What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-03-11 compared with 2024-03-11 · 381 added, 303 removed, 716 unchanged (49% of the section changed)

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Other Information.

During the three months ended December 31, 2024, none of our directors or officers (as defined in Rule 16a-1 under the Exchange Act) adopted or terminated any contract, instruction, or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any "non-Rule 10b5-1 trading arrangement" (as defined in Item 408 of Regulation S-K).

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

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The information required by this Item 10 is incorporated herein by reference to the information that will be contained in our proxy statement related to our annual meeting of stockholders to be held in 2025 (the “2025 Annual Meeting of Stockholders”), which we intend to file with the SEC within 120 days of the year ended December 31, 2024.

A copy of our Insider Trading Compliance Policy is filed as Exhibit 19 to this Annual Report on Form 10-K.

Executive Compensation.

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2015 Stock Option/Stock Issuance Plan (the “2015 Plan”).

To the extent stock options outstanding under the 2015 Plan are forfeited, lapse unexercised

or are settled in cash, the shares of Class A common stock subject to the stock options will be available for future issuance under the 2020 Plan.

To the extent stock options outstanding under the 2015 Plan are forfeited, lapse unexercised or are settled in cash, the shares of Class A common stock subject to the stock options will be available for future issuance under the 2020 Plan.

1,685,962 shares of Class A common stock were initially available for issuance under the 2020 Plan.

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The calculation of the weighted average exercise price does not include outstanding equity awards that are received or exercised for no consideration.

On January 31, 2024, the Compensation Committee of the Company’s Board of Directors approved an exchange program to reprice certain stock options granted under the 2020 Plan with exercise prices per share greater than $7.00.

The exercise prices of the stock options were reduced to $3.61.

On January 31, 2024, the Company granted stock options covering 1,615,561shares 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.

In addition to the amounts available for future issuance noted in the table above, such grants also partially utilized the increased availability from the automatic increase of 927,904 on January 1, 2024.

The other information required by this Item is incorporated herein by reference to the information that will be contained in our proxy statement related to the 2025 Annual Meeting of Stockholders, which we intend to file with the SEC within 120 days of the year ended December 31, 2024.

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(solely with respect to Section 11.18)

Exhibit Number

Filed/Furnished Herewith

Restated Certificate of Incorporation of Elutia Inc.

Certificate of Amendment to the Restated Certificate of Incorporation of Elutia Inc.

Amended and Restated Bylaws of Elutia Inc.

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Form of Common Warrant

Exhibit Number

Filed/Furnished Herewith

2023 Form of Prefunded Warrant

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and the Investors named therein

2024 Form of Prefunded Warrant

Exhibit Number

Filed/Furnished Herewith

Description of Securities

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2020 Incentive Award Plan and form of stock option agreements thereunder

Exhibit Number

Filed/Furnished Herewith

Form of Restricted Stock Unit Award Agreement (approved August 2022)

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Non-Employee Director Compensation Program

Exhibit Number

Filed/Furnished Herewith

2020 Employee Stock Purchase Plan

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and Thomas Englese

Exhibit Number

Filed/Furnished Herewith

Letter Agreement, dated as of March 22, 2023, by and between Elutia Inc.

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Credit Agreement, dated as of August 10, 2022, between Elutia Inc.

and SWK Funding LLC, as Agent and the Lenders from time to time party thereto

and SWK Funding LLC, as

Exhibit Number

Filed/Furnished Herewith

Agent and the Lenders from time to time party thereto

Amendment Letter, dated as of October 9, 2022 to Credit Agreement, dated as of August 10, 2022, between Elutia Inc.

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and SWK Funding LLC, as Agent and the Lenders from time to time party thereto (as amended by the Amendment Letter dated as of October 9, 2022)

Exhibit Number

Filed/Furnished Herewith

Amendment Letter, dated as of November 21, 2022, to the Credit Agreement, dated as of August 10, 2022, among Elutia Inc., SWK Funding LLC, as Agent, and the Lenders from time to time party thereto (as amended).

Amendment Letter, dated as of November 30, 2022, to the Credit Agreement, dated as of August 10, 2022, among Elutia Inc., SWK Funding LLC, as Agent, and the Lenders from time to time party thereto (as amended).

Exhibit Number

Filed/Furnished Herewith

First Amendment, dated as of May 12, 2023, to the Credit Agreement, dated August 10, 2022, by and among Aziyo Biologics, Inc., SWK Funding LLC, as Agent and the Lenders from time to time party thereto

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and the Investors named therein.

Subsidiaries of Elutia, Inc.

Amendment No.

1 to Royalty Agreement with Ligand Pharmaceuticals Incorporated

Form of Amendment to Stock Option Agreements, dated January 31, 2024, between the Company and C.

Randal Mills, Ph.D.

Form of Amendment to Restricted Stock Unit Agreements, dated January 31, 2024, between the Company and C.

Randal Mills, Ph.D.

Exhibit Number

Filed/Furnished Herewith

Form of Stock Option Agreement under the Elutia Inc.

Amended and Restated 2020 Incentive Award Plan.

Form of Restricted Stock Unit Agreement under the Elutia Inc.

Amended and Restated 2020 Incentive Award Plan.

Second Amendment to Credit Agreement, dated March 27, 2024, by and among Elutia Inc., SWK Funding LLC, as Agent, and the Lenders from time to time party thereto.

Placement Agency Agreement, dated June 16, 2024, by and between Elutia Inc.

and Lake Street Capital Markets, LLC

Form of Securities Purchase Agreement

Insider Trading Compliance Policy

Subsidiaries of Elutia, Inc.

Consent of PricewaterhouseCoopers LLP

Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit Number

Filed/Furnished Herewith

Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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Excess Incentive-based Compensation Recoupment Policy

Exhibit Number

Filed/Furnished Herewith

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

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Inline XBRL Taxonomy Extension Calculation Linkbase Document

Exhibit Number

Filed/Furnished Herewith

Inline XBRL Taxonomy Extension Definition Linkbase Document

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RANDAL MILLS, PH.D.

Randal Mills, Ph.D.

President and Chief Executive Officer

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March 11, 2025

Randal Mills, Ph.D.

/s/Matthew Ferguson

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The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2022.

Basis for Opinion

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Accounts receivable, net

Receivables of FiberCel litigation costs

Insurance receivables of litigation costs

Prepaid expenses and other current assets

Current assets of discontinued operations

Total current assets

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Operating lease right-of-use assets and other

Noncurrent assets of discontinued operations

Liabilities and Stockholders’ Equity (Deficit)

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Accrued expenses

Payables to tissue suppliers

Current portion of long-term debt

Current portion of revenue interest obligation

Contingent liability for FiberCel litigation

Contingent liability for legal proceedings

Current operating lease liabilities

Current liabilities of discontinued operations

Total current liabilities

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Warrant liability

Long-term operating lease liabilities

Other long-term liabilities

Noncurrent liabilities of discontinued operations

Total liabilities

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Accumulated deficit

Total stockholders’ equity (deficit)

Total liabilities and stockholders' equity (deficit)

Total stockholders’ deficit

Total liabilities and stockholders' deficit

The accompanying notes are an integral part of these consolidated financial statements.

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Research and development

FiberCel litigation costs, net

Litigation costs, net

Total operating expenses

Loss from continuing operations

Interest expense

Other expense (income), net

Interest expense, net

Loss on revaluation of warrant liability

Other (income) expense, net

Loss before provision for income taxes

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Net loss per share from continuing operations attributable to common stockholders - basic and diluted

Net income per share from discontinued operations attributable to common stockholders - basic and diluted

Income per share from discontinued operations attributable to common stockholders - basic and diluted

Net loss per share - basic and diluted

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Balance, December 31, 2022

Proceeds from stock option exercises

Additional issuance costs in connection with private placement

Proceeds from sale of common stock through Employee Stock Purchase Plan

Proceeds from sale of common stock in secondary public offering, net of issuance costs of $ 1,074

Issuance of common stock in connection with private placement, net of issuance costs of $ 0.4 million

Issuance of common stock under Employee Stock Purchase Plan

Vesting of restricted stock units, net of shares withheld and taxes paid

Issuance of warrants in connection with debt financing

Stock-based compensation

Balance, December 31, 2023

Proceeds from sale of common stock in connection with private placement, net of issuance costs of $ 0.4 million

Proceeds from sale of common stock through Employee Stock Purchase Plan

Issuance of common stock in connection with registered direct offering, net of issuance costs of $ 1.1 million

Exercise of stock options

Exercise of Common Warrants and Prefunded Warrants

Issuance of common stock under Employee Stock Purchase Plan

Vesting of restricted stock units, net of shares withheld and taxes paid

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Gain on sale of Orthobiologics Business, excluding divestiture costs

Loss on extinguishment of debt and revaluation of warrant liability

Loss on revaluation of warrant liability

Gain on revaluation of revenue interest obligation

Amortization of deferred financing costs and debt discount

Interest expense recorded as additional revenue interest obligation or long-term debt

Interest expense recorded as additional revenue interest obligation and long-term debt

Stock-based compensation

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Accounts receivable

Receivables of FiberCel litigation costs

Insurance receivables of litigation costs

Prepaid expenses and other

Accounts payable and accrued expenses and payables to tissue suppliers

Contingent liability for FiberCel litigation

Accounts payable and accrued expenses

Contingent liability for legal proceedings

Other liabilities

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Expenditures for property, plant and equipment

Net cash provided by (used in) investing activities

Net cash (used in) provided by investing activities

FINANCING ACTIVITIES:

Proceeds from public offering or private placement with warrants, net of offering costs

Repayments under revolving line of credit

Proceeds from stock option exercises

Proceeds (repayments) of long-term debt, net

Deferred financing costs

Costs related to the extinguishment of debt

Proceeds (repayments) of long-term debt

Proceeds from exercises of Common Warrants and Prefunded Warrants

Payments on revenue interest obligation

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Payments for taxes upon vesting of restricted stock units

Proceeds from sales of common stock through Employee Stock Purchase Plan

Proceeds from stock option exercises and issuance of common stock under ESPP

Net cash provided by financing activities

Net increase (decrease) in cash

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Net (decrease) increase in cash

Cash and cash equivalents, beginning of year

Cash and cash equivalents, end of year

Supplemental Cash Flow and Non-Cash Financing Activities Disclosures:

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Fair value of warrants issued

Operating lease right-of-use asset extensions executed, net of early terminations

Conversion of Common Warrants and Prefunded Warrants to common stock

The accompanying notes are an integral part of these consolidated financial statements.

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Organization and Description of Business

(together with its consolidated subsidiaries, "Elutia” or the “Company”) is a commercial-stage company leveraging its unique understanding of biologics to improve the interaction between implanted medical devices and patients by reducing complications associated with these surgeries.

(together with its consolidated subsidiaries, "Elutia” or the “Company”) is a commercial-stage company leveraging its unique understanding of biologics combined with local drug delivery to improve the interaction between implanted medical devices and patients by reducing complications associated with these surgeries.

The Company has developed a portfolio of products using both human and porcine tissue that are designed to be as close to natural biological material as possible.

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The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary.

Intercompany accounts and transactions have been eliminated in consolidation.

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The assets sold represent the entirety of the Company’s Orthobiologics segment.

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

In the sale, the Company received $ 14.6 million, and the Company 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).

There have been no earn-out payments made to date.

Additionally, the purchase agreement provides for a customary indemnity holdback in the amount of $ 1.5 million to be retained by Berkeley for 24 months after close.

The Company recognized a gain of approximately $ 6.0 million on the sale of the Orthobiologics Business which is recorded in " Income from discontinued operations " in the Company's consolidated statement of operations for the year ended December 31, 2023.

In the purchase agreement, the Company has retained the liabilities arising out of the VBM and FiberCel matters, as described in Note 17, both of which products were part of the Orthobiologics Business.

The Company recognized a gain of $ 6.0 million on the sale of the Orthobiologics Business during the year ended December 31, 2023 and an additional gain of $ 0.2 million during the year ended December 31, 2024 from an adjustment payment related to the final working capital received by Berkeley at the sale date.

The indemnity holdback is available as a source of recovery for Berkeley for claims of indemnification under the purchase agreement, and some or all of the holdback may be retained by Berkeley if Berkeley is successful in asserting a claim or claims for indemnification against the Company.

The Company is aware of certain indemnity-related claims raised, including a claim from a former supplier alleging breach of contract.

Based on the Company’s ongoing assessment of these claims, along with the remaining indemnity holdback of $ 1.5 million, the Company does not consider a loss to be probable or estimable as of December 31, 2024.

Should the Company receive incremental proceeds in the future through an earn-out payment or payment of the holdback amount, an additional gain will be recorded upon the receipt of such amounts.

The sale of the Orthobiologics Business represents a strategic shift that has a major effect on the Company’s operations and financial results.

Accordingly, this transaction is accounted for as Discontinued Operations for all periods presented in accordance with Accounting Standards Codification (“ASC”) 205-20, Discontinued Operations .

Unless indicated otherwise, the information in the notes to the consolidated financial statements relates to continuing operations.

See Note 4 for further discussion of the divestiture of the Orthobiologics Business.

See Note 4 for further discussion of the sale of the Orthobiologics Business and the presentation of such business as discontinued operations for the year ended December 31, 2023.

Unless indicated otherwise, the information in the notes to consolidated financial statements for the year ended December 31, 2023 relates to continuing operations.

In accordance with Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40) , the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.

For the year ended December 31, 2023, the Company incurred a net loss of $ 37.7 million, and as of December 31, 2023, the Company had an accumulated deficit of $ 175.6 million.

For the year ended

December 31, 2024, the Company incurred a net loss of $ 53.9 million, and as of December 31, 2024, the Company had an accumulated deficit of $ 229.6 million.

In addition, during the year ended December 31, 2024, the Company used $ 22.7 million of cash in operating activities and expects to continue to incur cash outflows in 2025.

Because of the numerous risks and uncertainties associated with the Company’s commercialization and development efforts, the Company is unable

to predict when it will become profitable, and it may never become profitable.

Because of the numerous risks and uncertainties associated with the Company’s commercialization and development efforts, the Company is unable to predict when it will become profitable, and it may never become profitable.

The Company’s inability to achieve and then maintain profitability would negatively affect its business, financial condition, results of operations and cash flows.

Furthermore, even if the Company does achieve profitability, it may not be able to sustain or increase profitability on an ongoing basis, or, in general, be able to satisfy its obligations, including those related to the FiberCel Recall described in Note 17, when they become due.

In order to mitigate the current and potential future liquidity issues caused by the matters noted above, the Company may seek to raise capital through the issuance of common stock, such as the private placement which we closed in September 2023, which is described further in Note 14, or pursue asset sale or other transactions, such as the sale of the Orthobiologics Business described above.

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

As such, based on its current operating plans, the Company believes there is uncertainty as to whether its future cash flows along with its existing cash, issuances of additional equity and cash generated from expected future sales will be sufficient to meet the Company’s anticipated operating needs through twelve months from the financial statement issuance date.

Due to these factors, there is substantial doubt about the Company’s ability to continue as a going concern within one year after the issuance of the financial statements.

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, based on our current operating plans, we believe there is uncertainty as to whether our future cash flows along with our existing cash, issuances of additional equity and cash generated from expected future sales will be sufficient to meet our anticipated operating needs through twelve months from the consolidated financial statement issuance date.

Due to these factors, there is substantial doubt about our ability to continue as a going concern within one year after the issuance of the consolidated financial statements.

The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

That is, the accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities in the ordinary course of business.

That is, the accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities in the ordinary course of business.

Reclassifications

A reclassification has been made to prior year amounts to conform to current year financial statement presentation and had no impact on previously reported results.

The reclassification relates to the separate presentation of the prior year loss on revaluation of warrant liability.

Such loss was formerly shown as a component of other (income) expense, net in the accompanying consolidated statements of operations.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Estimates and assumptions relating to inventories, receivables, long-lived assets, the valuation of stock-based awards, the valuation of the revenue interest obligation, the valuation of the warrant liability, the contingent liability for the FiberCel Litigation and deferred income taxes are made at the end of each financial reporting period by management.

Estimates and assumptions relating to inventories, receivables, long-lived assets, the valuation of stock-based awards, the valuation of the revenue interest obligation, the valuation of the warrant liability, the contingent liabilities for legal proceedings and deferred income taxes are made at the end of each financial reporting period by management.

Management continually re-evaluates its estimates, judgments and assumptions, and management's evaluation could change.

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Other than voting rights, the Class B common stock has the same rights as the Class A common stock, and therefore both are treated as the same class of stock for purposes of the earnings per share calculation.

Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average shares outstanding during the period.

For purposes of the diluted net income (loss) per share attributable to common stockholders calculation, stock options, restricted stock units (“RSUs”) and certain warrants are considered to be common stock equivalents.

All common stock equivalents have been excluded from the calculation of diluted net loss per share attributable to common stockholders, as their effect would be anti-dilutive for all periods presented.

Therefore, basic and diluted net loss per share were the same for both periods presented.

The Company is also authorized to issue up to 10,000,000 shares of preferred stock with a par value of $ .001 .

No shares have been issued or are outstanding as of December 31, 2024 and December 31, 2023.

Basic net income per share is computed by dividing net income available to each class of shares by the weighted-average number of shares of common stock and participating securities outstanding during the period.

Participating securities include common and prefunded warrants.

Net loss is not allocated to participating securities as they do not have

an obligation to fund losses.

For purposes of the diluted net income per share attributable to common stockholders calculation, stock options, restricted stock units (“RSUs”) and warrants are considered to be common stock equivalents.

See Note 16 for further discussion of net loss per share attributable to common stockholders.

Fair Value of Financial Instruments

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Cash and Cash Equivalents

The Company maintains its cash balances at banks and financial institutions.

The Company maintains its cash and cash equivalent balances at banks and financial institutions.

The balances are insured up to the legal limit.

The Company maintains cash balances that may, at times, exceed this insured limit.

The Company maintains cash and cash equivalent balances that may, at times, exceed this insured limit.

The Company considers cash on hand, demand deposits in a bank, money market funds, and all highly liquid investments with an original maturity of 90 days or less to be cash and cash equivalents.

Accounts Receivable and Allowances

Accounts receivable in the accompanying balance sheets are presented net of allowances for doubtful accounts and other credits.

Accounts receivable in the accompanying balance sheets are presented net of allowances for credit losses.

The Company grants credit to customers in the normal course of business, but generally does not require collateral or any other security to support its receivables.

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In circumstances where a specific customer is unable to meet its financial obligations to the Company, a provision to the allowance for doubtful accounts is recorded to reduce the net recognized receivable to the amount that is reasonably expected to be collected.

For all other customers, a provision to the allowance for doubtful accounts is recorded based on factors including the length of time the receivables are past due, the current business environment and the Company’s historical experience.

For all other customers, a provision to the allowance for credit losses is recorded based on factors including the length of time the receivables are past due, the current business environment and the Company’s historical experience.

Provisions to the allowance for doubtful accounts are recorded to general and administrative expenses.

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The Company's allowance for doubtful accounts was approximately $ 0.6 million and $ 0.7 million as of December 31, 2024 and 2023, respectively.

Inventories, consisting of purchased materials, direct labor and manufacturing overhead, are stated at the lower of cost or net realizable value, with cost determined generally using the average cost method.

At each balance sheet date, the Company also evaluates inventories for excess quantities, obsolescence or shelf life expiration.

This evaluation includes analysis of the Company’s current and future strategic plans, historical sales levels by product, projections of future demand, the risk of technological or competitive obsolescence for products, general market conditions and a review of the shelf life expiration dates for products.

To the extent that management determines there is excess or obsolete inventory or quantities with a shelf life that is too near its expiration for the Company to reasonably expect that it can sell those products prior to their expiration, the Company adjusts the carrying value to estimated net realizable value.

Inventory, consisting of purchased materials, direct labor and manufacturing overhead, is stated at the lower of cost or net realizable value, with cost determined generally using the average cost method.

At each balance sheet date, the Company also evaluates inventory for excess quantities, obsolescence or shelf-life expiration.

This evaluation includes an analysis of the Company’s current and future strategic plans, historical sales levels by product, projections of future demand, the risk of technological or competitive obsolescence for products, general market conditions and a review of the

shelf-life expiration dates for products.

Property and Equipment

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Repairs and maintenance costs are expensed as incurred.

In February 2016, the FASB issued ASU No 2016-02 “Leases” to increase the transparency and comparability about leases among entities.

Additional ASUs have been issued subsequent to ASU 2016-02 to provide supplementary clarification and implementation guidance for leases related to, among other things, the application of certain practical expedients, the rate implicit in the lease, lessee reassessment of lease classification, lessor reassessment of lease term and purchase options, variable payments that depend on an index or rate and certain transition adjustments.

ASU 2016-02 and these additional ASUs are now codified as Accounting Standards Codification Standard 842 - “Leases” (“ASC 842”).

ASC 842 supersedes the lease accounting guidance in Accounting Standards Codification 840 “Leases” (“ASC 840”) and requires lessees to recognize a lease liability and a corresponding lease asset for virtually all lease contracts.

It also requires additional disclosures about leasing arrangements.

The Company elected to utilize the “package” of expedients, as defined in ASC 842, which retain the lease classification and initial direct costs for any leases that existed prior to adoption of the standard.

Accordingly, previously reported financial information has not been restated to reflect the application of the new standard to the comparative periods presented.

The Company adopted the standard in the fourth quarter of 2022 for the full 2022 year resulting in the recognition of a Right-of-use (“ROU”) asset and operating lease liability on the Company’s consolidated balance sheet of approximately $ 2.4 million as of January 1, 2022 .

As the ROU asset and the lease payable obligation were essentially the same upon adoption of ASC 842 , there was no cumulative effect impact on the Company’s accumulated deficit.

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No 2016-02, Leases to increase the transparency and comparability about leases among entities.

ASU 2016-02 and certain additional ASUs are now codified as ASC 842, Leases .

ASC 842 supersedes the lease accounting guidance in ASC 840 and requires lessees to recognize a lease liability and a corresponding lease asset for virtually all lease contracts.

The Company determines if an arrangement contains a lease at inception.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from that lease.

Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from that lease.

For leases with a term greater than 12 months, ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.

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Purchased intangible assets with finite lives are carried at acquired fair value, less accumulated amortization.

Amortization is computed over the estimated useful lives of the respective assets.

Amortization is recorded over the estimated useful lives of the respective assets.

The Company periodically evaluates the period of depreciation or amortization for long-lived assets to determine whether current circumstances warrant revised estimates of useful lives.

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The Company accounts for its warrants in accordance with ASC 815, Derivatives and Hedging – Contracts in Entity's Own Equity , as either liabilities or as equity instruments depending on the specific terms of the warrant agreement.

The Prefunded and Common Warrants issued in connection with the September 2023 private placement (see Note 14) are

classified as liabilities and are recorded at fair value.

The warrants are subject to re-measurement at each settlement date and at each balance sheet date and any change in fair value is recognized in other expense (income), net in the consolidated statements of operations.

The warrants issued in connection with the September 2023 private placement and June 2024 registered direct offering (see Note 14) are classified as liabilities and are recorded at fair value.

The warrants are subject to re-measurement at each

settlement date and at each balance sheet date and any change in fair value is recognized in other (income) expense, net in the consolidated statements of operations.

The Company estimates the fair value of the warrant liability using a Black-Scholes pricing model.

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A portion of the Company’s product revenue is generated from consigned inventory maintained at hospitals and from inventory physically held by distributors and direct sales representatives.

For these types of products sales, the Company retains control until the product has been shipped, used or implanted, at which time revenue is recognized.

For these types of product sales, the Company retains control until the product has been used or implanted, at which time revenue is recognized.

The Company elected to account for shipping and handling activities as a fulfillment cost rather than a separate performance obligation.

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The related shipping and freight charges incurred by the Company are included in sales and marketing costs.

Shipping and handling costs were not material in both the years ended December 31, 2023 and 2022, respectively.

Shipping and handling costs were not material in both the years ended December 31, 2024 and 2023.

Contracts with customers state the final terms of the sale, including the description, quantity, and price of each implant distributed.

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The Company accounts for its stock-based compensation plans in accordance with FASB Accounting Standards Codification (“ASC”) 718, Accounting for Stock Compensation .

FASB ASC 718 requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors, including employee stock options and restricted stock units.

ASC 718 requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors, including employee stock options and restricted stock units.

Stock-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense on a straight-line basis over the requisite service period of the entire award.

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The Company’s cash balances with the individual institutions may at times exceed the federally insured limits.

As of December 31, 2023, there was one customer that represented 10 % of the Company’s net sales for the year ended 2023 and another customer that represented 31 % of the Company’s accounts receivable as of December 31, 2023.

During the year ended December 31, 2024, there was one customer that represented 15 % of the Company’s net sales in such year, and during the year ended December 31, 2023, there was one customer that represented 10 % of the Company’s sales in such year.

There was one customer that represented 14 % of the Company’s accounts receivable as of December 31, 2024, and there was one customer that represented 31 % of the Company’s accounts receivable as of December 31, 2023.

Comprehensive Income (Loss)

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The amendments in this update should be applied retrospectively to all prior periods presented in the consolidated financial statements and are effective for fiscal years beginning after December 31, 2023 and interim periods within fiscal years beginning after December 31, 2024.

Early adoption is permitted.

The Company is currently evaluating the potential impact of this guidance on its consolidated financial statements.

The adoption of this standard did not have a material impact on the Company’s consolidated financial statements;

however, the Company has expanded its disclosures in Note 18, Segment Information.

In December 2023, the FASB issued ASU No.

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Early adoption is permitted.

The Company is currently evaluating the potential impact of this guidance on its consolidated financial statements.

The Company does not expect the adoption of this guidance to have any material effects on its financial condition, results of

operations or cash flows.

The Company is currently evaluating any new disclosures that may be required upon adoption of ASU 2023-09.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Topic 220-40).

This update assesses the disaggregation of income statement expense which requires more detailed information about specified categories of expenses included in certain expense captions presented on the face of the income statement.

The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Early adoption is permitted.

The amendments may be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the financial statements.

The Company is currently evaluating any new disclosures that may be required upon adoption of ASU 2024-03.

Sale of Orthobiologics Business

As described in Note 2, on November 8, 2023, the Company completed the sale of its Orthobiologics Business.

The sale of the Orthobiologics Business represents a strategic shift that has a major effect on the Company’s operations and financial results.

Accordingly, the Orthobiologics Business is reported as discontinued operations in accordance with

ASC 205-20 - Discontinued Operations .

The related assets and liabilities of the Orthobiologics Business are classified as assets and liabilities of discontinued operations as of December 31, 2022 in the consolidated balance sheets and the results of operations from the Orthobiologics Business are reported as discontinued operations in the consolidated statements of operations for the years ended December 31, 2023 and 2022, with the year ended December 31, 2023 including the financial results from January 1, 2023 through the transaction closing date of November 8, 2023.

Applicable amounts in the prior year have been recast to conform to this discontinued operations presentation.

The following tables show the assets and liabilities of the discontinued operations:

Year Ended December 31, 2022

Carrying amounts of the major classes of assets included in discontinued operations:

Accounts receivable, net

Prepaid expenses and other current assets

Total current assets

Property and equipment, net

Operating lease right-of-use assets and other

Total non-current assets

Total assets of discontinued operations

Carrying amounts of the major classes of liabilities included in discontinued operations:

Accounts payable

Accrued expenses and other current liabilities

Payables to tissue suppliers

Current operating lease liabilities

Total current liabilities

Long-term operating lease liabilities

Total liabilities of discontinued operations

Accordingly, the Orthobiologics Business is reported as discontinued operations in accordance with ASC 205-20 - Discontinued Operations and the amounts for the years ended December 31, 2023 have been recast to conform to this discontinued operations presentation.

In accordance with ASC 205-20, only expenses specifically identifiable and related to a business to be disposed may be presented in discontinued operations.

The following table shows the financial results of the discontinued operations for the years ended December 31, 2023 and 2022, with the year ended December 31, 2023 including the financial results from January 1, 2023 through the transaction closing date of November 8, 2023:

The following table shows the financial results of the discontinued operations from January 1, 2023 through the transaction closing date of November 8, 2023.

Additionally, a gain of $ 0.2 million was recognized during the year ended December 31, 2024 related to the final working capital adjustment received from Berkeley.

Cost of goods sold

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Net income (loss)

Total operating and investing cash flows of discontinued operations for the years ended December 31, 2023 and 2022 are comprised of the following:

Total operating and investing cash flows of discontinued operations from January 1, 2023 through the transaction closing date of November 8, 2023 are comprised of the following:

Significant operating non-cash reconciliation items:

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Expenditures for property, plant and equipment

The Company’s Women’s Health product, SimpliDerm, has historically been processed by Elutia at the Company’s Richmond, California facility;

however, with the divestiture of the Orthobiologics Business, which includes such facility, SimpliDerm will be provided to the Company on a go forward basis through a long-term supply agreement with the purchaser, Berkeley.

Stock-Based Compensation

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As of December 31, 2024, the Company had 396,561 shares of Class A common stock available for issuance under the 2020 Plan, and on January 1, 2025, the shares available for issuance were increased by 1,408,426 pursuant to the automatic increase provisions of the plan.

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.

Stock Options

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The fair value of stock options is determined on the grant date using assumptions for the estimated fair value of the underlying common stock, expected term, expected volatility, dividend yield, and the risk-free interest rate.

Before the completion of the Company’s IPO, the Board of Directors determined the fair value of common stock considering the state of the business, input from management, third party valuations and other considerations.

The Company uses the simplified method for estimating the expected term used to determine the fair value of options.

The expected volatility of the Class A common stock is partially based on the historical volatility of comparable companies in the industry whose share prices are publicly available.

The expected volatility of the Class A common stock is based on the Company’s historical stock data.

The Company uses a zero -dividend yield assumption as the Company has not paid dividends since inception nor does it anticipate paying dividends in the future.

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Dividend yield

The Company has also granted to President and Chief Executive Officer stock options that vest in equal installments upon the achievement of certain share price thresholds for twenty consecutive days of trading at each respective threshold.

In January 2024, the Company granted 390,625 options that vested on a defined date following the U.S.

Food and Drug Administration’s (“FDA”) clearance of the Company’s EluPro product (referred to as CanGarooRM during development) product.

With the FDA’s approval of EluPro in June 2024, such vesting occurred in August 2024.

Consistent with the above, these performance vesting options were valued using the Black-Scholes model.

During the year ended December 31, 2024, the Company also granted 162,500 stock options that vest in equal installments upon the achievement of certain share price thresholds for twenty consecutive days of trading at each respective threshold.

For these stock options, the Company accounted for the awards as market condition awards and used an option pricing model, the Monte Carlo model, to determine the fair value of the respective equity instruments and an expense recognition term of approximately three years .

As of December 31, 2023, there are 182,511 stock options outstanding that are market condition stock option awards.

As of December 31, 2024, there were a total of 345,011 stock options outstanding that are market condition stock option awards.

Restricted Stock Units

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Unvested, December 31, 2023

( 1,129,748 )

Unvested, December 31, 2024

The total fair value of the RSUs granted during the year ended December 31, 2023 and 2022 of $ 0.3 million and $ 2.4 million, respectively was based on the fair market value of the Company's Class A common stock on the date of grant.

The fair value at the time of the grant is amortized to expense on a straight-line basis over the vesting period of three to four years .

The Company has also granted to President and Chief Executive Officer RSUs that vest in equal installments upon the achievement of certain share price thresholds for twenty consecutive days of trading at each respective threshold.

For these RSUs, the Company accounted for the awards as market condition awards and used a Monte Carlo model to determine the fair value of these RSUs as well as the expense recognition term of two to three years using the graded vesting method.

The total fair value of the RSUs granted during the years ended December 31, 2024 and 2023 was $ 8.5 million and $ 0.3 million, respectively.

For the performance vesting RSUs, the fair value was based on the fair market value of the Company's Class A common stock on the date of grant.

The market condition RSUs are valued as described below.

The respective fair values are amortized to expense on a straight-line basis over the vesting period of generally three to four years .

As of December 31, 2024, $ 4.4 million of unrecognized compensation costs related to RSUs is expected to be recognized over a weighted average period of 2.0 years.

During the year ended December 31, 2024, the Company granted 554,375 RSUs that vested on a defined date following the FDA’s clearance of the Company’s EluPro product.

With the FDA’s approval of EluPro in June 2024, such vesting occurred in August 2024.

These performance vesting RSUs were valued using the fair value of the Company’s Class A common stock on the date of grant.

The Company has also granted 162,500 RSUs that vest in equal installments upon the achievement of certain share price thresholds for twenty consecutive days of trading at each respective threshold.

For these RSUs, the Company accounted for the awards as market condition awards and used a Monte Carlo model to

determine the fair value of these RSUs as well as the expense recognition term of approximately three years using the graded vesting method.

As of December 31, 2024, there were 252,394 RSUs outstanding that were market condition RSU awards.

As of December 31, 2023, $ 0.8 million of unrecognized compensation costs related to RSUs is expected to be recognized over a weighted average period of approximately two years .

Employee Stock Purchase Plan

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The ESPP is considered compensatory for purposes of stock-based compensation expense.

The number of shares reserved under the ESPP will automatically increase on the first day of each fiscal year through January 1, 2030, in an amount equal to the lesser of (i) 1 % of the total shares of Class A common stock outstanding on the final day of the immediately preceding calendar year;

or (ii) a lesser number of shares determined by the Company’s board of directors.

The number of shares reserved under the ESPP will automatically increase on the first day of each fiscal year through January 1, 2030, in an amount as set forth in the ESPP.

As of December 31, 2024, the total shares of Class A common stock authorized for issuance under the ESPP was 774,341 , of which 471,126 remained available for future issuance.

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Property and equipment, net

Depreciation and amortization expense on property and equipment totaled approximately $ 0.1 million in both the years ended December 31, 2023 and 2022.

Depreciation and amortization expense on property and equipment totaled approximately $ 0.1 million in both of the years ended December 31, 2024 and 2023.

Amounts included within cost of goods sold are not material.

The Company leases one production facility, one administrative and research facility and one administrative facility under non-cancelable operating lease arrangements that expire through July 2024.

Our administrative and research facility contains renewal options and escalation clauses based upon increases in the lessors’ operating expenses and other charges.

As of December 31, 2024, the Company leases one production facility, one administrative and research facility and one administrative facility under non-cancelable operating lease arrangements that expire through October 2026.

The following is a summary of the Company’s ROU assets and operating lease liabilities as of December 31, 2024 and 2023 (in thousands):

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Weighted average discount rate

For the years ended December 31, 2023 and 2022, the Company recognized operating lease cost of approximately $ 0.5 million and $ 0.4 million, respectively.

Cash paid for amounts included in the measurement of operating lease liabilities are included in operating cash flows and were approximately $ 0.6 million and $ 0.4 million for the years ended December 31, 2023 and 2022, respectively.

For the years ended December 31, 2024 and 2023, the Company recognized operating lease costs of approximately $ 0.6 million and $ 0.5 million, respectively.

Cash paid for amounts included in the measurement of operating lease liabilities are included in operating cash flows and were approximately $ 0.6 million for both the years ended December 31, 2024 and 2023.

The table below reconciles the Company’s future cash obligations to the operating lease liabilities recorded on the balance sheet as of December 31, 2024 (in thousands):

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Long-term operating lease liabilities

In March 2025, the Company signed a new lease for 26,598 square feet.

This new facility will be utilized for office, manufacturing and laboratory space.

The lease expires in January 2036 with early termination dates in 2029 and 2033.

Monthly lease payments (including allocation portions of property taxes, insurance and other landlord operating expenses) total approximately $ 75,000 with annual rent escalations of 3 %.

Rent is abated for the first 12 months of occupancy and is discounted at 50 % for months 18 through 24.

Intangible Assets

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A substantial portion of the assets acquired consisted of intangible assets related to the acquired products and customer relationships.

Management determined that the estimated acquisition-date fair values of the intangible assets related to acquired products and customer relationships were $ 29.3 million and $ 4.7 million, respectively.

determined that the estimated acquisition-date fair values of the intangible assets related to acquired products and customer relationships were $ 29.3 million and $ 4.7 million, respectively.

The components of identified intangible assets as of December 31, 2024 and 2023 are as follows (in thousands):

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Acquired products and customer relationships are both amortized over a ten-year period.

Amortization expense totaled approximately $ 3.4 million for each of the years ended December 31, 2023 and 2022, which is included in cost of

goods sold in the accompanying consolidated statements of operations.

Amortization expense totaled approximately $ 3.4 million for each of the years ended December 31, 2024 and 2023, which is included in cost of goods sold in the accompanying consolidated statements of operations.

Annual amortization expense is expected to be approximately $ 3.4 million during the years ended December 31, 2024 through 2026 and approximately $ 1.5 million during the year ended December 31, 2027.

Long-Term Debt

On May 31, 2017, the Company entered into a $ 12 million term loan facility (“MidCap Loan Facility”) and an $ 8.0 million asset-backed revolving line of credit (“MidCap Credit Facility”), under which the Company’s borrowing capacity was limited by certain qualifying assets, with MidCap Financial Trust (“May 2017 Financing”).

The MidCap Loan Facility was amended in December 2017, February 2018 and July 2019 (all amendments being considered modifications) such that an additional $ 1.5 million, $ 3.0 million, and $ 3.5 million, respectively were received by the Company bringing the total aggregate principal amount outstanding under the MidCap Loan Facility to $ 20 million.

The borrowings under the MidCap Loan Facility and the MidCap Credit Facility were fully repaid with a portion of the proceeds from the SWK Loan Facility as more fully described below.

O n August 10, 2022, the Company entered into a senior secured term loan facility with SWK Funding LLC, as agent, and other lenders party thereto for an aggregate principal amount of $ 25 million, and the Company amended the facility on May 12, 2023 (as amended, the “SWK Loan Facility”).

An initial draw of $ 21 million was made in August 2022, with the additional $ 4 million drawn on December 14, 2022 upon satisfaction of the amended terms enabling such receipt.

O n August 10, 2022, the Company entered into a senior secured term loan facility with SWK Funding LLC, as agent, and other lenders party thereto for an aggregate principal amount of $ 25 million, and the Company amended the facility in May 2023, March 2024 and September 2024 (as amended, the “SWK Loan Facility”).

An initial draw of $ 21 million was made in August 2022, and an additional $ 4 million was made on December 14, 2022.

The SWK Loan Facility also allows for the establishment of a separate, new asset-based revolving loan facility of up to $ 8 million, which has not been entered into to date.

The SWK Loan Facility matures on August 10, 2027 and accrues interest, payable quarterly in arrears.

Principal amortization of the SWK Loan Facility starts on November 15, 2024, which amortization may be extended to November 17, 2025 if certain conditions have been satisfied.

Principal payments during the amortization period will be limited based on revenue-based caps.

As of December 31, 2023, quarterly principal payments are scheduled to begin on November 15, 2024, in an amount equal to 5 % of the aggregate principal amount funded with the balance paid at maturity.

Principal amortization of the SWK Loan Facility, as amended in September 2024, starts in November 2025.

Principal payments during the amortization period will be limited based on revenue-based caps, although as of December 31, 2024, no such caps are applicable and quarterly principal payments will be in an amount equal to 5 % of the aggregate principal amount funded with the balance paid at maturity.

T he SWK Loan Facility also includes both revenue and liquidity covenants, restrictions as to payment of dividends, and is secured by all assets of the Company, subject to certain customary exceptions.

As of December 31, 2024, Elutia was in compliance with its financial covenants under the agreement governing the SWK Loan Facility (“SWK Loan Facility Agreement”).

All of the SWK Loan Facility borrowings take the form of Secured Overnight Financing Rate (“SOFR”) loans and bear interest at a rate per annum equal to the sum of an applicable margin of (i) 7.75 % and the “Term SOFR Rate” (based upon an interest period of 3 months), or (ii) if the Company has elected the PIK Interest option (as defined below), 3.75 % and the “Term SOFR Rate.” The Company may elect a portion of the interest due, to be paid in-kind at a rate per annum of 4.5 % (“PIK Interest”), and such election may be made (x) until November 15, 2024 if the conditions to draw the Additional Term Loan have not been met, or (y) if such conditions to draw the Additional Term Loan have been satisfied, until November 17, 2025.

The “Term SOFR Rate” is subject to a floor of 2.75 %.

The agreement governing the SWK Loan Facility also includes an exit fee equal to 6.5 % of the aggregate principal amount funded prior to termination plus $ 62,500 and prepayment penalties equal to:

(i) if such prepayment occurs prior to the first anniversary of the Closing Date, 2 % of the aggregate principal amount funded prior to the termination plus remaining unpaid interest payments scheduled to be paid during the first year of the loan or (ii) if such prepayment occurs after the first anniversary of the Closing Date but prior to the second anniversary of the Closing Date, 2 % of the aggregate principal amount funded prior to the termination.

The weighted average interest rate on the SWK Loan Facility was 13.2 % for the year ended December 31, 2023 and 12.6 % for the period from August 10, 2022 through December 31, 2022.

The agreement governing the SWK Loan Facility also includes an exit fee equal to 6.5 % of the aggregate principal amount funded prior to termination plus $ 112,500 .

The weighted average interest rate on the SWK Loan Facility was 13.4 % and 13.2 % for the years ended December 31, 2024 and 2023, respectively.

The Company elected the PIK interest option for all four quarters of both 2024 and 2023.

On August 10, 2022, the Company issued to SWK Funding LLC a warrant (“Class A Warrant”) to purchase, in the aggregate, up to 187,969 shares of Class A common stock of the Company, $ 0.001 par value per share at an exercise price of $ 6.65 per share.

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The debt discount and deferred financing costs will be recognized as interest expense through the maturity of the loan.

The Company used $ 16 million of the proceeds of the SWK Loan Facility to repay all outstanding obligations on the MidCap Loan Facility and MidCap Credit Facility.

Such payment included (i) $ 12.8 million to repay all outstanding principal and accrued interest on the MidCap Loan Facility, (ii) $ 1.7 million to pay the prepayment and exit fees on the MidCap Loan Facility and (iii) $ 1.5 million to repay the outstanding balance, accrued interest and exit fees on the MidCap Credit Facility.

The prepayment fees, payment of unaccrued exit fees and the write-off of unamortized deferred financing costs resulted in a loss to the Company of approximately $ 1.2 million which has been recorded as other expense (income), net in the accompanying consolidated statements of operations for the year ended December 31, 2022.

The SWK Loan Facility Agreement requires certain mandatory prepayments, subject to certain exceptions, with:

(1) 100 % of any net casualty proceeds in excess of $ 250,000 and (2) for non-ordinary course asset sales, an amount equal to the difference between (x) the proportion of divested gross profit (as defined in the SWK Loan Facility Agreement) to the Company’s total gross profit (as defined in the SWK Loan Facility Agreement) multiplied by the outstanding loans under the SWK Loan Facility and (y) the difference between $ 1,000,000 and the aggregate sale proceeds of any assets previously sold during the fiscal year.

No such mandatory prepayments were required during the year ended December 31, 2022;

however, the closing of the divestiture of the Orthobiologics Business on November 8, 2023 triggered the mandatory prepayment of $ 4.0 million.

Of such amount, $ 2.0 million wa s paid shortly after closing of the divestiture of the Orthobiologics Business and the remainder was paid on February 15, 2024 based on mutual agreement between the parties.

Borrowings under the MidCap Loan Facility, as amended, bore interest at a rate per annum equal to the sum of (x) the greater of (i) 2.25 % and (ii) the applicable London Interbank Offered Rate for U.S.

dollar deposits divided by 1.00 minus the maximum effective reserve percentage for Eurocurrency funding (“LIBOR”) plus (y) 7.25 %.

The weighted average interest rate on MidCap Loan Facility was 9.5 % from January 1, 2022 through August 10, 2022 (the “Repayment Date”).

Borrowings under the MidCap Credit Facility bore interest at a rate per annum equal to the sum of (x) the greater of (i) 2.25 % and (ii) LIBOR plus (y) 4.95 %.

The weighted average interest rate on MidCap Credit Facility was 7.2 % from January 1, 2022 through the Repayment Date.

During 2017, the Company restructured certain of its liabilities with a tissue supplier and entered into an unsecured promissory note totaling $ 2.1 million.

The note bears interest at 5 % and includes quarterly interest-only payments in 2017 and quarterly interest and principal payments from March 31, 2018 through August 31, 2021.

The Company used $ 1.4 million of the proceeds from the SWK Loan Facility to repay the remaining balance on the promissory note;

however the accrued interest on the promissory note was forgiven by the lender.

Such forgiveness resulted in a gain to the Company of approximately $ 0.4 million which has been recorded as other expense (income), net in the accompanying consolidated statements of operations for the year ended December 31, 2022.

The closing of the divestiture of the Orthobiologics Business in November 2023 triggered the mandatory prepayment of $ 4.0 million.

Of such amount, $ 2.0 million wa s paid shortly after closing of the divestiture in 2023 and the remainder was paid in February 2024 based on mutual agreement between the parties.

As noted above, the Company executed an amendment to the SWK Loan Facility in September 2024 which, among other items, served to defer the commencement of principal repayment from November 2024 to November 2025.

As of December 31, 2024, the contractual maturities of the long-term debt are as follows (in thousands):

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Deferred Financing Costs

Exit Fee Liability

Current Portion

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As part of the CorMatrix asset acquisition described in Note 9, the Company assumed a restructured, long-term obligation (the “Initial Revenue Interest Obligation”) to Ligand Pharmaceuticals (“Ligand”) with an estimated present value on the acquisition date of $ 27.7 million.

Subject to annual minimum payments of $ 2.75 million per year, the terms of the Initial Revenue Interest Obligation require Elutia to pay Ligand, 5 % of future sales of the products Elutia acquired from CorMatrix, including CanGaroo, ProxiCor, Tyke and VasCure, as well as products substantially similar to those products, such as the version of CanGaroo that Elutia is currently developing that is designed to include antibiotics.

Furthermore, a $ 5.0 million payment will be due to Ligand if cumulative sales of these products exceed $ 100 million and a second $ 5.0 million will be due if cumulative sales exceed $ 300 million during the ten-year term of the agreement which expires on May 31, 2027.

On January 10, 2024, the Company entered into an amendment to the Revenue Interest Obligation (“Amended Revenue Interest Obligation”).

Pursuant to the Amended Revenue Interest Obligation, the parties modified and restructured the Revenue Interest Obligation by (i) revising the annual minimum payments for 2024 and each subsequent fiscal year during the term of the agreement from $ 2.75 million to $ 4.4 million;

(ii) agreeing to a payment by the Company of $ 3.0 million in satisfaction of all royalty obligations for the first three fiscal quarters of 2023, with half of such amount to be paid not later than January 20, 2024, and the remainder to be paid not later than April 10, 2024;

(iii) agreeing to a payment by the Company of $ 1.1 million in satisfaction of the royalty obligations for the fourth quarter of 2023;

and (iii) waiving the obligation of Elutia to make the $ 5.0 million milestone payment that became due to Ligand in the second quarter of 2023.

As of December 31, 2023, the Company recorded the present value of the estimated total future payments under the Initial Revenue Interest Obligation as a long-term obligation and the short-term portion is comprised of (i) the 2023 and 2024 minimum payments, (ii) the first $ 5.0 million sales milestone payment noted above and (iii) the unpaid portion of the 2022 minimum payments.

The short-term portion as of December 31, 2022 is comprised of (i) the 2023 minimum payments, (ii) the first $ 5.0 million sales milestone payment noted above and (iii) the unpaid portion of the 2022 minimum payments.

Furthermore, a $ 5.0 million payment would be due to Ligand if cumulative sales of these products exceed $ 100 million and a second $ 5.0 million will be due if cumulative sales exceed $ 300 million or the assets related to CanGaroo and any substantially similar products undergo a change of control during the ten-year term of the agreement which expires on May 31, 2027.

On January 10, 2024, the Company entered into an amendment to the Revenue Interest Obligation (the “Amended Revenue Interest Obligation”).

Pursuant to the Amended Revenue Interest Obligation, the parties modified and restructured the Revenue Interest Obligation by revising the annual minimum payments for 2024 and each subsequent fiscal year during the term of the agreement from $ 2.75 million to $ 4.4 million.

Such minimums are payable quarterly within 30 days after each quarter-end date.

Additionally, the Company made payments totaling $ 3.0 million ( 50 % paid in January 2024 and 50 % paid in April 2024) in satisfaction of all royalty obligations for the first three fiscal quarters of 2023 and made a payment in February 2024 of $ 1.1 million in satisfaction of the royalty obligations for the fourth quarter

Furthermore, as part of the Amended Revenue Interest Obligation, Ligand waived the Company’s obligation to make the $ 5.0 million milestone payment that became due to Ligand in the second quarter of 2023.

The Company has estimated the value of the Initial Revenue Interest Obligation as of December 31, 2024 and 2023, including contingent milestone payments and estimated sales-based payments, based on assumptions related to future sales of the acquired products.

At each reporting period, the value of the Revenue Interest Obligation is re-measured based on current estimates of future payments, with changes to be recorded in the consolidated statements of operations using the catch-up method.

The Amended Revenue Interest Obligation changed the timing and extent of future payments by the Company to Ligand and such change to the estimated future payments yielded a reduction to the total obligation of approximately $ 1.4 million during the year ended December 31, 2024.

The resulting gain was recognized as other income in the accompanying consolidated statement of operations.

There was no change to estimated future payments during the year ended December 31, 2023, and thus, no re-measurement gain or loss was recognized.

As of December 31, 2024, the short-term portion of the Amended Revenue Interest Obligation is comprised of the newly established annual minimum payments of $ 4.4 million.

As of December 31, 2023, the short-term portion of the Initial Revenue Interest Obligation is comprised of (i) the 2023 and 2024 minimum payments, (ii) the first $ 5.0 million sales milestone payment noted above and (iii) the unpaid portion of the 2022 minimum payments.

Fair Value Measurements

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Fair Value Measurements at December 31, 2023 Using:

Money market fund

Revenue Interest Obligation*

Warrant liability

Fair Value Measurements at December 31, 2024 Using:

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see discussion of value below

The warrant liability in the table above consisted of the fair value of Offering Warrants (as defined in Note 14 below) to purchase the Company’s Class A Common Stock and was based on significant inputs not observable on the market, which represents a Level 3 measurement within the fair value hierarchy.

See Note 14 for discussion of the Company’s valuation methods and related impacts on the consolidated statement of operations with respect to the warrant liability.

The Company has estimated the value of the Initial Revenue Interest Obligation as of December 31, 2023 and 2022, including contingent milestone payments and estimated sales-based payments, based on assumptions related to future sales of the acquired products.

There was no change to estimated future payments during the year ended December 31, 2023 and thus, no re-measurement gain or loss was recognized.

In connection with our estimation at December 31, 2022, it was determined that the estimated future payments, discounted at the original discount rate, had decreased since the prior estimates.

Such decrease was primarily the result of anticipated changes to our strategic partnerships relative to sales of both our CanGaroo and cardiovascular product lines that were expected to impact the timing and extent of such sales and, thereby, were expected to reduce expected future payments to Ligand.

The change to estimated future payments yielded a reduction to the total Revenue Interest Obligation of approximately $ 5.0 million for the year ended December 31, 2022 with such amount recognized as a gain in other expense (income), net in our consolidated statement of operations.

The following table provides a rollforward of the aggregate fair value of the Revenue Interest Obligation and warranty liability categorized with Level 3 inputs for the years ended December 31, 2023 and 2022 (in thousands):

The warrant liability in the table above consisted of the fair value of Common Warrants, 2023 Prefunded Warrants and 2024 Prefunded Warrants (as defined in Note 14 below) to purchase the Company’s Class A Common Stock and, with respect to the Common Warrants, was based on significant inputs not observable on the market, which represents a Level 3 measurement within the fair value hierarchy.

See Note 14 for discussion of the Company’s valuation methods and related impacts on the consolidated statement of operations relative to the warrant liability.

See Note 11 for discussion of the fair valuation of the Company’s Revenue Interest Obligation.

The following table provides a rollforward of the aggregate fair value of the Revenue Interest Obligation categorized with a Level 3 input for the years ended December 31, 2024 and 2023 (in thousands):

Revenue Interest Obligation

Warranty Liability

Balance as of January 1, 2022

Payments on Revenue Interest Obligation

Balance, January 1, 2023

Interest accrued to Revenue Interest Obligation

Gain on revaluation of revenue interest obligation

Balance as of December 31, 2022

Balance, December 31, 2023

Payments on Revenue Interest Obligation

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Gain on revaluation of revenue interest obligation

Fair value adjustment to warrant liability

Balance as of December 31, 2023

Balance, December 31, 2024

See Note 14 for the rollforward of the aggregate fair value of the warrant liability.

The Company is subject to income taxes in the United States.

Income taxes are accounted for under the asset and liability method.

Deferred income tax assets and liabilities are calculated based on the difference between the financial

statement carrying amounts of existing assets and liabilities and their respective tax bases using the enacted income tax rates expected to be in effect during the years in which the temporary differences are expected to reverse.

Deferred income tax assets and liabilities are calculated based on the difference between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases using the enacted income tax rates expected to be in effect during the years in which the temporary differences are expected to reverse.

The reconciliation of the U.S.

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Change in valuation allowance

Income tax expense

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes as well as net operating loss carryforwards.

Effective tax rate

carryforwards.

As of December 31, 2024 and 2023, significant components of the Company’s net deferred income taxes are as follows (in thousands):

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Operating lease liability

FiberCel litigation costs

Litigation costs

Deferred tax liabilities:

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Net deferred tax asset, net of valuation allowance

The Company did not recognize any deferred benefit for income taxes for the years ended December 31, 2023 and 2022, as the increases to the respective net deferred tax assets of $ 7.1 million and $ 7.6 million, respectively, were offset by corresponding increases to the Company’s deferred tax asset valuation allowance due to uncertainty of realizing the deferred tax assets.

The Company did not recognize any deferred benefit for income taxes for the years ended December 31, 2024 and 2023, as the increases to the respective net deferred tax assets of $ 8.4 million and $ 7.1 million, respectively, were offset by corresponding increases to the Company’s deferred tax asset valuation allowance due to the uncertainty of realizing the deferred tax assets.

The Company evaluates the need for deferred tax asset valuation allowances based on a more likely than not standard.

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These ownership changes may limit the amount of carryforwards that can be utilized annually to offset future taxable income.

The Company has not conducted a study to assess whether a change of control has occurred or whether there have been multiple changes of control since inception due to the significant complexity and cost associated with such a study.

The Company has not conducted a study to assess whether a change of control has occurred or whether there have been multiple changes of control since inception due to the significant

complexity and cost associated with such a study.

If the Company has experienced a change of control, as defined by Section 382, at any time since inception, utilization of the net operating loss carryforwards would be subject to an annual limitation under Section 382.

Any limitation may result in expiration of a portion of the net operating loss carryforwards before utilization.

Any limitation may result in the expiration of a portion of the net operating loss carryforwards before utilization.

As of December 31, 2024 and 2023, the Company had no unrecognized tax benefits.

Common Stock and Warrants

Registered Direct Offerings of Common Stock and Warrants

On June 16, 2024, the Company sold, in a registered direct offering (“2024 Registered Offering”) an aggregate of (i) 3,175,000 shares of the Company’s Class A common stock and (ii) prefunded warrants (“2024 Prefunded Warrants”) to purchase up to an aggregate of 725,000 shares of Class A Common Stock.

The public offering price for each share of Class A Common Stock was $ 3.40 , and the public offering price for each 2024 Prefunded Warrant was $ 3.399 , for aggregate gross proceeds of approximately $ 13.3 million, before deducting offering expenses.

The 2024 Prefunded Warrants have an exercise price of $ 0.001 per share of Class A Common Stock, are exercisable immediately and will expire when exercised in full.

The Company incurred transaction fees, including commissions and legal fees, of approximately $ 1.4 million in connection with the Registered Offering, of which $ 1.1 million were allocated to the issuance of the common stock.

Subsequent to December 31, 2024, on February 4, 2025, the Company sold, in a registered direct offering (“2025 Registered Offering”) an aggregate of (i) 5,520,000 shares of our Class A common stock and (ii) prefunded warrants (“2025 Prefunded Warrants”) to purchase up to an aggregate of 480,000 shares of Class A Common Stock.

The public offering price for each share of Class A Common Stock was $ 2.50 , and the public offering price for each 2025 Prefunded Warrant was $ 2.499 , for aggregate gross proceeds of approximately $ 15.0 million, before deducting offering expenses.

The 2025 Prefunded Warrants have an exercise price of $ 0.001 per share of Class A Common Stock, are exercisable immediately and will expire when exercised in full.

Private Placement of Common Stock and Warrants

On September 21, 2023, the Company sold, in a private offering an aggregate of (i) 6,852,811 units (“Common Units”) each comprised of (a) one share of the Company’s Class A common stock and (b) a warrant (“Common Warrant”) to purchase one and one half shares of Class A Common Stock, and (ii) 503,058 units (the “Prefunded Units”), each comprised of (a) a prefunded warrant (“Prefunded Warrant”) to purchase one share of Class A Common Stock, and (b) a Common Warrant.

On September 21, 2023, the Company sold, in a private offering (“Private Offering”) an aggregate of (i) 6,852,811 units (“Common Units”) each comprised of (a) one share of the Company’s Class A common stock and (b) a warrant (“Common Warrant”) to purchase one and one half shares of Class A Common Stock, and (ii) 503,058 units (the “Prefunded Units”), each comprised of (a) a prefunded warrant (“2023 Prefunded Warrant”) to purchase one share of Class A Common Stock, and (b) a Common Warrant.

The Common Units were sold at a purchase price of $ 1.4275 per unit, and the Prefunded Units were sold at a purchase price of $ 1.4265 per unit, for aggregate gross proceeds of approximately $ 10.5 million, before deducting offering expenses.

Each Common Warrant is exercisable at any time until the earlier of (a) 30 trading days after the clearance by the FDA of the Company’s CanGarooRM antibiotic-eluting biologic envelope or (b) five years from the date of the offering, at an exercise price per share of $ 1.4275 .

Each Common Warrant was exercisable until July 31, 2024, the date which was 30 trading days after the clearance by the FDA of the Company’s EluPro product, at an exercise price per share of $ 1.4275 .

As discussed below, all Common Warrants were exercised before they expired.

Each 2023 Prefunded Warrant is exercisable at any time at a nominal exercise price per share of $ 0.001 (with the remainder of the exercise price per share of Class A Common Stock having been prefunded to the Company).

The Company incurred transaction fees, including commissions and legal fees, of approximately $ 1.1 million in connection with the private placement, of which $ 0.4 million were allocated to the issuance of the common stock.

See below for discussion of the accounting for warrants and the allocation of the remainder of the transaction fees.

The Company incurred transaction fees, including commissions and legal fees, of approximately $ 1.1 million in connection with the Private Offering, of which $ 0.4 million were allocated to the issuance of the common stock.

See below for discussion of the accounting for the warrants and the allocation of the remainder of the transaction fees from both the 2024 Registered Offering and Private Offering.

Warrant Liabilities

The Company has concluded that the Common Warrants and the Prefunded Warrants (collectively, the “Offering Warrants”) do not meet the equity contract scope exception under ASC 815-40 as in the event of a (i) fundamental transaction such as a merger and (ii) failure to timely delivery warrant shares upon exercise, certain provisions may require the Company to adjust the settlement value that is not consistent with a fixed-for-fixed option pricing model.

As a result, as of the September 21, 2023 issuance date, the Company allocated $ 8.6 million of the gross proceeds from the offering to the Offering Warrants based on their fair value, and the remaining $ 1.9 million was allocated to the common shares and recorded as permanent equity.

The liability associated with the Offering Warrants is recorded as warrant liability in the accompanying consolidated balance sheet as of December 31, 2023.

The valuation of the Offering Warrants is adjusted to fair value (Level 3) at each subsequent balance sheet date until the warrants are settled.

To this end, due primarily to fluctuations in the Company’s underlying common stock price between the issuance date of the Offering Warrants and December 31, 2023, the warrant liability was revalued to $ 12.8 million as of December 31, 2023.

The change in fair value of $ 4.2 million has been recorded as other expense (income), net in the accompanying consolidated statements of operations for the year ended December 31, 2023.

The Company also allocated a portion of the transaction fees noted above to the Offering Warrants and expensed within other expense (income), net, approximately $ 0.7 million of these fees.

The Company calculated the fair value of the Offering Warrants using the Black-Scholes option pricing model with the following inputs:

September 21, 2023

The Company has concluded that the 2024 Prefunded Warrants from the Registered Offering and the Common Warrants and the 2023 Prefunded Warrants from the Private Offering do not meet the equity contract scope exception under ASC 815-40 as in the event of a (i) fundamental transaction such as a merger and (ii) failure to timely deliver warrant

shares upon exercise, certain provisions of which may require the Company to adjust the settlement value in a manner that is not consistent with a fixed-for-fixed option pricing model.

As a result, with respect to the 2024 Prefunded Warrants, the Company allocated $ 2.5 million of the gross proceeds from the Registered Offering to such warrants based on their fair value.

Similarly, with respect to the Common Warrants and 2023 Prefunded Warrants, the Company allocated $ 8.6 million of the gross proceeds from the Private Offering to such warrants based on their fair value.

Additionally, the Company allocated a portion of the transaction fees from both the Registered Offering and the Private Offering to the respective warrants and recognized the expense within other (income) expense, net.

Such expenses totaled $ 0.3 million during the year ended December 31, 2024, and $ 0.8 million during the year ended December 31, 2023.

As noted above, the last exercise date for the Common Warrants was July 31, 2024.

All Common Warrants outstanding were exercised by such date yielding exercise proceeds of $ 15.7 million during the year ended December 31, 2024.

Certain of these exercises ultimately resulted in their conversion to 2023 Prefunded Warrants.

The liability associated with the 2024 Prefunded Warrants, Common Warrants and 2023 Prefunded Warrants is recorded as warrant liability in the accompanying consolidated balance sheet as of December 31, 2024 and December 31, 2023.

A summary of the warrant activity for the years ended December 31, 2024 and 2023, respectively is as follows:

Common Warrants

2023 Prefunded Warrants

2024 Prefunded Warrants

Outstanding, January 1, 2023

Outstanding, December 31, 2023

Conversions of Common Warrants to 2023 Prefunded Warrants

( 3,896,130 )

( 7,137,674 )

Outstanding, December 31, 2024

The valuation of the warrants is adjusted to fair value (Level 3) at each subsequent balance sheet date until the warrants are settled.

The following table provides a rollforward of the aggregate fair value of the warrant liability for the years ended December 31, 2024 and 2023, respectively (in thousands):

Common Warrants

2023 Prefunded Warrants

2024 Prefunded Warrants

Total Offering Warrants

Warrant Liability, January 1, 2023

Fair value upon issuance

Loss on revaluation of warrant liability

Warrant Liability, December 31, 2023

Fair value upon issuance

Loss on revaluation of warrant liability

Conversions of Common Warrants to 2023 Prefunded Warrants

Warrant Liability, December 31, 2024

The fair value adjustments were driven mainly by changes in the Company’s stock price and have been recorded as loss on revaluation of warrant liability in the accompanying consolidated statements of operations for the years ended December 31, 2024 and 2023.

The Company calculated the fair value of the Common Warrants using the Black-Scholes option pricing model with the following inputs as of June 30, 2024 (the last reporting date prior to all remaining Common Warrant exercises in July 2024) and December 31, 2023:

June 30, 2024

December 31, 2023

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Dividend yield

The expected term of the Offering Warrants is based on a significant unobservable input, the Company’s probability-weighted expectations relative to the timing of the clearance by the U.S.

Food & Drug Administration of the Company’s CanGarooRM antibiotic-eluting biologic envelope.

Public Offering of Common Stock

On December 1, 2022, the Company issued and sold 2,350,000 shares of its Class A common stock at a price to the public of $ 4.75 per share in a registered underwritten public offering, resulting in net proceeds to the Company of approximately $ 10.2 million, after deducting underwriting discounts and offering expense.

The Company has used the price of its Class A Common Stock to estimate the fair value of the 2024 Prefunded Warrants and 2023 Prefunded Warrants at each measurement date.

The price of the Company’s Class A Common Stock approximates the fair value of the 2024 Prefunded Warrants and 2023 Prefunded Warrants due to the exercise price per share of $ 0.001 .

Retirement Plan

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The Company matches employee contributions made to the plan according to a specified formula.

The Company’s matching contributions totaled approximately $ 0.3 million for both the years ended December 31, 2023 and 2022.

In June 2022, our former President and Chief Executive Officer, in connection with his resignation from the Company, entered into a separation agreement pursuant to which he remained a full-time, non-officer employee of the Company through September 30, 2022 to assist with the transition of his duties to his successor.

On September 30, 2022, our former President and Chief Executive Officer received:

(i) cash severance in an amount equal to his base salary for a period of 12 months and 100 % of his annual target bonus and (ii) the COBRA benefits, during the 12-month period following September 30, 2022.

The Company recognized these severance costs totaling approximately $ 1.0 million over the period from June 21, 2022 through September 30, 2022, and as of December 31, 2022, all such expenses remaining to be paid were included in Accrued Expenses in the accompanying consolidated balance sheets.

The Company’s matching contributions totaled approximately $ 0.1 million and $ 0.3 million for the years ended December 31, 2024 and 2023, respectively.

Net Loss Per Share

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Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same.

The Company excluded the following potential common shares, presented based on amounts outstanding at period end, from the computation of diluted net loss per share attributable to common stockholders:

The Company excluded

the following potential common shares, presented based on amounts outstanding at period end, from the computation of diluted net loss per share attributable to common stockholders:

Options to purchase common stock

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2023 Prefunded Warrants

2024 Prefunded Warrants

Commitment and Contingencies

Cook Biotech License and Supply Agreements

Elutia has entered into a license agreement with Cook Biotech Incorporated (“Cook Biotech”) for an exclusive, worldwide license to the porcine tissue for use in the Company’s Cardiovascular and CanGaroo products, subject to certain co-exclusive rights retained by Cook Biotech.

The term of such license is through the date of the last to expire of the licensed Cook Biotech patents, which is anticipated to be July 2031.

Along with this license agreement, Elutia entered into a supply agreement whereby Cook Biotech would be the exclusive supplier to Elutia of the licensed porcine tissue.

Under certain limited circumstances, Elutia has the right to manufacture the licensed product and pay Cook Biotech a royalty of 3 % of sales of the Elutia-manufactured tissue.

Elutia has entered into a license agreement, as amended, with Cook Biotech (“Cook”), now owned by Evergen, for an exclusive, worldwide license to the porcine tissue for use in the Company’s Cardiac Patch and CanGaroo products, subject to certain co-exclusive rights retained by Cook (the “Cook License Agreement”).

The term of such license is through the date of the last to expire of the licensed Cook patents, which is anticipated to be July 2031.

Along with this license agreement, Elutia entered into a supply agreement whereby Cook would be the exclusive supplier to Elutia of licensed porcine tissue.

Under certain limited circumstances, Elutia has the right to manufacture the licensed product and pay Cook a royalty of 3 % of sales of the Elutia-manufactured tissue.

The supply agreement expires on the same date as the related license agreement.

No royalties were paid to Cook Biotech during the years ended December 31, 2023 and 2022.

Elutia has also entered into an amendment to the Cook Biotech license agreement (the “Cook Biotech Amendment”) in order to add fields of exclusive use.

Specifically, the Cook Biotech Amendment provides for a worldwide exclusive license to the porcine tissue for use with neuromodulation devices in addition to cardiovascular devices.

The Cook Amendment includes license fee payments of $ 0.1 million per year in each of the years 2021 through 2026.

Such license payments would accelerate if a change in control, as defined, occurs within Elutia.

The Company, in its sole discretion, can terminate the license agreement at any time.

In February 2024, it was announced that Cook Biotech was acquired by RTI Surgical, Inc.

The Company does not expect the acquisition to affect its supply agreement with Cook Biotech, which the Company understands will continue as a subsidiary of RTI Surgical.

No royalties were paid or due to be paid to Cook during the years ended December 31, 2024 or 2023.

The Cook License Agreement also provides for a worldwide exclusive license to the porcine tissue for use with neuromodulation devices in addition to cardiovascular devices and includes license fee payments of $ 0.1 million per year in each of the years 2021 through 2026.

Such license payments would accelerate if a change in control, as defined in the Cook License Agreement, occurs within Elutia.

The Company, in its sole discretion, can terminate the Cook License Agreement at any time.

Legal Proceedings

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In June 2021, the Company announced a voluntary recall of a single lot of FiberCel fiber viable bone matrix.

Since September 2021, 109 lawsuits or claims have been filed or asserted against the Company.

Since September 2021, 110 product liability lawsuits or claims have been filed or asserted against the Company involving FiberCel.

As of December 31, 2024, there were 66 active lawsuits or claims against the Company, including 23 lawsuits or claims where settlements have been reached but not yet been paid as of December 31, 2024.

The lawsuits, which have been filed against Elutia, certain Medtronic entities, and others, allege that the plaintiffs were exposed to and/or contracted tuberculosis and/or suffered substantial symptoms and complications following the implantation of FiberCel during orthopedic fusion operations.

Such lawsuits were filed in Indiana state court (collectively, the “Indiana State Complaints”);

Such lawsuits were filed in the Superior Court of Marion County, Indiana (collectively, the “Indiana State Complaints”);

the Superior Court of the State of Delaware (collectively, the “Delaware State Complaints”);

the Circuit Court of Maryland (collectively, the “Maryland State Complaints”);

the Court of Common Pleas of Ohio (the “Ohio State Complaint”);

District Court of the Southern District of Ohio (the “Ohio Federal Complaint”);

District Court for the Western District of North Carolina (“North Carolina Federal Complaint”);

the Circuit Court of Florida, and the U.S.

the Court of Common Pleas of

Montgomery County, Ohio and the U.S.

District Court of the Southern District of Ohio (the “Ohio Complaints”);

District Court for the Western District and Eastern District of North Carolina (collectively, the “North Carolina Federal Complaints”);

the Circuit Court of Okaloosa County, Florida, and the U.S.

District Court for the Northern District and the Southern District of Florida (collectively, the “Florida Complaints”);

District Court for the Eastern District of Michigan (collectively “Michigan Federal Complaints.”);

District Courts for the Eastern District of Michigan (collectively “Michigan Federal Complaints.”);

District Court for the District of Colorado (“Colorado Federal Complaint”);

District Court for the District of Oregon (“Oregon Federal Complaint”);

the Fayette, Kentucky Circuit Court and the U.S.

the Circuit Court of Fayette County, Kentucky and the U.S.

District Court for the Eastern District of Kentucky (collectively, “Kentucky Complaints.”);

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District Court of Arizona (“Arizona Federal Complaint");

District Court for the Northern District of Georgia (“Georgia Federal Complaint”).

Plaintiffs in the Indiana State Complaints allege a cause of action under Indiana’s Product Liability Act, citing manufacturing defects, defective design and failure to properly warn and instruct, and several of the complaints allege loss of consortium.

Plaintiffs in these actions assert that the defendants are strictly liable or have breached the duty of care owed to plaintiffs by failing to exercise reasonable care in designing, manufacturing, marketing and labeling FiberCel and are seeking various types of damages, including economic damages, non-economic damages and loss of consortium.

Plaintiffs in these actions assert that the defendants are strictly liable or have breached the duty of care owed to plaintiffs by failing to exercise reasonable care in designing, manufacturing, marketing and labeling FiberCel and seek various types of damages, including economic damages, non-economic damages and loss of consortium.

Plaintiffs in one of the Indiana State Complaints allege causes of action for product liability, negligence, breach of express and implied warranties, and punitive damages.

Each of the plaintiffs in the Delaware State Complaints alleges negligence, breach of implied warranty, breach of express warranty, and medical monitoring and punitive damages, and two also allege loss of consortium.

Plaintiffs in the Delaware State Complaints are seeking economic, consequential, and punitive damages.

Each of the plaintiffs in the Delaware State Complaints alleges negligence, breach of implied warranty, breach of express warranty, medical monitoring, and punitive damages, and two also allege loss of consortium.

Plaintiffs in the Delaware State Complaints seek economic, consequential, and punitive damages.

The Maryland State Complaints assert claims of negligence, breach of implied warranty, breach of express warranty, medical monitoring, and loss of consortium.

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The Colorado Federal Complaint asserts causes of action for strict product liability, misrepresentation, negligence, breach of express warranty, and breach of implied warranty of merchantability.

The Michigan Federal Complaints assert causes of action for negligence, gross negligence breach of implied warranty, breach of express warranty, intentional infliction of emotional

distress, and liability under the res ipsa loquitur doctrine.

The Michigan Federal Complaints assert causes of action for negligence, gross negligence breach of implied warranty, breach of express warranty, intentional infliction of emotional distress, and liability under the res ipsa loquitur doctrine.

The Michigan Federal Complaints seek compensatory damages and punitive damages.

The North Carolina Federal Complaint alleges causes of action for negligence, defective design, breach of implied warranty, breach of express warranty, and loss of consortium, and seeks both compensatory and punitive damages.

The North Carolina Federal Complaints allege causes of action for negligence, defective design, breach of implied warranty, breach of express warranty, and loss of consortium, and seek both compensatory and punitive damages.

The Oregon Federal Complaint asserts strict liability claims for defective design, defective manufacture, and failure to warn, and seeks compensatory damages.

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The Kentucky Complaints assert strict liability claims based on manufacturing defect, design defect, failure to warn, negligence, breach of implied warranty, breach of express warranty, and seek recovery for medical monitoring, loss of consortium, compensatory damages, and punitive damages.

The Louisiana Federal Complaint asserts claims of violation of the Louisiana products liability act, negligence and gross negligence, breach of implied warranty, breach of express warranty and seek recovery for medical monitoring.

The Louisiana Federal Complaint asserts claims of violation of the Louisiana Products Liability Act, negligence and gross negligence, breach of implied warranty, and breach of express warranty and seeks recovery for medical monitoring.

The Illinois Complaints contain claims of strict liability, defective design and manufacturing, breach of express warranty, breach of implied warranty and negligence and seek compensatory damages.

Plaintiff in the Pennsylvania Federal Complaint asserts claims for strict liability, negligence, breach of implied warranty, and breach of express warranty, as well as claims under the Wrongful Death Act and the Survival Act and seeks compensatory and punitive damages.

The Virginia Federal Complaint asserts causes of action for negligent failure to warn, negligence, breach of implied warranty, breach of express warranty and seeks recovery for medical monitoring, compensatory damages and punitive damages.

The Pennsylvania Federal Complaint asserts claims for strict liability, negligence, breach of implied warranty, and breach of express warranty, as well as claims under the Wrongful Death Act and the Survival Act, and seeks compensatory and punitive damages.

The Virginia Federal Complaint asserts causes of action for negligent failure to warn, negligence, breach of implied warranty, and breach of express warranty and seeks recovery for medical monitoring, compensatory damages and punitive damages.

The California Federal Complaint advances claims of strict liability (defective design and manufacture), negligence and breach of implied warranty and seeks compensatory damages and recovery for medical monitoring.

The Arizona Federal Complaint asserts strict product liability claims for defective design, manufacture and failure to warn, negligence, breach of implied warranty and breach of express warranty and seeks recovery for medical monitoring, loss of consortium, compensatory damages, and punitive damages.

The Company refers to all of the aforementioned litigation, or claim notices, collectively as the “FiberCel Litigation.”

The Georgia Federal Complaint asserts causes of action for negligence, including negligent design, negligent failure to warn, negligent manufacturing, and negligent misrepresentation;

strict liability claims based on manufacturing defect, design defect, and

failure to warn;

breach of implied warranty of merchantability;

breach of implied warranty of fitness for a particular purpose;

breach of express warranty;

and loss of consortium and it seeks compensatory damages and punitive damages.

The Company refers to the aforementioned litigation and claim notices collectively as the “FiberCel Litigation.”

Viable Bone Matrix Litigation

In July 2023, the Company announced a voluntary recall of a single lot of a certain viable bone matrix (“VBM”) product and the market withdrawal of all of its VBM products produced after a specified date.

Notice of the voluntary recall was issued to centers after the Company learned of post-surgical Mycobacterium tuberculosis (“MTB”) infections in two patients treated with a VBM product from a single donor lot.

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.

Based on our discussions with the CDC, the Company believes that a total of 36 patients were treated with product from the single donor lot.

Since August 2023, 24 product liability lawsuits or claims have been filed or asserted against the Company involving VBM.

As of December 31, 2024, there were 15 active lawsuits or claims against the Company, including three lawsuits or claims where settlements had been reached but not yet paid.

Furthermore, there is one claim where the statute of limitation to file a lawsuit has expired.

The lawsuits, which have been filed against Elutia and others, allege that the plaintiffs were exposed to and/or contracted tuberculosis and/or suffered substantial symptoms and complications following the implantation of VBM during orthopedic fusion operations.

To date, these lawsuits have been filed in California Superior Court (collectively, the “California State Complaints”), the United States District Court for the Southern District of California (the “California Federal Complaint”), the United States District Court for the Eastern District of Louisiana (collectively, the “Louisiana Federal Complaints”), and the United States District Court for the Western District of Texas (the “Texas Federal Complaint”).

Plaintiffs in the California State Complaints and California Federal Complaint assert that the defendants are strictly liable or have breached the duty of care owed to plaintiffs by failing to exercise reasonable care in designing, manufacturing, marketing, and labeling VBM and seek various types of damages, including economic damages, non-economic damages, and loss of consortium damages.

The Plaintiffs in one of the California State Complaints also assert claims for fraudulent inducement, misrepresentation, and intentional infliction of emotional distress.

Plaintiffs in the Louisiana Federal Complaints generally assert causes of action under the Louisiana Product Liability Act, citing design defects, manufacturing defects, and failure to properly warn, and several plaintiffs allege loss of consortium.

Plaintiffs in these actions also assert that defendants are strictly liable or have breached the duty of care owed to plaintiffs by failing to exercise reasonable care in designing, manufacturing, marketing and labeling VBM and seek economic damages, non-economic damages and loss of consortium.

Some plaintiffs in the Louisiana Federal Complaints also allege claims for breach of implied warranty and breach of express warranty, medical monitoring, and punitive damages.

Plaintiffs in the Texas Federal Complaint assert violations of the Texas Business and Commerce Code, citing alleged breaches of the warranties of merchantability and fitness for a particular purpose.

Plaintiffs further assert that the defendants breached the duty of care owed to plaintiffs by failing to exercise reasonable care in designing, manufacturing, marketing, and labeling VBM and seek various types of damages, including economic damages, non-economic damages, exemplary damages, and loss of consortium damages.

The Company refers to the aforementioned litigation and claim notices collectively as the “VBM Litigation.”

Medtronic Litigation

In June 2024, the Company filed an action against Medtronic Sofamor Danek USA, Inc.

(“Medtronic”) in the Superior Court of the State of Delaware.

The Company’s complaint alleges breach of the 2019 Tissue Product Supply Agreement (the “Supply Agreement”) between the Company and Medtronic.

In particular, the complaint alleges that Medtronic did not honor its contractual obligations to obtain insurance coverage and to defend and indemnify the Company for over 100 lawsuits against the Company alleging claims arising from the use of FiberCel products distributed by Medtronic.

The complaint does not specify the amount of damages owed by Medtronic for these breaches.

On July 31, 2024, Medtronic responded to the complaint by denying Elutia’s claims and asserting a single counterclaim alleging that Elutia breached certain representations and warranties under the Supply Agreement and owes ongoing indemnity obligations to Medtronic.

The counterclaim does not specify the amount of any alleged damages.

On October 15, 2024,

Medtronic filed a motion to dismiss Elutia’s claims.

The court held a hearing on January 9, 2025, and has not yet issued a ruling on the motion to dismiss.

Given the early stages of this matter and the Company’s intention to vigorously defend this counterclaim, we do not consider a loss to be probable or estimable at this time.

Contingent Liability for Legal Proceedings

FiberCel Litigation

Since August 2022, the Company has engaged in a process to negotiate and attempt to resolve many of the cases in the FiberCel Litigation.

In total, Elutia’s liability in 44 of the cases was settled for a total cash outlay of approximately $ 14.4 million.

For the remaining 80 cases for which settlements have not been reached, the Company estimated a probable loss related to each case and has recorded a liability at an estimated amount of $ 15.0 million at December 31, 2023, which is recorded as Contingent liability for FiberCel litigation in the accompanying consolidated balance sheets.

For the remaining 66 cases, the Company estimated a probable loss related to each case and has recorded a liability at a total estimated amount of $ 15.9 million at December 31, 2024, which is recorded as Contingent Liability for Legal Proceedings in the accompanying consolidated balance sheets.

Such liability includes $ 8.2 million for which the settlements have been reached but have not yet been paid.

In order to reasonably estimate the liability for the unsettled FiberCel Litigation cases, the Company, along with outside legal counsel, has assessed a variety of factors, including (i) the extent of the injuries incurred, (ii) recent experience on the settled claims, (iii) settlement offers made to the other parties to the litigation and (iv) any other factors that may have a material effect on the FiberCel Litigation.

While the Company believes its estimated liability to be reasonable, the actual loss amounts are highly variable and are dependent upon the relevant facts and case by case resolutions.

As more information is learned about asserted claims and potential future trends, adjustments may be made to this Contingent Liability for FiberCel Litigation as appropriate.

Management believes that it is reasonably possible that the Company could incur liabilities in excess of amounts accrued and the ultimate liability could be material to the results of operations and the cash flows in the period recognized.

As more information is learned about asserted claims and potential future trends, adjustments may be made to this Contingent Liability for Legal Proceedings as appropriate.

Management believes that it is reasonably possible that the Company could incur liabilities in excess of amounts accrued and the ultimate liability could be material to the Company’s financial position, results of operations and cash flows in the period recognized.

The Company, however, is unable to estimate the possible loss or range of loss in excess of the amount recognized at this time.

Defense costs are recognized in the accompanying consolidated statements of operations as incurred.

The Company has purchased insurance coverage that, subject to common contract exclusions, provided coverage for the FiberCel Litigation product liability losses as well as legal defense costs.

Additionally, the Company has various potential indemnity and/or contribution rights against third party sources with respect to certain product liability losses.

VBM Litigation

Since June 2023, the Company has also engaged in a process to negotiate and attempt to resolve many of the cases in the VBM Litigation.

In total, Elutia’s liability in nine of the cases has been settled for a total cash outlay of approximately $ 1.0 million.

For the remaining 26 cases, which includes unasserted claims that the Company believes are probable of assertion, the Company estimated a probable loss at an estimated amount of $ 4.5 million at December 31, 2024, which is recorded as Contingent Liability for Legal Proceedings in the accompanying consolidated balance sheets.

Such liability includes $ 0.5 million for which the settlements have been reached but have not yet been paid.

The expense related to this estimate was recorded within Litigation costs, net in the accompanying consolidated statement of operations, with the entirety of such expense offset by insurance recoveries received or receivable as further described below.

In order to reasonably estimate the liability for the unsettled VBM Litigation cases and unasserted claims, the Company, along with outside legal counsel, has assessed a variety of factors, including (i) the extent of the injuries incurred, (ii) recent experience on the settled claims, (iii) settlement offers made to the other parties to the litigation and (iv) any other factors that may have a material effect on the VBM Litigation.

While the Company believes its estimated liability to be reasonable, the actual loss amounts are highly variable and are dependent upon the relevant facts and case-by-case resolutions.

As more information is learned about asserted and unasserted claims and potential future trends, adjustments may be made to this Contingent Liability for Legal Proceedings as appropriate.

The Company, however, is unable to estimate the possible loss or range of loss in excess of the amount recognized at this time.

Defense costs for both the FiberCel Litigation and VBM Litigation are recognized in the accompanying consolidated statements of operations as incurred, with the entirety of such expense related to the VBM Litigation offset by insurance recoveries received or receivable as further described below.

Insurance Receivables of Litigation Costs

The Company has purchased insurance coverage that, subject to common contract exclusions, provided coverage for the FiberCel Litigation and VBM Litigation product liability losses as well as legal defense costs.

When settlements are reached and/or amounts are recorded in the related Contingent Liability for FiberCel Litigation, the Company calculates amounts due to be reimbursed pursuant to the terms of the coverage and related agreements, and pursuant to other indemnity or contribution claims, in respect of product liability losses and related defense costs.

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The determination that the recorded receivables are probable of collection is based on the terms of agreements reached in respect of indemnity and contribution claims as well as the advice of the Company’s outside legal counsel.

These receivables at December 31, 2023 totaled $ 2.7 million and are recorded as Receivables of FiberCel Litigation Costs in the accompanying consolidated balance sheets.

The indemnity and contribution receivables amount at December 31, 2023 represents amounts that are not believed to be subject to any current dispute.

At December 31, 2023, the Company continues to pursue up to $ 3.8 million or more in additional amounts in respect of such indemnity and contribution claims and as such, has not been reflected as part of this receivable.

The Company will vigorously pursue its position with respect to this amount.

Viable Bone Matrix Recall

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.

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

Management has determined that there is a reasonably possible likelihood of material claims due to the VBM Recall, but does not believe that an estimate of the loss or range of loss can be made.

This is mainly due to the early stages of the lawsuits and claims and the lack of receipt by the Company of the medical records needed to assess any possible loss.

Consequently, management has determined that no probable liability for such possible claims would be recognized for the VBM Recall as of December 31, 2023.

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

Consistent with the FiberCel Litigation above, the Company has purchased insurance coverage that, subject to common contract exclusions, provide coverage for the possible claims associated with the VBM Recall as well as legal defense costs.

As of December 31, 2023, the Company has recorded a legal fee liability and related insurance receivable totaling $ 0.1 million for legal services rendered in defending Elutia in the VBM Recall.

As of both December 31, 2023 and 2022, the Company was not a party to, or aware of, any legal matters or claims with material financial exposure, except for the FiberCel Litigation and the VBM Recall.

These receivables as of December 31, 2024 and 2023 totaled $ 4.8 million and $ 2.7 million, respectively and are recorded as Insurance Receivables of Litigation Costs in the accompanying consolidated balance sheets.

All such receivables as of December 31, 2024 related to the VBM Litigation, and nearly all of such receivables at December 31, 2023 related to the FiberCel Litigation.

The Company had been pursuing additional recovery amounts in respect of indemnity and contribution claims with certain insurance providers.

During the year ended December 31, 2024, the Company resolved these matters through a settlement totaling $ 1.6 million, with such recovery being recorded within Litigation costs, net in the accompanying consolidated statement of operations for the year ended December 31, 2024.

As of both December 31, 2024 and 2023, the Company was not a party to, or aware of, any legal matters or claims with material financial exposure, except for the FiberCel Litigation, VBM Litigation and Medtronic matter.

Segment Information

With the divestiture of the Orthobiologics Business, the Company now operates in three segments.

These segments are based on financial information that is utilized by the Company’s CODM to assess performance and allocate resources.

This financial information does not include the assets by segment.

The Company determined its operating and reportable segments to be consistent with its major product groupings – Device Protection, Women’s Health and Cardiovascular.

For the years ended December 31, 2023 and 2022, the Company’s net sales disaggregated by segment were as follows (in thousands):

Year Ended December 31,

The accounting policies of the segments are the same as those described in the summary of significant accounting policies.

The Chief Operating Decision Maker ("CODM") is the Chief Executive Officer.

The CODM evaluates the performance of our segments based upon, among other things, segment net sales and segment gross profit, excluding intangible asset amortization (“segment gross profit”).

Segment gross profit is what the CODM uses in evaluating our results of operations and the financial measure that provides insight into our overall performance and financial position.

The CODM considers budget-to-actual variances and variances against prior years using segment gross profit when making decisions about allocating resources to the segments.

Asset information is not provided as the Company's CODM does not regularly review or utilize detailed asset data to assess segment performance.

For the year ended December 31, 2024, the Company’s segment gross profit was comprised of the following (in thousands):

Device Protection

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Cardiovascular

Total Net Sales

The net sales above include the revenues derived from one customer which represents 10 % of total net sales.

Cost of goods sold, excluding intangible asset amortization

Segment gross profit

The net sales for the year ended December 31, 2024 include the revenues derived from one customer which represents 14 % of total net sales.

Such customer is included within the Cardiovascular segment.

For the years ended December 31, 2023 and 2022, the Company’s gross profit disaggregated by segment was as follows (in thousands):

Gross profit:

For the year ended December 31, 2023, the Company’s segment gross profit was comprised of the following (in thousands):

Device Protection

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Cardiovascular

Gross profit, excluding intangible asset amortization

Intangible asset amortization expense

Cost of goods sold, excluding intangible asset amortization

Segment gross profit

The net sales for the year ended December 31, 2023 include the revenues derived from one customer which represents 10 % of total net sales.

Such customer is included within the Cardiovascular segment.

The following table is a reconciliation of segment gross profit to the consolidated loss before provision for income taxes for the years ended December 31, 2024 and 2023 (in thousands):

Gross profit, excluding intangible asset amortization

Segment gross profit

Intangible asset amortization expense

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Research and development

FiberCel litigation costs, net

Litigation costs, net

Loss from operations

Interest expense

Other expense (income), net

Loss on revaluation of warrant liability

Other (income) expense, net

Loss before provision for income taxes

During the years ended December 31, 2023 and 2022, the Company did not have any international product sales to specific countries where such country-specific sales represented material product sales, and the Company did not own any long-lived assets outside the United States.

During the years ended December 31, 2024 and 2023, the Company did not have any material international product sales, and the Company did not own any long-lived assets outside the United States.

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 9A. Controls and Procedures