Nuo Therapeutics, Inc.: Form 10-Q for the period ended Sep 30, 2025

The following discussion and analysis of the financial condition and results of operations of Nuo Therapeutics, Inc. ("Nuo," the "Company," "we," "us," or "our") should be read in conjunction with the financial statements and related notes appearing elsewhere in this Quarterly Report and our Annual Report on Form 10-K for the year ended December 31, 2024 (our “Annual Report”), filed with the U.S. Securities and Exchange Commission (the "SEC") on April 1, 2025.

The Company owns or has rights to various copyrights, trademarks and trade names used in its business, including, but not limited to, Aurix®. This Quarterly Report also includes discussions of or references to other trademarks, service marks, and trade names of other companies, including, but not limited to, the Angel Whole Blood Separation System®. Other trademarks and trade names appearing in this Quarterly Report are the property of the holder of such trademarks and trade names.

Special Note Regarding Forward Looking Statements

Certain statements, other than purely historical information in this Quarterly Report (including this section) constitute “forward-looking statements”. Forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance, or achievements, and may contain the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” “will be,” “will continue,” “will likely result,” “could,” “may” and words of similar import. These statements reflect the Company’s current view of future events and are subject to certain risks and uncertainties as noted in this Quarterly Report and in other reports filed by us with the SEC, including Forms 8-K, 10-Q, and 10-K. These risks and uncertainties include, among others, the following:

• our limited revenue base and sources of working capital;
• our limited operating experience;
• our ability to continue as a going concern
• the dilutive impact of raising additional equity or debt;
• our ability to timely and accurately report our financial results and prevent fraud if we are unable to maintain effective disclosure and internal controls;
• acceptance of our product by the medical community and patients;
• our ability to obtain adequate reimbursement from third-party payors;
• our ability to contract with healthcare providers;
• our reliance on several single source suppliers and our ability to source raw materials at affordable costs;
• our ability to protect our intellectual property;
• our compliance with governmental regulations;
• our ability to successfully sell and market the Aurix System;
• our ability to perform under and realize sales and related benefits from our distribution agreement with Smith+Nephew as well as its ability to market and sell its private label Aurix product;
• the fees, minimum purchase commitments, and expenses and costs associated with our distribution agreement with Smith+Nephew;
• the impact of and our ability to undertake any license of our Aurix product, or receive and negotiate a business combination offer, due to the binding notification and negotiation rights we have provided to Smith+Nephew; and
• our ability to successfully pursue strategic collaborations to help develop, support, or commercialize our current and future products.

Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results could differ materially from those anticipated in these forward-looking statements.

In addition to the risks identified under the heading “Risk Factors” in our Annual Report and the other filings referenced above, other sections of this Quarterly Report may include additional factors which could adversely affect our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on our business, or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.

The Company undertakes no obligation and does not intend to update, revise or otherwise publicly release any revisions to its forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of any unanticipated events.

Our Business and Product

We are a commercial-stage medical device company focused on developing and marketing products for chronic wound care primarily within the U.S. We commercialize innovative cell-based technologies that harness the regenerative capacity of the human body to trigger natural healing. The use of autologous (i.e., from self, the patient’s own) biological therapies for tissue repair and regeneration is part of a clinical strategy designed to improve long-term recovery in inherently complex chronic conditions with significant unmet medical needs.

Our only current commercial offering consists of a point of care technology for the separation of autologous blood to produce a platelet-based therapy for use in the chronic wound care market. This offering is known as “Aurix” or the “Aurix System”. The FDA cleared the Aurix System for marketing in 2007 as a device under Section 510(k) of the Federal Food, Drug, and Cosmetic Act (“FDCA”). Aurix is one of three platelet derived products cleared by the FDA for chronic wound care use and can be used for most exuding wounds. The advanced wound care market, within which Aurix competes, is composed of advanced wound care dressings, wound care devices, and wound care biologics, and is estimated to be an approximately $10.8 billion global market in 2021 with the North American market estimated at approximately $4.15 billion in 2020. Estimates remain that 1-2% of the population in the developed countries will suffer from a chronic wound at least once in their lifetime. According to the National Institute of Health, treatment of diabetic foot ulcers cost an estimated $9-$13 billion annually in the U.S. alone. An aging population and the still increasing prevalence of diabetes suggests a continued increase in the patient population at risk of developing chronic, non-healing wounds.

The Aurix System produces a platelet rich plasma (“PRP”) gel at the point of care using the patient’s own platelets and plasma sourced from a small draw of peripheral blood. The Aurix PRP comprises a natural, endogenous complement of protein and non-protein signal molecules that are believed to contribute to effective healing. During treatment, the patient’s platelets are activated and release hundreds of growth factor proteins and other signaling molecules that form a biologically active hematogel. Aurix delivers concentrations of the natural complement of cytokines, growth factors and chemokines that are known to regulate angiogenesis (i.e., the development of new blood vessels), cell growth, and the formation of new tissue. Once applied to the prepared wound bed, the biologically active Aurix hematogel is thought to work by restoring the balance in the wound environment to transform a non-healing wound to a wound that heals naturally.

In 2012, a Medicare National Coverage Determination (“NCD”) from CMS reversed a twenty-year old non-coverage decision for autologous blood derived products used in wound care. This NCD allowed for Medicare coverage under the Coverage with Evidence Development (“CED”) program. CED programs have been employed for a selected variety of other therapies, including transcatheter aortic valve repair and cochlear implantation. Under the CED program, CMS provides reimbursement for items or services on the condition that they be furnished in approved clinical protocols or in the collection of additional clinical data. Under the CED program, a facility treating a patient with Aurix was reimbursed by Medicare when health outcomes data were collected to inform future coverage decisions. The intent of the CED program was to evaluate the outcomes of Aurix therapy for the broader Medicare population when it is used in a “real world” continuum of care.

In May 2019, we transmitted a letter memorandum to CMS’ Coverage and Analysis Group (“CAG”) in support of our completed formal request for reconsideration of the then existing national coverage determination based on the clinical data collected and published under the CED program. The completed formal public request for reconsideration was made on May 8, 2019.

In April 2021, CMS issued a final coverage decision memo indicating that Medicare would nationally cover autologous PRP for the treatment of chronic non-healing diabetic wounds for individual patients' care for a duration of 20 weeks under Section 1862(a)(1)(A) of the Social Security Act. This coverage applies when using devices whose FDA-cleared indications include the management of exuding cutaneous wounds, such as diabetic ulcers. Coverage of autologous PRP beyond 20 weeks for diabetic foot ulcers and for the treatment of all other chronic, non-diabetic, non-healing wounds will be determined by local Medicare Administrative Contractors ("MACs").

Although FDA cleared the Aurix System for marketing for wound care management in 2007 under Section 510(k) of the FDCA, CMS only established economically viable reimbursement for the product beginning in 2016. For 2025, the CMS national average reimbursement rate for the Aurix System is $1,829 per treatment in place of service ("POS") 22 (hospital outpatient departments), which we believe provides appropriate payment to facilities for product usage. The Company also submitted public comments to CMS as part of its annual rule-making procedures under the Physician Fee Schedule ("PFS") for payments to clinicians in primarily POS 11 (physician offices). In November 2024, CMS issued its final PFS for calendar 2025 and established a national average payment of $890. In response to this final rule which removed the payment amount discretion from the MACs within POS 11, the Aurix System became economically viable within the physician office care setting effective January 1, 2025.

Historically, we have used single suppliers for several components of the Aurix product line. We outsource the manufacturing of various product components to contract manufacturers. While we believe these manufacturers demonstrate competency, reliability and stability, there is no assurance that one or more of them will not experience an interruption or inability to provide us with the products needed to satisfy customer demand. Additionally, while most of the components of Aurix are generally readily available on the open market, a reagent, bovine thrombin, is available exclusively through Pfizer, with whom we have an existing supply agreement. Furthermore, we have historically sourced the ascorbic acid reagent component from a single supplier but have now established dual supply of this component.

Our Strategy and Market

Our current commercial focus is to continue engaging and establishing relationships with providers treating chronic non-healing wounds to demonstrate the clinical benefits we believe result from the use of Aurix in the treatment of complex wounds. Increasing physician awareness of the differentiating attributes of Aurix will be key to establishing a base of product revenues upon which to grow. We anticipate developing these relationships with clinical providers and treatment facilities primarily by establishing a variety of distributor and sales agent arrangements throughout the United States and internationally. Our commercial team consists of five senior employees who are leveraging their current and historical relationships to establish additional third-party sales arrangements.

Following the restart of our business activities in October 2021, commercially available Aurix product was first available in May 2022 for demonstration and evaluation purposes. Through a growing sales agent network, Aurix is presently being evaluated by various hospital Value Analysis Committees (VACs) as part of the process of approving its clinical use. While limited initial commercial revenues were recorded during the second half of 2022, revenues increased to approximately $609,000 in 2023 and further increased to approximately $1,365,000 in 2024, and we expect revenues will continue growing in the future.

As of September 30, 2025, we had established contractual relationships with more than 200 third-party entity and individual representatives including a multi-state agreement with Pacific Medical, Inc. covering multiple large markets in the western United States. The number of sales agent representatives may continue to expand modestly in the months ahead, but the current focus is establishing commercial customer relationships with wound care providers in primarily hospital outpatient wound care clinics and ensuring that the reimbursement mechanisms are appropriately administered by the local Medicare Administrative Contractors in support of the April 2021 NCD.

Distribution Agreement with Smith+Nephew

On March 31, 2025, we entered into a Distribution Agreement (the “Distribution Agreement”) with a U.S. affiliate of Smith & Nephew PLC (“Smith+Nephew”), a global medical technology company. Under the Distribution Agreement, we will supply Smith+Nephew its own private label of our Aurix product. Although Smith+Nephew will be the sole and exclusive distributor in the United States of a private label Aurix product (the “Private Label product”), we have the ability and will continue to market, distribute, and sell our own Aurix branded product.

Under the Distribution Agreement, Smith+Nephew will purchase Private Label product from us from time to time at agreed upon transfer pricing and we shall manufacture, package, and ship the Private Label product to Smith+Nephew’s customers in accordance with purchase orders and the Distribution Agreement. During the initial term of the Distribution Agreement commencing on the date of first sale by Smith+Nephew, minimum annual purchase commitments will apply to Smith+Nephew of an average of approximately $500,000 per year for Smith+Nephew to maintain exclusive distribution rights.

As consideration for entering into the Distribution Agreement, Smith+Nephew paid us an upfront distribution fee of $1,500,000 for distribution rights and we are also eligible to be paid by Smith+Nephew an additional $750,000 in fees based on our establishment and maintenance of reimbursement in certain categories for the Aurix and the Private Label products. These fees will be refundable to Smith+Nephew on a pro rata basis for the unexpired initial term of the Distribution Agreement if we do not comply with certain terms and conditions.

The Distribution Agreement is for an initial term of five years and is renewable for additional two-year terms subject to earlier termination in accordance with the terms and conditions of the agreement. Although the Distribution Agreement is exclusive to Smith+Nephew in the United States, we are entitled to maintain our existing distributors and increase our sales agent network for the Aurix product. The Distribution Agreement also contains other standard and negotiated terms and conditions including non-solicitation of each party’s customers based on identified customer lists, and liability and indemnity clauses.

The $1,500,000 upfront distribution fee will be recognized ratably as revenue on a straight-line basis over the initial five-year term of the Distribution Agreement. For the nine months ended September 30, 2025, we recognized $150,000 of license revenue under the Distribution Agreement.

We believe that Smith+Nephew will need time to establish and begin commercial sales of its Private Label product. As a result, we anticipate modest sales under the Distribution Agreement during the next 12 months. While the Distribution Agreement will provide us with revenues, we also will incur expenses at the outset of the Distribution Agreement to enable us to comply with its provisions as well as packaging, shipping, and related costs associated with delivering the Private Label product for Smith+Nephew. The amount of these expenses and costs will vary depending on the amount of purchase orders that we receive from Smith+Nephew.

On May 14, 2025, we entered into Amendment No. 1 (the “Amendment”) to the Distribution Agreement. The Amendment supplements the Distribution Agreement by additionally providing for an interim sales agency arrangement whereby Smith+Nephew is entitled to act as sales agent on an interim basis for the sale of products under the Aurix brand to certain Smith+Nephew customers. As compensation, Smith+Nephew is entitled to a commission on net sales of the Nuo branded products sold to the Smith+Nephew customers. The Amendment’s interim sales agency arrangement terminates upon the earlier of December 31, 2025 or the date notified in writing by Smith+Nephew upon not less than thirty days’ notice of such termination.

The description above of the Amendment is qualified by reference to the full text of such agreement, a copy of which was filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2025.

The Science Underlying Aurix/Platelet Rich Plasma

Normal Wound Healing

The science underlying wound healing is well-established. An immediate early event critical for wound healing is the influx of platelets to the wound site. Platelets bind to elements within damaged tissue such as collagen fragments and endogenous thrombin molecules and are activated to release a diversity of growth factors and other biomolecules from their alpha and dense granules (Reed 2000, Nieswandt, 2003). These biomolecules provide signals essential for biological responses regulating hemostasis and effective tissue regeneration.

Chronic Wounds

Dysregulation of numerous cellular and biological responses contribute to the chronic wound phenotype. Chronic wounds have reduced levels of growth factors and concomitant decreases in cellular proliferation (Mast 1996). There is increased cellular senescence (Telgenhoff 2005), and there generally is a lack of perfusion that can inhibit the delivery of nutrients and cells required for regeneration (Guo 2010). As the body attempts to stave off infection, elevated concentrations of free radicals accumulate in the chronic wound and further damage surrounding tissue (Moseley 2004, James 2003).

Aurix Therapy

Aurix has been cleared by FDA for marketing with an indication for wound management including such chronic wounds as leg ulcers, pressure ulcers, and diabetic ulcers and other exuding wounds such as mechanically or surgically debrided wounds. The Aurix therapeutic is formed by mixing a sample of a patient’s platelets and plasma with pharmaceutical grade thrombin and ascorbic acid. The thrombin activates platelets while ascorbic acid drives the synthesis of high tensile strength collagen, clears damaging free radicals and controls gel consistency. The topical dermal application of Aurix gel bypasses the lack of local perfusion to provide immediate signals for new tissue formation and ultimately healing.

The Efficacy of Aurix Relates to Biological Activity Released by Platelets

Regenerative Capacity

More than 300 proteins are released by human platelets in response to thrombin activation (Coppinger 2004). Important examples include vascular endothelial cell growth factor (“VEGF”), platelet derived growth factor (“PDGF”), epidermal growth factor (“EGF”), fibroblast growth factor (“FGF”) and transforming growth factor-beta (“TGF-B”) (Eppley 2004, Everts 2006). These proteins are critical for organized wound healing, regulating responses such as vascularization, cell proliferation, cell differentiation, and deposition of new extracellular matrix (Goldman 2004). Platelets also release chemokines such as Interleukin-8 (“IL-8”), stromal cell derived factor-1 (“SDF-1”), and platelet factor-4 (“PF-4”) (Chatterjee 2011, Gear 2003) that control the mobilization and migration of stem cells and fibroblasts (Werner 2003 and Gillitzer 2001), which contribute to tissue regeneration.

Anti-infective Activity

The bioburden population in chronic wounds vary over time and wounds invariably retain or become re-infected with some level of bacteria that is detrimental to healing (Howell-Jones 2005). In addition to regenerative capacity, platelets release anti-microbial peptides effective against a broad range of pathogens including Methicillin Resistant Staphylococcus Aureus (“MRSA”) (Moojen 2007, Jia 2010, Tang 2002, Bielecki 2007).

Clinical Efficacy

Multiple efficacy and effectiveness studies have been published in peer reviewed journals documenting the impact of using Aurix to treat chronic wounds, available as part of the reconsideration review by CMS in establishing the NCD, including the following:

• In the published study of the clinical data collected during the CED program for diabetic foot ulcers, Aurix demonstrated a significant time to heal advantage compared to wounds treated with usual and customary care (including any available advanced therapy). A higher percentage of healing was observed across all wound severities (Wagner Grade 1-4) and in a patient population with significant comorbidities. (Gude W, Hagan D, Abood F, Clausen P: Aurix Gel is an Effective Intervention for Chronic Diabetic Foot Ulcers: A Pragmatic Randomized Controlled Trial. Advances in Skin and Wound Care, 2019; 32(9): 416-426.)
• In a double blinded randomized controlled trial, 81% of the most common-sized diabetic foot ulcers healed with Aurix compared with 42% of control wounds. Mean time to healing was six weeks. (Driver V, Hanft J, Fylling, C et al.: A Prospective, Randomized, Controlled Trial of Autologous Platelet-Rich Plasma Gel for the Treatment of Diabetic Foot Ulcers. Ostomy Wound Management, 2006; 52(6): 68-87.)
• In 285 chronic wounds in 200 patients, 96.5% of the wounds had a positive response within an average of 2.2 weeks with an average of 2.8 Aurix treatments (de Leon J, Driver VR, Fylling CP, Carter MJ, Anderson C, Wilson J, et al.: The Clinical Relevance of Treating Chronic Wounds with an Enhanced Near-physiological Concentration of Platelet-Rich Plasma (PRP) Gel. Advances in Skin and Wound Care, 2011; 24(8), 357-368.)
• In a retrospective, longitudinal study of 40 Wagner grade II through IV diabetic foot ulcers, most with critical limb ischemia, wounds increased in size in the approximate 100 days prior to the initiation of comprehensive wound care treatment. Upon treatment with debridement, revascularization, antibiotics and off-loading, the wounds continued to increase in size over a subsequent 75-day period. Once they were then treated with Aurix, the wounds immediately changed healing trajectory and 83% of the wounds healed with an average of 6.1 Aurix treatments per wound (Sakata, J., Sasaki, S., Handa, K., et al. A Retrospective, Longitudinal Study to Evaluate Healing Lower Extremity Wounds in Patients with Diabetes Mellitus and Ischemia Using Standard Protocols of Care and Platelet-Rich Plasma Gel in a Japanese Wound Care Program. Ostomy Wound Management, 2012; 58(4):36-49.)

Results of Operations

The amounts presented in these comparison sections are rounded to the nearest thousand.

Comparison of Three Months Ended September 30, 2025 and 2024

Revenue and Gross Profit

Total revenues for the three months ended September 30, 2025 totaled approximately $1,032,000 including $75,000 of license fee revenue related to the Smith+Nephew distribution agreement. Product revenues for the three months ended September 30, 2025 totaled approximately $957,000 in comparison to product and total revenues of approximately $371,000 in the three months ended September 30, 2024 representing an increase of approximately $661,000. Product revenues associated with the Smith+Nephew private label distribution arrangement were recognized for the first time in the three months ended September 30, 2025 consisting solely of centrifuge devices sold to Smith+Nephew in anticipation of their product launch. Associated gross profit was approximately $625,000 in the three months ended September 30, 2025 in comparison to approximately $270,000 of gross profit in the three months ended September 30, 2024. The increase in revenues was due primarily to (i) increased Aurix product revenues resulting from an expanding customer base over the past year, (ii) the initial Smith+Nephew product revenues for centrifuge devices discussed above and (iii) license fee revenue under the distribution agreement. Aggregate gross margin was approximately 61% in the quarter as compared to approximately 73% in the prior year’s quarter. The gross margin decline was primarily due to the centrifuge devices sold to Smith+Nephew at a near zero gross margin on the negotiated transfer price of the devices including the impact of tariff surcharges from the device manufacturer which was partially offset by the license fee revenues having no associated cost.

Operating Expenses

Total operating expenses increased approximately $318,000 to approximately $1,166,000 comparing the three months ended September 30, 2025 to the three months ended September 30, 2024. The increase from the prior year was due primarily to increases in (i) professional fees of approximately $91,000 due largely to the combination of increased consulting expenses for our quality management systems and reimbursement support services and legal and accounting fees (ii) third party commission expense of approximately $86,000 for independent sales representatives and distributors resulting from increased Aurix product revenues , and (iii) compensation and benefit costs of approximately $74,000 attributable to added sales management personnel.

Other Income (Expense)

Other income (expense), net for the three months ended September 30, 2025 and 2024 primarily represents modest interest income on cash balances in excess of interest expense associated with the financing of insurance premiums while other income for the three-month periods was nominal.

Comparison of Nine Months Ended September 30, 2025 and 2024

Revenue and Gross Profit

Total revenues for the nine months ended September 30, 2025 totaled approximately $2,217,000 including $150,000 of license fee revenue related to the Smith+Nephew distribution agreement. Product revenues for the nine months ended September 30, 2025 totaled approximately $2,067,000 in comparison to product revenues of approximately $970,000 in the nine months ended September 30, 2024 representing an increase of approximately $1,096,000. Product revenues associated with the Smith+Nephew private label distribution arrangement were recognized for the first time in the three months ended September 30, 2025 consisted solely of centrifuge devices sold to Smith+Nephew in anticipation of their product launch. Associated gross profit was approximately $1,530,000 in the nine months ended September 30, 2025 in comparison to approximately $754,000 of gross profit in the nine months ended September 30, 2024. The increase in revenues was due primarily to (i) increased Aurix product revenues resulting from an expanding customer base over the past year, (ii) the initial Smith+Nephew product revenues for centrifuge devices discussed above and (iii) license fee revenue of $150,000 under the distribution agreement. Aggregate gross margin was approximately 69% in the nine months ended September 30, 2025 as compared to approximately 78% in the prior year’s nine-month period. The gross margin decline was primarily due to the centrifuge devices sold to Smith+Nephew at a near zero gross margin on the negotiated transfer price of the devices including the impact of tariff surcharges from the device manufacturer which was partially offset by the license fee revenues having no associated cost.

Operating Expenses

Total operating expenses increased approximately $884,000 to approximately $3,467,000 comparing the nine months ended September 30, 2025 to the nine months ended September 30, 2024. The increase from the prior year was due primarily to increases in (i) professional fees of approximately $374,000 due largely to the combination of increased legal fees associated with the negotiation and finalization of the Smith+Nephew distribution agreement and SEC registration statements filed in the nine-month period and consulting expenses for our quality management system and reimbursement support services and legal (ii) third party commission expense of approximately $221,000 for independent sales representatives and distributors resulting from increased Aurix product revenues, and (iii) compensation and benefit costs of approximately $154,000 attributable primarily to added sales management personnel.

Other Income (Expense)

Other income (expense), net for the nine months ended September 30, 2025 primarily represents interest expense associated with the financing of insurance premiums in excess of interest income on cash balances while other income for the nine-month periods was nominal.

Liquidity and Capital Resources

Overview

As of September 30, 2025, we had cash balances of approximately $0.5 million, total current assets of approximately $1.5 million and total current liabilities of approximately $1.3 million. As an operational business, we have a history of losses and are not currently profitable. For the years ended December 31, 2024, and 2023, we incurred net losses of approximately $2.3 million and $3.2 million, respectively. As of September 30, 2025, our accumulated deficit was approximately $34.2 million, and our stockholders’ deficit was approximately $0.4 million.

During the three-month period ended September 30, 2025, we sold 527,612 shares of common stock to certain accredited investors pursuant to a Securities Purchase Agreement which closed in July for total proceeds of $791,418. We also received proceeds of $113,541 from the exercise of common stock options during the three-month period ended September 30, 2025. During the nine-month period ended September 30, 2025, we received $1.5 million from Smith+Nephew representing the upfront distribution fee under the Distribution Agreement.

Effective January 1, 2024, pursuant to the provisions of the August 2022 Common Stock and Warrant Purchase Agreement with Pacific Medical, Inc. ("Pacific Med"), we issued Pacific Med a warrant to purchase up to 500,000 shares of common stock at a price equal to $0.56, the 20-day volume weighted average closing price per share of our common stock ending December 31, 2023. A portion of the warrant was exercised during the nine-month period ended September 30, 2024 and we received proceeds of $151,200.

On May 12, 2025, the SEC declared the Company's shelf registration statement on Form S-3 effective. The shelf registration statement enables us to offer and sell, from time to time in one or more offerings, shares of our common stock with an aggregate offering amount not exceeding $15 million. The shelf registration statement could provide us with access to liquidity from the public markets should we decide to utilize it for that purpose.

During the year ended December 31, 2024, we sold 2,000,000 shares of common stock to certain accredited investors pursuant to Securities Purchase Agreements in two private placements which closed in May and September 2024 for total proceeds of $1,500,000.

Our continuing losses and limited cash resources raise substantial doubt about our ability to continue as a going concern, and we need to raise additional funds in order to continue to conduct our business. If we are unable to secure sufficient capital to fund our operating activities, we may be forced to delay further the completion of, or significantly reduce the scope of, our current business plan. It is uncertain whether we will be able to obtain such financing on satisfactory terms or at all. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

We may not be able to obtain additional capital as required to finance our efforts, through equity or debt financing or any combination thereof, on satisfactory terms or at all. Additionally, any such financing, if obtained, may not be adequate to meet our capital needs and to support our operations.

We maintain our cash deposits primarily in financial institutions, which may at times exceed amounts covered by insurance provided by the U.S. Federal Deposit Insurance Corporation (“FDIC”). We have not experienced any losses related to amounts in excess of FDIC limits.

Cash Flows

Net cash provided by (used in) operating, investing, and financing activities for the periods presented were as follows:

Operating Activities

Cash used in operating activities for the nine months ended September 30, 2025 of approximately $442,000 primarily reflects our net loss of approximately $1,934,000 adjusted by (i) the $1,350,000 increase in deferred revenues and (ii) approximately $177,000 in total for amortization of right of use assets, depreciation of property and equipment, and stock-based compensation. The deferred revenue is due to the receipt of the $1.5 million upfront distribution fee from Smith+Nephew in conjunction with the private label distribution agreement which was effective as of March 31, 2025.

Cash used in operating activities for the nine months ended September 30, 2024 of approximately $1,741,000 primarily reflects our net loss of approximately $1,827,000 adjusted by (i) approximately $94,900 total depreciation and amortization expense and stock-based compensation expense and (ii) a provisions for credit losses and inventory obsolescence totaling $47,500.

Investing Activities

Cash used in investing activities for the nine months ended September 30, 2025 and 2024 primarily represents approximately $220,000 and $150,000 in expenditures, respectively, for the purchase of Aurix centrifuge devices.

Financing Activities

Cash provided by financing activities for the nine months ended September 30, 2025 reflects proceeds of (i) $791,418 from the sale of 527,612 shares of common stock in a private placement which closed in July 2025 and (ii) $113,541 from the exercise of common stock options.

Cash provided by financing activities for the nine months ended September 30, 2024 reflects proceeds of (i) $1,500,000 from the sale of 2,000,000 shares of common stock in two private placements which closed in May and September 2024 and (ii) $151,200 from the exercise of 270,000 warrants in June 2024.

Inflation

The Company believes that the rates of inflation in recent years have not had a significant impact on its operations.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

Critical Accounting Policies

Our unaudited consolidated financial statements included in Part I, Item 1 of this Quarterly Report are prepared in conformity with U.S. GAAP, which require us to make estimates and assumptions regarding future events that affect the amounts reported in our financial statements and accompanying notes. We base these estimates on our experience and assumptions regarding future events we believe to be reasonable under the circumstances. Actual results could differ from those estimates and such differences may be material to the unaudited consolidated financial statements. Consistent with the disclosure in our Annual Report for the year December 31, 2024, there are no accounting policies identified as critical.

Evaluation of Disclosure Controls and Procedures

Under the supervision of and with the participation of our management, including our Chief Executive and Financial Officer, who is our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report. The term “disclosure controls and procedures,” as set forth in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Based on the evaluation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report, we concluded that, as of such date, our disclosure controls and procedures were not effective due to the existence of the material weaknesses previously disclosed in our Annual Report as described below under “Material Weaknesses” and “Remediation Plan.”

Notwithstanding the conclusion that our disclosure controls and procedures as of the end of the period covered by this Quarterly Report were not effective, management believes that the consolidated financial statements and related financial information included in this Quarterly Report fairly present in all material respects our financial condition, results of operations and cash flows as of the dates presented, and for the periods ended on such dates, in conformity with GAAP.

Material Weaknesses

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 our annual or interim financial statements will not be prevented or detected on a timely basis. In connection with the preparation of our Annual Report and the consolidated financial statements and related disclosures therein, management identified the following material weaknesses.

Beginning in mid-2019, we ceased ongoing operational activities and terminated all our financial accounting and reporting resources as we worked to reach a favorable outcome to Medicare reimbursement coverage for the Aurix System. When we re-started commercial operations in 2022 and as disclosed since our Annual Report for the year ended December 31, 2021, the Company had not hired and did not maintain a sufficient complement of accounting and financial reporting resources. The lack of sufficient accounting and financial reporting resources also prevented the Company from maintaining appropriately designed, and monitoring the effectiveness of, internal control over financial reporting.

Remediation Plan

Beginning in 2022, the Company engaged outside consultants to assist with various accounting and financial reporting matters and will continue assessing the need for hiring additional internal accounting and third-party financial reporting resources. As additional financial resources are obtained and we increase our operating activity, management, under the oversight of the Audit Committee of the Board of Directors, will continue to implement measures designed to improve our internal control over financial reporting to remediate the identified material weaknesses, namely, to identify and engage, through internal hiring and the use of external third parties, a sufficient complement of accounting and financial reporting resources and to periodically assess the design and operating effectiveness of our internal controls.

While we believe that these efforts will improve our internal control over financial reporting, the implementation of these measures is ongoing and will require validation and testing of the design and operating effectiveness of internal controls over a sustained period of financial reporting cycles. We cannot assure you that the measures we have taken to date, or that we may take in the future, will be sufficient to remediate the material weaknesses we have identified or avoid potential future material weaknesses.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

There have been no material changes from the risk factors as previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.