What changed in this filing

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Item 1A. Risk Factors

2025-03-11 compared with 2024-03-11 · 131 added, 153 removed, 1105 unchanged (20% of the section changed)

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Risks Related to Our Business

We have incurred operating losses and may continue to do so for the near-term future, and we cannot assure you that we will be able to generate sufficient revenue to achieve or sustain profitability.

Our future results depend upon our ability to successfully commercialize, market and sell our newly approved EluPro antibacterial envelope device and the success of a smaller suite of established products than has historically been the case.

The Company has focused much of its attention recently on EluPro, which was cleared for marketing by the U.S.

Food and Drug Administration (“FDA”) in June 2024 and is indicated for use with implantable electronic devices including cardiac and neurostimulator devices.

We believe the Company’s success is highly dependent on the successful commercialization, marketing and sale of EluPro, as well as the extension of our drug-eluting biomatrix (“DEB”) technology into potential adjacent applications.

Alongside EluPro, we continue to market the CanGaroo bioenvelope, our first generation product, which uses the same biomatrix but does not contain antibiotics.

Our Device Protection products, EluPro and CanGaroo, are sold through both our internal sales force and independent sales agents and our commercial

partner, Boston Scientific Corporation.

We believe the commercialization and marketing efforts with respect to EluPro will require significant investments in time and resources.

However, there can be no assurance that we will have or be able to obtain sufficient resources to make the necessary investments in order to increase the sales and market penetration for EluPro, or that if made, such investments will yield the results sought.

If we fail to successfully commercialize, market and sell EluPro, the Company’s business and financial condition may be materially adversely affected.

On November 8, 2023, we sold our Orthobiologics Business for consideration of $14.6 million up front, as adjusted, and up to $20 million payable in the form of earn-out payments over the five years following the closing.

The purchaser did not assume any liabilities related to the FiberCel or VBM Recalls, or any claims or lawsuits related thereto.

Our former Orthobiologics segment accounted for 52% and 39% of our consolidated net sales and gross profit, respectively in the year ended December 31, 2022.

Our future results depend on the success of our Device Protection, Women’s Health and Cardiovascular businesses.

There can be no guarantee, however, that we will be able to increase the sales or profitability of the remaining businesses sufficiently to replace or exceed the financial contribution from the Orthobiologics Business.

Our enhanced reliance in the wake of the disposition of the Orthobiologics Business on a smaller suite of existing products and on future products may pose risks to the Company’s growth.

If the financial contribution from remaining legacy products and other DEB products fail to replace lost contribution from the Orthobiologics Business, or otherwise fail to meet expectations, the Company’s business and financial condition may be materially adversely affected.

We have incurred operating losses and may continue to do so in the near-term, and we cannot assure you that we will be able to generate sufficient revenue to achieve or sustain profitability.

For the years ended December 31, 2024 and 2023, we had net losses of $53.9 million and $37.7 million, respectively.

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Our ability to achieve profitability will depend on our ability to generate sales from existing or new products sufficient to exceed our ongoing operating expenses and capital requirements.

Because of the numerous risks and uncertainties affecting product sales and our ongoing commercialization and product development efforts, including our ability to obtain FDA clearance for the next generation of our flagship CanGaroo product, CanGarooRM, we are unable to predict with any certainty whether we will be able to increase sales of our products or the timing or amount of ongoing expenditures we will be required to incur.

Because of the numerous risks and uncertainties affecting product sales and our ongoing commercialization and product development efforts, including our ability to commercialize our flagship Device Protection product, EluPro, we are unable to predict with any certainty whether we will be able to increase sales of our products or the timing or amount of ongoing expenditures we will be required to incur.

Sales of our products, as well as meaningful reductions, suspensions or discontinuations of such sales, may not offset our operating expenses.

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We have incurred net losses since our inception in 2015.

For the year ended December 31, 2023, we had net losses of $37.7 million and as of December 31, 2023, we had an accumulated deficit of $175.6 million.

For the year ended December 31, 2024, we had a net loss of $53.9 million and as of December 31, 2024, we had an accumulated deficit of $229.6 million.

To date, we have financed our operations primarily through amounts borrowed under our credit facilities, sales of our products, proceeds from offerings and sales of our common stock and more recently, through the sale of our Orthobiologics Business.

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As a result, we anticipate that we will need additional funding to support our continuing operations and pursue our growth strategy.

In order to mitigate the current and potential future liquidity issues, we may seek to raise capital through the issuance of common stock or pursue asset sale or licensing transactions.

However, such transactions may not be successful and we may not be able to raise additional equity or sell or license assets on acceptable terms, or at all.

In order to mitigate the current and potential future liquidity issues caused by the matters noted above, we may seek to raise capital through

the issuance of common stock or pursue asset sales or other transactions, such as the sale of the Orthobiologics Business described above.

However, such transactions may not be successful, and we may not be able to raise additional equity, refinance our debt instruments, or sell assets on acceptable terms, or at all.

As such, there can be no assurance that we will be able to continue as a going concern.

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As of December 31, 2024, we had $23.9 million of indebtedness outstanding, consisting of $23.5 million outstanding under our SWK Loan Facility (as defined under Part II, Item 7.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Credit Facilities”), net of $0.8 million of unamortized discount and deferred financing costs.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Credit Facilities”), plus $0.9 million of exit fee liabilities, less $0.5 million of unamortized discount and deferred financing costs.

In addition, we are party to a royalty agreement with Ligand Pharmaceuticals Incorporated (“Ligand”) pursuant to a long-term obligation to Ligand, which we amended in January 2024 (the “Revenue Interest Obligation”).

The Revenue Interest Obligation requires us to pay Ligand 5.0% of future sales of our CanGaroo, ProxiCor, Tyke and VasCure products, and substantially similar products, through May 31, 2027, subject to annual minimum payments of $4.4 million.

The Revenue Interest Obligation requires us to pay Ligand 5.0% of future sales of our CanGaroo, ProxiCor, Tyke and VasCure products, and substantially similar products, such as EluPro, through May 31, 2027, subject to annual minimum payments of $4.4 million.

See Part II, Item 7.

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If the lender were to terminate either the SWK Loan Facility, the lender may declare all or any portion of these obligations to become immediately due and payable.

Our future results depend upon the success a smaller suite of established products than has historically been the case in the past, and upon the success of our CanGarooRM product, which has not yet been approved for sale.

On November 8, 2023, we sold our Orthobiologics Business for consideration of approximately $14.6 million up front, as adjusted, and up to $20 million payable in the form of earn-out payments over the five years following the closing.

The purchaser did not assume any liabilities related to the FiberCel or VBM Recalls, or any claims or lawsuits related thereto.

Our former Orthobiologics segment accounted for 52% and 39% of our consolidated net sales and gross profit, respectively in the year ended December 31, 2022.

Our future results depend on the success of our Device Protection, Women’s Health and Cardiovascular businesses.

Moreover, the Company has focused much of its attention recently on a version of its established CanGaroo product known as CanGarooRM, a biomatrix that combines the CanGaroo envelope with antibiotics.

CanGarooRM will require FDA clearance of a 510(k) submission to be marketed in the United States.

We submitted the required 510(k) premarket notification in April 2022 and, in March 2023, received a Not Substantially Equivalent letter from FDA requiring us to address questions relating to drug testing.

On December 18, 2023, the Company submitted a 510(k) notification to address the FDA’s questions.

Although the Company anticipates a favorable approval decision in the first half of 2024 and is preparing for a commercial launch of CanGarooRM, there is no assurance that the FDA will approve the new product on our anticipated timeline, or at all.

See the risk factors captioned “ Our long-term growth depends on our ability to enhance our products, expand our product indications and develop, acquire and commercialize additional product offerings ” and “ The regulatory approval, certification and clearance processes of the FDA and comparable foreign authorities and notified bodies are lengthy, time consuming and inherently unpredictable, and if we are ultimately unable to obtain regulatory approval or other marketing authorizations or certifications for our products and product candidates, our business will

be substantially harmed ” below for further information.

Delays and other adverse developments in the approval process for CanGarooRM and other future products may adversely delay or change the Company’s plans and its future success.

Our enhanced reliance in the wake of the disposition of the Orthobiologics Business on a smaller suite of existing products and on future products may pose risks to the Company’s growth.

If the financial contribution from remaining legacy products and the future contribution from planned products like CanGarooRM fail to replace lost contribution from the Orthobiologics Business, or otherwise fail to meet expectations, the Company’s business and financial condition may be materially adversely affected.

We face significant litigation related to FiberCel.

In June of 2021, the Company announced the FiberCel Recall.

Our FiberCel products were included in the sale of our former Orthobiologics Business to Berkeley, but Berkeley did not assume any liabilities related to the FiberCel Recall, our market withdrawal of all of our viable bone matrix products, or any claims or lawsuits related thereto.

We have been named in multiple lawsuits alleging that the plaintiffs contracted tuberculosis and are suffering substantial adverse symptoms following the implantation of FiberCel during spinal fusion operations, which are described in further detail in Part I, Item 3, “Legal Proceedings” and Note 17 to the consolidated financial statements included elsewhere in this Annual Report.

We have incurred and will continue to incur costs to defend these lawsuits.

Furthermore, these proceedings are still expected to continue for the reasonably foreseeable future, and we cannot predict the course the proceedings will take or their ultimate outcome.

As discussed below under “ We face the risk of product liability claims and may not be able to obtain or maintain adequate product liability insurance”, we have recorded a total estimated contingent liability of $15.0 million related to the resolution of all FiberCel lawsuits and claims and have recorded insurance receivables of $2.7 million in respect of our insurance coverage for the FiberCel Recall product liability losses, as well as related legal defense costs incurred as of December 31, 2023.

We face significant litigation related to our FiberCel and Viable Bone Matrix recalls, and have no more insurance coverage on the FiberCel recall.

In June of 2021, we announced our FiberCel Recall and in June 2023, we announced our VBM Recall and the market withdrawal of all of our VBM products produced after a specified date.

Our VBM products, which encompass FiberCel, were included in the sale of our former Orthobiologics Business to Berkeley, but Berkeley did not assume any liabilities related to the FiberCel and VBM Recalls, our market withdrawal of all of our viable bone matrix products, or any claims or lawsuits related thereto.

We have been named in multiple lawsuits alleging that the plaintiffs contracted tuberculosis and are suffering substantial adverse symptoms following the implantation of FiberCel or VBM during spinal fusion or other operations, which are described in further detail in Part I, Item 3, “Legal Proceedings” and Note 17 to the consolidated financial statements included elsewhere in this Annual Report.

As discussed below under “ We face the risk of product liability claims and may not be able to obtain or maintain adequate product liability insurance”, we have recorded a total estimated contingent liability of $20.4 million related to the resolution of all FiberCel and VBM lawsuits, comprised of $15.9 million for FiberCel and $4.5 million for VBM as of December 31, 2024.

While we believe our estimated liability to be reasonable, the actual loss amounts are highly variable and turn on a case-by-case analysis of the relevant facts.

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In addition, this contingent liability excludes the future costs to defend against the lawsuits and claims.

As of December 31, 2023, the estimated contingent liability for FiberCel lawsuits exceeds the FiberCel insurance receivable by $12.3 million and as such, the excess will be our financial responsibility.

The satisfaction of this net obligation and the future costs incurred are expected to have a material adverse effect on our cash flow, results of operations, financial position and prospects.

We face significant risks related to our Viable Bone Matrix recall.

In July 2023, we announced the VBM Recall, a voluntary recall of a single lot of one of our VBM products and the market withdrawal of all of our VBM products produced after a specified date.

Our VBM products were included in the sale of our former Orthobiologics Business to Berkeley, but Berkeley did not assume any liabilities related to the VBM Recall, our market withdrawal of all of our viable bone matrix products, or any claims or lawsuits related thereto.

Notice of the VBM Recall was issued to centers after we learned of post-surgical MTB infections in two patients treated with product from a single donor lot of our VBM product.

Prior to release, samples from this specific lot had tested negative for MTB by an independent laboratory using a nucleic acid test that is designed to specifically detect the MTB organism.

A total of 36 patients were treated with product from the single donor lot.

At present, two lawsuits and 15 claims have been asserted as a result of the VBM Recall.

We have purchased insurance coverage that, subject to common contract exclusions, is expected to provide full coverage for the VBM Recall as well as legal defense costs.

While unknown at this time, possible losses in connection with the VBM Recall could have a material effect on our financial position and results of operations.

As of December 31, 2024, insurance remains available to cover the cost of the VBM liability and related defense costs.

However, conversely, we have no more insurance to cover the cost of the FiberCel liability and the related defense costs as of December 31, 2024.

Because we have exhausted our insurance coverage for this matter, the entire contingent

liability for FiberCel Recall product liability losses is our financial responsibility.

The satisfaction of this obligation and the future costs incurred are expected to have a material adverse effect on our cash flow, results of operations, financial position and prospects.

We face the risk of product liability claims and may not be able to obtain or maintain adequate product liability insurance.

Our business exposes us to the risk of product liability claims that are inherent in the manufacturing, processing, investigating and marketing of medical devices and human and animal tissue products.

For example, within our recently divested Orthobiologics Business, in June 2021, the FiberCel Recall occurred and in July 2023, the VBM Recall

For example, within our recently divested Orthobiologics Business, in June 2021, the FiberCel Recall occurred and in July 2023, the VBM Recall occurred.

S ince September 2021, we have received notice of 110 separate lawsuits or claims related to the FiberCel Recall alleging that the plaintiffs contracted tuberculosis and/or suffered substantial symptoms and complications following the implantation of FiberCel during spinal fusion operations.

As of December 31, 2023, 80 lawsuits or claims related to the FiberCel Recall remain outstanding and unsettled.

Furthermore, with respect to the VBM Recall, we have received notice of two lawsuits and 15 claims, all of which remain unsettled as of December 31, 2023 .

As of December 31, 2024, 66 lawsuits or claims related to the FiberCel Recall and 15 lawsuits and claims related to the VBM Recall remain outstanding .

These lawsuits and claims are described in further detail in See Part II, Item 1, “Legal Proceedings” and Note 17 to the consolidated financial statements included elsewhere in this Annual Report.

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Our product liability insurance is subject to deductibles and coverage limitations, and we may not be able to maintain this insurance.

As of December 31, 2023, we have recorded insurance receivables of $2.7 million on our balance sheet in respect of our insurance coverage for the FiberCel Recall product liability losses with such receivable representing the total remaining insurance coverage for the FiberCel Recall as of that date.

As of December 31, 2023, we have recorded insurance receivables of $0.1 on our balance sheet in respect of our insurance coverage for the VBM Recall.

As described above, our future FiberCel Recall litigation costs and obligations now significantly exceed insurance coverage and are expected to have a material adverse effect on our cash flow and financial position.

As of December 31, 2024, we have exhausted our insurance coverage for the FiberCel Recall product liability losses, meaning the remaining contingent liability estimated at $15.9 million at December 31, 2024 is entirely our financial responsibility.

As of December 31, 2024, we have recorded insurance receivables of $4.8 million on our balance sheet as a loss recovery resulting from our insurance coverage for the VBM Recall.

As described above, our future FiberCel Recall litigation costs and obligations are now fully our financial responsibility and are expected to have a material adverse effect on our cash flow and financial position.

Additionally, it is possible that future claims related to the VBM Recall or other product liability claims could exceed the limits of, or be excluded from, coverage under our policies, and claims against us could also increase the cost of maintaining our coverage.

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Our future capital needs are uncertain and we may need to raise funds in the future, and such funds may not be available on acceptable terms or at all.

Our future capital needs are uncertain and, as such, we may seek to raise additional capital through equity offerings, debt financings, collaborations or other arrangements.

Our future capital needs are uncertain and, as such, we may seek to raise additional capital through equity offerings, debt financings, collaborations or other arrangements to finance our ongoing operations, including our efforts to commercialize, market and sell EluPro, or as all or part of the consideration paid for acquisitions and strategic investments that we may make in the future.

Any future funding requirements will depend on many factors, including, among other things:

● our ability to commercialize, market and sell our newly approved EluPro antibacterial envelope device;

● continued patient, physician and market acceptance of our products;

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Should we have limited access to additional financing sources, we may need to defer capital expenditures or seek other sources of liquidity, which may not be available to us on acceptable terms or at all.

All of these factors related to global economic conditions, which are beyond our control, could adversely impact our business, financial condition, results of operations and liquidity.

All of these factors related to global economic

conditions, which are beyond our control, could adversely impact our business, financial condition, results of operations and liquidity.

Our long-term growth depends on our ability to enhance our products, expand our product indications and develop, acquire and commercialize additional product offerings.

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Developing, acquiring and commercializing products is expensive and time-consuming and could divert management’s attention away from our core business.

Even if we are successful in developing additional

products, the success of any new product offering or enhancements to any of our existing products will depend on several factors, including our ability to:

Even if we are successful in developing additional products, the success of any new product offering or enhancements to any of our existing products will depend on several factors, including our ability to:

● properly identify and anticipate physician and patient needs;

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In addition, our research and development efforts may require a substantial investment of time and resources before we are adequately able to determine the commercial viability of a new product, technology or other innovation.

In March 2023, we received a Not Substantially Equivalent letter from FDA requiring us to address questions relating to drug testing, primarily a request by FDA to modify an in vitro drug release assay employed as a manufacturing control.

In December 2023, we submitted a 510(k) premarket notification to the FDA for our next-generation DEB product, CanGarooRM.

If we are not able to obtain FDA regulatory clearance for this product candidate within our planned timeline, if at all, our ability to commercialize this product and generate sales therefrom will be adversely impacted.

Even if we are successful in obtaining the required regulatory clearance, there can be no assurances that we will be able to achieve market acceptance or that we will able to realize the intended benefits from commercializing this product candidate.

In addition, we will be required to invest additional time and resources to address the outstanding items and provide the additional data requested to FDA, which could divert management’s attention from core business and result in additional research and development expenses.

Even if we are able to successfully develop and commercialize new product offerings or enhancements, they may be quickly rendered obsolete by changing customer preferences or the introduction by our competitors of products embodying new technologies or features and/or otherwise not produce sales in excess of the costs of development, any of

which could also materially and adversely affect our business, financial condition and results of operations.

For instance, on June 14, 2024, we received written notice from the FDA that it had reviewed our premarket notification report filed under Section 510(k) of the Federal Food, Drug and Cosmetic Act of 2022 related to the antibacterial envelope device known during development as CanGarooRM, and now known as EluPro, that the FDA had determined “substantial equivalence” with respect to such device, and that such device may be marketed and sold subject to the general controls provisions of that law.

In order for Elutia to capitalize on such clearance however, the company will have to invest time and resources into commercializing and marketing EluPro in order to increase its sales and market penetration, and to leverage the company’s drug-eluting bioenvelope technology into potential adjacent applications.

These efforts will require significant investments.

There can be no guarantee that Elutia will have or be able to obtain sufficient resources to make the necessary investments, or that if made, such investments will yield the results sought.

Furthermore, to the extent we seek to enhance our products and broaden our product portfolio through acquisitions or other commercial transactions, we will be subject to additional risks.

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On November 8, 2023, we completed the sale of the assets of our former Orthobiologics Business to Berkeley.

In the sale, we received approximately $14.6 million, and we may earn up to an additional $20 million, in the aggregate, in the form of earn-out payments.

In the sale, we received $14.6 million, and we may earn up to an additional $20 million, in the aggregate, in the form of earn-out payments.

The earn-out payments are equal to 10% of the actual revenue earned by Berkeley in each of the five years after the closing of the sale from sales of specified Orthobiologics products under the purchase agreement (including improvements, modifications, derivatives and enhancements related to those products).

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Because we depend upon a limited number of third-party suppliers and manufacturers and, in certain cases, exclusive suppliers for products essential to our business, we may incur significant product development costs and experience material delivery delays if we lose any significant supplier, which could materially and adversely affect our business, financial condition and results of operations.

We obtain some of our raw materials from a limited group of suppliers and, for reasons of quality assurance, cost-effectiveness, availability or constraints resulting from regulatory requirements, we rely on a single supplier, Cook Biotech, to source the SIS ECM biomaterial used to manufacture CanGaroo and our cardiovascular products.

We obtain some of our raw materials from a limited group of suppliers and, for reasons of quality assurance, cost-effectiveness, availability or constraints resulting from regulatory requirements, we rely on a single supplier, Cook, to source the SIS ECM biomaterial used to manufacture EluPro, CanGaroo and our Cardiovascular products.

Additionally, with the sale of our Orthobiologics Business in November 2023 to Berkeley, we no longer operate our former Richmond, California human tissue processing and distribution facility;

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At present, Berkeley is our single source of supply for SimpliDerm, but we are evaluating additional options for supply redundancy.

For us to be successful, our suppliers must be able to provide us with products and components in substantial quantities, in compliance with regulatory requirements, in accordance with agreed upon specifications, at acceptable costs and on a timely basis.

and on a timely basis.

Our efforts to maintain a continuity of supply and high quality and reliability may not be successful on a timely basis or at all.

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This could significantly disrupt our ability to purchase or lease required equipment, supplies, products and components in a cost-effective and timely manner, and could have a material adverse effect on our business, financial condition and results of operations.

Any casualty, natural disaster or other disruption of any of our sole-source suppliers’ operations, for example due to a COVID-19 infection of employees of the supplier, or any unexpected loss of any existing exclusive supply contract, could have a material adverse effect on our business, financial condition and results

of operations.

Any casualty, natural disaster or other disruption of any of our sole-source suppliers’ operations or any unexpected loss of any existing exclusive supply contract could have a material adverse effect on our business, financial condition and results of operations.

In addition, if a change in manufacturer results in a significant change to any product, a new 510(k) clearance from the FDA or similar international regulatory authorization, or certification may be necessary before we implement the change, which could cause substantial delays.

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We currently rely on the efforts of our commercial partners and independent sales agents to generate a substantial portion of our net sales, and we expect to continue to rely on these third parties to generate a substantial portion of our net sales in the future while we work to grow our direct sales force.

For example, we have commercial agreements with major medical device companies, including Boston Scientific, Sientra and LeMaitre Vascular.

For example, we have commercial agreements with major medical device companies, including Boston Scientific, Tiger and LeMaitre Vascular.

As a result, the impairment or termination of these relationships for any reason, or the failure of these parties to diligently sell our products and comply with applicable laws and regulations, has and could in the future materially and adversely affect our ability to generate revenue and profits.

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In addition to the risk of losing customers, the operation of local laws and our agreements with our commercial partners and independent sales agents would make it difficult for us to replace a commercial partner or independent sales agent we believe is underperforming.

We are also subject to the risk that any such commercial partner will experience financial difficulties, or seek protection in bankruptcy.

For example, in February 2024, Sientra reported that it had filed for chapter 11 bankruptcy protection in the Bankruptcy Court for the District of Delaware.

If a commercial partner experiences financial difficulties, that could prevent them from making payments to us on a timely basis or at all, and if a commercial partner seeks bankruptcy protection, our contracts with that partner could be rejected or a purchaser of the partner’s business could elect not to assume our contract.

The loss of one or more significant commercial partners, a material reduction in their purchases of our product or their inability to perform their contractual obligations, including, for example, committed purchase requirements could adversely affect our business, financial condition and results of operations.

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Our competitors have historically dedicated, and will continue to dedicate, significant resources to promote their products and to develop new products that compete with ours.

Customers in our target markets consider

many factors when selecting a product, including product efficacy, ease of use, price, availability of payor coverage and adequate third-party reimbursement for procedures using the product, customer support services for technical-, clinical- and reimbursement-related matters and customer preference for, and loyalty to, particular products or a particular manufacturer.

Customers in our target markets consider many factors when selecting a product, including product efficacy, ease of use, price, availability of payor coverage and adequate third-party reimbursement for procedures using the product, customer support services for technical-, clinical- and reimbursement-related matters and customer preference for, and loyalty to, particular products or a particular manufacturer.

We expect competition to remain intense as competitors introduce additional competing products and enhancements to their existing products, and continue expanding into geographic markets where we currently operate or plan to expand.

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● more effective pricing and revenue strategies.

Our ability to achieve and maintain profitability will depend, in part, on our ability to develop or acquire proprietary products that reach the market in a timely manner, receive adequate coverage and reimbursement for procedures using our products, and are safer and more effective than their alternatives, as well as our ability to otherwise compete effectively on the factors listed above.

procedures using our products, and are safer and more effective than their alternatives, as well as our ability to otherwise compete effectively on the factors listed above.

If we are unable to do so, our sales and/or margins will decrease, which could have a material adverse effect on our business, financial condition and results of operations.

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Medical technology companies, healthcare systems and group purchasing organizations (“GPOs”) have intensified competitive pricing pressure as a result of industry trends and new technologies.

Rising healthcare costs have resulted in numerous cost reform initiatives by legislators, regulators and third-party payors.

The healthcare system is under significant financial pressure to reduce costs, and rising healthcare costs have resulted in numerous cost reform initiatives by legislators, regulators and third-party payors.

This cost reform has triggered a consolidation trend in the healthcare industry to aggregate purchasing power and, as a result, purchasing decisions are increasingly shifting to hospitals, integrated delivery networks (“IDNs”) and other hospital groups, and away from individual surgeons and physicians.

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We manufacture our porcine tissue products using technically complex processes requiring specialized facilities, highly specific raw materials, skill and diligence by our personnel and other production constraints.

The complexity of these processes, as well as strict company and government standards for the manufacture and storage of our products, subject us to production risks.

The complexity of

these processes, as well as strict company and government standards for the manufacture and storage of our products, subject us to production risks.

In addition to ongoing production risks, process deviations or unanticipated effects of approved process changes may result in non-compliance with regulatory requirements, including stability requirements or specifications.

The occurrence of this or any other actual or suspected production or distribution problem can lead to lost

inventory, customer returns and, in some cases, recalls, with consequential damage to our reputation and customer relationships and the risk of product liability.

The occurrence of this or any other actual or suspected production or distribution problem can lead to lost inventory, customer returns and, in some cases, recalls, with consequential damage to our reputation and customer relationships and the risk of product liability.

Product recalls and investigations, and the remediation of any potential or identified problems can cause production delays and result in substantial additional expenses and lost revenue.

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We do not have redundant facilities.

The SIS ECM biomaterial used in our medical device products are manufactured by Cook Biotech at their facility in West Lafayette, Indiana and converted to a finished product at our facility in Roswell, Georgia.

The SIS ECM biomaterial used in our medical device products are manufactured by Cook at their facility in West Lafayette, Indiana and converted to a finished product at our facility in Roswell, Georgia.

Regulatory approvals or certifications of our products are limited to one or more specifically approved manufacturing facilities.

As a result, if we fail to produce enough of a product at a facility, or if any of our production facilities were to be shut down or otherwise become unavailable for any reason, finding alternative manufacturing capabilities and obtaining the necessary regulatory approvals or certifications would require a considerable amount of time and expense and would cause a significant disruption in service to our customers.

Disruption to our facilities could arise for a variety of reasons, including technical, labor or other difficulties, equipment malfunction, contamination due to a COVID-19 infection or otherwise, the failure of our employees to follow specific protocols and procedures, the destruction of, or damage to, any facility (as a result of a natural or man-made disaster, including, but not limited to, a tornado, flood, fire, power outage or other event), quality control issues or other reasons.

Disruption to our facilities could arise for a variety of reasons, including technical, labor or other difficulties, equipment malfunction, contamination, the failure of our employees to follow specific protocols and procedures, the destruction of, or damage to, any facility (as a result of a natural or man-made disaster, including, but not limited to, a tornado, flood, fire, power outage or other event), quality control issues or other reasons.

Any disruption in the operation of our facilities as a result of any of the above could impair our product development and commercialization efforts and result in lost sales, lost customers and harm to our reputation, any of which would negatively impact our growth prospects and profitability and have a material adverse effect on our business, financial condition and results of operations.

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Such contracts often include exceptions for purchasing certain innovative new technologies, however.

Accordingly, the commercial success of our products may also depend to some extent on our ability to either negotiate favorable purchase contracts with key GPOs and/or persuade hospitals and clinics to purchase our product “off contract.”

Accordingly, the commercial success of our products may also depend to some extent on our ability to either negotiate favorable purchase contracts with key GPOs and/or negotiate direct pricing with hospitals and clinics.

The healthcare industry in the United States has experienced a trend toward cost containment as government and private payors seek to control healthcare costs by paying service providers lower rates.

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Quality is extremely important to us and our customers due to the serious and costly consequences of product failure.

Quality and safety issues may occur with respect to any of our products, and our future operating results will

depend on our ability to maintain an effective quality control system and effectively train and manage our workforce with respect to our quality system.

Quality and safety issues may occur with respect to any of our products, and our future operating results will depend on our ability to maintain an effective quality control system and effectively train and manage our workforce with

respect to our quality system.

The development, manufacture and control of our products are subject to extensive and rigorous regulation by numerous government agencies, including the FDA.

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We had two recalls in products formerly distributed through our recently divested Orthobiologics Business – one in June 2021 and one in July 2023.

These recalls had negative effects on our business, financial condition and results of operations and resulted in a number of lawsuits filed against us as discussed under the risk factor “ We face significant litigation related to FiberCel ” included in this Annual Report.

These recalls had negative effects on our business, financial condition and results of operations and resulted in a number of lawsuits filed against us as discussed under the risk factor “We face significant litigation related to our FiberCel and Viable Bone Matrix recalls, and have no more insurance coverage on the FiberCel recall” included in this Annual Report.

Any product recall we or a third-party manufacturer may conduct in the future, whether voluntary or required, could also have a negative impact on our business, financial condition and results of operations, and this effect may be material.

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The inability to recruit or a loss of the services of any executive, key employee or consultant may impede the progress of our research, development, commercialization and sales growth objectives, which could have a material adverse effect on our business, financial condition, results of operations and our ability to grow our business.

Our sales into foreign markets expose us to risks associated with international sales and operations.

Though we have historically focused our market development and commercial activities primarily in the United States, we have obtained marketing registrations, developed commercial and distribution capabilities and are currently selling CanGaroo and our cardiovascular products in several countries outside the United States through commercial partnerships or independent sales agents.

Our international sales subject us to additional risks as compared to those we face in the United States.

The sale and shipment of our products across international borders subject us to extensive U.S.

and foreign governmental trade, import and export and customs regulations and laws, including but not limited to, the Export Administration Regulations, which are administered by the Bureau of Industry and Security (“BIS”) within the Department of Commerce, and economic and trade sanctions, which are administered by the Office of Foreign Assets Control (“OFAC”) within the U.S.

Department of the Treasury.

These regulations limit our ability to market, sell, distribute or otherwise transfer our products or technology to prohibited countries, territories, or persons.

Compliance with these regulations and laws is costly, and failure to comply with applicable legal and regulatory obligations could adversely affect us in a variety of ways that include, but are not limited to, significant criminal, civil and administrative penalties, including imprisonment of individuals, monetary fines, denial of export privileges, seizure of shipments and restrictions on certain business activities.

The failure to comply with applicable legal and regulatory obligations could also result in the disruption of our distribution and sales activities.

These risks may limit or disrupt our sales and commercialization efforts outside the United States, restrict the movement of funds or result in the deprivation of contractual rights or the taking of property by nationalization or expropriation without fair compensation.

Operating in international markets also requires significant management attention and financial support, and, as a result, will divert these resources away from our other operations.

We are subject to anti-bribery, anti-corruption and anti-money laundering laws, including the U.S.

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As our international operations increase, we expect to implement policies and procedures designed to promote compliance by us and our directors, officers, employees, representatives, consultants and agents with the FCPA, the Bribery Act and other anti-corruption laws, as well as economic sanctions and export controls.

We cannot assure you, however, that any such policies and procedures will be sufficient or that directors, officers, employees, representatives, consultants and agents have not engaged, and will not engage, in conduct for which we may be held responsible, nor can we assure you that our business partners have not engaged, and will not engage, in conduct that could materially affect their ability to perform their contractual obligations to us or result in our being held liable for such conduct.

their ability to perform their contractual obligations to us or result in our being held liable for such conduct.

Violations of the FCPA, Bribery Act, other anti-corruption laws, economic sanctions, export control laws and/or anti-money laundering and anti-terrorism laws or regulations may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could have a material adverse effect on our business, financial condition and results of operations.

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Any misconduct in any of these areas, whether by our own employees or by contractors, vendors, business associates, consultants or other entities acting as our agents, could result in regulatory sanctions, criminal or civil liability and serious harm to our reputation.

It is not always possible to identify and deter misconduct, and the precautions we take to detect and prevent this activity may not be effective in preventing such conduct,

mitigating risks, or reducing the chance of governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations.

It is not always possible to identify and deter misconduct, and the precautions we take to detect and prevent this activity may not be effective in preventing such conduct, mitigating risks, or reducing the chance of governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations.

If any such investigations or other actions or lawsuits are instituted against us, those actions could have a significant impact on our business, financial condition and results of operations, including, without limitation, the imposition of significant fines and other sanctions that may materially impair our ability to run a profitable business.

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Accordingly, we may not be able to utilize a material portion of our federal and state NOLs or credits.

Our ability to utilize our NOLs or credits is conditioned upon our attaining profitability and generating U.S.

Our ability to utilize our NOLs or credits is

conditioned upon our attaining profitability and generating U.S.

federal and state taxable income.

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In addition, U.S.

and foreign regulatory authorities routinely conduct audits of clinical studies and such audits may result in adverse regulatory actions.

and foreign regulatory authorities routinely conduct audits of clinical studies and such

audits may result in adverse regulatory actions.

If we are unable to develop a body of statistically significant evidence from our clinical study program, whether due to adverse results or the inability to complete properly designed studies, domestic and international public and private payors could refuse to cover procedures using our products, limit the manner in which they cover our products or reduce the price they are willing to pay or reimburse for procedures using our products.

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Market opportunity estimates and growth forecasts are inherently uncertain.

Our estimates of the annual total addressable markets for our products are based on a number of internal and third-party estimates and assumptions, including, without limitation, the number of implantable electronic device procedures as well as the number of procedures

using biologic products annually in the United States.

While we believe our assumptions and the data underlying our estimates are reasonable, these assumptions and estimates may not be correct and the conditions supporting our assumptions or estimates may change at any time, thereby reducing the predictive accuracy of these underlying factors.

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In addition, policies, regulations, or the type and amount of clinical data necessary to gain clearance, certification or approval may change during a product candidate’s development.

Before we can market or sell a new medical device or a new use of or a claim for or significant modification to an existing medical device in the United States, we must obtain either clearance from the FDA under Section 510(k) of the Federal Food, Drug, and Cosmetic Act (the “FDCA”) or approval of an application for premarket approval, or PMA, unless an exemption applies.

In the United States, we have obtained 510(k) premarket clearance from the FDA to market products such as our CanGaroo, VasCure, ProxiCor and Tyke products.

the Federal Food, Drug, and Cosmetic Act (the “FDCA”) or approval of an application for premarket approval, or PMA, unless an exemption applies.

In the United States, we have obtained 510(k) premarket clearance from the FDA to market products such as our EluPro, CanGaroo, VasCure, ProxiCor and Tyke products.

In the 510(k) premarket clearance process, the FDA must determine that a proposed device is “substantially equivalent” to a device legally on the market, known as a “predicate” device, with respect to intended use, technology and safety and effectiveness, in order to clear the proposed device for marketing.

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This may result in substantial fines or penalties.

Additionally, the FDA may not approve our products for desired indications or could mandate clinical studies for modifications.

Additionally,

the FDA may not approve our products for desired indications or could mandate clinical studies for modifications.

Any delays or failures in obtaining required clearances or approvals may impede the timely introduction of new or enhanced products, adversely affecting our future growth and operating results.

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Regulatory changes could result in restrictions on our ability to continue or expand our operations, and higher than anticipated costs or lower than anticipated sales.

Even after we have obtained the proper regulatory clearance to market a device, we have

ongoing responsibilities under FDA regulations and applicable foreign laws and regulations.

Even after we have obtained the proper regulatory clearance to market a device, we have ongoing responsibilities under FDA regulations and applicable foreign laws and regulations.

The FDA, state and foreign regulatory authorities have broad enforcement powers.

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For example, FDA may decide that certain uses of SimpliDerm may not be considered HCT/Ps in specific breast reconstruction procedures, necessitating clinical studies and potential PMA approval.

HCT/Ps are subject to donor eligibility, screening,

Good Tissue Practices, labeling, and post-market reporting requirements.

HCT/Ps are subject to donor eligibility, screening, Good Tissue Practices, labeling, and post-market reporting requirements.

Failure to comply may result in FDA enforcement actions, including warning letters, fines, injunctions, recalls, seizures, and, in severe cases, criminal penalties.

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Factors like delays in study initiation, disagreements with regulatory authorities, difficulties in agreement with third-party contractors, unexpected costs, slow patient enrollment, protocol amendments, safety concerns, or manufacturing issues may disrupt or halt clinical studies.

Factors influencing patient enrollment and study completion include the study protocol, patient proximity to clinical sites, eligibility criteria, compliance, competition from other studies, and perceptions of product advantages.

Challenges such as extensive post-treatment procedures, concurrent competitor studies, patient dropouts, or unrelated adverse events can lead to delays, increased costs, or study failures.

Regulatory changes may render existing data insufficient for approval.

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The complex and unpredictable nature of clinical studies underscores the challenges and uncertainties inherent in the development of medical products.

The disruptions caused by the COVID-19 pandemic have heightened the likelihood of encountering difficulties or delays in initiating, enrolling, conducting, or completing planned and ongoing clinical studies, posing a significant threat to our business, financial condition, and prospects.

Challenges such as extensive post-treatment procedures, concurrent competitor studies, patient dropouts, or unrelated adverse events can lead to delays, increased costs, or study failures.

Disruptions at the FDA and other government agencies or notified bodies caused by funding shortages or global health concerns could hinder their ability to hire, retain or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, cleared, certified or approved or commercialized in a timely manner or at all, which could negatively impact our business.

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Average review times have fluctuated in recent years, and disruptions, such as government shutdowns and furloughs, can impede the clearance and approval process.

The COVID-19 pandemic further impacted regulatory activities, with postponed inspections and ongoing adaptations to ensure safety.

Continued global health concerns may lead to additional delays in inspections and regulatory processes.

Prolonged government shutdowns or persistent pandemic-related disruptions could significantly affect the timely review of our regulatory submissions, posing a material adverse effect on our business.

Prolonged government shutdowns or pandemic-related disruptions could significantly affect the timely review of our regulatory submissions, posing a material adverse effect on our business.

We are bound by federal, state, and foreign fraud and abuse laws, violations of which could result in significant penalties.

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● the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which created additional federal criminal statutes that prohibit, among other things, executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters;

● the federal Physician Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or CHIP, to report annually to CMS, information related to payments and other transfers of value to physicians, which is defined broadly to include doctors, dentists, optometrists, podiatrists and chiropractors, certain non-physician providers such as physician assistants and nurse practitioners, and teaching hospitals, and applicable manufacturers and GPOs, to report annually ownership and investment interests held by such physicians and their immediate family members.

family members.

Manufacturers are required to submit annual reports to CMS and failure to do so may result in civil monetary penalties for all payments, transfers of value or ownership or investment interests not reported in an annual submission and may result in liability under other federal laws or regulations.

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All claims were dismissed with prejudice in a settlement, where Mr.

Rakin denied any

Rakin denied any wrongdoing.

Such events could harm our reputation and adversely impact our business, financial condition, and results of operations.

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The Affordable Care Act (“ACA”), enacted in March 2010, brought about substantial changes to healthcare financing, introducing reforms such as the creation of the Patient-Centered Outcomes Research Institute and payment system changes like bundled payments.

Despite facing legal challenges, the ACA remained in effect as of June 17, 2021, following a U.S.

Supreme Court dismissal of a recent judicial challenge.

President Biden's executive order during this period aimed to enhance access to health insurance coverage by reviewing existing policies and removing barriers through Medicaid or the ACA.

Subsequent legislative changes post-ACA, including the Budget Control Act of 2011 and the American Taxpayer Relief Act of 2012, have impacted Medicare payments, influencing healthcare providers.

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Our commercial success will depend in part on our success in obtaining and maintaining issued patents, trademarks and other intellectual property rights in the United States and elsewhere and protecting our proprietary technology.

If we do not adequately protect our intellectual property and proprietary technology, competitors may be able

to use our technologies or the goodwill we have acquired in the marketplace and erode or negate any competitive advantage we may have, which could harm our business and ability to achieve profitability.

If we do not adequately protect our intellectual property and proprietary technology, competitors may be able to use our technologies or the goodwill we have acquired in the marketplace and erode or negate any competitive advantage we may have, which could harm our business and ability to achieve profitability.

Some of our intellectual property rights depend on licensing agreements with third parties, and our patent coverage includes protection provided by licensed patents.

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In recent years, patent rights have been the subject of significant litigation.

Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our owned or licensed patents or narrow the scope of our patent protection.

Changes in either the patent laws or interpretation

of the patent laws in the United States and other countries may diminish the value of our owned or licensed patents or narrow the scope of our patent protection.

Though an issued patent is presumed valid and enforceable, its issuance is not conclusive as to its inventorship, scope, validity or enforceability, and it may not provide us with adequate proprietary protection or competitive advantages against competitors with similar products.

Competitors could attempt to replicate some or all of the competitive advantages we derive from our development efforts, willfully infringe, misappropriate or otherwise violate our intellectual property rights, design around our patents or develop and obtain patent protection for more effective technologies, designs or methods.

CanGaroo and SimpliDerm are the only current products covered by issued patents.

EluPro, CanGaroo and SimpliDerm are the only current products covered by issued patents.

We rely on unpatented trade secrets and know-how for several of our current products to develop and maintain our competitive position.

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It may be difficult to detect infringers who do not advertise the components that are used in their products.

Moreover, it may be difficult or impossible

to obtain evidence of infringement in a competitor’s or potential competitor’s product.

Moreover, it may be difficult or impossible to obtain evidence of infringement in a competitor’s or potential competitor’s product.

We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if we were to prevail, may not be commercially meaningful.

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If we or our collaborators or licensors, fail to establish, maintain or protect such patents and other intellectual property rights, such rights may be reduced or eliminated.

If our collaborators or licensors are not fully cooperative or disagree with us as to the prosecution, maintenance or enforcement of any patent rights, such patent rights could be compromised.

If our collaborators or licensors are not fully cooperative or disagree with us as to the prosecution, maintenance or enforcement of any patent rights, such patent rights

could be compromised.

If there are material defects in the form, preparation, prosecution or enforcement of our patents or patent applications, such patents may be invalid and/or unenforceable, and such applications may never result in valid and enforceable patents.

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These applications may later result in issued patents, or the revival of previously abandoned patents, that will prevent, limit or otherwise interfere with our ability to make, use or sell our products.

Third parties may, in the future, assert claims that we are employing their proprietary technology without authorization, including claims from competitors or from non-practicing entities that have no relevant product sales and against whom our own patent portfolio may have no deterrent effect.

Third parties may, in the future,

assert claims that we are employing their proprietary technology without authorization, including claims from competitors or from non-practicing entities that have no relevant product sales and against whom our own patent portfolio may have no deterrent effect.

As we continue to commercialize our products in their current or updated forms, launch new products and enter new markets, we expect competitors may claim that one or more of our products infringe, misappropriate or otherwise violate their intellectual property rights as part of business strategies designed to impede our successful commercialization and entry into new markets.

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We could encounter delays in product introductions while we attempt to develop alternative methods or products.

If we fail to obtain any required licenses or make any necessary changes to our products or technologies, we may have to withdraw existing products from the market or may be unable to commercialize one or more of our products.

If we fail to obtain any required licenses or make any necessary changes to our

products or technologies, we may have to withdraw existing products from the market or may be unable to commercialize one or more of our products.

In addition, we generally indemnify our customers with respect to infringement by our products of the proprietary rights of third parties.

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If we are unable to protect the confidentiality of our trade secrets, our business and competitive position could be harmed.

In addition to patent protection, we also rely upon copyright and trade secret protection, as well as non-disclosure agreements and invention assignment agreements with our employees, consultants, independent sales agents and other

third parties, to protect our confidential and proprietary information.

In addition to contractual measures, we try to protect the confidential nature of our proprietary information using commonly accepted physical and technological security measures.

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Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate.

In addition, changes in the law and legal decisions by courts in the United States and foreign countries may affect our ability to obtain adequate protection for our technology and the enforcement of our intellectual property.

In addition, changes in the law and legal decisions by courts in the United States and

foreign countries may affect our ability to obtain adequate protection for our technology and the enforcement of our intellectual property.

Any of the foregoing could have a material and adverse effect on our business, financial condition and results of operations.

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from the EU will not be known for some time, which could lead to a period of uncertainty relating to our ability to obtain and maintain patents and trademarks in the U.K.

2012, the European Patent Package, or EU Patent Package, regulations were passed with the goal of providing for a single pan-European Unitary Patent, and a new European Unified Patent Court, or UPC, for litigation of European patents.

In 2012, the European Patent Package, or EU Patent Package, regulations were passed with the goal of providing for a single pan-European Unitary Patent, and a new European Unified Patent Court, or UPC, for litigation of European patents.

It is possible that implementation of the EU Patent Package will occur in the first half of 2023.

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Under certain circumstances, the government may also claim ownership in such inventions or compel us to license them to third parties.

Any failure by us to comply with federal regulations regarding intellectual property rights that were developed through the use of U.S.

Any failure by

us to comply with federal regulations regarding intellectual property rights that were developed through the use of U.S.

government funding could have a material and adverse effect on our business, financial condition and results of operations.

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We rely on these licenses in order to be able to use and sell various proprietary technologies that are material to our business, as well as technologies we intend to use in our future commercial activities.

For example, we expect that we will be dependent on our licensing arrangements with Cook Biotech, relating to CanGaroo and our cardiovascular products.

For example, we expect that we will be dependent on our licensing arrangements with Cook, relating to EluPro, CanGaroo and our cardiovascular products.

Our rights to use these technologies and the inventions claimed in the licensed patents are subject to the continuation of and our compliance with the terms of those license agreements.

Our existing license agreements impose, and we expect that future license agreements will also impose on us, various diligence obligations, milestone payments, royalties and other obligations.

If we fail to comply with our obligations under these agreements, or if we are subject to a bankruptcy proceeding, the licensor may have the right to terminate the license, in which case we would not be able to market products covered by the license, which would adversely affect our business, financial condition and results of operations.

we fail to comply with our obligations under these agreements, or if we are subject to a bankruptcy proceeding, the licensor may have the right to terminate the license, in which case we would not be able to market products covered by the license, which would adversely affect our business, financial condition and results of operations.

As we have done previously, we may need to obtain additional licenses from third parties in order to advance our research or allow commercialization of our products and technologies.

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If we are unable to do so, we may be unable to develop or commercialize the affected products and technologies, which could materially harm our business.

In addition, the third

parties owning such intellectual property rights could seek either an injunction prohibiting our sales, or, with respect to our sales, an obligation on our part to pay royalties or other forms of compensation and damages.

In addition, the third parties owning such intellectual property rights could seek either an injunction prohibiting our sales, or, with respect to our sales, an obligation on our part to pay royalties or other forms of compensation and damages.

In some cases, we may not have the right to control the prosecution, maintenance or filing of the patents that are licensed to us, or the enforcement of these patents against infringement by third parties.

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The market price of our Class A common stock is likely to be highly volatile and may fluctuate substantially due to a variety of factors, many of which are outside of our control, including, among other things:

● our ability to successfully commercialize, market and sell our newly approved EluPro antibacterial envelope device;

● the volume and timing of sales of our products;

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● disputes or other developments with respect to our or others’ intellectual property rights;

● our ability to develop, obtain regulatory clearance or approval for, and market new and enhanced products on a timely basis, including our CanGarooRM;

● our ability to develop, obtain regulatory clearance or approval for, and market new and enhanced products on a timely basis;

● changes or proposed changes in laws or regulations or differing interpretations or enforcement thereof affecting our business;

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● general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors;

● other factors discussed in Part I, Item 1A.

“Risk Factors” of this Annual Report.

In recent years, the stock markets generally have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies, including, as a result of the pandemic related to COVID-19 including variants and resurgences.

● other factors discussed in this Part I, Item 1A.

“Risk Factors” of our Annual Report.

In recent years, the stock markets generally have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies.

Broad market and industry factors may significantly affect the market price of our Class A common stock, regardless of our actual operating performance.

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The interests of these stockholders may not be the same as or may even conflict with your interests.

For example, these stockholders could attempt to delay or prevent a change in control of the company, even if such change in control would benefit our other

stockholders, thereby depriving our other stockholders of an opportunity to receive a premium for their common stock as part of a sale of the company or our assets.

For example, these stockholders could attempt to delay or prevent a change in control of the company, even if such change in control would benefit our other stockholders, thereby depriving our other stockholders of an opportunity to receive a premium for their common stock as part of a sale of the company or our assets.

Conversely, these stockholders may pursue acquisitions, divestitures and other transactions that, in their judgment, could enhance the value of their investment, even though such transactions might involve risks to you.

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Because our Class B common stock is generally non-voting, stockholders who own more than 10% of our common stock overall but 10% or less of our Class A common stock will not be required to report changes in their ownership from transactions in our Class B common stock pursuant to Section 16(a) of the Exchange Act and would not be subject to the short-swing profit provisions of Section 16(b) of the Exchange Act.

You may be diluted by the future issuance of additional common stock in connection with our incentive plans, acquisitions or otherwise.

You may be diluted by the future issuance of additional common stock in connection with any future public or private offerings of our securities, our incentive plans, acquisitions or otherwise.

As of December 31, 2024, we had 169,102,768 shares of Class A common stock authorized but unissued and 15,686,594 shares of Class B common stock authorized but unissued.

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As of December 31, 2024, we had a total of 3,220,991 shares of our Class A common stock issuable upon the exercise of outstanding options under our 2015 Stock Option/Stock Issuance Plan, as amended (the “2015 Plan”) and our Amended and Restated 2020 Incentive Award Plan (the “2020 Plan”) at a weighted average exercise price of $5.23 per share, 1,806,344 of which were vested as of such date, 1,417,123 shares of Class A common stock issuable upon the settlement of RSUs granted under our 2020 Plan to several of our executive officers, employees and consultants, 396,561 additional shares of our Class A common stock reserved for future issuance under our 2020 Plan, not including the additional shares of Class A common stock that will be reserved for future issuance under our 2020 Plan pursuant to provisions in the 2020 Plan that automatically increase the number of shares of our Class A common stock reserved for future issuance thereunder, and 471,126 shares of our Class A common stock available for future issuance under our 2020 Employee Stock Purchase Plan (the “2020 ESPP”), not including the additional shares of Class A common stock that will be reserved for future issuance under our 2020 ESPP pursuant to provisions in the 2020 ESPP that automatically increase the number of shares of our Class A common stock reserved for future issuance thereunder.

Additionally, as of December 31, 2023, we had total warrants outstanding of 11,724,831 to purchase our Class A common stock comprised of up to 187,969 warrants issued to the lender under the SWK Loan Facility and 11,536,862 warrants issued to investors in our September 2023 Class A common stock private placement.

On January 31, 2024, we granted stock options covering 1,615,561 shares of Class A common stock and restricted stock units covering 2,267,500 shares of Class A common stock to employees and consultants under the 2020 Plan.

Any additional shares of common stock that we issue, including under our 2020 Plan, 2020 ESPP or other equity incentive plans that we may adopt in the future, or as a result of any exercise of the warrant, would dilute the percentage ownership and voting power held by investors who purchase our common stock.

In the future, we may also issue additional securities if we need to raise capital, including, but not limited to, in connection with acquisitions, which could constitute a material portion of our then-outstanding shares of our common stock.

Additionally, as of December 31, 2024, we had total warrants outstanding of 4,486,295 to purchase our Class A common stock comprised of up to 187,969 warrants issued to the lender under the SWK Loan Facility and 4,298,326 warrants issued to investors in our September 2023 Class A common stock private placement or June 2024 Class A common stock registered direct offering.

In addition, subsequent to the end of 2024, on February 4, 2025, the Company sold, in a registered direct offering, an aggregate of 5,520,000 shares of Class A common stock and prefunded warrants to purchase up to an aggregate of 480,000 shares of Class A Common Stock.

Any additional shares of common stock that we issue, including under our 2020 Plan, 2020 ESPP or other equity incentive plans that we may adopt in the future, or as a result of any exercise of outstanding warrants, would dilute the percentage ownership and voting power held by investors who purchase our common stock.

In the future, we may also issue additional securities if we need to raise capital to finance our ongoing operations, including our efforts to commercialize, market and sell EluPro, or in connection with acquisitions or other strategic investments, which securities could constitute a material portion of our then-outstanding shares of our common stock.

We are an “emerging growth company” and a “smaller reporting company,” and the reduced disclosure requirements applicable to emerging growth companies and smaller reporting companies may make our common stock less attractive to investors.

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If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies, including reduced financial and executive compensation disclosure.

In addition, even if we cease to be an emerging growth company, we will remain exempt from the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act provided we do not qualify as an “accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if our annual revenue was $100 million or more during our most recently completed fiscal year and the market value of our common equity held by non-affiliates is $75 million or more as of the last business day of our most recently completed second fiscal quarter, and only after we have been subject to the reporting requirements of the Exchange Act for a period of at least 12 calendar months.

In addition, even if we cease to be an emerging growth company, we will remain exempt from the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act provided we do

not qualify as an “accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if our annual revenue was $100 million or more during our most recently completed fiscal year and the market value of our common equity held by non-affiliates is $75 million or more as of the last business day of our most recently completed second fiscal quarter, and only after we have been subject to the reporting requirements of the Exchange Act for a period of at least 12 calendar months.

We will continue to incur increased costs as a result of operating as a public company, and our management is required to devote substantial time to new compliance initiatives and corporate governance practices.

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Moreover, these rules and regulations have and will continue to increase our legal and financial compliance costs and make some activities more time-consuming and costly.

For example, these rules and regulations make it more difficult and more expensive for us to obtain director and officer liability insurance, which requires us to incur substantially higher costs to

obtain the same or similar coverage or accept reduced policy limits and coverage, which in turn could also make it more difficult for us to attract and retain qualified individuals to serve on our board of directors and as our executive officers.

For example, these rules and regulations make it more difficult and more expensive for us to obtain director and officer liability insurance, which requires us to incur substantially higher costs to obtain the same or similar coverage or accept reduced policy limits and coverage, which in turn could also make it more difficult for us to attract and retain qualified individuals to serve on our board of directors and as our executive officers.

We cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.

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These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our Class A common stock.

In addition, because our board of directors is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors.

management by making it more difficult for stockholders to replace members of our board of directors.

Among other things, these provisions include those establishing:

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Our certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty or other wrongdoing by any of our directors, officers, employees or agents to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL or our certificate of incorporation or bylaws, (iv) any action to interpret, apply, enforce or determine the validity of our certificate of incorporation or bylaws or (v) any action asserting a claim governed by the internal affairs doctrine;

provided that, the exclusive forum provision will not apply to suits brought to enforce any liability or duty created by the Securities Act, the Exchange Act, the rules and regulations thereunder or any other claim for which the federal courts have exclusive jurisdiction;

provided that, the exclusive forum provision will not apply to suits brought to enforce any liability or duty created

by the Securities Act, the Exchange Act, the rules and regulations thereunder or any other claim for which the federal courts have exclusive jurisdiction;

and provided further that, if and only if the Court of Chancery of the State of Delaware dismisses any such action for lack of subject matter jurisdiction, such action may be brought in another state or federal court sitting in the State of Delaware.

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If our operating and financial performance in any given period does not meet the guidance we provide to the public, the market price of our Class A common stock may decline.

We may, but are not obligated to, continue to provide public guidance on our expected operating and financial results for future periods.

We may, but are not obligated to, provide public guidance on our expected operating and financial results for future periods.

Any such guidance will be comprised of forward-looking statements subject to certain risks and uncertainties similar to those described in this Annual Report and any additional risks and uncertainties described from time to time in our public filings or other public statements.

Our actual results may not always be in line with or exceed any guidance we have provided, especially in times of economic uncertainty.

There can be no assurance that we will continue to issue public guidance in the future.

If, in the future, we provide guidance, and our operating and/or financial results for a particular period do not meet such guidance or the expectations of investment analysts, or if we reduce, withdraw or otherwise change our guidance for future periods, or stop providing guidance, the market price of our Class A common stock will likely decline.

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We do not control these analysts.

We may be slow to attract research

coverage and the analysts, who publish information about our Class A common stock, may have had relatively little experience with us or our industry, which could affect their ability to accurately forecast our results and could make it more likely that we fail to meet their estimates.

If no or few securities or industry analysts commence coverage of us, the trading price for our stock would be negatively impacted.

We may be slow to attract research coverage and the analysts, who publish information about our Class A common stock, may have had relatively little experience with us or our industry, which could affect their ability to accurately forecast our results and could make it more likely that we fail to meet their estimates.

If no or few securities or industry analysts provide coverage of us, the trading price for our stock would be negatively impacted.

In the event we obtain securities or industry analyst coverage, if any of the analysts who cover us issue an adverse or misleading opinion regarding us, our business model, our financial performance, our stock price or otherwise, our stock price would likely decline.

1 unchanged sentence

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-K

Item 1A. Risk Factors