What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-14 compared with 2025-05-13 · 139 added, 67 removed, 273 unchanged (43% of the section changed)

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We also sell legacy products into the Cardiovascular market.

In Cardiovascular, we sell our specialized porcine small intestine submucosa, which is based on the same the biomatrix used to make EluPro and CanGaroo, for use as an intracardiac and vascular patch as well as for pericardial reconstruction.

In Cardiovascular, we sell our specialized porcine small intestine submucosa, which is based on the same biomatrix used to make EluPro and CanGaroo, for use as an intracardiac and vascular patch as well as for pericardial reconstruction.

In addition, our TYKE product is designed for use in the neonatal patient population.

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We intend to develop our own in-house capability for the production of certain components of EluPro as well as the potential internal production of current and future Women’s Health products.

To this end, in March 2025, we signed a lease for 26,598 square feet in Gaithersburg, Maryland and expect to commence operations there in the second quarter of 2025.

To this end, in March 2025, we signed a lease for 26,598 square feet of production, laboratory and administrative space in Gaithersburg, Maryland and moved our executive offices to that location in May 2025.

We anticipate being able to internally produce certain components of EluPro in the fourth quarter of 2025.

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The assets sold represent the entirety of our Orthobiologics segment.

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

The earn-out payments are equal to 10% of the actual revenue earned by Berkeley in each of the five years

after the closing of the sale from sales of specified Orthobiologics products under the purchase agreement (including improvements, modifications, derivatives and enhancements related to those products).

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

out payments.

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

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

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In the purchase agreement, the Company has retained the liabilities arising out of the viable bone matrix (“VBM”) and FiberCel matters, as described in Note 9, both of which products were part of the Orthobiologics Business.

We recognized a gain of $6.0 million on the sale of the Orthobiologics Business in 2023 and an additional gain of $0.2 million in 2024 from an adjustment payment related to the final working capital received by Berkeley at the sale date.

We recognized a gain of $6.0 million on the sale of the Orthobiologics Business in 2023 and an additional gain of $0.2 million in the second quarter of 2024 from an adjustment payment related to the final working capital received by Berkeley at the sale date.

Should we 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.

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From April 2023 through April 2025, our cardiovascular products were sold through a distribution agreement with LeMaitre Vascular.

In May 2025, we began selling these products directly to hospitals and other healthcare facilities through independent sales agents.

In April 2025, this agreement with LeMaitre Vascular terminated, and, in May 2025, we began selling these products directly to hospitals and other healthcare facilities through independent sales agents.

In recent years, we have incurred significant costs in the operation of our business.

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Our cost of goods sold relate to purchased raw materials and the processing and conversion costs of such raw materials consisting primarily of salaries and benefits, supplies, quality control testing and the manufacturing overhead incurred at our processing facility in Roswell, Georgia.

The Roswell facility has additional capacity, which if utilized, would further leverage our fixed overhead.

The Roswell facility has additional capacity, which if utilized,

would further leverage our fixed overhead.

Cost of goods sold also includes the amortization of intangibles generated from the CorMatrix Acquisition in 2017.

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Results of Operations

Comparison of the Three Months Ended March 31, 2025 and 2024

Three Months Ended March 31,

Comparison of the Three Months Ended June 30, 2025 and 2024

Three Months Ended June 30,

Change 2024 / 2025

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Income tax expense

Net income (loss) from continuing operations

Discontinued operations

Net income (loss)

1 unchanged sentence

Net sales information for our products is summarized as follows:

Three Months Ended March 31,

Three Months Ended June 30,

Change 2024 / 2025

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Total Net Sales

Total net sales decreased $0.7 million, or 9.9%, to $6.0 million in the three months ended March 31, 2025 compared to $6.7 million in the three months ended March 31, 2024.

Revenues from Device Protection increased compared to the prior year’s first quarter due to volume growth from EluPro whose full commercial launch commenced in January 2025 after FDA clearance in June 2024.

Such increase, however, was offset by volume declines in Women’s Health and Cardiovascular.

The decline in Women’s Health was caused by case volume reductions at certain hospital customers, and various physician users of SimpliDerm who transferred to hospitals where SimpliDerm is not yet available.

With respect to Cardiovascular, as noted above, the exclusive distribution agreement with LeMaitre Vascular terminated in April 2025 and we recommenced selling these products directly in May 2025.

Total net sales were $6.3 million in both the three months ended June 30, 2025 and 2024.

While total net sales were essentially unchanged, the revenues from Device Protection increased by $0.9 million compared to the prior year’s second quarter due to volume growth from EluPro, for which the full commercial launch commenced in January 2025 after FDA clearance in June 2024.

Such increase, however, was offset by declines in Women’s Health and Cardiovascular.

The decline in Women’s Health was caused by various physician users of SimpliDerm who transferred to hospitals where SimpliDerm is not yet available and by decreased sales generated by Tiger.

With respect to Cardiovascular, as noted above, the exclusive distribution agreement with LeMaitre Vascular terminated in April 2025, and we recommenced selling these products directly through independent sales agents in May 2025.

We anticipate Cardiovascular sales will increase in future quarters of 2025, both through volume growth and higher unit prices as such sales will be at end-user pricing versus contracted prices.

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Cost of goods sold and gross margin percentage information for our products is summarized as follows:

Three Months Ended March 31,

Three Months Ended June 30,

Change 2024 / 2025

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Total Cost of Goods Sold

Total cost of goods sold decreased $0.3 million to $3.6 million in the three months ended March 31, 2025 compared to $3.9 million in the three months ended March 31, 2024.

Gross margin was 40.7% in the three months ended March 31, 2025 compared to 42.5% in the three months ended March 31, 2024.

Gross margin, excluding intangible asset amortization, was 54.8% in the three months ended March 31, 2025 consistent with 55.2% in the three months ended March 31, 2024.

While the overall changes between years in the gross margin measures were modest, it included increases to the Women’s Health gross margin due to certain non-recurring write-offs in the prior year quarter, and declines to the Device Protection gross margin due to the addition of EluPro in 2025 which currently carries a lower gross margin than CanGaroo.

We expect the Device Protection gross margin to improve over the course of calendar year 2025 as we increase production volumes and further production efficiencies are achieved.

Total cost of goods sold decreased $0.3 million to $3.2 million in the three months ended June 30, 2025 compared to $3.5 million in the three months ended June 30, 2024.

Gross margin was 48.8% in the three months ended June 30, 2025 compared to 44.5% in the three months ended June 30, 2024.

Gross margin, excluding intangible asset amortization, was 62.4% in the three months ended June 30, 2025 compared to 58.0% in the three months ended June 30, 2024.

The improvement between years was due primarily to favorability in Device Protection, where the gross margins in the 2024 period were impacted by certain production inefficiencies that were not present in the 2025 period with robust production being now required to ensure the supply of EluPro keeps pace with anticipated sales growth.

Operating Expenses

Sales and Marketing

Sales and marketing expenses decreased $0.3 million, or 8.4%, to $3.0 million in the three months ended March 31, 2025 compared to $3.3 million in the three months ended March 31, 2024.

As a percentage of sales, sales and marketing expenses increased to 50.3% in the three months ended March 31, 2025 from 49.4% in the three months ended March 31, 2024.

The modest decrease in expense was largely attributable to lower non-cash equity compensation in the 2025 period.

Sales and marketing expenses increased $0.5 million, or 13.5%, to $3.8 million in the three months ended June 30, 2025 compared to $3.3 million in the three months ended June 30, 2024.

As a percentage of sales, sales and marketing expenses increased to 60.3% in the three months ended June 30, 2025 from 52.9% in the three months ended June 30, 2024.

The increase was largely attributable to sales commission expense growth commensurate with higher Device Protection revenues and a return in the second quarter of 2025 to the direct selling of our Cardiovascular products.

These increases were partially offset by lower non-cash equity compensation in the 2025 period.

General and Administrative

G&A expenses decreased $1.2 million, or 23.4%, to $3.9 million in the three months ended March 31, 2025 compared to $5.1 million in the three months ended March 31, 2024.

As a percentage of net sales, G&A expenses decreased to 64.2% in the three months ended March 31, 2025 from 75.5% in the three months ended March 31, 2024.

The decrease in expense was primarily driven by lower non-cash equity compensation and legal fees in the 2025 period.

G&A expenses decreased $1.0 million, or 21.2%, to $3.7 million in the three months ended June 30, 2025 compared to $4.7 million in the three months ended June 30, 2024.

As a percentage of net sales, G&A expenses decreased to 59.0% in the three months ended June 30, 2025 from 74.5% in the three months ended June 30, 2024.

The decrease in expense was primarily driven by lower non-cash equity compensation in the 2025 period.

Research and Development

R&D expenses decreased $0.3 million, or 22.8% to $0.9 million in the three months ended March 31, 2025 compared to $1.2 million in the three months ended March 31, 2024.

The decrease in expense was largely attributable to lower non-cash equity compensation in the 2025 period along with reductions in outside testing services after the FDA‘s clearance of EluPro in June 2024.

R&D expenses increased $0.5 million, or 45.5% to $1.5 million in the three months ended June 30, 2025 compared to $1.0 million in the three months ended June 30, 2024.

The increase in expense reflects our heightened development activity in the 2025 period.

Our future development efforts are focused on expanding our EluPro offering with additional sizes and product features, (ii) developing new products within the DEB product portfolio and (iii) conducting clinical studies to validate the performance characteristics of our products and to capture patient data necessary to support our commercial efforts.

Litigation Costs, net

Litigation costs, net increased to $2.6 million in the three months ended March 31, 2025 compared to $1.8 million in the three months ended March 31, 2024.

The current year increase was due to the availability of insurance coverage on the FiberCel Litigation in the 2024 period which allowed for the full recovery of legal defense costs in the prior year’s quarter.

As of March 31, 2025, insurance remains available to cover the cost of the VBM Litigation and related defense costs;

Litigation costs, net increased to $4.0 million in the three months ended June 30, 2025 compared to $2.3 million in the three months ended June 30, 2024.

The increase in expense was primarily due to the continued evaluation of the contingent FiberCel liability.

As of June 30, 2025, insurance remains available to cover the cost of the VBM Litigation and related defense costs;

however, we have no more insurance to cover the cost of the FiberCel Litigation and the related defense costs.

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Interest Expense

Interest expense was approximately $1.1 million in the three months ended March 31, 2025 compared to $1.3 million in the three months ended March 31, 2024.

The decrease was primarily due to lower principal outstanding on the SWK debt in the current year period as a result of mandatory repayments in connection with our sale of the Orthobiologics Business in November 2023.

Interest expense was approximately $0.5 million in the three months ended June 30, 2025 compared to $1.3 million in the three months ended June 30, 2024.

The decrease was primarily due to the error correction related to the January 2024 Ligand amendment described in Note 7 to the condensed consolidated financial statements.

Comparison of the Six Months Ended June 30, 2025 and 2024

Six Months Ended June 30,

Change 2024 / 2025

(in thousands, except percentages)

Cost of goods sold

Sales and marketing

General and administrative

Research and development

Litigation costs, net

Total operating expenses

Loss from operations

Interest expense, net

(Gain) loss on revaluation of warrant liability

Other expense (income), net

Other expense (income), net was an expense of $0.1 million in the three months ended March 31, 2025 and was attributable to the transaction fees incurred in connection with the 2025 Registered Offering which were allocated to the 2025 Prefunded Warrants (defined below).

See Note 8 to the condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information.

Other expense (income), net was income of $1.4 million in the three months ended March 31, 2024 attributable to the $1.4 million gain on the revaluation of our Revenue Interest Obligation to Ligand.

See Note 7 to the condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information.

Loss before provision of income taxes

Income tax expense

Net loss from continuing operations

Discontinued operations

NM = not meaningful

Net sales information for our products is summarized as follows:

Six Months Ended June 30,

Change 2024 / 2025

(in thousands, except percentages)

Device protection

Women's health

Cardiovascular

Total Net Sales

Total net sales decreased $0.7 million, or 5.3%, to $12.3 million in the six months ended June 30, 2025 compared to $13.0 million in the six months ended June 30, 2024.

Revenues from Device Protection increased compared to the prior year period due to volume growth from EluPro, for which the full commercial launch commenced in January 2025 after FDA clearance in June 2024.

Such increase, however, was offset by declines in Women’s Health and Cardiovascular.

The decline in Women’s Health was caused by various physician users of SimpliDerm who transferred to hospitals where SimpliDerm is not yet available and by decreased sales generated by Tiger.

With respect to Cardiovascular, as noted above, the exclusive distribution agreement with LeMaitre Vascular terminated in April 2025 and we recommenced selling these products directly through independent sales agents in May 2025.

We anticipate Cardiovascular sales will increase in future quarters of 2025 both through volume growth and higher unit prices as such sales will be at end-user pricing versus contracted prices.

Cost of Goods Sold

Cost of goods sold and gross margin percentage information for our products is summarized as follows:

Six Months Ended June 30,

Change 2024 / 2025

(in thousands, except percentages)

Device protection

Women's health

Cardiovascular

Cost of goods sold, excluding intangible asset amortization

Intangible asset amortization expense

Total Cost of Goods Sold

Total cost of goods sold decreased $0.6 million to $6.8 million in the six months ended June 30, 2025 compared to $7.3 million in the six months ended June 30, 2024.

Gross margin was 44.9% in the six months ended June 30, 2025 compared to 43.5% in the six months ended June 30, 2024.

Gross margin, excluding intangible asset amortization, was 58.7% in the six months ended June 30, 2025 compared with 56.5% in the six months ended June 30, 2024.

While the overall changes between years in the gross margin measures were modest, the overall increase included growth in the Women’s Health gross margin due to certain non-recurring write-offs in the prior year period, and declines to the Device Protection gross margin due to the addition of EluPro in 2025, which currently carries a lower gross margin than CanGaroo.

Operating Expenses

Sales and Marketing

Sales and marketing expenses increased $0.2 million, or 2.6%, to $6.8 million in the six months ended June 30, 2025 compared to $6.6 million in the six months ended June 30, 2024.

As a percentage of sales, sales and marketing expenses increased to 55.4% in the six months ended June 30, 2025 from 51.1% in the six months ended June 30, 2024.

These increases were partially offset by lower non-cash equity compensation in the 2025 period.

General and Administrative

G&A expenses decreased $2.2 million, or 22.4%, to $7.6 million in the six months ended June 30, 2025 compared to $9.7 million in the six months ended June 30, 2024.

As a percentage of net sales, G&A expenses decreased to 61.5% in the six months ended June 30, 2025 from 75.0% in the six months ended June 30, 2024.

The decrease in expense resulted largely from the non-cash equity compensation grants made in January 2024.

Research and Development

R&D expenses increased to $2.4 million in the six months ended June 30, 2025 compared to $2.2 million in the six months ended June 30, 2024.

The increase in expense reflects our heightened development activity in the 2025 period.

Litigation Costs, net

FiberCel litigation costs increased to $6.6 million in the six months ended June 30, 2025 compared to $4.1 million in the six months ended June 30, 2024.

The increase in expense was primarily due to the continued evaluation of the contingent FiberCel liability.

As of June 30, 2025, insurance remains available to cover the cost of the VBM Litigation and related defense costs;

however, we have no more insurance to cover the cost of the FiberCel Litigation and the related defense costs.

See further discussion in Note 9 to the condensed consolidated financial statements.

Interest Expense

Interest expense was approximately $1.6 million in the six months ended June 30, 2025 compared to $2.6 million in the six months ended June 30, 2024.

The decrease was primarily due to the error correction related to the January 2024 Ligand amendment described in Note 7 to the condensed consolidated financial statements.

Non-GAAP Financial Measures

This Quarterly Report presents our gross margin, excluding intangible asset amortization, for the three months ended March 31, 2025 and 2024.

This Quarterly Report presents our gross margin, excluding intangible asset amortization, for the three and six months ended June 30, 2025 and 2024.

We calculate gross margin, excluding intangible asset amortization, as gross profit, excluding amortization expense relating to intangible assets we acquired in the CorMatrix Acquisition, divided by net sales.

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In addition, other companies, including companies in our industry, may use other measures to evaluate their performance, which could reduce the usefulness of this non-GAAP financial measure as a tool for comparison.

The following table presents a reconciliation of our gross margin, excluding intangible asset amortization, for the three months ended March 31, 2025 and 2024, to the most directly comparable GAAP financial measure, which is our GAAP gross margin (in thousands).

The following table presents a reconciliation of our gross margin, excluding intangible asset amortization, for the six months ended June 30, 2025 and 2024, to the most directly comparable GAAP financial measure, which is our GAAP gross margin (in thousands).

Three Months Ended

Six Months Ended

Cost of goods sold

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Liquidity and Capital Resources

As of March 31, 2025, we had cash of approximately $17.4 million.

Since inception, we have financed our operations primarily through amounts borrowed under our credit facilities, proceeds from our initial public offering (“IPO”), sales of our products and more recently, the sale of our Orthobiologics Business, proceeds from a follow-on offerings and private placements of our common stock and warrants and substitution of certain cash payment obligations with stock issuances.

As of June 30, 2025, we had cash of approximately $8.5 million compared to $13.2 million as of December 31, 2024.

Since inception, we have financed our operations primarily through amounts borrowed under our credit facilities, proceeds from our initial public offering (“IPO”), sales of our products and more recently, the sale of our Orthobiologics Business, proceeds from follow-on offerings and private placements of our common stock and warrants and substitution of certain cash payment obligations with stock issuances.

Our historical cash outflows have primarily been associated with acquisitions and integration, manufacturing and administrative costs, general and marketing, research and development, clinical activity, purchase of property and equipment used in our production activities, litigation defense and settlement costs and investing in our commercial infrastructure through our direct sales force and our commercial partners in order to expand our presence and to promote awareness and adoption of our products.

Such commercial infrastructure costs are likely to become more significant in the future as we further commercialize the newly approved EluPro product.

As of March 31, 2025, our accumulated deficit was $233.5 million.

As of June 30, 2025, our accumulated deficit was $243.1 million.

On February 4, 2025, we 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.

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Our inability to achieve and then maintain profitability would negatively affect our business, financial condition, results of operations and cash flows.

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 equity or debt securities, as we did in the 2025 Registered Offering, 2024 Registered Offering and Private Offering described above, issue common stock to satisfy certain obligations in lieu of cash, as we did in the Ligand amendment described below 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 we may not be able to raise additional equity, refinance our debt instruments, or sell assets on acceptable terms, or at all.

issue common stock to satisfy certain obligations in lieu of cash, as we did in the May 2025 Ligand amendment described below or pursue asset sale or other transactions, such as the sale of the Orthobiologics Business described above.

In the future, the Company may also seek to obtain waivers, amendments or other accommodations with lenders or other obligees in order to help manage the Company’s indebtedness and other obligations, such as the May 2025 amendment to the SWK Loan Facility described below.

However, such transactions may not be successful, and we may not be able to raise additional equity, refinance our debt instruments, sell assets or obtain waivers or amendments to our obligations 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 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 financial statements.

Cash Flows for the Three Months ended March 31, 2025 and 2024

Three Months Ended

Cash Flows for the Six Months ended June 30, 2025 and 2024

Six Months Ended

(in thousands)

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Financing activities

Net decrease in cash

Net decrease in cash and cash equivalents

Cash Flows From Operating Activities

Net cash used in operating activities for the three months ended March 31, 2025 was $8.9 million compared to $2.6 million for the three months ended March 31, 2024.

The year-over-year increase was primarily due to higher paydowns of current trade obligations in the 2025 quarter as well as FiberCel settlement payments of $3.0 million in the current quarter.

Net cash used in operating activities for the six months ended June 30, 2025 was $17.1 million compared to $7.0 million for the six months ended June 30, 2024.

The year-over-year increase was primarily due to inventory growth in the 2025 period to keep pace with EluPro sales growth, as well as FiberCel settlement payments of $7.1 million in the six months ended June 30, 2025.

Cash Flows From Investing Activities

Net cash provided by investing activities for the three months ended March 31, 2025 was $0.3 million compared to net cash used in investing activities of $0.02 million for the three months ended March 31, 2024.

Both periods reflect purchases of property and equipment primarily for our production facilities.

Net cash used in investing activities for the six months ended June 30, 2025 was $0.4 million compared to net cash provided by investing activities of $0.2 million for the six months ended June 30, 2024.

The current year period reflects purchases of property and equipment for our production facilities.

The prior year period reflects our receipt of an adjustment payment related to the final working capital received by Berkeley at the sale date of our Orthobiologics Business.

Cash Flows From Financing Activities

Net cash provided by financing activities for the three months ended March 31, 2025 was $13.3 million compared to cash used in financing activities of $4.1 million for the three months ended March 31, 2024.

Net cash provided by financing activities for the six months ended June 30, 2025 was $12.8 million compared to cash used in financing activities of $5.7 million for the six months ended June 30, 2024.

The current year’s cash generation was primarily through the 2025 Registered Offering which yielded net proceeds of $13.8 million.

The cash used in the 2024 period was caused largely by repayments totaling $4.6 million of our long-term debt and revenue interest obligation offset by the proceeds from Common Warrant and Prefunded Warrant exercises of $1.1 million.

The prior year’s cash generation was primarily through the 2024 Registered Offering and warrant exercises, which yielded net proceeds of $12.4 million offset by long-term debt and the revenue interest obligation payments totaling $7.2 million.

Credit Facilities

As of March 31, 2025, we had $24.3 million of indebtedness outstanding, consisting of $23.8 million outstanding under our SWK Loan Facility described below and $1.0 million of exit fee liabilities, net of $0.5 million of unamortized discount and deferred financing costs.

As of June 30, 2025, we had $24.3 million of indebtedness outstanding, consisting of $23.8 million outstanding under our SWK Loan Facility described below and $1.0 million of exit fee liabilities, net of $0.5 million of unamortized discount and deferred financing costs.

Such indebtedness currently has a principal payment commencement date of November 15, 2025, with quarterly principal payments in an amount equal to 5% of the outstanding principal.

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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.

As of March 31, 2025, we had $23.8 million of indebtedness outstanding under our SWK Loan Facility and an exit fee liability to SWK of $1.0 million, with such balances being net of $0.5 million of unamortized discount and deferred financing costs.

As of June 30, 2025, we had $23.8 million of indebtedness outstanding under our SWK Loan Facility and an exit fee liability to SWK of $1.0 million, with such balances being net of $0.5 million of unamortized discount and deferred financing costs.

Interest Rates

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

As of March 31, 2025, quarterly principal payments will be in an amount equal to 5% of the aggregate principal amount funded with the balance paid at maturity.

As of June 30, 2025, quarterly principal payments will be in an amount equal to 5% of the aggregate principal amount funded with the balance paid at maturity.

All obligations under the SWK Loan Facility are, and any future guarantees of those obligations will be, secured by, among other things, and in each case subject to certain exceptions, a first priority lien on and security interest in, upon, and to all of our assets, whether now owned or hereafter acquired, wherever located.

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The first covenant, which is measured quarterly, requires us to achieve a specified Minimum Aggregate Revenue (as defined in the SWK Loan Facility) for the preceding 12-month period or, alternatively, to maintain Consolidated Unencumbered Liquid Assets (as defined in the SWK Loan Facility) greater than either (i) the outstanding principal balance of the loan, or (ii) the aggregate operating cash burn (as defined in the SWK Loan Facility) for the preceding 12-month period.

The second covenant requires us to maintain a minimum liquidity (as defined in the SWK Loan Facility) of the greater of (a) $5.0 million and (b) the sum of the operating cash burn for the two prior consecutive fiscal quarters then ended (the “Liquidity Covenant”).

See below for discussion of amendment to the Liquidity Covenant in May 2025.

The SWK Loan Facility Agreement contains events of default, including, most significantly, a failure to timely pay interest or principal, insolvency, or an action by the FDA or such other material adverse event impacting the operations of Elutia.

As of March 31, 2025, we were in compliance with the financial covenants and all other covenants.

May 2025 Amendment

The second covenant initially required us to maintain a minimum liquidity (as defined in the SWK Loan Facility) of the greater of (a) $5.0 million and (b) the sum of the operating cash burn for the two prior consecutive fiscal quarters then ended (the “Liquidity Covenant”).

In May 2025, we entered into an amendment to the SWK Loan Facility.

The amendment, among other things:

(i) allows for 100% of the interest payment due and owing in May 2025 to be paid as PIK interest, (ii) removed mandatory repayment obligations related to non-ordinary course asset sales, (iii) allows us to request that SWK advance a new term loan in the amount of up to $5.0 million, which advance will be in the sole and absolute discretion of SWK and (iv) fixed the amount of the minimum liquidity covenant to be $8.0 million.

(i) allowed for 100% of the interest payment due and owing in May 2025 to be paid as PIK interest, (ii) removed mandatory repayment obligations related to non-ordinary course asset sales, (iii) allowed us to request that SWK advance a new term loan in the amount of up to $5.0 million, which advance will be in the sole and absolute discretion of SWK and (iv) fixed the amount of the Liquidity Covenant to a minimum liquidity of $8.0 million.

In consideration for the amendment, the Company agreed to issue SWK 50,000 shares of its Class A Common Stock in a private placement.

As of June 30, 2025, we were in compliance with the financial covenants, as amended, and all other covenants.

Ligand Revenue Interest Obligation

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Effective May 8, 2025, we entered into a subscription agreement and further amendment to the Revenue Interest Obligation with Ligand.

Through the amendment, $2.2 million in outstanding royalty obligations (royalty obligations for the fiscal quarters ended December 31, 2024 and March 31, 2025) owed by Elutia to Ligand under the Revenue Interest Obligation as amended was satisfied by the issuance of 1,105,528 shares of Elutia’s Class A common stock to Ligand in a transaction registered with the Securities and Exchange Commission.

Through the amendment, $2.2 million in outstanding royalty obligations (royalty obligations for the fiscal quarters ended December 31, 2024 and March 31, 2025) owed by Elutia to Ligand under the Revenue Interest Obligation as amended were satisfied by the issuance of 1,105,528 shares of Elutia’s Class A common stock to Ligand in a transaction registered with the Securities and Exchange Commission.

Funding Requirements

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If our available cash balances and cash flow from operations are insufficient to satisfy our liquidity requirements, we may seek to raise additional capital through equity offerings, debt financings, substitution of cash payment obligations with equity or asset sale or other transactions.

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

In the future, we may also seek to preserve existing capital by obtaining waivers, amendments or similar accommodations from our lenders and other obligees.

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

We may also consider raising additional capital in the future to expand our business, pursue strategic investments or take advantage of financing opportunities.

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The preparation of our unaudited condensed consolidated financial statements in accordance with GAAP requires us to make estimates and assumptions that affect reported amounts and related disclosures.

We have discussed the policies and estimates that we believe are critical and require the use of complex judgment in their application in our Annual Report, and, during the three months ended March 31, 2025, there were no material changes to those previously disclosed other than those outlined in Note 2, “Summary of Significant Accounting Policies.”

We have discussed the policies and estimates that we believe are critical and require the use of complex judgment in their application in our Annual Report, and, during the six months ended June 30, 2025, there were no material changes to those previously disclosed other than those outlined in Note 2, “Summary of Significant Accounting Policies.”

Recent Accounting Pronouncements

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis