Fair Value of Financial Assets and Liabilities

9 Months Ended

Sep. 30, 2025

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 September 30, 2025
	Level 1		Level 2		Level 3		Total
Liabilities:
Acquisition-related contingent consideration obligations	$	—	$	—	$	1,413	$	1,413
Contingent stock consideration		—		—		27		27
Warrant liability - July 2023 Registered Direct Warrants		—		—		1,233		1,233
Warrant liability - April 2023 Registered Direct Warrants		—		—		1,159		1,159
Warrant liability - May 2022 PIPE Warrants		—		—		557		557
Warrant liability - Public Warrants		575		—		—		575
	$	575	$	—	$	4,389	$	4,964

	Fair Value Measurements as of December 31, 2024
	Level 1		Level 2		Level 3		Total
Liabilities:
Acquisition-related contingent consideration obligations	$	—	$	—	$	1,413	$	1,413
Contingent stock consideration		—		—		27		27
Short-term debt – Yorkville convertible note		—		—		1,865		1,865
Short-term debt - unsecured senior convertible notes		—		—		620		620
Warrant liability - July 2023 Registered Direct Warrants		—		—		1,115		1,115
Warrant liability - April 2023 Registered Direct Warrants		—		—		1,022		1,022
Warrant liability - May 2022 PIPE Warrants		—		—		505		505
Warrant liability - November 2024 Purchaser Warrants		—		—		278		278
Warrant liability - November 2024 Placement Agent Warrants		—		—		48		48
Warrant liability - Sponsor Warrants		—		—		9		9
Warrant liability - Public Warrants		287		—		—		287
	$	287	$	—	$	6,902	$	7,189

During the three and nine months ending September 30, 2025, and 2024, there were no transfers between Level 1, Level 2 and Level 3.

The carrying values of 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 for the periods ending September 30, 2025 and December 31, 2024:

	Balance as of January 1, 2025		Net transfers in to (out of) Level 3		Purchases, settlements and other net		Fair value adjustments		Balance as of September 30, 2025
Liabilities:
Acquisition-related contingent consideration obligations	$	1,413	$	—	$	—	$	—	$	1,413

	Balance as of January 1, 2024		Net transfers in to (out of) Level 3		Purchases, settlements and other net		Fair value adjustments			Balance as of December 31, 2024
Liabilities:
Acquisition-related contingent consideration obligations	$	1,606	$	—	$	—	$	(193	)	$	1,413

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 consolidated statements of operations and comprehensive loss. 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 the contingent consideration as a long-term liability in the condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024.

Valuation of Contingent Stock Consideration

The contingent stock consideration liability at September 30, 2025, 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. 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 for the periods ending September 30, 2025 and December 31, 2024:

	Balance as of January 1, 2025		Net transfers in to (out of) Level 3		Purchases, settlements and other net		Fair value adjustments		Balance as of September 30, 2025
Liabilities:
Contingent stock consideration	$	27	$	—	$	—	$	—	$	27

	Balance as of January 1, 2024		Net transfers in to (out of) Level 3		Purchases, settlements and other net		Fair value adjustments		Balance as of December 31, 2024
Liabilities:
Contingent stock consideration	$	27	$	—	$	—	$	—	$	27

The fair value of the liability to issue future shares of Class A common stock was estimated by the Company at each reporting date 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 statements of operations and comprehensive loss. 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 change in the fair value of the contingent stock consideration obligation during the three and nine months ending September 30, 2025 was de minimis. The Company has classified all of the contingent stock consideration in the condensed consolidated balance sheets as a component of accrued expenses and other current liabilities as of September 30, 2025 and December 31, 2024.

Valuation of Short-Term Debt – Yorkville and Unsecured Senior Convertible Notes

The Company elected the fair value option to account for the Yorkville PPA signed on September 15, 2022 (see Note 11). As of December 31, 2023, due to the short-term nature of the debt, the fair value of the Yorkville PPA approximated the settlement amount, which was fully paid on January 17, 2024. The Company also elected the fair value option to account for the Yorkville convertible promissory note signed on March 13, 2024 (see Note 11) and the unsecured senior convertible notes issued pursuant to the securities purchase agreement signed on November 25, 2024 (see Note 11). The fair value measurement of the debt is determined using Level 3 inputs and assumptions unobservable in the market. Changes in the fair value of debt that is accounted for at fair value, inclusive of related accrued interest expense, are presented as gains or losses in the accompanying condensed consolidated statements of operations and comprehensive loss under change in fair value of debt. The portion of total changes in fair value of debt attributable to changes in instrument-specific credit risk are determined through specific measurement of periodic changes in the discount rate assumption exclusive of base market changes and are presented as a component of comprehensive loss in the accompanying condensed consolidated statements of operations and comprehensive loss. The actual settlement of the short-term debt could differ from current estimates based on the timing of when and if the investors elect to convert amounts into common shares, potential cash repayment by the Company prior to maturity, and movements in the Company’s common share price.

The following table presents a reconciliation of short-term debt obligations measured on a recurring basis using Level 3 inputs for the nine months ended September 30, 2025:

Liabilities:
Balance as of January 1, 2025	$	2,485
Conversion of debt into common shares		(922	)
Settlement of debt in connection with issuance of common stock		(3,470	)
Fair value adjustment through earnings		1,907
Balance as of September 30, 2025	$	—

The fair values of the Yorkville convertible promissory note and the unsecured senior convertible notes are based on valuations which employ a Monte Carlo model and a credit default model. The Company utilized Level 3 inputs in a probability weighted model based on outcomes of a default, repayment and conversion of the notes. The measurements are based upon unobservable inputs supported by little or no market activity based on the Company’s own assumptions. The fair value of the Yorkville convertible promissory note on March 13, 2024, the date of issuance, was $2,993 and the aggregate fair value of the unsecured senior convertible notes at the dates of issuance was $689.

Significant inputs for the Yorkville convertible promissory note valuation model were as follows:

	September 30, 2025		December 31, 2024
Common share price	$	N/A	$	2.08
Credit spread		N/A		7.50	%
Dividend yield		N/A		0	%
Term (years)		N/A		0.20
Risk-free interest rate		N/A		4.30	%
Volatility		N/A		50.0	%

Significant inputs for the unsecured senior convertible notes valuation model were as follows:

	September 30, 2025		December 31, 2024
Common share price	$	N/A	$	2.08
Credit spread		N/A		7.60	%
Dividend yield		N/A		0	%
Term (years)		N/A		0.90
Risk-free interest rate		N/A		4.20	%
Volatility		N/A		50.0	%

Valuation of Warrant Liability

The warrant liability at September 30, 2025, is comprised of the fair value of warrants to purchase shares of Class A common stock. The Public Warrants are recorded at fair value based on the period-end publicly stated close price, which is a Level 1 input. The January 2024 Bridge Loan - Tranche #2 Warrants (prior to reclassification to equity classified) and November 2024 Purchaser Warrants and Placement Agent Warrants were recorded at fair value based on a Monte Carlo simulation model and the Registered Direct, PIPE and Sponsor Warrants are recorded at their respective closing date fair values based on a Black-Scholes option pricing model that utilizes inputs for: (i) the 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, which are Level 3 inputs. The Black-Scholes option pricing model’s primary unobservable input utilized in determining the fair values of the warrant liabilities is the expected volatility of the Class A common stock. Prior to the merger, Legacy Celularity was a private company and lacked company-specific historical and implied volatility information for its stock. Therefore, the expected stock price volatility was previously estimated using the historical volatilities of a peer group of comparable public companies. Beginning with the current period, the Company estimates expected volatility based solely on the historical volatility of its common stock. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve for time periods approximately equal to the estimated remaining term of the warrants. Inputs to the Monte Carlo and Black-Scholes option pricing models for the warrants are updated each reporting period to reflect fair value.

The following table presents a reconciliation of the warrant liabilities measured on a recurring basis using Level 3 inputs for the nine months ended September 30, 2025:

Balance as of January 1, 2025	$	2,977
Issuance of RWI Warrant in connection with RWI binding term sheet		5,031
Gain recognized in earnings from change in fair value		(516	)
Balance as of March 31, 2025	$	7,492
Reclassification of November 2024 Purchaser and Placement Agent warrants to equity		(359	)
Loss recognized in earnings from change in fair value		1,010
Balance as of June 30, 2025	$	8,143
Reclassification of RWI Bridge warrants to equity		(8,902	)
Loss recognized in earnings from change in fair value		3,708
Balance as of September 30, 2025	$	2,949

Significant inputs for the May 2022 PIPE Warrants and the 2023 Registered Direct Warrants were as follows:

	September 30, 2025			December 31, 2024
Common share price	$	2.07		$	2.08
Exercise price	$	3.50 – 7.50		$	3.50 - 7.50
Dividend yield		0	%		0	%
Term (years)		3.03 – 3.34			3.78 - 4.09
Risk-free interest rate		3.51	%		4.3	%
Volatility		125.4% - 125.6	%		98.5% - 98.8	%

On July 24, 2025 the RWI Bridge Warrants were reclassified from liability to equity classification. The Company also issued an additional tranche of 500,000 equity-classified warrants to RWI. Significant inputs for the RWI Bridge Warrants are as follows:

	July 24, 2025			February 12, 2025
	(reclassification and issuance)			(issuance)
Common share price	$	3.16		$	1.88
Exercise price (1)	$	2.84		$	2.49 - 8.10
Equity volatility		N/A			120.0	%
Term (years)		2.9 – 5.0			3.4 - 4.4
Risk-free interest rate		3.87 – 3.98	%		4.00	%
Volatility		120.48 – 125.27	%		112.5	%

(1) The exercise price of the RWI Bridge Warrants is the product of (i) 90% and (ii) the official closing price of the Company’s Class A Common Stock on July 24, 2025, as quoted on the principal Trading Market of the Class A Common Stock (or, if such date is not a Trading Day, then on the immediately following Trading Day), provided that, if the product of (i) and (ii) is less than $1.50, then the New Exercise Price shall be the product of (y) 180% and (z) the official closing price of the Company’s Class A Common Stock on July 24, 2025, and, if necessary, each Trading Day thereafter, each as quoted on the principal Trading Market of the Class A Common Stock, until the product of (y) and (z) is equal to or above $1.50, provided further that, the exercise price of any new RWI warrant shall not be higher than the exercise price of the existing RWI warrant that the new RWI warrant is replacing.

Significant inputs for the Sponsor Warrants are as follows:

	September 30, 2025			December 31, 2024
Common share price	$	2.07		$	2.08
Exercise price	$	115.00		$	115.00
Dividend yield		0	%		0	%
Term (years)		0.8			1.5
Risk-free interest rate		3.7	%		4.2	%
Volatility		123.1	%		111.4	%