What changed in this filing

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Item 1A. Risk Factors

2026-03-26 compared with 2025-03-20 · 166 added, 154 removed, 235 unchanged (58% of the section changed)

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Investing in our common stock involves a high degree of risk and there can be no assurance that our future results will meet expectations.

You should carefully consider the risks and uncertainties described below, together with all of the other information contained in this Annual Report on Form 10-K, before purchasing our common stock.

You should carefully consider the risks and uncertainties described below, together with all of the other

information contained in this Annual Report on Form 10-K, before purchasing our common stock.

If we are unable to successfully address these risks and challenges, our business, financial condition, results of operations, or prospects could be materially and adversely affected.

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RISK FACTOR SUMMARY

• The loss of our largest customer will negatively impact our revenue, and we may not be able to replace that lost revenue with new business.

• Our A&R Loan Agreement (as defined below) with Innovatus contains certain covenants that could adversely affect our operations and, if an event of default were to occur, we could be forced to repay the outstanding indebtedness sooner than planned and possibly at a time when we do not have sufficient capital to meet this obligation.

The occurrence of any of these events could cause a significant adverse impact on our business, prospects and share price.

• Our existing capital resources may not be adequate to finance our operating cash requirements beyond the length of time that we have estimated and additional capital that we may need to operate or expand our business may not be available.

• We have limited capital resources and will likely need additional funding to operate and expand our business.

If we are unable to raise additional capital on attractive terms, or at all, we may be unable to grow our operations.

• We face competition in the concentrates market and have large competitors with substantial resources.

• Newer treatment methods and newly available medications may decrease the need for concentrates.

Our business is highly regulated, resulting in additional expense and risk of noncompliance that can materially and adversely affect our business, results of operations, financial position and cash flows.

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• Our business could be adversely affected by economic downturns, inflation, increases in interest rates, natural disasters, public health crises, cybercrime, political crises, geopolitical events, such as the crisis in Ukraine and the Middle East, or other macroeconomic conditions, which could have a material and adverse effect on our results of operations and financial condition.

RISKS RELATED TO OUR FINANCIAL POSITION

The loss of our largest customer will negatively impact our revenue, and we may not be able to replace that lost revenue with new business.

In the fall of 2024, we were notified by our largest customer that it would be moving a substantial portion (and possibly all) of its business to another concentrates supplier in 2025.

We expect this customer to complete this transition no later than mid-2025, and there can be no expectation there will be continued sales to this customer beyond this point.

We believe that this will result in the loss of almost half of our sales volume and $34 million in revenue compared to 2024.

While we are currently endeavoring to increase our sales to other customers and expand our product portfolio to fill this gap, there can be no assurance that we will be successful in doing so.

Failure to replace this lost business will likely result in a substantial decrease in our revenue and a decrease in our profit.

In addition, we will need to restructure our operations to reduce our overhead in the short term, which could impact our ability to expand our business in the longer term should we be able to attract enough business to replace the revenue gap left by the loss.

Our A&R Loan Agreement with Innovatus contains certain covenants that could adversely affect our operations and, if an event of default were to occur, we could be forced to repay the outstanding indebtedness sooner than planned and possibly at a time when we do not have sufficient capital to meet this obligation.

The occurrence of any of these events could cause a significant adverse impact on our business, prospects and share price.

In March 2020, we entered into the Loan Agreement with Innovatus to make certain term loans to the Company in the aggregate principal amount of up to $35 million.

Net draw down proceeds at closing were approximately $21 million, net of estimated fees and expenses.

On January 2, 2024, we amended and restated the Loan Agreement (the “A&R Loan Agreement”) to provide for the continuation of term loans initially borrowed under the Loan Agreement, in an aggregate outstanding principal amount of $8.0 million as of the effective date and $8.5 million as of December 31, 2024 .

Pursuant to the A&R Loan Agreement, we have pledged substantially all of our assets and the assets of our subsidiary, Rockwell Transportation, Inc., and have agreed that we may not sell or assign rights to our patents and other intellectual property without the prior consent of Innovatus.

Additionally, the Loan Agreement contains customary representations and warranties and affirmative covenants, subject to customary carve outs, and includes financial covenants related to liquidity and actual hemodialysis products revenue (measured on a biannual basis).

The A&R Loan Agreement also contains negative covenants that, among other things, restrict our ability to:

• incur additional indebtedness;

• grant liens;

• make distributions, including dividends;

• enter into a merger or consolidation;

• alter the business of the Company;

• sell all or a portion of the Company’s property, business or assets.

These terms of the A&R Loan Agreement could prevent us from taking certain actions without the consent of our lenders, which may limit our flexibility in operating our business and our ability to take actions that might be advantageous to us and our stockholders, placing us at a competitive disadvantage compared to our competitors who have less leverage and who therefore may be able to take advantage of opportunities that our leverage prevents us from exploiting.

These covenants could also limit our ability to make needed capital expenditures or otherwise conduct necessary or desirable business activities.

If we cannot maintain compliance with the covenants under our A&R Loan Agreement, we may trigger an event of default.

Our ability to comply with these covenants may be adversely affected by events beyond our control.

For example, on November 10, 2022, we entered into the Second Amendment to Loan Agreement under which we:

(i) prepaid an aggregate principal amount

of $5.0 million in outstanding term loans in one installment on November 14, 2022;

and (ii) agreed to make interest-only payments until September 2023 (at which time we resumed scheduled debt payments) in consideration for certain modifications to the financial covenants under the Loan Agreement.

The A&R Loan Agreement requires that we make interest-only payments for thirty months, or up to thirty-six months if certain conditions are met.

Those conditions were satisfied in 2024, and the Company may make interest only payments for thirty-six months.

The loan will mature on January 1, 2029, unless repaid earlier.

The A&R Loan Agreement includes a financial covenant that requires actual consolidated revenue from the sale and supply of hemodialysis products for the trailing six-month period (ended on the date when tested), to be not less than 85.0% of the projections for the same period and, beginning with the quarter ending September 30, 2024, actual consolidated revenue from the sale and supply of hemodialysis products for the trailing six-month period (ended on the date when tested), to be not less than 80.0% of the projections for the same period.

Because those projections were submitted prior to our becoming aware of DaVita’s intention to completely transition its business to another supplier by mid-2025, we may not be able to satisfy this covenant if we are unable to acquire enough new business to increase our revenue or cure a breach by submitting revised projections in accordance with the A&R Loan Agreement.

Our inability to satisfy this financial covenant or cure any breach would constitute an event of default.

The A&R Loan Agreement also includes a liquidity covenant that requires us to maintain minimum liquidity of the greater of (x) our three-month cash burn or (y) the sum of $1.5 million and the aggregate amount of capital lease payments required to be made during the succeeding 12 months (or during a continuing event of default, the aggregate amount of capital lease payments required to be made during the entire term of such capital leases).

Although we are currently in compliance with all reporting and financial covenants, there can be no assurance that we will be able to continue to maintain compliance in the future.

The A&R Loan Agreement also includes customary events of default, including, among other things, a change of control or a failure to comply with certain of the covenants in the A&R Loan Agreement.

Upon the occurrence and continuation of an event of default, all amounts due under the A&R Loan Agreement become (in the case of a bankruptcy event), or may become (in the case of all other events of default and at the option of Innovatus), immediately due and payable.

If an event of default under the A&R Loan Agreement should occur, we could be required to immediately repay the outstanding indebtedness.

If we are unable to repay this debt, the lenders would be able to foreclose on the secured collateral, including our cash accounts, and take other remedies permitted under the A&R Loan Agreement.

Even if we are able to repay the indebtedness on an event of default, the repayment of these sums may significantly reduce our working capital and impair our ability to operate as planned.

The occurrence of any of these events could cause a significant adverse impact on our business and financial condition.

• Our existing capital resources may not be adequate to finance our operating cash requirements in the future and additional capital that we may need to operate or expand our business may not be available.

• We have limited capital resources and will likely need additional funding to operate and expand our business.

If we are unable to raise additional capital on attractive terms, or at all, we may be unable to sustain our operations.

We have limited capital resources, a cumulative deficit of approximately $397.7 million since inception and we may incur further losses.

As of December 31, 2024, we had approximately $21.6 million of cash, cash equivalents and investments available-for-sale, and working capital of $22.9 million.

Net cash provided by operating activities for the year ended December 31, 2024 was approximately $4.2 million.

While we expect to have sufficient capital through 12 months from the date of this filing, there is uncertainty beyond that period.

Our ability to fund our planned activities will be dependent upon our ability to acquire new customers, execute on business development plans, raise additional capital, control our costs and maintain or increase our gross margin on sales.

These factors are subject to significant risks and uncertainties and there can be no assurance that we will be successful in raising additional capital, controlling costs and restructuring our customer relationships.

If we are unable to achieve one or all of these objectives, we may be forced to implement further cost-saving measures that could have a negative impact on our activities.

If we are unable to increase our revenues and decrease our expenses or raise any required capital, we may be forced to curtail our activities and, ultimately, cease operations.

In addition, our day-to-day operations depend in part on the amount of credit our suppliers will extend to us.

If we are unable to maintain a favorable financial position, that credit may be curtailed, which could significantly impact our operations.

Even if we are able to raise sufficient capital, such financings may only be available on unattractive terms, or result in significant dilution of stockholders’ interests and, in such event, the market price of our common stock may decline.

Our existing capital resources may not be adequate to finance our operating cash requirements for the length of time that we have estimated and additional capital that we may need to operate or expand our business may not be available.

Our forecast of the period of time through which our existing capital resources will be adequate to support our current operations is a forward-looking statement that involves risks and uncertainties.

The actual amount of funds we will need to operate is subject to many factors, some of which are beyond our control.

These factors include, but are not limited to:

• our ability to enter into new contracts and negotiate favorable terms with current and future customers;

• our ability to increase our prices to keep up with inflation;

• whether we experience significant input costs for, or disruptions to, the manufacturing or distribution of our products;

• whether we expand into new territories;

• whether we develop and launch new product offerings.

If we are required to raise additional capital to fund our operations, such equity financings may be dilutive to our stockholders and newly issued securities may have rights, preferences or privileges senior to those of holders of our common stock.

Any debt financing is limited by the terms of our Securities Purchase Agreement with DaVita, dated as of April 6, 2022, pursuant to which they invested in our convertible preferred stock.

Specifically, until DaVita owns less than 50% of its investment, the Company may only incur additional debt in the form of a purchase money loan, a working capital line of up to $5 million or to refinance existing debt, unless DaVita consents.

Debt financing, if available, may involve significant cash payment obligations and covenants that restrict our ability to operate as a business.

If our operations require substantial cash resources in the future in excess of our liquid resources on hand and if our cash flows are not sufficient to support financing through unsecured indebtedness, we may not be able to obtain debt financing, and our capital financing options may become limited.

Regardless of whether we seek to raise additional working capital through the sale of equity securities or the incurrence of indebtedness, if we do not have sufficient funds available to run our concentrates business and pursue business opportunities, our business, results of operations, financial position and cash flows could be materially adversely affected.

Our revenue growth and profitability projections are based on various assumptions that may not come to fruition.

Our revenue growth and profitability projections are subject to many assumptions regarding our future operations, including that we are successful in expanding to new territories, that we successfully license and launch new product offerings, that we are able to add new profitable business, increase our prices to keep up with inflation, and that we do not experience significant disruptions to the manufacturing or distribution of our products, among other assumptions.

If we are unsuccessful in one or more of those efforts, we may not be able to achieve our projected growth and profitability.

If we are unable to raise additional capital on attractive terms, or at all, we may be unable to grow our operations.

RISKS RELATED TO OUR BUSINESS

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In addition to Fresenius, Nipro may be seeking to increase its market share of the domestic concentrates market, which, if successful, could have an impact upon our market share and profitability.

In addition, certain national medical products distributors have recently expanded their logistical capabilities to reach the outpatient dialysis space, which may also have an impact on the competitive landscape.

A few customers account for a substantial portion of the end user sales of our concentrate products.

A small group of customers account for a substantial portion of the end user sales of our concentrate products.

The loss of any of these customers could materially and adversely affect our business, results of operations, financial position and cash flows.

Sales of our medical device products are highly concentrated among a few customers.

As noted above, one customer accounted for nearly half of our sales in each of the last three years and for a substantial number of the clinics we serve, and that customer notified us in the fall of 2024 that it would be moving a substantial portion of its business to another concentrates supplier.

We had experienced further concentration with regard to that customer through the Evoqua Acquisition.

We have other large customers, both domestic and international, that account for a significant remaining portion of our remaining business.

Sales of our medical device products are highly concentrated among a small group of customers.

Prior to 2025, one customer accounted for nearly half of our sales and for a substantial number of the clinics we supplied.

While we continue to sell to that customer, sales are now substantially reduced compared to before 2025.

We now have a group of larger customers, both

domestic and international, that account for a significant portion of our business.

The loss of any of these significant customers could materially and adversely affect our business, results of operations, financial position and cash flows.

Market dynamics in our concentrates business have resulted in fluctuating volumes that could lead to the implementation of cost-saving measures that would have a material and adverse effect on our business.

Volumes have fluctuated in our concentrates business due to the reduction in patient census and cost saving measures by our customers, including switching to single-use bicarbonate canisters.

If these volumes decrease substantially, we may be forced to further consolidate our operations and curtail our activities to lower our fixed costs.

While our fixed costs would be reduced by such actions, we may not be able to realize the full amount of that reduction if our variable costs (such as transportation) increase and we are unable to pass along those increases to our customers.

In addition, a consolidation or restructuring of our business could lead to significant one-time costs related to exiting operations.

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

Advancements in treatment modalities for end stage kidney disease and the introduction of new pharmacologic therapies may reduce demand for our hemodialysis concentrate products.

The market for our hemodialysis concentrate products depends on the continued utilization of in-center hemodialysis as a primary treatment modality for patients with end stage kidney disease (“ESKD”).

However, the treatment landscape for ESKD is evolving.

Technological advances, alternative renal replacement therapies, and newly developed pharmacologic agents may reduce the number of patients requiring conventional hemodialysis or may decrease the frequency or intensity of hemodialysis treatments.

For example, increased adoption of home-based dialysis modalities, including peritoneal dialysis and home hemodialysis, as well as improvements in kidney transplantation outcomes, may reduce reliance on in-center hemodialysis services.

In addition, the development and commercialization of innovative therapies and devices, including wearable or implantable artificial kidney technologies, regenerative medicine approaches, and other emerging treatment options, could further diminish the demand for traditional hemodialysis.

Moreover, recently approved or future pharmacologic therapies designed to treat diseases for which chronic kidney disease (“CKD”) is a comorbidity, slow the progression of CKD or better manage complications associated with ESKD may delay or reduce the need for dialysis initiation.

Emerging clinical evidence indicates that certain glucagon-like peptide-1 (“GLP-1”) receptor agonists may effectively treat the diseases for which CKD is a comorbidity and may also slow the progression of CKD in some patient populations.

Because diabetes and obesity are leading contributors to CKD and ESKD, broader adoption of GLP-1 therapies and other novel metabolic treatments could reduce the incidence of CKD or delay its progression to ESKD and therefore reduce the number of patients requiring dialysis.

To the extent these therapies decrease the number of patients who progress to dialysis-dependent kidney failure, or meaningfully delay dialysis initiation, demand for in-center hemodialysis treatments may decline over time.

In addition, broader clinical adoption of such therapies, changes in clinical practice guidelines, or shifts in reimbursement policies favoring alternative treatments could adversely affect the volume of hemodialysis treatments administered.

If the number of patients receiving in-center hemodialysis decreases, demand for our products could also decrease.

Any significant reduction in demand for our hemodialysis concentrates would adversely affect our revenues, profitability, and cash flows, and could materially and adversely affect our business, results of operations, financial position and cash flows.

If our customers move back to entering into long-term bundled product contracts with suppliers, our business could suffer.

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While the dialysis customer base currently seems to be moving away from restrictive bundled contracts, which has improved market access for Rockwell, there have been cycles in the past in which purchasing bundled products was in favor.

We do not currently have a full renal product portfolio to leverage as a comprehensive or bundled offering to providers, as we do not sell dialysis machines, certain dialysis machine-related disposables, nor certain pharmaceutical products used as part of dialysis treatments.

If the current cycle shifts toward providers preferring longer-term agreements across a wide range of dialysis-related products, our business could suffer due to lost sales.

We do not currently have a full renal product portfolio to leverage as a comprehensive or bundled offering to providers, as we do not sell dialysis machines, certain dialysis machine-related disposables, or certain pharmaceutical products used as part of dialysis treatments.

If the current cycle shifts toward customers preferring bundled contracts across a wide range of dialysis-related products, our business could suffer due to lost sales.

We have been, and may continue to be, materially and adversely affected by increases in raw material, labor and transportation costs and may be unable to recover certain costs due to provisions in our contracts that limit price increases, and we may lose other customers due to price sensitivity.

A significant portion of our costs relate to chemicals and other raw materials and transportation, which are out of our control, and we may not be able to recover a portion of such costs due to provisions in our agreements with our customers that cap price increases.

A significant portion of our costs relate to chemicals and other raw materials and transportation and we have no control over the price of such materials and services.

We may not be able to recover a portion of such costs due to provisions in our agreements with our customers that cap price increases.

The costs of chemicals and other raw materials are subject to price volatility based on supply and demand (including any volume discounts based on our manufacturing needs) and are highly influenced by the overall level of economic activity in the United States and abroad, which may be affected by changes in U.S.

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In addition, labor costs have been steadily rising, and our manufacturing process is labor intensive, which increases our costs to produce our products.

Rising labor costs also impact our transportation division, where we have fixed sale prices with delivery commitments to customers and thus may be required to absorb increased shipping costs.

These costs have tended to rise from year to year and are likely to continue to rise in the future.

In the past year, raw materials costs have increased significantly, due to short supply and excess demand.

In addition, in some areas, we have a single source of raw materials, which makes us particularly sensitive to cost increases.

In addition, in some regions, we have a single source of raw materials, which makes us particularly sensitive to cost increases.

Transportation also comprises a significant portion of our costs.

In the past, we have been adversely affected by a general shortage in commercial truckers in the United States and significant increases in labor and fuel costs.

In addition, there has, in the past, been a nationwide shortage of diesel fuel in the United States, which we use to run our delivery trucks.

Such a shortage has, and in the future may again result in, an increase in the cost of diesel fuel or lack of availability of diesel fuel and we would need to find another way to deliver our products to clinics.

The recent spike in global oil prices due to the conflict in the Middle East may further increase our fuel, shipping and input costs, particularly if the price increase is sustained.

In addition, we have experienced a nationwide shortage of diesel fuel in the United States or a significant increase in the price of diesel fuel, which we use to run our delivery trucks.

An increase in the cost of diesel fuel or lack of availability of diesel fuel could significantly increase our costs or require us to find another way to deliver our products to clinics, including through use of third-party freight.

If we are unable to do so, we could be in breach of our contracts.

In addition, any increase in the use of third-party freight would significantly increase our costs, which we may not be able to pass on to our customers.

We expect that if we continue to be subject to the limitations on price increases in our contracts, increasing costs and decreasing volumes may continue to negatively impact our profit margins and materially and adversely affect our financial position.

A portion of our customers do not have contracts with us and buy products strictly on a purchase order basis.

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In addition, if we do have contracts with our customers, some allow for price increases only once per year.

In situations where we are able to increase prices to keep up with our costs, we may lose customers if such customers are unwilling to pay higher prices.

That would result in lost revenue for the Company and may negatively impact our financial position and results of operations.

In situations where we are able to increase prices to keep up with our costs, including through surcharges and other methods, we may lose customers if such customers are unwilling to pay higher prices.

Any inability to pass along costs, decrease in demand or loss of customers would result in lost revenue for the Company and may negatively impact our financial position and results of operations.

Unfavorable weather, economic conditions or supply shortages could materially and adversely affect our business, financial condition or results of operations.

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A severe weather or other geological event in our locations or those of our suppliers, or prolonged economic downturn or persistent inflation have and could continue to result in a variety of risks to our business, including our ability to recover our costs or to raise additional capital when needed on acceptable terms, if at all.

Severe weather events have forced us to close our manufacturing facilities temporarily, which strains our production.

In addition, weather-related events may jeopardize our ability to deliver our products as required by our contracts.

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Any of the foregoing could harm our business, and we cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact our business.

Our production and other processes are somewhat manual, which introduces risk of error and may result in rising production costs.

The production of our hemodialysis concentrates products is somewhat manual and involves considerable unskilled labor.

Certain aspects of our production and other processes are manual, which introduces risk of error and may result in rising production costs.

Certain aspects of the production of our hemodialysis concentrates products are manual and involve considerable unskilled labor.

The manual nature of production can introduce the risk of error.

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Many of our products are “made to order,” which can further increase production costs, as we have to frequently change production runs.

Unless we are able to further automate our production processes, our costs may continue to increase and we may be unable to recover those rising costs or may lose customers altogether, which could negatively impact on our financial position.

Unless we are able to further automate our production processes, our costs may continue to increase and we may be unable to recover those rising costs or may lose customers altogether if they are unwilling to pay higher prices, which could negatively impact our financial position.

We may not be successful in expanding our business or in our business development efforts related to in-licensing, acquisitions or other business collaborations.

Even if we are able to enter into business development arrangements, they could have a negative impact on our business and our profitability.

We may seek to make acquisitions or enter into business development arrangements in our concentrates business to expand our customer base or geographic footprint.

In addition, as part of our business strategy, we may seek to acquire or in-

license products or product candidates that we believe are a complementary fit with our business, as well as other product or product candidates that we believe have substantial development potential.

We may not be able to identify such opportunities.

If we do, the negotiation of such arrangements can be a lengthy, complex and expensive process and there can be no assurance that any such negotiations will be completed on a timely basis or at all or result in an arrangement that will enable us to effectively integrate, develop and launch such products or product candidates effectively.

In addition, the market potential for new products or product candidates is highly uncertain and evaluation of such potential requires significant judgment and assumptions.

There is a significant risk that any new product may not be able to be brought to market as profitably as expected or at all.

If the results of any new product initiative are materially worse than expected, it could have a material adverse effect on our business, results of operations, financial position and cash flows.

Our business depends on government funding of health care, and changes could impact our ability to be paid in full for our products, increase prices or cause consolidation in the dialysis provider market.

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This may result in increased purchasing leverage for providers across all dialysis product categories and increased pricing pressure on all suppliers to the industry.

Our medical device products are life sustaining and any failure to supply them to our customers and resulting scrutiny related to such circumstances could negatively impact our reputation and stock price.

Our medical device products are life-sustaining and any failure to supply them to our customers could result in scrutiny and negatively impact our reputation and stock price.

Our hemodialysis concentrates products are critical to sustain the lives of patients who need them.

Routine business actions we take under our contractual arrangements with purchasers or individual clinics, such as price increases or discontinuation of supply to customers who fail to pay us on time or at all, could mean that our customers may need to find alternative sources of supply and may not be able to serve their patients.

Routine business actions we take under our contractual arrangements with customers or individual clinics, such as price increases or discontinuation of supply to customers who fail to pay us on time or at all, could mean that our customers may need to find alternative sources of supply and may not be able to serve their patients.

This may result in increased governmental or other scrutiny on our business.

Such actions could also result in reputational harm to us and have a negative impact on our stock price.

We may not be successful in expanding our business or in our business development efforts related to in-licensing, acquisitions or other business collaborations.

Even if we are able to enter into business development arrangements, they could have a negative impact on our business and our profitability.

We may seek to make further acquisitions or enter into business development arrangements in our concentrates business to expand our customer base or geographic footprint.

In addition, as part of our business strategy, we may seek to acquire or in-license products or product candidates that we believe are a complementary fit with our business, as well as other product or product candidates that we believe have substantial development potential.

We may not be able to identify such opportunities.

In addition, the market potential for new products or product candidates is highly uncertain and evaluation of such potential requires significant judgment and assumptions.

There is a significant risk that any new product may not be able to be brought to market as profitably as expected or at all.

If the results of any new product initiative are materially worse than expected, it could have a material adverse effect on our business, results of operations, financial position and cash flows.

We have in-licensed rights to certain patents that cover Triferic.

If we fail to remain in compliance with these license agreements, we could forfeit the rights to these patents, which could result in our noncompliance with those partnership agreements.

We have acquired rights to certain patents under license agreements, including from an affiliate of Dr.

Ajay Gupta, our former Chief Scientific Officer.

These in-licensed patents, if granted, cover Triferic AVNU and have other claims that could cover Triferic.

If we fail to remain in compliance with the terms of these license agreements, including due diligence obligations relating to our efforts to develop and commercialize licensed products in certain markets, we could be found to be in breach of these license agreements.

If this was to happen, the licensor could terminate the license agreement in certain circumstances, causing us to forfeit our rights to the licensed patents.

This could potentially subject us to expensive and protracted litigation.

Any of these occurrences could significantly harm our results of operations.

Market dynamics in the concentrates business have resulted in fluctuating volumes that could lead to the implementation of cost-saving measures that would have a material and adverse effect on our business.

Volumes have fluctuated in our concentrates business due to changes in patient census and cost saving measures implemented by our customers, including switching to single-use bicarbonate canisters and bags.

If volumes decrease substantially, we may be forced to further consolidate our operations and curtail our activities to lower our fixed costs.

While we expect that our fixed costs would be reduced by such actions, we may not be able to realize the full amount of that reduction if our variable costs (such as transportation) increase and we are unable to pass along those increases to our customers.

In addition, a consolidation or restructuring of our business could lead to significant one-time costs related to exiting operations.

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

Our business and operations would suffer in the event of a security breach, system failure, invasion, corruption, destruction or interruption of our or our business partners’ critical information technology systems or infrastructure.

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Despite the implementation of security measures, these systems are vulnerable to damage from computer viruses, unauthorized access, cyber-attacks, natural disasters, terrorism, war and telecommunication, electrical and other system failures due to employee error, malfeasance or other disruptions.

We could experience a business interruption, monetary loss, intentional theft of confidential information or reputational damage, including damage to key customer and partner relationships, from system failures, espionage attacks, malware, ransomware or other cyber-attacks.

Such cyber-security breaches may compromise our system infrastructure or lead to data leakage, either internally or at our contractors or consultants.

Such cyber-security breaches may compromise our system infrastructure or lead to data leakage, either internally or at our customers or business partners.

Cybersecurity incidents, including phishing attacks and attempts to misappropriate or compromise confidential or proprietary information or sabotage enterprise IT systems, are becoming increasingly frequent and more sophisticated.

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We are highly dependent on the operations, sales, product development, and business development expertise of the principal members of our management, operations and sales team.

We have hired executive-level employees who are leading our development and operational initiatives.

We have hired executive-level employees who are leading our operational and functional initiatives.

Although we have entered into employment agreements with our executives and key employees, each of them may terminate their employment with us at any time.

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Competition to hire from this limited pool is intense, and we may be unable to hire, train, retain or motivate these key personnel on acceptable terms given the competition among numerous medical device, pharmaceutical and biotechnology companies for similar personnel.

Finding production associates for our manufacturing facilities and truck drivers for our transportation division has also presented challenges for us.

There is similarly a great deal of competition for these workers.

Finding production associates for our manufacturing facilities and truck drivers for certain routes in our transportation division has also presented challenges for us in the past.

There is similarly competition for these workers.

This competition has resulted in increasing compensation costs as we attempt to attract and retain workers.

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If one of our employees was accidentally injured from the use, storage, handling or disposal of these materials or wastes, the medical costs related to his or her treatment would be covered by our workers’ compensation insurance policy.

However, we do not carry specific hazardous waste insurance coverage and our property and casualty and general liability insurance policies specifically exclude coverage for damages and fines arising from hazardous waste exposure or contamination.

However, we do

not carry specific hazardous waste insurance coverage and our property and casualty and general liability insurance policies specifically exclude coverage for damages and fines arising from hazardous waste exposure or contamination.

Accordingly, in the event of contamination or injury, we could be held liable for damages or penalized with fines in an amount exceeding our resources, and our clinical trials or regulatory approvals could be suspended, or operations otherwise affected.

RISKS RELATED TO OUR FINANCIAL POSITION

The reduction in sales to our largest customer required us to right size our operations and our inability to appropriately reduce our scale would have a negative impact on our results of operations and financial condition.

In the fall of 2024, we were notified by our largest customer that it would be moving a substantial portion of its business to another concentrates supplier in 2025.

While we continue to sell to that customer, sales are now substantially reduced compared to before 2025.

Because this customer represented approximately half of our sales volume, we reduced our cost structure to maintain our pricing and our profit margin.

In August 2025, we ceased production in our South Carolina facility to reduce our overhead.

We have also contracted a portion of our transportation operations to reduce costs.

While we were able to cut our costs through these actions, we may seek to or be required to further reduce our costs or pass along cost increases to customers when contracts permit.

We are also seeking to increase our sales to new and existing customers and expand our product portfolio to increase revenue in the wake of the decrease in sales from our largest customer.

The recent restructuring of our operations could impact our ability to expand our business in the longer term should we be able to attract enough business to replace the revenue gap left by the loss of our largest customer.

Our Loan Agreement with Innovatus contains certain covenants that could adversely affect our operations and, if an event of default were to occur, we could be forced to repay the outstanding indebtedness sooner than planned and possibly at a time when we do not have sufficient capital to meet this obligation.

The occurrence of any of these events could cause a significant adverse impact on our business, prospects and share price.

In March 2020, we entered into the Loan Agreement with Innovatus to make certain term loans to the Company in the aggregate principal amount of up to $35 million.

Net draw down proceeds at closing were approximately $21 million, net of estimated fees and expenses.

Additionally, the A&R Loan Agreement contains customary representations and warranties and affirmative covenants, subject to customary carve outs, and includes financial covenants related to liquidity and actual hemodialysis products revenue (measured on a biannual basis).

The A&R Loan Agreement also contains negative covenants that, among other things, restrict our ability to:

• incur additional indebtedness;

• grant liens;

• make distributions, including dividends;

• enter into a merger or consolidation;

• alter the business of the Company;

• sell all or a portion of the Company’s property, business or assets.

These covenants could also limit our ability to make needed capital expenditures or otherwise conduct necessary or desirable business activities.

If we cannot maintain compliance with the covenants under our A&R Loan Agreement, we may trigger an event of default.

Our ability to comply with these covenants may be adversely affected by events beyond our control.

For example, on November 10, 2022, we entered into the Second Amendment to Loan Agreement under which we:

(i) prepaid an aggregate principal amount of $5.0 million in outstanding term loans in one installment on November 14, 2022;

The A&R Loan Agreement requires that we make interest-only payments for thirty months, or up to thirty-six months if certain conditions are met.

Those conditions were satisfied in 2024, and the Company may make

interest only payments for thirty-six months.

The loan will mature on January 1, 2029, unless repaid earlier.

The A&R Loan Agreement includes a financial covenant that required actual consolidated revenue from the sale and supply of hemodialysis products for the trailing six-month period (ended on the date when tested), to be not less than 85.0% of the projections for the same period and, beginning with the quarter ending September 30, 2024, actual consolidated revenue from the sale and supply of hemodialysis products for the trailing six-month period (ended on the date when tested), to be not less than 80.0% of the projections for the same period.

Those projections were amended to account for the lost revenue from DaVita when it moved to a different supplier.

Our inability to satisfy this financial covenant or cure any breach would constitute an event of default.

Although we are currently in compliance with all reporting and financial covenants, there can be no assurance that we will be able to continue to maintain compliance in the future.

The A&R Loan Agreement also includes customary events of default, including, among other things, a change of control or a failure to comply with certain of the covenants in the A&R Loan Agreement.

If an event of default under the A&R Loan Agreement should occur, we could be required to immediately repay the outstanding indebtedness.

If we are unable to repay this debt, the lenders would be able to foreclose on the secured collateral, including our cash accounts, and take other remedies permitted under the A&R Loan Agreement.

Even if we are able to repay the indebtedness on an event of default, the repayment of these sums may significantly reduce our working capital and impair our ability to operate as planned.

The occurrence of any of these events could cause a significant adverse impact on our business and financial condition.

We have limited capital resources and will likely need additional funding to expand our business.

If we are unable to raise additional capital on attractive terms, or at all, we may be unable to sustain our operations.

We have limited capital resources and a cumulative deficit of approximately $403.0 million since inception and we may incur further losses.

As of December 31, 2025, we had approximately $25.0 million of cash, cash equivalents and investments available-for-sale, and working capital of $28.6 million.

Net cash used in operating activities for the year ended December 31, 2025 was approximately $0.7 million.

While we expect to have sufficient capital through 12 months from the date of this filing, there is uncertainty beyond that period.

Our ability to fund our planned activities will be dependent upon our ability to acquire new customers or grow revenues from existing customers, execute on business development plans, raise additional capital, control our costs and maintain or increase our gross margin on sales.

If we are unable to achieve one or all of these objectives, we may be forced to implement further cost-saving measures that could have a negative impact on our activities.

If we are unable to increase our revenues and decrease our expenses or raise any required capital, we may be forced to curtail our activities and, ultimately, cease operations.

In addition, our day-to-day operations depend in part on the amount of credit our suppliers will extend to us.

If we are unable to maintain a favorable financial position, that credit may be curtailed, which could significantly impact our operations.

Our existing capital resources may not be adequate to finance our operating cash requirements in the future and additional capital that we may need to operate or expand our business may not be available.

The actual amount of funds we will need to operate is subject to many factors, some of which are beyond our control.

These factors include, but are not limited to:

• our ability to enter into new contracts and negotiate favorable terms with current and future customers;

• our ability to increase our prices to keep up with inflation;

• whether we experience significant input costs for, or disruptions to, the manufacturing or distribution of our products;

• whether we expand into new territories;

• whether we develop and launch new product offerings.

Any debt financing is limited by the terms of our Securities Purchase Agreement with DaVita, dated as of April 6, 2022, pursuant to which they invested in our convertible preferred stock.

Specifically, until DaVita owns less than 50% of its investment, we may only incur additional debt in the form of a purchase money loan, a working capital line of up to $5 million or to refinance existing debt, unless DaVita consents.

Debt financing, if available, may involve significant cash payment obligations and covenants that restrict our ability to operate as a business.

Our financial projections are based on various assumptions that may not come to fruition.

Our financial projections, including without limitation those relating to profitability and operating cash flow, are subject to many assumptions regarding our future operations, including that we are successful in selectively automating our operations, that we successfully license, launch or acquire new product offerings, that we are able to add new profitable business, increase our prices to keep up with inflation, and that we do not experience significant disruptions to the manufacturing or distribution of our products, among other assumptions.

If we are unsuccessful in one or more of those efforts, we may not be able to achieve our financial projections.

RISKS RELATED TO LEGAL AND REGULATORY

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In addition, manufacturers and their facilities are required to comply with extensive FDA requirements, including ensuring that quality control and manufacturing procedures conform to current good manufacturing practices ("cGMP") and applicable state laws.

such, we and our distribution partners are subject to continual review and periodic inspections to assess compliance with cGMP and state laws.

For example, in 2024, the FDA conducted a routine cGMP inspection of one of our manufacturing facilities and issued observations.

The Company performed corrective actions and resolved the issue.

As such, we and our distribution partners are subject to continual review and periodic inspections to assess compliance with cGMP and state laws.

For example, in 2025, the FDA conducted a routine cGMP inspection of one of our manufacturing facilities and issued observations, in response to which the Company performed corrective actions and resolved the issue.

While the finding was not serious, management expended time and effort on the correction.

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Our failure to comply with applicable regulations could also result in product liability litigation against us.

In addition, our failure to comply with applicable regulations with respect to our concentrates products could constitute a breach of our Amended and Restated Products Purchase Agreement with DaVita (the “Amended Agreement”), providing DaVita with various remedies that would be material and adverse to us.

In addition, our failure to comply with applicable regulations with respect to our concentrates products could constitute a breach of our customer agreements.

Moreover, changes in applicable regulatory requirements could significantly increase the costs of our operations, which we may not be able to recover under our fixed price contracts.

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Operating in the medical device industry involves numerous commercial relationships, complex contractual arrangements, uncertain intellectual property rights, potential product liability and other aspects that create heightened risks of disputes, claims, lawsuits and investigations.

In particular, we may face claims related to the safety of our products, intellectual property matters, employment matters, tax matters, commercial disputes, competition, sales and marketing practices, environmental matters, personal injury, insurance coverage and acquisition or divestiture‑related matters.

In particular, we may face claims related to the safety of our products, intellectual property matters, employment matters, tax matters, commercial or financial disputes, competition, sales and marketing practices, environmental matters, personal injury, insurance coverage and acquisition or divestiture‑related matters.

A counterparty may assert claims that we do not believe are meritorious, but we nonetheless need to defend.

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We may have significant legal expenses that are not covered by insurance.

In addition, our reputation could be damaged by such sanctions or product liability litigation and that could harm our business

reputation and marketing ability.

In addition, our reputation could be damaged by such sanctions or product liability litigation and that could harm our business reputation and marketing ability.

Any such sanctions or litigation could also hurt our ability to retain product liability insurance or make such insurance more expensive.

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It is possible that we may infringe on intellectual property rights of others without being aware of the infringement.

If a third party believes that one of our products infringes on the third party’s patent, it may sue us even if we have received our own patent protection for the technology.

If we infringe the rights of a third party, we could be prevented from manufacturing and selling products, forced to pay damages, compelled to license technology from the party claiming infringement and lose the opportunity to license our technology to others and collect royalty payments, any of which could have a material adverse effect on our business.

If we are prevented from selling any of our concentrate or ancillary products due to a patent infringement or if our ability to sell any of our concentrate or ancillary products due to a patent infringement is materially and adversely affected, DaVita may be entitled to terminate our Amended Agreement.

If a third party believes that one of our products infringes on the third party’s intellectual property, it may sue us even if we or our manufacturer have received protection for the technology.

If we infringe the rights of a third party, we could be prevented from manufacturing and selling products, forced to pay damages, compelled to license intellectual property from the party claiming infringement and lose the opportunity to license our technology to others and collect royalty payments, any of which could have a material adverse effect on our business.

As is common in the medical device industry, we engage the services of consultants to assist us in the development of our products.

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Litigation may be necessary to defend against these claims.

Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management and day-to-day business operations.

Even if we are

successful in defending against these claims, litigation could result in substantial costs and be a distraction to management and day-to-day business operations.

Many of our employees and certain of our directors were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors.

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Such litigation, if instituted, could result in substantial costs and diversion of management attention and resources, which could significantly harm our profitability and reputation.

Shares eligible for future sale may affect the market price of our common stock.

Any future sales by us of substantial amounts of our common stock, or the possibility of such sales, could adversely affect the market price of our common stock and also impair our ability to raise capital through an offering of our equity securities in the future.

In the future, we may issue additional shares or warrants in connection with investments or for other purposes considered advisable by our Board.

Any substantial sale of our common stock may have an adverse effect on the market price of our common stock and may dilute the economic value and voting rights of existing stockholders.

In addition, as of December 31, 2024, there were 695,749 shares issuable upon the exercise of then-outstanding and exercisable stock options, 1,190,498 shares issuable upon the exercise of then-outstanding stock options that were not yet exercisable, and 3,984,484 shares issuable upon the exercise of then-outstanding and exercisable warrants.

The market price of the common stock may be depressed by the potential exercise of these options and warrants and the sale of the underlying common stock.

The holders of these options and warrants are likely to exercise them when we would otherwise be able to obtain additional capital on more favorable terms than those provided by the options and warrants.

We may fail to qualify for continued listing on Nasdaq, which could make it more difficult for our stockholders to sell their shares.

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As a result, we moved our listing to The Nasdaq Capital Market and effected an 11-for-1 reverse stock split in May 2022 to regain compliance.

While we have been in compliance with the minimum closing bid price requirement since that time, there can be no assurance that we will be able to maintain compliance with the minimum bid price requirement going forward.

While this reverse stock split addressed the listing deficiency, there can be no assurance that we will be able to maintain compliance with the minimum bid price requirement going forward.

Our stock price has been volatile and has trended below the minimum closing bid price from time to time.

If our common stock were delisted by Nasdaq, we could face significant material adverse consequences, including:

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• a decreased ability to issue additional securities or obtain additional financing in the future.

Shares eligible for future sale may affect the market price of our common stock.

In the future, we may issue additional shares or warrants in connection with investments or for other purposes considered advisable by our Board.

Any substantial sale of our common stock may have an adverse effect on the market price of our common stock and may dilute the economic value and voting rights of existing stockholders.

In addition, as of December 31, 2025, there were 1,170,397 shares issuable upon the exercise of then-outstanding and exercisable stock options, 2,106,167 shares issuable upon the exercise of then-outstanding stock options that were not yet exercisable, and 3,984,484 shares issuable upon the exercise of then-outstanding and exercisable warrants.

The market price of the common stock may be depressed by the potential exercise of these options and warrants and the sale of the underlying common stock.

Our ability to use our net operating loss carryforwards to offset potential taxable income and related income taxes that would otherwise be due may be limited.

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Since inception, we have not paid any cash dividend on our common stock and do not anticipate paying such dividends in the foreseeable future.

The payment of dividends is within the discretion of our Board of Directors and depends upon our earnings, capital requirements, financial condition and requirements, future prospects, restrictions in future financing agreements, business conditions and other factors deemed relevant by the Board.

business conditions and other factors deemed relevant by the Board.

We intend to retain earnings and any cash resources to finance our operations.

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The global economy, including credit and financial markets, has experienced extreme volatility and disruptions, including, among other things, diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, supply chain shortages, increases in inflation rates, higher interest rates, and uncertainty about political and economic stability.

The Federal Reserve has raised interest rates multiple times in response to concerns about inflation and it may raise them again.

Higher interest rates, coupled with reduced government spending and volatility in financial markets, may increase economic uncertainty and affect consumer spending.

Similarly, the ongoing military conflict between Russia and

Ukraine and the conflict in the Middle East have created extreme volatility in the global capital markets and may have further global economic consequences, including disruptions of the global supply chain.

Similarly, the ongoing military conflict between Russia and Ukraine, the conflict in the Middle East, trade disruptions due to tariffs and threats to global alliances have created extreme volatility in the global capital markets and may have further global economic consequences, including disruptions of the global supply chain.

Any such volatility and disruptions may adversely affect our business or the third parties on whom we rely.

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Increased inflation rates can adversely affect us by increasing our costs, including labor and employee benefit costs.

We have experienced and may in the future experience disruptions as a result of such macroeconomic conditions and the occurrence of natural disasters and public health crises, including delays or difficulties in manufacturing sufficient quantities of materials.

If we fail to maintain inventory or deliver product as a result of such delays or difficulties, we could breach our agreements.

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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 1A. Risk Factors