes Celularity Tendon Wrap (CTW) with a 510(k) application expected in H2 2025[234] - Celularity operates a commercial biobanking business under the LifebankUSA brand, offering collection, processing, and cryogenic storage services[235] Recent Developments Highlights key corporate and financial events that have occurred recently - Celularity entered into multiple merchant cash advance (MCA) agreements, transferring rights to $3.96 million in future receivables for $2.376 million in upfront cash[237][231] - The maturity date of the Convertible Promissory Note with Yorkville was extended to October 15, 2025[238] - Nasdaq issued a delisting notice due to the company's failure to timely file its Form 10-Q, with an exception granted until August 31, 2025[239] - The company completed private placements in June and July 2025, raising approximately $3.035 million[240][242] - On August 13, 2025, Celularity sold intellectual property to Celeniv Pte Ltd for $33.812 million to satisfy the RWI Bridge Loan[245] Going Concern Discusses the substantial doubt about the company's ability to continue as a going concern due to financial challenges - The company's ability to continue as a going concern is in substantial doubt due to significant operating losses ($10.5 million for Q1 2025) and an accumulated deficit of $919.5 million[250] - Additional outside capital is required to fund future operations, but sufficient capital for the next 12 months has not been secured[250][251] - Approximately $6.3 million of principal debt is outstanding and due within one year, with substantially all subject to forbearance agreements[250] - The company faces potential delisting from Nasdaq due to late Form 10-Q filing, which could materially adversely affect its ability to continue as a going concern[250][251] Business Segments Describes the company's three operational segments: Cell Therapy, Degenerative Disease, and BioBanking - Celularity manages operations through three segments: Cell Therapy, Degenerative Disease, and BioBanking[253] - The Cell Therapy segment has not generated revenue from product sales to date, as its programs are in development[253] Acquisitions and Divestitures Outlines the company's history of strategic acquisitions to build its portfolio - In May 2017, Celularity acquired HLI Cellular Therapeutics, LLC (LifebankUSA) and its biomaterial assets[255] - In August 2017, the company acquired Anthrogenesis, gaining a portfolio of pre-clinical and clinical stage assets[256] - On October 9, 2024, Celularity acquired Sequence LifeScience, Inc's Rebound™ product and related assets for up to $5.5 million[257] Licensing Agreements Details significant licensing agreements that are part of the company's business strategy - The Celgene License grants Celgene a worldwide, royalty-free, non-exclusive license to certain intellectual property[259] - The CVR Agreement with Celgene entitles holders to potential milestone payments and royalties, though no payments have been made to date[260] - The multi-year Regeneron Services Agreement was terminated by Regeneron on August 6, 2025[261] - A license agreement with BioCellgraft, Inc grants exclusive rights for the dental market for total license fees of $5.0 million[262] Components of Operating Results Explains the key line items that constitute the company's operating results - Net revenues include sales of biomaterial products and fees for biobanking services[263] - Cost of revenues covers labor, material, and overhead for the biobanking and degenerative disease segments[264] - Research and development expenses are primarily for scientific research, pre-clinical studies, and clinical development of NK cell programs[265] - Selling, general and administrative expenses include personnel costs for executive management, finance, legal, HR, and IT[266] - Changes in the fair value of contingent consideration liability are remeasured each reporting period and recorded in the statements of operations[267] Results of Operations Provides a detailed comparison and analysis of the company's operating results for Q1 2025 versus Q1 2024 Comparison of Three Months Ended March 31, 2025 to March 31, 2024 (in thousands) | Metric | March 31, 2025 | March 31, 2024 | Increase (Decrease) | Percent Increase (Decrease) | | :----------------------------------- | :------------- | :------------- | :------------------ | :-------------------------- | | Net revenues | $11,426 | $14,681 | $(3,255) | (22.2)% | | 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 operating expenses | $21,912 | $22,057 | $(145) | (0.7)% | | Cost of revenues (excl. amortization)| $3,554 | $1,640 | $1,914 | 116.7% | | 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)% | | Loss from operations | $(10,486) | $(7,376) | $(3,110) | 42.2% | | Total other expense | $(9,268) | $(14,637) | $5,369 | (36.7)% | | 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)% | | Loss on debt extinguishment | $(5,736) | $(3,908) | $(1,828) | 46.8% | - Net revenues decreased by $3.3 million (22.2%) to $11.4 million, primarily due to a $3.8 million decrease in product sales[269] - Cost of revenues increased by $1.9 million (117%) to $3.6 million, driven by a $0.7 million write-off of Interfyl bulk material costs[270] - Research and development expenses decreased by $2.1 million (36.2%) to $3.7 million, mainly due to lower lab supplies and personnel costs[271][272] - Total other expense decreased by $5.369 million (36.7%) to $9.3 million, primarily due to a positive change in fair value of warrant liabilities[273] Liquidity and Capital Resources Discusses the company's liquidity position, sources of capital, and funding requirements - As of March 31, 2025, the company had $0.3 million in unrestricted cash and an accumulated deficit of $919.5 million, indicating insufficient liquidity[274][277] - The company relies on revenues from biomaterials and biobanking, and financing activities to fund operations[274] - The CEO extended his outstanding loans to December 31, 2025, and the company received $2.46 million from warrant exercises in January 2025[275][276] - The company anticipates needing substantial additional funding through equity, debt, or collaborations to support R&D and commercialization[278][279] Cash Flows Analyzes the changes in cash flows from operating, investing, and financing activities Summary of Cash Flows (Three Months Ended March 31, in thousands) | Cash Flow Activity | 2025 | 2024 | Change | | :----------------- | :------- | :------- | :------- | | Operating activities | $(2,993) | $(4,403) | $1,410 | | Investing activities | $0 | $(39) | $39 | | Financing activities | $2,320 | $6,227 | $(3,907) | | Net change in cash, cash equivalents and restricted cash | $(673) | $1,785 | $(2,458) | - Net cash used in operating activities decreased by $1.410 million to $3.0 million in Q1 2025, primarily due to lower R&D costs and higher working capital[282] - Net cash provided by financing activities decreased by $3.907 million to $2.3 million in Q1 2025, mainly due to lower proceeds from warrants and PIPE offerings[284] Critical Accounting Policies States that there have been no significant changes to the company's critical accounting policies - There have been no significant changes in the company's critical accounting policies during the three months ended March 31, 2025[286] Recent Accounting Pronouncements Discusses recently issued accounting standards that may impact the company's financial statements - The company is evaluating the effect of ASU 2023-09 (Income Tax Disclosures) and ASU 2024-03 (Disaggregation of Income Statement Expenses)[50][51] - The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, makes permanent key elements of the Tax Cuts and Jobs Act, and its impact is being evaluated[52][241] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that there are no applicable quantitative and qualitative disclosures about market risk for the reported period - The company has no applicable quantitative and qualitative disclosures about market risk for the period[288] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were not effective as of March 31, 2025 - Management concluded that disclosure controls and procedures were not effective as of March 31, 2025, due to material weaknesses in internal control and failure to timely file reports[291] - Identified material weaknesses include failures in control environment, risk assessment, control activities, information and communication, and monitoring[294] - Remediation efforts include hiring additional accounting personnel, formalizing roles, and engaging an outside firm for internal control documentation and design[292][294] Evaluation of Disclosure Controls and Procedures Details the conclusion that disclosure controls were ineffective due to material weaknesses and late filings - Disclosure controls and procedures were deemed ineffective as of March 31, 2025, due to material weaknesses in internal control over financial reporting and the failure to timely file reports[291] - Material weaknesses identified include deficiencies in control environment, risk assessment, control activities, information and communication, and monitoring processes[294] Changes in Internal Control over Financial Reporting Reports on changes in internal controls during the quarter - No changes in internal controls occurred during Q1 2025 that materially affected or are likely to materially affect internal control, other than ongoing remediation efforts[293] PART II. OTHER INFORMATION This part provides information on legal proceedings, risk factors, unregistered sales of securities, and other required disclosures Item 1. Legal Proceedings Celularity is involved in several legal proceedings, including a Civil Investigative Demand and various claims for unpaid services - The company received a Civil Investigative Demand under the False Claims Act concerning claims submitted to Medicare/Medicaid for its products[297] - Celularity filed a complaint against Evolution Biologyx, LLC to recover approximately $2.350 million in unpaid invoices[298] - A judgment was entered against the company for $350 thousand in favor of TargetCW, and Hackensack Meridian Health filed a complaint seeking $946 thousand[299][300] - Clinical Resource Network filed a complaint seeking $176 thousand for unpaid payrolling services[301] Item 1A. Risk Factors This section refers to the comprehensive risk factors detailed in the company's Annual Report on Form 10-K - The company's operations and financial results are subject to various risks and uncertainties, as described in its Annual Report on Form 10-K for the year ended December 31, 2024[302] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company issued several unregistered equity securities to employees, consultants, and note holders - On January 3, 2025, 21,739 shares of Class A common stock were issued to a former employee as part of a settlement agreement[303] - On May 19, 2025, 50,000 shares of Class A common stock were issued to a consultant for business development and strategic advisory services[304] - On June 25, 2025, 490,632 shares of Class A common stock were issued to holders of unsecured senior convertible notes following a conversion price amendment[306] Item 3. Defaults Upon Senior Securities This section states that there were no defaults upon senior securities during the reported period - There were no defaults upon senior securities during the period[307] Item 4. Mine Safety Disclosures This section indicates that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to the company[308] Item 5. Other Information No directors or officers adopted or terminated Rule 10b5-1 trading plans during the fiscal quarter - No directors or officers adopted or terminated Rule 10b5-1 trading plans or non-Rule 10b5-1 trading plans during the fiscal quarter[309] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including various agreements and officer certifications - The exhibits include various agreements related to securities purchases, warrant adjustments, amended warrants, and promissory notes, along with officer certifications[310][311]