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Item 7. Management’s Discussion and Analysis

2026-03-26 compared with 2025-02-28 · 80 added, 80 removed, 37 unchanged (81% of the section changed)

Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

following discussion should be read in conjunction with our consolidated financial statements and the related notes contained elsewhere

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materially from any future performance suggested below.

Medical Corporation is a late clinical-stage medical device company focused on the advancement of innovative bioprosthetic (tissue-based)

solutions to improve the standard of care for the treatment of venous disease.

Chronic Venous Disease (CVD) is the world’s most

prevalent chronic disease, impacting approximately 70% of the adult population of the U.S.

Chronic Venous Insufficiency (CVI), is a large

subset of CVD, which most often occurs when valves inside of the veins of the leg become damaged, resulting in the backwards flow of

blood (reflux), blood pooling in the lower leg, increased pressure in the veins of the leg (venous hypertension) and in severe cases,

venous ulcers that are difficult to heal.

The Company is developing surgical and non-surgical replacement venous valves for patients

suffering from severe CVI of the deep venous system of the leg.

Company’s lead product is the VenoValve®, which is a first-in-class surgical replacement venous valve that is currently being

evaluated in a U.S.

pivotal study.

The Company is also developing a second product called enVVe®, which is a first-in-class, non-surgical,

transcatheter based replacement venous valve.

The Company is currently conducting pre-clinical testing on enVVe.

Both the VenoValve and

enVVe are designed to act as one-way valves, to help assist in propelling blood up the veins of the leg, and back to the heart and lungs.

VenoValve and enVVe are being developed first for approval by the U.S.

Food and Drug Administration (FDA).

We expect the VenoValve to

be eligible for FDA approval first, followed two to three years later by enVVe.

If approved, we expect the VenoValve and enVVe to co-exist,

with the VenoValve as a surgical replacement venous valve option and enVVe as a non-surgical replacement venous valve option, although

we cannot provide any assurance that either the VenoValve or enVVe will receive approval from the FDA (see the section entitled “Risk

Medical Corporation is a medical device company focused on the advancement of innovative bioprosthetic (tissue-based) solutions to improve

the standard of care for the treatment of venous disease.

Chronic Venous Disease (“CVD”) is the world’s most prevalent

chronic disease, impacting approximately 70% of the adult population of the U.S.

Chronic Venous Insufficiency (“CVI”), is

a large subset of CVD, which most often occurs when valves inside of the veins of the leg become damaged, resulting in the backwards

flow of blood (reflux), blood pooling in the lower leg, increased pressure in the veins of the leg (venous hypertension) and in severe

cases, venous ulcers that are difficult to heal.

The Company is developing a replacement venous valve for patients suffering from severe

CVI of the deep venous system of the leg.

Company first developed the VenoValve®, which was a first-in-class surgical replacement venous valve.

On August 19, 2025, the Company

received a not-approvable letter from the U.S.

Food and Drug Administration (“FDA”) in response to its PMA application for

the VenoValve.

The Company is now focused on its next-generation, non-surgical venous valve product, called the enVVe® system.

enVVe System consists of the enVVe Valve, enVVe Delivery System, enVVe Nose Cone, the enVVe Delivery System Accessories, and the enVVe

Crimping System.

The enVVe Valve is a first-in-class, non-surgical, transcatheter based replacement venous valve being developed for

the treatment of severe CVI.

The enVVe Valve is designed to act as a one-way valve, to help assist in propelling blood up the veins of

the leg, and back to the heart and lungs.

The Company has completed pre-clinical testing on the enVVe System and has begun discussions

with the FDA regarding the enVVe pivotal trial.

is being developed for approval by the FDA.

We cannot provide any assurance that either enVVe will receive approval from the FDA (see the section entitled “Risk

Factors” in this Annual Report on Form 10-K).

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valves, and there are currently no effective treatments for deep venous CVI caused by incompetent valves.

team of officers and directors has been affiliated with numerous medical devices that have received FDA approval or CE marking and that

have been commercially successful.

We develop and manufacture our products in connection with our clinical trials in a 14,507 sq.

leased manufacturing facility in Irvine, California, which has been ISO 13485-2016 certified for the design, development and manufacturing

of tissue based implantable medical devices.

Company has completed pre-clinical testing on the enVVe System and has begun discussions with the FDA regarding the enVVe pivotal trial,

which it expects to begin in 2026.

develop and manufacture our products in connection with our clinical trials in a 14,507 sq.

leased manufacturing facility in Irvine,

California, which has been ISO 13485-2016 certified for the design, development and manufacturing of tissue based implantable medical

Reverse Stock Split

the annual meeting of the Company’s stockholders held on December 11, 2025 (the “2025 Annual Meeting”), the Company’s

stockholders approved an amendment to the Company’s amended and restated certificate of incorporation to effect a reverse stock

split of our common stock, at a ratio between one-for-five (1:5) and one-for-thirty-five (1:35).

January 2, 2026, the Company’s board of directors approved a one-for-thirty-five (1:35) reverse stock split of the outstanding

shares of our common stock (the “Reverse Stock Split”).

On January 16, 2026, the Company filed an amendment to the amended

and restated certificate of incorporation with the Secretary of State of the State of Delaware to effect the Reverse Stock Split, which

became effective on January 20, 2026.

The amendment did not change the number of authorized shares of our common stock.

as the context otherwise requires, all common stock share numbers, share price amounts (including exercise prices, conversion prices,

and closing market prices) and shares issued upon the exercise of warrants contained in this Annual Report on Form 10-K have been retroactively

adjusted to reflect the Reverse Stock Split.

of Operations

of the year ended December 31, 2025 to the year ended December 31, 2024

a late-stage clinical medical device Company, we are not currently generating revenue and our future revenue, if any, is dependent

on our ability to commercialize our product candidates.

We will not begin generating revenue with respect to any of our product

candidates until after we obtain FDA approval, if at all.

We hope to eventually achieve revenues by commercializing and selling our products or licensing

our technologies to companies that have the resources and infrastructure in place to manufacture, market and sell our products.

commercialization and/or licensing of any of our products may take several years, if it is to occur at all, and depends on our

ability to obtain regulatory approval.

reported net losses of $19.5 million and $21.8 million for the years ended December 31, 2025 and 2024, respectively, representing a decrease

in net loss of $2.3 million or 11%, resulting from, as described in further detail below, a decrease in operating expenses of $2.9 million,

and an increase in other income of $0.2 million.

and a decrease in other income of $0.6 million.

a developmental stage Company, our revenue, if any, is expected to be diminutive and dependent on our ability to commercialize our product

We are not currently generating revenue and do not expect significant revenue until we successfully commercialize our lead

product candidate after receiving FDA approval, if ever.

and Development Expenses

the year ended December 31, 2024, research and development expenses decreased by $1.4 million or 10%, to $12.2 million from $13.6

million for the year ended December 31, 2023.

The decrease is due to a decrease of $2.2 million in costs for the SAVVE trial, and a

$0.3 million decrease in other lab costs, partially offset by an increase of $0.9 million in employee compensation from the

increases in staffing, and an increase of $0.2 million in costs related to the GLP study for the enVVe.

Costs related to SAVVE

decreased in 2024 because, after full enrollment in 2023, activity shifted to ongoing monitoring, data collection, and preparation

and filing of the PMA.

The increase in compensation cost is due to the hiring of additional personnel supporting ongoing VenoValve

testing and trial activity in addition to the preparation for the enVVe GLP study.

the year ended December 31, 2025, research and development expenses decreased by $2.2 million or 19%, to $10.0 million from $12.2 million

for the year ended December 31, 2024.

The decrease primarily resulted from $2.4 million in lower costs related to the VenoValve study

as the amount of follow-up for each participant decreases over time, partially offset by $0.2 million in higher compensation costs from

additional personnel.

We expect a moderate overall increase in expenses from current levels as costs related to the VenoValve pivotal

study continue and costs related to the enVVe pivotal study would begin if IDE approval from the FDA is received.

General and Administrative Expenses

For the year ended December 31, 2024, selling, general and administrative

expenses decreased by $0.1 million or 1%, to $11.6 million from $11.7 million for the year ended December 31, 2023.

This decrease is primarily

driven by share-based compensation which decreased $1.1 million from 2023 to 2024.

Selling, general and administrative expenses also decreased

$0.1 million from lower travel cost, and $0.1 million from lower insurance cost in 2024.

These decreases were partially offset by a $0.7 million increase in legal costs and a $0.5 million increase in

costs related to conferences, and market research as the Company started increasing its market visibility in anticipation of commercialization activity if FDA approval

of the VenoValve PMA is received.

For the year ended December 31, 2024, other income increased $0.3 million

to $2.0 million from $1.7 million for the year ended September 30, 2023.

Other income in both periods reflects realized gains, interest,

and unrealized gains from our program to invest excess cash in U.S.

the year ended December 31, 2025, selling, general and administrative expenses decreased by $0.7 million or 6%, to $10.9 million from

$11.6 million for the year ended December 31, 2024.

This decrease is primarily driven by $1.1 million in non-recurring legal costs incurred

during the year ended December 31, 2024 and $0.7 million from the net effect of lower stock-based compensation cost incurred as option

grants are issued and vest.

These decreases were partially offset by a $0.3 million non-recurring severance expense recorded in 2025,

$0.4 million related to higher compensation costs from additional personnel, and a net $0.4 million increase related to various other

the year ended December 31, 2025, other income decreased $0.6 million to $1.4 million from $2.0 million for the year ended December 31,

2024 as a result of the Company holding less U.S.

Treasury securities in 2025 than 2024.

Other income in both periods reflects net realized

gains, interest, and unrealized losses from our program to invest excess cash in U.S.

Treasury securities.

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internal administrative functions.

Research and development activities are for continued product development and clinical trials for

VenoValve and for enVVe.

The Company will continue to incur these costs to complete its clinical trials, enhance products, develop new

products, and operate as a public company for the foreseeable future as we seek to obtain regulatory approval for our studies and product

are not currently generating revenue.

However, with the filing of our final PMA module completed in December 2024, we hope to

receive FDA approval during 2026, and we have commenced limited activity toward commercial launch in anticipation of that approval.

To-date, this activity is primarily market research and attendance at conferences.

If and when we receive FDA approval of our PMA,

we expect to significantly increase costs related to commercial launch and to direct spending toward establishing our market presence and

generating revenue.

Research and development activities were for product development and clinical trials for the VenoValve

and for the enVVe System.

The Company will continue to incur these costs to complete its clinical trials for the VenoValve and the enVVe

System, enhance products, develop new products, and operate as a public company for the foreseeable future as we seek to obtain regulatory

approval for our studies and product candidates.

do not currently have material commitments for capital expenditures or other expenditures with the exception of our facility lease commitment

of $0.4 million per year.

We expect a modest increase in purchases of property and equipment and in facility lease costs as we continue

SAVVE, commence TAVVE, and plan for commercialization of the VenoValve.

We expect a nominal increase in purchases of property and equipment and in facility lease costs as we commence

future capital requirements will remain dependent upon a variety of factors, especially including the success of our clinical trials

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We anticipate that our cash burn rate

will increase from current levels of approximately $4 million to $5 million per quarter to $5 million to $6 million per quarter in 2025.

Even after considering this increase, we should have sufficient cash to fund operations through mid-2026.

have historically funded our operations through financing activities such as the capital raises completed in 2024 and 2023.

to raise additional capital in the future.

may increase from current levels of approximately $4 million per quarter to between $4 million and $5 million per quarter in 2026.

after considering this increase, we should have sufficient cash to fund operations through mid-2027.

have historically funded our operations through financing activities such as the capital raises.

We will need to raise additional capital

in the future.

Any inability to raise additional financing would have a material adverse effect on us.

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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-K

Item 7. Management’s Discussion and Analysis