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Item 1A. Risk Factors

2026-03-26 compared with 2025-03-20 · 61 added, 62 removed, 331 unchanged (27% of the section changed)

4 unchanged sentences

Risks Related to our Business

Our recurring losses from operations and dependency upon future issuances of equity or other financing to fund ongoing operations have raised substantial doubt as to our ability to continue as a going concern .

We will be required to raise additional funds to finance our operations and remain a going concern;

we may not be able to do so, and/or the terms of any financings may not be advantageous to us.

The continuation of our business is dependent upon raising additional capital.

We expect to devote substantial resources for the commercialization of UltraMIST which will require additional capital resources.

We incurred a net loss of $31.4 million and $ 25.8 million for the years ended December 31, 2024 , and 2023 , respectively.

The operating losses and the current portion of our Senior Secured Debt indicate substantial doubt about the Company’s ability to continue as a going concern for a period of at least twelve months from the filing of this Annual Report on Form 10-K.

Management’s plans are to obtain additional capital in 2025.

The Company could obtain additional capital through the issuance of common or preferred stock, securities convertible into common stock, or secured or unsecured debt.

These possibilities, to the extent available, may be on terms that result in significant dilution to the Company’s existing stockholders.

In addition, there can be no assurances that the Company’s plans to obtain additional capital will be successful on the terms or timeline it expects, or at all.

If these efforts are unsuccessful, the Company may be required to significantly curtail or discontinue operations or, if available, obtain funds through financing transactions with unfavorable terms.

The accompanying consolidated financial statements have been prepared in conformity with U.S.

GAAP, which contemplate continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business.

The carrying amounts of assets and liabilities presented in the consolidated financial statements do not necessarily purport to represent realizable or settlement values.

The consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty.

The Company’s consolidated financial statements do not include any adjustments relating to the recoverability of assets and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

We have identified material weaknesses in our internal control over financial reporting.

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A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

These material weaknesses are as follows:

• The Company lacked expertise and resources to analyze and properly apply U.S.

GAAP to complex and non-routine transactions such as complex financial instruments and derivatives and complex sales distributing agreements with select vendors.

• A lack of internal resources to analyze and properly apply U.S.

GAAP to account for financial instruments included in service agreements with select vendors.

• Failure to implement controls around the following accounting processes:

Equity, Financial Reporting, Accounts Payable, Expenses, Revenue, Accounts Receivable, Tax, Cash, Debt, Fixed Assets, Inventory, Commissions, Entity-Level, Human Resources/Payroll, and IT processes:

change management, operations, and access security.

As such, we believe that accounting and IT processes and procedures need to be tested for operating effectiveness.

We are taking certain measures to remediate these material weaknesses described above as discussed further in Part II, Item 9A of this Annual Report on Form 10-K;

We are taking certain measures to remediate these material weaknesses as discussed further in Part II, Item 9A of this Annual Report on Form 10-K;

however, such material weaknesses had not been remediated as of December 31, 2025.

In addition, due to the material weaknesses in internal control over financial reporting, we have also determined that our disclosure controls and procedures were ineffective as of December 31, 2024.

The material weaknesses will not be considered remediated until management completes the design and implementation of the measures described above and the controls operate for a sufficient period of time and management has concluded, through testing, that these controls are effective.

In addition, due to the material weaknesses in internal control over financial reporting, we have also determined that our disclosure controls and procedures were not operating effectively as of December 31, 2025.

The material weaknesses will not be considered remediated until management completes the design and implementation of the applicable controls, such controls have operated effectively for a sufficient period of time, and management has concluded, through testing, that these controls are operating effectively.

In connection with the preparation of our consolidated financial statements for the year ended December 31, 2025, we engaged a third party to conduct a sales and use tax nexus study.

Management used this third party report and identified that we had a historical state and local sales tax liability related to prior periods.

We are required and subject to collect and remit sales and use tax in state and local jurisdictions where we have economic and physical nexus.

During the year ended December 31, 2025, we determined that a sales tax liability, related to the periods of 2022 through 2025, was probable and determined an estimated liability for sales transactions processed in jurisdictions where we had not previously reported.

Management has concluded that the error was material to the previously issued annual financial statements and, accordingly, a restatement of prior period financial information was required in accordance with U.S.

GAAP and SEC rules.

For further information, refer to Note 2 to the consolidated financial statements.

There can be no assurance as to when the material weaknesses will be remediated.

At this time, we cannot provide an estimate of costs expected to be incurred in connection with implementing this remediation plan;

however, these remediation measures will be time consuming, will result in us incurring significant costs, and will place significant demands on our financial and operational resources.

We cannot assure that the measures we have taken to date and may take in the future will be sufficient to remediate the control deficiencies that led to our material weaknesses in internal control over financial reporting or that they will prevent or avoid potential future material weaknesses to be identified in the future.

These remediation measures will be time consuming, will result in us incurring significant costs, and will place significant demands on our financial and operational resources.

The effectiveness of our internal control over financial reporting is subject to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the possibility of human error, and the risk of fraud.

Any failure to design, implement and maintain effective internal control over financial reporting and effective disclosure controls and procedures, or any difficulties encountered in their implementation or improvement, may result in additional material misstatements of our consolidated financial statements, or cause us to fail to meet our periodic reporting obligations, which may adversely affect our business, financial condition and results of operations.

Any failure to design, implement, and maintain effective internal control over financial reporting and effective disclosure controls and procedures, or any difficulties encountered in their implementation or improvement, could result in errors in our financial statements that could require us to restate our financial statements, cause us to fail to meet our reporting obligations, and cause shareholders to lose confidence in our reported financial information, all of which could materially and adversely affect our business, financial condition, results of operations, and stock price.

Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited.

We have incurred net losses since our inception.

If not utilized, some of our federal and state net operating loss (“NOL”) carryforwards will begin to expire in various years beginning after 2033.

Under the Internal Revenue Code of 1986, as amended, (the “Code”), and certain similar state tax provisions, we are generally allowed to carry forward our NOLs from a prior taxable year to offset our future taxable income, if any, until such NOLs are used or expire, subject to certain limitations.

The same is true of other unused tax attributes, such as tax credits.

In addition, under Section 382 of the Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOLs to offset future taxable income.

During the quarter ended June 30, 2025, we completed an IRC Section 382 analysis of our tax attributes.

That analysis showed that $44.2 million of our NOL tax attributes would expire before becoming available under our limitation as a result of shifts in our ownership.

We have adjusted our tax attributes to account for this limitation.

Our history of operating losses and prior reliance on external financing has raised, and could again raise, substantial doubt about our ability to continue as a going concern.

The Company has historically experienced recurring net losses, accumulated deficits, negative working capital, and significant debt maturities, which raised substantial doubt about its ability to continue as a going concern.

During the year ended December 31, 2025 , management executed a comprehensive refinancing of the Company’s secured debt with a new lender, which extended the maturity of the Company’s principal debt obligations and established a secured revolving credit facility.

In addition, the Company generated net income of $11.8 million for the year ended December 31, 2025 , and achieved positive operating income for both the years ended December 31, 2025 , and December 31, 2024.

Management evaluated the Company’s financial condition and projected cash flows for the twelve months following the issuance of the consolidated financial statements included in this Annual Report on Form 10-K.

Based on the debt refinancing, improved operating performance, and expected cash inflows from operations, we believe that our anticipated cash flows from operations, and cash on hand will be sufficient to satisfy our working capital needs, capital expenditures and debt repayments for at least twelve months from the issuance date of these consolidated financial statements.

However, there can be no assurance that the Company will continue to generate positive operating results or maintain sufficient liquidity in the future.

Management will continue to monitor the Company’s financial position, operating results, and compliance with debt covenants.

If the Company is unable to sustain improved operating performance, maintain access

to financing, or comply with applicable debt covenants, its financial condition and ability to continue operations could be materially adversely affected.

If we are unable to successfully raise additional capital, our viability may be threatened;

however, if we do raise additional capital, your percentage ownership as a stockholder could decrease and constraints could be placed on the operations of our business.

We have experienced negative operating cash flows since our inception and have funded our operations primarily from proceeds received from sales of our capital stock, the issuance of promissory notes and convertible promissory notes, the issuance of notes payable to related parties, and product sales.

We will seek to obtain additional funds in the future either through equity or debt financings or through strategic alliances with third parties, either alone or in combination with equity financings.

Prior to 2025, we experienced negative operating cash flows and funded our operations primarily from proceeds received from sales of our capital stock, the issuance of promissory notes and convertible promissory notes, the issuance of notes payable to related parties, and product sales.

We may seek to obtain additional funds in the future either through equity or debt financings or through strategic alliances with third parties, either alone or in combination with equity financings.

These financings could result in substantial dilution to the holders of our common stock or require contractual or other restrictions on our operations or on alternative business opportunities that may be available to us.

If we can raise additional funds by issuing debt securities, these debt securities could impose significant additional restrictions on our operations.

Any such required financing may not be available in amounts or on terms acceptable to us, and the failure

to procure such required financing could have a material adverse effect on our business, financial condition, and results of operations, or threaten our ability to continue as a going concern.

Any such required financing may not be available in amounts or on terms acceptable to us, and the failure to procure such required financing could have a material adverse effect on our business, financial condition, and results of operations, or threaten our ability to continue as a going concern.

A variety of factors could impact our need to raise additional capital, the timing of any required financing and the amount of such financings.

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Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements, or mergers with, or acquisitions by, large and established companies, or through the development of novel products and technologies.

The industry in which we operate has undergone, and we expect it to continue to undergo, rapid and significant technological change, and we expect competition to intensify as technological advances are made.

The industry in which we operate has undergone, and we

expect it to continue to undergo, rapid and significant technological change, and we expect competition to intensify as technological advances are made.

Changes in reimbursement affecting the wound care market could adversely affect our customers and indirectly reduce demand for our products.

The wound care market is highly dependent on reimbursement from governmental and private third-party payors, including CMS and Medicare Administrative Contractors.

CMS and other payors periodically revise coverage policies, payment levels, coding guidance, and utilization rules for wound care products and procedures, including cellular and tissue-based products for skin wounds ("skin substitutes" or allografts) and other advanced wound care therapies.

Although our UltraMIST system is not a skin substitute or allograft product, many of our customers operate within care settings where these products are frequently used as part of broader wound care treatment protocols.

Significant reimbursement reductions or policy changes affecting such products or procedures could negatively affect the economics of wound care practices, hospitals, and other providers.

These changes could reduce provider revenues, alter treatment protocols, or limit capital expenditures, which could indirectly reduce demand for our products.

Reimbursement policies are determined by governmental and private payers and are outside our control.

Changes affecting the wound care reimbursement environment could adversely affect the financial condition of our customers and have a material adverse effect on our business, financial condition, and results of operations.

Many of our product component materials are only produced by a single supplier for such product component.

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The loss of our key management would likely hinder our ability to execute our business plan.

As a small company with less than 50 employees, our success depends on the continuing contributions of our management team and qualified personnel.

As a small company with fewer than 60 employees, our success depends on the continuing contributions of our management team and qualified personnel.

Turnover, transitions or other disruptions in our management team and personnel could make it more difficult to successfully operate our business and achieve our business goals and could adversely affect our results of operation and financial condition.

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In addition, we may not be able to maintain insurance coverage at a reasonable cost, or in sufficient amounts or scope, to protect us against losses.

Any claims against us, regardless of their merit, could severely harm our financial condition, strain our management team and other resources, and adversely impact or eliminate the prospects for commercialization of the product candidate, or sale of the product, that is the subject of any such claim.

the product candidate, or sale of the product, that is the subject of any such claim.

Although we do not promote any off-label use, off-label uses of products are common, and the FDA does not regulate a physician’s choice of treatment.

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Regulatory approval of our products may be withdrawn at any time.

made available to patients, and there can be no assurance that such approval will not be withdrawn or restricted.

After regulatory approval has been obtained for medical device products, the product and the manufacturer are subject to continual review, including the review of adverse experiences and clinical results that are reported after our products are made available to patients, and there can be no assurance that such approval will not be withdrawn or restricted.

Regulators may also subject approvals to restrictions or conditions or impose post-approval obligations on the holders of these approvals, and the regulatory status of such products may be jeopardized if such obligations are not fulfilled.

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Reimbursement and healthcare payment systems in international markets vary significantly by country and include both government sponsored healthcare and private insurance.

To obtain reimbursement or pricing approval in some countries, we may be required to produce clinical data, which may involve one or more clinical trials, that compares the cost-effectiveness of our approved products to other available therapies.

To obtain reimbursement or pricing approval in some countries, we may be required to produce clinical data,

which may involve one or more clinical trials, that compares the cost-effectiveness of our approved products to other available therapies.

We may not obtain international reimbursement or pricing approvals in a timely manner, if at all.

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In addition, FDA regulations and guidance are often revised or reinterpreted by the agency in ways that may significantly affect our business and our products.

We could experience an adverse impact on our operating results due to such changes, including increased pricing

pressure in these markets.

We could experience an adverse impact on our operating results due to such changes, including increased pricing pressure in these markets.

Governments, hospitals, and other third-party payers also could reduce the amount of approved reimbursement for our products or deny coverage altogether.

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If we fail to comply with Federal and state documentation, coding, and billing rules, we could be subject to liability under the Federal False Claims Act, including criminal and/or civil penalties, loss of licenses and exclusion from the Medicare and Medicaid programs.

The False Claims Act prohibits individuals and companies from knowingly submitting false claims for payments to, or improperly retaining overpayments from, the government.

The False Claims Act prohibits

individuals and companies from knowingly submitting false claims for payments to, or improperly retaining overpayments from, the government.

Our financial relationships with healthcare providers and others who provide products or services to Federal healthcare program beneficiaries are potentially governed by the Federal Anti-Kickback Statute, False Claims Act, and similar state laws.

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Additionally, amendments to HIPAA provide that the state attorneys general may bring an action against a covered entity for a violation of HIPAA.

As we expand our business such that Federal laws regarding PHI and privacy apply to our operations, any

noncompliance with such regulations could have a material adverse effect on our business, results of operations and financial condition.

As we expand our business such that Federal laws regarding PHI and privacy apply to our operations, any noncompliance with such regulations could have a material adverse effect on our business, results of operations and financial condition.

In addition to our obligations under HIPAA, many states have laws that govern the processing, collection, use, disclosure, transfer, storage, disposal and protection of health-related and other sensitive and personal information.

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On the state level, Washington and Nevada have adopted significant new legislation addressing businesses treatment of consumer health information, and Connecticut added more stringent protections for health information to its existing comprehensive state privacy law.

In both Washington and Nevada’s laws, there are restrictive provisions limiting collection and disclosure of consumer health information, and Washington’s law provides a separate private right of action for violations.

In both Washington and Nevada’s laws, there are restrictive provisions limiting collection and disclosure of consumer health information, and

Washington’s law provides a separate private right of action for violations.

Any noncompliance with applicable laws or regulations could have a material adverse effect on our business, results of operations and financial condition.

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Moreover, some of our academic institution licensees, evaluators, collaborators, and scientific advisors have rights to publish data and information to which we have rights.

If we cannot maintain the confidentiality of our technologies and other confidential information in

connection with our collaborations, our ability to protect our proprietary information or obtain patent protection in the future may be impaired, which could have a material adverse effect on our business.

If we cannot maintain the confidentiality of our technologies and other confidential information in connection with our collaborations, our ability to protect our proprietary information or obtain patent protection in the future may be impaired, which could have a material adverse effect on our business.

Accordingly, we may fail to secure meaningful patent protection relating to any of our existing or future products or discoveries despite the expenditure of considerable resources.

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Consequently, we cannot be certain as to the type and scope of patent claims to which we may in the future be entitled under our license agreements or that may be issued to us.

These applications may not be sufficient to meet the statutory requirements for patentability and, therefore, may not result in enforceable patents covering the products we want to commercialize.

These applications may not be sufficient to meet the

statutory requirements for patentability and, therefore, may not result in enforceable patents covering the products we want to commercialize.

Further, patent applications in the United States that are not filed in other countries may not be published or generally are not published until at least 18 months after they are first filed, and patent applications in certain foreign countries generally are not published until many months after they are filed.

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Even if we can obtain rights to a third party’s patented intellectual property, those rights may be nonexclusive and, therefore, our competitors may obtain access to the same intellectual property.

Ultimately, we may be unable to commercialize our products or may have to cease some of our business operations because of patent infringement claims, which could

materially harm our business.

Ultimately, we may be unable to commercialize our products or may have to cease some of our business operations because of patent infringement claims, which could materially harm our business.

We cannot guarantee that our products or technologies will not conflict with the intellectual property rights of others.

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If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if our stock price appreciates.

The rights of the holders of common stock may be impaired by the potential issuance of preferred stock.

Our board of directors has the right, without stockholder approval, to issue preferred stock with voting, dividend, conversion, liquidation, or other rights which could adversely affect the voting power and equity interest of the holders of common stock, which could be issued with the right to more than one vote per share, and could be utilized as a method of discouraging, delaying or preventing a change of control.

The possible negative impact on takeover attempts could adversely affect the price of our common stock.

We have not sought an advisory stockholder vote to approve the compensation of our named executive officers.

Rule 14a-21 under the Exchange Act requires us to seek a separate stockholder advisory vote at our annual meeting at which directors are elected to approve the compensation of our named executive officers, not less frequently than once every three years (say-on-pay vote), and, at least once every six years, to seek a separate stockholder advisory vote on the frequency with which we will submit advisory say-on-pay votes to our stockholders (say-on-frequency vote).

We have not submitted to our stockholders a say-on-pay vote to approve an advisory resolution regarding our compensation program for our named executive officers, or a say-on-frequency vote.

Consequently, the board of directors has not considered the

outcome of our say-on-pay vote results when determining future compensation policies and pay levels for our named executive officers.

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