What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-11-13 compared with 2025-08-07 · 114 added, 90 removed, 119 unchanged (63% of the section changed)

37 unchanged sentences

one for the removal of ticagrelor and another for the removal of the direct oral anticoagulants (DOAC) apixaban and rivaroxaban in a cardiopulmonary bypass circuit during urgent cardiothoracic procedures.

The Company submitted a De Novo Request to the FDA in September 2024, requesting marketing authorization of DrugSorb-ATR to reduce the severity of perioperative bleeding in CABG patients on the antithrombotic drug ticagrelor, which was accepted for substantive review in October 2024.

On April 25, 2025, the FDA issued a denial letter regarding the Company’s De Novo Request for DrugSorb-ATR, identifying remaining deficiencies that must be addressed before the De Novo Request can be granted, and the device can be authorized for commercialization in the U.S.

The Company believes these items can be most effectively and expeditiously resolved through the formal appeal process.

In July, the Company participated in an appeal hearing with the FDA for supervisory review (administrative appeal) under 21 CFR 10.75.

The appeal hearing included FDA senior leadership, Company management and our external surgical experts.

The Company continues to believe that remaining deficiencies in its DeNovo application can be effectively resolved through this supervisory review process which is expected to be completed by the end of August 2025, and that a final regulatory decision can be achieved in 2025.

On November 1, 2024 we received Medical Device Single Audit Program (MDSAP) certification, a key regulatory milestone that certifies compliance of our quality management system with the standard regulatory requirements of Canada, the United States, Brazil, Japan and Australia;

and then promptly submitted our Medical Device License (MDL) marketing application to Health Canada on November 1, 2024, with MDSAP certification - a requirement for the submission.

On June 26, 2025, Health Canada issued a Notice of Refusal of the Company’s Medical Device License application, identifying remaining deficiencies that must be addressed before the application can be granted and the device is authorized for commercialization.

As part of Health Canada’s prescribed reconsideration process, and following discussions with Health Cananda, the Company has filed a Level 1 “Request for Reconsideration” and with agreement from the Medical Devices Directorate Bureau Director will pursue the review following conclusion of the Company’s review with the FDA.

If marketing authorization is not received as part of the reconsideration process, the Company can then file a formal Appeal with the Director General of the Medical Devices Directorate.

DrugSorb-ATR is not yet granted or approved in the United States and Canada, respectively.

The Company is actively pursuing regulatory approval of DrugSorb-ATR with the FDA and will pursue regulatory approval with Health Canada with better visibility from the FDA.

DrugSorb-ATR is not yet granted or approved in either the U.S.

Upon approval, the Company expects to rapidly commercialize DrugSorb-ATR in the U.S.

8 unchanged sentences

Summary of Operational and Recent Business Highlights

● Total revenue was $18.3 million for the six months ended June 30, 2025, an increase of $0.5 million, or 2.9%, compared to the prior year.

● Gross profit was $13.0 million for the six months ended June 30, 2025, a decrease of $0.4 million, or 2.7%, compared to the prior year.

Gross margin was 71% for the six months ended June 30, 2025, compared to 75% in the prior year.

● Our loss from operations improved by 8.8% to approximately $7.5 million, from $8.2 million for the six months ended June 30, 2025, and 2024, respectively.

This improvement was driven by a 5.0% reduction in total operating expense year over year.

● Total revenue was $27.8 million for the nine months ended September 30, 2025, an increase of $1.4 million, or 5.2%, compared to the prior year.

● Gross profit was $19.7 million for the nine months ended September 30, 2025, an increase of $1.1 million, or 5.7%, compared to the prior year.

Gross margin was 71% for the nine months ended September 30, 2025, compared to 71% in the prior year.

● Our loss from operations improved by 20.6% to approximately $10.4 million, from $13.1 million for the nine months ended September 30, 2025, and 2024, respectively.

This improvement was driven by a 5.2% increase in total revenue and a 5.2% reduction in total operating expense year over year.

● We strengthened our balance sheet with the completion of a shareholder Rights Offering in January 2025 that provided $5.4 million net proceeds, and then added another $1.4 million net proceeds with the exercise of the Series A Right Warrant in February 2025.

● In April 2025, we further supplemented our cash balance with the receipt of $1.7 million from the sale of our 2023 and amended 2022 Net Operating Loss (NOL) and R&D tax credits from the Technology Business Tax Certificate Transfer Program, sponsored by the New Jersey Economic Development Authority (NJEDA).

● Appointed Thomas Shannon as Vice President of Marketing for North America to lead the marketing strategy and execution of DrugSorb-ATR in the U.S.

and appointed Melanie Grossman, CPA as Vice President and Corporate Controller.

● On May 22, 2025, a new contemporary real-world data analysis was presented at EuroPCR, highlighting the intraoperative use of the Company’s technology to significantly reduce the severity of bleeding in urgent coronary artery bypass grafting (CABG) patients on the blood thinner, ticagrelor (Brilinta®, AstraZeneca) who had not completed the recommended drug washout period.

Storey, et al.

(Storey, R.F., et al.

Early CABG with intraoperative hemadsorption in patients on ticagrelor.

Cardiovascular Revascularization Medicine.) The information in this data analysis are referenced for general information only and are not incorporated by reference into this Report.

Cardiovascular Revascularization Medicine.

) The information in this data analysis are referenced for general information only and are not incorporated by reference into this Report.

● Continued to see real world validation of improved clinical outcomes (reduced serious perioperative bleeding) in cardiac surgery patients on a blood thinner at several global cardiac surgery conferences including EuroPCR, ESCVS, EACTS, and TCT.

● On July 31, 2025 the Company highlighted data demonstrating the vital and evolving role of CytoSorb therapy in the treatment of sepsis and septic shock–among the deadliest challenges in critical care medicine.

Recent data demonstrate early and intensive use of CytoSorb therapy improves clinical outcomes for patients suffering from these conditions.

The Company will present a World Sepsis Day Global Webinar on September 10, 2025 in commermoration of Sepsis Awareness Month and World Sepsis Day.

The Company presented a World Sepsis Day Global Webinar on September 10, 2025 in commemoration of Sepsis Awareness Month and World Sepsis Day.

See our Current Report on Form 8-K, filed with the SEC on August 1, 2025, for additional information.

● On September 16, 2025, the Company announced that it would file a new De Novo application for DrugSorb-ATR with the FDA.

This decision followed an appeal meeting and decision by the FDA that upheld its previous denial of the Company’s DrugSorb-ATR De Novo application, but affirmed that there were no safety related issues with the device, and requested additional information to support the Company’s desired label indication.

As part of the resubmission process, the Company filed a pre-submission meeting request with supporting documentation to the FDA on November 7, 2025.

A formal meeting with the FDA is anticipated in either late fourth quarter of 2025, or early 2026 to confirm the requirements for the new De Novo submission, followed by a formal submission in the first quarter of 2026.

A regulatory decision is expected in mid-2026 following a typical 150-day review process.

● Continued to see real world validation of improved clinical outcomes (reduced serious perioperative bleeding) in cardiac surgery patients on a blood thinner at global cardiac surgery conferences including EuroPCR, ESCVS, EACTS and TCT

● On November 13, 2025, the Company and Avenue Capital Group entered into the First Amendment to Loan Documents (“the Amended Loan and Security Agreement”), amending the Company’s Loan and Security Agreement, dated June 28, 2024, as supplemented.

The Amended Loan and Security Agreement provides for access to an additional aggregate $2.5 million (“Tranche 2a”) from Avenue Capital Group in November 2025 and for the extension of the interest only period from July 1, 2026 to December 31, 2026, followed by equal monthly installments of principal plus accrued and unpaid interest until maturity on July 1, 2027.

The Company will have access to an additional aggregate $2.5 million (“Tranche 2b”) from Avenue Capital Group, subject to FDA approval of DrugSorb-ATR, between January 1, 2026 and December 31, 2026.

Tranche 2a and Tranche 2b, in the aggregate, replace Tranche 2 of the original loan.

The Amended Loan and Security Agreement requires that the Company maintain certain operating cash burn targets (as defined in the Amended Loan and Security Agreement) prior to FDA approval of DrugSorb-ATR and also provides for a further six-month extension of the interest only period to the July 1, 2027 maturity date upon FDA approval of DrugSorb-ATR.

● On November 13, 2025, the Company announced it initiated a strategic workforce and cost reduction plan (the “Strategic Workforce and Cost Reduction Plan”) to reduce costs, optimize operations, and accelerate a path to cash-flow profitability.

This initiative follows a comprehensive review of the Company’s cost structure and operating model.

As part of the Strategic Workforce and Cost Reduction Plan, the Company reduced its workforce by approximately 10%, reduced and realigned operating and production expenses, and now expects that the Company will reach operating cash flow break-even in the first quarter of 2026.

The Company expects to record a charge of up to $0.9 million that will include severance and other cash and non-cash charges related to the restructuring.

The estimated costs that the Company expects to incur, and the timing thereof, are subject to a number of assumptions, and actual amounts may differ materially.

Results of Operations:

Comparison for the three months ended June 30, 2025 and 2024:

Three Months Ended June 30,

Comparison for the three months ended September 30, 2025 and 2024:

Three Months Ended September 30,

(in thousands)

10 unchanged sentences

Total other income (expense), net

Income (Loss) before benefit from income taxes

For the three months ended June 30, 2025, we generated total revenue of approximately $9.6 million, an increase of approximately $0.8 million, or 8.8%, as compared to revenues of approximately $8.8 million for the three months ended June 30, 2024.

Revenue growth was led by strength in our direct German and International territories compared to lower performance in the second quarter of 2024 and the first quarter of 2025.

Loss before benefit from income taxes

For the three months ended September 30, 2025, we generated total revenue of approximately $9.5 million, an increase of approximately $0.9 million, or 10.1%, and 3.8% on a constant currency basis, as compared to revenues of approximately $8.6 million for the three months ended September 30, 2024.

Revenue growth was led by strength in our distributor and strategic partner sales and direct sales outside of Germany, partially offset by lower revenue in our direct German market.

The Company began a proactive reorganization and strategic realignment of our German commercial team and sales approach in the first quarter of 2025.

We are making steady progress with this important initiative and are pleased with this initial improvement in our second quarter of 2025, and remain confident it will lead to stronger execution and improved performance in Germany and our financial results overall this year.

Gross profit was approximately $6.8 million for the three months ended June 30, 2025, an increase of approximately $0.3 million, or 4.8%, as compared to gross profit of $6.5 million for the three months ended June 30, 2024.

Gross margins were 70.9% and 73.5% for the three months ended June 30, 2025 and 2024, respectively.

The decrease in gross margin was primarily due to the write - off of inventory of $0.1 million which had a negative impact on gross margin of 1.5%.

We are making steady progress with this important initiative and are tracking to expectations through the third quarter of 2025, and remain confident it will lead to stronger execution and improved performance in Germany and our financial results overall into next year.

Gross profit was approximately $6.7 million for the three months ended September 30, 2025, an increase of approximately $1.4 million, or 26.8%, as compared to gross profit of $5.2 million for the three months ended September 30, 2024.

Gross margins were 70.3% and 61.0% for the three months ended September 30, 2025 and 2024, respectively.

Prior year gross margins were negatively impacted by a planned reduction in units production to rebalance inventory levels, coupled with a short-term manufacturing issue which was resolved in the third quarter of last year and resulted in significantly lower number of CytoSorb devices produced in the quarter.

Research and Development Expenses

Our research and development costs were approximately $1.3 million and $1.5 million for the three months ended June 30, 2025 and 2024, respectively, a decrease of approximately $0.3 million, or 16.9%.

This decrease was driven by a decrease in our clinical trial costs due to the completion of the STAR-T clinical trial, and other payroll and project-related cost reductions.

Our research and development costs were approximately $0.9 million and $1.8 million for the three months ended September 30, 2025 and 2024, respectively, a decrease of approximately $0.9 million, or 49.7%.

This decrease was driven by a decrease in our clinical trial costs due to the completion of the STAR-T clinical trial, the reduction of grant funded projects, and other payroll and project-related cost reductions.

Selling, General and Administrative Expenses

Our selling, general and administrative expenses were approximately $9.2 million and $8.6 million for the three months ended June 30, 2025 and 2024, respectively, an increase of approximately $0.6 million, or 7.2%.

This increase was mainly due to higher legal, financial and consulting costs of $0.5 million and net other compensation expenses of $0.1 million, partially offset by lower royalty expenses of and $0.2 million.

The decrease in royalty expense was the result of the expiration of a 4% royalty in August of 2024.

Our selling, general and administrative expenses were approximately $8.6 million and $8.3 million for the three months ended September 30, 2025 and 2024, respectively, an increase of approximately $0.3 million, or 4.2%.

The increase is primarily due to costs associated with the regulatory submission and anticipated commercial approval and launch of DrugSorb-ATR in North America, partially offset by lower non-cash stock comp and other compensation costs, and lower royalty expense as a result of the expiration of a 4% royalty in August of 2024.

Gain (Loss) on Foreign Currency Transactions

For the three months ended June 30, 2025, the gain on foreign currency transactions was approximately $6.2 million, as compared to a loss on foreign currency transactions of approximately $0.5 million for the three months ended June 30, 2024.

The gain was directly related to the increase in the spot exchange rate of the Euro to the U.S.

dollar as of June 30, 2025 to $1.17 per Euro from $1.08 at March 31, 2025.

The prior year loss was directly related to the decrease in the spot exchange rate of the Euro to the U.S.

dollar as of June 30, 2024, to $1.07 per Euro from $1.08 per Euro at March 31, 2024.

For the three months ended September 30, 2025, the loss on foreign currency transactions was approximately $0.1 million, as compared to a gain on foreign currency transactions of approximately $2.7 million for the three months ended September 30, 2024.

The loss was directly related to the slight decrease in the spot exchange rate of the Euro to the U.S.

dollar as of September 30, 2025 compared to June 30, 2025.

The prior year gain was directly related to the increase in the spot exchange rate of the Euro to the U.S.

dollar as of September 30, 2024, to $1.11 per Euro from $1.07 per Euro at June 30, 2024.

Loss From Operations

Our loss from operations was flat at approximately $3.6 million for each of the three months ended June 30, 2025 and 2024.

Comparison for the six months ended June 30, 2025 and 2024:

Six Months Ended June 30,

Our loss from operations decreased by 40.7% to approximately $2.9 million, from $4.8 million for the nine months ended September 30, 2025, and 2024, respectively.

This improvement was primarily the result of a 5.5% reduction in operating expenses year over year, and the increase in gross profit.

Comparison for the nine months ended September 30, 2025 and 2024:

Nine Months Ended September 30,

(in thousands)

10 unchanged sentences

Total other income (expense), net

Income (loss) before benefit from income taxes

For the six months ended June 30, 2025, we generated total revenue of approximately $18.3 million, an increase of approximately $0.5 million, or 2.9%, and 1.8% on a constant currency basis, as compared to revenues of approximately $17.8 million for the six months ended June 30, 2024.

Revenue growth was led by strength in our direct German and International territories compared to lower performance in the second quarter of 2024 and the first quarter of 2025.

Loss before benefit from income taxes

For the nine months ended September 30, 2025, we generated total revenue of approximately $27.8 million, an increase of approximately $1.4 million, or 5.2%, and 2.2% on a constant currency basis, as compared to revenues of approximately $26.4 million for the nine months ended September 30, 2024.

Revenue growth was led by strength in our other direct European territories, and distributors and strategic partner sales, and partially offset by a decrease in revenue in our direct German market.

The Company began a proactive reorganization and strategic realignment of our German commercial team and sales approach in the first quarter of 2025.

We are making steady progress with this important initiative, and are pleased with this initial improvement in our second quarter of 2025, and remain confident it will lead to stronger execution and improved performance in Germany and our financial results overall this year.

Gross profit was approximately $13.0 million for the six months ended June 30, 2025, a decrease of approximately $0.4 million, or 2.7%, as compared to gross profit of $13.4 million for the six months ended June 30, 2024.

Gross margins were 71.0% and 75.0% for the six months ended June 30, 2025 and 2024, respectively.

The decrease in gross margin was primarily due to a 8.9% reduction in the number of units produced, and the write-off of inventory of $0.3 million which had a negative impact on gross margin of 1.4%.

Gross profit was approximately $19.7 million for the nine months ended September 30, 2025, an increase of approximately $1.1 million, or 5.7%, as compared to gross profit of $18.6 million for the nine months ended September 30, 2024.

Gross margins were 70.7% and 70.5% for the nine months ended September 30, 2025 and 2024, respectively.

Research and Development Expenses

Our research and development costs were approximately $2.9 million and $3.8 million for the six months ended June 30, 2025 and 2024, respectively, a decrease of approximately $0.8 million, or 22.4%.

This decrease was driven by a decrease in our clinical trial costs due to the completion of the STAR-T clinical trial, and other payroll and project-related cost reductions.

Our research and development costs were approximately $3.8 million and $5.6 million for the nine months ended September 30, 2025 and 2024, respectively, a decrease of approximately $1.8 million, or 31.3%.

This decrease was driven by a decrease in our clinical trial

costs due to the completion of the STAR-T clinical trial, lower grant funded projects, and other payroll and project-related cost reductions.

Selling, General and Administrative Expenses

Our selling, general and administrative expenses were approximately $17.6 million and $17.8 million for the six months ended June 30, 2025 and 2024, respectively, a decrease of approximately $0.2 million, or 1.3%.

This decrease was mainly due to decreases in stock-based compensation and royalty expenses of $0.9 million and $0.7 million, respectively, which was partially offset by increases in legal, financial and consulting costs of $0.5 million, and net other compensation expenses of approximately $0.6 million.

The decrease in royalty expense was the result of the expiration of a 4% royalty in August of 2024.

Our selling, general and administrative expenses were approximately $26.2 million and $26.1 for the nine months ended September 30, 2025 and 2024, respectively, an increase of approximately $0.1 million, or 0.4%.

This increase was mainly due to increases in legal, regulatory, financial and consulting costs including costs associated with our 2024 audited financial statements, as well as regulatory filings and initial costs associated with the anticipated approval and commercial launch of DrugSorb-ATR in North America, partially offset by decreases in stock-based compensation expense, and royalty expenses.

The decrease in stock-based compensation expense was primarily related to the full vesting of certain stock options in earlier periods and the decrease in royalty expense was the result of the expiration of a 4% royalty in August of 2024.

Gain (Loss) on Foreign Currency Transactions

For the six months ended June 30, 2025, the gain on foreign currency transactions was approximately $9.2 million, as compared to a loss on foreign currency transactions of approximately $2.0 million for the six months ended June 30, 2024.

For the nine months ended September 30, 2025, the gain on foreign currency transactions was approximately $9.1 million, as compared to a gain on foreign currency transactions of approximately $0.7 million for the nine months ended September 30, 2024.

The gain was directly related to the increase in the spot exchange rate of the Euro to the U.S.

dollar as of June 30, 2025 to $1.17 per Euro from $1.03 per Euro at December 31, 2024.

The prior year loss was directly related to the decrease in the spot exchange rate of the Euro to the U.S.

dollar as of June 30, 2024, to $1.07 per Euro from $1.11 per Euro at December 31, 2023.

dollar as of September 30, 2025 to $1.17 per Euro from $1.03 per Euro at December 31, 2024.

The prior year gain was directly related to the increase in the spot exchange rate of the Euro to the U.S.

dollar as of September 30, 2024, to $1.11 per Euro from $1.10 per Euro at December 31, 2023.

Loss From Operations

Our loss from operations decreased by 9.4% to approximately $7.5 million, from $8.2 million for the six months ended June 30, 2025, and 2024, respectively.

This improvement was primarily the result of a 5.0% reduction in operating expenses year over year, partially offset by the decrease in gross profit.

Our loss from operations decreased by 20.6% to approximately $10.4 million, from $13.1 million for the nine months ended September 30, 2025, and 2024, respectively.

This improvement was primarily the result of a 5.2% reduction in operating expenses year over year, and the increase in gross profit.

Liquidity and Capital Resources

Since inception, our operations have been primarily financed through the issuance of debt and equity securities.

As of June 30, 2025, we had current assets of approximately $23.0 million and current liabilities of approximately $9.8 million.

As of September 30, 2025, we had current assets of approximately $21.3 million and current liabilities of approximately $12.6 million.

Effective Shelf Registration

We have an effective shelf registration statement dated September 30, 2024 with the SEC which enables us to raise up to $150 million in one or more offerings, through the issuance and sale of any combination of equity securities, debt securities, warrants and units.

Approximately $149.7 million of this amount was available as of June 30, 2025.

Approximately $149.7 million of this amount was available as of September 30, 2025.

We have also allocated $20 million of our total shelf amount to our ATM facility.

At June 30, 2025, approximately $19.4 million was available for use under the ATM facility.

At September 30, 2025, approximately $19.4 million was available for use under the ATM facility.

During the nine months ended September 30, 2025, we did not raise any proceeds under the ATM facility.

Loan and Security Agreement

On June 28, 2024 (the “Closing Date”), the Company entered into a Loan and Security Agreement with the Avenue Capital Group (“Loan”).

Avenue Capital Group agreed to loan the Company up to an aggregate of $20 million (the “Avenue Capital Commitment”), to be disbursed in two tranches.

The first tranche of $15.0 million (“Tranche 1”), consists of $10.0 million which was available to the Company on the Closing Date and $5.0 million constitutes restricted cash, which was released from its restriction on January 10, 2025, as the following conditions were achieved:

(i) the FDA has accepted Company’s application for review with respect to DrugSorb-ATR De Novo 510(k) and (ii) the Company has received a minimum of $3.0 million in net proceeds from the sale of its equity securities after the Closing Date.

The restriction was released on a dollar-for-dollar basis for equity raised between $3.0 million and $5.0 million.

The second tranche (“Tranche 2”) consists of $5.0 million, which may be disbursed at the Company’s request between July 1, 2025 and December 31, 2025, provided that the Company receives FDA marketing approval of its DrugSorb-ATR application.

The proceeds from the Avenue Capital Commitment were used to pay off the existing outstanding debt with Bridge Bank and will additionally be used for working capital purposes and to fund general business requirements.

Amounts borrowed under the Avenue Capital Commitment shall bear interest at a variable rate per annum equal to the greater of (A) the Prime Rate plus five percent (5.00%) or (B) thirteen and one-half percent (13.50%).

The loan requires interest-only payments for the first 24 months through July 1, 2026, followed by equal monthly

installments of principal plus accrued and unpaid interest until maturity, on July 1, 2027;

provided, however that if the Company draws the full amount of Tranche 2 by December 31, 2025, and achieves for the trailing six month period ended June 30, 2026, at least $25 million of revenue, (the Interest only Milestone as defined in the Loan), the Interest only Period will be extended by six months to January 1, 2027, followed by equal monthly installments of principal plus accrued and unpaid interest through January 1, 2028.

On November 13, 2025, the Company and Avenue Capital Group entered into the Amended Loan and Security Agreement, amending the Company’s Loan and Security Agreement, dated June 28, 2024, as supplemented.

Tranche 2a and Tranche 2b, in the aggregate, replace Tranche 2 of the Avenue Capital Commitment.

On October 22, 2024, the Company announced that the FDA had accepted its application of DrugSorb-ATR, which was one of the two conditions required by the restricted cash debt covenant.

Proceeds from the Rights Offering on January 10, 2025 satisfied the second condition of the debt covenant which now allows for the $5.0 million of restricted cash on the Company’s consolidated balance sheets to become unrestricted, and available for use.

Rights Offering

On January 10, 2025, the Company closed the subscription period of its previously announced rights offering (the “Rights Offering”), raising aggregate gross proceeds of $6.25 million ($5.4 million net of fees) from the sale of all 6.25 million Units reserved for the Rights Offering.

5 unchanged sentences

On June 11, 2025, the 5-day volume weighted average price of Common Stock over the last five-trading days prior to June 10, 2025 was lower than the minimum required price of $2.00 and, as a result, the Series B Right Warrants issued in connection with the previously announced Rights Offering expired worthless pursuant to their terms.

We are also proactively managing our resources with a focus on driving commercial success, investing in key areas such as our regulatory submissions of DrugSorb-ATR to the FDA and Health Canada and the development of clinical data.

We have also instituted and continue to maintain tight control over expenditures and have lowered our spending over the past year.

As of June 30, 2025, we had approximately $11.7 million in cash, including approximately $10.2 million in unrestricted cash and cash equivalents and $1.5 million of non-current restricted cash, which raises substantial doubt about the Company’s ability to continue as a going concern.

Resource Allocation and Path to Cash-Flow Profitability

We proactively manage our resources with a focus on driving commercial success, investing in key areas such as our regulatory submissions of DrugSorb-ATR to the FDA and Health Canada and the development of clinical data.

We have instituted and continue to maintain tight control over expenditures and have lowered our spending over the past year.

Further, on November 13, 2025, the Company announced it initiated a Strategic Workforce and Cost Reduction Plan to reduce costs, optimize operations, and accelerate a path to cash-flow profitability.

This initiative follows a comprehensive review of the Company’s cost structure and operating model.

The Company expects to record a charge of up to $0.9 million that will include severance and other cash and non-cash charges related to the restructuring.

The estimated costs that we expect to incur, and the timing thereof, are subject to a number of assumptions, and actual amounts may differ materially.

As of September 30, 2025, we had approximately $9.1 million in cash, including approximately $7.6 million in unrestricted cash and cash equivalents and $1.5 million of non-current restricted cash.

These cash and restricted cash balances considered with our historical cash used in operations, notwithstanding our Strategic Workforce and Cost Reduction Plan and the impact of the Amended Loan and Security Agreement both of which were announced on November 13, 2025, raises substantial doubt about the Company’s ability to continue as a going concern within twelve months after the date that the accompanying condensed consolidated financial statements are issued.

On a proforma-basis, giving effect to the impact of receiving the additional $2.5 million from Tranche 2(a) of the Amended Loan and Security Agreement, as if it had occurred on September 30, 2025, our total cash balance would have been $11.6 million, including $10.1 million in unrestricted cash and cash equivalents and $1.5 million of non-current restricted cash.

As of September 30, 2025, the total amount of debt drawn under our Loan and Security Agreement was $15.0 million.

On a proforma basis, giving effect to the impact of receiving the additional $2.5 million from Tranche 2 (a) of the Amended Loan and Security Agreement, as if it had occurred on September 30, 2025, our total debt drawn would have been $17.5 million.

Our expected future capital requirements may depend on many factors, including expanding our customer base and sales force, the timing and extent of spending in obtaining regulatory approval and introduction of new products, including the potential regulatory approval and introduction of DrugSorb-ATR in the U.S.

and Canada which decisions are expected in 2025, our ability to successfully appeal the denial letter received from the FDA, relating to our De Novo Request for DrugSorb-ATR, and the related opportunity to receive Tranche 2 of Avenue Capital Commitment by December 31, 2025 and achieve the Interest-Only Milestone of the Avenue Capital Commitment and extend the interest-only period by six months to January 1, 2027.

which decision is now expected in mid-2026, and the related opportunity to receive Tranche 2b of the Amended Avenue Capital Commitment by December 31, 2026.

Additional sources of liquidity available to us include the 2024 Shelf, other public or private equity offerings, debt financing or from other sources.

1 unchanged sentence

There is no assurance that we will be able to secure funding on terms acceptable to us, or at all.

The increasing need for capital could also make it more difficult to obtain funding through either equity or debt.

Although the Company has taken actions to achieve cash flow breakeven, if it does not achieve this goal, the potential increased need for capital could also make it more difficult to obtain funding through either equity or debt.

Should additional capital not become available to us as needed, we may be required to take certain actions, such as slowing sales and marketing expansion, delaying further regulatory approvals, or reducing headcount.

2 unchanged sentences

There can be no assurance that management will be successful in these endeavors.

Loan and Security Agreement

On June 28, 2024 (the “Closing Date”), the Company entered into a Loan and Security Agreement with the Avenue Capital Group.

Avenue Capital Group agreed to loan the Company up to an aggregate of $20 million, to be disbursed in two tranches:

(1) one tranche of $15 million (“Tranche 1”), of which $10 million is available to the Company on the Closing Date and $5 million which remained classified as restricted cash through January 10, 2025, when it was released from its restriction as the following conditions were met:

(i) the FDA has accepted Company’s application for review with respect to DrugSorb-ATR De Novo 510(k) and (ii) the Company has received a minimum of $3 million in net proceeds from the sale of its equity securities after the Closing Date.

A second tranche of up to $5 million, may be disbursed at the Company’s request between July 1, 2025 and December 31, 2025, provided that the Company receives FDA marketing approval of its DrugSorb-ATR application (“Tranche 2” and together with Tranche 1, the “Avenue Capital Commitment”).

All unpaid principal and accrued and unpaid interest shall be due and payable in full by the maturity date.

If the 2nd tranche is fully funded by December 2025, and the Company achieves the Interest-Only Milestone of the Avenue Capital Commitment, the maturity date is January 1, 2028;

otherwise, the maturity date is July 1, 2027.

Commencing on August 1, 2024, the Company makes monthly interest only payments during the initial 25-month period following the Closing Date, followed by equal monthly installments through the maturity date consisting of principal plus accrued and unpaid interest, unless otherwise extended by six months upon achievement of the Interest-Only Milestone.

On October 22, 2024, the Company announced that the FDA had accepted its application of DrugSorb-ATR, which was one of the two conditions required by the restricted cash debt covenant.

The Company believes these items can be most effectively and expeditiously resolved through the formal appeal process.

In July, the Company participated in an appeal hearing with the FDA for supervisory review (administrative appeal) under 21 CFR 10.75.

The appeal hearing included FDA senior leadership, Company management and our external surgical experts.

For further discussion regarding the Loan Agreement please see Long Term Debt note to our Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report on Form 10-Q.

On September 16, 2025, the Company announced that it would file a new De Novo application for DrugSorb-ATR with the FDA.

This decision followed an appeal meeting and decision by the FDA to uphold its previous denial of the Company’s original DrugSorb-ATR application, but affirmed that there were no safety related issues with the device, and requested additional information to support the Company’s desired label indication.

As part of the resubmission process, the Company filed a pre-submission meeting request with supporting documentation to the FDA on November 7, 2025.

A formal meeting with the FDA is anticipated in either late fourth quarter of 2025, or early 2026 to confirm the requirements for the new De Novo submission.

A standard regulatory decision is expected in mid-2026 following a typical 150-day review process.

For further discussion regarding the Loan and Security Agreement, and Amended Load and Security Agreement please see Note 6, “Long Term Debt” and Note 10, “Subsequent Events” to our Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report on Form 10-Q.

Critical Accounting Policies and Estimates

8 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis