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Cover Page	3 Months Ended
Cover Page	Mar. 31, 2022
Cover [Abstract]
Document Type	S-1
Amendment Flag	false
Entity Registrant Name	CELULARITY INC.
Entity Central Index Key	0001752828
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 48,039	$ 37,240	$ 54,311
Accounts receivable, net of allowance of $283 and $272 as of December 31, 2021 and December 31, 2020, respectively	3,622	2,745	1,134
Notes receivable	2,392	2,488	5,416
Inventory	14,715	9,549	3,850
Prepaid expenses	6,969	7,076	6,576
Other current assets	2	2	873
Total current assets	75,739	59,100	72,160
Property and equipment, net	77,962	90,625	90,077
Goodwill	123,304	123,304	123,304
Intangible assets, net	122,646	123,187	125,379
Right-of-use assets—operating	15,691	0
Restricted cash	14,825	14,836	15,202
Inventory, net of current portion	3,225	2,721	1,998
Other long-term assets	810	355	2,888
Total assets	434,202	414,128	431,008
Current liabilities:
Accounts payable	10,418	9,317	5,390
Accrued expenses and other current liabilities	13,438	11,661	13,451
Current portion of financing obligation	0	3,051	3,008
Deferred revenue	2,178	2,196	4,828
Total current liabilities	26,034	26,225	26,677
Deferred revenue, net of current portion	1,928	1,871	7,621
Acquisition-related contingent consideration	237,071	232,222	273,367
Noncurrent lease liabilities—operating	30,463	0
Financing obligations	0	28,085	27,634
Warrant liabilities	46,894	25,962	76,640
Deferred income tax liabilities	10	10	7
Other liabilities	1,897	335	349
Total liabilities	344,297	314,710	412,295
Commitments and contingencies (Note 11)
Stockholders' equity (deficit):
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, none issued and outstanding at December 31, 2021; none authorized, issued and outstanding as of December 31, 2020	0	0
Common Stock, $0.0001 par value, 730,000,000 shares authorized, 124,307,884 issued and outstanding as of December 31, 2021; 155,640,290 shares authorized, 18,529,453 shares issued and outstanding as of December 31, 2020	14	12	1
Treasury stock, at cost, 0 and 90,834 shares as of December 31, 2021 and December 31, 2020, respectively			(256)
Additional paid-in capital	812,443	763,087	32,418
Accumulated deficit	(722,552)	(663,681)	(563,563)
Total stockholders' equity (deficit)	89,905	99,418	(531,400)
Total liabilities, redeemable convertible preferred stock and stockholders' equity (deficit)	$ 434,202	414,128	431,008
Series A Redeemable Convertible Preferred Stock
Redeemable convertible preferred stock:
Redeemable convertible preferred stock		0	184,247
Series B Redeemable Convertible Preferred Stock
Redeemable convertible preferred stock:
Redeemable convertible preferred stock		0	290,866
Series X Redeemable Convertible Preferred Stock
Redeemable convertible preferred stock:
Redeemable convertible preferred stock		$ 0	$ 75,000

Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Accounts receivable, net of allowance	$ 518	$ 272
Accounts receivable, net of allowance		$ 283	$ 272
Common stock, par value (in Dollars per share)	$ 0.0001	$ 0.0001	$ 0.0001
Common stock, shares authorized	730,000,000	730,000,000	155,640,290
Common stock, shares issued	137,722,917	124,307,884	18,529,453
Common stock, shares outstanding	137,722,917	124,307,884	18,529,453
Preferred stock par value (in Dollars per share)	$ 0.0001	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	10,000,000	10,000,000	0
Preferred stock, shares issued	0	0	0
Preferred stock, shares outstanding	0	0	0
Treasury stock, Shares		0	90,834
Series A Redeemable Convertible Preferred Stock
Redeemable convertible preferred stock, par value (in Dollars per share)		$ 0.0001	$ 0.0001
Redeemable convertible preferred stock, shares authorized		0	29,484,740
Redeemable convertible preferred stock, shares issued		0	29,484,740
Redeemable convertible preferred stock, shares outstanding		0	29,484,740
Series B Redeemable Convertible Preferred Stock
Redeemable convertible preferred stock, par value (in Dollars per share)		$ 0.0001	$ 0.0001
Redeemable convertible preferred stock, shares authorized		0	75,088,327
Redeemable convertible preferred stock, shares issued		0	41,205,482
Redeemable convertible preferred stock, shares outstanding		0	41,205,482
Series X Redeemable Convertible Preferred Stock
Redeemable convertible preferred stock, par value (in Dollars per share)		$ 0.0001	$ 0.0001
Redeemable convertible preferred stock, shares authorized		0	11,953,274
Redeemable convertible preferred stock, shares issued		0	11,953,274
Redeemable convertible preferred stock, shares outstanding		0	11,953,274

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021	Dec. 31, 2020
Net revenues:
Total revenues	$ 5,935	$ 2,660	$ 21,335	$ 14,278
Cost of goods sold (excluding amortization of acquired intangible assets)
Research and development	21,673	16,990	88,353	52,707
Selling, general and administrative	16,460	7,626	71,341	31,336
Change in fair value of contingent consideration liability	4,849	20,656	(41,145)	(55,566)
Amortization of acquired intangible assets	541	541	2,192	3,394
Impairment of acquired intangible assets	0	0	0	129,400
Total operating expenses	47,549	47,055	130,394	166,203
Loss before income taxes	(41,614)	(44,395)	(109,059)	(151,925)
Other income (expense):
Interest income	6	140	332	370
Interest expense	0	(752)	(3,171)	(2,354)
Change in fair value of warrant liabilities	(20,932)	(36,505)	13,482	(58,686)
Loss on the sale of business				(4,434)
Income (expense) related to warrant liabilities			13,482	(58,686)
Other (expense) income, net	(327)	(27)	(1,682)	4,096
Total other income (expense)	(21,253)	(37,144)	8,961	(61,008)
Net loss before income taxes	(62,867)	(81,539)	(100,098)	(212,933)
Income tax expense (benefit)	0	0	20	(4,700)
Net loss	$ (62,867)	$ (81,539)	$ (100,118)	$ (208,233)
Net loss per share—basic and diluted	$ (0.48)	$ (3.4)	$ (1.49)	$ (11.31)
Weighted average shares outstanding - basic and diluted	130,398,811	23,990,063	67,057,278	18,417,910
Product Sales and Rentals
Net revenues:
Total revenues	$ 651	$ 840	$ 3,801	$ 6,854
Cost of goods sold (excluding amortization of acquired intangible assets)
Cost of revenues	474	518	3,528	2,247
Services
Net revenues:
Total revenues	1,283	1,264	5,522	5,556
Cost of goods sold (excluding amortization of acquired intangible assets)
Cost of revenues	948	724	3,649	2,294
License, Royalty and Other
Net revenues:
Total revenues	4,001	556	12,012	1,868
Cost of goods sold (excluding amortization of acquired intangible assets)
Cost of revenues	$ 2,604	$ 0	$ 2,476	$ 391

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (Deficit) (Unaudited) - USD ($) $ in Thousands	Total	Cumulative Effect Period Of Adoption Adjustment Member	PIPE Investors	Palantir	CTH	Series A Redeemable Convertible Preferred Stock	Series B Redeemable Convertible Preferred Stock	Series B Redeemable Convertible Preferred Stock CariCord	Series X Redeemable Convertible Preferred Stock	Common Stock	Common Stock PIPE Investors	Common Stock Palantir	Common Stock CTH	Treasury Stock	Additional Paid-in Capital	Additional Paid-in Capital PIPE Investors	Additional Paid-in Capital Palantir	Additional Paid-in Capital CTH	Accumulated Deficit	Accumulated Deficit Cumulative Effect Period Of Adoption Adjustment Member
Balance at Dec. 31, 2019	$ (327,420)									$ 1					$ 27,909				$ (355,330)
Temporary Equity, Balance (in Shares) at Dec. 31, 2019						29,484,740	27,552,236		11,953,274
Temporary Equity, Balance at Dec. 31, 2019						$ 184,247	$ 206,035		$ 75,000
Balance (in Shares) at Dec. 31, 2019										18,421,084				(13,975)
Exercise of stock options	138														138
Exercise of stock options (in Shares)										108,369
Repurchase of common stock	(256)													$ (256)
Repurchase of common stock (in Shares)														(76,859)
Stock-based compensation expense	4,371														4,371
Share issuance costs							(15)
Issuance of convertible preferred stock							$ 84,596	$ 250
Issuance of convertible preferred stock (in Shares)							13,620,063	33,183
Net loss	(208,233)																		(208,233)
Balance at Dec. 31, 2020	(531,400)									$ 1				$ (256)	32,418				(563,563)
Temporary Equity, Balance (in Shares) at Dec. 31, 2020						29,484,740	41,205,482		11,953,274
Temporary Equity, Balance at Dec. 31, 2020						$ 184,247	$ 290,866		$ 75,000
Balance (in Shares) at Dec. 31, 2020										18,529,453				90,834
Stock-based compensation expense	1,009														1,009
Net loss	(81,539)																		(81,539)
Balance at Mar. 31, 2021	$ (611,930)									$ 1				$ (256)	33,427				(645,102)
Temporary Equity, Balance (in Shares) at Mar. 31, 2021						29,484,740	41,205,482		11,953,274
Temporary Equity, Balance at Mar. 31, 2021						$ 184,247	$ 290,866		$ 75,000
Balance (in Shares) at Mar. 31, 2021	90,834									18,529,453
Balance at Dec. 31, 2020	$ (531,400)									$ 1				$ (256)	32,418				(563,563)
Temporary Equity, Balance (in Shares) at Dec. 31, 2020						29,484,740	41,205,482		11,953,274
Temporary Equity, Balance at Dec. 31, 2020						$ 184,247	$ 290,866		$ 75,000
Balance (in Shares) at Dec. 31, 2020										18,529,453				90,834
Exercise of stock options	197														197
Exercise of stock options (in Shares)										572,252
Stock-based compensation expense	40,010														40,010
Recapitalization from GX Acquisition Corp. merger, net of redemptions, equity issuance costs and merger costs (in Shares)										94,122,408				90,834
Recapitalization from GX Acquisition Corp. merger, net of redemptions, equity issuance costs and merger costs	485,598									$ 10				$ 256	485,332
Recapitalization net of redemptions, equity issuance costs and merger costs redeemable convertible preferred stock (in Shares)						(29,484,740)	(41,205,482)		(11,953,274)
Recapitalization net of redemptions, equity issuance costs and merger costs redeemable convertible preferred stock						$ (184,247)	$ (290,866)		$ (75,000)
Issuance of common stock			$ 83,400	$ 20,000	$ 5,333						$ 1					$ 83,399	$ 20,000	$ 5,333
Issuance of common stock (in Shares)											8,340,000	2,000,000	743,771
Reclassification of liability classified legacy warrants to equity	96,398														96,398
Net loss	(100,118)																		(100,118)
Balance at Dec. 31, 2021	99,418									$ 12					763,087				(663,681)
Balance (Accounting Standards Update201602 Member) at Dec. 31, 2021		$ 3,996																		$ 3,996
Temporary Equity, Balance (in Shares) at Dec. 31, 2021						0	0		0
Temporary Equity, Balance at Dec. 31, 2021						$ 0	$ 0		$ 0
Balance (in Shares) at Dec. 31, 2021										124,307,884				0
Reclassification of previously exercised stock options (in Shares)										131,253
Reclassification of previously exercised stock options	441														441
Exercise of warrants (in Shares)										13,281,386
Exercise of warrants	46,485									$ 2					46,483
Exercise of stock options	21														21
Exercise of stock options (in Shares)										10,255
Purchase and retirement of common shares										(3,058)
Purchase and retirement of common shares, value	(11)														(11)
Stock-based compensation expense	2,422														2,422
Net loss	(62,867)																		(62,867)
Balance at Mar. 31, 2022	$ 89,905									$ 14					$ 812,443				$ (722,552)
Balance (in Shares) at Mar. 31, 2022										137,727,720

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021	Dec. 31, 2020
Cash flow from operating activities:
Net loss	$ (62,867)	$ (81,539)	$ (100,118)	$ (208,233)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation and amortization	2,284	1,936	8,817	8,174
Non cash lease expense	(1)
Deferred income taxes			(1,353)	(8,482)
Impairment charges				129,400
Provision for doubtful accounts	235	(59)	298	292
Share-based compensation expense	2,422	1,009	40,010	4,371
Change in fair value of warrant liabilities	20,932	36,505	(13,482)	58,686
Amortization of inventory step-up				57
Issuance of common stock to settle liability with CTH			5,333
Loss on sale of business				4,434
Change in fair value of contingent consideration	4,849	20,656	(41,145)	(55,566)
Change in fair value of contingent stock consideration	1,565
Other, net	96	(47)	2,627	70
Changes in assets and liabilities:
Accounts receivable	(1,112)	185	(1,909)	1,652
Inventory	(5,670)	(1,162)	(6,422)	(643)
Prepaid expenses and other assets	(348)	(780)	3,068	(5,761)
Sale of net operating losses and research and development tax credits			1,356	3,765
Accounts payable	1,334	85	3,007	314
Accrued expenses and other liabilities	1,937	(1,272)	(1,801)	184
Deferred revenue	39	(597)	(8,382)	4,093
Right-of-use assets and lease liabilities	52
Net cash used in operating activities	(34,253)	(25,080)	(110,096)	(63,193)
Cash flow from investing activities:
Capital expenditures	(1,454)	(1,479)	(6,203)	(27,834)
Proceeds from the sale of business				15,019
Proceeds from promissory note			300
Net cash used in investing activities	(1,454)	(1,479)	(5,903)	(12,815)
Cash flow from financing activities:
Proceeds from issuance of Series B redeemable convertible preferred stock and warrants, net of issuance costs				102,535
Repurchase of common stock				(256)
Proceeds from short term borrowings - related party			5,000
Payment of short term borrowings - related party			(5,000)
Cash received on recapitalization			5,386
Proceeds from Palantir investment			20,000
Proceeds from PIPE financing			83,400
Proceeds from the exercise of stock options	10		638	138
Proceeds from the exercise of warrants	46,485
Payments of PIPE/SPAC related costs		(4,842)	(10,862)	(403)
Net cash provided by (used in) financing activities	46,495	(4,842)	98,562	102,014
Net (decrease) increase in cash, cash equivalents and restricted cash	10,788	(31,401)	(17,437)	26,006
Cash, cash equivalents and restricted cash at beginning of year	52,076	69,513	69,513	43,507
Cash, cash equivalents and restricted cash at end of year	62,864	38,112	52,076	69,513
Supplemental disclosure of cash flow information:
Cash paid for interest			146	0
Cash paid for income taxes				13
Supplemental non-cash investing and financing activities:
Property and equipment included in accounts payable and accrued expenses	(1,015)	(287)	(970)	(806)
Cancellation of treasury stock			256
Issuance of common stock as payment for PIPE/merger related costs			10,795
Reclassification of warrant liabilities to equity			96,398
Reclass of offering costs paid in prior year			153
Change in PIPE/SPAC related costs captured in accounts payable and accrued expenses		$ 1,026		(2,130)
Recognition of asset and financing obligation related to facility build out				(216)
Receipt of convertible note in connection with the Sanuwave Transaction				4,524
UltraMIST systems reclass from inventory to fixed assets				79
Fair value of warrants issued in connection with Series B preferred stock sale				17,954
Issuance of warrants at estimated fair value				11,988
Issuance of Series B convertible preferred stock in connection with CariCord acquisition				$ 250
Reclassification of option liabilities to equity	$ 441
Gx Acquisition Corp.
Supplemental non-cash investing and financing activities:
Recapitalization from merger			550,113
Non-cash assets acquired from the merger			163
Warrant liability assumed from the merger			$ 59,202

Nature of Business and Basis of Presentation

3 Months Ended

12 Months Ended

Mar. 31, 2022

Dec. 31, 2021

Accounting Policies [Abstract]

Nature of Business and Basis of Presentation

1.	Nature of Business and Basis of Presentation

Celularity Inc., (“Celularity” or the “Company”), formerly known as GX Acquisition Corp. (“GX”), was a blank check company incorporated in Delaware on August 24, 2018. The Company was formed for the purpose of effectuating a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses.

On July 16, 2021 (the “Closing Date”), the Company consummated the previously announced merger pursuant to the Merger Agreement and Plan of Reorganization, dated January 8, 2021 (the “Merger Agreement”), by and among GX, Alpha First Merger Sub, Inc., a Delaware corporation and a direct, wholly owned subsidiary of GX (“First Merger Sub”), Celularity LLC (f/k/a Alpha Second Merger Sub LLC ), a Delaware limited liability company and a direct, wholly owned subsidiary of GX (“Second Merger Sub”), and the entity formerly known as Celularity Inc., incorporated under the laws of the state of Delaware on August 29, 2016 (“Legacy Celularity”). Upon completion of the merger transaction GX changed its name to Celularity Inc. The business combination was accounted for as a reverse recapitalization in conformity with accounting principles generally accepted in the United States (see Note 3).

Description of Business

Celularity is a clinical-stage biotechnology company leading the next evolution in cellular medicine by developing

off-the-shelf

placental-derived allogeneic T cells engineered with chimeric antigen receptor (“CAR”) T cells, natural killer (“NK”) cells and

mesenchymal-like

adherent stromal cells (“MLASCs”), targeting indications across cancer, infectious and degenerative diseases. Celularity is headquartered in Florham Park, NJ. Legacy Celularity acquired Anthrogenesis Corporation (“Anthrogenesis”) in August 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. Celularity currently has three active clinical trials and intends to work with the U.S. Food and Drug Administration (“FDA”) to resolve its questions on an investigational new drug application (“IND”) it submitted in the first quarter of 2022 before commencing an additional clinical trial.

The Celularity IMPACT platform capitalizes on the benefits of placenta-derived cells to target multiple diseases, and provides seamless integration, from bio sourcing through manufacturing cryopreserved and packaged allogeneic cells at its purpose-built U.S.-based 147,215 square foot facility. Celularity’s placental-derived cells are allogeneic, meaning they are intended for use in any patient, as compared to autologous cells, which are derived from an individual patient for that patient’s use. From a single source material, the postpartum human placenta, Celularity derives four allogeneic cell types: T cells, unmodified NK cells,

genetically-modified

NK cells and MLASCs, which have resulted in five key cell therapeutic programs:

CYCART-19,

CYNK-001,

CYNK-101,

APPL-001

and

PDA-002,

focused on six initial indications.

CYCART-19

is a placental-derived

CAR-T

cell therapy, in development for the treatment of B-cell malignancies, initially targeting the CD19 receptor.

CYNK-001

is a placental-derived unmodified NK cell in development for the treatment of acute myeloid leukemia (“AML”), a blood cancer, and for glioblastoma multiforme (“GBM”), a solid tumor cancer.

CYNK-101

is a placental-derived genetically modified NK cell in development, to be evaluated in combinaion with a monoclonal antibody to target HER2+ cancers, such as gastric cancer.

APPL-001

is a placenta-derived MLASC being developed for the treatment of Crohn’s disease.

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, dependence on Key personnel, protection of proprietary technology, compliance with governmental regulations

and the ability to secure additional capital to fund operations. Drug candidates currently under development will require significant additional approval prior to commercialization, including extensive preclinical and clinical testing and regulatory approval. These efforts require significant amounts of additional capital, adequate personnel, and infrastructure and extensive compliance-reporting capabilities. Even if the Company’s drug development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

COVID-19

On March 10, 2020, the World Health Organization declared the

COVID-19

outbreak a pandemic. The virus and actions taken to mitigate its spread have had, and are expected to continue to have, a broad adverse impact on the economies and financial markets of many countries, including the geographical areas in which the Company operates and conducts its business and which the Company’s partners operate and conduct their business. The Company is currently following the recommendations of local health authorities to minimize exposure risk for its team members and visitors. However, the scale and scope of this pandemic is unknown and the duration of the business disruption and related financial impact cannot be reasonably estimated at this time. While management has implemented specific business continuity plans to reduce the potential impact of

COVID-19,

there is no guarantee that the Company’s continuity plans will be successful.

Although the Company was able to operate continuously since the pandemic began, the Company implemented

work-from-home

policies as needed following local health recommendations for

non-essential

employees and employees whose roles are able to be performed remotely. Because certain elements of the Company’s operations (such as processing placental tissue, certain biological assays, translational research and storage of cord blood) cannot be performed remotely, the Company instituted controls and protocols including mandatory temperature checking, symptom assessment forms, incremental cleaning and sanitization of common surfaces to mitigate risks to employees.

Due to a broad decline in economic activity and restrictions on physical access to certain medical facilities, the Company did experience a decrease in the net revenues of its degenerative disease business due to the pandemic in 2021. As for clinical trials, the Company did not cancel or postpone enrollment solely due to the risks of

COVID-19.

However, enrollment in the clinical trial evaluating

CYNK-001

for AML experienced some delays in the first half of 2020 as sites assessed their safety protocols and experienced high volumes of

COVID-19

patients. Enrollment has continued in the AML trial and remains ongoing. As a result, during 2020 the Company had a year-over-year increase in research and development expenses notwithstanding the enrollment delays. The Company also initiated a clinical trial evaluating

CYNK-001

in patients with

COVID-19,

which necessitated additional research and development and project management resources. The Company believes that it would have deployed its human and capital resources to other efforts, such as its

CYCART-19

clinical development program, had the

COVID-19

pandemic not struck.

COVID-19

did not have a material negative impact on oncology clinical trial patient accrual rates during 2021. However, screenings and enrollments in the

COVID-19

trial were lower once vaccines became more widely available. During 2021, Celularity continued to utilize mandatory temperature checking and symptom assessment forms and, commencing with the third quarter of 2021, instituted additional safety protocols for unvaccinated employees. Celularity also utilized a liaison to help schedule vaccination appointments for employees.

The extent to which

COVID-19

or any other health epidemic may impact the Company’s results will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of

COVID-19

and the actions to contain

COVID-19

or treat its impact, among others. Accordingly,

COVID-19

could have a material adverse effect on the Company’s business, results of operations, financial condition, and prospects.

Going Concern

In accordance with Accounting Standards Update (“ASU”) No.

2014-15,

Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic

205-40)

, the Company has evaluated whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued.

Since its inception, Legacy Celularity funded its operations primarily with proceeds from the sales of preferred stock as well as revenues generated through its biobanking and degenerative disease commercial operations. The Company has incurred recurring losses since its inception, including net losses of $62,867 and $100,118 for the three months ended March 31, 2022 and the year ended December 31, 2021, respectively. In addition, as of March 31, 2022, the Company had an accumulated deficit of $722,552. The Company expects to continue to generate operating losses for the foreseeable future. As of March 31, 2022, the Company expects that its cash and cash equivalents will not be sufficient to fund its operating expenses and capital expenditure requirements through at least 12 months from the issuance of the condensed consolidated financial statements.

The Company is seeking additional funding through public or private equity and/or debt financings. The Company may not be able to obtain financing on acceptable terms, or at all. The terms of any financing may adversely affect the holdings or the rights of the Company’s stockholders.

Based on its recurring losses from operations incurred since inception, expectation of continuing operating losses for the foreseeable future, and need to raise additional capital to finance its future operations, the Company has concluded that there is substantial doubt about its ability to continue as a going concern.

The accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Accordingly, the unaudited condensed consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.

1. Nature of Business and Basis of Presentation

On July 16, 2021 (the “Closing Date”), the Company consummated the previously announced merger pursuant to the Merger Agreement and Plan of Reorganization, dated January 8, 2021 (the “Merger Agreement”), by and among GX, Alpha First Merger Sub, Inc., a Delaware corporation and a direct, wholly owned subsidiary of GX (“First Merger Sub”), Celularity LLC (f/k/a Alpha Second Merger Sub LLC), a Delaware limited liability company and a direct, wholly owned subsidiary of GX (“Second Merger Sub”), and the entity formerly known as Celularity Inc., incorporated under the laws of the state of Delaware on August 29, 2016 (“Legacy Celularity”). Upon completion of the merger transaction, GX changed its name to Celularity Inc.

The business combination was accounted for as a reverse recapitalization in conformity with accounting principles generally accepted in the United States (see Note 3). Reported shares and earnings per share available to holders of the Company’s common stock, prior to the business combination, have been retroactively restated as shares reflecting the exchange ratio established in the business combination (1.00 share of Legacy Celularity for approximately 0.7686 shares of Celularity).

Description of Business

Celularity is a clinical-stage biotechnology company leading the next evolution in cellular medicine by developing

off-the-shelf

placental-derived allogeneic T cells engineered with chimeric antigen receptor (“CAR”) T cells, natural killer (“NK”) cells and mesenchymal-like adherent stromal cells (“ASCs”), targeting indications across cancer, infectious and degenerative diseases. Celularity is headquartered in Florham Park, NJ. Legacy Celularity acquired Anthrogenesis Corporation (“Anthrogenesis”) in August 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. Celularity currently has

three

active clinical trials and plans to submit two additional investigational new drug (“IND”) applications in 2022. The Celularity IMPACT platform capitalizes on the benefits of placenta-derived cells to target multiple diseases, and provides seamless integration, from bio sourcing through manufacturing cryopreserved and packaged allogeneic cells at its purpose-built U.S.-based

150,000

square foot facility. Celularity’s placental-derived cells are allogeneic, meaning they are intended for use in any patient, as compared to autologous cells, which are derived from an individual patient for that patient’s use. From a single source material, the postpartum human placenta, Celularity derives four allogeneic cell types: T cells, unmodified NK cells, genetically-modified NK cells and ASCs, which have resulted in five key cell therapeutic programs:

CYCART-19,

CYNK-001,

CYNK-101,

APPL-001

and

PDA-002,

focused on six initial indications.

CYCART-19

is a placental-derived

CAR-T

cell therapy, in development for the treatment of

B-cell

malignancies, initially targeting the CD19 receptor.

CYNK-001

is a placental-derived unmodified NK cell in development for the treatment of acute myeloid leukemia (“AML”), a blood cancer, and for glioblastoma multiforme (“GBM”), a solid tumor cancer.

CYNK-101

is a placental-derived genetically modified NK cell in development, to be evaluated in combination with a monoclonal antibody to target HER2+ cancers, such as gastric cancer.

APPL-001

is a placenta-derived ASC being developed for the treatment of Crohn’s disease.

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with governmental regulations

Acquisitions

Shortly after Legacy Celularity’s incorporation in 2016, it completed four business combinations. Legacy Celularity did not have any significant activities prior to its acquisitions.

On May 31, 2017, Legacy Celularity acquired HLI Cellular Therapeutics, LLC (“HLI CT”) from Human Longevity Inc. (“Human Longevity”). HLI CT operated LifebankUSA, a private umbilical cord blood stem cell and cord tissue bank that offers parents the option to collect, process and cryogenically preserve newborn umbilical cord blood stem cells and cord tissue units. The HLI CT acquisition also provided Legacy Celularity with rights to a portfolio of biomaterial assets, including Biovance

and Interfyl

as well as

PSC-100,

a development-stage placental stem cell program. Prior to the acquisition, Human Longevity entered into to a Supply Agreement and a License, Marketing and Development Agreement (collectively, “the HLI Agreements”) with Alliqua Biomedical Inc. (“Alliqua”). The HLI Agreements gave Alliqua exclusive rights to market and distribute Biovance

and Interfyl

. Rights, title and interest into the HLI Agreements transferred to the Company as a result of the HLI CT acquisition. In aggregate, the fair value of the consideration to acquire HLI CT was $28,876. The acquisition led to goodwill and intangible assets including

in-process research

and development (“IPR&D”) and a licensing agreement.

On August 15, 2017, Legacy Celularity executed a Merger Agreement with Celgene whereupon it acquired Anthrogenesis, a wholly-owned subsidiary of Celgene (the “Anthrogenesis Merger Agreement”). The Anthrogenesis acquisition included a portfolio of

pre-clinical and

clinical stage assets, including key cellular therapeutic assets in immuno-oncology, inflammatory and

age-related diseases,

that Legacy Celularity continues to develop. The Anthrogenesis acquisition gives Legacy Celularity access to Anthrogenesis’ proprietary technologies and processes for the recovery of large quantities of high-potential stem cells and cellular therapeutic products derived from postpartum human placentas (each an “Anthrogenesis Product”). As part of the Anthrogenesis acquisition, some of the inventors of the Anthrogenesis Products and other key members of the Anthrogenesis Product development team joined Legacy Celularity. In aggregate, the fair value of the consideration to acquire Anthrogenesis was $346,430. The acquisition led to goodwill and intangible assets including IPR&D and a licensing agreement and contingent value rights (“CVR”) agreement.

In August 2017, Legacy Celularity issued shares of its Series X Preferred Stock to Celgene as merger consideration and entered into a contingent value rights agreement (the “CVR Agreement”) with Celgene pursuant to which it issued one

CVR in respect of each share of Series X Preferred Stock issued to Celgene in connection with the Anthrogenesis acquisition. The CVR Agreement entitles the holders of the CVRs to an aggregate amount, on a per program basis, of $50,000 in regulatory milestones and an aggregat

e $125,000 in commercial milestone payments with respect to certain programs. In addition, with respect to each such program and calendar year, the CVR holders will be entitled, with respect to a given calendar year and program, to receive a royalty equal to a

mid-teen percentage

of the annual net sales for such program, from the date of the first commercial sale of such program’s product in a particular country until the latest to occur of the expiration of the last to expire of any valid patent claim covering such program product in such country, the expiration of marketing exclusivity with respect to such product in such country, and August 2027 (i.e., the tenth anniversary of the closing of the acquisition of Anthrogenesis). Celularity estimates the liability associated with the CVR quarterly. Changes to that liability include but are not limited to changes in Celularity clinical programs, assumptions about the commercial value of those programs and the time value of

money.

On May 7, 2018, the Company completed an Asset Purchase Agreement with Alliqua, a regenerative technologies company that commercializes regenerative medical products (the “Alliqua APA”). The Alliqua APA included the acquisition of Alliqua’s biologic wound care business, including the marketing and distribution

rights to Biovance

and Interfyl

as well as a Class II medical device, the MIST

and UltraMIST

Therapy Systems. In connection with the Alliqua APA, the Company paid cash consideration

f $

29,000

. The Alliqua acquisition led to goodwill and intangible assets.

debt or significant liabilities were assumed by the Company.

On October 5, 2018, the Company acquired CariCord Inc. (“CariCord”), a family cord blood bank established by ClinImmune Labs University of Colorado Cord Blood Bank (“ClinImmune Labs”) and the Regents of the University of Colorado, a body corporate, for and on behalf of the University of Colorado School of Medicine (the “University of Colorado”). In the aggregate, the fair value of the consideration to acquire CariCord was $9,326. The acquisition led to goodwill and intangible assets.

COVID-19

On March 10, 2020, the World Health Organization declared the

COVID-19

COVID-19,

there is no guarantee that the Company’s continuity plans will be successful.

Although the Company was able to operate continuously throughout 2020 and 2021, the Company implemented work-from-home policies as needed following local health recommendations for

non-essential

COVID-19.

However, enrollment in the clinical trial evaluating

CYNK-001

for AML experienced some delays in the first half of 2020 as sites assessed their safety protocols and experienced high volumes of

COVID-19

CYNK-001

in patients with

COVID-19,

which necessitated additional research and development and project management resources. The Company believes that it would have deployed its human and capital resources to other efforts, such as its

CYCART-19

clinical development program, had the

COVID-19

pandemic not struck.

COVID-19

did not have a material negative impact on oncology clinical trial patient accrual rates during 2021. However, screenings and enrollments in the

COVID-19

The extent to which

COVID-19

or any other health epidemic may impact the Company’s results will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may

emerge concerning the severity of

COVID-19

and the actions to contain

COVID-19

or treat its impact, among others. Accordingly,

COVID-19

could have a material adverse effect on the Company’s business, results of operations, financial condition, and prospects.

Going Concern

In accordance with Accounting Standards Update (“ASU”)

No. 2014-15,

Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic

205-40)

$100,118 and $208,233 for the years ended December 31, 2021 and 2020, respectively. In addition, as of December 31, 2021, the Company had an accumulated deficit of $663,681. The Company expects to continue to generate operating losses for the foreseeable future. As of the date these financial statements are issued, the Company expects that its cash and cash equivalents will not be sufficient to fund its operating expenses and capital expenditure requirements through at least 12 months from the issuance of the consolidated financial statements.

The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Accordingly, the consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.

Summary of Significant Accounting Policies

3 Months Ended

12 Months Ended

Mar. 31, 2022

Dec. 31, 2021

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2.	Summary of Significant Accounting Policies

Basis of Presentation

The Company’s unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The unaudited condensed consolidated financial statements include the accounts of wholly owned subsidiaries, after elimination of intercompany accounts and transactions. The unaudited condensed consolidated financial information presented herein reflects all financial information that, in the opinion of management, is necessary for a fair statement of financial position, results of operations and cash flows for the periods presented.

The Company’s condensed consolidated financial statements are prepared in accordance with the U.S. Securities and Exchange Commission’s 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 year ended December 31, 2021.

In the opinion of management, the accompanying interim financial statements include all normal and recurring adjustments (which consist primarily of accruals, estimates and assumptions that impact the financial statements) considered necessary to present fairly the Company’s financial position as of March 31, 2022, and its results of operations, statement of changes in stockholder’s equity (deficit) and cash flows for the three months ended March 31, 2022 and 2021. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. The interim

financial statements, presented herein, do not contain the required disclosures under GAAP for annual financial statements. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s annual audited financial statements and related notes as of and for the year ended December 31, 2021 included in the Annual Report on Form

10-K

filed with the Securities and Exchange Commission on March 31, 2022 (the “2021 Form 10-K”).

Use of Estimates

The preparation of the Company’s condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of 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 impairment assessment, the valuation of inventory, of contingent consideration and contingent stock consideration, determination of incremental borrowing rates, accrual of research and development expenses, and the valuations of stock options and preferred stock warrants. The Company based its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates when there 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.

Fair Value Measurements

Certain assets and liabilities of the Company are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable 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, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by 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 assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

Leases

In accordance with ASU

2016-02,

the Company classifies leases at the lease commencement date. At the inception of an arrangement, the Company will determine whether the arrangement is or contains a lease based on the circumstances present. Leases with a term greater than one year will be recognized on the condensed consolidated balance sheets as

right-of-use

assets (“ROU”), lease liabilities, and if applicable, long-term lease liabilities. The Company includes renewal options to extend the lease in the lease term where it is reasonably certain that it will exercise these options. Lease liabilities and the corresponding ROU are recorded based on the present values of lease payments over the terms. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate incremental borrowing rates, which are the rates that would be incurred to borrow on a collateralized basis, over similar terms, amounts equal to the lease

payments in a similar economic environment. Variable payments that do not depend on a rate or index are not included in the lease liability and are recognized as incurred. Lease contracts do not include residual value guarantees nor do they include restrictions or other covenants. Certain adjustments to ROUs may be required for items such as initial direct costs paid, incentives received, or lease prepayments. If significant events, changes in circumstances, or other events indicate that the lease term or other inputs have changed, the Company would reassess lease classification, remeasure the lease liability using revised inputs as of the reassessment date, and adjust the ROU.

The Company has elected the “package of 3” practical expedients permitted under the transition guidance, which eliminates the requirements to reassess prior conclusions about lease identification, lease classification, and initial direct costs. The Company also adopted an accounting policy which provides that leases with an initial term of 12 months or less and no purchase option that the Company is reasonably certain of exercising will not be included within the lease right-of-use assets and lease liabilities on its condensed consolidated balance sheets.

Refer to Note 8 for further information.

Net Loss per Share

The following potentially dilutive securities have been excluded from the computation of diluted weighted-average shares of common stock outstanding, prior to the use of the two-class method, as they would be anti-dilutive:


	Three Months Ended March 31,
	2022		2021
Redeemable convertible preferred stock		—		107,525,553
Stock options		23,999,206		22,815,643
Restricted stock units		517,616		—
Warrants		29,404,809		25,775,905

		53,921,631		156,117,101

Segment Information

Operating segments are defined as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources in assessing performance. The Company manages 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, 2022 and 2021 in Note 15.

Concentrations of Credit Risk and Significant Customers

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The Company generally maintains balances in various operating accounts at financial institutions that management believes to be of high credit quality, in amounts that may exceed federally insured limits. The Company has not experienced any losses related to its cash and cash equivalents or restricted cash and does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

The Company 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 December 31, 2021, one of the Company’s customers comprised approximately 47% of the Company’s total outstanding accounts receivable. As of March 31, 2022, no single

customer provided more than 10% of Company’s total outstanding accounts receivable. No single customer provided 10% or more of the revenue earned during the three months ended March 31, 2022 and 2021.

Emerging Growth Company

Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act of 1933, as amended, registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended “Exchange Act”)) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

This may make comparison of the Company’s financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Recently Adopted Accounting Pronouncements

On January 1, 2022, the Company adopted ASU

2016-02,

which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a ROU asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less may be accounted for similar to existing guidance for operating leases today.

The Company adopted ASU

2016-02

utilizing the modified retrospective transition method in the first quarter of fiscal 2022 and did not restate comparative periods. The Company has elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed it to carry forward the historical lease classification. Refer to Note 8 for further information on the impact of the adoption of ASU

2016-02

on the Company’s condensed consolidated financial statements.

The Company recorded ROU assets and lease liabilities of $15,678 and $30,399, respectively, on the condensed consolidated balance sheets. Incremental borrowing rates as of January 1, 2022, the date the new standard was adopted, were used to calculate the present value of the Company’s lease portfolio as of that date. Leases previously identified as

build-to-suit

leases were derecognized pursuant to the transition guidance provided for

build-to-suit

leases in ASC

2016-02.

The impact of the derecognition of the

build-to-suit

lease was a net reduction of $3,996 to accumulated deficit as of January 1, 2022. The standard did not materially impact the consolidated net losses or operating cash flows.

In May 2021, the FASB issued ASU

2021-04,

Earnings Per Share

(Topic 260),

Debt—Modifications and Extinguishments

(Subtopic

470-50),

Compensation—Stock Compensation

(Topic 718), and

Derivatives and Hedging—Contracts in Entity’s Own Equity

(Subtopic

815-40):

Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding

Equity-Classified

Written Call Options

(“ASU

2021-04”).

ASU

2021-04

provides guidance as to how an issuer should account for a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option (i.e., a warrant) that remains equity-classified after modification or exchange as an exchange of the original instrument for a new instrument. An issuer should measure the effect

of a modification or exchange as the difference between the fair value of the modified or exchanged warrant and the fair value of that warrant immediately before modification or exchange and then apply a recognition model that comprises four categories of transactions and the corresponding accounting treatment for each category (equity issuance, debt origination, debt modification, and modifications unrelated to equity issuance and debt origination or modification). The Company adopted ASU

2021-04

effective January 1, 2022 and considered this guidance when evaluating the amendment of the Company’s warrants in March 2022 (See Note 10.)

Recently Issued Accounting Pronouncements

In August 2020, the FASB issued ASU

2020-06,

(Subtopic

470-20):

Debt — Debt with Conversion and Other Options

(“ASU

2020-06”)

to address the complexity associated with applying GAAP to certain financial instruments with characteristics of liabilities and equity. ASU

2020-06

includes amendments to the guidance on convertible instruments and the derivative scope exception for contracts in an entity’s own equity and simplifies the accounting for convertible instruments which include beneficial conversion features or cash conversion features by removing certain separation models in Subtopic

470-20.

Additionally, ASU

2020-06

will require entities to use the

“if-converted”

method when calculating diluted earnings per share for convertible instruments. ASU

2020-06

is effective for fiscal years beginning after December 15, 2023 (fiscal year 2024 for the Company), including interim periods within those fiscal years. The Company does not expect the impact of ASU

2020-06

to have an impact on its financial position, results of operations or cash flows.

In June 2016, the FASB issued ASU

2016-13,

Financial Instruments — Credit Losses

(“ASU

2016-13”),

which changes the accounting for recognizing impairments of financial assets. Under the new guidance, credit losses for certain types of financial instruments will be estimated based on expected losses. ASU

2016-13

also modifies the impairment models for

available-for-sale

debt securities and for purchased financial assets with credit deterioration since their origination. ASU

2016-13

is effective for annual periods beginning after December 15, 2022 (fiscal year 2023 for the Company), and interim periods within those periods, with early adoption permitted. The Company is currently evaluating the impact that the adoption of ASU

2016-13

will have on its condensed consolidated financial statements.

2. Summary of Significant Accounting Policies

Basis of Presentation

The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The consolidated financial statements include the accounts of wholly owned subsidiaries, after elimination of intercompany accounts and transactions. The consolidated financial information presented herein reflects all financial information that, in the opinion of management, is necessary for a fair statement of financial position, results of operations and cash flows for the periods presented.

Use of Estimates

The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, assumptions related to the Company’s goodwill and intangible impairment assessment, the valuation of inventory and of contingent consideration,

accrual of research and development expenses, and the valuations of stock options and preferred and common stock warrants. The Company based its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates when there are changes in circumstances, facts and experience. Changes

estimates are recorded in the period in which they become known. Actual results could differ from those estimates.

Fair Value Measurements

•

Level 1 — Quoted prices in active markets for identical assets or liabilities.

•

Cash and Cash Equivalents

Cash and cash equivalents consist principally of cash held in commercial bank accounts, money market funds and U.S. Treasury securities having an original maturity of less than three months. The Company considers all highly liquid investments with maturities of three months or

less

at the date of acquisition to be cash equivalents. At December 31, 2021 and 2020, substantially all cash and cash equivalents were held in either commercial bank accounts or money market funds.

Restricted Cash

As of December 31, 2021 and 2020, the Company maintained letters of credit of $14,836 and $15,202, respectively, for the benefit of the landlord of leased properties, which the Company classified as restricted cash

(non-current)

on its consolidated balance sheets.

Inventory

Inventory is stated at the lower of cost or market (net realizable value), with cost being determined on a

first-in,

first-out basis.

Prior to initial approval from the U.S. Food and Drug Administration (“FDA”) or other regulatory agencies, the Company expenses costs relating to the production of inventory in the period incurred. After such time as the product receives initial regulatory approval, the Company capitalizes the inventory costs related to the product. The Company continues to expense costs associated with clinical trial material as research and development expense.

The Company periodically analyzes the inventory levels to determine whether there is any obsolete, expired, or excess inventory. If any inventory is (i) expected to expire prior to being sold, (ii) has a cost basis in excess of its

net realizable value, (iii) is in excess of expected sales requirements as determined by internal sales forecasts, or (iv) fails to meet commercial sale specifications, the inventory is written-down through a charge to cost of goods sold. The determination of whether inventory costs will be realizable requires estimates by management of future expected inventory requirements, based on sales forecasts. Once packaged,

Biovance

currently has a shelf-life of five years in the United States and between two and three years outside of the United States, and Interfyl

has a shelf-life of five years. If actual market conditions are less favorable than those projected by management, inventory write-downs may be required. Inventory, net of current portion on the Company’s consolidated balance sheets includes inventory expected to remain on hand beyond one

year.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization expense is recognized using the straight-line method over the estimated useful life of each asset, as follows:


	Estimated Useful Life
Building		26 years
Furniture and fixtures		5—7 years
Lab equipment		5 years
Computer equipment		3 years
Software		3 years
Leasehold improvements		shorter of the estimated useful life and the lease term

Estimated useful lives are periodically assessed to determine if changes are appropriate. Maintenance and repairs are charged to expense as incurred. When assets are retired or otherwise disposed of, the cost of these assets and related accumulated depreciation or amortization are eliminated from the consolidated balance sheet and any resulting gains or losses are included in the consolidated statement of operations in the period of disposal. Costs for capital assets not yet placed into service are capitalized as

construction-in-progress

and depreciated once placed into service.

Impairment of Tangible Long-Lived Assets

Tangible long-lived assets consist of property, plant and equipment. Tangible long-lived assets to be held and used are tested for recoverability whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. Factors that the Company considers in deciding when to perform an impairment review include significant underperformance of the business in relation to expectations, significant negative industry or economic trends and significant changes or planned changes in the use of the assets. If an impairment review is performed to evaluate a long-lived asset group for recoverability, the Company compares forecasts of undiscounted cash flows expected to result from the use and eventual disposition of the long-lived asset group to its carrying value. An impairment loss would be recognized in loss from operations when estimated undiscounted future cash flows expected to result from the use of an asset group are less than its carrying amount. The impairment loss would be based on the excess of the carrying value of the impaired asset group over its fair value, determined based on discounted cash flows. The Company did

t record any impairment losses on tangible long-lived assets during the years ended December 31, 2021 and 2020.

Business Combinations

The purchase price allocation for business combinations requires extensive use of accounting estimates and judgments to allocate the purchase price to the identifiable tangible and intangible assets acquired and liabilities assumed based on their respective fair values. Under Accounting Standards Codification 805,

Business Combinations

, the Company first determines whether substantially all of the fair value of the gross assets

acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the single asset or group of assets, as applicable, is not a business. If the single asset or group of similar assets does not meet the threshold, an entity must next evaluate whether both an input and substantive process are present.

The Company accounts for business combinations using the acquisition method of accounting. Application of this method of accounting requires that (i) identifiable assets acquired (including identifiable intangible assets) and liabilities assumed generally be measured and recognized at fair value as of the acquisition date and (ii) the excess of the purchase price over the net fair value of identifiable assets acquired and liabilities assumed be recognized as goodwill, which is not amortized for accounting purposes but is tested for impairment at least annually. Acquired IPR&D is recognized at fair value and initially characterized as an indefinite-lived intangible asset, irrespective of whether the acquired IPR&D has an alternative future use. Transaction costs related to business combinations are expensed as incurred.

Determining the fair value of assets acquired and liabilities assumed in a business combination requires management to use significant judgment and estimates, especially with respect to intangible assets. Critical estimates in valuing certain identifiable assets include, but are not limited to, the selection of valuation methodologies, estimates of future revenue and cash flows, expected long-term market growth, future expected operating expenses, costs of capital and appropriate discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and, as a result, actual results may differ materially from estimates.

During the measurement period, which extends no later than one year from the acquisition date, the Company may record certain adjustments to the carrying value of the assets acquired and liabilities assumed with the corresponding offset to goodwill. After the measurement period, all adjustments are recorded in the consolidated statements of operations as operating expenses or income.

Acquisition-related contingent consideration, which consists of potential milestone and royalty obligations (see Note 11), was recorded in the consolidated balance sheets at its acquisition-date estimated fair value, in accordance with the acquisition method of accounting. The fair value of the acquisition-related contingent consideration is remeasured each reporting period, with changes in fair value recorded in the consolidated statements of operations. The fair value measurement is based on significant inputs not observable by market participants and thus represents a Level 3 input in the fair value hierarchy (see Note 4).

Asset Acquisitions

The Company measures and recognizes asset acquisitions that are not deemed to be business combinations based on the cost to acquire the assets, which includes transaction costs. In an asset acquisition, the cost allocated to acquire IPR&D with no alternative future use is charged to research and development expense at the acquisition date.

In-Process

Research and Development

The fair value of IPR&D acquired through a business combination is capitalized as an indefinite-lived intangible asset until the completion or abandonment of the related research and development activities. When the related research and development is completed, the asset is reclassified to a definite-lived asset and amortized over its estimated useful life.

The fair value of an IPR&D intangible asset is typically determined using an income approach whereby management forecasts the net cash flows expected to be generated by the asset over its estimated useful life. The net cash flows reflect the asset’s stage of completion, the probability of technical success, the projected costs to complete, expected market competition, and an assessment of the asset’s life-cycle. The net cash flows are then adjusted to present value by applying an appropriate discount rate that reflects the risk factors associated with the cash flow streams.

Indefinite-lived IPR&D is not subject to amortization but is tested annually for impairment or more frequently if there are indicators of impairment. The Company tests its indefinite-lived IPR&D annually for impairment during the fourth quarter. In testing indefinite-lived IPR&D for impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances would indicate that it is more likely than not that its fair value is less than its carrying amount, or the Company can perform a quantitative impairment analysis to determine the fair value of the indefinite-lived IPR&D without performing a qualitative assessment. Qualitative factors that the Company considers include significant negative industry or economic trends and significant changes or planned changes in the use of the assets. If the Company chooses to first assess qualitative factors and the Company determines that it is more likely than not that the fair value of the indefinite-lived IPR&D is less than its carrying amount, the Company would then determine the fair value of the indefinite-lived IPR&D. Under either approach, if the fair value of the indefinite-lived IPR&D is less than its carrying amount, an impairment charge is recognized in the consolidated statements of operations. During the year ended December 31, 2020, the Company recognized an impairment charge related to its indefinite-lived IPR&D of $129,400. No such charge was recognized during the year ended December 31, 2021 (see Note 8).

Goodwill

Goodwill represents the excess of the fair value of the consideration transferred over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. Goodwill is not subject to amortization but is tested annually for impairment or more frequently if there are indicators of impairment. The Company typically tests its goodwill annually for impairment in the fourth quarter of each year.

Prior to the third quarter of 2020, the Company managed its operations as one reporting unit. In the third quarter of 2020, the Company began to manage its operations through an evaluation of three different operating segments: Cell Therapy, Degenerative Disease and BioBanking (see Note 18). The Company determined that the operating segments represented the reporting units.

As a result of the change in reporting units, goodwill was required to be allocated across the operating segments under the new reporting structure. Goodwill was attributed to each reporting unit based on the acquired value, which is reflective of the relative fair value.

In testing goodwill for impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances would indicate that it is more likely than not that the fair value of the reporting unit was less than its carrying amount, or the Company can perform a quantitative impairment analysis without performing the qualitative assessment. Examples of such events or circumstances considered in the Company’s qualitative assessment include, but are not limited to, a significant adverse change in legal or business climate, an adverse regulatory action or unanticipated competition. If the Company chooses to first assess qualitative factors and the Company determines that it is more likely than not that the fair value of its reporting unit is less than its carrying amount, the Company would then perform the quantitative impairment test. The quantitative test starts with comparing the fair value of the reporting unit to the carrying amount of a reporting unit, including goodwill. If the fair value of the reporting unit exceeds the carrying amount, no impairment loss is recognized. However, if the fair value of the reporting unit is less than its carrying value, the Company would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to the

reporting unit.

Preferred Stock Warrants Liabilities

Prior to the business combination with GX (see Notes 1 and 3), the Company classified warrants for the purchase of shares of its convertible preferred stock (see Note 12) as liabilities on its consolidated balance sheets as these warrants were freestanding financial instruments that may have required the Company to transfer assets upon exercise. The warrant liabilities, which consisted of warrants for the purchase of Series B convertible preferred stock, were initially recorded at fair value upon the date of issuance of each warrant and was subsequently

remeasured to fair value at each reporting date. Changes in the fair value of the warrant liabilities were recognized as a component of other (expense) income in the consolidated statement of operations. Fair value of the preferred stock warrant liabilities were remeasured through the July 16, 2021

closing

date on the consolidated statement of operations until the liability was reclassified to equity on the closing date.

Leases

The Company enters into lease agreements for its laboratory and office facilities. The Company determines if a lease arrangement is an operating lease or capital lease at inception. Rent expense is recognized on a straight-line basis over the term of the lease. Incentives granted under the Company’s facilities leases, including allowances to fund leasehold improvements and rent holidays, are recorded as a deferred rent liability and are recognized as reductions to rental expense on a straight-line basis over the remaining term of the lease.

The Company considers the nature of the renovations and the Company’s involvement during the construction period of newly leased office space to determine if it is considered to be the owner of the construction project during the construction period. If the Company determines that it is the owner of the construction project, it is required to capitalize the fair value of the asset, including potentially the building, construction costs incurred, and capitalized interest, on its consolidated balance sheet along with a corresponding financing liability

(“build-to-suit accounting”).

Upon occupancy for

build-to-suit leases,

the Company assesses whether the circumstances qualify for sales recognition under the sale-leaseback accounting guidance. If the lease meets the sale-leaseback criteria, the Company will remove the asset and related financial obligation from the balance sheet and evaluate the lease for treatment as a capital or operating lease. If upon completion of construction, the project does not meet the sale-leaseback criteria, the leased property will be treated as a capital lease for financial reporting purposes.

Revenue Recognition

The Company generates revenue from its degenerative disease commercial operations (i.e., the sale of Biovance

, Interfyl

and MIST

and UltraMIST

Therapy System), biobanking services (i.e., the collection, processing and storage of umbilical cord and placental blood and tissue after full-term pregnancies), and license, royalty and other operations (i.e., license agreement with Sanuwave Health Inc.).

Product sales and rentals

Biovance

is a decellularized, dehydrated human amniotic membrane with a preserved natural epithelial basement membrane and an intact extracellular matrix structure with its biochemical components, and is intended for use as a biological membrane covering that provides the extracellular matrix while supporting the repair of damaged tissue. Interfyl

is an allogeneic decellularized particulate human placental connective tissue matrix consisting of natural human structural and biochemical extracellular matrix components and is intended for use in both surgical requirements and wound care as the replacement or supplementation of damaged or inadequate integumental tissue. UltraMIST

is a low frequency ultrasound system used to promote wound healing through wound cleansing and maintenance debridement by the removal of fibrin, yellow slough, tissue exudates and bacteria. The MIST

/UltraMIST

Therapy System consists of a generator and treatment wand (collectively, the “MIST Equipment”) along with

single-use

applicators (the “MIST Applicators”) and optional accessories (e.g., roll stand and carts).

The Company recognizes revenue when control of the products and services is transferred to its customers in an amount that reflects the consideration it expects to receive from its customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when, or as, the performance obligations have been satisfied.

A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. The Company considers a performance obligation satisfied once it has transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. Transaction prices of products or services are typically based on contracted rates with customers and to the extent that the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing the expected value method or the most likely amount, depending on the circumstances, to which the Company expects to be entitled.

The Company provides for rights of return to customers on its degenerative disease products. To date, the Company has had minimal product returns and therefore does not record a provision for returns. The Company offers product warranties which provide assurance that the product will function as expected and in accordance with specification. Customers can purchase warranties separately and these warranties give rise to a separate performance obligation.

The Company’s MIST

/UltraMIST

Therapy System had both software and

non-software (e.g.,

hardware) components that function together to deliver the product’s essential functionality. In addition, the hardware sold could not be used apart from the embedded software. The MIST Equipment was obtained by the customer in

three

ways: (a) the purchase of the MIST Equipment outright; (b) the lease of the MIST Equipment for a monthly rental fee; or

whereupon the Company provided the MIST Equipment for a single pay per use fee, subject to a minimum purchase requirement of MIST Applicators. MIST Applicators were separately ordered and purchased by customers who opted to purchase or directly lease the equipment. In addition, the Company offered the MIST Equipment for a standard

day evaluation period at

charge to the customer for the MIST Equipment; however, MIST Applicators were required to be purchased during the evaluation term. When the Company leased or entered into a

pay-per-use arrangement,

it retained title to the equipment at all times.

For multiple-element arrangements, revenue is allocated to each performance obligation based on its relative standalone selling price. Standalone selling prices are determined based on observable prices at which the Company separately sells its products or services. When the Company’s customer arrangements are multiple-element arrangements that contains a lease or

pay-per-use arrangement,

the Company allocates the arrangement consideration between the lease deliverable (i.e., the MIST Equipment) and

non-lease deliverable

(i.e., the MIST Applicators). The consideration related to the

pay-per-use arrangements

was allocated to the lease deliverable based on the “Minimum Volume Method”, which used the contractual minimum volume in the relative fair value calculation because the ultimate level of MIST Applicator purchases was unknown. The consideration allocated related to the lease arrangement was established in the lease arrangement.

The Company provides inventory to certain customers through

pre-arranged agreements

on a consignment basis. Customers consigned inventory is maintained and stored by certain customers; however, ownership remains with the Company.

Services

Processing and storage services include the Company providing umbilical cord blood, placental blood and tissue processing and storage for private use. Revenues recognized for the fees for processing and storage represent sales of the biobanking to customers. The Company recognizes revenue from processing fees at the point in time of the successful completion of processing and recognizes storage fees over time, which is ratably over the contractual storage period.

License, royalty and other

Under license agreements, the Company assesses whether the related performance obligation is satisfied at a point in time or over time.

Under the license agreement with Sanuwave Health Inc. (“Sanuwave”) which acquired certain assets comprising its MIST

/UltraMIST

business (see Note 14), the Company received a quarterly license fee and a defined royalty on each product sold. A credit was provided to Sanuwave for Biovance royalties up to the quarterly license fee. The Company recognized the quarterly license fee over each quarterly term based on the actual sales occurring over the period. The license agreement with Sanuwave was terminated during the third quarter of 2021 due to an uncured material breach.

At the inception of each arrangement that includes milestone payments based on certain events, the Company evaluates whether the milestones are considered probable of being achieved and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. The Company evaluates factors such as the scientific, clinical, regulatory, commercial, and other risks that must be overcome to achieve the particular milestone in making this assessment. There is considerable judgment involved in determining whether it is probable that a significant revenue reversal would not occur. At the end of each subsequent reporting period, the Company reevaluates the probability of achievement of all milestones subject to constraint and, if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative

catch-up

basis, which would affect revenues and earnings in the period of adjustment. If a milestone or other variable consideration relates specifically to the Company’s efforts to satisfy a single performance obligation or to a specific outcome from satisfying the performance obligation, the Company generally allocates the milestone amount entirely to that performance obligation once it is probable that a significant revenue reversal would not occur. See Note 14 for further discussion of the Company’s license agreements.

For certain distribution agreements as described in Note 15, the Company will utilize the practical expedient in ASC 606-10-55-83, whereby an entity may recognize revenue in the amount to which the entity has a right to invoice so long as the consideration from a customer corresponds directly with the value received. Thus, the Company will recognize revenue upon invoicing for these agreements (subsequent to receipt of the related purchase order).

Research and Development Costs

The Company has entered into various research and development and other agreements with commercial firms, researchers, universities and others for provisions of goods and services. These agreements are generally cancellable, and the related costs are recorded as research and development expenses as incurred. Research and development expenses include costs for salaries, employee benefits, subcontractors, facility-related expenses, depreciation and amortization, stock-based compensation, third-party license fees, laboratory supplies, and external costs of outside vendors engaged to conduct discovery, preclinical and clinical development activities and clinical trials as well as to manufacture clinical trial materials, and other costs. The Company records accruals for estimated ongoing research and development costs. When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the studies or clinical trials, including the phase or completion of events, invoices received and contracted costs. Significant judgments and estimates are made in determining the accrued balances at the end of any reporting period. Actual results could differ materially from the Company’s estimates. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. Such prepaid expenses are recognized as an expense when the goods have been delivered or the related services have been performed, or when it is no longer expected that the goods will be delivered, or the services rendered.

Upfront payments, milestone payments and annual maintenance fees under license agreements are expensed in the period in which they are incurred.

Advertising and Marketing Costs

Advertising and marketing costs are expensed as incurred. Advertising and marketing costs are included in selling, general and administrative expenses and were $252 and $764 for the years ended December 31, 2021 and 2020, respectively.

Government Grants

From time to time, the Company may be awarded a government research grant. Under these arrangements, the Company recognizes awarded grants as a reduction to research and development expense at the point in time where achievement of related milestones is confirmed by the governmental agency. The Company recorded a reduction of $290 to research and development expense resulting from grant awards for the year ended December 31, 2020. The Company did not receive grant monies during 2021.

Patent Costs

All patent-related costs incurred in connection with filing and prosecuting patent applications are expensed as incurred due to the uncertainty about the recovery of the expenditure. Amounts incurred are classified as general and administrative expenses.

Stock-Based Compensation

The Company measures all stock-based awards granted to employees and directors based on the fair value on the date of the grant and recognizes compensation expense for those awards, over the requisite service period, which is generally the vesting period of the respective award. The Company typically issues stock-based awards with only service-based vesting conditions and records the expense for these awards using a straight-line method.

During 2020, the Company’s Board of Directors approved the award of performance-based stock options to a

non-employee consultant

who also serves as a director for the Company (see Note 13). The performance-based stock options are earned based on the attainment of specified goals achieved over the performance period. The Company recognizes expense for performance-based awards over the related vesting period once it deems the achievement of the performance condition is probable. The Company reassesses the probability of vesting at each reporting period for performance-based awards and adjusts expense accordingly on a cumulative basis.

The fair value of each services and performance-based stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The Company historically has been a private company and lacks company-specific historical and implied volatility information for its stock. Therefore, it estimates its expected stock price volatility based on the historical volatility of publicly traded peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. The expected term of the Company’s stock options granted to employees is determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The expected term of stock options granted to

non-employee

consultants is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. The expected dividend yield is

zero

based on the fact that the Company has never paid cash dividends on common stock and does not expect to pay any cash dividends in the foreseeable future (see Note 13).

In September 2021, the Company awarded options to its President which have market-based vesting conditions. The Company uses the Monte-Carlo model in order to calculate the fair value of the market-based awards. Also in 2021, the Company granted restricted stock units (“RSU”), the fair value of which is determined based on the stock price on the date of grant.

The Company classifies stock-based compensation expense in its consolidated statement of operations in the same manner in which the award recipient’s payroll costs are classified or in which the award recipient’s service

payments are classified. The Company elects to account for forfeitures as they occur and compensation cost previously recognized for an award that is forfeited because of a failure to satisfy a service or performance condition is reversed in the period of the

forfeiture

Comprehensive Loss

Comprehensive loss includes net loss as well as other changes in stockholders’ equity (deficit) that result from transactions and economic events other than those with stockholders. There was no difference between net loss and comprehensive loss for each of the periods presented in the accompanying consolidated financial statements.

Income Taxes

The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the consolidated financial statements or in the Company’s tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and 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 that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies.

The Company accounts for uncertainty in income taxes recognized in the consolidated financial statements by applying a

two-step process

to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained based on the technical merits of the position. If the tax position is deemed

more-likely-than-not to

be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the consolidated financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than

% likelihood of being realized upon ultimate settlement with the tax authority. The provision for income taxes includes the effects of unrecognized tax benefits, as well as the related interest and penalties (see Note 17).

Net Loss per Share

Basic net loss per share of common stock is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during each period. Diluted net loss per share of common stock includes the effect, if any, from the potential exercise or conversion of securities, such as redeemable convertible preferred stock, stock options and warrants, which would result in the issuance of incremental shares of common stock. For diluted net loss per share, the weighted-average number of shares of 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 included in the calculation as the impact is anti-dilutive.

The following potentially dilutive securities have been excluded from the computation of diluted weighted-average shares of common stock outstanding, prior to the use of the

two-class method,

as they would be anti-dilutive:


	December 31,
	2021		2020
Redeemable convertible preferred stock		—		82,643,496
Stock options		26,533,868		17,167,165
Restricted stock units		474,700		—
Warrants		42,686,195		19,811,204

		69,694,763		119,621,865

Segment Information

one segment. In the third quarter of 2020, the Company began to manage its operations through an evaluation of

three

distinct businesses segments: Cell Therapy, Degenerative Disease and BioBanking. These segments are presented for the years ended December 31, 2021 and 2020 in

Note 18.

Concentrations of Credit Risk and Significant Customers

The Company has not experienced any losses related to its cash and cash equivalents or restricted cash and does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

The Company 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. During the year ended December 31, 2021, the Company had one customer (Customer A) provide for

% of revenue and another customer provide for

% of total revenue. In the year ended December 31, 2020, the Company had one customer provide for

% of the revenue earned. As of December 31, 2021, Customer A comprised approximately

% of the Company’s outstanding accounts receivable. As of December 31, 2020, one of the Company’s customers comprised approximately

% of the Company’s outstanding accounts receivables.

Emerging Growth Company

non-emerging growth

companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

Recently Adopted Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU

No. 2019-12,

Simplifying the Accounting for Income Taxes

(Topic 740) (“ASU

2019-12”).

The objective of the standard is to improve areas of GAAP by removing certain exceptions permitted by Accounting Standards Codification 740 and clarifying existing guidance to facilitate consistent application. The standard was effective for the Company beginning on January 1, 2021. The adoption of ASU

2019-12

as of January 1, 2021 did not have a material impact on the consolidated financial statements.

Recently Issued Accounting Pronouncements

In August 2020, the FASB issued ASU

2020-06,

(Subtopic

470-20):

Debt — Debt with Conversion and Other Options

(“ASU

2020-06”)

to address the complexity associated with applying GAAP to certain financial instruments with characteristics of liabilities and equity. ASU

2020-06

470-20.

Additionally, ASU

2020-06

will require entities to use the

“if-converted”

method when calculating diluted earnings per share for convertible instruments. ASU

2020-06

is effective for fiscal years beginning after December 15, 2021 (fiscal year 2022 for the Company), including interim periods within those fiscal years. As no debt is currently outstanding, the Company does not expect the impact of ASU

2020-06

to have an impact on its financial position, results of operations or cash flows.

In June 2016, the FASB issued ASU

2016-13,

Financial Instruments — Credit Losses

(“ASU

2016-13”),

2016-13

also modifies the impairment models for

available-for-sale

debt securities and for purchased financial assets with credit deterioration since their origination. ASU

2016-13

will have on its consolidated financial statements.

In February 2016, the FASB issued ASU

No. 2016-02

, Leases (Topic 842)

(“ASU

2016-02”),

right-of-use

asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less may be accounted for similar to existing guidance for operating leases today. The guidance is effective for the Company for annual reporting periods beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022, with early adoption permitted.

The Company adopted ASC 842 as of January 1, 2022 using the modified retrospective method, which did not require it to restate prior periods and did not have an impact on retained earnings. The Company has elected the “package of 3” practical expedients permitted under the transition guidance, which eliminates the requirements to reassess prior conclusions about lease identification, lease classification, and initial direct costs. The Company also adopted an accounting policy which provides that leases with an initial term of 12 months or less and no purchase option that the Company is reasonably certain of exercising will not be included within the lease

right-of-use

assets and lease liabilities on its Consolidated Balance Sheets.

At the inception of an arrangement, the Company will determine whether the arrangement is or contains a lease based on the circumstances present. Leases with a term greater than one year will be recognized on the Consolidated Balance Sheets as

right-of-use

assets, lease liabilities, and if applicable, long-term lease liabilities. The Company includes renewal options to extend the lease in the lease term where it is reasonably certain that it will exercise these options. Lease liabilities and the corresponding

right-of-use

assets will be recorded based on the present values of lease payments over the terms. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company will utilize the appropriate incremental borrowing rates, which are the rates that would be incurred to borrow on a collateralized basis, over similar terms, amounts equal to the lease payments in a similar economic environment. Variable payments that do not depend on a rate or index are not included in the lease liability and are recognized as incurred. Lease contracts do not include residual value

guarantees nor do they include restrictions or other covenants. Certain adjustments to the

right-of-use

assets may be required for items such as initial direct costs paid, incentives received, or lease prepayments. If significant events, changes in circumstances, or other events indicate that the lease term or other inputs have changed, the Company would reassess lease classification, remeasure the lease liability using revised inputs as of the reassessment date, and adjust the

right-of-use

asset.

The Company has not yet finalized the impact of this new standard, however, the Company is expecting its adoption will have a material effect on the Company’s consolidated financial statements. Upon adoption, the most significant impact relates to an equity adjustment and the recognition of a new

right-of-use

asset and lease liability arising from the derecognition of existing assets and liabilities from the failed sale-leaseback transaction of the Company’s Florham Park, New Jersey facility. Upon adoption, the Company will derecognize the portion of the existing

build-to-suit

facility financing obligation and the corresponding existing asset that was recorded solely as a result of the transaction’s

build-to-suit

designation in accordance with Topic 840. The difference associated with this derecognition will be recorded as an adjustment to equity as of January 1, 2022. The Company will then follow the general lessee transition requirements discussed above to record the new

right-of-use

asset and lease liability in accordance with Topic 842. Certain Company-paid costs associated with this transaction that were capitalized will not be derecognized and thus will be carried over and retained at their currently recognized balances as they would have been recognized in the absence of the

build-to-suit

designation. Further information regarding this transaction is discussed within Note 11.

Business Combinations

3 Months Ended

12 Months Ended

Mar. 31, 2022

Dec. 31, 2021

Business Combinations And Disposals [Abstract]

Business Combinations

3.	Business Combinations

On July 16, 2021, the Company consummated the previously announced merger pursuant to the Merger Agreement, by and among GX, First Merger Sub, Second Merger Sub and Legacy Celularity (see Note 1).

wholly-owned

subsidiary of GX (Legacy Celularity, in its capacity as the surviving corporation of the merger, the “Surviving Corporation”) (the “First Merger”) and (b) immediately following the First Merger and as part of the same overall transaction as the First Merger, the merger of the Surviving Corporation with and into Second Merger Sub, with Second Merger Sub as the surviving entity of the Second Merger, which ultimately resulted in Legacy Celularity becoming a wholly-owned direct subsidiary of GX (the “Second Merger” and, together with the FirstMerger, the “Mergers” and, collectively with the other transactions described in the Merger Agreement, the “Business Combination”). On the Closing Date, the Company changed its name from GX Acquisition Corp. to Celularity Inc.

Immediately prior to the effective time of the Mergers (the “Effective Time”), each share of preferred stock of Legacy Celularity (the “Legacy Celularity Preferred Stock”) that was issued and outstanding was automatically converted into a number of shares of common stock of Legacy Celularity, par value $0.0001 per share (the “Legacy Celularity Common Stock”) at the then-effective conversion rate as calculated pursuant to the Amended and Restated Certificate of Incorporation of Legacy Celularity, dated March 16, 2020, as amended (the “Legacy Celularity Charter”), such that each converted share of Legacy Celularity Preferred Stock was no longer outstanding and ceased to exist, and each holder of Legacy Celularity Preferred Stock thereafter ceased to have any rights with respect to such securities (the “Legacy Celularity Preferred Stock Conversion”).

At the Effective Time, by virtue of the First Merger and without any action on the part of GX, First Merger Sub, Legacy Celularity or the holders of any of the following securities:

each share of Legacy Celularity Common Stock (including shares of Legacy Celularity Common Stock resulting from the conversion of shares of Celularity Preferred Stock described above) that was issued and outstanding immediately prior to the Effective Time was cancelled and converted into the right to receive a number of shares of Company Class A common stock, par value $0.0001 per share (“Company Class A Common Stock”) equal to the Exchange Ratio (as defined below) (the “Per Share Merger Consideration”);

each share of Legacy Celularity Common Stock or Legacy Celularity Preferred Stock (together, “Legacy Celularity Capital Stock”) held in the treasury of Celularity was cancelled without any conversion thereof and no payment or distribution was made with respect thereto;

each share of First Merger Sub common stock, par value $0.01 per share, issued and outstanding immediately prior to the Effective Time was converted into and exchanged for one validly issued, fully paid and nonassessable share of common stock, par value $0.0001 per share, of the Surviving Corporation;

each Legacy Celularity Warrant (as to which no notice of exercise had been delivered to Legacy Celularity prior to the Closing) that was outstanding immediately prior to the Effective Time (and which would have otherwise been exercisable in accordance with its terms immediately following the Effective Time), became, to the extent consistent with the terms of such Legacy Celularity Warrant, the right to purchase shares of Company Class A Common Stock (and not Celularity Capital Stock) (each, a “Converted Warrant”) on the same terms and conditions (including exercisability terms) as were applicable to such Legacy Celularity Warrant immediately prior to the Effective Time, except that (A) each Converted Warrant became exercisable for that number of shares of Company Class A Common Stock equal to the product (rounded down to the nearest whole number) of (1) the number of shares of Legacy Celularity Common Stock that would have been issuable upon the exercise of a Legacy Celularity Warrant for cash and assuming the conversion of the Series B Preferred Stock underlying such outstanding Legacy Celularity Warrant into Legacy Celularity Common Stock (the “Celularity Warrant Shares”) subject to the Legacy Celularity Warrant immediately prior to the Effective Time and (2) the Exchange Ratio (as defined below); and (B) the per share exercise price for each share of Company Class A Common Stock issuable upon exercise of the Converted Warrant is equal to the quotient (rounded up to the nearest whole cent) obtained by dividing (1) the per share exercise price for each share of Series B Preferred Stock issuable upon exercise of such Celularity Warrant immediately prior to the Effective Time by (2) the Exchange Ratio (as defined below); and

each option to purchase Legacy Celularity Common Stock, whether or not exercisable and whether or not vested, that was outstanding immediately prior to the Effective Time (each, a “Legacy Celularity Option”) was assumed by GX and converted into an option to purchase shares of Company Class A Common Stock (each, a “Converted Option”).

The Business Combination was accounted for as a reverse recapitalization in conformity with accounting principles generally accepted in the United States. Under this method of accounting, GX was treated as the “acquired” company for financial reporting purposes. This determination was primarily based on existing Legacy Celularity stockholders comprising a relative majority of the voting power of the combined company, Legacy Celularity’s operations prior to the acquisition comprising the only ongoing operations of Celularity, the majority of Celularity’s board of directors appointment by Legacy Celularity, and Legacy Celularity’s senior management comprising a majority of the senior management of Celularity. Accordingly, for accounting purposes, the financial statements of the combined entity represented a continuation of the financial statements of Legacy Celularity with the business combination being treated as the equivalent of Legacy Celularity issuing stock for the net assets of GX, accompanied by a recapitalization. The Company recorded net assets of GX at historical costs, with no goodwill or other intangible assets recorded. Operations prior to the business combination are

those of Legacy Celularity. Reported shares and earnings per share available to holders of the Company’s Class A Common Stock, prior to the Business Combination, have been retroactively restated as shares reflecting the exchange ratio established in the business combination (1.00 share of Legacy Celularity for approximately 0.7686 shares of Celularity Class A Common Stock).

Net proceeds from this transaction totaled $108,786. These proceeds were comprised of $5,386 held in GX’s trust account, $83,400 received from the completion of a concurrent private investment in public equity financing (“PIPE Financing”) and $20,000 received from an investment by Palantir Technologies, Inc. (“Palantir”). The Company incurred $21,658 in transaction costs relating to the merger with GX of which $10,795 were satisfied by the issuance of Class A Common Stock, which has been offset against additional

paid-in

capital in the condensed consolidated statements of convertible preferred stock and stockholders’ equity (deficit).

Pursuant to the terms of the Merger Agreement, the existing stockholders of Legacy Celularity exchanged their interests for shares of Class A Common Stock of Celularity. In addition, GX had previously issued public warrants and private placement warrants (collectively, the “GX Warrants”) as part of the Units in its IPO in May 2019 None of the terms of the GX Warrants were modified as a result of the Business Combination. On the date of the Business Combination, the Company recorded a liability related to the GX Warrants of $59,202, with an offsetting entry to additional

paid-in

capital. During the three months ended March 31, 2022, the fair value of the GX Warrants decreased to $46,894, resulting in an expense reduction of $20,932 in the condensed consolidated statements of operations for the three months ended March 31, 2022.

Upon consummation of the Business Combination, Legacy Celularity warrants qualified for equity classification. As a result, the transaction date fair value of the Legacy Celularity warrants of $96,398 was reclassified from warrant liability to additional

paid-in

capital (see Note 4).

Immediately following the Business Combination, there were 122,487,174 shares of Class A Common Stock with a par value of $0.0001 issued and outstanding, options to purchase an aggregate of 21,723,273 shares of Class A Common Stock and 42,686,195 warrants outstanding to purchase shares of Class A Common Stock.

PIPE Financing (Private Placement)

On the Closing Date, certain significant stockholders of Legacy Celularity or their affiliates (including Sorrento Therapeutics, Inc. (“Sorrento”), Starr International Investments Ltd. and Dragasac Limited, an indirect wholly owned subsidiary of Genting Berhad, collectively, the “Subscribers”) purchased from Celularity an aggregate of 8,340,000 shares of Class A Common Stock (the “PIPE Shares”), for a purchase price of $10.00 per share and an aggregate purchase price of $83,400, pursuant to separate subscription agreements dated January 8, 2021 (collectively, the “Subscription Agreements”). Pursuant to the Subscription Agreements, the Company agreed to provide the Subscribers with certain registration rights with respect to the PIPE Shares.

Arrangement with Palantir Technologies Inc.

Pursuant to the subscription agreement entered into by GX with Palantir on May 5, 2021, Palantir purchased 2,000,000 shares of Class A Common Stock at a price of $10.00 per share and an aggregate purchase price of $20,000, upon closing of the Business Combination and closing of the PIPE financing.

3. Business Combinations and

Disposals

Fiscal 2021

On July 16, 2021, the Company consummated the previously announced merger pursuant to the Merger Agreement, by and among GX, First Merger Sub, Second Merger Sub and Legacy Celularity (see Note 1).

Pursuant to the terms of the Merger Agreement, a business combination between GX and Legacy Celularity was effected through the (a) merger of First Merger Sub with and into Legacy Celularity with Legacy Celularity surviving as a wholly-owned subsidiary of GX (Legacy Celularity, in its capacity as the surviving corporation of the merger, the “Surviving Corporation”) (the “First Merger”) and (b) immediately following the First Merger and as part of the same overall transaction as the First Merger, the merger of the Surviving Corporation with and into Second Merger Sub, with Second Merger Sub as the surviving entity of the Second Merger, which ultimately resulted in Legacy Celularity becoming a wholly-owned direct subsidiary of GX (the “Second Merger” and, together with the First Merger, the “Mergers” and, collectively with the other transactions described in the Merger Agreement, the “Business Combination”). On the Closing Date, the Company changed its name from GX Acquisition Corp. to Celularity Inc.

At the Effective Time, by virtue of the First Merger and without any action on the part of GX, First Merger Sub, Legacy Celularity or the holders of any of the following securities:

number of shares of Company Class A common stock, par value $0.0001 per share (“Company Class A Common Stock”) equal to the Exchange Ratio (as defined below) (the “Per Share Merger Consideration”);

b)	each share of Legacy Celularity Common Stock or Legacy Celularity Preferred Stock (together, “Legacy Celularity Capital Stock”) held in the treasury of Celularity was cancelled without any conversion thereof and no payment or distribution was made with respect thereto;

goodwill or other intangible assets recorded. Operations prior to the business combination are those of Legacy Celularity. Reported shares and earnings per share available to holders of the Company’s Class A common stock, prior to the Business Combination, have been retroactively restated as shares reflecting the exchange ratio established in the business combination (1.00 share of Legacy Celularity for approximately

0.7686

shares of Celularity Class A common stock).

Net proceeds from this transaction totaled $

108,786

. These proceeds were comprised of $

5,386

held in GX’s trust account, $

83,400

received from the completion of a concurrent private investment in public equity financing (“PIPE Financing”) and $

20,000

received from an investment by Palantir Technologies, Inc. The Company

incurred $

21,657

in transaction costs relating to the merger with GX of which $

10,795

were satisfied by the issuance of Class A common stock, which has been offset against additional

paid-in

capital in the Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit).

Pursuant to the terms of the Merger Agreement, the existing stockholders of Legacy Celularity exchanged their interests for shares of Class A common stock of Celularity. In addition, GX had previously issued public warrants and private placement warrants (collectively, the “GX Warrants”) as part of the Units in its initial public offering in May 2019. None of the terms of the GX Warrants were modified as a result of the Business Combination. On the date of the Business Combination, the Company recorded a liability related to the

GX Warrants

of $59,202, with an offsetting entry to additional

paid-in

capital. During the pe

iod from July 17, 2021 to December 31, 2021, the fair value of the GX Warrants decreased to $25,962, resulting in an expense reduction of $33,240 in the consolidated statement of operations for the year ended December 31, 2021.

paid-in

capital

(see Note 12).

Immediately following the Business Combination, there were

122,487,174

shares of Class A common stock with a par value of $

0.0001

issued and outstanding, options to purchase an aggregate of

21,723,273

shares of Class A common stock and

42,686,195

warrants outstanding to purchase shares of Class A common stock.

PIPE Financing (Private Placement)

On the Closing Date, certain significant stockholders of Legacy Celularity or their affiliates (including Sorrento Therapeutics, Inc., Starr International Investments Ltd. and Dragasac Limited, an indirect wholly owned subsidiary of Genting Berhad, collectively, the “Subscribers”) purchased from Celularity an aggregate of 8,340,000 shares of Class A common stock (the “PIPE Shares”), for a purchase price of $10.00 per share and an aggregate purchase price of $83,400, pursuant to separate subscription agreements dated January 8, 2021 (collectively, the “Subscription Agreements”). Pursuant to the Subscription Agreements, the Company agreed to provide the Subscribers with certain registration rights with respect to the PIPE Shares.

Arrangement with Palantir Technologies Inc.

Pursuant to the subscription agreement entered into by GX with Palantir Technologies Inc. (“Palantir”) on May 5, 2021, Palantir purchased 2,000,000 shares of Class A common stock at a price of $10.00 per share and an aggregate purchase price of $20,000, upon closing of the Business Combination and closing of the PIPE financing.

Fiscal 2020

On August 6, 2020, the Company executed (i) an asset purchase agreement to sell certain assets comprising its MIST

/UltraMIST

business to Sanuwave and (ii) a five-year licensing agreement with Sanuwave for total consideration of $24,524 (the “Sanuwave Transaction”), of which $20,000 was paid at or prior to closing. The remaining $4,524 of the purchase price was financed through a convertible promissory note due on or before August 6, 2021. The convertible promissory note can be converted into shares of Sanuwave stock at the election of the Company any time on or after

January 1, 2021

. As of December 31, 2021 the fair value of the

convertible promissory

note related to Sanuwave was $2,488 which is included in other current assets on the consolidated balance sheet.

The five-year

licensing arrangement with Sanuwave includes: (i) an exclusive Biovance license for distribution and commercialization in the wound care market and (ii) a

non-exclusive

license for the distribution and commercialization of Interfyl in the wound care market. Under the licensing agreement, the Company will

receive a quarterly license fee and a defined royalty on each product sold. A credit is provided to Sanuwave for Biovance royalties up to the quarterly license fee amount.

The following assets and liabilities were divested/written off in this transaction:


Assets Divested
Inventory	$	1,901
Intangible assets, net		13,296
Property, and equipment, net		452
Goodwill		3,764

Total assets divested	$	19,413

The total upfront consideration was allocated between both components of the Sanuwave Transaction to (i) calculate the goodwill attributed to the UltraMIST business, (ii) determine the allocation of arrangement consideration to the three performance obligations and (iii) determine the loss on sale of the UltraMIST business. The Company utilized a discounted cash flow model to value the UltraMIST business, which determined the fair

value of the UltraMIST business was $15,019. Significant inputs of this discounted cash flow model included (i) a discount rate of 11%, (ii) tax rate of 26% and (iii) a long-term growth rate of 2%. The remaining proceeds of $9,505 were allocated to the license agreement on a residual basis. During the third quarter of 2020, the Company recognized a loss on sale of UltraMIST of $4,434, which included approximately $40 in related professional fees. Due to the Company’s tax position as of the closing date, there was no tax impact resulting from the sale

the UltraMIST

business.

Fair Value of Financial Assets and Liabilities

3 Months Ended

12 Months Ended

Mar. 31, 2022

Dec. 31, 2021

Fair Value Disclosures [Abstract]

Fair Value of Financial Assets and Liabilities

4. Fair Value of Financial Assets and Liabilities

The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicate the level of the fair value hierarchy used to determine such fair values:


	Fair Value Measurements as of March 31, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents—money market funds	$	46,490	$	—	$	—	$	46,490
Convertible note receivable		—		—		2,392		2,392

	$	46,490	$	—	$	2,392	$	48,882

Liabilities:
Contingent stock consideration	$	—	$	—	$	1,565	$	1,565
Acquisition-related contingent consideration obligations		—		—		237,071		237,071
Warrant liability—Sponsor Warrants		—		—		27,200		27,200
Warrant liability—Public Warrants		19,694		—		—		19,694

	$	19,694	$	—	$	265,836	$	285,530


	Fair Value Measurements as of December 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents—money market funds	$	36,700	$	—	$	—	$	36,700
Convertible note receivable		—		—		2,488		2,488

	$	36,700	$	—	$	2,488	$	39,188

Liabilities:
Acquisition-related contingent consideration obligations	$	—	$	—	$	232,222	$	232,222
Warrant liability—Sponsor Warrants		—		—		13,600		13,600
Warrant liability—Public Warrants		12,362		—		—		12,362

	$	12,362	$	—	$	245,822	$	258,184

During the three months ended March 31, 2022 and 2021, there were no transfers between Level 1, Level 2 and Level 3.

The Company’s cash equivalents consisted of money market funds. The money market fund was valued using inputs observable in active markets for similar securities, which represents a Level 1 measurement in the fair value hierarchy.

The carrying values of accounts receivable, accounts payable, deferred revenue and other current liabilities approximate fair value in the accompanying condensed consolidated financial statements due to the short-term nature of those instruments.

Valuation of Contingent Consideration

The fair value measurement of the contingent consideration obligations is determined using Level 3 inputs and is based on a

probability-weighted

income approach. The measurement is based upon unobservable inputs supported by little or no market activity based on the Company’s own assumptions.

The following table presents a reconciliation of contingent consideration obligations measured on a recurring basis using Level 3 inputs as of March 31, 2022 and December 31, 2021:


	Balance as of December 31, 2021		Net transfers in to (out of) Level 3		Purchases, settlements and other net		Fair value adjustments			Balance as of March 31, 2022
Liabilities:
Contingent stock consideration	$	—	$	—	$	—	$	1,565		$	1,565
Acquisition-related contingent consideration obligations		232,222		—		—		4,849			237,071

	$	232,222	$	—	$	—	$	6,414		$	238,636


	Balance as of December 31, 2020		Net transfers in to (out of) Level 3		Purchases, settlements and other net		Fair value adjustments			Balance as of December 31, 2021
Liabilities:
Acquisition-related contingent consideration obligations	$	273,367	$	—	$	—	$	(41,145	)	$	232,222

The fair value of the liability to make potential future milestone and

earn-out

payments was estimated by the Company at each reporting date based, in part, on the results of a third-party valuation using a discounted cash flow analysis based on various assumptions, including the probability of achieving specified events, discount rates, and the period of time until

earn-out

payments are payable and the conditions triggering the milestone payments are met. The actual settlement of contingent consideration could differ from current estimates based on the actual occurrence of these specified events.

At each reporting date, the Company revalues the contingent consideration obligation to estimated fair value and records changes in fair value as income or expense in the Company’s condensed consolidated statement of operations. Changes in the fair value of the contingent consideration obligations may result from changes in discount periods and rates, changes in the timing and amount of revenue estimates and changes in probability assumptions with respect to the likelihood of achieving the various contingent consideration obligations. The Company has classified all of the contingent consideration as a long-term liability in the condensed consolidated balance sheet as of March 31, 2022 and December 31, 2021. See Note 9, “Commitment and Contingencies”, for more information on contingent consideration.

Valuation of Preferred Stock Warrant Liability

The warrant liability at March 31, 2022 is composed of the fair value of warrants to purchase shares of Class A Common Stock. The private placement warrants assumed upon the Business Combination (the “Sponsor Warrants”) were recorded at the Closing Date fair value based on a Black-Scholes option pricing model that utilizes inputs for: (i) value of the underlying asset, (ii) the exercise price, (iii) the risk-free rate, (iv) the volatility of the underlying asset, (v) the dividend yield of the underlying asset and (vi) maturity. The Black-Scholes option pricing model’s primary unobservable input utilized in determining the fair value of the Sponsor Warrants is the expected volatility of the Class A Common Stock. Inputs to the Black-Sholes option pricing model for the Sponsor Warrants are updated each reporting period to reflect fair value. The public warrants assumed upon the Business Combination (the “Public Warrants”) were recorded at the closing date fair value based on the close price of such warrants. Each subsequent reporting period, the Public Warrants are

marked-to-market

based on the

period-end

close price.

As of March 31, 2022 and December 31, 2021, the fair value of the warrant liabilities was $46,894 and $25,962, respectively. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve for time periods approximately equal to the estimated remaining term of the warrants.

The following table provides a roll-forward of the aggregate fair values of the Company’s warrant liabilities for which fair values are determined using Level 3 inputs:


Balance as of December 31, 2020	$	76,640
Gain recognized in earnings from change in fair value		(13,482	)
Warrant liability assumed at Closing Date (Sponsor Warrants)		34,764
Warrant liability assumed at Closing Date (Public Warrants)		24,438
Reclassification of Legacy Celularity Warrants to equity		(96,398	)

Balance as of December 31, 2021	$	25,962

Balance as of December 31, 2021	$	25,962
Loss recognized in earnings from change in fair value		20,932

Balance as of March 31, 2022	$	46,894

The fair value of the Public Warrants was $19,694 and $12,362 as of March 31, 2022 and December 31, 2021, respectively, based on the publicly stated closing price. The fair value of the Sponsor Warrants was $27,200 and $13,600 as of March 31, 2022 and December 31, 2021, respectively. Significant inputs for the Sponsor Warrants are as follows:


	March 31, 2022			December 31, 2021
Common share price	$	8.71		$	5.12
Exercise price	$	11.50		$	11.50
Dividend yield		0	%		0	%
Term (years)		4.3			4.5
Risk-free interest rate		2.43	%		1.19	%
Volatility		53.0	%		63.0	%

Valuation of the Convertible Note Receivable

The convertible note receivable was received in connection with the disposition of the UltraMIST/MIST business in 2020. At any time on or after January 1, 2021, at the sole discretion of the Company, amounts outstanding under the convertible note receivable (including accrued interest) may be converted into Sanuwave common stock at a defined rate. The convertible promissory note was to be paid on or before August 6, 2021, however, remains outstanding in full at March 31, 2021 As of March 31, 2022 and December 31, 2021, the Company utilized Level 3 inputs on a probability weighted model based on outcomes of a default, repayment and conversion of the note. The measurement is based upon unobservable inputs supported by little or no market activity based on the Company’s own assumptions.

Significant inputs for the convertible note valuation model are as follows:


	March 31, 2022			December 31, 2021
Face value	$	4,000		$	4,000
Coupon rate		12% - 17	%		12% - 17	%
Stock price	$	0.10		$	0.17
Term (years)		.51 - 1.17			.7 - 3.19
Risk-free interest rate		1.07	%		0.29	%
Volatility		n/a			n/a

Valuation of the Contingent Stock Consideration

The contingent stock consideration liability at March 31, 2022, is comprised of the fair value of potential future issuance of Class A Common Stock to CariCord participating shareholders pursuant to a settlement agreement signed during the year ended December 31, 2021 (see Note 9). The fair value measurement of the contingent stock consideration obligation is determined using Level 3 inputs and is based on a

probability-weighted

expected return methodology (“PWERM”). The measurement is largely based upon unobservable inputs supported by little or no market activity based on the Company’s own assumptions.

The following table presents a reconciliation of the contingent stock consideration obligation measured on a recurring basis using Level 3 inputs as of March 31, 2022 and December 31, 2021:


	Balance as of December 31, 2021		Net transfers in to (out of) Level 3		Purchases, settlements and other net		Fair value adjustments		Balance as of March 31, 2022
Liabilities:
Contingent stock consideration	$	—	$	—	$	—	$	1,570	$	1,570

The fair value of the liability to issue future shares of Class A Common Stock was estimated by the Company at each reporting date based on the results of a third-party valuation using a PWERM based on various inputs and assumptions, including the Company’s common share price, discount rates, and the probability of achieving specified future operational targets. The actual settlement of contingent stock consideration could differ from current estimates based on the actual achievement of these specified targets and movements in the Company’s common share price.

At each reporting date, the Company revalues the contingent stock consideration obligation to estimated fair value and records changes in fair value as income or expense in the Company’s condensed consolidated statement of operations. Changes in the fair value of the contingent stock consideration obligation may result from changes in discount rates, changes in the Company’s common share price, and changes in probability assumptions with respect to the likelihood of achieving specified operational targets. The Company has classified all of the contingent stock consideration as a long-term liability in the condensed consolidated balance sheet as of March 31, 2022. See Note 9, “Commitments and Contingencies”, for more information on contingent stock consideration.

Fair Value of Financial Assets and Liabilities


	Fair Value Measurements as of December 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents — money market funds	$	36,700	$	—	$	—	$	36,700
Convertible note receivable		—		—		2,488		2,488

	$	36,700	$	—	$	2,488	$	39,188

Liabilities:
Contingent consideration obligations	$	—	$	—	$	232,222	$	232,222
Warrant liability — Sponsor Warrants		—		—		13,600		13,600
Warrant liability — Public Warrants		12,362		—		—		12,362

	$	12,362	$	—	$	245,822	$	258,184


	Fair Value Measurements as of December 31, 2020
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents — money market funds	$	45,000	$	—	$	—	$	45,000
Convertible note receivable		—		—		4,715		4,715

	$	45,000	$	—	$	4,715	$	49,715

Liabilities:
Contingent consideration obligations		—		—		273,367		273,367
Preferred stock warrants		—		—		76,640		76,640

	$	—	$	—	$	350,007	$	350,007

During the years ended December 31, 2021 and 2020, there were no transfers between Level 1, Level 2 and Level 3.

The Company’s cash equivalents consisted of a money market fund. The money market fund was valued using inputs observable in active markets for similar securities, which represents a Level 1 measurement in the fair value hierarchy. The carrying values of accounts receivable, accounts payable, deferred revenue and other current liabilities approximate fair value in the accompanying consolidated financial statements due to the short-term nature of those instruments.

Valuation of Contingent Consideration

The fair value measurement of the contingent consideration obligations is determined using Level 3 inputs and is based on a probability-weighted income approach. The measurement is based upon unobservable inputs supported by little or no market activity based on the Company’s own assumptions.

The following table presents a reconciliation of contingent consideration obligations measured on a recurring basis using Level 3 inputs as of December 31, 2021 and 2020:


	Balance as of December 31, 2020		Net transfers in to (out of) Level 3		Purchases, settlements and other net		Fair value adjustments			Balance as of December 31, 2021
Liabilities:
Contingent consideration obligations	$	273,367	$	—	$	—	$	(41,145	)	$	232,222


	Balance as of December 31, 2019		Net transfers in to (out of) Level 3		Purchases, settlements and other net		Fair value adjustments			Balance as of December 31, 2020
Liabilities:
Contingent consideration obligations	$	328,933	$	—	$	—	$	(55,566	)	$	273,367

The fair value of the liability to make potential future milestone and

earn-out payments

was estimated by the Company at each reporting date based, in part, on the results of a third-party valuation using a discounted cash flow analysis based on various assumptions, including the probability of achieving specified events, discount rates, and the period of time until

earn-out payments

are payable and the conditions triggering the milestone payments are met. The actual settlement of contingent consideration could differ from current estimates based on the actual occurrence of these specified events.