Nuo Therapeutics, Inc 10-K for FY2024
Nuo Therapeutics, Inc. (AURX)
About this 10-K
Nuo Therapeutics, Inc filed this 10-K on April 1, 2025, covering the fiscal year ended December 31, 2024 (FY2024).
Headline figures
Fiscal year ended December 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $1.37M
- up 124.3% from $608.53K a year earlier
- Net loss
- $2.32M
- compared with a net loss of $3.17M a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______________ to _______________
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(Exact name of registrant as specified in its charter)
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(Address of principal executive offices) (Zip Code)
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Securities registered pursuant to Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act:
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ☐
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer ☐ |
Accelerated filer ☐ |
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Smaller reporting company |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
The aggregate market value of voting common equity held by non-affiliates of the registrant, computed by reference to the closing price as reported on the OTC Markets Group for the registrant’s common stock, as of June 28, 2024, the last business day of the registrant’s second fiscal quarter of 2024 was approximately $
As of March 28, 2025, the number of shares outstanding of the registrant’s common stock was
NUO THERAPEUTICS, INC.
Special Note Regarding Forward-Looking Statements
Certain statements, other than purely historical information, in this Annual Report on Form 10-K (this "Annual Report") including the section titled “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” 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 Annual Report and in other reports filed by us with the Securities and Exchange Commission (the “SEC”), including Forms 8-K and 10-Q. These risks and uncertainties include, among others, the following:
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our limited revenue base and sources of working capital; |
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our limited operating experience; |
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our ability to continue as a going concern; |
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the dilutive impact of raising additional equity or debt; |
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our ability to timely and accurately report our financial results and prevent fraud if we are unable to maintain effective disclosure and internal controls; |
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acceptance of our product by the medical community and patients; |
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our ability to obtain adequate reimbursement from third-party payors; |
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our ability to contract with healthcare providers; |
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our reliance on several single source suppliers and our ability to source raw materials at affordable costs; |
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our ability to protect our intellectual property; |
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our compliance with governmental regulations; |
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our ability to successfully sell and market the Aurix System; |
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our ability to attract and retain key personnel, including both of our executive officers; |
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| ● | 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 | |
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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 “Item 1A. Risk Factors” in this Annual Report and the other filings referenced above, other sections of this 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.
The Company owns or has rights to various copyrights, trademarks and trade names used in its business, including, but not limited to, Aurix®. This Annual 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 Annual Report are the property of the holder of such trademarks and trade names.
Corporate Overview
Nuo Therapeutics, Inc. is a Delaware corporation organized in 1998 under the name Informatix Holdings, Inc. In 1999, Autologous Wound Therapy, Inc., an Arkansas Corporation, merged with and into Informatix Holdings, Inc. and the name of the surviving corporation was changed to Autologous Wound Therapy, Inc. In 2000, Autologous Wound Therapy, Inc. changed its name to Cytomedix, Inc. (“Cytomedix”). In 2001, Cytomedix, filed for bankruptcy, from which it emerged in 2002 under a Plan of Reorganization.
In September 2007, Cytomedix received Section 510(k) clearance from the U. S. Food and Drug Administration (“FDA”) for the AutoloGel™ System, now known as the Aurix System (“Aurix”), for processing peripheral blood into an autologous platelet rich plasma ("PRP") for wound management .
In 2010, Cytomedix acquired the Angel Whole Blood Separation System from Sorin Group USA, Inc. In 2012, Cytomedix, acquired Aldagen, Inc. (“Aldagen”), a privately held developmental cell-therapy company. Aldagen remains a non-operational, wholly owned subsidiary of the Company.
In 2014, Cytomedix changed its name to Nuo Therapeutics, Inc. In 2016, the Company filed for and emerged from bankruptcy under Chapter 11. Effective May 1, 2019, the Company furloughed its remaining employees and ceased standard operational activities as it awaited developments concerning its reconsideration request with the Centers for Medicare & Medicaid Services (“CMS”) regarding Medicare coverage for Aurix.
In April 2021, CMS issued a favorable National Coverage Determination (“NCD”) for autologous PRP products and the Company restarted business activities in October 2021. The Company's principal offices are located in Houston, Texas.
Our Business and Product
We are a regenerative therapies 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 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 number 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.
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 December 31, 2024, 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 to 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 will pay us up to $2,250,000 for distribution rights and in exchange for 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 description above of the Distribution Agreement is qualified by reference to the full text of such agreement, a copy of which is filed as Exhibit 10.1 to this Annual Report and incorporated herein.
The Science Underlying Aurix and 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 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 varies 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:
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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.) |
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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.) |
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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.) |
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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.) |
Customer Concentration
Our revenues are derived from the sale of the Aurix product to customers consisting primarily of hospital outpatient wound care clinics and other private practice physicians treating chronic wounds. The Aurix product became commercially available for sale again in mid-2022 with limited revenues generated during the balance of the year ended December 31, 2022. Product revenues increased to approximately $1,365,000 for the year ended December 31, 2024 versus approximately $609,000 for the year ended December 31, 2023.
Licenses and Intellectual Property Rights
Nuo relies on a combination of trademarks, trade secrets, copyright laws as well as confidentiality agreements, contractual provisions, and other similar measures, to establish and protect its business interests.
Government Regulation
Government authorities in the U.S., Canada, the European Union, and other countries extensively regulate pharmaceutical products, biologics, and medical devices. The Company’s products and product candidates are subject to approval or clearance by the governing bodies prior to and during the marketing and distribution of a product. Regulatory requirements apply to, but are not limited to, research and development, safety and efficacy, clinical studies, manufacturing, labeling, distribution, advertising and marketing, and the import and export of products. Before a product candidate is cleared or approved by the governing bodies for commercial marketing, rigorous preclinical and human clinical testing may be necessary to determine the safety and efficacy or effectiveness of the product. If the Company fails to comply with the applicable laws and regulations at any time during the product development process, approval, or clearance process, or during commercialization, it may become subject to administrative penalties, injunction or criminal prosecution. These sanctions may include, but are not limited to, refusal to approve or clear pending applications, withdrawals of approvals, clinical holds, warning letters, product recalls, product seizures, total or partial suspension of the Company’s operations, injunctions, fines, civil penalties and/or criminal prosecution. Any enforcement action could have a material adverse effect on the Company.
Medical Device Regulation
The Company reinitiated manufacture and available commercial distribution of the Aurix System in May 2022. As such, this and future products manufactured and/or distributed by the Company may be subject to regulations by the applicable governing bodies, including but not limited to, the FDA, Health Canada, the European Medicines Agency, the Japanese Ministry of Health & Welfare, and other regulatory agencies. The Company currently has no meaningful business development initiatives outside of the U.S. Each of the foreign governing bodies noted above serves a comparable function as the FDA. As such, the Company and its products and product candidates are subject to the regulations enforced by these regulatory bodies and other entities. These regulations include, but are not limited to, product clearance, documentation requirements, good manufacturing practices, quality systems regulation, and medical device reporting. Labeling and promotional activities are also subject to regulation by the U.S. Federal Trade Commission, in certain circumstances. Current enforcement policies prohibit the marketing of cleared or approved medical devices for unapproved uses. The labeling and advertising of medical devices are reviewed by various government bodies to ensure that unapproved uses are not promoted. Before a new medical device can be introduced to the market, the manufacturer must obtain clearance or approval from the applicable regulatory agency, depending upon the device classification. In the U.S., medical devices are classified into one of three classes — Class I, II, or III. In the U.S., Class I devices are non-critical products that the FDA believes can be adequately regulated by “general controls” which include provisions relating to labeling, manufacturer registration, defect notification, records and reports, and the FDA’s Quality Systems Regulations. Most Class I devices are exempt from pre-market notification. Class II devices are products for which the general controls of Class I devices, by themselves, are not sufficient to assure safety and effectiveness and, therefore, require additional controls. Additional controls for Class II devices may include performance standards, post-market surveillance patient registries, pre-market clearance through the Section 510(k) notification system, and the adherence to FDA guidance. Standards may include both design and performance requirements. Class III devices have the most restrictive controls and require pre-market approval by the FDA. All of the governing bodies with responsibility over the Company’s products have the ability to inspect medical device manufacturers, order recalls of medical devices in some circumstances, seize non-complying medical devices, and pursue prosecution of either civil or criminal violations.
For most class II devices, Section 510(k) of the Federal Food, Drug, and Cosmetic Act (“FDCA”) requires individuals or companies manufacturing medical devices intended for human use to file a notice with the FDA at least ninety days before intending to introduce the device into the market. This notice, commonly referred to as a 510(k) premarket notification, must identify the type of classified device into which the product falls, the class of that type, and a specific product already being marketed or cleared by the FDA and to which the product is “substantially equivalent.” In some instances, the 510(k) must include data from human clinical studies to establish “substantial equivalence.” The FDA must agree with the claim of “substantial equivalence” before the device can be marketed. The statutory time frame for clearance of a 510(k) is ninety days, though it often takes longer. Nuo currently only markets a product that is subject to, and has obtained, 510(k) clearance.
The Aurix System consists of the Aurix Wound Dressing Kit, Aurix Reagent Kit, and Aurix System Centrifuge II. Each component of the Aurix System is a legally marketed product that has been cleared or approved by the FDA. The Aurix System Centrifuge II, when used with the Aurix Wound Dressing Kit and Aurix Reagent Kit, are suitable for use on exuding wounds such as leg ulcers, pressure ulcers and diabetic ulcers, and for the management of mechanically or surgically debrided wounds.
As a specification developer, manufacturer, and distributor of medical devices, the Company is required to comply with other regulations and standards, such as the FDCA and implementing regulations set forth in 21 CFR et seq. and also ISO 13485. As a manufacturer and distributor of medical devices, the Company, and in some instances its subcontractors, is required to register its facilities and products manufactured annually with the appropriate governing bodies and certain state agencies. Additionally, the Company is subject to periodic inspections by the governing bodies to assess compliance with quality regulations. Facilities may also be subject to inspections by other federal, foreign, state, or local agencies. Accordingly, manufacturers such as the Company must continue to expend time, money, and effort around production and quality control to maintain compliance with quality systems and ISO 13485 and other aspects of regulatory compliance.
Fraud and Abuse Laws
The Company may also be indirectly subject to federal and state anti-kickback and physician self-referral laws. Federal physician self-referral legislation (commonly known as the Stark Law) prohibits, subject to certain exceptions, physician referrals of Medicare and Medicaid patients to an entity providing certain designated health services (“DHS”) if the physician or an immediate family member has a financial relationship with the entity. The Stark Law also prohibits the entity receiving the referral from billing any good or service furnished pursuant to an unlawful referral, and any person collecting any amounts in connection with an unlawful referral is obligated to refund such amounts. CMS has issued numerous regulations containing exceptions to the prohibitions of the Stark Law. If a physician and a DHS entity have financial relationship subject to the Stark Law, then an exception must be met or else the DHS entity cannot bill for the service. A person who engages in a scheme to circumvent the Stark Law’s referral prohibition may be fined up to $100,000 for each such arrangement or scheme. The penalties for violating the Stark Law also include civil monetary penalties of up to $15,000 per referral and possible exclusion from federal health care programs such as Medicare and Medicaid. Violations of the Stark Law have also been the basis for False Claims Act actions, discussed below. Various states have corollary laws to the Stark Law (so-called “baby Stark” laws), including laws that require physicians to disclose any financial interest they may have with a health care provider to their patients when referring patients to that provider. Both the scope and exception for such laws vary from state to state.
The Company may also be subject to federal and state anti-kickback laws. Section 1128B(b) of the Social Security Act, commonly referred to as the Anti-Kickback Law, prohibits persons from knowingly and willfully soliciting, receiving, offering or providing remuneration, directly or indirectly, in cash or in kind, to induce either the referral of an individual, or the furnishing, recommending, or arranging for a good or service, for which payment may be made under a federal health care program, such as Medicare and Medicaid. The Anti-Kickback Law is broad, and it prohibits many arrangements and practices that are otherwise lawful in businesses outside of the health care industry. The Office of the Inspector General (“OIG”) of the U.S. Department of Health and Human Services (“DHHS”) has issued regulations, commonly known as “safe harbors” that set forth certain provisions which, if fully met, will assure health care providers and other parties that they will not be prosecuted under the federal Anti-Kickback Law. Although full compliance with these provisions ensures against prosecution under the Anti-Kickback Law, the failure of a transaction or arrangement to fit within a specific safe harbor does not necessarily mean that the transaction or arrangement is illegal or that prosecution under the federal Anti-Kickback Law will be pursued. As with the Stark Law, violations of the Anti-Kickback Law can result in a False Claims Act action. Many states have adopted laws similar to the federal Anti-Kickback Law, and some of these state prohibitions apply to patients for health care services reimbursed by any source, not only federal health care programs such as Medicare and Medicaid.
In addition, there are other U.S. health care fraud laws to which the Company may be subject that prohibit knowingly and willfully executing or attempting to execute a scheme or artifice to defraud any health care benefit program, including private payers (“fraud on a health benefit plan”) and that prohibit knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement or representation in connection with the delivery of or payment for health care benefits, items or services. These laws apply to any health benefit plan, not just Medicare and Medicaid.
The Company may also be subject to other U.S. laws that prohibit submitting, or causing to be submitted, claims for payment or causing such claims to be submitted that are false. Violation of these false claims’ statutes may lead to civil money penalties, criminal fines and imprisonment, and/or exclusion from participation in Medicare, Medicaid and other federally funded state health programs. These statutes include the federal False Claims Act, which prohibits the knowing filing of a false claim (or causing the submission of a false claim) or the knowing use of false statements to obtain payment from the U.S. federal government. Under provisions of the Affordable Care Act, the failure to report and refund an overpayment to the Medicare or Medicaid programs within 60 days of the identification of the overpayment may also be an obligation subjecting the defendant to a False Claims Act action. Finally, a recent U.S. Supreme Court case, Universal Health Services v. United States ex rel. Escobar, upheld the “implied false certification” theory under which a defendant submits a claim for payment that makes a specific representation about the goods or services provider, but fails to disclose the defendant’s noncompliance with a statutory, regulatory, or contractual requirement that would be material to the Government’s payment decision. When an entity is determined to have violated the False Claims Act, the entity must pay three times the actual damages sustained by the government, plus mandatory civil penalties. Suits filed under the False Claims Act can be brought by an individual on behalf of the government (a “qui tam action”). Such individuals (known as “qui tam relators”) may share in the amounts paid by the entity to the government in fines or settlement. In addition, certain states have enacted laws modeled after the False Claims Act. “Qui tam” actions have increased significantly in recent years causing greater numbers of health care companies to have to defend false claim actions, pay fines or be excluded from the Medicare, Medicaid or other federal or state health care programs as a result of an investigation arising out of such action.
Several states also have referral, fee splitting and other similar laws that may restrict the payment or receipt of remuneration in connection with the purchase or rental of medical equipment and supplies. State laws vary in scope and have been infrequently interpreted by courts and regulatory agencies but may apply to all health care products and services, regardless of whether Medicaid or Medicare funds are involved.
Employees
The Company had 9 full-time employees as of December 31, 2024 which are all compensated as salaried employees. None of the Company’s employees is covered by a collective bargaining agreement or represented by a labor union. The Company considers its employee relations to be good.
Research and Development
During the years ended December 31, 2024 and 2023, we incurred no significant costs for research and development activities.
Competition
While Aurix faces competition in the chronic wound care market from any other FDA cleared platelet derived products, we also face competition from pharmaceutical companies, biopharmaceutical companies, medical device companies, and other competitors in the areas of advanced wound care dressings, wound care devices, and wound care biologics. Leading companies in the advanced wound care market include Smith+Nephew, 3M, MoInlycke, and ConvaTec. Leading competitors in the wound care market that offer other biologic products such as tissue-based products include companies such as MiMedx, Organogenesis, Integra Life Sciences, as well as a significant number of smaller companies. While we believe that Aurix can compete favorably based on broad application across multiple wound etiologies, we expect that many physicians and allied professionals will continue to employ other treatment approaches and technologies, separately and in combination, in an attempt to treat chronic and hard-to heal wounds. The chronic wound market has many therapies that compete with Aurix that have established habitual use patterns and provider contracts to encourage standardized use. Furthermore, other companies have developed or are developing products that could be in direct future competition with our current product line. We may not be able to compete effectively against such companies. Many of these companies have substantially greater capital resources, larger marketing staff and more experience in commercializing products than we do. See “Item 1A. Risk Factors – Risks Relating to Distribution of Our Product - Our Product Has Existing Competition in the Marketplace.”
Raw Materials
A reagent, bovine thrombin (Thrombin JMI), used for our Aurix product is available exclusively through Pfizer. Pfizer may unilaterally raise the price for the reagent. If a temporary or permanent interruption in the supply of the reagent were to occur, or the manufacturing costs charged by Pfizer exceed what we can reasonably afford, it would have a material adverse effect on our business.
Available Information
We file annual, quarterly, and current reports, proxy statements and other information with the SEC. The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov. We also make available through our website at www.nuot.com our annual reports on Form 10-K, our quarterly reports on Form 10-Q and current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we have filed it electronically with, or furnished it to, the SEC. Information appearing on, and accessible through, our website is not part of this Annual Report.
An investment in the Company involves a high degree of risk. Before making an investment decision with respect to our common stock, you should consider the risks described below in addition to the cautionary statements and risks described elsewhere and the other information in this Annual Report and in our other filings with the SEC, including subsequent reports on Forms 10-Q and 8-K. The risks described below may not be the only risks the Company faces. Additional risks not yet known or currently believed to be immaterial may also impair our business. If any of these known or unknown risks or uncertainties actually occurs, our business, financial condition or results of operations could suffer and our common stock could be adversely impacted, resulting in a loss of part or all of your investment.
Risks Related to Our Financial Position
Our Revenue Base Is Limited to a Single Product Seeking Market Adoption; We Need Substantial Additional Financing and our Ability to Successfully Affect Such Financing Could Be Limited.
Our current revenue base is limited to our Aurix product, and our Aurix revenue has been limited to date. We have a history of losses and are not currently profitable. For the year ended December 31, 2024, we incurred a net loss of approximately $2.3 million. Even if we succeed in raising substantial additional funds, we expect to incur losses and negative operating cash flows in the immediate future. We may never generate sufficient revenues to achieve and maintain profitability.
Historically, we have financed our operations through a combination of the sale of debt, equity and equity-linked securities, licensing, royalty, and product revenues. Until we can generate a sufficient amount of revenues to finance our cash requirements, which we may never do, we need to finance future cash needs. It is substantially uncertain whether we will be able to obtain such financing on satisfactory terms or at all.
If adequate capital cannot be obtained on a timely basis and on satisfactory terms, it would have a material adverse effect on our ability to implement our business plan, and our revenues and operations and the value of our common stock would be materially and negatively impacted, and we may be forced to curtail or cease our operations.
We Have a Limited Operating History and Limited Operating Experience.
We only recently began re-implementing our commercialization strategy for Aurix in the second half of 2022. Thus, we still have a limited operating history. Continued operating losses, together with the risks associated with our ability to gain new customers for Aurix, may have a material adverse effect on our liquidity. We may also be forced to respond to unforeseen difficulties, such as decreased demand for our products and services, downward pricing trends, regulatory requirements, and unanticipated market pressures.
Our Financial Position Creates Doubt as to Whether We Will Continue as a Going Concern.
The Company reestablished commercial operations in 2022 and generated limited revenues of approximately $112,000 for the year ended December 31, 2022. For the year ended December 31, 2023, product revenues increased to approximately $609,000 while subsequently increasing to $1,365,000 for the year ended December 31, 2024. For the years ended December 31, 2024 and 2023, the Company had a net loss of approximately $2.3 million and $3.2 million, respectively. There can be no assurances that we will be able to achieve a level of revenues adequate to generate sufficient cash flow from operations or obtain funding from additional financing through private placements, public offerings and/or bank financing necessary to support our working capital requirements. It is uncertain whether we will be able to obtain such financing on satisfactory terms or at all. Our continuing losses and limited cash resources raise substantial doubt about our ability to continue as a going concern, and we need to raise substantial additional funds in order to continue to conduct our business. If we are unable to increase our revenues to secure sufficient capital to fund our operating activities, we may be forced to delay the completion of, or significantly reduce the scope of, our current business plan, delay the pursuit of commercial insurance reimbursement for our wound treatment technologies, and postpone the hiring of new personnel.
We May Issue Additional Equity or Debt Securities Which Will Likely Dilute and May Materially and Adversely Affect the Price of our Common Stock.
Additional issuance of our common stock or other equity or convertible debt securities will likely dilute the ownership interests of our stockholders. Sales of substantial amounts of shares of our common stock in the public market, or the perception that those sales may occur, could negatively affect the market price of our common stock. We have used, and will likely continue to use, our common stock or securities convertible into or exchangeable for common stock to fund working capital needs or to acquire technology, product rights or businesses, or for other purposes. If additional equity and/or equity-linked securities are issued, particularly during times when our common stock is trading at relatively low-price levels, the price of our common stock may be materially and adversely affected.
We May Not Be Able to Timely and Accurately Report our Financial Results or Prevent Fraud If We Are Unable to Maintain Effective Disclosure and Internal Controls.
Effective disclosure controls and procedures and internal control over financial reporting is necessary for us to provide reliable financial reports in a timely manner. Our management concluded there was a material weakness in our internal control over financial reporting as of the period covered by this Annual Report. Although we have taken steps to remediate such weakness, the material weakness cannot be considered remediated until the controls operate for a sufficient period of time and management concludes that our internal controls are operating effectively. While we believe that our intended remediation efforts will resolve the identified material weakness, there is no assurance that such efforts will be sufficient or that additional actions will not be necessary, which may undermine our ability to provide timely, accurate and reliable reports on our financial and operating results. Further, if we remediate our current material weakness but identify new material weaknesses in our internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports and the value of our common stock may be negatively affected. As a result of such failures, we could also become subject to investigations by the SEC, or other regulatory authorities, and become subject to litigation from investors and stockholders, which could harm our reputation, financial condition or divert financial and management resources from our business.
Risks Related to Our Business, Industry and Regulatory Approval of Our Product
The Success of Aurix Is Dependent on Acceptance by the Medical Community.
The commercial success of our product will depend upon the medical community and patients accepting the therapies as safe and effective. It will also depend on our success introducing the Aurix product within the broad chronic wound market and encouraging provider evaluation and adoption of Aurix in the context of pre-existing wound treatment clinical practice.
Furthermore, the willingness of the medical community to accept or evaluate our products and processes may be impacted by the medical community’s acceptance of the quality of the clinical information that was collected and published as a result of the CED process. If the medical community and patients do not ultimately accept the therapies as safe and effective, or we are unable to raise awareness of our products and processes, our ability to sell our product may be materially and adversely affected, and the results of our operations may be adversely affected.
The Successful Commercialization of the Aurix System Will Depend on Obtaining Reimbursement from Third-Party Payors.
In the U.S., the market for any pharmaceutical or biologic product is affected by the availability of reimbursement from third-party payors, such as government health administration authorities, private health insurers, health maintenance organizations and pharmacy benefit management companies. If we cannot demonstrate favorable outcomes or a cost-benefit relationship, we may have difficulty obtaining adequate coverage or reimbursement for our products from these payors. Third-party payors may also deny coverage for our product if they determine that the product is experimental, unnecessary, or inappropriate. Coverage and reimbursement are often determining factors in predicting a product’s success, with some physicians and patients strongly favoring only those products for which they will be reimbursed.
The Aurix System is marketed to healthcare providers. Some of these providers, in turn, seek reimbursement from third-party payors such as Medicare, Medicaid, and other private insurers. While we have established Medicare coverage of Aurix through the NCD reconsideration, we may not be successful with our complete reimbursement strategy, including, without limitation, obtaining any additional regulatory approvals.
Should we seek to expand our commercialization internationally, we would be subject to international regulations, where the pricing of prescription pharmaceutical products and services and the level of government reimbursement may be subject to governmental control. In some countries, pricing negotiations with governmental authorities can take six to twelve months or longer after the receipt of marketing approval for a product. To obtain reimbursement or pricing approval in some countries, we may be required to conduct one or more clinical trials that compare the cost effectiveness of our product or product candidates to other available therapies. Conducting one or more of these clinical trials would be expensive and result in delays in the commercialization of our current and future products.
Managing and reducing healthcare costs has become a major priority of federal and state governments in the U.S. As a result of healthcare reform efforts, we might become subject to future regulations or other cost-control initiatives that materially restrict the price we can receive for our current and future products. Third-party payors may also limit access and reimbursement for newly approved healthcare products generally or limit the indications for which they will reimburse providers or suppliers who use any products that we may develop. Cost control initiatives could decrease the price for any products that we may develop, which would result in lower product revenues to us.
A Disruption in Healthcare Provider Networks Could Have an Adverse Effect on Operations and Profitability.
Our operations and future profitability are dependent, in large part, upon the ability to contract with healthcare providers on favorable terms. In any particular service area, healthcare providers could refuse to contract with us or take other actions that could result in higher healthcare costs or create difficulties in meeting our regulatory requirements. In some service areas, certain healthcare providers may have a significant market presence. If healthcare providers refuse to contract with us, use their market position to negotiate unfavorable contracts or place us at a competitive disadvantage, our ability to market services or to be profitable in those service areas could be adversely affected. Provider networks could also be disrupted by the financial insolvency of a large healthcare provider group. Any disruption in provider networks could adversely impact our business, results of operations and financial condition.
Liquidity Problems or Bankruptcy of our Key Customers or Collaborators Could Have a Significant Adverse Effect on our Business, Financial Condition and Results of Operations.
Our sales to customers are typically made on credit without collateral. There is a risk that key customers will not pay, or that payment may be delayed, because of bankruptcy, contraction of credit availability to such customers, weak sales, or other factors beyond our control, which could increase our exposure to losses from bad debts. In addition, if our key customers were to cease doing business as a result of bankruptcy or significantly reduce their orders from us, it could have a significant adverse effect on our business, financial condition, and results of operations. In addition, if our collaborators face liquidity problems or file for bankruptcy, they may choose to divert resources away from their continued cooperation and engagement with us or otherwise choose or be forced to reduce operations, which could also have a significant adverse effect on our business, financial condition, and results of operation.
We May Be Unable to Attract a Strategic Partner for the Further Development of Potential Future Product Candidates.
Even if positive clinical data is eventually achieved in any future clinical trials, we may not be able to enter into strategic partnerships, licensing, or other similar arrangements that we may consider necessary or appropriate to commercialize product candidates successfully, or even have the resources necessary to seek such arrangements. Furthermore, even if such a strategic relationship regarding any of our current and future products or product candidates is reached, development milestones, clinical data, or other such benchmarks may not be achieved. Therefore, our products and product candidates may never proceed toward commercialization or drive cash infusions for us, and we may ultimately not be able to monetize the patents, existing clinical data, and other intellectual property.
Our Limited Number of Staff May Affect our Ability to Conduct our Operations and Other Functions Effectively.
Our future success depends on our ability to attract, retain, and motivate highly skilled management, scientific and sales personnel. As of December 31, 2024, we had only nine full-time employees. Our ability to maintain and provide services to our customers and our ability to provide the necessary support as part of any collaborations depends upon our ability to hire and retain business development and scientific and technical personnel with the skills necessary to keep pace with continuing changes in regenerative biological therapy technologies. Our current liquidity situation makes it unlikely that we will be able to hire additional personnel in the immediate future. Even assuming that we can resolve our immediate liquidity concerns, competition for such personnel is intense; we compete with pharmaceutical, biotechnology and healthcare companies with greater access to resources. Our inability to hire qualified personnel may lead to higher recruitment, relocation, and compensation costs for such personnel. These increased costs may make hiring new key personnel impractical.
We Are Substantially Dependent Upon our Executive Officers.
Our success substantially depends on the continued service of key management, in particular David E. Jorden, our Chief Executive and Financial Officer, and Peter Clausen, our Chief Scientific and Operating Officer. We currently do not maintain key person insurance on, Mr. Jorden or Dr. Clausen. The loss of Mr. Jorden or Dr. Clausen, or other key employees or executive officers, could adversely impact our ability to continue operations unless and until a replacement is identified.
We Rely on a Single Supplier for the Reagent Used for Aurix and an Interruption in our Supply Chain Could Have a Material Adverse Effect on our Business.
A reagent used for our Aurix product, bovine thrombin (Thrombin JMI), is available exclusively through Pfizer. Pfizer may unilaterally raise the prices for the reagent. If a temporary or permanent interruption in the supply of the reagent were to occur, or the manufacturing costs charged by Pfizer exceed what we can reasonably afford, we would have to seek alternative sources of supply. There is no assurance we would be able to identify a suitable second source of supply or do so without significant delay. Despite our efforts to maintain an adequate supply of inventory, the loss of Pfizer, or its inability to provide us with an adequate supply of a reagent, could cause delay in the manufacture of our product, thereby impairing our ability to meet the demand of our customers and causing significant harm to our business. Any disruption of this nature or increased expenses could harm our commercialization efforts and adversely affect our operating results.
We Could Be Affected by Malpractice or Product Liability Claims.
Providing medical care entails an inherent risk of professional malpractice and other claims. We do not control or direct the practice of medicine by physicians or health care providers who use our product and do not assume responsibility for compliance with regulatory and other requirements directly applicable to physicians. There is no assurance that claims, suits, or complaints relating to the use of our products, and treatment administered by physicians, will not be asserted against us in the future. The production, marketing and sale, and use of our product entails risks that product liability claims will be asserted against us. These risks cannot be eliminated, and we could be held liable for any damages that result from adverse reactions or infectious disease transmission. Such liability could materially and adversely affect our business, prospects, operating results, and financial condition. We currently maintain professional and product liability insurance coverage, but the coverage limits of this insurance may not be adequate to protect against all potential claims. We may not be able to obtain or maintain professional and product liability insurance in the future on acceptable terms or with adequate coverage against potential liabilities.
Risks Related to Distribution of Our Product
There Can Be No Assurance that Smith+Nephew Will Be Able to Establish a Market for its Private Label Product.
On March 31, 2025, we entered into a Distribution Agreement (the “Distribution Agreement”) with Smith+Nephew, a global medical technology company. Under the Distribution Agreement, we will supply to Smith+Nephew its own private label of our Aurix product (the “Private Label product”). There is no assurance that Smith + Nephew will find a market for its Private Label product. The amount of our sales under the Distribution Agreement will depend in part on the amount of purchase orders that we receive from Smith+Nephew. If Smith+Nephew does not establish a sufficient market for its Private Label product, then our business and operating results and financial condition may be adversely affected.
Fulfilling Purchase Orders under the Distribution Agreement Will Place Demands on our Management and Financial Resources.
While we currently manufacture, package, and ship our Aurix product, we have no history operating as a supplier for a private label product. Establishing and maintaining logistics to supply Private Label product will necessitate that we meet certain deadlines, performance measures and other standards, and compliance and other requirements. This will place demands on our management and financial resources, which may be burdensome particularly for a smaller company like ours. The costs and expenses associated with fulfilling purchase orders resulting from and generally complying with the Distribution Agreement will reduce the corresponding income we earn. There can be no assurance that the demands on our management and financial resources related to the Distribution Agreement will not adversely affect our business and operating results and financial condition.
The Existence of a Private Label Alternative to our Aurix Product May Limit the Potential Customers and Sales for our Aurix Product.
A private label arrangement represents an alternative to a supplier’s own branded product. Compared to Nuo, Smith+Nephew is a larger company with more resources and a more substantial number of sales representatives. Further, we will have no direct control over the prices that Smith+Nephew will charge its customers for its Private Label product. Although the Distribution Agreement provides Smith+Nephew with exclusive distribution of a private label Aurix product in the United States, we are entitled to maintain our current distributors for the Aurix product in addition to expanding the number of our sales agents. The existence of a competing distributor and product in the market may adversely affect our ability to increase sales of our own Aurix product.
If Smith+Nephew Determines that Marketing and Sales of its Private Label Product Do Not Meet Its Expectations or Priorities, then Smith+Nephew May Terminate the Distribution Agreement.
If Smith+Nephew determines that marketing and sales of its Private Label product do not meet its expectations or priorities, then Smith+Nephew may terminate the Distribution Agreement. The Distribution Agreement is for an initial term of five years, but Smith+Nephew has the ability to terminate upon 12 months’ notice. If Smith+Nephew determines that sales of its Private Label product do meet expectation or priorities, or Smith+Nephew otherwise determines not to continue marketing the Private Label product, then Smith+Nephew may terminate the Distribution Agreement. In such an event, we would no longer generate revenues under the Distribution Agreement and our business and operating results and financial condition may be adversely affected.
Our Product Has Existing Competition in the Marketplace and We May Not Be Able to Compete Effectively.
In the market for biotechnology products, we face competition from pharmaceutical companies, biopharmaceutical companies, medical device companies, and other competitors. Despite the addition of the Private Label product and our Distribution Agreement with Smith+Nephew, we will continue to face competitive forces. The chronic wound market has many therapies that compete with Aurix that have established habitual use patterns and provider contracts to encourage standardized use. Furthermore, other companies have developed or are developing products that could be in direct future competition with our current product line. Biotechnology development projects are characterized by intense competition. Thus, we may not be the first to market with any newly developed products and we may not successfully be able to market these products. If we are not able to participate and compete in the regenerative biological therapy market, our financial condition will be materially and adversely affected. We may not be able to compete effectively against such companies in the future. Many of these companies have substantially greater capital resources, larger marketing staff and more experience in commercializing products than we do. Recently developed technologies, or technologies that may be developed in the future, may be the basis for developments that will compete with our current and future products.
Our Efforts to Secure Commercial Partners May Not Be Successful.
In addition and subject to the Distribution Agreement with Smith+Nephew, from time to time, we may engage in discussions with larger companies regarding potential strategic partnerships involving the broad commercialization of Aurix. The resources and expertise of such a partner would greatly facilitate the capture of market share within the wound care market but would require that the economic benefits of such a broad penetration would be shared with said partner. We may not be successful in securing such a partner. Furthermore, even if a partner is secured, the partnership may not attain the market penetration contemplated, and the profits ultimately realized by us, if any, may not be sufficient to allow us to execute our business strategy. Furthermore, under the Distribution Agreement, we must offer Smith+Nephew certain licensing and distribution rights in connection with improvements to our Aurix product and new products. These rights may prevent or limit our ability to secure an additional strategic partner.
We May Use Third-Party Collaborators and Service Providers to Help Us Support, Develop or Commercialize our Product Candidates, and our Ability to Commercialize Such Candidates May Be Impaired or Delayed if Such Collaborations or Engagements Are Unsuccessful.
In addition and subject to the Distribution Agreement with Smith+Nephew, we may in the future selectively pursue strategic collaborations or engagements for, among other purposes, development, data collection, analysis, and/or commercialization of our product candidates, domestically or otherwise. There can be no assurance as to our ability to utilize the data from such engagements to their potential. Nor can there be any assurance, in general, that we will be able to identify suitable future collaborators or negotiate collaboration agreements on terms that are acceptable to us or at all. In any current or future third-party collaborations, we are and would be dependent upon the success of the collaborators in performing their responsibilities and their continued cooperation and engagement. For a variety of reasons outside of our control, our collaborators or third-party providers may not cooperate with us or perform their obligations under our agreements with them. We cannot control the amount and timing of our collaborators’ resources that will be devoted to performing their responsibilities under our agreements with them. Our collaborators may choose to pursue alternative technologies in preference to those being developed in collaboration with us. The development and commercialization of our product candidates will be delayed if collaborators fail to conduct their responsibilities in a timely manner or in accordance with applicable regulatory requirements or if they breach or terminate their collaboration agreements with us. Disputes with our collaborators could also result in product development delays, decreased revenues and litigation expenses. Furthermore, under the Distribution Agreement, we must offer Smith+Nephew certain licensing and distribution rights in connection with improvements to our Aurix product and new products, as well as additional notification and negotiation rights. These rights may prevent or limit our ability to use third-party collaborators and service providers.
If We Are Unable to Maintain and Expand Our Network of Distributors and Sales Agents, We May Not Be Able to Generate Sales.
Our operating results are directly dependent upon the sales and marketing efforts of not only our employees, but also our current independent distributors and sales agents. We face significant challenges and risks in managing our geographically dispersed distribution network and retaining the individuals who make up that network. In addition, the Distribution Agreement with Smith+Nephew provides it with exclusive distribution rights for a private label of our Aurix product and limits our ability to engage new distributors. If certain of our current distributors and sales agents were to cease to do business with us, our sales could be adversely affected. Because of the intense competition for their services, we may be unable to recruit or retain additional qualified sales agents. We may not be able to enter into agreements with them on favorable or commercially reasonable terms, if at all. Failure to engage or retain qualified sales agents would prevent us from maintaining or expanding our business and generating sales.
Risks Related to Government Regulations
Our Product Is Subject to Governmental Regulation.
Our success is also impacted by factors outside of our control. Our current technology and products are subject to extensive regulation by numerous governmental authorities in the U.S., both federal and state, and in foreign countries by various regulatory agencies. Specifically, our product is subject to regulation by the U.S. Food and Drug Administration, or FDA, and state regulatory agencies. The FDA regulates drugs, medical devices, and biologics that move in interstate commerce and requires that such products receive clearance or pre-marketing approval based on evidence of safety and efficacy. The regulations of government health ministries in foreign countries are analogous to those of the FDA in both application and scope. In addition, any change in current regulatory interpretations by, or the positions of, state regulatory officials where our product is used could materially and adversely affect our ability to sell our product in those states. The FDA will require us to obtain clearance or approval of new or modified devices when used for treating specific wounds or marketed with specific wound-healing claims, or for other products under development.
We believe our current product for sale is legally marketed. As we expand and offer and/or develop additional products in the U.S. and in foreign countries, clearance or approval from the FDA and comparable foreign regulatory authorities prior to introduction of any such products into the market may be required. We provide no assurance that we will be able to obtain all necessary approvals from the FDA or comparable regulatory authorities in foreign countries for these products. Failure to obtain the required approvals would have a material adverse impact on our business and financial condition.
Compliance with FDA and other governmental requirements imposes significant costs and expenses. Further, our failure to comply with these requirements could result in sanctions, limitations on promotional or other business activities, or other adverse effects on our business. Further, recent efforts to control healthcare costs could negatively affect demand for our current and future products and services.
We Must Comply with the Physician Payment Sunshine Act.
We are required to comply with the United States Physician Payment Sunshine Act, which requires certain manufacturers of drugs, medical devices, biologicals, and medical supplies that participate in U.S. federal healthcare programs to report certain payments and items of value given to physicians and teaching hospitals. Manufacturers are required to report this information annually to CMS. Manufacturers are required to report aggregate payment data to CMS by the 90th day of each subsequent calendar year. We cannot assure you that we will collect and report all data timely and accurately. If we fail to accurately and timely report this information, we could suffer severe penalties.
Any applicable manufacturer that fails to timely, accurately, or completely report the information required in accordance with the rules of the Sunshine Act is subject to a civil monetary penalty of not less than $1,000, but not more than $10,000, for each payment or other transfer of value or ownership or investment interest not reported timely, accurately, or completely (up to $150,000). For “knowing” failures to report, the penalties increase to not less than $10,000, but not more than $100,000, for each such failure (up to $1,000,000). The amount of civil monetary penalties imposed on each applicable manufacturer or applicable group purchasing organization is aggregated separately. Subject to separate aggregate totals, the maximum combined annual total is $1,150,000.
Several of the U.S. states have parallel reporting laws, sometimes accompanied with “gift bans” prohibiting manufacturers from making gifts or other remunerations to prescribers. Massachusetts and Vermont are two such states. There are various penalties associated with noncompliance with the state laws, as well.
Legislative and Administrative Action May Have an Adverse Effect on the Company.
Political, economic, and regulatory influences are subjecting the health care industry in the U.S. to fundamental change. We cannot predict what other legislation relating to our business or to the health care industry may be enacted, including legislation relating to third-party reimbursement, or what effect such legislation may have on our business, prospects, operating results and financial condition. We expect federal and state legislators to continue to review and assess alternative health care delivery and payment systems and possibly adopt legislation affecting further changes in the health care delivery system. Such laws may contain provisions that may change the operating environment for hospitals and managed care organizations. Health care industry participants may react to such legislation by curtailing or deferring expenditures and initiatives, including those relating to our current and future products. Future legislation could result in modifications to the existing public and private health care insurance systems that would have a material adverse effect on the reimbursement policies discussed above. With growing pressures on government budgets, government efforts to contain or reduce health care spending in some way or another are likely to continue. Any measures to restrict health care spending could result in decreased revenue from products and decrease potential returns from any future research and development initiatives. Furthermore, we may not be able to successfully neutralize any lobbying efforts against any initiatives we may have with governmental agencies. In addition to legislative initiatives, we may be subject to changes in current regulations and policies affecting coverage and reimbursement for our current and future products. Administrative agencies such as the Centers for Medicare and Medicaid Services have broad discretion to adopt or modify polices through rulemaking, and adoption of rules that curtail access to our products or limit reimbursement could have a material adverse effect on the adoption of our current and future products by health care providers, which would have a material adverse effect on our business.
Failure to Obtain Regulatory Approval in International Jurisdictions Would Prevent Us from Marketing our Product Abroad.
We have initially and may in the future further seek to market some of our product candidates outside the U.S. In order to market our product candidates in the European Union and many other jurisdictions, we must submit clinical data concerning our product candidates and obtain separate regulatory approvals and comply with numerous and varying regulatory requirements. The approval procedure varies among countries and can involve additional testing. The time required to obtain approval from foreign regulators may be longer than the time required to obtain FDA approval. The regulatory approval process outside the U.S. may include all of the risks associated with obtaining FDA approval. In addition, in many countries outside the U.S., it is required that the product candidate be approved for reimbursement before it can be approved for sale in that country. In some cases, this may include approval of the price we intend to charge for our product, if approved. We may not obtain approvals from regulatory authorities outside the U.S. on a timely basis, or at all. Approval by the FDA does not ensure approval by regulatory authorities in other countries or jurisdictions, and approval by one regulatory authority outside the U.S. does not ensure approval by regulatory authorities in other countries or jurisdictions or by the FDA, but a failure or delay in obtaining regulatory approval in one country may negatively affect the regulatory process in other countries. We may not be able to file for regulatory approvals and may not receive the necessary approvals to commercialize any products in any market and therefore may not be able to generate sufficient revenues to support our business.
Risks Related to Our Intellectual Property and Cybersecurity
Our Intellectual Property Assets Are Critical to our Success.
We regard our trademarks, trade secrets and other intellectual property assets as critical to our success. We rely on a combination of trademarks, trade secret and copyright laws, as well as confidentiality procedures, contractual provisions, and other similar measures, to establish and protect our intellectual property. We attempt to prevent disclosure of our trade secrets by restricting access to sensitive information and requiring employees, consultants, and other individuals with access to our sensitive information to sign confidentiality agreements. Despite these efforts, we may not be able to prevent misappropriation of our technology or deter others from developing similar technology in the future. Furthermore, policing the unauthorized use of our intellectual property assets is difficult and expensive. Litigation could result in substantial costs and diversion of resources. We can provide no assurance that we will be successful in any litigation matter relating to our intellectual property assets. Any misappropriation of our intellectual property assets could have a material adverse effect on our ability to increase sales of our commercial product and/or continue the development of any future pipeline candidates.
If We Are Unable to Protect the Confidentiality of our Proprietary Information and Know-how, our Competitive Position Would Be Impaired.
A significant amount of our technology, especially regarding manufacturing processes, is unpatented and is maintained by us as trade secrets. The background technologies used in the development of our product candidates are known in the scientific community, and it is possible to duplicate the methods we use to create our product candidates. In an effort to protect these trade secrets, we require our employees, consultants and contractors to execute confidentiality agreements with us. These agreements require that all confidential information developed by the individual or made known to the individual by us during the individual’s relationship with us be kept confidential and not disclosed to third parties. These agreements, however, may not provide us with adequate protection against improper use or disclosure of confidential information, and these agreements may be breached. Adequate remedies may not exist in the event of unauthorized use or disclosure of our confidential information. A breach of confidentiality could affect our competitive position. In addition, in some situations, these agreements may conflict with, or be subject to, the rights of third parties with whom our employees, consultants, collaborators or advisors have previous employment or consulting relationships. Also, others may independently develop substantially equivalent proprietary information and techniques or otherwise gain access to our trade secrets. The disclosure of our trade secrets would impair our competitive position.
If We Infringe, or Are Alleged to Infringe, Intellectual Property Rights of Third Parties, our Business Could Be Harmed.
Our research, development, and commercialization activities, including any product candidates resulting from these activities, may infringe, or be claimed to infringe, patents or other proprietary rights owned by third parties, and to which we do not hold licenses or other rights. There may be patent applications owned by third parties that have been filed but not published that, when issued, could be asserted against us. These third parties could bring claims against us that would cause us to incur substantial expenses and, if successful against us, could cause us to pay substantial damages.
Further, if a patent infringement suit were brought against us, we could be forced to stop or delay research, development, manufacturing or sales of the product or product candidate that is the subject of the suit. We have not conducted an exhaustive search or analysis of third-party patent rights to determine whether our research, development, or commercialization activities, including any product candidates resulting from these activities, may infringe or be alleged to infringe any third-party patent rights. As a result of intellectual property infringement claims, or to avoid potential claims, we may choose or be required to seek a license from the third party. These licenses may not be available on acceptable terms, or at all. Even if we are able to obtain a license, the licensee would likely obligate us to pay license fees or royalties or both, and the rights granted to us might be nonexclusive, which could result in our competitors gaining access to the same intellectual property.
Ultimately, we could be prevented from commercializing a product or be forced to cease some aspect of our business operations, if, as a result of actual or threatened patent infringement claims, we are unable to enter into licenses on acceptable terms. All of the issues described above could also affect our potential collaborators to the extent we have any collaborations then in place, which would also affect the success of the collaboration and therefore us. There has been substantial litigation and other proceedings regarding patent and other intellectual property rights in the pharmaceutical and biotechnology industries. In addition to infringement claims against us, we may become a party to other patent litigation and other proceedings, including inter partes review and/or interference proceedings declared by the U. S. Patent and Trademark Office and opposition proceedings in the European Patent Office, regarding intellectual property rights with respect to our product candidates and technology.
Our Business May Be Adversely Impacted by Information Systems Failures or Data Breaches.
We rely on information systems to process transactions, communicate with customers, manage our business, and process and maintain data and other information. We are not aware of any material losses to our business or results of operations due to information system failures, data breaches, or cybersecurity incidents. However, threats to information systems are evolving and disruptions can be caused by a variety of events, such as viruses, malicious malware, unauthorized access attempts to data, or other types of cybersecurity incidents. Such events could produce disruptions that result in an unexpected delay in operations, loss of confidential or otherwise protected information, corruption of data, and expenses related to the repair or replacement of our computer systems. We cannot be certain that our information system and cybersecurity protocols are sufficient to withstand a cybersecurity incident. The inability to maintain proper function, security, and availability of our information systems and the data maintained in those systems could interrupt our operations and could result in loss of sales or legal or regulatory claims which could adversely affect our revenues and profits or damage our reputation. We also rely on numerous third-party providers for information technology services, and we face similar risks relating to these providers. While our general insurance coverage may, subject to policy terms and conditions including deductibles, cover specific aspects of information systems and cybersecurity risks, such insurance coverage may be insufficient to cover all losses. As information system and cybersecurity risks continue to evolve, we may be required to expend additional resources to continue to enhance our information system and cybersecurity measures and to investigate and remediate any information system and cybersecurity vulnerabilities.
Data Privacy Security Failures or Breaches Could Expose us to Regulatory and Other Liability.
We are subject to various federal and state laws governing privacy and security of personally identifiable information. Despite safeguards by us, a data privacy security failure or breach could occur as a result of unintentional or deliberate acts to obtain unauthorized access to information, or to destroy, manipulate, or sabotage data. Information system threats, failures breaches, or incidents also could result in the loss or release of personally identifiable information. A privacy or cybersecurity failure or breach could cause a loss of business, regulatory enforcement, substantial legal liability, and reputational harm. Further, the adoption of new privacy and cybersecurity laws at the federal and state level could require us to incur significant compliance costs.
Risks Related to Our Common Stock
A Retail Trading Market for our Common Stock May Not Actively Develop.
Shares of our common stock currently resumed trading on the OTCQB on August 22, 2022. Prior to then, due to a prior lack of current and publicly available information about the Company, trading in shares of our common stock was eligible only for unsolicited quotes on the “Expert Market” of the OTC Markets Group. Because quotations in Expert Market securities are restricted from public viewing, the designation severely limits the number of buyers of and effectively prevents the development of an active trading market in, designated securities. Even though shares of our common stock now trade on the OTCQB, there can be no assurance as to whether OTC Markets Group will continue to enable shares of our common stock to be quoted on a retail market or whether shares of our common stock can successfully be traded on other trading platforms. As a result, any limited trading of shares of our common stock subject to having a higher risk of wider spreads, increased volatility, and price dislocations.
Trading on an Over-the-Counter Market Could Adversely Affect the Liquidity of our Common Stock.
Trading in our common stock on the OTCQB since August 22, 2022 has been very limited and we cannot make any assurances that the trading volume will increase, or, if and when it increases, that it will be sustained at any level. Over-the-counter markets are generally considered to be less efficient than, and not as broad as, a stock exchange. Stockholders may have difficulties reselling significant numbers of shares of common stock at any particular time and may not be able to resell their shares of common stock at or above the price paid for such shares. As a result, stockholders may be required to hold shares of common stock for an indefinite period of time. In addition, sales of substantial amounts of common stock could lower the prevailing market price of our common stock.
U.S. Broker-Dealers May Be Discouraged from Effecting Transactions in Shares of our Common Stock.
Our Common Stock may be deemed a “penny stock” under SEC rules. As a result, trading in our common stock may be subject to the requirements of SEC rules that require additional disclosure by broker-dealers in connection with any trades involving a stock defined as a penny stock (generally, any non-exchange listed equity security that has a market price share of less than $5.00 per share, subject to certain exceptions) and a two business day “cooling off period” before broker and dealers can effect transactions in penny stocks. For these types of transactions, the broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transaction before the sale. The broker-dealer also must disclose the commissions payable to the broker-dealer, current bid and offer quotations for the penny stock and, if the broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market. These, and the other burdens imposed upon broker-dealers by the penny stock requirements, could discourage broker-dealers from effecting transactions in our common stock, which could severely limit the market liquidity of our common stock and the ability of holders of our common stock to sell it.
The Compliance and Reporting Requirements of Being a Public Reporting Company Can Be Time-Consuming and Costly.
We are a public reporting company and, accordingly, are subject to the information and reporting requirements of the Exchange Act, and other federal securities laws, including compliance with the Sarbanes-Oxley Act. Preparing and filing annual and quarterly reports, proxy statements and other information with the SEC and furnishing audited reports to stockholders is costly. In addition, we may face time consuming and costly effects to develop and implement internal controls and reporting procedures required by the Sarbanes-Oxley Act.
Our Officers, Directors and Principal Stockholders Can Exert Significant Influence Over Us and May Make Decisions That Are Not in the Best Interests of All Stockholders.
As of March 10, 2025, our officers and directors beneficially owned approximately 20.4% of our shares of common stock, while three other principal stockholders beneficially owned in the aggregate an additional approximately 40.9% of our shares of common stock. As a result, our officers, directors, and certain principal holders of common stock are able to affect the outcome of, or exert significant influence over, all matters requiring stockholder approval, including the election and removal of directors and the approval of a business combination. This concentration of ownership of our common stock could have the effect of delaying or preventing a change of control of us or otherwise discouraging or preventing a potential acquirer from attempting to obtain control of us. This, in turn, could have a negative effect on the market price of our common stock, if and when it commences trading. It could also prevent our stockholders from realizing a premium over the market prices for their shares of common stock. Moreover, the interests of this concentration of ownership may not always coincide with our interests or the interests of other stockholders, and accordingly, they could cause us to enter into transactions or agreements that we would not otherwise consider.
Transactions Engaged in by our Officers, Directors or Principal Stockholders Involving our Common Stock May Have an Adverse Effect on the Value of our Common Stock.
Sales of our common stock by our officers, directors and principal stockholders could have the effect of lowering the price or value of our common stock. The perceived risk associated with the possible sale of a large number of shares of common stock by those stockholders could cause some of our stockholders to sell their stock, thus adversely affecting the value of our common stock. Our largest stockholders, directors and executive officers may sell a significant number of shares for a variety of reasons unrelated to the performance of our business. Our stockholders may perceive these sales as a reflection of management’s view of the business, which may result in some stockholders selling their shares of our common stock. These sales also could adversely affect the value of our common stock.
Volatility of our Stock Price Could Adversely Affect Current and Future Stockholders.
The market price of our common stock is likely to fluctuate widely in response to various factors which are beyond our control. The price of our common stock is not necessarily indicative of our operating performance or long-term business prospects. In addition, the securities markets have periodically experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock. Factors that could cause the market price to fluctuate substantially include, among others:
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our ability or inability to execute our business plan; |
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the dilutive effect or perceived dilutive effect of additional equity financings; |
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investor perception of our company and of the industry; |
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the success of competitive products or technologies; |
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regulatory developments in the U.S. or overseas; |
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developments or disputes concerning patents or other proprietary rights; |
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the recruitment or departure of key personnel; or |
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general economic, political and market conditions. |
The stock market in general can often experience extreme price and volume fluctuations. Any such market fluctuations could result in extreme volatility in the price of our common stock, which could cause a decline in the value of our common stock. Price volatility could be worse if the trading volume of our common stock is low.
Notification, Negotiation, and Participation Rights We Provided to Smith+Nephew May Impact our Ability to License the Aurix Product to or Enter into a Business Combination with a Third Party, or our Ability to Sell Equity Securities during the Term of the Distribution Agreement.
Among the terms of the Distribution Agreement, we provided to Smith+Nephew for a period of 18 months a right of notification, and a right of first negotiation for 45 days, in the event we receive a proposal from another party for (a) the license, assignment, transfer, or disposal of our Aurix product or related products, or (b) a business combination that we submit or recommend to our stockholders. Under the Distribution Agreement, we also provided to Smith+Nephew a right of notification and participation in any proposed sale of our equity securities. There can be no assurance whether we will receive a proposal or offer, or consummate a relevant transaction, during the 18-month period through September 2026. There also can be no assurance whether we seek to sell equity securities during the term of the Distribution Agreement. The existence of these rights may adversely impact whether we receive licensing or similar proposals, whether we receive a business combination offer, or whether we seek to sell equity securities. Even if we receive such a proposal or offer, or sell securities, the existence of these rights held by Smith+Nephew may adversely affect the price and terms of such a proposal, offer, or transaction, and the willingness of and timing for us or other parties to complete such a proposal, offer, or transaction.
ITEM 1B. Unresolved Staff Comments
Not applicable.
We have implemented an information security management system in accordance with our risk profile and business that is designed to protect the Company from cybersecurity threats. As our business operations grow, we plan to develop a more robust and detailed strategy for cybersecurity in alignment with nationally accepted standards.
Our principal executive offices are located in a leased space at 8285 El Rio Street, Suite 190, Houston, TX 77054.
The Company does not own any real property and does not intend to invest in any real property in the foreseeable future.
There are currently no claims or actions pending against us, the ultimate disposition of which could have a material adverse effect on our results of operations, financial condition, or cash flows.
ITEM 4. Mine Safety Disclosures
Not applicable.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Shares of our common stock trade on the OTCQB tier of the over-the counter market operated by OTC Markets Group, Inc. under the symbol “AURX”. Over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down, or commission, and may not necessarily reflect actual transactions.
Holders
According to information provided by the transfer agent of the Company, there were approximately 800 holders of record of our common stock as of March 10, 2024.
Dividends
We have never paid or declared cash distributions or dividends in our history, and we do not intend to pay cash dividends on our common stock in the foreseeable future. We currently intend to retain all earnings, if and when generated, for reinvestment in our business.
Penny Stock
The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Our common stock may be deemed a “penny stock.” The definition of penny stock under SEC rules generally includes equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, deliver a standardized risk disclosure document, which generally: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of securities’ laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and significance of the spread between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; and develop defines significant terms in the disclosure document or in the conduct of trading in penny stocks. The broker-dealer also must provide to the customer, prior to effecting any transaction in a penny stock, (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitably statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for shares of our common stock.
Issuer Purchases of Equity Securities
None.
Recent Sales of Unregistered Securities
None.
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and related notes appearing elsewhere in this Annual Report. The discussion in this section regarding the Company’s business and operations includes “forward-looking statements”. See “Special Note Regarding Forward-Looking Statements” at the beginning of this Annual Report.
Overview
Nuo is a regenerative therapies company developing and marketing products 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 or the patient’s own) biological therapies for tissue repair and regeneration is part of a transformative clinical strategy designed to improve long-term recovery in complex chronic conditions with significant unmet medical needs.
Our only current commercial offering consists of point of care technology for the safe and effective separation of autologous blood to produce a platelet-based therapy for the chronic wound care market (the "Aurix System"). The Company ceased normal operating activities effective May 1, 2019, as it awaited developments concerning Medicare coverage of the Aurix System under its National Coverage Decision (“NCD”) reconsideration request. Product sales were reinitiated in mid-2022 after the favorable NCD determination was issued in April 2021, the Aurix System supply chain was re-established, and equity capital was accessed in December 2021 via the early exercise of warrants under a warrant modification agreement.
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 with 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. The Distribution Agreement is for an initial term of five years and is renewable for additional two-year terms, subject to provisions for earlier termination.
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 will pay us up to $2,250,000 for distribution rights and in exchange for our establishment and maintenance of reimbursement in certain categories for the Aurix and the Private Label products. Such 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. A portion of the $2,250,000 was previously paid to us during the fiscal period ended March 31, 2025 in connection with entering into an exclusivity period to negotiate 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 limited 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.
Comparison of the Years Ended December 31, 2024 and 2023
The revenue amounts presented in these comparison sections are rounded to the nearest thousand.
Revenue and Gross Profit
Product revenues for the year ended December 31, 2024 totaled approximately $1,365,000 with approximately $1,062,000 of associated gross profit and a resulting gross margin of approximately 78%. Product revenues for the year ended December 31, 2023 totaled approximately $609,000 and associated gross profit for the year was approximately $482,000 with a resulting gross margin of 79%. The approximately 124% increase in product revenues for 2024 versus 2023 is attributable to increased adoption of the Aurix product by hospital facilities and physician providers as product awareness increases.
Operating Expenses
Total operating expenses decreased approximately $131,000 to approximately $3,520,000 comparing the year ended December 31, 2024 to the prior full year 2023 period. The decrease was attributable to decreases of (i) approximately $244,000 in compensation and benefits expense as salary costs related to sales related headcount decreased approximately $250,000 (ii) approximately $81,000 for credit losses provision, and (iii) approximately $35,000 in lease costs as we terminated the lease on our Florida office space in March 2024. These decreases were partially offset by increases of (i) approximately $195,000 in sales commission costs to independent sales representatives and (ii) approximately $55,000 in professional fees.
Interest Expense, net
Interest income, net for the year ended December 31, 2024 of approximately $100 represents net interest income from interest income on excess cash balances slightly in excess of interest expense attributable to the financing of insurance premiums. Interest expense, net for the year ended December 31, 2023 of approximately $3,200 represents the financing costs of insurance premiums in excess of interest income on reduced excess cash balances in 2023.
Other Income (Expense)
Other income for the year ended December 31, 2024 primarily represents the gain of approximately $133,600 realized from the negotiated settlement of legacy accounts payable with third-party vendors including the full release of any ongoing payment liability.
Liquidity and Capital Resources
Overview
As of December 31, 2024, we had cash and cash equivalents of approximately $0.3 million, total current assets of approximately $0.8 million and total current liabilities of approximately $0.6 million. 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 December 31, 2024, our accumulated deficit was approximately $32.3 million and our stockholders’ equity was approximately $0.5 million.
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.
Financing Activities
During the year ended December 31, 2023, we sold 2,442,500 shares of common stock to certain accredited investors pursuant to Securities Purchase Agreements in two private placements which closed in August and December 2023 for proceeds of $1,997,500.
Effective January 1, 2024, pursuant to the provisions of the August 2022 Common Stock and Warrant Purchase Agreement, we issued Pacific Medical 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. The warrant was exercised on June 27, 2024 and we received proceeds of $151,200.
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.
Going Concern
Our continuing losses and limited cash resources raise substantial doubt about our ability to continue as a going concern, and we need to raise substantial 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.
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 at all obtained, may not be adequate to meet our capital needs and to support our operations.
Cash Flows
Net cash provided by (used in) operating, investing, and financing activities for the periods presented were as follows:
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Year Ended December 31, 2024 |
Year Ended December 31, 2023 |
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Cash flows used in operating activities |
$ | (2,231,622 | ) | $ | (3,167,782 | ) | ||
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Cash flows used in investing activities |
$ | (154,962 | ) | $ | (7,244 | ) | ||
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Cash flow provided by financing activities |
$ | 1,741,617 | $ | 1,997,500 | ||||
Operating Activities
Cash used in operating activities for the year ended December 31, 2024 of approximately $2.2 million primarily reflects our net loss of approximately $2.3 million adjusted by the net effect of (i) approximately $0.2 million in total for amortization of right of use assets, depreciation of property and equipment, and stock-based compensation, (iii) approximately $0.1 million in combined provisions for credit losses and inventory obsolescence partially offset by the approximately $0.1 million gain on settlement of legacy accounts payable balances.
Cash used in operating activities for the year ended December 31, 2023 of approximately $3.2 million primarily reflects our net loss of approximately $3.2 million adjusted by an offsetting approximately $0.3 million net change in operating assets and liabilities and (i) approximately $0.1 million in total amortization of right of use assets, property and equipment depreciation, and stock-based compensation and (ii) approximately $0.2 million in combined provisions for credit losses and inventory obsolescence.
Investing Activities
Cash used in investing activities for the year ended December 31, 2024 of approximately $155,000 primarily represents our purchase of centrifuge devices in the amount of approximately $151,000. We had limited investing activities of approximately $7,000 for the year ended December 31, 2023.
Financing Activities
Cash provided by financing activities for the year ended December 31, 2024 of approximately $1.7 million represents proceeds of (i) $1.5 million from two equity private placements that closed in May and September 2024, (ii) $151,000 from the exercise of 270,000 warrants in June 2024, and (iii) approximately $90,000 from the exercise of options in December 2024.
Cash provided by financing activities for the year ended December 31, 2023 of approximately $2.0 million represents proceeds from two equity private placements that closed in August and December 2023.
Inflation
The Company does not believe that inflation has had a material effect on its operations.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements.
Critical Accounting Policies
This Management's Discussion and Analysis of Financial Condition and Results of Operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. A summary of our significant accounting policies is included in Note 2 to the accompanying consolidated financial statements.
A “critical accounting policy” is one that is both important to the portrayal of our financial condition and results of operations and that requires management’s most difficult, subjective, or complex judgments. Such judgments are often the result of a need to make estimates about the effect of matters that are inherently uncertain. There are no accounting policies identified as critical.
Recent Accounting Pronouncements Not Yet Adopted
See the discussion of Recent Accounting Developments in Note 2 - Liquidity and Summary of Significant Accounting Principles.
The Company does not believe that any recently issued effective standards, or standards issued but not yet effective, if adopted, would have a material effect on the accompanying consolidated financial statements.
ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
ITEM 8. Financial Statements and Supplementary Data
The information required pursuant to this Item 8 is incorporated by reference herein to our consolidated financial statements beginning on page F-1 of this Annual Report.
ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.
ITEM 9A. Controls and Procedures
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 Annual Report. The term “disclosure controls and procedures,” as set forth in Rules 13a-15(e) and 15d-15(e) under 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 Annual Report, we concluded that, as of such date, our disclosure controls and procedures were not effective due to the existence of the material weaknesses in the Company’s internal control over financial reporting 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 Annual Report were not effective, and notwithstanding the material weaknesses in our internal control over financial reporting described below, management believes that the consolidated financial statements and related financial information included in this Annual 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.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Our management conducted an assessment of our internal control over financial reporting as set forth in Item 308(a) of Regulation S-K promulgated under the Exchange Act and Section 404 of the Sarbanes-Oxley Act as of the end of the end of the period covered by this Annual Report. Based on this assessment, our management concluded that our internal control over financial reporting was ineffective due to the continuing material weakness in our internal control over financial reporting described below under “Material Weaknesses” and “Remediation Plan.”
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 this Form 10-K and the consolidated financial statements and related disclosures herein, 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 in Annual Report on Form 10-K for the fiscal year ended December 31, 2022, we 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 us from maintaining appropriately designed, and monitoring the effectiveness of, internal control over financial reporting.
Remediation Plan
Since 2022, we have engaged outside consultants to assist with various accounting and financial reporting matters and we will continue assessing the need for hiring additional internal accounting and third-party financial reporting resources. As we continue to obtain additional financial resources and as we continue to 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 continue to 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
Other than as described above, there were no changes in our internal control over financial reporting during the fiscal quarter ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Rule 10b5-1 Plans
During the year ended December 31, 2024, of our directors or executive officers adopted, modified or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement" as such terms are defined under Item 408 of Regulation S-K.
Entry into a Material Definitive Agreement
On March 31, 2025, we entered into a Distribution Agreement (the “Distribution Agreement”) with Smith & Nephew, Inc (“Smith+Nephew”), a U.S. affiliate of Smith & Nephew PLC, a global medical technology company. Under the Distribution Agreement, we will supply to 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 brand Aurix 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 will 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 first date of 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 will pay us up to $2,250,000 for distribution rights and in exchange for our establishment and maintenance of reimbursement in certain categories for the Aurix and the Private Label products. Such 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 sales agents for the Aurix product. The Distribution Agreement also contains other standard and negotiated terms and conditions including non-solicitation of each parties’ customers based on identified customer lists, and liability and indemnity clauses.
In connection with entering into the Distribution Agreement, Smith+Nephew obtained certain additional information rights related to Nuo’s business and corporate matters. In particular, we provided to Smith+Nephew a right of notification and a right of first negotiation over a defined period, in the event we receive from another party a proposal for (a) the license, assignment, transfer, or disposal of our Aurix product or related products, or (b) a business combination that we submit or recommend to our stockholders. These rights continue for a limited period of the initial term of the Distribution Agreement. These information rights were agreed upon as binding provisions in a term sheet dated February 11, 2025 that we entered into with Smith+Nephew which resulted in the Distribution Agreement.
The description above of the Distribution Agreement is qualified by reference to the full text of such agreement, a copy of which is filed as Exhibit 10.1 to this Annual Report and incorporated herein.
ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
ITEM 10. Directors, Executive Officers, and Corporate Governance
Set forth below is information regarding the directors and executive officers of the Company. Officers are appointed by, and serve at the pleasure of, the Board of Directors.
|
Name |
Age |
Position |
||
|
David E. Jorden |
62 |
Chief Executive and Financial Officer; Director |
||
|
C. Eric Winzer |
68 |
Independent Director |
||
|
Scott M. Pittman |
66 |
Independent Director |
||
|
Paul D. Mintz, MD |
76 |
Independent Director |
||
|
Peter A. Clausen |
58 |
Chief Scientific and Operating Officer |
David E. Jorden has been Chief Executive and Financial Officer of the Company since July 1, 2016 after serving as Acting Chief Executive Officer effective January 8, 2016 and Acting Chief Financial Officer effective May 2015. Mr. Jorden also serves as Secretary of the Company. He has served as a director since October 2008. Mr. Jorden is also presently serving since June 2013 as Chief Executive Officer for Nanospectra Biosciences, Inc., a private company developing nanoparticle directed photothermal ablation technology of solid tumors. From 2003 to 2008, he was with Morgan Stanley’s Private Wealth Management group where he was responsible for equity portfolio management. Prior to Morgan Stanley, Mr. Jorden served as Chief Financial Officer for Genometrix, Inc., a private genomics/life sciences company focused on high-throughput microarray applications. Mr. Jorden was previously a principal with Fayez Sarofim & Co. Mr. Jorden has a MBA from Northwestern University’s Kellogg School and a B.B.A. from University of Texas at Austin. He is a Chartered Financial Analyst and previously held a Certified Public Accountant designation.
Mr. Jorden was chosen to serve on the Board in part because of his extensive financial experience, particularly in the life sciences industry. As our current Chief Executive and Financial Officer, he provides the Board with critical insight into the day-to-day operations of the Company.
C. Eric Winzer has served as director since January 30, 2009. Mr. Winzer has over 30 years of experience in addressing diverse financial issues including raising capital, financial reporting, investor relations, banking, taxation, mergers and acquisitions, financial planning and analysis, and accounting operations. Mr. Winzer has been the Chief Financial Officer at Immunomic Therapeutics, Inc., a privately-held clinical stage biotechnology company, since May 2015. From June 2009 to April 2015 Mr. Winzer served as the Principal Accounting Officer, Senior Vice President of Finance, and Chief Financial Officer for OpGen Inc. (OPGN), a precision medicine company that went public in May 2015. Before his tenure with OpGen Inc., Mr. Winzer held multiple executive positions at Avalon Pharmaceuticals, Inc. (AVRX) including serving as its Chief Financial Officer and Executive Vice President, Principal Accounting Officer, and Secretary. Before joining Avalon Pharmaceuticals, Mr. Winzer held numerous senior financial positions over twenty years at Life Technologies Corporation (LIFE) (now part of Thermo Fisher Scientific (TMO)) and its predecessor companies, Invitrogen (IVGN) and Life Technologies, Inc. (LTEK). From 1980 to 1986, Mr. Winzer held various financial positions at Genex Corporation. Mr. Winzer holds a B.A. in Economics and Business Administration from Western Maryland College (now McDaniel College) and an M.B.A. from Mount Saint Mary's University.
Mr. Winzer was chosen to serve as a director of the Company in part because of his executive experience in the life sciences industry and his substantial financial knowledge and expertise.
Scott M. Pittman has served as a director since May 5, 2016. Mr. Pittman has over 30 years in hospital executive management. Since 2014, he has served in operational and business development roles for, and currently is Senior Vice President of, Buchanan General Hospital. Since 2010, he has been a Registered Representative with Calton & Associates. From 2001 to 2009, he was a hospital CEO with Adventist Health Systems. During 1989 to 2001, he was a hospital executive and system COO for Princeton Community Hospital Assoc. Mr. Pittman has developed several multi-million-dollar hospital and program service expansions, healthcare entity acquisitions and mergers, and served on state and regional health planning organizations. He is a magna cum laude graduate of Southwestern Adventist University with B.A. and B.S. Degrees in Business and Finance, and a Masters of Hospital Administration from Medical College of Virginia.
Mr. Pittman was chosen to serve as a director of the Company in part because of his extensive experience as a hospital administration executive.
Paul D. Mintz, MD has served as a director since April 7, 2017. Dr. Mintz is a consultant in the fields of transfusion medicine and other biotherapies. He most recently served as Senior Vice President and Chief Medical Officer of Verax Biomedical, Inc., (Verax Biomedical). Prior to joining Verax Biomedical in early 2016, Dr. Mintz served as Director, Division of Hematology Clinical Review, Office of Blood Research and Review, Center for Biologics Evaluation and Research of the U.S. Food and Drug Administration from 2011 to 2016. Prior to that, for more than 30 years, Dr. Mintz was a member of the faculty of the University of Virginia, School of Medicine, where he was a tenured Professor of Pathology and Internal Medicine. He also served as Vice-Chair of Pathology and Chief of the Division of Clinical Pathology, and as Medical Director of the Clinical Laboratories and Transfusion Medicine Services at the University of Virginia Health System. In addition, Dr. Mintz served as Co-Medical Director of Virginia Blood Services. He served as a director of Immucor, Inc. (BLUD) from 2009 to 2011. Dr. Mintz is a former President of the American Association of Blood Banks (now the Association for the Advancement of Blood and Biotherapies), or AABB, served on AABB’s Board of Directors for nine years, and chaired and was a member of numerous AABB committees. He has also served as a member of the Board of Trustees of the National Blood Foundation. A recipient of a Transfusion Medicine Academic Award from the National Heart, Lung and Blood Institute, Dr. Mintz was an inaugural inductee into the National Blood Foundation Hall of Fame. He has served as a member of the Medicare Coverage Advisory Committee of CMS. Dr. Mintz is author or co-author of more than 100 articles and editorials spanning clinical practice, blood safety and the evaluation of new transfusion medicine technologies and has designed and served as principal investigator for numerous clinical trials. He is the sole editor of the first three editions of Transfusion Therapy: Clinical Principles and Practice (AABB Press) and has served on several journal editorial boards. Dr. Mintz earned his BA with High Distinction in Philosophy from the University of Rochester and received his MD with Honors from the University of Rochester, School of Medicine.
Dr. Mintz was chosen to serve as a director of the Company based in part on his recognized expertise in clinical practice, his extensive involvement in transfusion medicine, transfusion-related clinical trials, and regulatory leadership experience.
Peter A. Clausen has been our Chief Scientific and Operating Officer since January 1, 2022. He previously was appointed as the Chief Scientific Officer on March 30, 2014 and served in that position until December 31, 2019. He originally joined the Company in September 2008 and has more than 20 years of experience in the biotechnology industry. Dr. Clausen served as a Senior Product manager within the orthobiologics division at Arthrex Inc. from March 2020 to October 2021 where he was responsible for the development and launch of autologous biologics used to treat inflammatory mediated connective tissue disease. Prior to originally joining the Company, he was a founding member and Vice President of Research and Development at Marligen Bioscience, where he developed and commercialized innovative genomic and protein analysis products for the life sciences market. Dr. Clausen was the Manager of New Purification Technologies at Life Technologies and the Invitrogen Corporation. He also has significant experience within the commercial biotechnology industry developing peptide and small molecule therapeutics for application in the areas of inflammatory mediated disease and stem cell transplantation. He completed his post-doctoral training at the Laboratory of Molecular Oncology at the National Cancer Institute where his research efforts focused in the areas of oncology, hematopoiesis, and gene therapy. Dr. Clausen earned Ph.D. in Biochemistry from Rush University in Chicago and a Bachelor of Science degree in Biochemistry from Beloit College.
There are no family relationships between any of the Company’s executive officers or directors and, other than as disclosed above, there are no arrangements or understandings between a director and any other person pursuant to which such person was elected as director.
Corporate Governance
Each director holds office for the term for which he or she is elected or until his or her successor is duly elected. The Company has not made any material changes to the procedures by which stockholders may recommend nominees to the Board of Directors of the Company since 2022.
Audit Committee Financial Expert
The Board has established an Audit Committee in accordance with section 3(a)(58)(A) of the Exchange Act. The Audit Committee currently is comprised of Mr. Winzer, Dr. Mintz, and Mr. Pittman. The Board has determined that Mr. Winzer is independent and is an audit committee financial expert as defined by Item 407(d)(5) of Regulation S-K. The Company applies Nasdaq Stock Market corporate governance requirements and standards in determining director and Audit Committee independence.
Code of Conduct and Ethics
The Board has adopted a Code of Conduct and Ethics applicable to all directors, officers, and employees in accordance with Item 406 of Regulation S-K. A copy of this Code of Conduct and Ethics is available on our website at www.nuot.com.
Insider Trading Policy
We have adopted insider trading policies and procedures governing the purchase, sale, and/or other dispositions of the Company’s securities applicable to our directors, officers, and employees that we believe are reasonably designed to promote compliance with insider trading laws, rules, and regulations. Our insider trading policy, among other things, (a) prohibits our directors, officers, and employees, and related persons and entities, from trading in our securities and securities of certain other companies while in possession of material nonpublic information, (b) prohibits our directors, officers, and employees from disclosing material, nonpublic information about the Company to others who may trade on the basis of that information, and (c) requires that our directors, executive officers, and employees only transact in our securities during a specified window period, subject to limited exceptions. It is also our policy that the Company itself will not engage in transactions in our securities, except in compliance with applicable securities laws. A copy of our insider trading policy is filed as Exhibit 19.1 to this Annual Report.
ITEM 11. Executive Compensation
This following table presents information regarding compensation paid to our named executive officers for the fiscal years ended December 31, 2024 and 2023.
Summary Compensation Table
|
Name and Principal Position |
Year |
Salary |
Bonus |
Option and Equity Awards |
All Other Compensation |
Total |
|||||||||||||||
|
David E. Jorden |
2024 |
$ | 225,000 | $ | - | $ | - | $ | - | $ | 225,000 | ||||||||||
|
Chief Executive and Financial Officer |
2023 |
$ | 225,000 | $ | - | $ | - | $ | - | $ | 225,000 | ||||||||||
|
Peter A. Clausen |
2024 |
$ | 210,000 | (a) | $ | - | $ | - | $ | - | $ | 210,000 | |||||||||
|
Chief Scientific and Operating Officer |
2023 |
$ | 225,000 | $ | - | $ | - | $ | - | $ | 225,000 | ||||||||||
|
(a) |
Effective January 1, 2024, Dr. Clausen voluntarily reduced his salary by $15,000 to enable a salary increase for certain other Company employees. |
Employment Agreements
On May 9, 2022, the Company entered into an employment agreement effective April 1, 2022 with David Jorden, the Company’s Chief Executive and Financial Officer. The employment agreement provides for a base salary to Mr. Jorden of Two Hundred Twenty-Five Thousand Dollars ($225,000) per year and, as determined by the Compensation Committee, an annual bonus of up to 50% of such base salary. The employment agreement with Mr. Jorden also provides, upon certain circumstances, for a severance payment to him of twelve months base salary as in effect at the time upon termination of services, including due to a change in control of the Company. The terms of the employment agreement with Mr. Jorden contain other customary provisions.
On May 9, 2022, the Company also entered into an employment agreement effective January 1, 2022 with Peter Clausen, the Company’s Chief Scientific Officer and Chief Operating Officer. The employment agreement provides for a base salary to Dr. Clausen as of May 1, 2022 of Two Hundred Twenty-Five Thousand Dollars ($225,000) per year and, as determined by the Compensation Committee, an annual bonus of up to 50% of such base salary. Effective January 1, 2024, Dr. Clausen voluntarily reduced his salary by $15,000 to enable a salary increase for certain other Company employees. The Company anticipates that Dr. Clausen’s voluntary salary reduction will continue until the Company becomes cash flow positive. The employment agreement with Dr. Clausen also provides, upon certain circumstances, for a severance payment to him of twelve months base salary as in effect at the time upon termination of services, including due to a change in control of the Company. The terms of the employment agreement with Dr. Clausen contain other customary provisions.
The descriptions above of the employment agreements for Mr. Jorden and Dr. Clausen are qualified by reference to the full text of such employment agreements, copies of which are incorporated by reference as exhibits to this Annual Report.
The Company does not provide any pension plans/benefits or non-qualified deferred compensation.
Outstanding Equity Awards
The following table sets forth the outstanding equity awards held by our named executive officers as of December 31, 2024.
Outstanding Equity Awards at December 31, 2024
|
Name |
Number of Securities Underlying Unexercised Options Exercisable |
Number of Securities Underlying Unexercised Options Unexercisable |
Option Exercise Price |
Option Expiration Date |
|||||||||
|
David E. Jorden |
162,500 | (a) | - | $ | 1.00 |
6/30/2026 |
|||||||
| 192,710 | (b) | - | $ | 0.40 |
8/8/2025 |
||||||||
| 125,000 | (c) | - | $ | 0.40 |
12/31/2025 |
||||||||
| 66,672 | (d) | - | $ | 0.50 |
03/03/2032 |
||||||||
| 125,000 | (e) | - | $ | 0.75 |
03/03/2032 |
||||||||
|
Peter A. Clausen |
183,853 | (b) | - | $ | 0.40 |
8/8/2025 |
|||||||
| 81,250 | (c) | - | $ | 0.40 |
12/31/2025 |
||||||||
| 43,228 | (d) | - | $ | 0.50 |
03/03/2032 |
||||||||
| 275,000 | (f) | - | $ | 0.75 |
03/03/2032 |
||||||||
|
(a) |
62,500 vested immediately upon the January 9, 2017 date of grant, 50,000 vested on March 31, 2017, and 50,000 vested on December 31, 2017. |
|
(b) |
Fully vested upon the August 9, 2018 date of grant in settlement of $77,083 and $73,541 of accrued compensation liabilities for Mr. Jorden and Dr. Clausen, respectively. |
|
(c) |
Fully vested upon the March 4, 2022 date of grant in settlement of $50,000 and $32,500 of accrued compensation liabilities for Mr. Jorden and Dr. Clausen, respectively. |
|
(d) |
Fully vested upon the March 4, 2022 date of grant in settlement of $33,336 and $21,614 of accrued compensation liabilities for Mr. Jorden and Dr. Clausen, respectively. |
|
(e) |
Fully vested upon the March 4, 2022 date of grant. |
|
(f) |
One-third vested immediately upon the March 4, 2022 date of grant and the remainder vested quarterly over three years. |
Potential Payments Upon Termination or Change of Control
The May 9, 2022 employment agreements described above of each of Mr. Jorden and Dr. Clausen provides, upon certain circumstances, for a severance payment of twelve months of his base salary as in effect at the time upon termination of services, including due to a change in control of the Company.
In addition, on August 9, 2024, the Company entered into Change in Control Agreements with four employees, including Mr. Jorden and Dr. Clausen. The Change in Control Agreements provide additional financial incentive to the employees to maximize stockholder value in connection with any future change in control transaction. Pursuant to the Change in Control Agreements, upon a change in control by which any person or group of persons becomes beneficial owner of at least 80% of the then outstanding voting securities of the Company or a sale of all or substantially all the assets of the Company, the employees will receive lump sum cash payments in the aggregate of up to $3,000,000 depending on the change in control acquisition value. In particular, for each of Mr. Jorden and Mr. Clausen, unless he does not significantly participate in effectuating the change in control, he will receive a payment of 0.15% of a change in control acquisition value between $40,000,000 and $60,000,000, approximately 0.35% of a change in control acquisition value between $60,000,001 and $85,000,000, or a maximum of $300,000 for a change in control acquisition value above $85,000,000. Acquisition value, including deductions, will be determined as described in the Change in Control Agreements. The Change in Control Agreements terminate on December 31, 2025, unless otherwise extended by the parties, and contains other customary provisions. The description of the Change in Control Agreements for Mr. Jorden and Dr. Clausen is qualified by reference to the full text of such agreements, copies of which are incorporated by reference as exhibits to this Annual Report.
Director Compensation in 2024
The following table sets forth, for the fiscal year ended December 31, 2024, the cash and non-cash compensation of our non-executive directors.
|
Fees Earned or Paid in Cash (a) |
Option and Equity Awards (b) |
Total | ||||||||||
|
Name |
2024 |
2024 |
2024 |
|||||||||
|
C. Eric Winzer |
$ | - | $ | 8,669 |
(c)
|
$ | 8,669 | |||||
|
Scott M. Pittman |
$ | - | $ | 8,669 |
(c)
|
$ | 8,669 | |||||
|
Paul D. Mintz, MD |
$ | - | $ | 5,418 |
(c)
|
$ | 5,418 | |||||
|
(a) |
Effective May 1, 2019, concurrent with the Company's decision to furlough its remaining employees, the Board ceased its cash fees for its service and has not since reinstituted such fees. |
|
(b) |
Represents the grant date fair value of the common stock options issued during the fiscal year indicated, calculated in accordance with FASB ASC Topic 718. The fair value was estimated using the assumptions detailed in Note 2 - Liquidity and Summary of Significant Accounting Principles to the Company’s consolidated financial statements included in this Annual Report. |
|
(c) |
On July 17, 2024, the Board granted 40,000 options to Mr. Winzer and Mr. Pittman and 25,000 options to Dr. Mintz. The options fully vest on the one-year anniversary of the grant date with an exercise price of $0.33. |
Equity Grant Practices
We do not have any formal policy that requires us to grant, or avoid granting, stock options at particular times. The Company has a small number of employee and directors. The Board and its Compensation, Nominating and Governance Committee grant stock option awards throughout the year based upon its determination of the Company’s and an individual grantee’s performance, and other relevant factors. During the period covered by this report, we did not grant any stock options to executive officers. We do not intend to time the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Beneficial Ownership Table
The following tables set forth information regarding the beneficial ownership of shares of our common stock as of date indicated by (i) each director; (ii) each of the named executive officers, as identified under “Summary Compensation Table” in Item 11 above; (iii) all directors and executive officers as a group and (iv) principal stockholders known by the Company to be beneficial owners of more than five percent of our common stock.
Beneficial ownership is determined in accordance with the rules of the SEC. Except as otherwise noted, below, each named beneficial owner known to the Company has sole voting and investment power with respect to the shares listed. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of our common stock that could be issued upon the exercise of outstanding options or warrants held by that person that are exercisable at the date indicated or within 60 days thereof are considered outstanding; however, these shares are not considered outstanding when computing the percentage ownership of any other person.
Except as otherwise noted below, the address for each person or entity listed in the table is c/o Nuo Therapeutics, Inc., 8285 El Rio, Suite 190, Houston, TX 77054.
As of March 10, 2025
|
Beneficial Ownership (1) |
||||||||
|
Beneficial Owner |
Number of |
Percent of |
||||||
|
Directors and Named Executive Officers |
||||||||
|
David E. Jorden (2) |
2,647,240 | 5.6 | % | |||||
|
C. Eric Winzer (3) |
365,729 | * | ||||||
|
Scott M. Pittman (4) |
5,536,054 | 11.8 | % | |||||
|
Paul D. Mintz (5) |
257,916 | * | ||||||
|
Peter A. Clausen (6) |
1,173,106 | 2.5 | % | |||||
|
All Directors and Executive Officers as a Group (5 persons) (7) |
9,980,045 | 20.4 | % | |||||
|
Principal Stockholders |
||||||||
|
Charles E. Sheedy (8) |
11,440,865 | 24.4 | % | |||||
|
Boyalife Asset Holding II, Inc. (9) |
4,900,000 | 10.5 | % | |||||
|
Paul Anthony Jacobs (10) |
2,800,000 | 6.0 | % | |||||
|
* |
Less than 1% |
|
(1) |
Based on 46,816,114 shares of common stock outstanding. |
|
(2) |
Includes 671,882 shares issuable upon exercise of options. |
|
(3) |
Includes 340,729 shares issuable upon exercise of options. |
|
(4) |
Includes 140,000 shares issuable upon exercise of options. |
|
(5) |
Represents shares issuable upon exercise of options. |
|
(6) |
Includes 583,431 shares issuable upon exercise of options. |
|
(7) |
Includes 1,993,958 shares issuable upon the exercise of options. |
|
(8) |
Based upon information available to the Company and information contained in Schedule 13D/A filed with the SEC on July 5, 2022 with respect to the beneficial ownership of shares of common stock as of July 5, 2022. According to the Schedule 13D/A, Mr. Sheedy shares voting and dispositive power with respect to 3,365 shares held in trusts for the benefit of Mr. Sheedy’s children. The mailing address of Mr. Sheedy is Two Houston Center, Suite 2907, 909 Fannin Street Houston, TX 77010. |
|
(9) |
Based upon information available to the Company and information contained in Schedule 13D/A filed with the SEC on September 21, 2017 with respect to the beneficial ownership of shares of common stock as of September 11, 2017. The mailing address of Boyalife Asset Holding II, Inc. is 2711 Citrus Road, Sacramento, CA 95742. |
|
(10) |
Based upon information contained in Schedule 13G/A filed with the SEC on October 22, 2024 with respect to the beneficial ownership of shares of common stock as of September 30, 2024. According to the Schedule 13G/A, Paul Anthony Jacobs has sole voting and dispositive power of 2,800,000 shares comprised of 2,550,000 shares held by Paul Anthony Jacobs as Trustee of the Paul Anthony Jacobs and Nancy E. Jacobs Joint Revocable Trust dated October 16, 1997 (Survivor’s Trust) and 250,000 shares held by P. Anthony Jacobs IRA. The mailing address of Mr. Jacobs is 5434 E. Lincoln Drive, Colonia Miramonte #28, Paradise Valley, AZ 85253 |
Securities Authorized for Issuance under Equity Compensation Plans
During the period covered by this Annual Report and currently, the sole equity compensation plan of the Company has been the Nuo Therapeutics, Inc. 2016 Omnibus Incentive Compensation Plan (the “Omnibus Plan”). Refer to Note 6 - Equity and Stock-Based Compensation in the Notes to the Consolidated Financial Statements in this Annual Report for additional information about our equity compensation plans and arrangements.
The following table sets forth information regarding the Omnibus Plan as of December 31, 2024.
|
Plan category |
Number of warrants, |
Weighted average warrants, |
Number of remaining future |
|||||||||
|
Equity compensation plans approved by security holders |
3,258,958 | $ | 0.61 | 991,042 | ||||||||
|
Equity compensation plans not approved by security holders |
— | $ | — | — | ||||||||
|
Total |
3,258,958 | $ | 0.61 | 991,042 | ||||||||
ITEM 13. Certain Relationships and Related Transactions, and Director Independence
Transactions with Related Persons
Except as set forth below, we were not involved in any related person transactions since the beginning of 2023, and we are not involved in any related person transaction currently, that is required to be disclosed under Item 404(d) of Regulation S-K.
2023 Private Placements
On August 1, 2023, the Company entered into a Securities Purchase Agreement, dated as of July 26, 2023, with certain accredited investors for the sale of 517,500 shares of the Company’s common stock at a price of $2.00 per share for proceeds of $1,035,000 (the “August Private Placement”). The closing of the August Private Placement also occurred on August 1, 2023. The investors in the August Private Placement included Scott M. Pittman, a member of the Board of Directors of the Company, Peter A. Clausen, the Chief Scientific and Operating Officer of the Company, and Charles E. Sheedy, a principal stockholder of the Company. Messrs. Pittman, Clausen, and Sheedy invested $200,000, $50,000, and $125,000, respectively, in the August Private Placement.
On December 18, 2023, the Company entered into a Securities Purchase Agreement, dated as of December 7, 2023, with certain accredited investors for the sale of 1,925,000 shares of the Company’s common stock at a price of $0.50 per share for proceeds of $962,500 (the “December Private Placement”). The closing of the December Private Placement occurred on December 19, 2023. The investors in the December Private Placement included Scott M. Pittman, Peter A. Clausen, and Charles E. Sheedy. Messrs. Pittman, Clausen, and Sheedy invested $300,000, $10,000, and $75,000, respectively, in the December Private Placement.
2024 Private Placements
On May 17, 2024, the Company entered into a Securities Purchase Agreement, dated as of May 10, 2024, with certain accredited investors for the sale of 867,833 shares of the Company’s common stock at a price of $0.75 per share for proceeds of $650,875 (the “May Private Placement”). The closing of the May Private Placement occurred on May 20, 2024. The investors in the May Private Placement included Scott M. Pittman, a member of the Board of Directors of the Company, Peter A. Clausen, the Chief Scientific and Operation Officer of the Company, and Charles E. Sheedy, a principal stockholder of the Company. Messrs. Pittman, Clausen, and Sheedy invested $101,250, $11,250, and $75,000, respectively in the May Private Placement.
On September 18, 2024, the Company entered into a Securities Purchase Agreement, dated as of September 13, 2024, with certain accredited investors for the sale of 1,132,167 shares of the Company’s common stock at a price of $0.75 per share for proceeds of $849,125 (the “September Private Placement”). The closing of the September Private Placement occurred on September 19, 2024. The investors in the September Private Placement included Charles E. Sheedy, a principal stockholder of the Company. Mr. Sheedy invested $93,750 in the September Private Placement.
Director Independence
The Company’s current directors are David E. Jorden, C. Eric Winzer, Scott M. Pittman, and Paul D. Mintz. The Board has chosen to apply Nasdaq Stock Market corporate governance requirements and standards in determining director independence. The Board has determined that all of the Company’s current directors meet such independence requirements with the exception of Mr. Jorden, who serves as the Chief Executive and Financial Officer of the Company.
ITEM 14. Principal Accounting Fees and Services
Since June 7, 2024, MaloneBailey LLP has been our independent registered public accounting firm. Previously beginning August 9, 2018, Marcum LLP had been our independent registered public accounting firm. The following table presents fees for professional services rendered by our principal accountants for the fiscal years 2024 and 2023:
|
2024 |
2023 |
|||||||
|
Audit Fees (1) |
$ | 135,000 | 155,000 | |||||
|
Audit-Related Fees |
– | – | ||||||
|
Tax Fees |
– | – | ||||||
|
All Other Fees |
– | – | ||||||
|
(1) |
Audit fees represent fees accrued and/or paid for annual professional services provided in connection with the audit of the Company’s annual financial statements, reviews of its quarterly financial statements, audit services provided in connection with statutory and regulatory filings for those years and fees related to non-routine SEC filings. In 2024, our audit fees paid to Marcum LLP totaled approximately $28,000 for review of our quarterly financial statements in early 2024 while MaloneBailey LLP was paid approximately $106,000 subsequent to their June 2024 engagement. |
Pursuant to its charter, the Audit Committee must pre-approve audit services and permitted non-audit services (including the fees and terms thereof) to be performed for the Company by its independent auditors. The Audit Committee may, when appropriate, form and delegate authority to subcommittees consisting of one or more members of the Audit Committee, including the authority to grant pre-approvals of audit and permitted non-audit services, provided that decisions of such subcommittee to grant pre-approvals shall be presented to the full Audit Committee at its next scheduled meeting.
All audit services and permitted non-audit services were pre-approved by the Audit Committee.
ITEM 15. Exhibits and Financial Statement Schedules
|
(a)(1) |
Financial Statements |
See the Index to Consolidated Financial Statements at page F-1 of this Annual Report:
|
(a)(2) |
Financial Statement Schedules |
Financial statement schedules have been omitted since they either are not required, not applicable, or the information is otherwise included in our consolidated financial statements or the related footnotes.
|
(a)(3) |
Exhibits |
|
* |
Indicates a management contract or compensatory plan or arrangement. |
| # | Certain portions have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K by means of marking such portions with brackets (“[****]”) because the identified confidential portions are not material and are the type of information that the Registrant treats as private or confidential. |
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
NUO THERAPEUTICS, INC. |
||
|
Date: April 1, 2025 |
By: |
/s/ David E. Jorden |
|
David E. Jorden |
||
|
Chief Executive and Financial Officer and Director |
||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
|
Date: April 1, 2025 |
/s/ David E. Jorden |
|
David E. Jorden |
|
|
Chief Executive and Financial Officer and Director |
|
|
(Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer) |
|
|
Date: April 1, 2025 |
/s/ Paul D. Mintz |
|
Paul D. Mintz |
|
|
Director |
|
|
Date: April 1, 2025 |
/s/ C. Eric Winzer |
|
C. Eric Winzer |
|
|
Director |
|
|
Date: April 1, 2025 |
/s/ Scott M. Pittman |
|
Scott M. Pittman |
|
|
Director |
NUO THERAPEUTICS, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
|
Audited Financial Statements |
|
|
Report of Independent Registered Public Accounting Firm (PCAOB Firm ID No. |
|
| Report of Independent Registered Public Accounting Firm (PCAOB Firm ID No. 688) | F-3 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of
Nuo Therapeutics, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Nuo Therapeutics, Inc. (the “Company”) as of December 31, 2024, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
Going Concern Matter
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations that raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgements. We determined that there are no critical audit matters.
/s/
www.malonebailey.com
We have served as the Company's auditor since 2024.
April 1, 2025
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of
Nuo Therapeutics, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Nuo Therapeutics, Inc. (the “Company”) as of December 31, 2023, the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for the year ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and the results of its operations and its cash flows for the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph – Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 2 to the financial statements, the Company has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
/s/ Marcum LLP
Marcum LLP
We served as the Company’s auditor from 2017 to 2024.
Houston, Texas
April 19, 2024
|
Consolidated Balance Sheets |
|
December 31, |
December 31, |
|||||||
|
2024 |
2023 |
|||||||
|
Assets |
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|
Current assets |
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Cash |
$ | $ | ||||||
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Accounts receivable, net |
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Inventory, net |
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Prepaid expenses and other current assets |
||||||||
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Total current assets |
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Property and equipment, net |
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Operating lease right of use assets |
||||||||
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Total assets |
$ | $ | ||||||
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Liabilities and Stockholders' Equity |
||||||||
|
Current liabilities |
||||||||
|
Accounts payable |
$ | $ | ||||||
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Accrued expenses |
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|
Current portion of operating lease liabilities |
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|
Total current liabilities |
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Non-current portion of operating lease liabilities |
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Total liabilities |
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Commitments and contingencies (Note 9) |
|
|
||||||
|
Stockholders' Equity |
||||||||
|
Common stock; $ |
||||||||
|
Additional paid-in capital |
||||||||
|
Accumulated deficit |
( |
) | ( |
) | ||||
|
Total stockholders' equity |
||||||||
|
Total liabilities and stockholders' equity |
$ | $ | ||||||
|
Consolidated Statements of Operations |
|
Year ended December 31, |
||||||||
|
2024 |
2023 |
|||||||
|
Revenue |
||||||||
|
Product sales |
$ | $ | ||||||
|
Total revenue |
||||||||
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Costs of sales |
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Gross profit |
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|
Operating expenses |
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Selling, general and administrative |
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Total operating expenses |
||||||||
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Loss from operations |
( |
) | ( |
) | ||||
|
Other income (expense) |
||||||||
|
Interest income (expense), net |
( |
) | ||||||
|
Gain on settlement of legacy accounts payable obligations |
||||||||
|
Other income |
||||||||
|
Loss before benefit for income taxes |
( |
) | ( |
) | ||||
|
Net loss |
$ | ( |
) | $ | ( |
) | ||
|
Net loss per share – basic and diluted |
$ | ( |
) | $ | ( |
) | ||
|
Weighted average shares outstanding – basic and diluted |
||||||||
|
Consolidated Statements of Changes in Stockholders' Equity |
For the Years Ended December 31, 2024 and 2023
|
Common Stock |
|
|||||||||||||||||||
|
Shares |
Amount (par $0.0001) |
Additional Paid-in Capital |
Accumulated Deficit |
Total Stockholders' Equity |
||||||||||||||||
|
Balance, December 31, 2022 |
( |
) | ||||||||||||||||||
|
Share-based compensation expense |
- | |||||||||||||||||||
|
Issuance of common stock for cash proceeds |
||||||||||||||||||||
|
Net loss |
- | ( |
) | ( |
) | |||||||||||||||
|
Balance, December 31, 2023 |
$ | $ | $ | ( |
) | $ | ||||||||||||||
|
Share-based compensation expense |
- | |||||||||||||||||||
|
Issuance of common stock for cash proceeds |
||||||||||||||||||||
|
Issuance of common stock for warrant exercise |
||||||||||||||||||||
|
Issuance of common stock for cashless warrant exercise |
( |
) | ||||||||||||||||||
|
Issuance of common stock for option exercise |
||||||||||||||||||||
|
Net loss |
- | ( |
) | ( |
) | |||||||||||||||
|
Balance, December 31, 2024 |
$ | $ | $ | ( |
) | $ | ||||||||||||||
Consolidated Statements of Cash Flows
|
Year ended December 31, |
||||||||
|
2024 |
2023 |
|||||||
|
CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||
|
Net loss |
$ | ( |
) | $ | ( |
) | ||
|
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
|
Stock-based compensation |
||||||||
|
Provision for credit losses |
||||||||
|
Provision for inventory obsolescence |
||||||||
|
Gain on settlement of accounts payable |
( |
) | ||||||
|
Depreciation expense |
||||||||
|
Amortization of operating lease right of use assets |
||||||||
|
Changes in operating assets and liabilities: |
||||||||
|
Accounts receivable, net |
( |
) | ( |
) | ||||
|
Inventory, net |
||||||||
|
Prepaid expenses and other current assets |
||||||||
|
Accounts payable |
( |
) | ( |
) | ||||
|
Accrued liabilities |
||||||||
|
Operating lease liabilities |
( |
) | ( |
) | ||||
|
Net cash used in operating activities |
( |
) | ( |
) | ||||
|
CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||
|
Purchases of property and equipment |
( |
) | ( |
) | ||||
|
Net cash used in investing activities |
( |
) | ( |
) | ||||
|
CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||
|
Net proceeds from issuance of common stock |
||||||||
|
Net proceeds from warrant issuance |
||||||||
|
Net proceeds from option exercise |
||||||||
|
Net cash provided by financing activities |
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|
NET DECREASE IN CASH |
( |
) | ( |
) | ||||
|
Cash, beginning of period |
||||||||
|
Cash, end of period |
$ | $ | ||||||
|
RECONCILIATION OF CASH, AND RESTRICTED CASH |
||||||||
|
Cash |
$ | $ | ||||||
|
Restricted cash |
||||||||
|
Cash, and restricted cash, beginning of period |
$ | $ | ||||||
|
SUPPLEMENTAL INFORMATION |
||||||||
|
Cash paid during the period for: |
||||||||
|
Interest |
$ | $ | ||||||
NUO THERAPEUTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – Description of Business
Description of Business
Nuo Therapeutics, Inc. (“Nuo Therapeutics,” the “Company,” “we,” “us,” or “our”) is a Delaware corporation organized in 1998 under the name Informatix Holdings, Inc. In 1999, Autologous Wound Therapy, Inc., an Arkansas Corporation, merged with and into Informatix Holdings, Inc. and the name of the surviving corporation was changed to Autologous Wound Therapy, Inc. In 2000, Autologous Wound Therapy, Inc. changed its name to Cytomedix, Inc. (“Cytomedix”). In 2001, Cytomedix, filed for bankruptcy from which it emerged in 2002 under a Plan of Reorganization. In September 2007, Cytomedix received 510(k) clearance for the Aurix System (“Aurix”), formerly known as the AutoloGel™ System, from the U. S. Food and Drug Administration (“FDA”). In April 2010, Cytomedix acquired the Angel Whole Blood Separation System (“Angel”) and the Angel Business, from Sorin Group USA, Inc. In February 2012, Cytomedix, acquired Aldagen, Inc. (“Aldagen”), a privately held developmental cell-therapy company located in Durham, NC. In 2014, Cytomedix changed its name to Nuo Therapeutics, Inc. In 2016, Nuo filed for and emerged from bankruptcy under Chapter 11. Effective May 1, 2019, we furloughed our remaining employees and ceased standard operational activities as we awaited developments concerning our reconsideration request with the Centers for Medicare & Medicaid Services (“CMS”) regarding Medicare coverage for Aurix. Based on a favorable National Coverage Determination (“NCD”) issued in April 2021, we initiated restart activities for the business beginning in October 2021. Aldagen is a non-operational, wholly owned subsidiary of Nuo.
Note 2 –Liquidity and Summary of Significant Accounting Principles
Liquidity
Since our inception, we have financed our operations by raising debt, issuing equity and equity-linked instruments, and executing licensing arrangements, and to a lesser extent by generating royalties and product revenues. In mid-2019, we ceased ongoing operational activities as we worked to reach a favorable outcome to Medicare reimbursement coverage for the Aurix System. In April 2021, CMS issued an NCD establishing national reimbursement coverage for Aurix when used in chronic non-healing wounds where a diabetes clinical diagnosis exists for the patient. During the year ended December 31, 2024, the Company raised proceeds of (i) $
We have incurred, and continue to incur, recurring losses and negative cash flows. As of December 31, 2024, we have an accumulated deficit of approximately $
The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities in the ordinary course of business. The propriety of using the going-concern basis is dependent upon, among other things, the achievement of future profitable operations, the ability to generate sufficient cash from operations, and potential other funding sources, including cash on hand, to meet our obligations as they become due.
We believe based on the operating cash requirements and capital expenditures expected for the next twelve months that our current resources and projected revenue from sales of Aurix products are insufficient to support our operations for the next 12 months. As such, we believe that substantial doubt about our ability to continue as a going concern exists. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Even assuming we succeed in raising sufficient additional funds in the near future to avoid a cessation of business operations, we require additional capital and will seek to continue financing our operations with external capital for the foreseeable future. Any debt financings may require us to comply with additional onerous financial covenants and restrict our business operations. Our ability to complete additional financings is dependent on, among other things, market reception of the Company and perceived likelihood of success of our business model, the state of the capital markets at the time of any proposed equity or debt offering, state of the credit markets at the time of any proposed loan financing, and on the relevant transaction terms, among other things. We may not be able to obtain additional capital as required to finance our efforts, through equity or debt financing, other transactions, or any combination thereof, on satisfactory terms or at all. Additionally, any such financing, if at all obtained, may not be adequate to meet our capital needs and to support our operations.
Basis of Presentation and Principles of Consolidation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The consolidated financial statements include the accounts of the Company and its wholly owned, controlled, and inactive subsidiary Aldagen. All significant inter-company accounts and transactions are eliminated in consolidation. The Company operates its business in operating segment consisting of reporting unit.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. In the accompanying consolidated financial statements, estimates are used for, but not limited to stock-based compensation, the fair value of common stock and equity-linked and derivative financial instruments, recoverability and depreciable lives of long-lived assets, deferred taxes and associated valuation allowance, the valuation and classification of debt instruments, and allowances for inventory obsolescence and doubtful accounts. Actual results could differ from those estimates.
Credit Concentration
We generate accounts receivable from the sale of our products. Specific customer receivable balances in excess of 10% of total receivables at December 31, 2024 and December 31, 2023 are listed below.
|
December 31, 2024 |
December 31, 2023 |
|||||||
|
Customer A |
|
* |
||||||
|
Customer B |
|
* |
||||||
|
Customer C |
|
|
||||||
|
Customer D |
* |
|
||||||
|
Customer E |
* |
|
||||||
|
Customer F |
* |
|
||||||
* less than 10%
Revenue from significant customers exceeding 10% of total revenues for the years ended December 31, 2024 and December 31, 2023 is listed below. All our revenue in both years was generated within the U.S.
|
Year Ended December 31, 2024 |
Year Ended December 31, 2023 |
||||||
|
Customer B |
|
* |
|||||
|
Customer C |
|
|
|||||
|
Customer F |
* |
|
|||||
|
Customer G |
* |
|
|||||
* less than 10%
Historically, we 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 established vendor relationship.
Cash
When applicable, we consider all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. Cash potentially subjects us to a concentration of credit risk, as approximately $
Accounts Receivables, net
We generate accounts receivables from the sale of the Aurix products and accounts receivable as of December 31, 2024 reflects customer receivables from commercial sales activities.
We provide for an allowance against receivables for estimated losses that may result from a customer’s inability or unwillingness to pay. The Company estimates credit losses expected over the life of its trade receivables and contract assets based on historical information combined with current conditions that may affect a customer’s ability to pay and reasonable and supportable forecasts. While the Company uses various credit quality metrics, it primarily monitors collectability by reviewing the duration of collection pursuits on its delinquent trade receivables and historical write-off trends. Based on the Company’s experience, the customer's delinquency status, which is analyzed periodically, is the strongest indicator of the credit quality of the underlying trade receivables. Accounts are written off against the allowance for doubtful accounts when we determine that amounts are not collectable. Recoveries of previously written-off accounts are recorded when collected. During the years ended December 31, 2024 and 2023, we recorded provisions for credit losses of $
Inventory, net
Our inventory is produced by third-party manufacturers and consists of raw materials and finished goods. Inventory cost is determined on a first-in, first-out basis and is stated at the lower of cost or net realizable value. We maintain an inventory of kits, reagents, and other disposables having shelf-lives that generally range from 12 months to two years.
As of December 31, 2024, our inventory consisted of approximately $
We provide for an allowance against inventory for estimated losses that may result in excess and obsolete inventory (i.e., from the expiration of products). Our reserve for inventory obsolescence is estimated based upon the inventory’s remaining shelf-life and our anticipated ability to sell such inventory, which is estimated using past experience and future forecasts, within its remaining shelf life. Expired products are segregated and used for demonstration purposes only; we will record the associated expense for this reserve to cost of sales in the consolidated statements of operations. For the years ended December 31, 2024 and 2023, we recorded provisions for inventory obsolescence of $
Property and Equipment
Property and equipment is stated at cost less accumulated depreciation and amortization. Assets are depreciated, using the straight-line method, over their estimated useful life ranging from to years. Maintenance and repairs are charged to operations as incurred.
Leases
At the inception of a contract, the Company determines if the arrangement is, or contains, a lease. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Rent expense is recognized on a straight-line basis over the lease term.
The Company has made certain accounting policy elections whereby the Company (i) does not recognize ROU assets or lease liabilities for short-term leases (those with original terms of 12-months or less) and (ii) combines lease and non-lease elements of its operating leases.
Revenue Recognition
The Company analyzes its revenue arrangements to determine the appropriate revenue recognition using the following steps: (i) identification of contracts with customers; (ii) identification of distinct performance obligations in the contract; (iii) determination of contract transaction price; (iv) allocation of contract transaction price to the performance obligations; and (v) determination of revenue recognition based on timing of satisfaction of the performance obligation. We recognize revenues upon the satisfaction of the performance obligations (upon transfer of control of promised goods or services to customers) in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. In certain instances where the revenue is variable and we cannot estimate the amount of consideration to which we expect to be entitled, we are constrained from initially recognizing revenue. In these cases, once the estimate is no longer constrained, we recognize revenue in the amount of consideration to which we expect to be entitled.
We provide for the sale of our products, including disposable processing sets and supplies to customers. Revenue from the sale of products is recognized upon shipment of products to the customers. We do not maintain a reserve for returned products, as in the past those returns have not been material and are not expected to be material in the future. Direct costs associated with product sales are recorded at the time that revenue is recognized.
Stock-Based Compensation
The fair value of employee stock options is measured at the date of grant. Expected volatilities for options are based on the equally weighted average historical volatility from comparable public companies with an expected term consistent with ours. Expected years until exercise represents the period of time that options are expected to be outstanding. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The Company estimated that the dividend rate on its common stock will be zero. The assumptions are summarized in the following table:
|
2024 |
2023 |
|||||
|
Risk free rate |
||||||
|
Weighted average expected years until exercise |
||||||
|
Expected stock volatility |
||||||
|
Dividend yield |
||||||
The Company recognizes forfeitures of stock-based awards as they occur.
Income Taxes
The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, current income tax expense or benefit is the amount of income taxes expected to be payable or refundable for the current year. Tax rate changes are reflected in income during the period such changes are enacted. We measure our deferred tax assets and liabilities using the enacted tax rates that we believe will apply in the years in which the temporary differences are expected to be recovered or paid. The Company expects that recent tax law changes contained in the Inflation Reduction Act and CHIPS Act will not have a material impact on its provision for income taxes.
A deferred income tax asset or liability is recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credits and loss carryforwards. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. All of our tax years remain subject to examination by the tax authorities.
The Company’s policy for recording interest and penalties associated with audits is to record such items as a component of income before taxes. There were no penalties and interest incurred in 2024 and 2023.
Fair Value Measurements
Our consolidated balance sheets may include certain financial instruments that are carried at fair value. Fair value is the price that would be received from the sale of an asset or paid to transfer a liability assuming an orderly transaction in the most advantageous market at the measurement date. U.S. GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of observability of inputs used in measuring fair value. These tiers include:
|
● |
Level 1, defined as observable inputs such as quoted prices in active markets for identical assets; |
|
|
● |
Level 2, defined as observable inputs other than Level 1 prices such as quoted prices for similar assets; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and |
|
|
● |
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. |
An asset or liability’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. At each reporting period if applicable, we perform a detailed analysis of our assets and liabilities that are measured at fair value. All assets and liabilities for which the fair value measurement is based on significant unobservable inputs or instruments which trade infrequently and therefore have little or no price transparency are classified as Level 3.
Basic and Diluted Earnings (Loss) per Share
In periods of net loss, basic loss per share is computed by dividing net loss available to common stockholders by the weighted average number of shares of common stock outstanding during the period. In periods of net loss, diluted loss per share is calculated similarly to basic loss per share because the impact of all potential dilutive common shares is anti-dilutive.
For periods of net income, diluted earnings per share is computed using the more dilutive of the “treasury method” or “two class method.” Dilutive earnings per share under the “treasury method” is calculated by dividing net income available to common stockholders by the weighted- average number of shares outstanding plus the dilutive impact of all potential dilutive common shares, consisting primarily of common shares underlying common stock options and stock purchase warrants using the treasury stock method, and convertible notes using the if-converted method.
The following table provides a reconciliation of the numerator and denominators used in the calculation of basic and diluted earnings (loss) per share for the years ended December 31, 2024 and 2023:
|
For the year ended December 31, |
||||||||
|
2024 |
2023 |
|||||||
|
Net Loss – basic and diluted |
$ | ( |
) | $ | ( |
) | ||
|
Weighted average shares outstanding – basic and diluted |
||||||||
|
Net Loss per Share – basic and diluted |
$ | ( |
) | $ | ( |
) | ||
The following table sets forth the potential dilutive securities excluded from the calculation of diluted loss per share for the years ended December 31, 2024 and 2023:
|
For the year ended December 31, |
||||||||
|
2024 |
2023 |
|||||||
|
Options |
||||||||
|
Warrants |
||||||||
|
Financing Participation Right and Contingent Warrant |
||||||||
|
Performance Shares |
||||||||
Segment Information
Operating segments are defined as components of an enterprise (business activity from which it earns revenue and incurs expenses) for which discrete financial information is available and regularly reviewed by the chief operating decision maker ("CODM") in deciding how to allocate resources and in assessing performance. The Company’s CODM is its Chief Executive and Financial Officer. The Company views its operations and manages its business as a operating and reporting segment. All the Company’s long-lived assets are in the United States.
Recent Accounting Developments
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (ASC 280): Improvements to Reportable Segment Disclosures expanding reportable segment disclosure requirements for public business entities primarily through additional disclosures about significant segment expenses that are regularly provided to the chief operating decision maker ("CODM") and included within each reported measure of segment profit and loss. The Company adopted this standard for its fiscal year 2024 annual financial statements and has applied this standard retrospectively for all prior periods presented in the consolidated financial statements. See Note 9 for further information.
In December 2023, the FASB issued final guidance in ASU No. 2023-09, Income Taxes (ASC 740): Improvements to Income Tax Disclosures requiring entities to provide additional information in the rate reconciliation and disclosures about income taxes paid. For public business entities, the guidance is effective for annual periods beginning after December 15, 2024.
We have evaluated all other issued and unadopted Accounting Standards Updates and believe the adoption of these standards will not have a material impact on our consolidated results of operations, financial position, or cash flows.
Note 3 – Property and Equipment
Property and equipment, net consisted of the following:
|
December 31, 2024 |
December 31, 2023 |
|||||||
|
Medical equipment |
$ | $ | ||||||
|
Office/warehouse equipment |
||||||||
|
Warehouse/production equipment |
||||||||
|
Less accumulated depreciation |
( |
) | ( |
) | ||||
|
Property and equipment, net |
$ | $ | ||||||
Depreciation expense was $
Note 4 — Accrued Liabilities
Accrued liabilities consisted of the following:
|
December 31, |
December 31, |
|||||||
|
2024 |
2023 |
|||||||
|
Accrued vacation payable |
$ | $ | ||||||
|
Accrued commissions payable |
||||||||
|
Accrued professional fees |
||||||||
|
Other payables |
||||||||
|
Total accrued liabilities |
$ | $ | ||||||
Note 5 – Stock Purchase Warrants
The following schedule reflects outstanding stock purchase warrants as of December 31, 2024 and 2023:
|
Description |
December 31, 2024 |
December 31, 2023 |
||||||
|
2022 Sales incentive warrants |
||||||||
|
Total |
||||||||
During the year ended December 31, 2022, the Company issued two warrants to purchase (i)
Note 6 – Equity and Stock-Based Compensation
Under the Company’s Second Amended and Restated Certificate of Incorporation, it has the authority to issue a total of
Pacific Medical Common Stock and Warrant Purchase Agreement
In August 2022, the Company entered into a Common Stock and Warrant Purchase Agreement (the “Agreement”) with Pacific Medical, Inc. (“Pacific Med”) for the sale and issuance of shares of common stock and warrants to purchase shares of common stock. Pacific Med is the exclusive distributor for the Aurix System product within a territory that covers the states of Washington, Oregon, Idaho, Montana, Wyoming, most of California, the northern half of Nevada, plus Alaska.
Pursuant to the Agreement, Pacific Med purchased
As part of the Agreement and as additional incentive compensation with respect to Pacific Med’s performance under its existing sales and distribution arrangement, the Company also provided to Pacific Med two compensatory performance-based stock purchase warrants and certain contingently issuable performance shares. The first warrant entitles Pacific Med to purchase up to
2023 Private Placement Equity Issuances
The Company sold
2024 Private Placement Equity Issuances
The Company sold
Stock-Based Compensation
In July 2016, the Board of Directors approved the Company’s 2016 Omnibus Incentive Plan (the “2016 Omnibus Plan”), and in August 2016, the Board amended such plan to include an evergreen provision, intended to increase the maximum number of shares issuable under the Omnibus Plan on the first day of each fiscal year (starting on January 1, 2017) by an amount equal to six percent (
A summary of stock option activity under the 2016 Omnibus Plan during the two years ended December 31, 2024 is presented below:
|
Stock Options – 2016 Omnibus Plan |
Shares |
Weighted Average |
Weighted |
|||||||||
|
Outstanding at January 1, 2023 |
$ | |||||||||||
|
Granted |
||||||||||||
|
Exercised |
||||||||||||
|
Forfeited or expired |
( |
) | ( |
) | - | |||||||
|
Outstanding at January 1, 2024 |
$ | |||||||||||
|
Granted |
||||||||||||
|
Exercised |
( |
) | ( |
) | - | |||||||
|
Forfeited or expired |
( |
) | ( |
) | - | |||||||
|
Outstanding at December 31, 2024 |
$ | |||||||||||
|
Exercisable at December 31, 2024 |
$ | |||||||||||
During the year ended December 31, 2023, there were
The aggregate intrinsic value for outstanding and exercisable options as of December 31, 2024 was approximately $
For the years ended December 31, 2024 and 2023, the Company recorded total stock-based compensation expense of $
Note 7 — Income Taxes
Income tax expense (benefit) for the years ended December 31, 2024 and 2023 consisted of the following:
|
Year ended December 31, |
||||||||
|
2024 |
2023 |
|||||||
|
Current provision (benefit) |
||||||||
|
Federal |
$ | $ | ||||||
|
State |
||||||||
|
Deferred provision (benefit) |
||||||||
|
Federal |
||||||||
|
State |
( |
) | ||||||
|
Change in valuation allowance |
( |
) | ( |
) | ||||
|
Consolidated provision (benefit) |
$ | $ | ||||||
Significant components of the Company's deferred tax assets and liabilities consisted of the following at December 31, 2024 and 2023:
|
December 31, |
||||||||
|
2024 |
2023 |
|||||||
|
Deferred tax assets: |
||||||||
|
Net operating loss carryforwards and credits |
$ | $ | ||||||
|
Property, equipment, intangible assets, and other |
||||||||
|
Stock-based compensation |
||||||||
|
Deferred tax liabilities |
||||||||
|
Valuation allowance |
( |
) | ( |
) | ||||
|
Net deferred tax assets |
$ | $ | ||||||
The following table presents a reconciliation between the U.S. federal statutory income tax rate and the Company's effective tax rate:
|
Year ended December 31, |
||||||||
|
2024 |
2023 |
|||||||
|
Federal tax rate |
( |
)% | ( |
)% | ||||
|
State tax rate, net of Federal benefit |
( |
)% | ( |
)% | ||||
|
Change in valuation allowance |
( |
)% | ( |
)% | ||||
|
Permanent differences and other |
% | % | ||||||
|
Effective tax rate |
% | ( |
)% | |||||
The Company has Federal net operating loss carry-forwards of approximately $
Note 8 - Segment Information
Nuo manages its business activities on a consolidated basis and operates as a operating segment dedicated to developing and marketing products for chronic wound care that harness the regenerative capacity of the human body to trigger natural healing. The Company derives its revenue from product sales of the Aurix product line. The accounting policies of the segment are the same as those described in Note 2.
Nuo's CODM is the Company's Chief Executive and Financial Officer, David E. Jorden. The CODM uses net loss, as reported in the Company's Consolidated Statements of Operations, in evaluating the performance of its segment and determining how to allocate resources of the Company as a whole. The CODM does not review assets in evaluating the results of the segment, and therefore, such information is not presented.
The following table presents the operating results of the Company's segment:
|
December 31, |
December 31, |
|||||||
|
2024 |
2023 |
|||||||
|
Total revenues |
$ | $ | ||||||
|
Less significant segment expenses: |
||||||||
|
Cost of sales (excluding provision for inventory obsolescence and applicable depreciation expense) |
||||||||
|
Total compensation and benefit costs (including third party commission expense) |
||||||||
|
Provisions for credit losses and inventory obsolescence |
||||||||
|
All other operating expenses (excluding depreciation and credit loss provision) (a) |
||||||||
| Other segment items: | ||||||||
|
Depreciation, amortization of right of use assets, and stock-based compensation |
||||||||
|
Interest expense (income), net |
( |
) | ||||||
|
Other expense (income), net(b) |
( |
) | ||||||
|
Consolidated net loss |
$ | ( |
) | $ | ( |
) | ||
(a)
(b)
Note 9 – Commitments and Contingencies
In February 2022, the Company entered into a commercial operating lease for its primary office and warehouse/distribution space in Texas. The lease requires the Company to pay for its insurance, taxes, and its share of common operating expenses. This lease expires in March 2027. The space remained under buildout and Landlord control during the three months ended March 31, 2022 with the Company acquiring control of the lease space effective April 1, 2022; as a result, a right of use asset and lease liability was recognized of $
The following table presents the components of rent expense:
|
For the Year Ended December 31, |
For the Year Ended December 31, |
|||||||
|
2024 |
2023 |
|||||||
|
Operating lease costs |
$ | $ | ||||||
|
Short term lease costs |
||||||||
|
Variable lease costs (common area maintenance and applicable taxes) |
||||||||
| Total rent expense | $ | $ | ||||||
Cash paid for amounts included in operating lease liabilities was approximately $
Future undiscounted cash flows under this lease are:
|
2025 |
||||
|
2026 |
||||
|
2027 |
||||
|
Total operating lease payments |
||||
|
Discount factor |
( |
) | ||
|
Present value of operating lease liabilities |
||||
|
Current portion of operating lease liabilities |
( |
) | ||
|
Non-current portion of operating lease liabilities |
$ |
Note 10 – Subsequent Events
On March 31, 2025, the Company entered into a Distribution Agreement (the “Distribution Agreement”) with a U.S. affiliate of Smith & Nephew PLC ("Smith+Nephew") to supply the Company’s Aurix product to Smith+Nephew under its own private label (the “Private Label product”). Under the Distribution Agreement, Smith+Nephew agreed to purchase Private Label product from the Company from time to time at agreed upon transfer pricing. The Distribution Agreement includes certain minimum purchase commitments by Smith+Nephew in order for Smith+Nephew to maintain exclusive distribution rights. The Distribution Agreement is for an initial term of years and is renewable for additional -year terms.
As consideration for entering into the Distribution Agreement, Smith+Nephew agreed to pay the Company up to $
Exhibit 4.1
Description of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934
Nuo Therapeutics, Inc. (“we,” “our,” “us” or the “Company”) has one class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”): common stock, $0.0001 par value per share (“Common Stock”).
Pursuant to the Second Amended and Restated Certificate of Incorporation of Nuo Therapeutics, Inc., as amended (the “Certificate of Incorporation”), our authorized capital stock consists of (i) 100,000,000 shares of Common Stock and (ii) 1,000,000 shares of preferred stock.
The following description summarizes the material terms of our Common Stock.
Common Stock
Dividend Rights
Subject to applicable law and the rights, powers and preferences of any class or series of preferred stock (to the extent such stock is designated, issued and outstanding), dividends may be paid on the Common Stock, as the Board of Directors shall from time to time determine, out of any assets of the Company available for such dividends.
Voting Rights
Subject to applicable law and the rights, powers and preferences of any class or series of preferred stock (to the extent such stock is designated, issued and outstanding), the holders of the Common Stock shall exclusively possess full voting power for the election of directors and for all other purposes. Any holder of Common Stock of the Company having the right to vote at any meeting of the stockholders or of any class or series thereof shall be entitled to one vote for each share of stock held by such holder, provided that no holder of Common Stock shall be entitled to cumulate his votes for the election of one or more directors or for any other purpose. At all meetings of stockholders for the election of directors, a plurality of the votes cast by holders of shares entitled to vote in the election of directors at the meeting shall be sufficient to elect. Unless otherwise required by applicable law, the Certificate of Incorporation or the By-Laws of the Company for approval or ratification of any matter approved and recommended by the Board of Directors, the vote required for approval or ratification shall be a majority of the votes cast on the matter, voted for or against. Stockholders of the Company holding stock representing not less than the minimum number of votes needed to authorize or take an action at a meeting may authorize or take that action by written consent in lieu of a meeting.
Board of Directors
Subject to applicable law and the rights, powers and preferences of any class or series of preferred stock (to the extent such stock is designated, issued and outstanding), holders of Common Stock are entitled to elect the Company’s directors. Directors shall be elected by a plurality of the votes cast at the annual meetings of stockholders. Each director so elected shall hold office until the next annual meeting and until his successor is duly elected and qualified or until his earlier death, resignation, disqualification or removal. Furthermore, stockholders entitled to vote in an election of directors may remove any director from office at any time, with or without cause, by the affirmative vote of the holders of a majority of the outstanding shares of capital stock then entitled to vote in the election of directors.
Liquidation Rights
In the event of any liquidation, dissolution or winding up of the Company, or any reduction or decrease of its capital stock resulting in a distribution of assets to the holders of Common Stock, subject to applicable law and the rights, powers and preferences of any class or series of preferred stock (to the extent such stock is designated, issued and outstanding), the holders of the Common Stock shall be entitled to receive, pro rata, all of the remaining assets of the Company available for distribution to its stockholders.
Notification, Negotiation, and Participation Rights
In connection with entering into a Distribution Agreement dated March 31, 2025 with Smith & Nephew, Inc. (Smith+Nephew), the Company provided certain rights to Smith+Nephew related to the Company's business and corporate matters. In particular, the Company provided to Smith+Nephew an 18-month right of notification, and first negotiation for a defined period, in the event the Company receives from another party a proposal for (a) the license, assignment, transfer, or disposal of the Company's Aurix product or related products, or (b) a business combination that the Company submits or recommends to stockholders. Under the Distribution Agreement, the Company also provided to Smith+Nephew a right of notification and participation in any proposed sale of Common Stock.
Other Rights and Limitations
The Common Stock will carry no preemptive or other subscription rights to purchase shares of the Common Stock and will not be convertible, redeemable or assessable or entitled to the benefits of any sinking fund.
Anti-Takeover Effects of Delaware Law and the Certificate of Incorporation and By-Laws
Certain provisions of Delaware law and the Certificate of Incorporation and By-Laws of the Company contain provisions that could have the effect of delaying, deferring or discouraging another party from acquiring control of us. These material provisions, which are summarized below, are expected to discourage certain types of coercive takeover practices and inadequate takeover bids. These provisions are also designed in part to encourage anyone seeking to acquire control of us to negotiate with the Board of Directors. We believe that the advantages gained by protecting our ability to negotiate with any unsolicited and potentially unfriendly acquirer outweigh the disadvantages of discouraging such proposals, including those priced above the then-current market value of our Common Stock, because, among other reasons, the negotiation of such proposals could improve their terms.
The Certificate of Incorporation and By-Laws of the Company include provisions that:
|
● |
require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent, unless a majority of the Board of Directors approves in advance the taking of such action by means of written consent of stockholders; |
|
● |
establish an advance notice procedure for stockholder approvals to be brought before a meeting of our stockholders, including proposed nominations of persons for election to the Board of Directors; |
|
● |
provide that vacancies on the Board of Directors may be filled only by a majority of directors then in office, even though less than a quorum; and |
|
● |
require approval of the stockholders of at least 66 2/3% of the shares to amend certain of the above-mentioned provisions. |
Exhibit 10.1
[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because the information is not material and is the type of information that the registrant treats as private or confidential
DISTRIBUTION AGREEMENT
Supplier wishes to appoint S+N and S+N wishes to be appointed as the Supplier’s exclusive distributor for the promotion and sale of the Products (as defined below) within the Territory (as defined below) under S+N’s Brand (as defined below), in accordance with and subject to the provisions set out in this Agreement.
The Parties agree as follows:
| Effective Date: | March 31, 2025 |
| Expiry Date: | The last day of the Initial Term or a Renewal Term pursuant to Section 15. |
| Territory: | The United States of America (and any Additional Territory as may be agreed in writing between the Parties from time to time). |
|
For SMITH + NEPHEW |
For NUO THERAPEUTICS, INC |
|||
|
Parties: Address: |
Smith & Nephew, Inc. (S+N) 150 Minuteman Rd Andover, MA 01810 |
Nuo Therapeutics, Inc. (NUO or Supplier) 8285 El Rio, Suite 190 Houston, TX 77054 |
||
|
Authorised Signatory |
Authorised Signatory | |||
| /s/ Michael Arndt | /s/ David Jorden | |||
| Signatures: | ||||
| Name: Michael Arndt | Name: David E. Jorden | |||
| Title: SVP Global Procurement | Title: CEO/CFO | |||
|
|
Date: March 31, 2025 |
Date: March 31, 2025 |
||
each a Party and together the Parties.
Addresses for Notices: Notices under this Agreement shall be addressed and delivered as follows:
|
S+N: |
Supplier: |
Deemed Delivery: |
|
|
By Hand or |
Smith & Nephew, Inc. Attention: Rohit Kashyap |
Nuo Therapeutics, Inc. Attention: David Jorden 8285 El Rio, Suite 190 Houston, TX 77054 |
Hand or recorded delivery: On signature of delivery receipt Pre-paid post within same country: 2nd business day after post Pre-paid post to outside country: 5th business day after post |
|
By Email |
Time of transmission; or, if transmitted after business hours then the next business day |
||
|
with (if the notice relates to Sections 10.5, 11, 12, 13, 15, 16, 17.2, 17.3, or 17.4 under this Agreement) a copy to: |
|||
|
By Hand or |
Smith & Nephew, Inc. 150 Minuteman Rd. Andover, MA 01810 Attention: Company Secretary |
David Mittelman Lucendo LLP 505 Montgomery St., 11th floor San Francisco, CA 94111 |
|
|
By Email |
|||
|
1. |
Appointment of S+N as Distributor in Territory |
|
1.1. |
Supplier hereby appoints S+N to be Supplier’s sole and exclusive distributor and reseller of biodynamic hematogel consumable products and system products, including but not limited to, the products further described in Schedule 1 (Products) (as may be amended from time to time) (including the Consumable Products and Equipment Products (as set forth in Schedule 1) and any autologous platelet-rich-plasma (PRP) product, reimbursable under the Medicare reimbursement code G0465, together with any updates, modifications, revisions, line extensions and upgrades thereto) (the Product(s)) for use in the treatment and management of acute and chronic wounds (the Field) in the Territory under the S+N Brand; provided, however, that NUO, its employees, contractors, NUO Sales Agents (as defined below), and NUO Distributors (as defined below) may sell and distribute Products under the NUO Brand (as defined below) in the Territory as further set out in Section 1.2. Supplier shall manufacture and supply the Products to S+N and its affiliated distributors, contractors and employees (S+N Distributors) under such appointment on an exclusive basis. S+N shall be entitled to exercise its rights and perform its obligations under this Agreement through S+N’s Affiliates. Where an S+N Distributor or S+N Affiliate orders Products from the Supplier, the term S+N shall be deemed to refer to the relevant S+N Distributor or S+N. Affiliate means, with respect to any person (which term is used broadly to include companies and other entities as well as individuals), any other person directly or indirectly controlling, controlled by or under common control with such person.; as used in the meaning of Affiliate, “control” means (i) the direct or indirect ownership of more than fifty percent (50%) of the capital stock (or such lesser percentage that is the maximum allowed to be owned by a foreign corporation in a particular jurisdiction); or (ii) the direct or indirect power to manage, direct or cause the direction of the management and policies of the entity or the power to elect more than fifty percent (50%) of the members of the governing body or board of such entity. |
|
1.2. |
With the exception of the S+N Brand and the NUO Brand, Supplier shall not create any further branded versions or unbranded versions of the Products for sale, directly or indirectly by Supplier or by any third party in the Territory or an Additional Territory, subject to Section 16.1. |
|
1.3. |
Supplier shall not directly or indirectly: (i) sell, provide, distribute, or supply Products under the S+N Brand, to any third party within the Territory (or allow any third party to do so); nor (ii) supply Products under the S+N Brand to any third party for resale in the Territory. In respect of Products under the NUO Brand, Supplier shall not directly or indirectly: (i) sell, provide, distribute, or supply Products under the NUO Brand, to any third party within the Territory (or allow any third party to do so); nor (ii) supply Products under the NUO Brand to any third party for resale in the Territory, with the exception that, Supplier may sell the Products under the NUO Brand to [****] (NUO Distributors), who may resell the Products under the NUO Brand to customers who are not the S+N Customers (as defined below) and that Supplier may use the NUO Sales Agents (as defined below) to represent it in relation to concluding direct sales with Supplier’s customers, which shall for the avoidance of doubt, exclude the S+N Customers. |
|
1.4. |
Supplier further agrees that: a) it shall not appoint additional third parties other than S+N or the NUO Distributors in connection with distribution or sale of the Products in the Territory (whether directly or indirectly); b) it shall not permit third parties other than S+N or the NUO Distributors to distribute or sell the Products in the Territory; c) it shall be responsible for ensuring the NUO Sales Agents and NUO Distributors comply with the terms of this Agreement, to include without limitation that they shall not solicit, approach in relation to or sell Products under the NUO Brand to the S+N Customers. NUO Sales Agents means any third-party entity or individual undertaking sales representation for Supplier who is paid a commission-based fee based on sales of Products under the NUO Brand, defined as individual independent sales agents or a group of agents or entities making up a sales agency and excluding any organisation that purchases products for re-sale. Third parties who purchase or take title to Products for re-sale or transfer to customers and third parties who are remunerated under any profit or revenue sharing arrangement are expressly excluded from and shall not be permitted as NUO Sales Agents. |
|
1.5. |
S+N shall be the exclusive distributor and reseller of any Products which incorporate or reference any trade names and trademarks owned by or licensed to S+N and/or its Affiliates that S+N and/or its Affiliates use in relation to the Products (S+N Marks) and Supplier shall not directly or indirectly manufacture, sell or otherwise transfer or dispose of any Products it has manufactured for S+N and which bear any S+N Marks to any third party. Products featuring the S+N Marks shall be those under the “S+N Brand” which shall be S+N’s private label version of the Products. S+N shall provide artwork for labels for such branding to be printed and affixed by Supplier at the conclusion of its manufacturing process prior to supply to S+N customers, in accordance with S+N’s instructions and this Agreement. S+N shall grant to NUO, a limited, non-exclusive, royalty-free, non-transferable, revocable license to apply the S+N Marks and S+N Brand to the Products purchased by S+N under this Agreement, in accordance with this Section. NUO shall be entitled to grant, where necessary, a sub-license of the aforementioned license to its first-tier manufacturing suppliers who are responsible for the manufacturing of the Products, provided NUO shall remain responsible to S+N for its suppliers. |
|
1.6. |
The NUO Brand shall be the own brand labelled version of the Products marketed by NUO as Aurix™ to NUO customers (for the avoidance of doubt excluding the S+N Customers) through the NUO Distributors or representation by NUO Sales Agents. The NUO Brand consists of trade names and trademarks owned by or licensed to Supplier. The NUO Brand and packaging to be affixed to Products sold by Supplier or the NUO Distributors shall be as shown in Schedule 1 (NUO Get Up). In the event of any proposed change to the NUO Brand or NUO Get Up, Supplier shall notify such proposed change to S+N [****] prior to the proposed date of change, and NUO shall ensure that such change complies with NUO’s obligations in this Section. Supplier shall ensure that at all times, the NUO Brand and NUO Get Up shall be sufficiently differentiated from the S+N Brand and any packaging utilized in Products under the S+N Brand, in terms of physical appearance and the audible name of Products under the S+N Brand, and at no time shall either Party attempt to pass off or trade Products branded under the NUO Brand or NUO Get Up as being Products under the S+N Brand or vice versa. In developing the NUO Brand and Get-Up and the S+N Brand and any packaging utilized in S+N Brand Products, or making changes thereto, the Parties agree that they shall collaborate in good faith to assure the respective brands and get-up are suitably distinguishable. [****] |
|
1.7. |
S+N shall engage in commercially reasonable efforts to promote, negotiate, receive and administer customer orders for the purchase by S+N customers of Products under the S+N Brand in the Territory. S+N and/or S+N’s Affiliates shall determine the resale price, terms and conditions of resale and target customers of Products under the S+N Brand in their own discretion, provided any customers of S+N shall exclude the NUO Customers (as defined below). S+N shall notify Supplier of orders placed by customers and Supplier shall pick, pack and ship to such customers, the relevant Products ordered by customers in accordance with the timeframes and logistics requirements as further set out in Schedule 2 (Operations). Supplier shall be solely responsible for warehousing, logistics and distribution activities connected with supply of the Products under the S+N Brand, as further set out in Schedule 2. |
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1.8. |
As at the Effective Date, S+N has identified a list [****] S+N Customers [****] (S+N Customer List) and Supplier has identified a list [****] NUO Customers [****] (NUO Customer List). Each Party shall update its customer list to remove or add new customers to whom product sales are made and provide notice of such updated customer list to the other Party in accordance with Schedule 3. [****]. Supplier shall promptly refer any enquiries or communications it receives from S+N Customers relating to the Products or enquiries it receives relating to Products under the S+N Brand during the Term of the Agreement to S+N. S+N shall promptly refer any enquiries or communications it receives from NUO Customers relating to the Products or enquiries it receives relating to Products under the NUO Brand during the Term of the Agreement to Supplier. |
|
1.9. |
Each Party shall permit, where requested by the other Party, an audit of the other Party’s customer list (the S+N Customer List or the NUO Customer List, as applicable) in order to verify compliance with the terms of this Agreement [****]. The Party requesting the audit shall engage an independent auditor for the purposes of undertaking the audit, such auditor shall be subject to obligations of confidentiality in relation to access to the other Party’s Confidential Information during such audit. |
|
2. |
License Fee and Reimbursement Fee |
|
2.1 |
S+N will pay Supplier an up front, one time, license and distribution fee of USD one million five hundred thousand ($1,500,000), associated with the rights granted to S+N to distribute Products under the S+N Brand, during each year of the Term in accordance with and subject to the terms of this Agreement (Licensing Fee). A credit of USD two hundred thousand ($200,000), previously paid by S+N to Supplier on or about February 11, 2025 in connection with entering into an exclusive negotiation period resulting in this Agreement, shall be applied to the Licensing Fee amount payable [****]. |
|
2.2 |
In addition to the Licensing Fee, S+N will pay Supplier a one time, upfront fee of: a) [****] in connection with the successful establishment and maintenance of reimbursement of the Products under the S+N Brand, when used in conjunction with [****] during the remaining Term of the Agreement; and/or b) [****] for the Products under the S+N Brand, during the remaining Term of the Agreement (the Reimbursement Fees). [****]. In the event Supplier fails to maintain reimbursement in accordance with a) and b) under this Section 2.2 having achieved such reimbursement, Supplier shall issue to S+N on demand [****] a pro rata refund of the Reimbursement Fees as relates to the unexpired portion of the Term commencing from the date on which reimbursement was cancelled or terminated. In the event that reimbursement is not achieved for the relevant categories and confirmed according to the evidence requirements in Schedule 3 (Governance), no Reimbursement Fees shall be payable by S+N. |
|
3. |
Purchase of Products |
|
3.1. |
Subject to Section 3.2, S+N may purchase from Supplier such quantities of Products as S+N specifies in a written purchase order (each a PO) from time to time, except to the extent such POs are cancelled by S+N in accordance with the terms of this Agreement. Each PO will form part of and be governed by the terms of this Agreement. Each PO shall be binding on Supplier if not specifically rejected by Supplier in writing [****]. In the event Supplier rejects a PO (subject to Section 4.2), it shall notify S+N in writing of its reasons for such rejection and shall meet with S+N at its request without delay in order to agree any necessary changes to the PO for it to be accepted. |
|
3.2. |
S+N and S+N’s Affiliates shall purchase Products equal to the purchase price values set out in Schedule 1 during the applicable period(s) set out in Schedule 1 (the Minimum Purchase Commitment). If S+N or its Affiliates do not purchase the Minimum Purchase Commitment during such periods, Supplier shall notify S+N in writing of the relevant shortfall against the Minimum Purchase Commitment with details of its calculations [****]. Supplier shall be entitled as its sole remedy for S+N’s failure to achieve the Minimum Purchase Commitment, to appoint on notice to S+N in writing, additional third party distributors under such parties’ own branding, to sell and distribute the Products in the Territory, but the remaining terms of this Agreement shall continue with full force and effect. |
|
3.3. |
No modified, additional, or different terms or conditions proposed by Supplier will be accepted by S+N or S+N’s Affiliates and shall not become part of any PO or this Agreement unless expressly agreed in writing by the duly authorized representatives of S+N. |
|
3.4. |
S+N shall not during the Term, develop, manufacture, source, promote, market, sell or distribute products which are substantially similar to the Products within the Field within the Territory or any Additional Territory, except as relates to performance of this Agreement (Field Limitation). |
|
3.5. |
Without prejudice to any other right or remedy available to it, S+N shall be entitled to cancel a PO, in whole or in part, at any time prior to the delivery date by giving written notice to Supplier, and all work under the PO (or the cancelled part) shall be discontinued immediately and Supplier shall use its best efforts to mitigate the impact of the cancellation. In the case of Products which are finished as at the date a PO is cancelled, Supplier shall re-allocate such Products for use in the Kanban Arrangements (as defined in Section 4) where such Kanban Arrangements are in operation, or shall otherwise deploy such Products to satisfy future POs issued by S+N or its Affiliates. In the event S+N cancels a [****], to the extent Supplier demonstrates it cannot utilize any finished products, work in progress or materials in connection with supply against S+N’s future Forecast or for an alternative purpose within the relevant shelf life of the Product, it shall notify S+N and S+N and Supplier shall discuss in good faith, acting reasonably a payment by S+N to Supplier of a proportion of the PO price as may be fair and reasonable having regard to any Products previously delivered under the PO and the value of any work in progress or materials written off under the PO and no further amounts shall be due by way of damages, loss of profits or otherwise from S+N to Supplier by reason of the cancellation [****]. |
|
4. |
Supply, Ordering and Delivery |
|
4.1. |
Supplier shall maintain sufficient inventory at all times of all parts and materials and in the case of Equipment Products and finished Consumable Products, at its sole cost and expense, to ensure continuous, on-time supply of Products to S+N to avoid backorders and to enable manufacturing and supply of the Products [****] or in accordance with the minimum and maximum limits applicable under any Kanban Arrangements in operation. Supplier confirms that it shall meet or exceed the lead times for manufacturing of the Products as set out in Schedule 1. |
|
4.2. |
S+N shall use reasonable efforts to provide [****] a rolling estimate only [****] of the projected volume of Product orders from S+N’s customers during the forecast period, by stock keeping unit or other mutually agreed identifier (Forecast). [****]. |
|
4.3. |
Supplier shall pick, pack and ship Products to the customer address in the Territory, notified by S+N to Supplier in S+N’s PO [****]. In the event this Agreement is extended to Additional Territories (as defined below), Supplier shall deliver Products to [****] unless otherwise agreed in writing by the Parties or under the relevant PO. Supplier shall obtain a signed written proof of delivery from S+N’s customer and shall be entitled to invoice S+N following completion of delivery, unless an alternative time for invoicing is agreed with S+N under the relevant PO. |
|
4.4. |
S+N shall pay Supplier’s valid, undisputed invoices within [****] of receipt. The purchase price for each Product is set out in Schedule 1. [****] |
|
4.5. |
Unless otherwise agreed by S+N in writing, all prices are: (i) inclusive of all packaging and delivery [****] |
|
4.6. |
Title to the Products shall pass to S+N [****]. In the event title to Products has transferred to S+N prior to delivery to S+N’s customer, Supplier shall hold such Products, clearly segregated from Supplier’s or any third party’s property [****]. |
|
4.7. |
If any Product does not comply with Section 7.3 or otherwise does not confirm with any term of this Agreement, then without limiting any other right or remedy that S+N may have, S+N, may reject those Products and Supplier shall collect such Products from their location [****]. |
|
4.8. |
Supplier shall deliver the Products on time and in full in accordance with the delivery dates set out in the PO or if no delivery date is stated, within [****]. |
|
4.9. |
With regard to all dates, delivery, and time periods set forth in this Agreement, time is of the essence. [****]. |
|
4.10. |
Supplier shall participate in Cost Improvement identification and associated agreed initiatives as described in Schedule 5. Supplier shall at all times meet or exceed the key performance indicators and performance levels set out in Schedule 5. |
|
4.11. |
Supplier shall operate the Kanban arrangements for stock and finished Product management and replenishment in accordance with Schedule 2 (Kanban Arrangements). |
|
5. |
Backorders |
|
5.1. |
A backorder occurs when any quantity of Product set out in a PO is not delivered to S+N within the time for delivery as set out in Section 4.8. If a backorder occurs, Supplier shall immediately as soon as it is aware of such backorder, provide S+N, in writing, with an estimated date by which the backorder will be resolved and the backordered Product will be shipped. Supplier shall also, in such written notice, propose a solution to satisfy S+N’s requirements for the backordered Product until the backorder is resolved. S+N reserves the right to accept or reject any such proposed solutions, acting in its reasonable discretion. |
|
5.2. |
If S+N determines that the Supplier’s proposed solution to a backorder is not acceptable then S+N may, having provided its reasons for its determination: (i) cancel, without penalty, the affected PO(s) [****]. |
|
6. |
Services for Equipment Products |
|
6.1. |
Supplier shall provide a returns process (including logistics) and repair and replacement services for the Equipment Products, in order to ensure continued availability and operation of the Equipment Products as further set out in Schedule 2 (Operations) or as otherwise agreed with S+N in writing by way of addendum to this Agreement from time to time (Equipment Services). [****]. |
|
7. |
Other Supplier Obligations: |
|
7.1. |
Supplier shall comply with the terms of the supplier quality agreement entered into between the Parties and attached as Schedule 4 (the SQA). Supplier shall be solely responsible for the preparation, filing, obtaining, maintaining, renewing, and holding of all Regulatory Materials and Regulatory Approval necessary (i) to manufacture the Products and (ii) to enable S+N to distribute, market, promote, sell or otherwise commercialize the Products in the Territory. For the purposes of this Agreement: |
|
(a) |
Regulatory Approval means all approvals necessary for the marketing, promotion, sale or distribution of the Product in any jurisdiction, including without limitation a price and/or reimbursement permit, if required for commercial sale of the Product, and approval of the applicable application to the appropriate regulatory authority for approval to market the Product in any jurisdiction; and |
|
(b) |
Regulatory Materials means all regulatory applications, submissions, notifications, communications, correspondence, registrations, Regulatory Approvals and/or other filings made to, received from or otherwise conducted with a regulatory authority in order to develop, manufacture, market, sell or otherwise commercialize the Product in any jurisdiction. |
|
7.2. |
Where there is a change in any Applicable Laws, or a new ISO standard, the Supplier shall [****] (i) be responsible for implementing such changes in a timely manner and before any applicable deadlines [****]. Applicable Law means statutes, duly promulgated Regulations, and regulatory policies, binding guidance or industry codes of any jurisdiction which apply to the Products (including applicable current good manufacturing practices), and decisions of binding or prospective effect, including without limitation, all relevant Medical Devices Guidance documents issued by a regulatory agency, department, bureau or other government entity or international organization to which such government entity may be a member or participant in respect of products which are similar to or the same as the Products. Regulations means laws, regulations, approvals, licenses, registrations or authorisations of any federal, state, local or foreign regulatory agency, department, bureau or other government entity applicable to or necessary for: (i) the manufacture, handling, storage, testing, export, import and transport of the Products; or (ii) the marketing, sale, or promotion of the Products to end users in the Territory. |
|
7.3. |
Supplier shall ensure that all Products supplied under this Agreement: |
|
7.3.1. |
fully comply with and are manufactured in accordance with Supplier’s and any manufacturer’s instructions for use (IFU), the specifications for the Products set out in Schedule 1 (as may be amended from time to time) (the Product Specifications), the SQA, and relevant technical literature, brochures and any other promotional materials published by Supplier; |
|
7.3.2. |
fully comply and are manufactured in accordance with Applicable Law; |
|
7.3.3. |
are manufactured in accordance with the Supplier Quality Agreement, Applicable Law, internationally recognized standards of good manufacturing practices and ISO 13485 and otherwise demonstrate that degree of skill, care, diligence, prudence and foresight which would reasonably and ordinarily be expected from a skilled and experienced person engaged in the design and manufacture of medical devices substantially similar to the Products (including sterile medical devices where the Products or components thereof are sterile); |
|
7.3.4. |
are safe, effective, and of satisfactory quality and suitable for use in accordance with the indications described in the IFU; |
|
7.3.5. |
are free from defects in design, materials and workmanship [****]; and |
|
7.3.6. |
in the case of Consumable Products [****] are in saleable condition with a minimum [****] shelf life [****] or such longer shelf life for which Supplier has Regulatory Approval (whichever is longer). Supplier shall promptly notify S+N if it receives Regulatory Approval for a longer shelf life for any of the Products. Supplier shall ensure that the labelling for the Products advises customers of room temperature, storage requirements and expiry dates. [****]. |
|
7.4. |
Save for changes mandated by Applicable Law, the Product Specifications may not change without the written agreement of the Parties. |
|
7.5. |
Supplier shall make sure that the contents of the IFU, label and packaging of the Products are true, accurate and complete and comply with all Applicable Laws including ensuring that the IFU shall clearly and accurately specify approved use, indication, contraindication, side effects and other appropriate cautions. |
|
7.6. |
Supplier shall execute such quality [****] plans and meet such manufacturing standards as are identified as necessary for continued manufacturing or sale of the Products in accordance with this Agreement [****] or where required pursuant to Applicable Law. |
|
7.7. |
Supplier hereby grants to S+N a right and license to use and receive the benefit of such Regulatory Approvals and Regulatory Materials necessary for S+N to market and commercialize the Products in the Territory. Supplier shall pay any fees to keep current all such Regulatory Approvals. |
|
7.8. |
Supplier shall promptly provide to S+N, any updates, new issues, revisions or modifications of, all IFUs, packaging, package inserts, and other literature or materials to be included with the Products or delivered to a customer with Products [****]. Supplier shall use its best efforts to provide S+N with notice of any proposed changes to such documents [****] prior to implementation of such changes. |
|
7.9. |
Supplier shall provide in a manner, format, and medium as agreed upon by the Parties, samples of literature, advertisements, and art to be used by S+N in preparing promotional materials and provide in writing all representations and claims associated with the Products that S+N or any of its representatives may make together with such instructions and user manuals as are necessary for sale and use of the Products (collectively literature, advertisements, art, representations, instructions, manuals and claims being referred to as Promotional Work). During the Term of this Agreement, Supplier hereby grants S+N and its Affiliates, their employees, representatives, suppliers, sales agents and distributors, a limited, non-exclusive, royalty-free, non-transferable license to use, copy, reproduce, distribute, and create derivatives of any Promotional Work for the purposes of S+N fulfilling its obligations and exercising its rights under this Agreement. |
|
7.10. |
Within [****] of receipt from S+N, Supplier shall review and approve [****] proposed sales and technical literature and other public information. If Supplier does not either approve or provide further comments on such material within the time set out in this sub-section, such material will be deemed approved. |
|
7.11. |
Supplier shall ensure that ownership and title of all packaging, printing plates, cylinders and any other equipment which incorporate the S+N Marks vest in S+N and, upon expiry or termination of this Agreement, [****]. |
|
7.12. |
Supplier shall [****] make available to S+N relevant published clinical and technical “white” papers that Supplier produces concerning the Products, for sales and promotional use as well as presentation and publication, by S+N, but not for resale. |
|
7.13. |
Upon request of S+N, Supplier initially shall provide [****] to S+N for Product training and education, which may include in addition, training relating to complaints handling, maintenance and repair or other such items as are requested by S+N [****] |
|
7.14. |
Supplier shall meet with S+N to discuss reasonable support related to clinical consulting in the Territory. Program types, duration, and cost allocation to be agreed upon by the Parties. |
|
7.15. |
Supplier shall provide prompt, competent, and continuous telephone support for the Products from 7:30 AM CT to 4:30PM CT to address Product related questions from S+N’s representatives and customers. Supplier shall provide training to S+N’s customer service team with respect to telephone support referral protocol. |
|
8. |
Mutual Obligations |
|
8.1. |
[****] the Parties shall collectively conduct a business review relevant to the Products and this Agreement, in accordance with Schedule 3 (Governance) to include any commercial and operational issues. [****]. The Parties shall agree in good faith on the timing and location for each such business review. |
|
8.2. |
Except as otherwise expressly set forth in this Agreement, each Party is responsible for providing, at its own expense, its own equipment, offices, working facilities and such other facilities and services as may be required to fulfill its obligations set out in this Agreement. |
|
8.3. |
Each Party shall ensure that all communications and representations it makes about Products are true, accurate, complete and consistent with the labeling of Products. Neither Party shall make false or misleading statements with regard to Products or issue any statement or publication that is detrimental to the reputation or goodwill of the other Party. |
|
8.4. |
No Party shall disclose any information, or make any public statements, concerning this Agreement (including its existence, its provisions, or disputes relating to it) provided that a party may disclose information concerning this Agreement: (i) to its legal advisers, auditors and/or regulator; (ii) to the extent required by law or under applicable stock exchange rules; and/or (iii) as necessary to enforce this Agreement. The foregoing shall not prohibit Supplier from providing such information as is required pursuant to Applicable Law to reimbursement authorities in connection with sales of the Products in the Territory. |
|
8.5. |
Except as expressly permitted under this Agreement or otherwise agreed by the Parties, neither Party shall modify, repackage, adulterate, misbrand, alter or add labels to or remove labels from any Product, nor alter the packaging or obscure, remove, conceal or otherwise interfere with any warnings or instructions for use, nameplates, trademarks or markings or any other indication of the source of origin of the goods that may be placed on the Products by Supplier. S+N may, without being in breach of this Agreement, indicate on Supplier’s label or packaging (or on any over-shipper packaging) that the Product under the S+N Brand is distributed by S+N. |
|
8.6. |
Supplier shall at all times in connection with performance of this Agreement, comply with Schedule 7 (Data Protection). [****]. |
|
9. |
Representations, Warranties and Undertakings |
|
9.1. |
Each Party warrants and represents at the Effective Date that: |
|
9.1.1. |
it is duly organized, validly existing and in good standing under the laws of the state, province, or country in which it is organized; |
|
9.1.2. |
it has the power and authority and the legal right to enter into this Agreement and to perform its obligations hereunder; |
|
9.1.3. |
it has taken all necessary action on its part to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder; |
|
9.1.4. |
it has obtained all necessary consents, approvals and authorizations of all governmental authorities and other persons required to be obtained by such Party in connection with this Agreement, except for those that cannot be obtained prior to the filing of an application for Regulatory Approval of the Product; neither it, nor any of its employees, contractors, permitted Sales Agents, permitted Distributors nor any other person controlled by it who is engaged by it in connection with its performance of this Agreement has been excluded, suspended, debarred, or disqualified from doing business by any regulatory or governmental authority, or any industry association, and |
|
9.1.5. |
entering into this Agreement does not conflict with or violate any requirement of Applicable Laws. |
|
9.2. |
Supplier warrants and represents at the Effective Date that: |
|
9.2.1. |
the information set out in the SQA is true and accurate; |
|
9.2.2. |
to its knowledge and having made all appropriate and reasonable enquiries, neither the manufacture nor the use of any Product infringes or misappropriates the intellectual property rights or other rights of any third party; |
|
9.2.3. |
it is the owner of or has the right to use the trademarks and trade names used by Supplier in respect of the Products (the Supplier’s Marks) and has the right to grant the licenses set out in this Agreement; |
|
9.2.4. |
it owns or has rights to use, all intellectual property rights necessary to supply the Products to S+N in accordance with the terms and conditions of this Agreement; |
|
9.2.5. |
Promotional Work created, supplied or otherwise used by Supplier in connection with the Products under the S+N Brand or the NUO Brand, shall be true, accurate and not misleading and shall comply with all Applicable Law; and |
|
9.2.6. |
the performance of its obligations under this Agreement does not materially conflict with, or constitute a material default or require any consent under, any material contractual obligation of Supplier. |
|
9.3. |
Supplier undertakes that: |
|
9.3.1. |
the information set out in the SQA will be true and accurate throughout the Term; |
|
9.3.2. |
the performance of Supplier’s obligations under this Agreement will not materially conflict with, or constitute a material default or require any consent under, any material contractual obligation of Supplier; |
|
9.3.3. |
Supplier will not enter into any contractual obligation that is inconsistent with the rights granted to S+N under this Agreement or that would prevent or restrict Supplier’s performance of its obligations under this Agreement; and |
|
9.3.4. |
Supplier will have, at the time of transfer of title in accordance with Section 4.6 and whilst any Products which have been purchased by S+N but have not yet been delivered to S+N or an S+N customer, the full power and lawful authority to transfer the full legal title to relevant Products to S+N or on S+N’s behalf, to S+N’s customer to whom Supplier delivers Products (as applicable) and Supplier shall maintain such Products, free and clear of any security interests, liens, charges or encumbrances. |
|
10. |
Intellectual Property Rights |
|
10.1. |
Supplier grants to S+N and its Affiliates, their employees, representatives, suppliers, sales agents and distributors, a limited, non-exclusive fully paid-up, non-royalty bearing, non-transferable license to use the Supplier’s Marks in connection with the promotion and sale of the Products in the Territory. during the Term of this Agreement. |
|
10.2. |
S+N shall promote and sell the Products in the Territory under S+N’s Marks, however, Supplier shall be identified on Product packaging and labeling as manufacturer and S+N shall be identified as the distributor. Supplier shall only be entitled to use any S+N Marks for the sole purpose of fulfilling its obligations under and in accordance with this Agreement and shall not use nor permit to be used the S+N Marks in any way either directly or indirectly without S+N’s prior written consent. |
|
10.3. |
Neither Party shall at any time, either during the term of this Agreement or thereafter, challenge the other Party’s ownership of the other Party’s trademarks that are licensed hereunder, challenge the validity of such trade marks, or do or cause to be done, or omit to do, any act or thing, the doing or omission of which would contest, or in any way impair or tend to impair, any right, title or interest of the other Party in the other Party’s trademarks that are licensed hereunder. |
|
10.4. |
Except as expressly set forth in this Agreement, neither Party grants any right, title, license or interest under its intellectual property rights to the other Party. |
|
10.5. |
Supplier shall notify S+N in writing promptly after becoming aware of any infringement or potential infringement by a third party of the S+N Marks or any other intellectual property rights of S+N relating to the Products. S+N shall notify Supplier in writing promptly after becoming aware of any infringement or potential infringement by a third party of the Supplier Marks or any other intellectual property rights of Supplier relating to the Products. [****]. |
|
10.6. |
If any infringement or potential infringement in connection with the Products or performance of this Agreement, relates to the S+N Marks or any S+N intellectual property rights, then the control and conduct of any such claims shall vest in S+N [****] |
|
10.7. |
If any infringement or potential infringement in connection with the Products or performance of this Agreement, relates to the Supplier Marks or any intellectual property rights associated with the Products (which are not intellectual property rights of S+N), or Promotional materials provided by Supplier, Supplier, at its sole expense, shall commence and pursue appropriate action as it may determine in its sole discretion to stop or prevent such infringement, including commencing negotiations with such alleged third party infringer or file a trade mark or patent infringement and/or other law suit [****] |
|
11. |
Confidentiality |
|
11.1. |
In the course of performing their respective duties under this Agreement, S+N and Supplier may become aware of confidential information of each other, including technical product data, business plans, product pricing, sales goals, marketing information, customer information and other information not generally available to the public including the terms and conditions of this Agreement (Confidential Information). Supplier and S+N shall, and shall ensure that each of their respective Affiliates shall: |
|
11.1.1. |
maintain Confidential Information which it has access to in connection with this Agreement or which is received from the other Party in strict confidence; |
|
11.1.2. |
use Confidential Information only for the purpose of fulfilling their obligations and exercising their rights under this Agreement or with the written consent of the other Party; and |
|
11.1.3. |
not disclose the Confidential Information of the other Party to any third party except in accordance with Section 11.2. |
|
11.2. |
The Parties shall be entitled to disclose Confidential Information of the other Party to their and their Affiliates’ employees who are under legal obligations of confidentiality and non-use no less onerous than those contained in this Section and who are not permitted to further disclose such Confidential Information. Supplier and S+N shall each be entitled to disclose Confidential Information of the other Party to its employees, representatives, permitted Sales Agents, permitted Distributors, or subcontractors where necessary for performance of this Agreement and who require access to such Confidential Information, provided that such employees, representatives, permitted Sales Agents, permitted Distributors, or subcontractors are under legal obligations of confidentiality substantially the same as those contained in this Section, including the survival of those obligations in the event of any termination of their relationship with Supplier or S+N. Supplier and S+N shall not allow any of their respective employees, representatives, permitted Sales Agents, permitted Distributors, or subcontractors who have not signed such an agreement to perform services under this Agreement. |
|
11.3. |
The confidentiality obligations set out in this Section shall not apply to information: |
|
11.3.1. |
that at the time of the disclosure is published or otherwise generally available to the public; |
|
11.3.2. |
that, after disclosure by the disclosing Party, is published or becomes generally available to the public otherwise than through an act or omission on the part of Supplier or S+N in violation of this Agreement; |
|
11.3.3. |
that Supplier or S+N can demonstrate was in its possession at the time of disclosure and was not acquired directly or indirectly from the other Party; |
|
11.3.4. |
rightfully acquired from others who were lawfully in possession of such information and who did not obtain it under any obligation of confidentiality to Supplier or S+N; and/or |
|
11.3.5. |
that a receiving Party can demonstrate that it developed without reference to the disclosing Party’s Confidential Information. |
|
11.4. |
A receiving Party shall be entitled to disclose Confidential Information of the other Party to the extent that the receiving Party is required to disclose such Confidential Information by law, provided that such Party gives the disclosing Party written notice of such disclosure (if legally permitted) and the recipient cooperates with the disclosing Party if it seeks a protective order. |
|
11.5. |
The obligations in this Section 11 shall remain in full force and effect throughout the Term and for a period of [****] from the date of expiry or termination of this Agreement. |
|
12. |
Compliance |
|
12.1. |
Each Party shall: (i) comply with the requirements of all Applicable Laws related to performance of this Agreement and related to the Products including those relating to payments or reimbursements in connection with national, provincial, or local healthcare programs, and the code of ethics of relevant industrial associations; and (ii) cooperate in any investigation relating to activities performed in connection with this Agreement, including investigations relating to fraud and abuse issues. |
|
12.2. |
Without prejudice to the generality of Section 7 or 12.1, Supplier shall perform its obligations under this Agreement, or other activities connected with this Agreement in a manner to ensure that: |
|
12.2.1. |
no Product supplied hereunder is produced in violation of the Fair Labor Standards Act, the Modern Slavery Act 2015 or other similar labor and human rights laws or regulations applicable in the Territory; and |
|
12.2.2. |
Products are not adulterated or misbranded within the meaning of the Federal Food, Drug and Cosmetic Act (FD&C Act) or under any other laws or regulations in the Territory and are not otherwise prohibited from being introduced into commerce. |
|
12.3. |
Supplier shall promptly notify S+N of any violations of or failure to comply with Applicable Laws by Supplier and legal proceedings threatened or commenced against Supplier which affect, or which are relevant to its performance of this Agreement, including by reason of any failure of Products to meet the conditions and standards required by Applicable Laws. S+N shall promptly notify Supplier of any violations of or failure to comply with Applicable Laws by S+N and legal proceedings threatened or commenced against S+N which affect, or which are relevant to its performance of this Agreement. |
|
12.4. |
Each Party shall conduct its business and affairs in an ethical manner and consistent with the provisions of Smith+Nephew’s Code of Conduct and Business Principles (a copy of which may be obtained at http://www.smith-nephew.com/compliance/code-of-conduct-and-business-principles. |
|
12.5. |
Neither Party shall seek, accept, offer, give or permit any payment, service, gift or other value from or to any person or firm as a condition or result of doing business with Supplier or S+N, if doing so would constitute a violation of applicable laws, including any law relating to bribery or corruption by Supplier, S+N or any of their respective Affiliates. Neither Party shall make facilitation payments in relation to the performance of this Agreement. Each Party shall take particular care to ensure the propriety of all interactions with government officials, healthcare professionals and other persons who might have authority or influence, directly or indirectly, over customers or any matters relating to the Products or S+N’s products, including the sale, marketing, promotion, importation, licensing or distribution of Products or S+N products. |
|
12.6. |
Neither Party shall employ or otherwise engage any person in connection with the Products or activities under this Agreement who is excluded, debarred, suspended, disqualified or otherwise ineligible from doing business by any regulatory or governmental authority or any industry association. |
|
12.7. |
[****] |
|
12.8. |
Supplier shall cooperate with S+N and shall provide S+N with all information S+N reasonably requests to enable S+N to meet its legal and regulatory obligations, including under the Modern Slavery Act 2015, Section 1502 of the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010 and any other legislation in any jurisdiction. |
|
12.9. |
Supplier shall keep and maintain current and accurate books, records and accounts reflecting all transactions and Supplier’s performance under this Agreement, including all device master records, quality control tests, device history records, root cause analyses, quality of supply agreements, and any other records necessary to demonstrate compliance with this Agreement (collectively the Records). Supplier shall organize and maintain the Records to enable identification of components, packaging materials, works-in-process and finished product and to identify the location of such components, packaging materials, works-in-process and finished product. The Records shall be of sufficient detail to provide traceability of specific lots of components and packaging materials used to produce each lot of Product. S+N reserves the right to review the Records as they may relate to the performance of and compliance with this Agreement. Supplier shall provide copies of any Records to S+N from time to time upon request. Upon reasonable notice and during normal business hours, Supplier shall provide reasonable access to such Records to verify compliance with the terms of this Agreement. S+N shall be permitted to conduct such review of Records using its own internal resources or by securing the services of a third party accounting/auditing firm. Supplier shall retain all Records under this Agreement for such period as is required by Applicable Law. |
|
12.10. |
Supplier shall use its best efforts to continue the supply of Products to S+N in case of events giving rise to business disruption including natural disaster, epidemics, terrorist attacks, fire, flood, loss of Product in transit, loss of utilities, loss of key personnel, industrial disputes, problems surrounding a single source of supply of raw materials or any component products, or any other occurrences which may affect the ability of Supplier to continue to supply the Products. [****]. |
|
13. |
Limitation of Liability; Indemnification |
|
13.1. |
Nothing in this Agreement shall exclude or restrict either Party’s liability in respect of any liability that cannot be excluded or limited pursuant to applicable law including: (i) death or personal injury resulting from negligence; and (ii) bribery, fraud or fraudulent misrepresentation. |
|
13.2. |
SUBJECT TO SECTION 13.1, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR ANY PERSON OR ENTITY FOR ANY PUNITIVE, MULTIPLE, INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER BASED ON CONTRACT, TORT OR OTHER LEGAL THEORY, INCLUDING LOSS OF PROFIT, EVEN IF THE PARTY IS NOTIFIED IN ADVANCE OF THE POSSIBILITY OF SUCH DAMAGES. THE FOREGOING LIMITATIONS OF LIABILITY SHALL NOT APPLY TO LIABILITY UNDER THE INDEMNIFICATION OBLIGATIONS (SECTIONS 13.3, 13.4, and 13.5 and Schedule 7), OR BREACH OF A PARTY’S CONFIDENTIALITY OBLIGATIONS SET OUT IN THIS AGREEMENT (SECTION 11), OR COSTS, LOSSES, DAMAGES AND REASONABLE EXPENSES INCURRED BY S+N AS A RESULT OF ANY PRODUCT RECALL OR LATE DELIVERY OF PRODUCTS. |
|
13.3. |
S+N shall fully indemnify and hold harmless Supplier and its Affiliates and their respective directors, officers, employees and representatives (each a Supplier Indemnitee) from and against any and all losses, damages, claims, liabilities, costs and expenses, including reasonable attorney fees, resulting from any claim, suit, action or proceeding (whether actual or threatened) (each an S+N Indemnity Claim) brought against a Supplier Indemnitee by a third party, to the extent arising from: [****]. S+N’s obligations as set out in this Section shall not apply to the extent an S+N Indemnity Claim is caused by Supplier Indemnitee’s breach of this Agreement, negligence, unlawful acts or omissions or willful misconduct. |
|
13.4. |
Supplier shall fully indemnify and hold harmless S+N and its Affiliates and their respective directors, officers, employees and representatives (each a S+N Indemnitee), from and against any and all losses, damages, claims, liabilities, costs and expenses, including reasonable attorney fees, resulting from any claim, suit, action or proceeding (whether actual or threatened) (each a Supplier Indemnity Claim): [****]. Supplier’s obligations as set out in this Section shall not apply to the extent a Supplier Indemnity Claim is caused by S+N Indemnitee’s breach of this Agreement, negligence, unlawful acts or omissions or willful misconduct. |
|
13.5. |
Each S+N Indemnitee and each Supplier Indemnitee shall be an Indemnified Party. An S+N Indemnity Claim and a Supplier Indemnity Claim for the purposes of this Section, shall each be a Claim. An Indemnified Party’s rights to indemnification are subject to the following: (i) the Indemnified Party shall notify the indemnifying Party in writing promptly after a Claim is made (however, the Indemnified Party’s failure to give prompt notice to indemnifying Party of any such Claim shall not relieve the indemnifying Party of any obligation hereunder except and to the extent that such failure prejudices indemnifying Party’s ability to defend against such claim); [****]; and (iii) the Indemnified Party cooperates with the indemnifying Party in the defense, conduct, prosecution or termination of the Claim, including the furnishing of information and the assistance from directors, officers, employees and agents of the Indemnified Party at the indemnifying Party's request [****]. |
|
14. |
Insurance |
|
|
At all times while Supplier is providing Products to S+N, and for a period of three (3) years after expiry or termination of the Agreement, Supplier shall obtain and maintain, at its sole cost and expense, the following insurance coverages: (1) Commercial General Liability insurance, including Products & Completed Operations liability, that meets the following requirements: (a) the insurance shall insure Supplier against all liability related to the Products (whether liability arises from Supplier’s conduct or by virtue of a Party’s participation in this Agreement), including liability for bodily injury, property damage, wrongful death, and any pertaining contractual indemnity obligation under this Agreement; (b) the coverage territory for this insurance shall be the Territory; and (c) the insurance shall be in an amount that is required by operation of law and reasonable and customary in the industry for companies of comparable size and activity, but not less than [****], such limits can be met using primary and excess insurance; (2) where vehicles are used in providing products and services hereunder, insurance for the risk of third party bodily injury and property damage in a form and type customary for the territory where the vehicles are operated with limits not less than [****]; and (3) Employers Liability/Workers Compensation or the equivalent in the territory where the work is being performed to meet the minimum statutory requirements thereof. For claims arising from the Products, Supplier shall name S+N as an Additional Insured (or the equivalent type of protection that extends S+N direct rights to defense and indemnity from the insurer for claims arising from the products and services provided hereunder to the extent that Supplier is required to indemnify S+N under this agreement) on any such policies, and Supplier’s insurance shall be primary to any insurance provided by S+N, which shall be strictly excess of Supplier’s insurance. Supplier shall be solely responsible for any deductibles and/or self-insured retentions under Supplier’s insurance policies. Supplier shall procure an endorsement whereby its insurer shall immediately notify S+N in the event of any material reduction or termination of coverage that affects coverage during the period for which Supplier is required to maintain insurance. S+N shall be provided with evidence of such insurance upon reasonable request; failure to request such evidence shall in no way waive the requirements set out in this Section. |
|
15. |
Term and Termination |
|
15.1. |
This Agreement will commence on the Effective Date and, shall continue in full force and effect unless terminated earlier in accordance with its terms, for a period of five (5) years (the Initial Term) following the expiry of which, it shall automatically renew, in successive additional periods of two (2) years each (each a Renewal Term). The Initial Term and any Renewal Term(s) collectively will be referred to as the Term. |
|
15.2. |
Each Party shall have the right to terminate this Agreement: |
|
15.2.1. |
immediately at any time by written notice to the other if the other Party commits any material breach of any of the provisions of this Agreement and, in the case of a breach which is capable of remedy, fails to remedy the same [****]; or |
|
15.2.2. |
immediately at any time by written notice to the other if the other Party is unable to pay its debts as they fall due, ceases or threatens to cease to carry on business, goes into compulsory or members voluntary liquidation, has a receiver appointed over all or part of its assets or undertaking or passes a resolution or holds a meeting in order to give effect to any of the above insolvency measures in any jurisdiction. |
|
15.3. |
S+N shall be entitled to terminate this Agreement, immediately on notice to Supplier if Supplier or its Affiliates, commits in the course of performing this Agreement, an illegal act or a material breach of Section 12 (Compliance) [****]. |
|
15.4. |
S+N shall be entitled to terminate this Agreement, on twelve (12) months’ advance written notice to Supplier at any time. Supplier shall be entitled to terminate the Agreement on no less than six (6) months’ notice, provided such notice shall not be permitted to take effect until expiry of the Initial Term. |
|
15.5. |
Upon the effective date of termination or expiration of this Agreement for any reason: |
|
15.5.1. |
S+N will cease to be an authorized distributor of Products in the Territory and the Field Limitation will cease to apply, provided S+N shall have the right to continue to sell, promote, consign or otherwise make available any of S+N’s existing inventory of Products or Equipment Products whether delivered or following delivery by Supplier. |
|
15.5.2. |
Supplier shall cease to use S+N Marks on the Products, the packaging and labeling of the Products and any promotional materials and cease to identify S+N as distributor of record on the packaging and labeling of the Products and any promotional materials; |
|
15.5.3. |
Supplier shall provide S+N, where required by S+N, with a last time buy of Products, [****]; and |
|
15.5.4. |
[****]. |
|
15.6. |
On expiry or termination of this Agreement the following Sections shall continue in full force and effect: Section 4.4, Section 6 (for the Warranty Period), Section 7 (for the duration of the shelf life for Consumable Products and for the duration of the Warranty Period for Equipment Products provided Supplier shall continue to perform any obligations applicable to it as manufacturer under applicable law), Section 8.4, Section 8.6, Section 9.3, Section 10, Section 11 (for the period set out in such Section), Section 12, Section 13, Section 14, Sections 15.5 to 15.9 (inclusive), Sections 16.4 to 16.6 (inclusive) and Section 17 (provided that Section 17.4 shall continue in full force and effect only until the later of the period set out therein and the duration of the Warranty Period for Equipment Products). |
|
15.7. |
Upon termination or expiry of this Agreement, each Party shall immediately return to the other, or destroy, all Confidential Information and promotional and other materials and product literature previously provided by one Party to the other, except (i) for copies of material required for archival, legal or regulatory purposes, regardless of whether the Party has previously paid for such items, and (ii) to the extent that S+N requires such items for the promotion and sale of Products in its inventory pursuant to Section 15.5.1. |
|
15.8. |
Upon expiration or termination of this Agreement, Supplier shall destroy or return to S+N, in accordance with S+N’s instructions, all inventories, samples, promotional materials and/or any other materials bearing S+N Marks in Supplier’s possession. |
|
15.9. |
In the event S+N terminates this Agreement under Section 15.2 or Section 15.3: |
|
15.9.1. |
S+N, at its discretion may, without penalty, return Products purchased by S+N to Supplier and receive a refund for the amount of the purchase price paid for such Products; and |
|
15.9.2. |
The Licensing Fee and Reimbursement Fee shall be refunded to S+N on demand, on a pro rata basis based on the unexpired portion of the Initial Term remaining as of the date of termination. |
|
16. |
Right of First Offer and Right of First Refusal |
|
16.1 |
Supplier shall not sell, provide, distribute or supply the Product under the S+N Brand, the NUO Brand or any alternative branding, to any third party in additional territories outside of the Territory (Additional Territories) except for [****] (Existing Territories) unless and until it has first provided S+N with the opportunity to become the distributor or reseller of the Products in any such Additional Territory by notifying S+N in writing of its intention to sell, provide or distribute the Products in the Additional Territory [****]. In the event Supplier’s appointed distributor or Supplier ceases to sell or distribute Products in the Existing Territories during the Term, the Existing Territories shall become Additional Territories for the purposes of this Agreement [****]. |
|
16.2 |
Supplier will notify S+N of the development and availability of any new products (meaning products which are not the Products as defined in Section 1.1 and which solely process or are intended to process whole-blood components for the Field) (New Products), and on request by S+N shall participate with S+N [****], in good faith negotiations on an exclusive basis, with a view to entering into an amendment to this Agreement relating to S+N’s appointment as distributor or reseller of the New Products in any Additional Territory, to include any terms on which Supplier may sell the New Products under the NUO Brand. For the avoidance of doubt, New Products meeting the definition above shall include any such products developed by or available from Supplier, its Affiliates or as part of Supplier’s or its Affiliates’ participation in a collaboration with a third party. |
|
16.3 |
The Parties may agree to collaborate on the regulatory strategy for any target Additional Territory or New Product [****]. |
|
16.4 |
For a period of eighteen (18) months following the Effective Date, or such longer period as the Parties’ may agree in writing, Supplier agrees that it shall notify S+N in writing of: (a) any proposed license, assignment, transfer or disposal of any of Supplier’s intellectual property rights relating to the Products or New Products; and/or (b) any proposed Business Combination (as defined below) of Supplier submitted or recommended to the stockholders of Supplier or NUO’s Board of Directors (a Disposal Notice) which shall include a reasonably detailed description of the terms and conditions proposed by any third party in connection with either (a) or (b) above (Proposed Transaction). The existence, terms, content, or effect of the Disposal Notice and Proposed Transaction shall constitute confidential information. Business Combination means (i) the acquisition by a third party of shares of capital stock of Supplier by tender, exchange offer or otherwise where such third party would become, directly or indirectly, the beneficial owner (within the meaning of Rule 13d-3 under the U.S. Securities Exchange Act of 1934, as amended) of the securities of Supplier representing [****] or more of Supplier’s capital stock, (ii) the effectiveness of any merger of Supplier with or into a third party, in which the capital stock of Supplier immediately prior to such merger represents less [****] of the voting power of the surviving entity (or, if the surviving entity is a wholly owned subsidiary, its parent) immediately after such merger, (iii) the sale of all or substantially all of the assets of Supplier; or (iv) the transfer of the legal power to direct or cause the direction of the general management of Supplier. |
|
16.5 |
For a period of [****] business days following S+N’s receipt of a Disposal Notice (the “Initial Offer Period”), S+N shall have the right, exercisable in its sole discretion by delivering a written notice to Supplier within the Initial Offer Period, to enter into exclusive negotiations with Supplier with respect to S+N undertaking the Proposed Transaction or a similar transaction, in which case Supplier and S+N will negotiate in good faith to determine the terms of such transaction by S+N for a period of at least forty five (45) business days (the “Exclusivity Period”). Supplier shall use best efforts to procure the relevant consents of any shareholder or other third party required to give effect to the rights granted to S+N under this Section. |
|
16.6 |
If S+N desires to undertake the Proposed Transaction or a similar transaction as a result of the negotiations with Supplier, Supplier and S+N shall negotiate the terms in good faith for a period of not less than forty-five (45) business days. If Supplier and S+N are unable to reach agreement on the Proposed Transaction/similar transaction within such timeframe (and no memorandum of understanding, term sheet or similar is able to be finalized), Supplier may, following the conclusion of such negotiation, undertake the Proposed Transaction on terms no less favorable in the aggregate than the terms last offered by S+N. If the terms of the Proposed Transaction materially change following such negotiations, Supplier shall have the obligation to re-offer any new terms to S+N pursuant to the procedure set out above. |
|
16.7 |
Supplier shall notify S+N in writing of any material change in its share ownership or management, unless otherwise publicly disclosed in a timely manner. In the event that a competitor of S+N becomes a major shareholder of Supplier or has the legal power to direct management of Supplier [****], S+N shall have a right to terminate the Agreement and Supplier shall refund to S+N, on a pro rata basis, the portion of the License Fee and/or Reimbursement Fees corresponding to the unexpired period of the Initial Term as at the date of such termination. |
|
16.8 |
Supplier shall [****] inform S+N of its proposed intent to sell equity securities via capital market activities (Offering) with the intent of allowing S+N to participate in such Offering if S+N so desires and any applicable financial advisory firm engaged by Supplier to assist in such Offering endorses S+N participation. Supplier and/or its financial representatives will keep S+N informed as to the progress of the Offering and solicit S+N’s participation in the Offering in accordance with timing considerations common in such Offerings. For the avoidance of doubt, any Offering shall not constitute a Business Combination. |
|
17. |
General Provisions |
|
17.1. |
This Agreement, including this document and its attachments and all documents referred to in it, constitutes the entire agree‐ment between the Parties with respect to its subject matter, and supersedes all prior agreements and understandings relating to the same subject matter, provided that if the Parties have entered into a quality agreement or similar arrangement setting out the Parties’ regulatory and quality assurance responsibilities relating to the Products then those agreements shall remain valid and Supplier shall continue to comply with its obligations in respect of such agreements or arrangements. |
|
17.2. |
Neither Party shall, without the prior written consent of the other Party, assign or otherwise transfer, sub-contract or otherwise deal with this Agreement or any of its rights or obligations under this Agreement except as expressly set out herein. S+N may assign or transfer this Agreement to any of its Affiliates or pursuant to merger or a disposal by S+N of its business relating to this Agreement and/or any of the Products. [****]. |
|
17.3. |
S+N shall be entitled to perform any of its obligations under this Agreement or through any S+N Affiliate; provided, however, that any act or omission of any such S+N Affiliate exercising or performing rights or obligations this Agreement shall for the purposes of this Agreement be deemed to be the act or omission of such S+N Affiliate only, and no other S+N Affiliate shall have any liability in respect of such action or omission. NUO may appoint its Affiliates as subcontractors on notice to S+N, provided NUO shall remain responsible and liable for such subcontractors’ performance in accordance with the terms and conditions of this Agreement. |
|
17.4. |
Supplier and [****] have entered into a [****] Agreement [****] for the purpose of [****] manufacturing and supplying Equipment Products to Supplier for its customers. Supplier warrants and represents that at all times during the Term of this Agreement it shall maintain a valid and legally binding contract for supply of Equipment Products with [****], corresponding to its obligations to S+N for manufacturing and supply of the Equipment Products hereunder. Supplier shall notify S+N immediately of: i) any event which Supplier is aware, may give rise to termination of the [****] Agreement (including without limitation any notice of termination issued in connection with the [****] Agreement) or any event which gives rise to actual termination of the [****] Agreement; ii) any event relating [****] or the [****] Agreement which affects or has the potential to affect, Supplier’s performance of its obligations under this Agreement; or iii) any proposed or potential material change to the [****] Agreement, and in each such case, shall discuss with S+N, any steps which may be practicable to ensure continued supply of the Equipment Products to S+N in accordance with the terms of this Agreement [****]. For the avoidance of doubt, any failure by Supplier to comply with its obligations hereunder in relation to the [****] Agreement shall constitute a material breach of this Agreement. |
|
17.5. |
THE PARTIES INTEND FOR THIS AGREEMENT AND THE RIGHTS GRANTED HEREIN TO COME WITHIN SECTION 365(n) OF THE U.S. BANKRUPTCY CODE (OR OTHER APPLICABLE CORRESPONDING INSOLVENCY LAW (CONCURSO OR OTHER EQUIVALENT PROCEEDINGS ACTS RELATED TO THE INSOLVENCY OF A PARTY) PROVIDING FOR OR PRESERVING LICENSE RIGHTS TO A LICENSEE) AND, NOTWITHSTANDING THE BANKRUPTCY OR INSOLVENCY OF SUPPLIER, THIS AGREEMENT AND THE RIGHTS GRANTED HEREIN SHALL REMAIN IN FULL FORCE AND EFFECT SO LONG AS S+N IS IN MATERIAL COMPLIANCE WITH THE TERMS AND CONDITIONS HEREOF. |
|
17.6. |
Subject to Section 17.7, nothing in this Agreement shall confer on any third party the right to enforce any provision of this Agreement. |
|
17.7. |
Any S+N Affiliate which purchases Products pursuant to this Agreement may enforce any term or condition of this Agreement as an intended third-party beneficiary of this Agreement. The Indemnified Parties may enforce their rights under Section 13 and Schedule 7. The consent of third parties shall not be required in relation to any amendment of this Agreement. |
|
17.8. |
If, in any action relating to this Agreement, any provision is found to be unenforceable, then such provision shall be modified to the minimum extent necessary to make it enforceable. All provisions in this Agreement are severable from every other provision so that the unenforceability of any provision in this Agreement shall not affect the enforceability of any other provision. |
|
17.9. |
Supplier is an independent contractor and nothing in this Agreement shall constitute an agency, partnership or joint venture, employment, franchise or other relationship between the Parties or shall authorize one Party to enter into contractual relationships or incur obligations on behalf of the other Party. Supplier’s employees (or those of its subcontractors, NUO Sales Agents or NUO Distributors) involved in the performance of Supplier’s obligations pursuant to this Agreement shall at all times be considered employees of Supplier or its subcontractors, NUO Sales Agents or NUO Distributors respectively. S+N shall not be responsible for any of Supplier’s business obligations (including insurance, social security contributions, workers’ compensation and employment related taxes), and Supplier shall fully indemnify and hold S+N and its Affiliates harmless from those obligations. |
|
17.10. |
The rights and remedies provided in this Agreement are cumulative and not exclusive of any rights or remedies otherwise provided by law. |
|
17.11. |
The failure of a Party to exercise or enforce any right under this Agreement shall not be deemed to be a waiver of that right. No waiver shall be effective against a Party unless set out in writing signed by an authorised representative of such Party. No waiver by either Party of any breach or default of any of the provisions in this Agreement shall be deemed a waiver as to any subsequent and/or similar breach or default. A waiver of any provision of this Agreement shall not be a waiver of any other provision. |
|
17.12. |
Each Party to this Agreement shall be responsible for the payment of its own costs and expenses in connection with the negotiation, preparation and execution of this Agreement. |
|
17.13. |
This Agreement may be executed in any number of counterparts, each of which shall constitute an original of this Agreement. Signatures provided by electronic signature or in a PDF or similar locked file transmitted by electronic mail will be deemed to be original signatures. |
|
17.14. |
This Agreement shall not be varied or any right hereunder waived, except in writing signed by the duly authorised representatives of both Parties. |
|
17.15. |
Notices and other communications between the Parties shall be in writing in the English language, except for communications regarding routine matters in the ordinary course of business, which may be in the language commonly used between the Parties, and shall be validly given and received when sent in the manner and to the address specified at the beginning of this Agreement, provided that communication by email shall not be sufficient to serve legal notice in respect of termination or dispute. Either Party may change its address by giving notice of the change to the other Party. |
|
17.16. |
Unless otherwise agreed in writing by the Parties, this Agreement and all related documents shall be drawn up in English. Any translations of this Agreement into any other language shall have no effect. All proceedings related to this Agreement shall be conducted in the English language. |
|
17.17. |
This Agreement and any dispute or claim arising out of or in connection with it or its subject matter or formation (including any non-contractual disputes, claims or obligations) shall be governed by and interpreted in accordance with the laws of the State of Delaware. The Parties specifically agree that the 1980 United Nations Convention on Contracts for the International Sale of Goods, as may be amended from time to time, shall not apply to this Agreement. |
|
17.18. |
Any dispute arising out of or in connection with this Agreement or other agreements and arrangements connected to or being the result of this Agreement, [****] shall be referred to and finally resolved by the courts of Delaware, who shall have exclusive jurisdiction. In any litigation, arbitration or other proceeding arising out of or related to this Agreement, the prevailing Party will be entitled to receive its reasonable attorneys’ fees, and reasonable costs and expenses. Nothing in this Section shall prevent either Party from seeking an interim injunction in respect of a breach of this Agreement. |
|
17.19. |
A reference to a statute or statutory provision is a reference to it as amended, extended or re-enacted from time to time. A reference to a statute or statutory provision shall include all subordinate legislation made from time to time under that statute or statutory provision. |
|
17.20. |
A reference to this Agreement or to any other agreement or document referred to in this Agreement is a reference to this Agreement or such other agreement as varied or novated (in each case, other than in breach of the provisions of this Agreement) from time to time. |
|
17.21. |
Any words following the terms “including”, “include”, “in particular”, “for example” or any other similar expression shall be construed as illustrative and shall not limit the sense of the words, description, definition, phrase or terms preceding those terms. |
|
17.22. |
A person includes a natural person, corporate or unincorporated body (whether or not having separate legal personality) and that person’s legal and personal representatives, successors and permitted assigns. |
|
17.23. |
A reference to a “business day” means a day, other than a Saturday, Sunday or public holiday in the State of Delaware. |
|
17.24. |
A reference to “USD” or “$” means United States dollars. |
Exhibit 19.1
NUO THERAPEUTICS, INC.
INSIDER TRADING POLICY
Purpose
This Insider Trading Policy (the “Policy”) provides guidelines with respect to transactions in the securities of Nuo Therapeutics, Inc. (the “Company”) and the handling of confidential information about the Company and the companies with which the Company engages in transactions or does business. The Company’s Board of Directors has adopted this Policy to promote compliance with federal and state securities laws that prohibit certain persons from (i) engaging in transactions in the securities of the Company while in possession of material non-public information, or (ii) providing material nonpublic information to other persons who may trade on the basis of that information.
Transactions Subject to this Policy
This Policy applies to transactions in the Company’s securities and any securities of a Company subsidiary (collectively referred to in this Policy as “Company Securities”), including the Company’s common stock, options to purchase common stock, or any other type of securities that the Company may issue.
Transactions subject to this Policy include purchases and sales of Company Securities and bona fide gifts of Company Securities. This Policy does not apply, however, to transactions for estate planning purposes, including gifts to a trust, charitable foundation, or similar entity, as long as you or your Family Members (as defined below) remain the sole beneficiaries of the transferred Company Securities and the terms of the transfer ensure that the Company Securities remain subject to the same restrictions that apply to you under this Policy.
Statement of Policy
It is the policy of the Company that no director, officer, or employee of the Company (or any other person designated as subject to this Policy) who is aware of material nonpublic information relating to the Company or any of its subsidiaries may directly or indirectly through Family Members (as defined below) or other persons or entities:
|
1. |
engage in transactions in Company Securities, except as specified in this Policy under the headings “Transactions Under Company Plans” and “Rule 10b5-1 Plans;” |
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2. |
recommend that others engage in transactions in any Company Securities; |
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disclose (“tip”) material nonpublic information to persons within the Company whose jobs do not require them to have that information, or outside of the Company to other persons, including, but not limited to, family, friends, business associates, investors, and expert consulting firms, unless the disclosure is authorized by the Company and subject to protection of such information; or |
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assist anyone engaged in the above activities. |
| Nuo Therapeutics, Inc. | Insider Trading Policy |
It is also the policy of the Company that no director, officer, or employee of the Company (or any other person designated as subject to this Policy) who, in the course of working for the Company, learns of material nonpublic information about a company (i) with which the Company does business, or (ii) that is involved in a potential transaction or business relationship with Company, may engage in transactions in that company’s securities until the information becomes public or is no longer material.
There are no exceptions to this Policy, other than as specifically noted herein. Small transactions and transactions that may be necessary or justifiable for independent reasons (such as the need to raise money for an emergency expenditure) are nonetheless subject to this Policy. Securities laws generally do not recognize any mitigating circumstances, and, in any event, even the appearance of an improper transaction should be avoided.
Consequences of Violations
The purchase or sale of securities while aware of material nonpublic information, or the disclosure of material nonpublic information to others who then engage in transactions in Company Securities, is prohibited by federal and state law. Insider trading violations may be pursued vigorously by the U.S. Securities and Exchange Commission (the “SEC”), U.S. Attorneys, and state enforcement authorities. Punishment for insider trading violations is severe, and could include significant fines and imprisonment.
In addition, an individual’s failure to comply with this Policy may subject the individual to Company-imposed sanctions, including dismissal for cause, whether or not the employee’s failure to comply results in a violation of law. Further, a violation of law, or even an investigation by the SEC that does not result in prosecution, can tarnish a person’s reputation and irreparably damage a career.
Persons Subject to the Policy
This Policy applies to all members of the Company’s Board of Directors and all officers and employees of the Company. The Company may also determine that other persons should be subject to this Policy, such as contractors or consultants who have access to material nonpublic information. This Policy also applies to family members, other members of a person’s household and entities controlled by a person covered by this Policy, as described below under the heading “Transactions by Family Members and Others.”
Transactions by Family Members and Others
This Policy applies to your family members who reside with you (including a spouse, a child, a child away at college, stepchildren, grandchildren, parents, stepparents, grandparents, siblings, and in-laws), anyone else who lives in your household, and any family members who do not live in your household but whose transactions in Company Securities are directed by you or are subject to your influence or control, such as parents or children who consult with you before they trade in Company Securities (collectively referred to as “Family Members”). You are responsible for the transactions of these other persons and therefore should make them aware of the need to confer with you before they trade in Company Securities, and you should treat all such transactions for the purposes of this Policy and applicable securities laws as if the transactions were for your own account.
| Nuo Therapeutics, Inc. | Insider Trading Policy |
This Policy also applies to any entities that you influence or control, including any corporations, partnerships, or trusts (collectively referred to as “Controlled Entities”). Transactions by these Controlled Entities should be treated for the purposes of this Policy and applicable securities laws as if they were for your own account.
Individual Responsibility
Persons subject to this Policy have ethical and legal obligations to maintain the confidentiality of information about the Company and to not engage in transactions in Company Securities while in possession of material nonpublic information. Each individual is responsible for making sure that he or she complies with this Policy, and that any Family Member or Controlled Entity also comply with this Policy.
The responsibility for determining whether an individual is in possession of material nonpublic information rests with that individual, and any action on the part of the Company, the Chief Executive Officer and/or Chief Financial Officer, or any employee or director pursuant to this Policy (or otherwise) does not in any way constitute legal advice or insulate an individual from liability under applicable securities laws.
All persons subject to this Policy must certify their understanding of, compliance with, and intent to comply with, this Policy. The form of certification is set forth in Appendix A hereto.
Definition of Material Nonpublic Information
A. Material Information. Information is considered “material” if a reasonable investor would consider that information important in making a decision to buy, hold, or sell securities. Any information that could be expected to materially affect a company’s stock price, whether it is positive or negative, should be considered material. Materiality is based on an assessment of all of the facts and circumstances and is often evaluated by enforcement authorities with the benefit of hindsight. While it is not possible to define all categories of material information, examples of information that ordinarily would be regarded as material include:
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a pending or proposed merger, acquisition or tender offer; |
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a pending or proposed acquisition or disposition of a significant asset; |
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a Company restructuring; |
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the gain or loss of a significant customer or supplier; |
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important business developments such as major contract awards or cancellations, trial results, strategic collaborators, or the status of regulatory submissions; |
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significant related party transactions; |
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projections of future earnings or losses, or other earnings guidance; |
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a change in dividend policy, the declaration of a stock split, or an offering of additional securities; |
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bank borrowings or other financing transactions out of the ordinary course; |
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a change in management; |
| Nuo Therapeutics, Inc. | Insider Trading Policy |
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a change in auditors or notice that the auditor’s reports may no longer be relied upon; |
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pending or threatened significant litigation, or the resolution of such litigation; |
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impending bankruptcy or the existence of severe liquidity problems of the Company; |
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a significant cybersecurity incident, such as a data breach, or any other significant disruption in the Company’s operations or loss, potential loss, breach or unauthorized access of its property; or |
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the imposition of an event-specific restriction on trading in Company Securities or the securities of another company or the extension or termination of such restriction. |
B. When Information is Considered Public. Information that has not been disclosed to the public is generally considered to be nonpublic information. In order to establish that the information has been disclosed to the public, it may be necessary to demonstrate that the information has been widely disseminated. Information generally would be considered widely disseminated if it has been disclosed through the newswire services, publication in a widely-available newspaper or news website, or public disclosure documents filed with the SEC that are available on the SEC’s website. By contrast, information would likely not be considered widely disseminated if it is available only to the Company’s employees, or if it is only available to a select group of analysts, brokers, and institutional investors.
Once information is widely disseminated, it is still necessary to provide the investing public with sufficient time to absorb the information. As a general rule, information should not be considered fully absorbed by the marketplace until after two full trading days have elapsed following the public release of the information. For example, if the Company were to make an announcement on a Monday during or after OTC Markets normal market hours, you should not trade in Company Securities until Thursday.
Transactions Under Company Plans
This Policy does not apply in the case of the following transactions, other than as specifically noted:
A. Stock Option Exercises. This Policy does not apply to the exercise of an employee stock option acquired pursuant to a Company employee benefit plan, or to the exercise of a tax withholding right pursuant to which a person has elected to have the Company withhold shares subject to an option to satisfy tax withholding requirements. This Policy does apply, however, to any sale of stock as part of a broker-assisted cashless exercise of an option, or any other market sale for the purpose of generating the cash needed to pay the exercise price of an option.
B. Restricted Stock Awards. This Policy does not apply to the vesting of restricted stock, or the exercise of a tax withholding right pursuant to which you elect to have the Company withhold shares of stock to satisfy tax withholding requirements upon the vesting of any restricted stock. This Policy does apply, however, to any market sale of restricted stock.
C. Stock Purchase Plan. This Policy does not apply to purchases of Company Securities in a Company stock purchase plan resulting from your periodic contribution of money to the plan pursuant to the election you made at the time of your enrollment in the plan. This Policy does apply, however, to your election to participate in the plan for any enrollment period and to your sales of Company Securities purchased pursuant to the plan.
D. Other Similar Transactions. Any other purchase of Company Securities from the Company or sales of Company Securities to the Company are not subject to this Policy.
| Nuo Therapeutics, Inc. | Insider Trading Policy |
Special and Prohibited Transactions
The Company has determined that there is a heightened legal risk and/or the appearance of improper or inappropriate conduct if the persons subject to this Policy engage in certain types of transactions. It therefore is the Company’s policy that any persons covered by this Policy may not engage in any of the following transactions, or should otherwise consider the Company’s preferences as described below:
A. Short Sales. Short sales of Company Securities (i.e., the sale of a security that the seller does not own) may evidence an expectation on the part of the seller that the securities will decline in value, and therefore have the potential to signal to the market that the seller lacks confidence in the Company’s prospects. In addition, short sales may reduce a seller’s incentive to seek to improve the Company’s performance. For these reasons, short sales of Company Securities are prohibited. In addition, Section 16(c) of the Exchange Act prohibits directors and certain officers from engaging in short sales.
B. Margin Accounts and Pledged Securities. Securities held in a margin account as collateral for a margin loan may be sold by the broker without the customer’s consent if the customer fails to meet a margin call. Similarly, securities pledged (or hypothecated) as collateral for a loan may be sold in foreclosure if the borrower defaults on the loan. Because a margin sale or foreclosure sale may occur at a time when the pledgor is aware of material nonpublic information or otherwise is not permitted to trade in Company Securities, a person subject to this policy is prohibited from holding Company Securities in a margin account or otherwise pledging Company Securities as collateral for a loan; provided, however, that the Chief Executive Officer and/or Chief Financial Officer may grant exceptions to this prohibition when a person – other than a Section 16 Insider (as defined below) – wishes to pledge Company Securities as collateral for a loan, not including margin debt, and (i) requests the exception at least two weeks before the transaction, and (ii) demonstrates the financial capacity to repay the loan without resorting to the pledged securities.
C. Standing and Limit Orders. Standing and limit orders (other than standing and limit orders under a compliant Rule 10b5-1 Plan as described below) create heightened risks for insider trading violations similar to the use of margin accounts. There is no control over the actual timing of purchases or sales that result from standing instructions to a broker, and as a result the broker could execute a transaction when a director, officer, or employee is in possession of material nonpublic information. The Company therefore discourages placing standing or limit orders on Company Securities. If a person subject to this Policy determines that they must use a standing order or limit order, the order should be limited to short duration and should otherwise comply with the restrictions and additional procedures outlined below.
| Nuo Therapeutics, Inc. | Insider Trading Policy |
Additional Procedures
The Company has established additional procedures in order to assist the Company in the administration of this Policy, to facilitate compliance with laws prohibiting insider trading while in possession of material nonpublic information, and to avoid the appearance of any impropriety.
A. Pre-Clearance Procedures. A director or executive officer of the Company required to file reports under Section 16(a) of the Exchange Act (a “Section 16 Insider”), as well as the Family Members and Controlled Entities of a Section 16 Insider, may not engage in any transaction in Company Securities without first obtaining pre-clearance of the transaction from the Chief Executive Officer and/or Chief Financial Officer. A request for pre-clearance should be submitted in writing to the Chief Executive Officer and/or Chief Financial Officer at least two business days in advance of the proposed transaction. The Chief Executive Officer and/or Chief Financial Officer is under no obligation to grant pre-clearance for the proposed transaction. If pre-clearance to engage in the transaction is not granted, the Section 16 Insider should refrain from initiating any transaction in Company Securities, and should not inform any other person of the restriction. The Chief Executive Officer and/or Chief Financial Officer may require one or more procedural conditions to grant pre-clearance including but not limited to a time period during which the proposed transaction must be effected (and transactions not effected within such time period would be subject to pre-clearance again). The Chief Executive Officer and/or Chief Financial Officer may not pre-clear his or her own transactions; instead, the Chief Executive Officer and/or Chief Financial Officer must submit a request for pre-clearance to the Chairman of the Audit Committee of the Board of Directors.
B. Quarterly Trading Restrictions. A director, officer, or employee of the Company (or any other person designated as subject to this Policy), as well as their Family Members or Controlled Entities, may not conduct any transactions involving Company Securities (except as specified by this Policy), during a “Restricted Period” beginning one week before the end of each fiscal quarter and ending after the second full trading day following the date of the public release of the Company’s earnings results for that quarter.
Under very limited circumstances, a person subject to this restriction may be permitted to engage in a transaction during a Restricted Period, but only upon obtaining pre-clearance from the Chief Executive Officer and/or Chief Financial Officer, who may request such person to describe the reason for such exception, including whether it was due to an unforeseen circumstance. The Chief Executive Officer and/or Chief Financial Officer shall promptly notify the Chairman of the Audit Committee of the Board of Directors of any exception granted hereby.
C. Event-Specific Restricted Periods. From time to time, an event may occur that is material to the Company and is known by only a few directors, officers, and/or employees. In such event, those directors, officers, and/or employees may be designated by the Chief Executive Officer and/or Chief Financial Officer as subject to this paragraph (such designated person, an “Event Insider”). So long as the event remains material and nonpublic, an Event Insider may not engage in transactions in Company Securities.
| Nuo Therapeutics, Inc. | Insider Trading Policy |
In addition, the Company’s financial results may be sufficiently material in a particular fiscal quarter that, in the judgment of the Chief Executive Officer and/or Chief Financial Officer, an Event Insider should refrain from engaging in transactions in Company Securities even sooner than the quarterly Restricted Period described above. In that situation, even without disclosing the reason for the restriction, the Chief Executive Officer and/or Chief Financial Officer may notify any such persons not to trade in Company Securities. The existence of an Event-Specific Restricted Period or the extension of a quarterly Restricted Period will not be announced to the Company as a whole, and should not be communicated to any other person. Even if the Chief Executive Officer and/or Chief Financial Officer has not designated you as an Event Insider who should not engage in transactions in Company Securities due to an Event-Specific Restricted Period, you should not trade while aware of material nonpublic information. Other than as described in the paragraph immediately below, exceptions will not be granted during an Event-Specific Restricted Period.
D. Exceptions. The quarterly trading restrictions and event-specific trading restrictions do not apply to those transactions to which this Policy does not apply, as described above under the heading “Transactions Under Company Plans.” Further, the requirement for pre-clearance, the quarterly trading restrictions, and event-specific trading restrictions do not apply to transactions conducted pursuant to a compliant Rule 10b5-1 Plan as described below.
Rule 10b5-1 Plans
Rule 10b5-1 under the Exchange Act provides a defense from Rule 10b-5 insider trading liability. In order to be eligible to rely on this defense, a person subject to this Policy must enter into a Rule 10b5-1 plan for transactions in Company Securities that meets certain conditions specified in the Rule (a “Rule 10b5-1 Plan”). If the plan meets the requirements of Rule 10b5-1, transactions in Company Securities may occur even when the person who has entered into the plan is aware of material nonpublic information.
To comply with this Policy, a Rule 10b5-1 Plan must meet the requirements of Rule 10b5-1. In general, a Rule 10b5-1 Plan must be entered into at a time when the person entering into the plan is not aware of material nonpublic information. Once the plan is adopted, the person must not exercise any influence over the amount of securities to be traded, the price at which the securities are to be traded, or the date of the trade. The plan must either specify the amount, pricing, and timing of transactions in advance or delegate discretion on these matters to an independent third party. The plan must include a cooling-off period before trading can commence that, for Section 16 Insiders, ends on the later of 90 days after the adoption of the Rule 10b5-1 Plan or two business days following the disclosure of the Company’s financial results in an SEC periodic report for the fiscal quarter in which the plan was adopted, and for persons other than Section 16 Insiders, 30 days following the adoption or modification of a Rule 10b5-1 Plan. A person may not enter into overlapping Rule 10b5-1 Plans (subject to certain exceptions) and may only enter into one Rule 10b5-1 Plan during any 12-month period (subject to certain exceptions). All persons entering into a Rule 10b5-1 Plan must act in good faith with respect to the plan.
Further, in addition to the pre-clearance procedures specified under the heading “Additional Procedures” above, a Section 16 Insider must provide a certification to the Chief Executive Officer and/or Chief Financial Officer (or, for a Rule 10b5-1 Plan by the Chief Executive Officer and/or Chief Financial Officer, to the Chairman of the Audit Committee of the Board of Directors) substantially in the form set forth in Appendix B hereto.
| Nuo Therapeutics, Inc. | Insider Trading Policy |
Post-Termination Transactions
This Policy continues to apply to transactions in Company Securities even after your termination of service to the Company. If an individual is in possession of material nonpublic information when his or her service terminates, that individual may not engage in transactions in Company Securities until that information has become public or is no longer material. The pre-clearance procedures specified under the heading “Additional Procedures” above, however, will cease to apply to transactions in Company Securities upon the expiration of any quarterly Restricted Period, Event-Specific Restricted Period, or other Company-imposed trading restrictions applicable at the time of the termination of service.
Administration of the Policy
The Chief Executive Officer and/or Chief Financial Officer, acting together or individually, shall be responsible for administration of this Policy. Any person who has a question about this Policy or its application to any proposed transaction may obtain additional guidance from the Chief Executive Officer and/or Chief Financial Officer.
Adopted March 25, 2025
Appendix A
INSIDER TRADING POLICY CERTIFICATION
I certify that I have received, reviewed, and understand the Nuo Therapeutics, Inc. Insider Trading Policy (the “Policy”).
I further certify that I will comply with the Policy for as long as I am subject to the Policy.
I understand that the Chief Executive Officer and/or Chief Financial Officer of the Company is available to answer any questions I have regarding the Policy or how it applies in a particular instance.
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Print name: |
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Signature: |
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Date: |
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Appendix B
RULE 10b5-1 CERTIFICATION
I certify that with respect to the proposed Rule 10b5-1 plan (the “Rule 10b5-1 Plan”) covering securities of Nuo Therapeutics, Inc. (the “Company”) beneficially owned by me that:
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I currently am not – and on the date of adoption of the Rule 10b5-1 Plan will not be – aware of material nonpublic information about such securities or the Company; and |
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I am adopting the Rule 10b5-1 Plan in good faith and not as part of a plan or scheme to evade Section 10(b) of the Securities Exchange Act of 1934, as amended, or Rule 10b5-1 promulgated thereunder. |
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Print name: |
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Signature: |
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Date: |
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Exhibit 31
Certification of Principal Executive and Principal Financial Officer Pursuant to Exchange Act Rule
13a-14(a)/15d-14(a) as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, David E. Jorden, certify that:
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I have reviewed this Annual Report on Form 10-K of Nuo Therapeutics, Inc.; |
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
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I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: April 1, 2025
/s/ David E. Jorden
David E. Jorden
Chief Executive and Financial Officer
(Principal Executive Officer and Principal Financial Officer)
Exhibit 32
Certification of Principal Executive and Principal Financial Officer Pursuant to
18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Pursuant to 18 U.S.C. §1350 and in connection with the Annual Report on Form 10-K of Nuo Therapeutics, Inc. (the “Company”) for the year ended December 31, 2024 (the “Report”), I, David E. Jorden, Chief Executive and Financial Officer of the Company, hereby certify that to my knowledge:
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: April 1, 2025
/s/ David E. Jorden
David E. Jorden
Chief Executive and Financial Officer
(Principal Executive Officer and Principal Financial Officer)
This certification is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Securities Act of 1934 (whether made before or after the date of the Report), irrespective of any general incorporation language contained in such filing.