TELA Bio, Inc.

Current report

Our current cash position, losses, negative cash flows from operations and covenant requirements under our Credit Agreement with Perceptive raise substantial doubt about our ability to continue as a going concern.

Current report

To date, we have incurred significant operating losses in each year since our inception and we anticipate that losses may continue for the next several years or until such time as we can generate substantial revenues and achieve profitability. Our Credit Agreement with Perceptive requires compliance with certain financial covenants, including minimum revenue and liquidity thresholds. Our ability to manage our future covenant compliance is dependent in part upon our ability to grow revenue and manage expenses. In connection with the preparation of this Quarterly Report on Form 10-Q for the period ended June 30, 2026, although we were in compliance with these covenants as of June 30, 2026 and we had cash and cash equivalents of $30.4 million, our current forecasts indicate that it is probable that we will not achieve the minimum revenue threshold required under the Credit Agreement for certain future quarterly periods within the twelve month period after June 30, 2026. If we fail to satisfy the minimum revenue covenant, or any other covenant, and do not obtain a waiver or amendment from Perceptive, Perceptive could declare an event of default and accelerate repayment of all outstanding principal and accrued interest under the Credit Agreement, terminate any commitment to extend further credit and foreclose on the collateral granted to it to collateralize such indebtedness. We do not expect to have sufficient liquidity to repay such obligations if repayment were accelerated and therefore there is substantial doubt as to whether we can continue as a going concern for the twelve months from the period ended June 30, 2026.

Current report

To address these conditions, we are evaluating and pursuing various actions, including seeking a waiver of, or amendment to, the applicable minimum revenue covenant requirements under the Credit Agreement, pursuing strategic initiatives intended to increase revenues, and implementing measures designed to reduce operating expenses. There can be no assurances that we will successfully negotiate such a waiver or amendment on acceptable terms, or at all, or that we will successfully implement adequate strategic initiatives resulting in an increase revenue to or reduction of expenses. Furthermore, our ability to achieve the level of revenue growth necessary to comply with the minimum revenue covenant is dependent on future operating performance and other factors that are not entirely within our control. In addition, the perception that we may not be able to continue as a going concern may impede our ability to pursue strategic opportunities or operate our business due to concerns about our ability to meet our contractual obligations.