Item 1A. Risk Factors
ITEM
1A. RISK FACTORS
In
addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item
1A. Risk Factors” in our 2025 Annual Report on Form 10-K, which could materially affect our business, financial condition or future
results. Except as set forth below, there have been no material changes during fiscal year 2026 to the risk factors that were included
in the Form 10-K.
We
have incurred substantial indebtedness under convertible notes issued in second quarter of 2026, which could adversely affect our liquidity
and result in significant dilution to our stockholders.
As
of June 30, 2026, we had $14.7 million of convertible notes payable outstanding, issued in private placements completed
in February, April and May 2026. These notes bear interest at 10% per annum (18% upon an event of default) and are convertible into shares
of our common stock at conversion prices subject to downward adjustment. Our ability to service this indebtedness depends on our future
operating performance, and our failure to make required payments or comply with applicable covenants could result in an event of default,
which could have a material adverse effect on our business and financial condition and cause us to cease operations. Conversion of these
notes and exercise of the related warrants will also result in substantial dilution to our existing stockholders.
Our
license and acquisition of assets from Celularity may not achieve the anticipated benefits, and we may be required to make significant
additional contingent payments.
In
April 2026, we completed the acquisition of an exclusive license to Celularity’s commercial-stage regenerative biomaterials portfolio
for aggregate upfront consideration of $13.3 million, and we may be required to pay up to an additional $20.0 million in contingent milestone
payments if certain commercial milestones are achieved. The anticipated benefits of this transaction, including the successful commercialization
of the licensed products under our BioNx brand, may not be realized on the timeline we expect, or at all, and integrating these products
and technologies may divert management attention and require significant additional expenditures.
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