Item 1A. Risk Factors
Item 1A. Risk Factors.
Our business, financial condition and operating results can be affected by a number of factors, whether currently known or unknown, including but not limited to those described as risk factors, any one or more of which could, directly or indirectly, cause our actual operating results and financial condition to vary materially from past, or anticipated future, operating results and financial condition. For a discussion of these potential risks and uncertainties, see Part I, Item 1A. “Risk Factors” of our 2025 Annual Report. Any of these factors, in whole or in part, could materially and adversely affect our business, financial condition, operating results and the price of our common stock. Except as set forth below, there have been no material changes in our risk factors from those included in our 2025 Annual Report:
The sale of our SimpliDerm Business may not be completed within the expected timeframe, or at all, and the failure to complete the transaction could adversely affect our business, our financial condition and the market price of our stock.
On July 16, 2026, we entered into an Asset Purchase Agreement (the “SimpliDerm APA”) to sell our SimpliDerm Business to Cellution Biologics Inc. (the “Disposition”). The consummation of the Disposition is subject to closing conditions, including, among others, (i) the accuracy of representations and warranties set forth in the SimpliDerm APA (subject to customary materiality qualifiers), (ii) the absence of any Material Adverse Effect (as defined in the SimpliDerm APA) with respect to the SimpliDerm Business, (iii) material compliance with covenants set forth in the SimpliDerm APA, (iv) the execution and delivery of certain related ancillary documents, (v) no termination or material impairment of assumed or shared contracts, (vi) resolution of certain supply related matters, and (vii) certain other conditions set forth in the SimpliDerm APA. Subject to the satisfaction or waiver of the conditions to the closing of the Disposition, the Company expects the Disposition to occur in the third quarter of 2026. However, we cannot predict when or if these conditions will be satisfied. There can be no assurance that our business, our relationships or our financial condition will not be adversely affected, as compared to the condition prior to the announcement of the Disposition, if the Disposition is not consummated in a timely matter, or at all. If the Disposition is not completed, our directors, executive officers and other employees will have expended time and effort and experienced distractions from their work during the pendency of the Disposition and we will have incurred third-party transaction costs, in each case, without any commensurate benefit, which may have a material and adverse effect on our stock price, financial condition and results of operations.
Even if the Disposition is completed, the amount of net proceeds that we will receive from the Disposition will be subject to uncertainties .
The amount of net proceeds that we will receive from the Disposition is subject to uncertainties. The SimpliDerm APA provides for aggregate consideration payable to us of up to $11 million, consisting of: (i) a base purchase price of $8 million in cash, payable at closing of the transaction, subject to adjustment for any inventory shortfall; (ii) a contingent payment of up to $2 million, payable upon completion of certain technology transfer and manufacturing transition milestones within an 18-month period following the closing of the transaction, subject to reduction for sales shortfalls against monthly SimpliDerm sales targets during such transition period (the “Milestone Payments”); and (iii) contingent payments of up to $1 million, in the aggregate, in the form of earn-out payments, payable for any four of the first five quarters following the closing of the transaction in which SimpliDerm sales exceed a specified quarterly revenue target (the “Earn-Out Payments”). However, there can be no assurance that these technology transfer and manufacturing transition milestones will be achieved, or that these revenue targets will be met, on a timely basis. Accordingly, we may not receive a portion, or any of, the contingent Milestone Payments and/or contingent Earn-Out Payments following the Disposition. In addition, following the Disposition, if Cellution successfully asserts claims against us pursuant to the
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SimpliDerm APA, the amount of net proceeds may be subject to further reduction. We may also have unforeseen liabilities and expenses that must be satisfied from the after-tax net proceeds of the Disposition. As a result, the amount of the net proceeds from the Disposition is subject to substantial uncertainty, and it is possible that the net proceeds from the Disposition will be materially less than we expect.
Even if the Disposition is completed, we may not realize some or all of the anticipated benefits of the sale of our SimpliDerm Business .
We may not be able to achieve the full strategic and financial benefits expected to result from the sale of our SimpliDerm Business, or such benefits may be delayed or not occur at all. Our ability to realize the anticipated benefits of the Disposition will depend significantly on our ability to successfully develop, commercialize and grow our drug-eluting biomatrix (“DEB”) platform. In addition, some of the anticipated benefits may not occur for a significant time period following the completion of the Disposition. If our strategy is not successful and does not achieve our expectations over the long term, our business, financial condition and results of operations may be adversely affected and the price of our stock could decline.
If the Disposition is completed, our future results of operations, which will be solely dependent on our ability to successfully develop, commercialize and grow our drug-eluting biomatrix platform and on the operations of our Cardiovascular segment, may differ materially from our previous results.
The SimpliDerm Business generated approximately 61% of our aggregate revenue for the first six months of 2026, and approximately 81% of our aggregate revenue for the first six months of 2025. Accordingly, our future financial results may differ from our previous results since our future financial results will be dependent solely (i) on our ability to successfully develop, commercialize and grow our drug-eluting biomatrix platform and (ii) on the existing operations of our Cardiovascular segment. In addition, as we have previously announced, we are also exploring the potential divestiture of our Cardiovascular product line.
As we have previously disclosed, following the sale of the CIED Business, we are focused on advancing our DEB platform. Our lead development programs in our DEB platform comprise NXT 41, a next-generation biologic matrix, and NXT-41x, which builds on the NXT-41 matrix by incorporating local antibiotic delivery. However, we have not yet received FDA clearance for either NXT-41 or NXT-41x. Moreover, there is no guarantee that the FDA approvals we may seek will be granted on a timely basis, or at all, or that other actions or approvals are not required. If we fail to successfully develop, commercialize, market and sell NXT-41x, the Company’s business and financial condition may be materially adversely affected.
We may not be able to maintain a listing of our Class A common stock on the Nasdaq Capital Market .
Because our Class A common stock is listed on the Nasdaq Capital Market, we must meet certain financial and liquidity criteria to maintain such listing. On August 6, 2026, we received a letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”), notifying us that, for the last 30 consecutive business days, the closing bid price for our Class A common stock, par value $0.001 per share (the “Common Stock”), was below $1.00 per share, which is the minimum closing bid price (the “Minimum Bid Price”) required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Notice”). We were provided a compliance period of 180 calendar days from the date of the Notice, or until February 2, 2027 (the “Compliance Period”), to regain compliance with the Minimum Bid Price requirement. As of the date of this filing, we have not had a closing bid price over $1.00 and there can be no assurance that we will regain compliance with the Minimum Bid Price requirement prior to the end of the Compliance Period or that we will otherwise maintain compliance with any of the other Nasdaq listing requirements.
If we do not regain compliance during the Compliance Period, we may be eligible for an additional 180-calendar day period to regain compliance with the Minimum Bid Price, provided that we meet the applicable market value of publicly held shares requirement for continued listing and all other applicable standards for initial listing on The Nasdaq Capital Market (except the Minimum Bid Price requirement), and notify Nasdaq of our intent to cure the deficiency by effecting a reverse stock split of our Common Stock, if necessary. If Nasdaq determines that we are not eligible for an
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additional 180 calendar days compliance period or we will not be able to cure the deficiency with the Minimum Bid Price requirement within the allotted compliance period, the Common Stock will be subject to delisting.
We will continue to actively monitor the closing bid price of our Common Stock and will evaluate available options, including, without limitation, seeking to effect a reverse stock split, in order to resolve the deficiency and regain compliance with the Minimum Bid Price requirement. However, if we fail to regain compliance with the Minimum Bid Price requirement, or otherwise violate or fail to meet any Nasdaq listing requirements, our Common Stock may be delisted. A delisting of our Common Stock from Nasdaq may materially impair our stockholders’ ability to buy and sell our Common Stock and could have an adverse effect on the market price of, and the efficiency of the trading market for, our Common Stock. In the event our Common Stock is delisted from Nasdaq, the delisting of our Common Stock could significantly impair our ability to raise capital and stockholder value.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.