10-K/A: Celularity Files Amendment to 10-K, Providing Detailed Insights into Executive Compensation and Corporate Governance

Celularity Inc. files an amendment to its 2024 annual report on Form 10-K/A, focusing on Part III disclosures related to directors, executive officers, compensation, and corporate governance.

Summary

• Celularity Inc. has filed Amendment No. 1 to its Form 10-K for the fiscal year ended December 31, 2024.
• The amendment includes information required by Part III of the form, specifically Items 10, 11, 12, 13, and 14.
• It also includes an updated list of exhibits, a signature page, and new certifications from the company's principal executive and financial officers.
• The original Form 10-K was filed with the SEC on May 8, 2025.
• The amendment does not change any other items or disclosures in the original filing and does not reflect events occurring after the original filing date.
• As of April 30, 2025, Robert J. Hariri serves as the Chief Executive Officer and Chairman of the Board, and John R. Haines is the Senior Executive Vice President, Chief Administrative Officer, and Corporate Secretary.
• David C. Beers is the Chief Financial Officer, and Stephen A. Brigido is the President, Degenerative Disease.
• Non-employee directors include Peter Diamandis, Geoffrey Ling, and Diane Parks.
• Dean C. Kehler resigned from the board effective May 14, 2025.
• The aggregate market value of voting and non-voting common equity held by non-affiliates on June 30, 2024, was $38.5 million.
• As of May 6, 2025, there were 23,949,229 shares of Class A common stock outstanding.

Sentiment

Score: 5

Explanation: The document presents factual information about the company's executive compensation, corporate governance, and related-party transactions. While there are some positive aspects, such as the establishment of governance committees and the adoption of a clawback policy, there are also negative aspects, such as the liquidity covenant default and the late filing of Section 16(a) reports. The sentiment is neutral overall.

Positives

• The company has established an audit committee, a compensation committee, and a nominating and corporate governance committee, each operating under a charter that satisfies SEC and Nasdaq standards.
• The board of directors has determined that all members of the board, except Dr. Hariri, are independent directors.
• The company has adopted a compensation recovery policy (Clawback Policy) to comply with Exchange Act Rule 10D-1 and Nasdaq Listing Rule 5608.
• The company has adopted Governance Principles to align the interests of directors and management with those of stockholders.

Negatives

• The company's cash and cash equivalents fell below the $3.0 million minimum liquidity covenant during the third quarter of 2023, which caused an event of default under the Starr bridge loan.
• The company accrued approximately $1.16 million for matching contributions into the 401(k) plan during the year ended December 31, 2022, but has not made the matching contribution to the plan.
• Several Section 16(a) reports were filed late by directors and officers in 2024.

Risks

• The classification of the board of directors may delay or prevent changes in control or management.
• The limitation of liability and indemnification provisions in the certificate of incorporation and bylaws may discourage stockholders from bringing lawsuits against directors.
• The company faces risks associated with related-party transactions, including potential conflicts of interest.
• The company's insider trading policy prohibits certain transactions in its securities, but violations could still occur.

Future Outlook

The document outlines several future actions, including potential payments to Starr and RWI from proceeds of a registered public offering, and the issuance of new warrants to Starr and RWI.

Management Comments

• The board of directors believes that combining the positions of Chief Executive Officer and Board Chair helps to ensure that the board of directors and management act with a common purpose.
• The board of directors expects management to consider risk and risk management in each business decision, to proactively develop and monitor risk management strategies and processes for day-to-day activities and to effectively implement risk management strategies adopted by the audit committee and the board of directors.

Industry Context

Celularity operates in the competitive biotechnology industry, focusing on cell therapeutics and immune-oncology. The company's collaborations, licensing agreements, and financing activities are typical for companies in this sector, which often rely on external funding and partnerships to advance their research and development programs.

Comparison to Industry Standards

• Celularity's executive compensation structure, including base salaries, bonuses, and equity awards, is generally consistent with industry practices for biotechnology companies of similar size and stage of development.
• The company's corporate governance practices, such as having independent directors and established committees, align with Nasdaq requirements and industry best practices.
• The related-party transactions, particularly the loans and securities purchase agreements with major shareholders, are not uncommon in the biotechnology industry, where companies often rely on existing investors for financing.
• However, the extent of related-party financing and the associated covenants and defaults may raise concerns about the company's financial stability and independence.

Management Changes

Corporate Governance

Related Party Transactions

• On March 20, 2023, Celularity entered into a securities purchase agreement with two accredited investors, including its Chairman and Chief Executive Officer, Dr. Robert Hariri, providing for the private placement of shares of Class A common stock and accompanying warrants.
• On August 21, 2023, Celularity entered into a loan agreement with its Chairman and Chief Executive Officer, Dr. Robert Hariri, and two unaffiliated lenders.
• On March 17, 2023, Celularity entered into a bridge loan agreement with C.V. Starr & Co., Inc., a beneficial owner of more than 5% of its common stock.
• On May 16, 2023, Celularity entered into a senior secured bridge loan agreement with RWI, which is affiliated with Lim Kok Thay, a former member of Celularity's board of directors.
• Alexandra Hariri, the daughter of Robert J. Hariri, M.D., Ph.D., Celularity's Chairman and Chief Executive Officer, is employed by Celularity as Vice President, Corporate Strategy & Business Development.

Stakeholder Impact

• The executive compensation policies and practices impact shareholders by aligning executive incentives with long-term company performance.
• The related-party transactions and financing activities impact shareholders and creditors by potentially affecting the company's financial stability and independence.
• The corporate governance policies and practices impact stakeholders by promoting transparency and accountability in the company's operations.

Next Steps

• The company may need to address the liquidity covenant default and ensure compliance with reporting requirements.
• The company will need to continue to monitor and manage its related-party transactions to avoid potential conflicts of interest.
• The company will need to evaluate its therapeutic candidates in light of the specific terms in the CVR Agreement to determine the specific products on which such amounts will be payable.
• The company will need to use a portion of the proceeds from our next registered public offering to pay Starr approximately $0.8 million, representing cash interest through January 31, 2025 and (ii) issue to Starr a new five-year warrant to purchase up to 100,000 shares of its Class A common stock.
• The company will need to use a portion of the proceeds from our next registered public offering to pay RWI approximately $1.3 million, representing cash interest through January 31, 2025 and (ii) issue to RWI, on July 24, 2025, a new five-year warrant to purchase up to 500,000 shares of its Class A common stock.

Key Dates

Keywords

executive compensation, corporate governance, directors, officers, Form 10-K, Celularity, equity, stock, indemnification, audit committee