Nubeva announces first sale of a reverse ransomware solution to the higher education market

GELESIS HOLDINGS, INC. Discussing management and analyzing financial condition and results of operations (Form 10-Q)

References to the "Firm," "our," "us," "we," or "Gelesis" consult with Gelesis
Holdings, Inc. and its consolidated subsidiaries (previously generally known as Capstar
Particular Objective Acquisition Corp. or "CPSR") following the Enterprise Mixture
with Gelesis Inc., or Legacy Gelesis. The next dialogue and evaluation of
the Firm's monetary situation and outcomes of operations ought to be learn in
conjunction with (i) the condensed consolidated monetary statements and the
notes thereto contained elsewhere on this Quarterly Report and (ii) the audited
historic consolidated monetary statements of Legacy Gelesis, and the notes
thereto, in our Type 8-Okay Modification No. 1 filed on with the SEC on March 24,
2022. Sure of the data contained on this dialogue and evaluation or
set forth elsewhere on this Quarterly Report, together with info with respect
to plans and technique for our enterprise, consists of forward-looking statements that
contain dangers and uncertainties. On account of many elements, together with, however not
restricted to, these set forth within the part entitled "Cautionary Be aware Relating to
Ahead-Trying Statements" on this Quarterly Report and people set forth within the
part entitled "Threat Elements" in Merchandise 1A of Half II of this Quarterly Report,
precise outcomes may differ materially from the outcomes described in or implied
by the forward-looking statements contained within the following dialogue and
evaluation. Though we imagine that the expectations mirrored within the
forward-looking statements are affordable, we can not assure future outcomes,
ranges of exercise, efficiency, or achievements. Besides as required by regulation, we
don't intend to replace any of those forward-looking statements after the date
hereof or to adapt these statements to precise outcomes or revised expectations.
It's best to fastidiously learn the sections entitled "Cautionary Be aware Relating to
Ahead-Trying Statements" and "Threat Elements" on this Quarterly Report to realize
an understanding of the essential elements that would trigger precise outcomes to
differ materially from our forward-looking statements.

Abstract

We're a industrial stage biotherapeutics firm constructed for shopper engagement.
We're targeted on advancing first-in-class superabsorbent hydrogel therapeutics
for persistent gastrointestinal, or GI, illnesses together with extra weight, kind 2
diabetes, NAFLD/NASH, useful constipation, and inflammatory bowel illness.
Our biomimetic superabsorbent hydrogels are impressed by the composition and
mechanical properties (e.g. firmness) of uncooked greens. They're conveniently
administered in capsules taken with water to create a a lot bigger quantity of
small, non-aggregating hydrogel items that develop into an built-in a part of the
meals, and act domestically within the digestive system.

Our first industrial product, Plenity®, acquired de novo clearance from the FDA
on April 12, 2019 to assist in weight administration in adults with extra weight or
weight problems, Physique Mass Index (BMI) of 25 to 40 kg/m2, when used along side
weight-reduction plan and train.

Plenity, which is out there by prescription in america, turned
out there for first industrial sale in Might 2020 to a restricted variety of
shoppers. In October 2020 availability was elevated to check industrial
curiosity and shopper expertise. Actions related to a full industrial
launch in america started in late 2021. In February 2022, we launched
the primary nationwide broad consciousness media marketing campaign for the product and we
continued to put money into broad consciousness through the 9 months ended September
30, 2022. Whereas these are vital milestones, continued commercialization of
Plenity would require vital exterior funding till we're capable of generate
optimistic money flows from product gross sales.

Since our inception, we now have devoted our sources to enterprise planning,
creating proprietary superabsorbent hydrogel manufacturing know-hows and
applied sciences, preclinical and medical improvement, industrial actions,
recruiting administration and technical workers and elevating capital. Now we have funded
our operations to this point by proceeds from the issuance of redeemable
convertible most well-liked inventory, license and collaboration agreements, long-term
loans, promissory notes, authorities grants and our January 2022 Enterprise
Mixture, pursuant to which we acquired roughly $105.0 million of gross
proceeds. Now we have incurred vital working losses to this point. Our internet losses
had been $14.1 million and $30.7 million for the three months ended September 30,
2022 and 2021, respectively, and $32.4 million and $74.1 million for 9 months
ended September 30, 2022 and 2021, respectively. As of September 30, 2022, we
had an collected deficit of $298.1 million. We count on to proceed to generate
working losses and unfavorable working money flows for the foreseeable future.


Because of this, we would require substantial extra funding to assist our
persevering with operations till we're capable of generate optimistic money flows from
product gross sales. Till such time, we count on to finance our operations by
fairness choices, debt financings or different capital sources, together with
collaborations, licenses, dealership partnerships or related preparations.
Nevertheless, we could also be unable to boost extra funds or enter into such different
preparations when wanted or on favorable phrases, if in any respect. If we're unable to
get hold of funding, we could also be compelled to delay, cut back or remove some or all of
our commercialization efforts, analysis and improvement applications or product
pipeline growth, which may adversely have an effect on our enterprise prospects, or we
could also be unable to proceed operations.


As of the date of this quarterly report, we count on that our present money and money equivalents will solely be adequate to fund our working bills and capital expenditure necessities within the second quarter of 2023, earlier than any extra issues

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funding, and never at the least twelve months past the date of issuance of the
unaudited condensed consolidated monetary statements included elsewhere on this
Quarterly Report. As well as, we anticipate that this extension of our money
runway into the second quarter of 2023 will solely be achievable with the
vital discount of discretionary spending from prior ranges, significantly
with respect to our discretionary gross sales and advertising and marketing actions and
manufacturing and provide chain features. Because of this, we now have concluded that
there may be substantial doubt about our means to proceed as a going concern. Our
unaudited condensed consolidated monetary statements included elsewhere on this
Quarterly Report, which have been ready in accordance with accounting
rules usually accepted in america ("US GAAP"), ponder that
we'll proceed to function as a going concern. Our monetary statements don't
comprise any changes which may consequence if we're unable to proceed as a
going concern. See "-Liquidity and Capital Assets" for additional info.



Current Developments

Payments of trade and promissory notes

On July 25, 2022 and August 4, 2022, we issued three time period promissory notes in
the mixture principal quantity of $25.0 million to current investor CMS
Bridging DMCC, an affiliate of CMS Medical Enterprise Funding (HK) Restricted
("CMS"), and current buyers PureTech Well being LLC ("PureTech") and SSD2 LLC
("SSD2"), for an mixture money buy worth of $25.0 million (the "2022
Promissory Notes"). Every of the 2022 Promissory Notes is unsecured and bears
curiosity at a fee of 15% every year. Every 2022 Promissory Be aware matures on the
earlier of (a) December 31, 2023 or (b) 5 (5) enterprise days following a
certified financing. Upon a fee default beneath any 2022 Promissory Be aware that
has not been cured after 5 days (i) we will likely be required to challenge sure
warrants to the holders as outlined by the 2022 Promissory Be aware agreements and
(ii) the holders could have the choice to transform excellent principal and
accrued curiosity into plenty of shares of our Widespread Inventory as outlined by the
2022 Promissory Be aware agreements.

Modify the CMS License Settlement and CMS Order

On August 4, 2022, we entered into an modification to the License, Collaboration
and Provide Settlement, dated June 18, 2020, by and between us and CMS. Pursuant
to the modification, the one-time, non-refundable, and non-creditable regulatory
approval milestone fee of $5.0 million supplied for within the unique
settlement turned instantly payable. As well as, the modification expands the CMS
Territory to incorporate Brunei, Myanmar, Cambodia, Timor-Leste, Indonesia, Laos,
Malaysia, the Philippines, Thailand and Vietnam and offers that the minimal
annual royalty time period for CMS territory will start January 2024 (moderately than
January 2022, as beforehand supplied beneath the unique settlement) and prolong
by the expiration date of the amended settlement.

Upon execution of the modification, we additionally issued to CMS a warrant to buy up
to 400,000 shares of widespread inventory, par worth $0.0001 per share, at an train
worth of $0.01 per share. The warrant expires on the date that's ten years from
the date of issuance and is exercisable at any time from the date of issuance
till the expiration date.


Single buy settlement modified by buy settlement

On August 9, 2022, we entered into an modification to the Warrant Buy
Settlement dated October 21, 2020, by and between us and the holders of the
warrants. Pursuant to the modification we deferred fee of the mixture
remaining buy worth beneath the patent license and project settlement and
grasp settlement between us and One S.r.l., totaling €2.5 million, (which we owe
to One S.r.l. shareholders) till March 31, 2023.

Beneath the modification, and for the deferment, we now have adjusted the train worth of 1,353,062 warranties of widespread inventory held by shareholders of 1 riyal of $4.26 to me $1.45.

Facilitate property rights with B. Riley Principal Capital 2, LLC

On August 11, 2022, we entered right into a Widespread Inventory Buy Settlement and a
Registration Rights Settlement with B. Riley Principal Capital II, LLC ("B.
Riley"). Pursuant to the settlement, we could have the fitting, however not the
obligation, to promote to B. Riley as much as the lesser of (i) $50,000,000 of newly
issued shares of our widespread inventory, and (ii) 14,506,475 shares of our widespread
inventory (which is the variety of shares equal to roughly 19.99% of the
mixture variety of shares of our widespread inventory issued and excellent
instantly previous to the execution of the settlement), occasionally throughout
the 24-month time period set forth within the settlement.


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Change in administration

On September 27, 2022, the Firm entered right into a separation and basic launch
settlement with Mr. David Abraham, our Common Counsel, Chief Compliance Officer
and Company Secretary by September 30, 2022. Pursuant to this separation
settlement, Mr. Abraham will stop to function Common Counsel, Chief Compliance
Officer and Company Secretary, efficient October 1, 2022. Mr. Abraham will
present consulting companies to the Firm to help with the transition of his
tasks.

Impression of COVID-19

In December 2019, diseases related to COVID-19 had been reported and the virus
has since prompted widespread and vital disruption to day by day life and
economies throughout geographies. The World Well being Group has categorized the
outbreak as a pandemic. Our enterprise, operations and monetary situation and
outcomes haven't been considerably impacted on account of the COVID-19
pandemic, moderately we now have acknowledged income for the primary time throughout 2020 and
we now have expanded our amenities, gross sales/advertising and marketing and provide chain personnel to
assist the sale of Plenity. To this point, COVID-19 has not materially impacted our
means to safe and ship provide of Plenity. To this point, COVID-19 has not
considerably impacted the continued medical trials of our different product
candidates.

In response to the COVID-19 pandemic, we now have taken swift actions to make sure the
security of our staff and different stakeholders. We're diligently working with
our suppliers, prospects, distributors and different companions to offer shoppers
with entry to Plenity, whereas taking into consideration regulatory, institutional, and
authorities steerage, insurance policies and protocols.

Nevertheless, the total extent of the impression of the pandemic and future outbreaks on
our enterprise, operations, and monetary situation and leads to future intervals
stay unsure, significantly, with respect to shopper demand for or entry to
Plenity, and the administration of medical analysis and improvement actions.
Additional, our means to supply uncooked supplies and elements, manufacture as nicely
as transport and distribute Plenity could also be restricted and due to this fact impression gross sales of
Plenity.

Full Freedom Over-the-Counter Plans

We imagine Plenity's benefits are its differentiated safety-to-efficacy
profile, broad accredited labeling, and affordability to the buyer.
Accordingly, we imagine it can be crucial that Plenity be broadly out there and
simply accessible to shoppers. We plan to pursue an software with the FDA to
change Plenity's classification in america from prescription-only to
over-the-counter. Along with making Plenity extra accessible to folks
scuffling with extra weight, we imagine making Plenity out there
over-the-counter may cut back prices related to buying new members and
permit us to cut back prices related to the prescription granting course of,
whereas additionally enabling new gross sales channels for the Firm. We plan to submit our
software to the FDA through the first quarter of 2023 and will obtain market
clearance by the third quarter of 2023.


The primary elements affecting the outcomes of operations

We imagine that our efficiency and future success depend upon a number of elements
that current not solely vital alternatives for us but additionally pose dangers and
challenges, together with these mentioned under. Specifically, our means to
efficiently tackle the under key elements relies upon our means to
efficiently increase the capital to fund such efforts. Our failure to acquire
extra funding could pressure us to delay, restrict or terminate our advertising and marketing
efforts and investments in our product pipeline, which can negatively impression our
means to develop our enterprise and appeal to and/or retain sufficient prospects to
function profitably.

New shopper acquisition

Our means to draw new shoppers is a key issue for our future progress. To
date we now have efficiently acquired shoppers by our U.S. industrial launch
along side the continued improvement of promoting and gross sales techniques. We
intend to amass new members in america by selling Plenity immediately
to the buyer. In gentle of present money sources, and to protect liquidity
whereas we search to boost extra capital through the third quarter of 2022, we
lowered investments in broad consciousness media and shopper acquisition, in contrast
to earlier quarters in 2022 and 2021. Nevertheless, we proceed to interact in
promotional actions, which we imagine will inspire a possible future member
to ask a well being care skilled about buying Plenity by one in every of two
channels:

Telehealth: We associate with a number one telehealth platform in america,
offering handy and rapid entry to physicians on-line for gratis.
Pursuant to an amended and restatement settlement, we now have granted Roman Well being
Pharmacy LLC ("Ro") unique distributor rights to promote Plenity in the United
States with respect to (i) shoppers who search an on-line session by
myplenity.com in america and (ii) sure named opponents and or
third events.

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Well being Care Suppliers: We interact a restricted contract gross sales pressure to advertise
Plenity to focus on physicians. To assist prescription achievement for our
non-telehealth custom HCP promotional efforts, we interact GoGoMeds ("GGM"), to
distribute all non-telehealth mail order prescriptions generated in the United
States by well being care suppliers.

Retention of shoppers

Our means to retain shoppers is a key consider our means to generate
income. We count on our direct house supply, easy and clear pricing, and
shopper engagement to boost the expertise of our shopper and promote
recurring income. Our buyer retention efforts could also be negatively impacted by
latest vital reductions in our discretionary spending with respect to
discretionary gross sales and advertising and marketing actions. If shopper retention decreases in
the longer term, then future income will likely be negatively impacted. The power of our
shoppers to proceed to pay for our services will even impression the
future outcomes of our operations.



Remainder of the world

We consider world strategic partnerships to construct our model globally; Nevertheless, we can also reserve the rights.

Europe: We acquired approval to market Plenity in Europe by a Conformité
Européenne (CE) mark for Plenity as a Class III medical machine indicated for
weight reduction in obese and overweight adults with a Physique Mass Index (BMI) of 25-40
kg/m2, when used along side weight-reduction plan and train.

CMS: In Higher China (together with Mainland China, Hong Kong, Macau, and Taiwan),
Singapore, United Arab Emirates, Brunei, Myanmar, Cambodia, Timor-Leste,
Indonesia, Laos, Malaysia, the Philippines, Thailand and Vietnam, we associate
with China Medical System Holdings Restricted (CMS) (HKG:0867) for the
commercialization of Plenity.

Investments in progress

We count on to make vital investments in promoting and advertising and marketing to amass
new shoppers. Promoting and advertising and marketing is a vital driver of progress, and over
the long run, we intend to proceed to make vital investments in shopper
acquisition and our promoting and industrial infrastructure. Nevertheless, in gentle of
present money sources, and to protect liquidity whereas we search to boost
extra capital through the third quarter of 2022, we lowered investments in
broad consciousness media, shopper acquisition, and the healthcare supplier gross sales
pressure in comparison with earlier quarters in 2022 and 2021. As such, we count on our
promoting and advertising and marketing expense decreased in absolute {dollars} throughout this era.
Nevertheless, if we're profitable in elevating extra capital sooner or later, we
count on to extend promoting and advertising and marketing actions to proceed to launch
Plenity, and count on promoting and advertising and marketing expense to lower as a proportion of
income over the long run, though our promoting and advertising and marketing expense could
fluctuate as a proportion of income from interval to interval because of the timing and
quantity of those bills.

Moreover, though we intend to proceed to put money into our manufacturing,
achievement and working capabilities sooner or later, these capabilities have
not too long ago been negatively impacted by latest vital reductions in our
discretionary spending with respect to manufacturing and provide chain features.
If we're profitable in elevating addition capital sooner or later, we count on to
proceed to put money into rising our manufacturing, achievement and working
capabilities. Within the brief time period, we count on these investments will enhance our
working bills; nonetheless, in the long run we anticipate that these
investments will positively impression our outcomes of operations. If we're unable
to generate adequate demand in Plenity, we could not have adequate funds to
make investments into these progress actions.

Develop product filter

Along with Plenity, we now have invested in a pipeline of product candidates for
prevalent and essential gastrointestinal, or GI, tract-related persistent illnesses
together with, kind 2 diabetes, NAFLD/NASH, useful constipation, and
inflammatory bowel illness by concentrating on the pure processes of the GI pathway.
We count on to proceed investing in our pipeline over time to broaden our
industrial alternative. The continued preclinical and medical improvement of
the pipeline would require vital monetary sources. If we're unable to
generate adequate demand in Plenity or increase extra capital at favorable
phrases, if in any respect, we could not have adequate funds to put money into the analysis and
improvement of extra product candidates.

Key enterprise metrics

We monitor the next key metrics to assist us consider our enterprise, determine traits affecting our enterprise, formulate enterprise plans and make strategic selections. We imagine the next metrics are helpful in evaluating our enterprise (greenback quantities in 1000’s besides the place famous):

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                            For the Three Months Ended September 30,        

For the 9 months ended September 30And the

                                2022                        2021                  2022                      2021
In 1000's                 (Unaudited)                 (Unaudited)          (Unaudited)               (Unaudited)
New members acquired                  23,500                      15,700            107,700                       44,000
Items offered                            92,070                      45,825            336,530                      132,602
Product income, internet     $             6,443         $             3,014     $       22,930         $              8,293
Common promoting worth
per unit, internet            $             69.98         $             65.77     $        68.14         $              62.54
Gross revenue             $             2,827         $               251     $        9,615         $                709
Gross margin                              44 %                         8 %               42 %                          9 %


New members acquired

We outline new members acquired because the variety of shoppers in america
who have begun their weight reduction journey with Plenity through the monetary
interval introduced. That is the whole variety of recurring and non-recurring
shoppers who have begun their weight reduction journey through the monetary interval
introduced. We don't differentiate from recurring and non-recurring shoppers as
of the date of this Quarterly Report as (i) we strongly imagine each member's
weight-loss journey is persistent and long-term in nature, and (ii) we now have not
initiated our long-term technique and mechanisms to retain and/or win-back
members. We'll proceed to judge the utility of this enterprise metric in
future intervals.

Items offered

Items offered are outlined because the variety of Plenity 28-day provide models offered by our strategic partnerships with on-line pharmacies and telehealth suppliers in addition to models offered to our strategic companions abroad United State.

Product income, internet

See the dialogue elsewhere on this dialogue and evaluation beneath ‘Key Parts of Outcomes of Operations – Product Income, Internet’.

Common promoting worth per unit, internet

Common promoting worth per unit, internet is the gross worth per unit offered through the
interval internet of estimates of per unit variable consideration for which reserves
are established for anticipated product returns, delivery prices to end-users,
pharmacy dishing out and platform charges, service provider and processing charges, and
promotional reductions provided to end-users. See "- Crucial Accounting Insurance policies
and Important Judgments and Estimates" under and the "Income Recognition"
part of Be aware 2 within the accompanying Notes to unaudited condensed consolidated
monetary statements included elsewhere on this Quarterly Report for a extra
detailed dialogue of our income recognition coverage.

Gross revenue and gross margin

Our gross revenue represents product income, internet, much less our complete value of products
offered, and our gross margin is our gross revenue expressed as a proportion of our
product income, internet. See dialogue elsewhere on this dialogue and evaluation
beneath the headings "Key Parts of Outcomes of Operations - Price of products
offered".

Our gross revenue and gross margin have been and can proceed to be affected by
plenty of elements, together with the costs we cost for our product, the prices
we incur from our distributors for sure elements of our value of products offered, the
mixture of channel gross sales in a interval, and our means to promote our stock. We
count on our gross margin to extend over the long run, though gross margins
could fluctuate from interval to interval relying on these and different elements.

Non-GAAP Monetary Actions

Along with our monetary outcomes decided in accordance with GAAP, we
imagine the next non-GAAP measure is beneficial in evaluating our working
efficiency. We use the next non-GAAP monetary measure to judge our
ongoing operations and for inside planning and forecasting functions. We
imagine that this non-GAAP monetary measure, when taken along with the
corresponding GAAP monetary measure, offers significant supplemental
info relating to our efficiency by excluding sure objects that will not be
indicative of our enterprise, outcomes of operations, or outlook. We take into account
Adjusted EBITDA to be an essential measure as a result of it helps illustrate
underlying traits in our enterprise and our historic working efficiency on a
extra constant foundation. We imagine that using Adjusted EBITDA is useful to
our buyers as it's a metric utilized by administration in assessing the well being of
our enterprise and our working efficiency.

Nevertheless, non-GAAP monetary info is introduced for supplemental
informational functions solely, has limitations as an analytical device and may
not be thought-about in isolation or as an alternative choice to monetary info
introduced in accordance with GAAP. As well as, different corporations, together with
corporations in our trade, could calculate similarly-titled non-GAAP monetary
measures in another way or could use different measures to judge their efficiency,
all of which may cut back the usefulness of our non-GAAP

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monetary measures as instruments for comparability. A reconciliation is supplied under
for the non-GAAP monetary measure to probably the most immediately comparable monetary
measure said in accordance with GAAP. Traders are inspired to evaluation the
associated GAAP monetary measure and the reconciliation of this non-GAAP monetary
measure to its most immediately comparable GAAP monetary measure, and to not rely
on any single monetary measure to judge our enterprise.

Adjusted EBITDA

Adjusted EBITDA is a key efficiency measure that our administration makes use of to evaluate
our working efficiency. As a result of Adjusted EBITDA facilitates inside
comparisons of our historic working efficiency on a extra constant foundation,
we use this measure for enterprise planning functions. We outline "Adjusted EBITDA"
as internet (loss) earnings earlier than depreciation and amortization bills, provision
for (profit from) earnings taxes, curiosity expense, internet, stock-based compensation
and (features) and losses associated to adjustments in honest worth of our earnout
legal responsibility, honest worth of our warrant legal responsibility, our convertible promissory word
legal responsibility and the One S.r.l. name choice.

The next desk reconciles internet loss and adjusted EBITDA for the three and 9 month interval ended September 30, 2022 and 2021, respectively:

                                For the Three Months Ended September       

For the 9 months ending in September

                                                 30,                                       30,
                                     2022                   2021               2022                   2021
In 1000's                     (Unaudited)            (Unaudited)        (Unaudited)            (Unaudited)
Adjusted EBITDA
Internet loss                        $      (14,149 )       $      (30,730 )   $      (32,365 )       $      (74,055 )
Provision for earnings taxes                   -                      -                  -                     17
Depreciation and amortization            1,260                    800              3,833                  2,291
Inventory primarily based compensation
expense                                  4,574                  1,086             26,539                  4,180
Change in honest worth of
earnout legal responsibility                       (2,814 )                    -            (55,495 )                    -
Change in honest worth of
warrants                                  (540 )                2,231             (6,624 )                9,282
Change in honest worth of
convertible
  promissory notes                         852                      -              1,008                      -
Change in honest worth of One
S.r.l. name
  choice                                (1,673 )                   47               (808 )                  601
Curiosity expense, internet                      164                    361                485                    949
Adjusted EBITDA                 $      (12,326 )       $      (26,205 )   $      (63,427 )       $      (56,735 )




Among the limitations of Adjusted EBITDA embody (i) Adjusted EBITDA doesn't
correctly replicate capital commitments to be paid sooner or later, and (ii) though
depreciation and amortization are non-cash prices, the underlying property could
must be changed and Adjusted EBITDA doesn't replicate these capital
expenditures. In evaluating Adjusted EBITDA, you have to be conscious that within the
future we'll incur bills much like the changes on this presentation.
Our presentation of Adjusted EBITDA shouldn't be construed as an inference that
our future outcomes will likely be unaffected by these bills or any uncommon or
non-recurring objects. When evaluating our efficiency, you must take into account
Adjusted EBITDA alongside different monetary efficiency measures, together with our
internet loss and different GAAP outcomes.



Presentation foundation

Our consolidated monetary statements and condensed consolidated monetary
statements are ready in accordance with GAAP. Any reference on this
dialogue and evaluation to relevant steerage is supposed to consult with the
authoritative United States usually accepted accounting rules as present in
the Accounting Requirements Codification ("ASC") and Accounting Requirements Updates
("ASUs") issued by the Monetary Accounting Requirements Board ("FASB").

Working segments are recognized as elements of an enterprise about which
separate discrete monetary info is out there for analysis by the chief
working determination maker, the Chief Government Officer, in making selections
relating to useful resource allocation and assessing efficiency. We view our operations
and handle our enterprise as one working section.

The noncontrolling curiosity attributable to Gelesis S.r.l., our variable
curiosity entity ("VIE"), is introduced as a separate part from stockholders'
deficit in our consolidated stability sheets and as a noncontrolling curiosity in
our condensed consolidated statements of noncontrolling curiosity, redeemable
convertible most well-liked inventory and stockholders' deficit. All intercompany balances
and transactions have been eradicated in consolidation.

The primary elements of the outcomes of operations

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Product income, internet

We acknowledge product income beneath Topic ASC 606, Income from contracts with prospects, after we switch promised items or companies to prospects in an quantity that displays the consideration to which the entity expects to be entitled in trade for these items or companies.

Our product income is derived from product gross sales of Plenity, internet of estimates
of variable consideration for which reserves are established for anticipated
product returns, delivery prices to end-users, pharmacy dishing out and platform
charges, service provider and processing charges, and promotional reductions provided to
end-users.

Price of products offered

Price of products offered consists of the price of manufacturing our proprietary
superabsorbent hydrogels for Plenity for which income was acknowledged through the
interval, in addition to the related prices for encapsulation, packaging, cargo,
provide administration and high quality assurance. Bills from royalty agreements on internet
product gross sales are additionally acknowledged as a part of value of products offered throughout
the interval by which the related revenues are acknowledged. A portion of
depreciation with respect to property and gear immediately utilized in
manufacturing Plenity models is acknowledged as a part of value of products offered
over the depreciable lifetime of the asset.

Promoting, basic and administrative bills

A significant factor of our promoting, basic and administrative bills is
comprised of our promoting and advertising and marketing expense, which incorporates our restricted
contract gross sales pressure within the US markets and discretionary shopper acquisition
bills.

Promoting, basic and administrative prices are expensed as incurred. Promoting,
basic and administrative prices embody gross sales and advertising and marketing prices incurred as a
results of the commercialization of our merchandise, payroll and personnel expense,
stock-based compensation expense, and prices of applications and infrastructure
needed for the final conduct of our enterprise.

Analysis and improvement expenditures

Analysis and improvement prices are expensed as incurred. Pay as you go analysis and
improvement prices are deferred and amortized over the service interval, because the
companies are supplied. Analysis and improvement prices embody payroll and
personnel expense, stock-based compensation expense, consulting prices, exterior
contract analysis and improvement bills, in addition to depreciation and
utilities. These actions relate primarily to formulation, CMC, preclinical
and discovery actions. As such, we don't monitor these analysis and
improvement bills on an indication-by-indication foundation as they primarily
relate to bills that are deployed throughout a number of initiatives beneath improvement
or are for future product and pipeline candidates which make the most of our platform
know-how.

Scientific trial prices are a part of analysis and improvement bills and
include medical trial and associated medical manufacturing prices, charges paid to
medical analysis organizations and investigative websites. We monitor and preserve
these prices on an indication-by-indication foundation.

Depreciation Calculation

The amortization expense pertains to an intangible asset that resulted from a modification of our grasp settlement with the unique inventor of our core patents, beneath which the proportion of royalties we must pay on future internet earnings had been lowered. The intangible asset is amortized over its helpful life, which is set as of the modification date to be the earliest expiration date for patents referring to the underlying mental property in November 2028.

Different non-operating earnings (bills), internet

Change within the honest worth of the revenue obligation

Now we have earnout shares that are contingent issuable as incremental
consideration pursuant to ASC 815. The earnout shares are initially recorded at
honest worth and remeasured to honest worth at every reporting date till settlement
with features and losses arising from adjustments in honest worth acknowledged within the
condensed consolidated statements of operations.

Modifications within the honest worth of orders

Now we have issued warrants to buyers that are legal responsibility categorized and
initially recorded at honest worth and remeasured to honest worth at every reporting
date till settlement with features and losses arising from adjustments in honest worth
acknowledged within the condensed consolidated statements of operations.

Change within the honest worth of convertible promissory notes

Now we have issued convertible promissory notes to buyers that are initially
recorded at honest worth and remeasured to honest worth at every reporting date till
compensation or conversion on the choice of the holders, with features and losses
arising from adjustments in honest worth acknowledged within the condensed consolidated
statements of operations.

Curiosity expense, internet

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Internet curiosity expense consists of curiosity incurred on numerous loans and curiosity earnings earned on money and money equivalents and marketable securities.

Different earnings (bills), internet

Different earnings, internet primarily consists of earnings earned on our grants from
authorities companies in Italy, analysis and improvement tax credit earned in
Italy for qualifying bills, and features and losses on international foreign money
transactions. Different earnings, internet additionally consists of adjustments in honest worth of the
One S.r.l. name choice.

Provision for earnings taxes

We should make sure estimates and judgments in figuring out earnings tax expense
for monetary assertion functions. The quantity of taxes presently payable or
refundable is accrued, and deferred tax property and liabilities are acknowledged
for the estimated future tax penalties attributable to variations between
the monetary assertion carrying quantity of current property and liabilities and
their respective tax bases. Deferred tax property are additionally acknowledged for
realizable loss and tax credit score carryforwards. Deferred tax property and
liabilities are measured utilizing substantively enacted tax charges in impact for the
12 months by which these non permanent variations are anticipated to be recovered or
settled. Internet deferred tax property aren't recorded if we don't assess their
realization as possible. The impact on deferred tax property and liabilities of a
change in earnings tax charges is acknowledged in our monetary statements within the
interval that features the substantive enactment date.

Operations outcomes

Comparability of the Three Months Ended September 30, 2022 and September 30, 2021:

                                            For the Three Months Ended September 30,
                                         2022                  2021                Change
                                      (Unaudited)           (Unaudited)
Income:
Product income, internet                $         6,443       $         3,014      $        3,429
Licensing income                               209                     -                 209
Whole income, internet                            6,652                 3,014               3,638
Working bills:
Prices of products offered                           3,616                 2,763                 853
Promoting, basic and
administrative                               17,032                24,725              (7,693 )
Analysis and improvement                      3,365                 3,238                 127
Amortization of intangible property               567                   567                   -
Whole working bills                     24,580                31,293              (6,713 )
Loss from operations                        (17,928 )             (28,279 )            10,351
Different non-operating earnings
(expense), internet                                3,779                (2,451 )             6,230
Loss earlier than earnings taxes                    (14,149 )             (30,730 )            16,581
Provision for earnings taxes                        -                     -                   -
Internet loss                            $       (14,149 )     $       (30,730 )    $       16,581


Product income, internet

We acknowledged product income, internet of $6.4 million for the three months ended
September 30, 2022, as in comparison with $3.0 million for the three months ended
September 30, 2021, a rise of $3.4 million or 114%. We offered 92,070 models at
a mean promoting worth per unit, internet of $69.98 for the three months ended
September 30, 2022, as in comparison with 45,825 models at a mean promoting worth per
unit, internet of $65.77 for the three months ended September 30, 2021.

The rise in models offered was primarily attributable to our deliberate and
executed commercialization technique for Plenity. We made Plenity out there for
industrial sale by a beta launch that started in in October 2020 and
continued all through 2021. Actions related to a full industrial launch
of the Product in america started in late 2021, and in February 2022, we
launched the primary nationwide broad consciousness media marketing campaign for Plenity and
continued to put money into shopper acquisition through the three months ended
September 30, 2022, although at a lowered degree in comparison with the prior quarters in
2022.

Price of products offered

We acknowledged value of products offered of $3.6 million for the three months ended
September 30, 2022, as in comparison with $2.8 million for the three months ended
September 30, 2021, a rise of $0.8 million. Depreciation as a part of
value of products offered was $0.7 million and $0.2 million for the three months ended
September 30, 2022 and 2021, respectively. The will increase had been primarily
attributable to the income acknowledged with respect to models offered for the three
months ended September 30, 2022, as in comparison with the three months ended September
30, 2021.

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Gross revenue was $3.0 million for the three months ended September 30, 2022, as
in comparison with $0.3 million for the three months ended September 30, 2021, an
enhance of $2.7 million. Gross margin additionally elevated to 44% for the three
months ended September 30, 2022, as in comparison with 8% for the three months ended
September 30, 2021. The will increase had been primarily attributable to manufacturing
commencing at our first commercial-scale manufacturing facility within the fourth
quarter of 2021 and the elevated manufacturing amount in addition to the
implementation of recent finished-goods packaging within the third quarter 2021.

Promoting, basic and administrative bills

The next desk summarizes our promoting, basic and administrative bills for the three months ended September 30, 2022 and 2021:

                                                         For the Three Months Ended September 30,
                                                        2022                2021              Change
In 1000's                                         (Unaudited)         (Unaudited)
Promoting and advertising and marketing expense                       $       7,330       $      21,575       $  (14,245 )
Common and administrative expense                          6,186               2,307            3,879
Non-cash stock-based compensation expense                   3,516                 843            2,673

Whole promoting and basic and administrative bills $17,032 $

   24,725       $   (7,693 )




Whole promoting, basic and administrative expense was $17.0 million and $24.7
million for the three months ended September 30, 2022 and 2021, respectively, a
lower of $7.7 million or 31%.

Promoting and advertising and marketing expense was $7.3 million and $21.6 for the three months
ended September 30, 2022 and 2021, respectively, a lower of $14.2 million.
The lower in promoting and advertising and marketing expense through the three months ended
September 30, 2022 in comparison with the three months ended September 30, 2021 was
primarily attributable to lowered investments in media content material creation,
healthcare supplier contract gross sales pressure, and startup prices related to the
broad industrial launch of Plenity.

Common and administrative expense was $6.2 million and $2.3 million for the
three months ended September 30, 2022 and 2021, respectively. The rise in
basic and administrative expense was primarily pushed by the administrators and
officers insurance coverage prices in addition to authorized prices related to being a public
firm.

Non-cash stock-based compensation expense was $3.5 million and $0.8 million for
the three months ended September 30, 2022 and 2021, respectively. The rise
of $2.7 million was primarily pushed by the compensation prices with respect to
contingently issuable earnout shares pertaining to Legacy Gelesis fairness awards
for the three months ended September 30, 2022 as in comparison with the three months
ended September 30, 2021.

Analysis and improvement expenditures

The next desk summarizes our R&D expenditures for the three months ending September 30, 2022 and 2021:

                                                   For the Three Months Ended September 30,
                                                2022                2021                Change
In 1000's                                 (Unaudited)         (Unaudited)
GS200                                       $          19       $         267                 (248 )
GS300                                                   6                 812                 (806 )
GS500                                                   4               1,106               (1,102 )
Unallocated bills
Different analysis and improvement bills             2,278                 809                1,469
Non-cash stock-based compensation expense           1,058                 244                  814

Whole search and improvement expenditures $3,365 $3,238 $127

Our analysis and improvement bills had been $3.4 million And the $3.2 million For the three months ending September 30, 2022 and 2021, respectively.



Non-cash stock-based compensation expense was $1.1 million and $0.2 million for
the three months ended September 30, 2022 and 2021, respectively. The rise
of $0.8 million was primarily attributable to the incremental compensation value
with respect to contingently issuable earnout shares pertaining to Legacy
Gelesis fairness awards for the three months ended September 30, 2022 as in contrast
to the three months ended September 30, 2021.



                                       36
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The lower in analysis and improvement bills inside medical indications
(GS200, GS300 and GS500) was primarily attributable to the conclusion of the
LIGHT-UP examine with respect to GS200 through the 12 months ended December 31, 2021, as
nicely because the strategic prioritization of the commercialization of Plenity
significantly with respect to our monetary and human sources. Different analysis
and improvement bills elevated $1.5 million primarily pushed by improvement
actions supporting the brand new manufacturing strains for the three months ended
September 30, 2022 as in comparison with the three months ended September 30, 2021.



Different non-operating earnings (bills), internet



We acknowledged different non-operating earnings, internet of $3.8 million and for the three
months ended September 30, 2022, as in comparison with different non-operating expense, internet
of $2.5 million for the three months ended September 30, 2021, a rise in
earnings of $6.2 million. The earnings for the three months ended September 30, 2022
was primarily attributable to earnings of $2.8 million with respect to the change
in honest worth of our earnout legal responsibility, achieve of $1.7 million with respect to the
change in honest worth of the One S.r.l name choice, achieve of $0.7 million with
respect to the change in honest worth of the rate of interest swap contract, as nicely
as earnings of $0.5 million with respect to the change in honest worth of our
warrant liabilities. The earnings for the three months ended September 30, 2022,
was additional attributable to $0.4 million acknowledged with respect to grants
awarded by the Puglia area of Italy.

The opposite non-operating expense for the three months ended September 30, 2021
was primarily attributable to a lack of $2.2 million acknowledged for the change
in honest worth of our warrant liabilities in addition to curiosity expense of $0.4
million with respect to our long-term debt obligations.

Comparability of the 9 months ended September 30, 2022 and September 30, 2021:

                                           For the 9 Months Ended September 30,
                                       2022                  2021                Change
                                    (Unaudited)           (Unaudited)
Income:
Product income, internet              $        22,930       $         8,293      $       14,637
Licensing income                             209                     -                 209
Whole income, internet                         23,139                 8,293              14,846
Working bills:
Prices of products offered                        13,315                 7,584               5,731
Promoting, basic and
administrative                             87,188                50,642              36,546
Analysis and improvement                   16,298                13,206               3,092
Amortization of intangible property           1,700                 1,700                   -
Whole working bills                  118,501                73,132              45,369
Loss from operations                      (95,362 )             (64,839 )           (30,523 )
Different non-operating earnings
(expense), internet                             62,997                (9,199 )            72,196
Loss earlier than earnings taxes                  (32,365 )             (74,038 )            41,673
Provision for earnings taxes                      -                    17                 (17 )
Internet loss                          $       (32,365 )     $       (74,055 )    $       41,690


Product income, internet

We acknowledged product income, internet of $22.9 million and $8.3 million for the
9 months ended September 30, 2022 and 2021, respectively, a rise of
$14.6 million or 176%. We offered 336,530 models at a mean promoting worth per
unit, internet of $68.14 for the 9 months ended September 30, 2022, as in comparison with
118,490 models at a mean promoting worth per unit, internet of $69.99 for the 9
months ended September 30, 2021.

The rise in models offered was primarily attributable to our deliberate and
executed commercialization technique for Plenity. We made Plenity out there for
industrial sale by a beta launch that started in in October 2020 and
continued all through 2021. Actions related to a full industrial launch
of the Product in america started in late 2021, and in February 2022, we
launched the primary nationwide broad consciousness media marketing campaign for Plenity and
continued to put money into broad consciousness through the 9 months ended September
30, 2022.

Price of products offered

We acknowledged value of products offered of $13.3 million and $7.6 million for the 9
months ended September 30, 2022 and 2021, respectively, a rise of $5.7
million or 76%. Depreciation as a part of value of products offered was $2.1
million and $0.6 million for the 9 months ended September 30, 2022 and 2021,
respectively. The will increase had been primarily pushed by the rise in models offered
coupled with decrease value per unit for the 9 months ended September 30, 2022,
as in comparison with the 9 months ended September 30, 2021.

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Gross revenue was $9.8 million and $0.7 million for the 9 months ended
September 30, 2022 and 2021, respectively, a rise of $8.9 million. Gross
margin additionally elevated to 42% for the 9 months ended September 30, 2022, as
in comparison with 9% for the 9 months ended September 30, 2021. The will increase had been
primarily attributable to manufacturing commencing at our first commercial-scale
manufacturing facility within the fourth quarter of 2021 and the elevated
manufacturing amount in addition to the implementation of recent finished-goods
packaging within the third quarter of 2021.

Promoting, basic and administrative bills

The next desk summarizes our promoting, basic and administrative bills for the 9 months ended September 30, 2022 and 2021:

                                             For the 9 Months Ended September 30,
                                         2022                  2021                 Change
In 1000's                          (Unaudited)           (Unaudited)
Promoting and advertising and marketing expense       $        50,691       $        36,534       $       14,157
Common and administrative
expense                                      19,089                11,232                7,857
Non-cash stock-based compensation
expense                                      17,408                 2,876               14,532
Whole promoting, basic and
administrative expense              $        87,188       $        50,642       $       36,546




Whole promoting, basic and administrative expense was $87.2 million and $50.6
million for the 9 months ended September 30, 2022 and 2021, respectively, an
enhance of $36.5 million or 72%.

Promoting and advertising and marketing expense elevated $14.2 million for the 9 months ended
September 30, 2022, as in comparison with the 9 months ended September 30, 2021. The
enhance in promoting and advertising and marketing expense was primarily attributable to
elevated advertising and marketing spend to assist the industrial sale of Plenity. In February
2022, we launched the primary nationwide broad consciousness media marketing campaign for the
product, which included TV, digital, social, and Out of Residence media channels to
develop consciousness of Plenity. We continued to put money into broad consciousness through the
9 months ended September 30, 2022.

Common and administrative expense elevated $7.9 million for the 9 months
ended September 30, 2022, as in comparison with the 9 months ended September 30,
2021. The rise was primarily attributable to skilled and authorized bills
incurred with respect to the Enterprise Mixture in addition to administrators and
officers insurance coverage prices as a public firm.

Non-cash stock-based compensation expense elevated $14.5 million for the 9
months ended September 30, 2022, as in comparison with the 9 months ended September
30, 2021. The rise was primarily attributable to compensation value with
respect to the issuance of recent fairness awards in 2022 in addition to the incremental
compensation value with respect to contingently issuable earnout shares
pertaining to Legacy Gelesis fairness awards.

Analysis and improvement expenditures

The next desk summarizes our R&D expenditures for the 9 months ended September 30, 2022 and 2021:

                                             For the 9 Months Ended September 30,
                                         2022                  2021                 Change
In 1000's                          (Unaudited)           (Unaudited)
GS200                               $            61       $         1,782               (1,721 )
GS300                                           127                 1,282               (1,155 )
GS500                                            75                 1,552               (1,477 )
Unallocated bills
Different analysis and improvement
bills                                      6,904                 7,285                 (381 )
Non-cash stock-based compensation
expense                                       9,131                 1,305                7,826
Whole Analysis and improvement
expense                             $        16,298       $        13,206       $        3,092



Whole analysis and improvement expense was $16.3 million and $13.2 million for
the 9 months ended September 30, 2022 and 2021, respectively, a rise of
$3.1 million or 23%.


Non-cash stock-based compensation expense elevated $7.8 million for the 9
months ended September 30, 2022, as in comparison with the 9 months ended September
30, 2021. The rise was primarily attributable to compensation value with
respect to the issuance of recent fairness awards in 2022 in addition to the incremental
compensation value with respect to contingently issuable earnout shares
pertaining to Legacy Gelesis fairness awards.



                                       38
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The lower in analysis and improvement bills inside medical indications
(GS200, GS300 and GS500) was primarily attributable to the conclusion of the
LIGHT-UP examine with respect to GS200 through the 12 months ended December 31, 2021, as
nicely because the strategic prioritization of the commercialization of Plenity
significantly with respect to our monetary and human sources.

Different non-operating earnings (bills), internet

We acknowledged different non-operating earnings, internet of $63.0 million for the 9
months ended September 30, 2022, as in comparison with expense, internet of $9.2 million for
the 9 months ended September 30, 2021, a rise in earnings of $72.2
million. The earnings for the 9 months ended September 30, 2022 was primarily
attributable to earnings of $55.5 million with respect to the change in honest worth
of our earnout legal responsibility, earnings of $6.6 million with respect to the change in
honest worth of our warrant liabilities in addition to earnings of $0.8 million with
respect to the One S.r.l. name choice. The earnings for the 9 months ended
September 30, 2022, was additional attributable to $0.8 million in funding tax
credit score earnings acknowledged with respect to sure tax incentives provided for
property and gear funding in Italy and earnings of $1.9 million acknowledged
with respect to grants awarded by the Puglia area of Italy.

9 months’ bills are over September 30, 2021 It was attributed primarily to the loss $9.2 million In reference to the change within the honest worth of our obligations beneath the ensures, partially offset by earnings $1.6 million
Acknowledged in relation to grants from the Puglia area in Italia.

Liquidity and capital sources

Since inception, we now have financed our operations primarily from the issuance of
fairness and debt devices, license and collaboration agreements, provide and
distribution agreements, and authorities grants. As of September 30, 2022, our
principal sources of liquidity had been our money and money equivalents within the quantity
of $24.8 million. Through the 9 months ended September 30, 2022, we closed a
enterprise mixture with CPSR, pursuant to which we acquired $105.0 million in
gross proceeds, previous to the fee of transactions charges due and payable. As of
the date of this Quarterly Report, we count on that our current money and money
equivalents will solely be adequate to fund our working bills and capital
expenditure necessities into the second quarter of 2023. As well as, we
anticipate that this extension of our money runway into the second quarter of
2023 will solely be achievable with the numerous discount of discretionary
spending from prior ranges, significantly with respect to our discretionary gross sales
and advertising and marketing actions and manufacturing and provide chain features.

As a consequence of our out there money and money equivalents, a historical past of recurring losses
from operations, unfavorable money flows from operations, and a big
collected deficit, we now have concluded that there's substantial doubt about our
means to proceed as a going concern. As well as, our impartial registered
public accounting agency included an emphasis of matter paragraph of their opinion
for the years ended December 31, 2021 and 2020, respectively, as to the
substantial doubt about our means to proceed as a going concern. Our
unaudited condensed consolidated monetary statements included elsewhere on this
Quarterly Report, which have been ready in accordance with GAAP, ponder
that we'll proceed to function as a going concern. Our monetary statements do
not comprise any changes which may consequence if we're unable to proceed as a
going concern.

Now we have incurred unfavorable money flows from working actions and vital
losses from operations up to now. We count on to proceed to incur working
losses for at the least the subsequent twelve months because of the investments that we intend
to make in our enterprise to assist the commercialization of Plenity and, as a
consequence, we would require extra capital sources to develop our enterprise.

future liquidity necessities

Previous to the closing of the Enterprise Mixture, holders of 26,844,777 shares
of CPSR Class A Widespread Inventory exercised their proper to redeem such shares for
money at a worth of roughly $10.00 per share for mixture funds of
$268,646,943. Because of this, upon closing of the Enterprise Mixture, we acquired
roughly $105.0 million of gross proceeds to fund our future capital and
liquidity wants. As a result of vital variety of redemptions, we applied an
various marketing strategy, prioritizing short-term working capital wants akin to
investments in uncooked supplies and completed items in addition to investments in gross sales
and advertising and marketing, and delaying sure long-term capital expenditures in industrial
infrastructure and sure analysis and improvement bills. We lowered and
optimized investments in gross sales and advertising and marketing, prioritizing investments in excessive
return and excessive publicity mediums. Now we have sought out, and proceed to hunt out,
various industrial preparations or geographic distribution partnerships to
finance sure investments in gross sales and advertising and marketing related to the sale of
Plenity. We count on these actions will present us with adequate liquidity to
handle short-term danger and uncertainty and (i) allow us to execute our
various marketing strategy, (ii) afford us time to entry financing alternate options
to offer for long-term liquidity and (iii) allow us to fund the continued
commercialization of Plenity. See Half II, Merchandise 1A, "Threat Elements - There have been a
vital variety of redemptions in reference to the Enterprise Mixture
and if we're not profitable in implementing an alternate marketing strategy and/or
elevating extra capital in a well timed method, we could have inadequate money and
liquidity to pay working bills and different obligations. Any such occasion would
have a fabric opposed impact on our enterprise and monetary situation." and
"Threat Elements - Dangers Associated to Possession of Our Widespread Inventory - Future gross sales of
our Widespread Inventory by us or current stockholders, and issuances of our Widespread
Inventory or rights to buy our Widespread

                                       39
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Inventory, together with pursuant to the Gelesis Holdings, Inc. 2021 Inventory Possibility and
Incentive Plan and future train of warrants, may end in extra
dilution of the proportion possession of our shareholders and will trigger our
share worth to fall." on this Quarterly Report for extra info relating to
sure elements which will impression our liquidity and our means to boost
extra capital.

Because of this, even with proceeds from the Enterprise Mixture, we'll want
substantial extra funding to assist our persevering with operations and pursue
our progress technique. Till such time as we are able to generate vital income from
product gross sales, if ever, we count on to finance our operations by issuance of
extra fairness, debt financings or different capital sources, which can embody
collaborations with different corporations or different strategic transactions.

As of the date of this Quarterly Report, we're persevering with to judge
alternatives to boost extra capital. If we're unsuccessful in elevating
extra capital, we could must additional prohibit our spending significantly
with respect to discretionary gross sales and advertising and marketing actions and our
manufacturing and provide chain features. Additional adjustments to the execution of
our various marketing strategy could impression the expansion of Plenity gross sales and the
tempo of acquisition and retention of shoppers, in addition to the value of our
widespread inventory.

income forecast

Our income projections are extremely depending on (i) our means to amass new
shoppers and/or retain current shoppers and (ii) our means to entry
extra capital and lift adequate ranges of funding in a well timed method to
assist the gross sales and advertising and marketing of Plenity at a broad nationwide degree inside the
United States. If our entry to extra capital is delayed or inadequate,
it might adversely impression the sale of Plenity and our income projections. See
Half II, Merchandise 1A "Threat Elements - Dangers Associated to Monetary Place and
Financing Wants - The monetary and operational projections and
commercialization and product candidate improvement timelines that we could
present occasionally are topic to inherent dangers." on this Quarterly
Report for extra info.

Order returns

As of the date of this Quarterly Report, we now have (i) 13,800,000 excellent
Public Warrants to buy 13,800,000 shares of our widespread inventory, exercisable
at an train worth of $11.50 per share, which expire on the sooner to happen
of January 13, 2027 or redemption; (ii) 7,520,000 excellent Non-public Warrants
to buy 7,520,000 shares of our widespread inventory, exercisable at an train
worth of $11.50 per share, which expire on the sooner of January 13, 2027 or
redemption; (iii) 3,013,365 exercisable Rollover Warrants, 1,353,062 of which
are exercisable at an train worth of $4.26 and expire on October 21, 2030 and
1,660,303 of that are exercisable at an train worth of $0.02 and expire on
February 15, 2025; and (iv) 400,000 warrants issued to CMS that are exercisable
at an train worth of $0.01 and expire on August 4, 2032.

The train of warrants is extremely depending on the value of our widespread inventory
and the unfold between the train worth of the warrant and the value of our
widespread inventory on the time of train. For instance, to the extent that the value
of our widespread inventory exceeds $11.50 per share, it's extra probably that holders of
our Public Warrants and Non-public Warrants will train their warrants. To the
extent that the value of our widespread inventory is lower than $11.50 per share, it's
much less probably that such holders will train their warrants. As of November 11,
2022, the closing worth of our widespread inventory worth was $0.35 per share. There can
be no assurance that our warrants will likely be within the cash previous to their expiration
and, as such, all or any of our warrants could expire nugatory. Our Public
Warrants beneath sure situations, as described within the warrant settlement, are
redeemable by the Firm at a worth of $0.01 per warrant or on a cashless
foundation. Our Non-public Warrants aren't redeemable as long as they're held by the
preliminary stockholders and are exercisable on a cashless foundation. Our Rollover
Warrants and CMS Warrants aren't redeemable and are exercisable on a cashless
foundation solely with respect to the 1,660,303 Rollover Warrants which have an train
worth of $0.02. As such, it's attainable that we could by no means generate any money
proceeds from the train of our warrants. As of the date of this Quarterly
Report, we now have neither included nor intend to incorporate any potential money
proceeds from the train of our warrants in our short-term or long-term
liquidity projections. We'll proceed consider the likelihood of warrant
train over the lifetime of our warrants and the benefit of together with potential money
proceeds from the train thereof in our liquidity projections.

To the extent such warrants are exercised, extra shares of our widespread inventory
will likely be issued, which is able to end in dilution to the holders of our widespread inventory
and enhance the variety of shares eligible for resale within the public market.
Gross sales of considerable numbers of such shares within the public market may adversely
have an effect on the market worth of our widespread inventory, which enhance the chance that
our warrants is not going to be within the cash previous to their expiration.

Financing danger

We count on to commit vital efforts to boost capital, restructure our
indebtedness and determine and consider potential strategic alternate options,
nonetheless, there may be no assurance that we'll achieve success in acquiring
capital adequate to satisfy our working wants on phrases or a timeframe
acceptable to us or in any respect. Additional, within the occasion that market situations
preclude our means to consummate such a transaction, we could also be required to
consider extra alternate options in restructuring our enterprise and our capital
construction. Any failure

                                       40
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in these efforts may pressure us to delay, restrict or terminate our operations,
make reductions in our workforce, discontinue our commercialization efforts for
Plenity in addition to different improvement applications, liquidate all or a portion of our
property or pursue different strategic alternate options, and/or search safety beneath the
provisions of the U.S. Chapter Code.

Though we now have estimated our liquidity necessities primarily based on assumptions, we
take into account to be affordable, we may have more money sources as a result of modified
enterprise situations or different developments, together with provide chain challenges,
disruptions as a result of COVID-19, aggressive pressures, and regulatory developments,
amongst different developments. Our finances projections could also be topic to value overruns
for causes exterior of our management and Plenity could expertise slower gross sales
progress than anticipated, which might pose a danger to attain optimistic money move.

Our future capital necessities will depend upon many elements, together with will increase
in gross sales of Plenity, will increase in our buyer base, the timing and extent of
spend to assist the growth of gross sales, advertising and marketing and improvement actions,
and the impression of the COVID-19 pandemic. We could sooner or later additionally enter into
preparations to amass or put money into complementary companies, companies and
applied sciences, together with mental property rights.

Now we have primarily based our estimate of liquidity on assumptions which will show to be
improper, and we may use our out there capital sources ahead of we presently
count on. Our money flows could fluctuate and are troublesome to forecast and can
depend upon many elements talked about elsewhere on this dialogue and evaluation. If
we require extra fairness or debt financing from exterior sources, we could not
be capable of increase it on phrases acceptable to us, or in any respect, and will pursue
financing transactions that won't be accomplished. If we're unable to boost
extra capital when desired, our enterprise, monetary situation and outcomes
of operations can be harmed.

money move

The next desk summarizes our money flows for every of the intervals introduced:

                                                          For the 9 Months Ended September 30,
                                                             2022                         2021
In 1000's                                             (Unaudited)                  (Unaudited)
Money (utilized in) supplied by:
Working actions                                 $            (61,453 )       $            (26,395 )
Investing actions                                               (8,473 )                      5,617
Financing actions                                               67,006                        5,472
Impact of trade charges on money                                     (630 )                       (816 )
Lower in money and money equivalents                $             (3,550 )       $            (16,122 )



Money utilized in working actions

Internet money utilized in working actions was $61.5 million and $26.4 million for
the 9 months ended September 30, 2022 and September 30, 2021, respectively.
Our internet loss after adjusting for non-cash working actions was $62.4 million
for the 9 months ended September 30, 2022, as in comparison with $57.3 million for
the 9 months ended September 30, 2021, a rise in lack of $5.1 million.
The rise in loss was partially offset by inflows of $5.2 million with
respect to pay as you go bills and different present property, $3.4 million grant
reimbursement collected in addition to outflows of $4.9 million with respect to
inventories for the 9 months ended September 30, 2022. For the 9 months
ended September 30, 2022, we additionally acquired $15.0 million as a pre-buy dedication
from Ro, which was partially offset by income acknowledged with respect to Ro of
$13.4 million for the 9 months ended September 30, 2022. The rise in
working exercise outflows was additional influenced by the timing of receivables
from our authorities grants in addition to GGM for the 9 months ended September
30, 2022, as in comparison with the 9 months ended September 30, 2021.

money (utilized in) supplied by investing actions

Internet money utilized in investing actions was $8.5 million for the 9 months ended
September 30, 2022, as in comparison with $5.6 million supplied by investing actions
for the 9 months ended September 30, 2021. The outflows had been primarily
attributable to $8.5 million within the buy of property and gear for the
9 months ended September 30, 2022. For the 9 months ended September 30,
2021, inflows had been primarily attributable to $24.0 million in maturities of
marketable securities, which had been partially offset by $18.4 million within the
buy of property and gear for the 9 months ended September 30, 2021.

Money supplied by financing actions

Internet money supplied by financing actions was $67.0 million and $5.5 million for
the three months ended September 30, 2022 and 2021, respectively. The rise
in inflows was primarily attributable to internet proceeds of $70.5 million acquired
from the completion of the Enterprise Mixture in January 2022 and $25 million
proceeds from issuance of promissory notes, partially offset by our

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compensation of convertible promissory notes additionally in January 2022, totaling $27.3
million, as in comparison with internet proceeds of $4.5 million from the issuance of loans
in Italy for the 9 months ended September 30, 2021.

Contractual obligations and commitments

Our contractual obligations primarily include our obligations beneath irrevocable working leases, promissory notes and debt obligations in addition to contractual obligations beneath vital agreements with associated and unrelated events.

For the three months ended September 30, 2022, we issued three time period promissory
notes within the mixture principal quantity of $25.0 million to current investor
CMS, and current buyers and associated events PureTech Well being LLC and SSD2
LLC, for an mixture money buy worth of $25.0 million. Every of the
promissory notes is unsecured and bears curiosity at a fee of 15% every year.
Every promissory word matures on the sooner of (a) December 31, 2023 or (b) 5
(5) enterprise days following a certified financing. Upon a fee default beneath
any promissory word that has not been cured after 5 days (i) the Firm will
be required to challenge sure warrants to the holders as outlined by the
promissory word agreements and (ii) the holders could have the choice to transform
excellent principal and accrued curiosity into plenty of shares of Gelesis
widespread inventory as outlined by the promissory word agreements.
At September 30, 2022, the mixture excellent stability of the promissory notes
was $25.9 million recorded at honest worth within the accompanying condensed
consolidated stability sheets. We acknowledged a lack of $0.8 million with respect
to the change within the honest worth of the 2022 Promissory Notes.

Apart from the aforementioned transactions, there have been no materials adjustments to
our contractual obligations and commitments from these described beneath the
heading "Administration's Dialogue and Evaluation of Monetary Situation and Outcomes
of Operations-Contractual Obligations and Commitments" in our Type 8-Okay Modification
No. 1 filed with the SEC on March 24, 2022, besides in January 2022, we settled
convertible promissory notes in money for principal plus accrued curiosity within the
mixture quantity of $27.3 million. For additional info on these convertible
promissory notes, please see Be aware 12 to the unaudited condensed consolidated
monetary statements included elsewhere on this Quarterly Report.

Steadiness Sheet Preparations

We presently don't have, and didn't have through the intervals introduced, any
off-balance sheet preparations, as outlined within the guidelines and rules of the
SEC.

SIGNIFICANT ACCOUNTING POLICIES, SIGNIFICANT JUDGMENTS AND ESTIMATES

For the three and 9 months ended September 30, 2022, there have been no
materials adjustments to our essential accounting insurance policies from these described in
"Administration's Dialogue and Evaluation of Monetary Situation and Outcomes of
Operations" in our Type 8-Okay Modification No. 1 filed with the SEC on March 24, 2022
apart from these described in Be aware 2 within the accompanying Notes to unaudited
condensed consolidated monetary statements included elsewhere on this Quarterly
Report.

Fashionable Accounting Statements

For a dialogue of latest accounting statements, see Be aware 2 to the accompanying notes to the unaudited condensed consolidated monetary statements which can be included elsewhere on this quarterly report.

Accounting Jobs Act Elections

Beneath Part 107(b) of the Jumpstart Our Enterprise Startups Act of 2012, or the
JOBS Act, an "rising progress firm" can delay the adoption of recent or revised
accounting requirements till such time as these requirements would apply to non-public
corporations. Now we have elected to avail ourselves of this exemption to delay
adopting new or revised accounting requirements till such time as these requirements
apply to non-public corporations. Nevertheless, the place allowable we now have early adopted
sure requirements as described in Be aware 2 of our consolidated monetary
statements. There are different exemptions and lowered reporting necessities
supplied by the JOBS Act that we're presently evaluating. For instance, as an
"rising progress firm," we're exempt from Sections 14A(a) and (b) of the
Trade Act which might in any other case require us to (1) submit sure government
compensation issues to shareholder advisory votes, akin to "say-on-pay,"
"say-on-frequency," and "golden parachutes;" and (2) disclose sure government
compensation associated objects such because the correlation between government
compensation and efficiency and comparisons of our chief government officer's
compensation to our median worker compensation.

We additionally intend to depend on an exemption from the rule requiring us to offer an
auditor's attestation report on our inside controls over monetary reporting
pursuant to Part 404(b) of the Sarbanes-Oxley Act. We'll proceed to stay
an "rising progress firm" till the earliest of the next: (1) the final
day of the fiscal 12 months following the fifth anniversary of the date of the
completion of this registration; (2) the final day of the fiscal 12 months by which
our complete annual gross income is the same as or greater than $1.07 billion; (3) the
date on which we now have issued greater than $1 billion in nonconvertible debt throughout
the earlier three years; or (4) the date on which we're deemed to be a big
accelerated filer beneath the principles of the SEC.



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