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Item 7. Management’s Discussion and Analysis

2026-03-26 compared with 2025-03-20 · 72 added, 88 removed, 103 unchanged (61% of the section changed)

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Rockwell Medical is a healthcare company that develops, manufactures, commercializes, and distributes a portfolio of hemodialysis products for dialysis providers worldwide.

The Company is a leading supplier of liquid and dry, acid and bicarbonate concentrates for dialysis patients in the United States.

Hemodialysis is the most common form of end-stage kidney disease treatment and is typically performed in freestanding outpatient dialysis centers, hospital-based outpatient centers, skilled nursing facilities, or a patient’s home.

The Company is a supplier of liquid and dry, acid and bicarbonate concentrates for dialysis patients in the United States.

Hemodialysis is the most common form of end-stage kidney disease treatment and is usually performed in freestanding outpatient dialysis centers, hospital-based outpatient centers, skilled nursing facilities, or a patient’s home.

This represents a large market opportunity for which we believe Rockwell's products are well-positioned to meet the needs of patients.

Rockwell manufactures hemodialysis concentrates at its facilities in Michigan, South Carolina, and Texas.

The Company delivers the majority of its hemodialysis concentrates products and mixers to dialysis clinics throughout the United States and internationally, utilizing its own delivery trucks and third-party carriers.

Rockwell has developed a core expertise in manufacturing and delivering hemodialysis concentrates, and has built a longstanding reputation for reliability, quality, and excellent customer service.

Rockwell's products are vital to vulnerable patients with end-stage kidney disease.

We are an established leader in manufacturing and delivering high-quality hemodialysis concentrates and dialysates, along with certain ancillary products, to dialysis providers and distributors in the United States and abroad.

Rockwell provides the hemodialysis community with products controlled by a Quality Management System regulated by the U.S.

Food and Drug Administration ("FDA").

Rockwell is ISO 13485 Certified and adheres to current Good

Manufacturing Practices ("cGMP") and the Association for Advancement of Medical Instrumentation ("AAMI") standards.

On July 10, 2023, the Company executed and consummated the transactions contemplated by an Asset Purchase Agreement (the "Purchase Agreement") with Evoqua Water Technologies LLC ("Evoqua") (the “Evoqua Asset Acquisition”).

Subject to the terms and conditions of the Purchase Agreement, at the closing of the transaction (the “Closing”), the Company purchased customer relationships, equipment and inventory from Evoqua, which were related to the manufacturing agreement ("CMA") with a third-party contract manufacturing organization ("CMO") located in Minnesota.

Total consideration was $17.4 million, comprising a cash payment at Closing of $12.4 million (inclusive of transaction costs) and two $2.5 million deferred payments.

On July 12, 2024, the Company and Evoqua executed an amendment to the Purchase Agreement (the "First Amendment"), which stipulated that the first deferred payment would be partially offset by $0.3 million to reimburse the Company for certain expenses incurred following the close of the Evoqua Asset Acquisition and split the first deferred payment into four quarterly installments to be paid through April 2025.

The First Amendment also split the second deferred payment into four quarterly installments to be paid from July 2025 through April 2026.

See Note 4 to our consolidated financial statments included in this Annual Report on Form 10-K for additional information.

The CMA with the CMO expired on December 31, 2024 after which the Company will only manufacture Rockwell Medical hemodialysis concentrates through its own facilities.

Prior to the expiration of the CMA, the Company transitioned customer relationships acquired through the Purchase Agreement over to Rockwell Medical's hemodialysis concentrates products.

On August 7, 2023, Rockwell was informed by Wanbang Biopharmaceuticals Co., Ltd.

(“Wanbang”), the Company’s commercialization partner in China for Triferic, that the main efficacy results of Wanbang’s clinical trial for Triferic (dialysate) compared with placebo were not obtained and Wanbang will not bring the product forward to registration.

As a result, the remaining $2.1 million of deferred license revenue was recorded into revenue, and the related portion of long-term inventory of $1.1 million was reserved.

Rockwell is ISO 13485 Certified and adheres to current Good Manufacturing Practices ("cGMP") and Association for Advancement of Medical Instrumentation ("AAMI") standards.

Rockwell manufactures hemodialysis concentrates at its facilities in Michigan and Texas, and manufactures its dry acid concentrate mixers at its facility in Iowa.

The Company previously operated a manufacturing and warehouse facility in South Carolina, but the Company concluded manufacturing at that facility in the third quarter of 2025 as part of its ongoing efforts to streamline operations and improve efficiency.

Rockwell delivers the majority of its hemodialysis concentrates products and mixers to dialysis clinics throughout the United States and internationally, utilizing its own delivery trucks and third-party carriers.

Rockwell has developed a core expertise in manufacturing and delivering hemodialysis concentrates, and has built a longstanding reputation for reliability, quality, and excellent customer service.

Our commercial organization supports the Company's vision to focus its efforts on driving Rockwell Medical towards sustainable profitability.

Our commercial team is focused on expanding revenue within our current customer base and seeking to grow revenue through the addition of new accounts to increase Rockwell's overall market share within the hemodialysis concentrates sector.

We focus on creating long-term partnerships with customers, securing appropriate pricing for our products, and delivering high-quality product to our customers for use with their patients.

We currently operate in one market segment, the hemodialysis market, which involves the manufacturing, sale and distribution of hemodialysis products to hemodialysis clinics, including dialysis concentrates, dialysis kits and other ancillary products used in the dialysis process.

On September 18, 2023, Rockwell and DaVita, Inc.

(“DaVita”) entered into an Amended and Restated Products Purchase Agreement (the "Amended Agreement"), which amended and restated the Product Purchase Agreement, dated July 1, 2019, as amended, under which the Company supplies DaVita with certain dialysis concentrates.

Under the Amended Agreement, the Company and DaVita agreed to an increase in product pricing, effective September 1, 2023 and a one-time payment of $0.4 million to Rockwell on or after December 1, 2023.

("DaVita") entered into an Amended and Restated Products Purchase Agreement ("the Amended Agreement"), under which the Company supplies DaVita with certain dialysis concentrates.

The term of the Amended Agreement was scheduled to expire on December 31, 2024.

Prior to the expiration, the Company received written notice from DaVita, notifying the Company that DaVita intended to extend the term of the Amended Agreement through December 31, 2025 (the "Extension Term").

Prior to the expiration, the Company received written notice from DaVita that DaVita intended to extend the term of the Amended Agreement through December 31, 2025 (the "Extension Term").

Subsequently, DaVita indicated that it would completely transition to another supplier, subject to further discussions between Rockwell and DaVita.

Product pricing was increased for the Extension Term.

DaVita subsequently indicated that it will completely transition to another supplier by mid-2025, subject to further discussions between Rockwell and DaVita, which are ongoing.

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

See Note 3 to our consolidated financial statements included in this Annual Report on Form 10‑K for additional information.

On January 2, 2024, the Company's Loan and Security Agreement (the “Loan Agreement”) with Innovatus Life Sciences Lending Fund I, LP (“Innovatus”) was amended to include, among other things, an interest-only period for 30 months, or up to 36 months if certain conditions are met, and extend the maturity date to January 1, 2029.

The Company satisfied those conditions and will now make interest-only payments for the full 36 months.

See Note 17 to our consolidated financial statements included in this Annual Report on Form 10-K for additional information.

On August 21, 2024, the Company entered into a distribution agreement with Nipro Medical Corporation ("Nipro"), a subsidiary of Nipro Corporation Japan and a leader in the global healthcare and medical device industry, under which Rockwell Medical supplies Nipro with the Company's liquid and dry acid and bicarbonate hemodialysis concentrates, as well as its dry acid concentrates mixer, for which Nipro has the right to distribute the Company's products globally, excluding the United States.

The Nipro Agreement will remain in effect for two years with the option to extend the agreement for an additional one-year period.

Nipro is the primary distributor of our dialysis concentrates in certain countries in Latin America.

On December 16, 2024, the Company entered into a product purchase agreement (the "Fresenius Agreement") with Fresenius Medical Care NA (“Fresenius”), the world's leading provider of dialysis products and services, under which the Company supplies Fresenius with the Company's liquid bicarbonate hemodialysis concentrates product, SteriLyte.

The Fresenius Agreement will remain in effect for three years with the option to renew for two additional one-year periods.

Additionally, during the year ended December 31, 2024, Rockwell Medical entered into several other multi-year product purchase agreements, which include supply and purchasing commitments from certain parties.

These agreements were with, but not limited to:

HydroCare, a leading provider of state-of-the-art dialysis water systems to healthcare facilities globally;

Nephro Group Dialysis Centers, the largest dialysis provider in the Philippines;

one of the largest health systems in the Mountain West region of the United States;

BioNuclear, a distributor of Rockwell's hemodialysis concentrates products within

the Dominican Republic;

and Atlantic Medical International, Bermuda's leading supplier of medical products and equipment for the acute and continuing care markets.

Additionally, DaVita agreed to quarterly, non-refundable payments totaling $2.0 million to ensure supply continuity for products purchased during the year ended December 31, 2025.

These quarterly, non-refundable payments of $2.0 million were recorded as revenue during the year ended December 31, 2025.

While DaVita did significantly reduce its product purchases from Rockwell, it did not completely transition its business to a different supplier.

On December 31, 2025, the Company and DaVita entered into a second amendment (the "Second Amendment") to the Amended Agreement which extended the term of the Amended Agreement by one additional year to December 31, 2026 (the "Second Extension Term").

The Second Amendment also provides for a price increase on the products sold under the Amended Agreement for the Second Extension Term.

In 2024, Rockwell continued to upgrade its manufacturing equipment to streamline production and improve margins, renegotiated pricing with key suppliers, and entered into several multi-year customer purchase agreements.

In 2025, the Company continued to right-size the organization, including the closure of the Greer facility, to enhance operational efficiency and support long-term growth, while meeting customer demand.

Throughout the year, Rockwell Medical signed several new long-term product purchasing agreements with university medical centers, kidney centers and hospital systems.

One notable new product purchase agreement was with Innovative Renal Care, one of the largest dialysis service providers in the United States, which will remain in effect for three years with the option to extend for an additional one-year period.

Rockwell Medical also worked to renew and expand existing product purchase agreements.

One notable expansion was with the largest provider of dialysis in skilled nursing facilities in the United States.

This product purchase agreement is in effect for three years with the option to renew for one additional year and includes supply and purchasing minimums.

Additionally in 2025, the Company added new customers in the western portion of the United States.

As a result, the western U.S.

now accounts for more than 10% of the Company's customer clinic footprint.

Results of Operations

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General and Administrative 14,032 20.3 % 14,108 13.9 % (0.5) %

Operating Income (Loss) $ 608 0.6 % $ (6,670) (8.0) % (109.1) %

Operating (Loss) Income $ (4,691) (6.8) % $ 608 0.6 % (871.5) %

During the year ended December 31, 2025, our net sales were $69.3 million compared to net sales of $101.5 million during the year ended December 31, 2024.

Product revenue for the year ended December 31, 2025 was $68.9 million compared to product revenue of $101.4 million for the year ended December 31, 2024.

The increase of $21.6 million was primarily due to $6.2 million from customers added through the Evoqua Asset Acquisition, $6.4 million from a special large order of premium-priced product by DaVita, as well as $9.1 million of increased sales and price increases to existing customers.

Net sales of non-product revenue were not material during the year ended December 31, 2024 compared to $3.8 million during the year ended December 31, 2023, which was the result of $2.3 million and $1.5 million of deferred license revenue recognition related to the terminations of distribution and license agreements with Wanbang and Baxter Healthcare Corporation ("Baxter") (respectively, the “Wanbang Agreement” and the “Baxter Distribution Agreement”) during the year ended December 31, 2023.

The decrease of $32.5 million was primarily due to a $34.6 million reduction in sales to DaVita, partially offset by an increase of $2.1 million from price increases to other existing customers and sales to new customers.

DaVita represented 16% and 45% of net sales for the years ended December 31, 2025 and 2024, respectively.

Net sales of non-product revenue were $0.3 million for the year ended December 31, 2025 from the recognition of the remaining deferred license revenue associated with Sun Pharmaceutical Industries Ltd.

("Sun Pharma"), Jeil Pharmaceutical Co., Ltd.

("Jeil Pharma") and Drogsan Pharmaceuticals ("Drogsan Pharma").

Net sales of non-product revenue were not material during the year ended December 31, 2024.

Cost of Sales and Gross Profit

Cost of sales during the year ended December 31, 2025 was $57.6 million, resulting in gross profit of $11.7 million, compared to cost of sales of $84.0 million and a gross profit of $17.5 million during the year ended December 31, 2024.

Gross profit increased by $8.8 million during the year ended December 31, 2024 compared to the year ended December 31, 2023 driven by $9.6 million of improved gross margin to existing customers driven primarily by price increases, $1.8 million from a special large order of premium-priced product by DaVita, partially offset by $1.5 million and $1.1 million of gross profit for the year ended December 31, 2023 associated with deferred license revenue recognition related to the terminations of the Baxter Distribution Agreement and the Wanbang Agreement, respectively.

Research and Product Development Expense

Research and product development expenses were $19,000 for the year ended December 31, 2024 compared with $1.1 million during the year ended December 31, 2023.

The decrease of $1.1 million is due to the decision to pause all research and development related to Triferic in 2023.

Approximately 37% of research and development expenses for the year ended December 31, 2023 were comprised of severance costs.

Gross profit decreased by $5.8 million during the year ended December 31, 2025 compared to the year ended December 31, 2024 driven by (i) a $6.7 million decrease in product sales, which includes $1.8 million from a special large order of premium-priced product to DaVita during the year ended December 31, 2024 that did not repeat in 2025, (ii) an increase of $1.0 million in additional manufacturing costs and (iii) an increase of $0.4 million in severance expense, partially offset by a price adjustment of $2.0 million for DaVita purchases for the year ended December 31, 2025 and a $0.3 million decrease in facility transition costs.

Selling and Marketing Expense

Selling and marketing expenses were $2.4 million during the year ended December 31, 2025 compared with $2.7 million during the year ended December 31, 2024.

The increase of $0.6 million is primarily due to higher employee compensation expenses.

The decrease of $0.4 million is due to $0.2 million of lower marketing costs and a $0.2 million decrease in employee compensation and recruiting expense.

General and Administrative Expense

General and administrative expenses were $14.0 million during the year ended December 31, 2025 compared with $14.1 million during the year ended December 31, 2024.

The $2.0 million increase was primarily due to $1.5 million of additional compensation expense, $0.2 million of increased administrative costs and $0.3 million increase in amortization of intangible assets.

The $0.1 million decrease was primarily due to increases of $0.5 million of stock-based compensation expense and $0.3 million of employee compensation, offset by decreases of $0.6 million of administrative expense and $0.3 million of professional fees.

Other Expense

Total other expense for the years ended December 31, 2024 and December 31, 2023 was $1.1 million and $1.8 million, respectively, which was driven by interest expense of $1.3 million and $2.3 million for the years ended December 31, 2024 and December 31, 2023, respectively, related to our debt facility (See Note 17 to our consolidated financial statements included in this Annual Report on Form 10-K for additional information on our debt facility), partially offset by $0.1 million and $0.2 million of interest income, respectively, as well as realized gains on available-for-sale of investments of $0.1 million and $0.3 million, respectively.

Total other expense for the years ended December 31, 2025 and December 31, 2024 was $0.6 million and $1.1 million, respectively, which was driven by interest expense of $1.1 million and $1.3 million, respectively, related to our debt facility (See Note 16 in the consolidated financial statements included in this Annual Report on Form 10-K), partially offset by $0.2 million and $0.1 million of interest income, respectively, as well as realized gains on available-for-sale of investments of $0.3 million and $0.1 million, respectively.

Liquidity and Capital Resources

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On December 31, 2025, we had an accumulated deficit of approximately $403.0 million and stockholders’ equity of $37.0 million.

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.

On July 10, 2023, Armistice Capital Master Fund Ltd.

(“Armistice”) exercised its warrant to purchase 9,900,990 shares of common stock with an exercise price of $1.39 per share (the "Prior Warrant") and the Company received gross proceeds of approximately $13.8 million.

See Note 12 to the consolidated financial statements included elsewhere in this Form 10-K for further details.

On July 10, 2023, the Company completed the Evoqua Asset Acquisition.

Total consideration was $17.4 million, comprising a cash payment at Closing of $12.4 million (inclusive of transaction costs) and two $2.5 million deferred payments.

On July 12, 2024, the Company and Evoqua executed the First Amendment, which stipulated that the first deferred payment would be partially offset by $0.3 million to reimburse the Company for certain expenses incurred following Closing and split the first deferred payment into four quarterly installments to be paid through April 2025.

The First Amendment also split the second deferred payment into four quarterly installments to be paid from July 2025 through April 2026.

See Note 4 to our consolidated financial statements statements included in this Annual Report on Form 10-K for additional information.

The actual amount of cash that we will need to execute our business strategy is subject to many factors, including, but not limited to the ability to meet our revenue forecasts, including those from DaVita, as well as the costs associated with our manufacturing and transportation operations related to our concentrate business.

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

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

The actual amount of cash that we will need to execute our business strategy is subject to many factors, including, but not limited to the ability to meet our revenue forecasts, as well as the costs associated with our manufacturing and transportation operations related to our concentrate business.

We may elect to raise capital in the future through one or more of the following:

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Specifically, until DaVita holds less than 50% of its original investment in the Company's Convertible Series X Preferred Stock, the Company may only incur additional debt in the form of a purchase money loan, a working capital line of up to $5.0 million or to refinance existing debt, unless DaVita consents.

We believe our ability to fund our activities in the long term will be highly dependent upon (i) our ability to execute on the growth strategy of our hemodialysis concentrates business and maintain sales with existing customers, (ii) our ability to achieve sustained profitability, including successfully reducing expenses to account for the lost DaVita business, and (iii) our ability to identify, develop, in-license, or acquire new products in developing our renal care product portfolio.

We believe our ability to fund our activities in the long term will be highly dependent upon (i) our ability to execute on the growth strategy of our hemodialysis concentrates business and maintain sales with existing customers, (ii) our ability to achieve sustained profitability and (iii) our ability to identify, develop, in-license, or acquire new products in developing our product portfolio.

All of these strategies are subject to significant risks and uncertainties such that there can be no assurance we will be successful in achieving them.

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Based on the currently available working capital and expectation of the ability of management to execute on the Company's operational plans noted above, management believes the Company currently has sufficient funds to meet its operating requirements for at least the next twelve months from the date of the filing of this report.

Additionally, the Company's plans may include raising capital, if needed, by using the $21.1 million remaining under our Sales Agreement, dated April 8, 2022, with Cantor Fitzgerald & Co.

acting as sales agent (as amended, the “ATM facility”), which provides for the offer and sale of up to an aggregate of $25.0 million of shares of the Company's common stock through the sales agent, or other methods or forms of financings, subject to existing limitations.

On January 2, 2024 the Loan Agreement was amended to include, among other things, an interest only period for 30 months, or up to 36 months if certain conditions are met, and extend the maturity date to January 1, 2029.

The Company is subject to certain covenants and cure provisions under its Loan Agreement with Innovatus.

Additionally, the Company's plans may include raising capital, if needed, by using the $13.1 million remaining under our at-the-market facility ("ATM Facility"), which provides for the offer and sale of up to an aggregate of $25.0 million of shares of the Company's common stock through the sales agent, or other methods or forms of financings, subject to existing limitations.

For further information on our ATM Facility, see Note 11 to our consolidated financial statements in this Annual Report on Form 10-K.

On January 2, 2024, we amended our Loan and Security Agreement (the "Loan Agreement") with Innovatus Life Sciences Lending Fund I, LP (“Innovatus”) to include, among other things, an interest only period of 30 months, or up to 36 months if certain conditions are met, and to extend the maturity date to January 1, 2029.

The Company is subject to certain covenants and cure provisions under the Loan Agreement.

As of December 31, 2025, the Company is in compliance with all covenants.

The 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 a new financial plan under which the Company is expected to break even on a cash flow basis prior to Maturity Date in accordance with the A&R Loan Agreement.

While we believe we will be able to take actions to satisfy this financial covenant, there can be no assurances.

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

See Note 16 to our consolidated financial statements included in this Annual Report on Form 10-K for additional information.

On July 4, 2025, the U.S.

119-21, a U.S.

federal statute passed by the 119th United States Congress that includes tax and spending policies (the “Act”), which contains a broad range of tax reform provisions affecting businesses,

including extending or reinstating certain provisions of the 2017 Tax Cuts and Jobs Act, tax relief measures, modifications of certain energy tax credits granted under the Inflation Reduction Act and limits on various tax deductions, among other key provisions.

The Company evaluated the Act and concluded it will not have a material impact on its consolidated financial statements.

Global Economic Considerations

The global macroeconomic environment is uncertain and could be negatively affected by, among other things, changes in U.S.

trade policies, including tariffs and other trade restrictions or the threat of such actions, instability in the global capital and credit markets, recent bank failures in the United States, supply chain weaknesses, and instability in the geopolitical environment, including as a result of the Russian invasion of Ukraine, the Middle East conflict and other political tensions, and the occurrence of natural disasters and public health crises.

trade policies, including tariffs and other trade restrictions or the threat of such actions, instability in the global capital and credit markets, supply chain weaknesses, and instability in the geopolitical environment, including as a result of the Russian invasion of Ukraine, the Middle East conflicts and other political tensions, and the occurrence of natural disasters and public health crises.

Such challenges have caused, and may continue to cause, recession fears, rising interest rates, foreign exchange volatility and inflationary pressures.

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Due to the rapidly evolving nature of the global situation, it is not possible to predict the extent to which these conditions could adversely affect the Company's liquidity and capital resources in the future.

Cash Provided By (Used In) Operating Activities

Net cash provided by operating activities was $4.2 million for the year ended December 31, 2024 compared to net cash used in operating activities of $9.4 million for the year ended December 31, 2023.

The change in cash provided by operating activities during the current period as compared to cash used in operating activities in the prior period was primarily due to (i) a decrease in net loss of approximately $8.0 million, (ii) an increase in cash provided by changes in current balance sheet accounts in the ordinary course of business of approximately $5.7 million, primarily due to increases of $7.3 million from accounts receivable, net and $3.8 million from deferred license revenue, partially offset by decreases of $2.1 million from accounts payable and $1.5 million from inventory and (iii) an increase in cash provided from non-cash adjustments.

Cash Used In Investing Activities

Net Cash (Used In) Provided by Operating Activities

Net cash used in operating activities was $0.7 million for the year ended December 31, 2025 compared to net cash provided by operating activities of $4.2 million for the year ended December 31, 2024.

The change in cash used in operating activities during the current period as compared to cash provided by operating activities in the prior period was primarily due to (i) an increase in net loss of approximately $4.8 million and (ii) an increase in cash used from non-cash adjustments, partially offset by (iii) a decrease in cash used by changes in current balance sheet accounts in the ordinary course of business of approximately $0.1 million, primarily due to decreases of $3.1 million from inventory and $0.8 million from accounts payable, partially offset by increases of $2.7 million from accounts receivable, net, $0.6 million from accrued and other liabilities and $0.4 million from deferred license revenue.

Net Cash Used In Investing Activities

Net cash used in investing activities was $8.5 million during the year ended December 31, 2025.

The net cash used was due to $5.9 million in purchases of our available-for-sale investments and $1.0 million for the purchase of equipment, offset by proceeds from the sale of our available-for-sale investments of $2.0 million .

The net cash used in investing activities was due to $24.2 million in purchases of our available-for-sale investments and $0.5 million for the purchase of equipment, partially offset by proceeds from the sale of our available-for-sale investments of $16.2 million.

Net cash used in investing activities was $4.9 million during the year ended December 31, 2024.

The net cash used was primarily due to the $12.4 million of cash paid in connection with the Evoqua Asset Acquisition, $5.7 million in purchases

of our available-for-sale investments and $0.3 million for the purchase of equipment, offset by proceeds from the sale of our available-for-sale investments of $15.3 million .

Cash Provided By Financing Activities

The net cash used in investing activities was due to $5.9 million in purchases of our available-for-sale investments and $1.0 million for the purchase of equipment, offset by proceeds from the sale of our available-for-sale investments of $2.0 million.

Net Cash Provided By Financing Activities

Net cash provided by financing activities was $4.3 million during the year ended December 31, 2025.

The net cash provided by financing activities was primarily due to the gross proceeds from the issuance of common stock in connection with the ATM facility of $10.2 million, partially offset by the cash paid in connection with the Evoqua Asset Acquisition of $1.6 million during the year ended December 31, 2024 .

The net cash provided by financing activities was primarily due to the net proceeds from the issuance of common stock in connection with the ATM facility of $7.8 million, partially offset by $2.4 million of earn-out payments in connection with the Company’s 2023 acquisition of certain customer relationships, equipment, and inventory from Evoqua Water Technologies LLC ("Evoqua") (the "Evoqua Asset Acquisition") during the year ended December 31, 2025 .

Net cash provided by financing activities was $7.3 million during the year ended December 31, 2024.

The net cash provided by financing activities was primarily due to the net proceeds from issuance of equity securities of $14.9 million, primarily comprised of gross proceeds from the issuance of common stock of $13.8 million in connection with Armistice's exercise of the Prior Warrant, offset by payments on the Company's debt, short term note payable, and finance leases which aggregated $3.5 million during the year ended December 31, 2023 .

Contractual Obligations and Other Commitments

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Changes in estimates are reflected in our financial statements in the period of change based upon on‑going actual experience, trends, or subsequent realization depending on the nature and predictability of the estimates and contingencies.

Certain accounting estimates, including those concerning revenue recognition, impairments of long‑lived assets, and deferred consideration are considered to be critical in evaluating and understanding our financial results because they involve inherently uncertain matters and their application requires the most difficult and complex judgments and estimates.

Certain accounting estimates, including those concerning revenue recognition, impairments of long‑lived assets, goodwill, and deferred consideration are considered to be critical in evaluating and understanding our financial results because they involve inherently uncertain matters and their application requires the most difficult and complex judgments and estimates.

These are described below.

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Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by us from a customer, are excluded from revenue.

Certain distributors deduct distribution service fees from amounts due to the Company.

These fees, along with chargebacks arising from contracted pricing arrangements with certain end customers, are recorded as reductions of revenue.

Chargebacks represent the difference between the distributor’s acquisition cost and the lower contracted price offered to the end customer, and are estimated and recorded as a reduction of revenue at the time of the initial sale to the distributor.

Shipping and handling costs associated with outbound freight related to contracts with customers are accounted for as a fulfillment cost and are included in cost of sales when control of the goods transfers to the customer.

Deferred License Revenue - Upfront fees received under distribution and license agreements have been deferred as a contract liability.

For all existing distribution and license agreements, the distribution and license agreement is not a distinct

performance obligation from the underlying product sales.

In instances where regulatory approval of the product has not been established and we do not have sufficient experience with the foreign regulatory body to conclude that regulatory approval is probable, the revenue for the performance obligation is recognized over the term of the license agreement (over time recognition).

Conversely, when regulatory approval already exists or is probable, revenue is recognized at the point in time that the estimated product sales under the agreement occur.

Impairment of Long-lived Assets

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Per §229.305 of Regulation S-K, the Company, designated a Smaller Reporting Company as defined in §229.10(f)(1) of Regulation S-K, is not required to provide the disclosure required by this Item.

Financial Statements and Supplementary Data.

The consolidated financial statements of the Registrant and other information required by this item are set forth beginning on page F‑1 immediately following the signature page hereof and incorporated herein by reference.

Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.

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