ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
(Address of principal executive offices) |
(Zip Code) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer |
☒ | Smaller reporting company | ||||
Emerging growth company |
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5 | ||||
6 | ||||
7 |
December 31, |
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2021 |
2020 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
$ | 37,240 | $ | 54,311 | ||||
Accounts receivable, net of allowance of $283 and $272 as of December 31, 2021 and December 31, 2020, respectively |
2,745 | 1,134 | ||||||
Notes receivable |
2,488 | 5,416 | ||||||
Inventory |
9,549 | 3,850 | ||||||
Prepaid expenses |
7,076 | 6,576 | ||||||
Other current assets |
2 | 873 | ||||||
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Total current assets |
59,100 | 72,160 | ||||||
Property and equipment, net |
90,625 | 90,077 | ||||||
Goodwill |
123,304 | 123,304 | ||||||
Intangible assets, net |
123,187 | 125,379 | ||||||
Restricted cash |
14,836 | 15,202 | ||||||
Inventory, net of current portion |
2,721 | 1,998 | ||||||
Other long-term assets |
355 | 2,888 | ||||||
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Total assets |
$ | 414,128 | $ | 431,008 | ||||
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Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) |
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Current liabilities: |
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Accounts payable |
$ | 9,317 | $ | 5,390 | ||||
Accrued expenses and other current liabilities |
11,661 | 13,451 | ||||||
Current portion of financing obligation |
3,051 | 3,008 | ||||||
Deferred revenue |
2,196 | 4,828 | ||||||
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Total current liabilities |
26,225 | 26,677 | ||||||
Deferred revenue, net of current portion |
1,871 | 7,621 | ||||||
Acquisition-related contingent consideration |
232,222 | 273,367 | ||||||
Financing obligations |
28,085 | 27,634 | ||||||
Warrant liabilities |
25,962 | 76,640 | ||||||
Deferred income tax liabilities |
10 | 7 | ||||||
Other liabilities |
335 | 349 | ||||||
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Total liabilities |
314,710 | 412,295 | ||||||
Commitments and contingencies (Note 11) |
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Redeemable convertible preferred stock: |
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Series A preferred stock, $0.0001 par value, none authorized, issued and outstanding as of December 31, 2021; 29,484,740 shares authorized, issued and outstanding as of December 31, 2020 |
— | 184,247 | ||||||
Series B preferred stock, $0.0001 par value, none authorized, issued and outstanding as of December 31, 2021; 75,088,327 shares authorized, 41,205,482 shares issued and outstanding as of December 31, 2020 |
— | 290,866 | ||||||
Series X preferred stock, $0.0001 par value, none authorized, issued and outstanding as of December 31, 2021; 11,953,274 shares authorized, issued and outstanding as of December 31, 2020 |
— | 75,000 | ||||||
Stockholders’ equity (deficit): |
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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 |
— | |||||||
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 |
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 |
763,087 | 32,418 | ||||||
Accumulated deficit |
(663,681 | ) | (563,563 | ) | ||||
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Total stockholders’ equity (deficit) |
99,418 | (531,400 | ) | |||||
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Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit) |
$ | 414,128 | $ | 431,008 | ||||
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Year Ended December 31, |
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2021 |
2020 |
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Net revenues: |
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Product sales and rentals |
$ | 3,801 | $ | 6,854 | ||||
Services |
5,522 | 5,556 | ||||||
License, royalty and other |
12,012 | 1,868 | ||||||
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Total revenues |
21,335 | 14,278 | ||||||
Operating expenses: |
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Cost of goods sold (excluding amortization of acquired intangible assets) |
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Product sales and rentals |
3,528 | 2,247 | ||||||
Services |
3,649 | 2,294 | ||||||
License, royalty and other |
2,476 | 391 | ||||||
Research and development |
88,353 | 52,707 | ||||||
Selling, general and administrative |
71,341 | 31,336 | ||||||
Change in fair value of contingent consideration liability |
(41,145 | ) | (55,566 | ) | ||||
Amortization of acquired intangible assets |
2,192 | 3,394 | ||||||
Impairment of acquired intangible assets |
— | 129,400 | ||||||
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Total operating expenses |
130,394 | 166,203 | ||||||
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Loss from operations |
(109,059 | ) | (151,925 | ) | ||||
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Other income (expense): |
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Interest income |
332 | 370 | ||||||
Interest expense |
(3,171 | ) | (2,354 | ) | ||||
Loss on the sale of business |
— | (4,434 | ) | |||||
Income (expense) related to warrant liabilities |
13,482 | (58,686 | ) | |||||
Other (expense) income, net |
(1,682 | ) | 4,096 | |||||
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Total other income (expense) |
8,961 | (61,008 | ) | |||||
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Net loss before income taxes |
(100,098 | ) | (212,933 | ) | ||||
Income tax expense (benefit) |
20 | (4,700 | ) | |||||
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Net loss |
$ | (100,118 | ) | $ | (208,233 | ) | ||
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Per share information: |
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Net loss per share – basic and diluted |
$ | (1.49 | ) | $ | (11.31 | ) | ||
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Weighted average shares outstanding – basic and diluted |
67,057,278 | 18,417,910 |
Series A Redeemable Convertible Preferred Stock |
Series B Redeemable Convertible Preferred Stock |
Series X Redeemable Convertible Preferred Stock |
Common Stock |
Treasury Stock |
Additional Paid-in Capital |
Accumulated Deficit |
Total Stockholders’ Equity (Deficit) |
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Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
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Balances at December 31, 2019 |
29,484,740 | $ | 184,247 | 27,552,236 | $ | 206,035 | 11,953,274 | $ | 75,000 | 18,421,084 | $ | 1 | (13,975 | ) | $ | — | $ | 27,909 | $ | (355,330 | ) | $ | (327,420 | ) | ||||||||||||||||||||||||||||
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Exercise of stock options |
— | — | — | — | — | — | 108,369 | — | — | — | 138 | — | 138 | |||||||||||||||||||||||||||||||||||||||
Repurchase of common stock |
— | — | — | — | — | — | — | — | (76,859 | ) | (256 | ) | — | — | (256 | ) | ||||||||||||||||||||||||||||||||||||
Stock-based compensation expense |
— | — | — | — | — | — | — | — | 4,371 | — | 4,371 | |||||||||||||||||||||||||||||||||||||||||
Share issuance costs |
— | — | — | (15 | ) | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Issuance of Series B preferred stock |
— | — | 13,620,063 | 84,596 | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Issuance of Series B convertible preferred stock in connection with CariCord acquisition |
— | — | 33,183 | 250 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | — | — | — | — | — | (208,233 | ) | (208,233 | ) | |||||||||||||||||||||||||||||||||||||
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Balances at December 31, 2020 |
29,484,740 | $ | 184,247 | 41,205,482 | $ | 290,866 | 11,953,274 | $ | 75,000 | 18,529,453 | $ | 1 | (90,834 | ) | $ | (256 | ) | $ | 32,418 | $ | (563,563 | ) | $ | (531,400 | ) | |||||||||||||||||||||||||||
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Exercise of stock options |
— | — | — | — | — | — | 572,252 | — | — | — | 197 | — | 197 | |||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense |
— | — | — | — | — | — | — | — | — | — | 40,010 | — | 40,010 | |||||||||||||||||||||||||||||||||||||||
Recapitalization from GX Acquisition Corp. merger, net of redemptions, equity issuance costs and merger costs |
(29,484,740 | ) | (184,247 | ) | (41,205,482 | ) | (290,866 | ) | (11,953,274 | ) | (75,000 | ) | 94,122,408 | 10 | 90,834 | 256 | 485,332 | — | 485,598 | |||||||||||||||||||||||||||||||||
Issuance of common stock to PIPE investors |
— | — | — | — | — | — | 8,340,000 | 1 | — | — | 83,399 | — | 83,400 | |||||||||||||||||||||||||||||||||||||||
Reclassification of liability classified legacy warrants to equity |
— | — | — | — | — | — | — | — | — | — | 96,398 | — | 96,398 | |||||||||||||||||||||||||||||||||||||||
Issuance of common stock to Palantir |
— | — | — | — | — | — | 2,000,000 | — | — | — | 20,000 | — | 20,000 | |||||||||||||||||||||||||||||||||||||||
Issuance of common stock to settle liability with CTH |
— | — | — | — | — | — | 743,771 | — | — | — | 5,333 | — | 5,333 | |||||||||||||||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | — | — | — | — | — | (100,118 | ) | (100,118 | ) | |||||||||||||||||||||||||||||||||||||
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Balances at December 31, 2021 |
— | $ | — | — | $ | — | — | $ | — | 124,307,884 | $ | 12 | — | $ | — | $ | 763,087 | $ | (663,681 | ) | $ | 99,418 | ||||||||||||||||||||||||||||||
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Year Ended December 31, |
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2021 |
2020 |
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Cash flow from operating activities: |
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Net loss |
$ | (100,118 | ) | $ | (208,233 | ) | ||
Adjustments to reconcile net loss to net cash used in operations: |
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Depreciation and amortization |
8,817 | 8,174 | ||||||
Deferred income taxes |
(1,353 | ) | (8,482 | ) | ||||
Impairment charges |
— | 129,400 | ||||||
Provision for doubtful accounts |
298 | 292 | ||||||
Stock-based compensation expense |
40,010 | 4,371 | ||||||
Change in fair value of warrant liabilities |
(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 |
(41,145 | ) | (55,566 | ) | ||||
Other, net |
2,627 | 70 | ||||||
Changes in assets and liabilities: |
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Accounts receivable |
(1,909 | ) | 1,652 | |||||
Inventory |
(6,422 | ) | (643 | ) | ||||
Prepaid expenses and other assets |
3,068 | (5,761 | ) | |||||
Sale of net operating losses and research and development tax credits |
1,356 | 3,765 | ||||||
Accounts payable |
3,007 | 314 | ||||||
Accrued expenses and other liabilities |
(1,801 | ) | 184 | |||||
Deferred revenue |
(8,382 | ) | 4,093 | |||||
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Net cash used in operating activities |
(110,096 | ) | (63,193 | ) | ||||
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Cash flow from investing activities: |
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Capital expenditures |
(6,203 | ) | (27,834 | ) | ||||
Proceeds from the sale of business |
— | 15,019 | ||||||
Proceeds from promissory note |
300 | — | ||||||
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Net cash used in investing activities |
(5,903 | ) | (12,815 | ) | ||||
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Cash flow from financing activities: |
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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 from GX Acquisition Corp. on recapitalization |
5,386 | — | ||||||
Proceeds from Palantir investment |
20,000 | — | ||||||
Proceeds from PIPE financing |
83,400 | — | ||||||
Proceeds from the exercise of stock options |
638 | 138 | ||||||
Payments of PIPE/SPAC related costs |
(10,862 | ) | (403 | ) | ||||
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Net cash provided by financing activities |
98,562 | 102,014 | ||||||
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Net (decrease) increase in cash, cash equivalents and restricted cash |
(17,437 | ) | 26,006 | |||||
Cash, cash equivalents and restricted cash at beginning of year |
69,513 | 43,507 | ||||||
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Cash, cash equivalents and restricted cash at end of year |
$ | 52,076 | $ | 69,513 | ||||
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Supplemental disclosure of cash flow information: |
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Cash paid for interest |
$ | 146 | $ | — | ||||
Cash paid for income taxes |
$ | — | $ | 13 | ||||
Supplemental non-cash investing and financing activities: |
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Property and equipment included in accounts payable and accrued expenses |
$ | (970 | ) | $ | (806 | ) | ||
Recapitalization from GX Acquisition Corp. merger |
$ | 550,113 | $ | — | ||||
Cancellation of treasury stock |
$ | 256 | $ | — | ||||
Non-cash assets acquired from merger with GX Acquisition Corp. |
$ | 163 | $ | — | ||||
Warrant liability assumed from the merger with GX Acquisition Corp. |
$ | 59,202 | $ | — | ||||
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 | $ | — | ||||
Changes in PIPE/SPAC related costs in accounts payable and accrued expenses |
$ | — | $ | (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 |
1. |
Nature of Business and Basis of Presentation |
2. |
Summary of Significant Accounting Policies |
• | 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. |
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 |
December 31, |
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2021 |
2020 |
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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 | ||||||
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69,694,763 | 119,621,865 | |||||||
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3. |
Business Combinations and Disposals |
a) | 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”); |
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; |
c) | 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; |
d) | 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 |
e) | 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”). |
Assets Divested |
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Inventory |
$ | 1,901 | ||
Intangible assets, net |
13,296 | |||
Property, and equipment, net |
452 | |||
Goodwill |
3,764 | |||
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Total assets divested |
$ | 19,413 | ||
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4. | Fair Value of Financial Assets and Liabilities |
Fair Value Measurements as of December 31, 2021 |
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Level 1 |
Level 2 |
Level 3 |
Total |
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Assets: |
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Cash equivalents - money market funds |
$ | 36,700 | $ | — | $ | — | $ | 36,700 | ||||||||
Convertible note receivable |
— | — | 2,488 | 2,488 | ||||||||||||
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$ | 36,700 | $ | — | $ | 2,488 | $ | 39,188 | |||||||||
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Liabilities: |
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Contingent consideration obligations |
$ | — | $ | — | $ | 232,222 | $ | 232,222 | ||||||||
Warrant liability - Sponsor Warrants |
— | — | 13,600 | 13,600 | ||||||||||||
Warrant liability - Public Warrants |
12,362 | — | — | 12,362 | ||||||||||||
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$ | 12,362 | $ | — | $ | 245,822 | $ | 258,184 | |||||||||
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Fair Value Measurements as of December 31, 2020 |
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Level 1 |
Level 2 |
Level 3 |
Total |
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Assets: |
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Cash equivalents – money market funds |
$ | 45,000 | $ | — | $ | — | $ | 45,000 | ||||||||
Convertible note receivable |
— | — | 4,715 | 4,715 | ||||||||||||
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$ | 45,000 | $ | — | $ | 4,715 | $ | 49,715 | |||||||||
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Liabilities: |
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Contingent consideration obligations |
— | — | 273,367 | 273,367 | ||||||||||||
Preferred stock warrants |
— | — | 76,640 | 76,640 | ||||||||||||
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$ | — | $ | — | $ | 350,007 | $ | 350,007 | |||||||||
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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 |
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Liabilities: |
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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 |
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Liabilities: |
||||||||||||||||||||
Contingent consideration obligations |
$ | 328,933 | $ | — | $ | — | $ | (55,566 | ) | $ | 273,367 |
Balance as of December 31, 2019 |
$ | — | ||
Fair value of warrants issued in connection with Series B preferred stock sale |
17,954 | |||
Issuance of warrant at fair value* |
11,988 | |||
Loss recognized in earnings from change in fair value |
46,698 | |||
|
|
|||
Balance as of December 31, 2020 |
$ | 76,640 | ||
|
|
|||
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 | ||
|
|
* | The warrants issued at fair value were immediately charged to expense see Note 12. |
December 31, 2021 |
July 16, 2021 |
|||||||
Common share price |
$ | 5.12 | $ | 10.20 | ||||
Exercise price |
$ | 11.50 | $ | 11.50 | ||||
Dividend yield |
0 | % | 0 | % | ||||
Term |
4.5 | 5.0 | ||||||
Risk-free interest rate |
1.19 | % | 0.79 | % | ||||
Volatility |
63.0 | % | 50.0 | % |
July 16, 2021 |
December 31, 2020 |
|||||||
Fair value of common stock |
$ | 9.66 - 10.20 |
$ | 4.17 - 6.95 |
||||
Exercise price a |
$ | 6.77 | $ | 6.77 | ||||
Term |
3.67 | 0.33 - 1.33 | ||||||
Volatility |
54 | % | 90 | % | ||||
Risk-free interest rate |
0.60 | % | 0.09% - 0.10 |
% |
(a) | The exercise price is the lower of $6.77 per share or 80% of either (i) the value attributed to one share of Legacy Celularity Series B Preferred Stock upon a consummation of a change of control or the closing of a strategic transaction or (ii) the price at which one share of Legacy Celularity common stock is sold to the public in an initial public offering. As amended on March 16, 2020, the warrants are exercisable on the first to occur of (a) March 16, 2025, (b) the consummation of Legacy Celularity’s initial public |
offering, (c) the consummation of a change of control and (d) the closing of a strategic transaction pursuant to which Legacy Celularity’s stockholders exchange their existing shares of capital stock in Legacy Celularity for shares in a company whose shares are listed on a national stock exchange. |
July 16, 2021 |
December 31, 2020 |
|||||||
Fair value of common stock |
$ | 9.66 - 10.20 |
$ | 4.17 - 6.95 |
||||
Exercise price b |
$ | 7.53 | $ | 7.53 | ||||
Term |
3.67 | 0.33 - 1.33 | ||||||
Volatility |
54 | % | 90 | % | ||||
Risk-free interest rate |
0.60 | % | 0.09% - 0.10 |
% |
(b) | The warrants are exercisable at a price of $7.53 per share on the first to occur of: (a) the 60-month anniversary of the date of issuance of the warrants, (b) the consummation of an agreement for a public exit event, and (c) the consummation of a change of control. |
December 31, 2021 |
December 31, 2020 |
|||||||
Face value |
$ | 4,000 | $ | 4,000 | ||||
Coupon rate |
12% - 17 |
% | 12 | % | ||||
Stock price |
$ | 0.17 | $ | 0.19 | ||||
Term (years) |
.7 - 3.19 |
0.6 | ||||||
Risk-free interest rate |
0.29 | % | 0.09 | % | ||||
Volatility |
n/a | 70 | % |
5. |
Inventory |
December 31, |
||||||||
2021 |
2020 |
|||||||
Raw materials |
$ | 2,359 | $ | 376 | ||||
Work in progress |
5,902 | 460 | ||||||
Finished goods |
4,057 | 5,016 | ||||||
|
|
|
|
|||||
Inventory, gross |
12,318 | 5,852 | ||||||
Less: inventory reserves |
(48 | ) | (4 | ) | ||||
|
|
|
|
|||||
Inventory, net |
$ | 12,270 | $ | 5,848 | ||||
|
|
|
|
|||||
Balance Sheet Classification: |
||||||||
Inventory |
9,549 | 3,850 | ||||||
Inventory, net of current portion |
2,721 | 1,998 | ||||||
|
|
|
|
|||||
$ | 12,270 | $ | 5,848 | |||||
|
|
|
|
6. |
Prepaid Expenses |
December 31, 2021 |
December 31, 2020 |
|||||||
Prepaid clinical expenses |
$ | 3,269 | $ | 5,151 | ||||
Prepaid insurance expense |
1,399 | 206 | ||||||
Other |
2,408 | 1,219 | ||||||
|
|
|
|
|||||
$ | 7,076 | $ | 6,576 | |||||
|
|
|
|
7. |
Property and Equipment, Net |
December 31, |
||||||||
2021 |
2020 |
|||||||
Building (1) |
$ | 12,513 | $ | 12,513 | ||||
Leasehold improvement (2) |
71,468 | 55,289 | ||||||
Laboratory and production equipment |
11,395 | 5,884 | ||||||
Machinery, equipment and fixtures |
7,974 | 3,704 | ||||||
Construction in progress |
2,054 | 19,773 | ||||||
|
|
|
|
|||||
Property and equipment |
105,404 | 97,163 | ||||||
Less: Accumulated depreciation (3) |
(14,779 | ) | (7,086 | ) | ||||
|
|
|
|
|||||
Property and equipment, net |
$ | 90,625 | $ | 90,077 | ||||
|
|
|
|
(1) | Includes $12,513 at December 31, 2021 and 2020 under financing lease resulting from a failed sale leaseback (see Note 11). |
(2) | Includes $70,959 and $55,273 at December 31, 2021 and 2020, respectively, under financing lease resulting from a failed sale leaseback (see Note 11). |
(3) | Includes $5,971 $2,624 at December 31, 2021 and 2020, respectively, under financing lease resulting from a failed sale leaseback (see Note 11). |
8. |
Goodwill and Intangible Assets, Net |
Cell Therapy |
Degenerative Disease |
Biobanking |
Total |
|||||||||||||
Balance at December 31, 2019 |
$ | 112,347 | $ | 7,374 | $ | 7,347 | $ | 127,068 | ||||||||
Derecognition of goodwill related to sale of UltraMIST business |
— | (3,764 | ) | — | (3,764 | ) | ||||||||||
Impairment |
— | — | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance at December 31, 2020 |
$ | 112,347 | $ | 3,610 | $ | 7,347 | $ | 123,304 | ||||||||
Impairment |
— | — | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance at December 31, 2021 |
$ | 112,347 | $ | 3,610 | $ | 7,347 | $ | 123,304 | ||||||||
|
|
|
|
|
|
|
|
December 31, 2021 |
December 31, 2020 |
Estimated Useful Lives |
||||||||||
Amortizable intangible assets: |
||||||||||||
Developed technology |
$ | 16,810 | $ | 16,810 | 11 – 16 years | |||||||
Customer relationships |
2,413 | 2,413 | 10 years | |||||||||
Trade names & trademarks |
570 | 570 | 10 – 13 years | |||||||||
Reacquired rights |
4,200 | 4,200 | 6 years | |||||||||
|
|
|
|
|||||||||
23,993 | 23,993 | |||||||||||
Less: Accumulated amortization |
||||||||||||
Developed technology |
(5,376 | ) | (4,203 | ) | ||||||||
Customer relationships |
(1,170 | ) | (906 | ) | ||||||||
Trade names & trademarks |
(220 | ) | (165 | ) | ||||||||
Reacquired rights |
(2,540 | ) | (1,840 | ) | ||||||||
|
|
|
|
|||||||||
(9,306 | ) | (7,114 | ) | |||||||||
|
|
|
|
|||||||||
Amortizable intangible assets, net |
14,687 | 16,879 | ||||||||||
Non-amortized intangible assets |
||||||||||||
Acquired IPR&D product rights |
108,500 | 108,500 | indefinite | |||||||||
|
|
|
|
|||||||||
$ | 123,187 | $ | 125,379 | |||||||||
|
|
|
|
2022 |
$ | 2,193 | ||
2023 |
2,193 | |||
2024 |
1,784 | |||
2025 |
1,493 | |||
2026 |
1,356 |
9. |
Accrued expenses and other current liabilities |
December 31, 2021 |
December 31, 2020 |
|||||||
Accrued clinical trial expense |
$ | 1,861 | $ | 2,644 | ||||
Accrued professional fees |
1,653 | 2,866 | ||||||
Accrued wages, bonuses, commissions and vacation |
3,824 | 4,991 | ||||||
Accruals for construction in progress |
— | 171 | ||||||
Deferred rent |
2 | 292 | ||||||
Other |
4,321 | 2,487 | ||||||
|
|
|
|
|||||
$ | 11,661 | $ | 13,451 | |||||
|
|
|
|
10. |
Short-term borrowings – related party |
11. |
Commitments and contingencies |
2022 |
$ | 2,861 | ||
2023 |
2,895 | |||
2024 |
2,969 | |||
2025 |
3,042 | |||
2026 |
3,116 | |||
Thereafter |
73,531 | |||
|
|
|||
Total |
$ | 88,414 | ||
|
|
12. |
Equity |
• | at any time while the Public Warrants are exercisable, |
• | upon not less than 30 days’ prior written notice of redemption to each Public Warrant holder, and |
• | if, and only if, there is a current registration statement in effect with respect to the issuance of the common stock underlying such warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing. |
Number of shares |
Exercise price |
Expiration date |
||||||||||
Dragasac Warrant |
6,529,818 | $ | 6.77 | * | March 16, 2025 | |||||||
March 2020 Series B Warrants |
13,281,386 | $ | 7.53 | March 16, 2025 | ||||||||
Public Warrants |
14,374,992 | $ | 11.50 | July 16, 2026 | ||||||||
Sponsor Warrants |
8,499,999 | $ | 11.50 | July 16, 2026 | ||||||||
|
|
|||||||||||
42,686,195 | ||||||||||||
|
|
* |
The exercise price is the lessor of $6.77 per share or 80% of either (i) the value attributed to one share of Legacy Celularity Series B Preferred Stock upon consummation of a change in control or the closing of a strategic transaction or (ii) the price at which one share of common stock is sold to the public market in an initial public offering. |
13. |
Stock-Based Compensation |
• | The expected term of employee stock options with service-based vesting is determined using the “simplified” method, whereby the expected life equals the arithmetic average of the vesting term and the original contractual term of the option due to the Company’s lack of sufficient historical data. The expected term of non-employee options is equal to the contractual term. |
• | The expected stock price volatility is based on historical volatilities of comparable public entities within the Company’s industry. |
• | The risk-free interest rate is based on the interest rate payable on U.S. Treasury securities in effect at the time of grant for a period that is commensurate with the respective expected term or contractual term. |
• | The expected dividend yield is 0% because the Company has not historically paid, and does not expect, for the foreseeable future, to pay a dividend on its common stock. |
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Risk-free interest rate |
0.8 | % | 1.0 | % | ||||
Expected term (in years) |
4.65 | 6.0 | ||||||
Expected volatility |
80.4 | % | 67.8 | % | ||||
Expected dividend yield |
— | % | — | % |
Options |
Weighted average exercise price |
Weighted average contract life |
Aggregate Intrinsic Value |
|||||||||||||
Balance at December 31, 2019 |
13,954,174 | $ | 0.75 | 7.6 | $ | 40,572 | ||||||||||
Granted |
4,662,072 | 3.70 | ||||||||||||||
Exercised |
(108,369 | ) | 3.88 | |||||||||||||
Forfeited |
(1,340,712 | ) | 2.17 | |||||||||||||
|
|
|||||||||||||||
Outstanding at December 31, 2020 |
17,167,165 | $ | 1.63 | 7.3 | $ | 100,633 | ||||||||||
|
|
|||||||||||||||
Granted |
9,681,736 | 8.57 | ||||||||||||||
Exercised |
(703,512 | ) | 0.91 | |||||||||||||
Forfeited |
(2,080,803 | ) | 4.04 | |||||||||||||
|
|
|||||||||||||||
Outstanding at December 31, 2021 |
24,064,586 | $ | 4.23 | 7.4 | $ | 56,525 | ||||||||||
|
|
|||||||||||||||
Vested and expected to vest December 31, 2021 |
24,064,586 | $ | 4.23 | 7.4 | $ | 56,525 | ||||||||||
Exercisable at December 31, 2021 |
17,840,068 | $ | 3.51 | 6.9 | $ | 51,898 |
Number of shares |
Weighted average grant date fair value |
|||||||
Outstanding at December 31, 2020 |
— | $ | — | |||||
Granted |
488,600 | 7.20 | ||||||
Forfeited |
(13,900 | ) | 7.20 | |||||
|
|
|||||||
Outstanding at December 31, 2021 |
474,700 | $ | 7.20 | |||||
|
|
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Cost of goods sold |
$ | 72 | $ | 70 | ||||
Research and development |
11,105 | 1,384 | ||||||
Selling, general and administrative |
28,833 | 2,917 | ||||||
|
|
|
|
|||||
$ | 40,010 | $ | 4,371 | |||||
|
|
|
|
14. |
Revenue Recognition |
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Product sales and rentals |
$ | 3,801 | $ | 6,854 | ||||
Services |
5,522 | 5,556 | ||||||
License, royalty and other |
12,012 | 1,868 | ||||||
|
|
|
|
|||||
Net revenues |
$ | 21,335 | $ | 14,278 | ||||
|
|
|
|
2021 |
2020 |
|||||||
Balance at January 1 |
$ | 12,449 | $ | 3,833 | ||||
Deferral of revenue* |
4,928 | 14,532 | ||||||
Recognition of unearned revenue** |
(13,310 | ) | (5,916 | ) | ||||
|
|
|
|
|||||
Balance at December 31 |
$ | 4,067 | $ | 12,449 | ||||
|
|
|
|
* | 2020 includes $9,505 received in advance of performing services under a license agreement (see Note 15). The remainder of the 2020 and all of the 2021 deferral of revenue resulted from payments received in advance of performance under the biobanking services storage contracts that are recognized as revenue under the contract as performance is completed. |
** | During the third quarter of 2021, the Company terminated the license agreement with Sanuwave due to an uncured material breach (See Note 15). As a result, the Company recognized the remaining deferred revenue of $6,754 that was to be recognized on a straight-line basis over the non-cancelable term of the license agreement. |
• | Supply of Biovance ® products; |
• | Supply of Interfyl ® products; |
• | Supply of Biovance 3L ® products; |
• | Supply of MIST ® and UltraMIST® product; |
• | Supply of MIST ® and UltraMIST® rental product. |
• | Collection and processing services; and |
• | Storage services. |
15. |
License and Distribution Agreements |
16. |
Benefit Plans |
17. |
Income Taxes |
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Current income tax expense (benefit): |
||||||||
Federal |
$ | — | $ | — | ||||
State |
17 | 17 | ||||||
|
|
|
|
|||||
Total current income tax expense (benefit) |
17 | 17 | ||||||
Deferred income tax expense (benefit): |
||||||||
Federal |
1 | (2,366 | ) | |||||
State |
2 | (2,351 | ) | |||||
|
|
|
|
|||||
Total deferred tax expense (benefit) |
3 | (4,717 | ) | |||||
|
|
|
|
|||||
Total (benefit) from income taxes |
$ | 20 | $ | (4,700 | ) | |||
|
|
|
|
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Federal statutory income tax rate |
21.0 | % | 21.0 | % | ||||
State income taxes, net of federal benefits |
9.8 | % | 3.0 | % | ||||
Research and development tax credits |
1.5 | % | 1.0 | % | ||||
Interest accretion expense |
8.6 | % | 5.5 | % | ||||
Change in valuation allowance |
(46.1 | )% | (21.6 | )% | ||||
Mark to market warrant |
2.8 | % | (5.7 | )% | ||||
Other permanent items |
2.4 | % | (1.0 | )% | ||||
Effective income tax rate |
0.0 | % | 2.2 | % | ||||
|
|
|
|
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Deferred tax assets: |
||||||||
Net operating loss carryforwards |
$ | 88,327 | $ | 53,495 | ||||
Research and development tax credit carryforwards |
7,672 | 5,673 | ||||||
Stock-based compensation expense |
11,748 | 1,304 | ||||||
Startup costs |
697 | 729 | ||||||
Intangible assets |
4,471 | 4,544 | ||||||
Deferred revenue |
1,103 | 3,226 | ||||||
Unicap |
6 | 6 | ||||||
Imputed interest on contingent payments |
4,410 | 2,340 | ||||||
Legal fee capitalization and amortization |
1,550 | 1,587 | ||||||
Other |
1,535 | 1,158 | ||||||
|
|
|
|
|||||
Total deferred tax assets |
121,519 | 74,062 | ||||||
Deferred tax liabilities: |
||||||||
In-process research and development |
(29,232 | ) | (27,930 | ) | ||||
|
|
|
|
|||||
Total deferred tax liabilities |
(29,232 | ) | (27,930 | ) | ||||
|
|
|
|
|||||
Valuation allowance |
(92,297 | ) | (46,139 | ) | ||||
|
|
|
|
|||||
Net deferred tax liabilities |
$ | (10 | ) | $ | (7 | ) | ||
|
|
|
|
Unrecognized Tax Benefits |
||||
Balance at December 31, 2019 |
$ | 786 | ||
|
|
|||
Increase related to current year tax provisions |
242 | |||
|
|
|||
Balance at December 31, 2020 |
$ | 1,028 | ||
|
|
|||
Increase related to current year tax provisions |
242 | |||
|
|
|||
Balance at December 31, 2021 |
$ | 1,270 | ||
|
|
18. |
Segment Information |
Year Ended December 31, 2021 |
||||||||||||||||||||
Cell Therapy |
BioBanking |
Degenerative Disease |
Other |
Total |
||||||||||||||||
Net revenues |
$ | — | $ | 5,522 | $ | 15,813 | $ | — | $ | 21,335 | ||||||||||
Gross profit |
— | 1,873 | 9,809 | — | 11,682 | |||||||||||||||
Direct expenses |
85,107 | 2,119 | 8,450 | 64,017 | 159,693 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Segment contribution |
(85,107 | ) | (246 | ) | 1,359 | (64,017 | ) | (148,011 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Indirect expenses |
(38,953 | ) (a) |
$ | (38,953 | ) | |||||||||||||||
|
|
|||||||||||||||||||
Loss from operations |
(109,058 | ) | ||||||||||||||||||
|
|
|||||||||||||||||||
(a) Components of other |
||||||||||||||||||||
Change in fair value of contingent consideration liability |
(41,145 | ) | ||||||||||||||||||
Amortization |
2,192 | |||||||||||||||||||
|
|
|||||||||||||||||||
Total other |
$ | (38,953 | ) |
Year Ended December 31, 2020 |
||||||||||||||||||||
Cell Therapy |
BioBanking |
Degenerative Disease |
Other |
Total |
||||||||||||||||
Net revenues |
$ | — | $ | 5,556 | $ | 8,722 | $ | — | $ | 14,278 | ||||||||||
Gross profit |
— | 3,262 | 6,084 | — | 9,346 | |||||||||||||||
Direct expenses |
51,470 | 1,653 | 10,348 | 20,573 | 84,043 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Segment contribution |
(51,470 | ) | 1,609 | (4,264 | ) | (20,573 | ) | (74,697 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Indirect expenses |
77,228 | (a) |
$ | 77,228 | ||||||||||||||||
|
|
|||||||||||||||||||
Loss from operations |
(151,925 | ) | ||||||||||||||||||
|
|
|||||||||||||||||||
(a) Components of other |
||||||||||||||||||||
Change in fair value of contingent consideration liability |
(55,566 | ) | ||||||||||||||||||
Impairment of acquired intangible assets |
129,400 | |||||||||||||||||||
Amortization |
3,394 | |||||||||||||||||||
|
|
|||||||||||||||||||
Total other |
$ | 77,228 |
19. |
Related Party Transactions |
20. |
Subsequent Events |
i. | Control Environment |
ii. | Accounting for Contingent Consideration |
iii. | Accounting for Deferred Taxes |
iv. | Accounting for Warrants |
• | Hiring additional accounting personnel to ensure timely reporting of significant matters. |
• | Designing and implementing controls to formalize roles and review responsibilities to align with our team’s skills and experience and designing and implementing formalized controls. |
• | Designing and implementing procedures to identify and evaluate changes in our business and the impact on our internal controls. |
• | Designing and implementing formal processes, policies and procedures supporting our financial close process. |
• | Consolidating all recurring valuation models under one service provider. |
• | Engaging an outside firm to assist with the documentation, design and implementation of our internal control environment. |
(1) | Financial Statements - See Index to Consolidated Financial Statements in Item 8. |
(2) |
Financial Statement Schedules |
(3) |
Exhibits |
101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* | Previously filed. |
# | Indicates a management contract or any compensatory plan, contract or arrangement. |
+ | Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request. |
¥ | Certain portions of this exhibit are omitted because they are not material and are the type that the registrant treats as private or confidential. |
††† | These certifications will not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act except to the extent specifically incorporated by reference into such filing. |
Celularity Inc. | ||||
Date: July 15, 2022 |
By: |
/s/ Robert J. Hariri | ||
Robert J. Hariri, MD., Ph.D. | ||||
Chief Executive Officer |
Name |
Title |
Date | ||
/s/ Robert J. Hariri Robert J. Hariri, M.D., Ph.D. |
Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer) |
July 15, 2022 | ||
/s/ David C. Beers David C. Beers |
Chief Financial Officer (Principal Financial and Accounting Officer) |
July 15, 2022 | ||
* Peter Diamandis, M.D |
Director |
July 15, 2022 | ||
* Dean C. Kehler |
Director |
July 15, 2022 | ||
* Lim Kok Thay |
Director |
July 15, 2022 | ||
* Marc Mazur |
Director |
July 15, 2022 | ||
Diane Parks |
Director |
July 15, 2022 | ||
* John Sculley |
Director |
July 15, 2022 | ||
* Robin L. Smith, M.D., MBA |
Director |
July 15, 2022 | ||
* Andrew C. von Eschenbach, M.D |
Director |
July 15, 2022 |
By: | /s/ Robert J. Hariri | |
Robert J. Hariri, MD., Ph.D. Attorney-in-Fact * Pursuant to Power of Attorney |