ELUTIA INC.

Our business, financial condition and operating results can be affected by a number of factors, whether currently known or unknown, including but not limited to those described as risk factors, any one or more of which could, directly or indirectly, cause our actual operating results and financial condition to vary materially from past, or anticipated future, operating results and financial condition. For a discussion of these potential risks and uncertainties, see Part I, Item 1A. “Risk Factors” of our 2025 Annual Report, as supplemented in Part II, Item 1A. “Risk Factors” of our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2026. Any of these factors, in whole or in part, could materially and adversely affect our business, financial condition, operating results and the price of our common stock. Except as set forth below, there have been no material changes in our risk factors from those included in our 2025 Annual Report, as supplemented in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2026. The risk factors set forth below should be read together with the risk factors described in such reports.

Our Loan Agreement with Avenue contains restrictive covenants and other obligations that may limit our flexibility in operating our business, and if we fail to comply with them, the Lenders could accelerate our indebtedness and foreclose on substantially all of our assets. We may also be unable to draw the Second Tranche Term Loan.

On August 11, 2026, we entered into the Loan Agreement, which provides for a senior secured term loan facility of up to $15.0 million, of which $10.0 million was funded on the closing date. Our obligations under the Loan Agreement are secured by substantially all of our assets, including our intellectual property. The Term Loan bears interest at a variable rate equal to the greater of (i) 12.25% and (ii) the Wall Street Journal Prime Rate plus 5.50%. Monthly interest-only payments are due until February 11, 2028 (or August 11, 2028, if the Second Tranche Term Loan is drawn), after which we must repay the principal in equal monthly installments through maturity on March 1, 2030. We must also pay a final payment fee equal to 4% of the Term Loan funded, and a prepayment premium of up to 3.0% if we prepay the Term Loan before maturity. Servicing this indebtedness will require a significant portion of our cash, and increases in the prime rate would increase our interest expense.

The Loan Agreement contains affirmative covenants, including certain liquidity requirements, and negative covenants that restrict our ability to, among other things, merge or consolidate with other companies, incur additional indebtedness, pay dividends, redeem our capital stock and grant liens on our assets. These restrictions may limit our ability to pursue financing, strategic or other transactions that we believe would be in our best interests. Our ability to comply with these covenants may be affected by events beyond our control. A failure to comply with the covenants, or the occurrence of another event of default, could result in the acceleration of all amounts outstanding under the Loan Agreement and the exercise by the Loan Agent of remedies against our assets, which would have a material adverse effect on our business and could force us to curtail or cease operations. In addition, the $5.0 million Second Tranche Term Loan is available only between May 1, 2027 and September 30, 2027 and is subject to the satisfaction of certain regulatory approvals and liquidity conditions, which we may not satisfy. These obligations come on top of our remaining payment obligations under the Ligand Revenue Interest Obligation, which expires on May 31, 2027 and was recorded entirely as a current liability of $4.3 million as of September 30, 2026, and our payment obligations under the Medtronic settlement.

The Avenue Warrants, the Lenders’ conversion and co-investment rights and our outstanding prefunded warrants may result in dilution to our stockholders and could make future financings more difficult. Changes in the fair value of our warrant and derivative liabilities may cause significant volatility in our reported results.

In connection with the Loan Agreement, we issued the Avenue Warrants to purchase 1,395,348 shares of our Class A common stock. Their exercise price is the lower of $0.86 per share or the lowest effective price per share paid in cash by third-party investors in any bona fide offering of our common stock (or instruments exercisable for or convertible into common stock) completed before December 31, 2026, subject to certain exceptions. The number of shares is also subject to adjustment in the event of a dilutive financing before December 31, 2026. The Lenders may also elect to convert up to $2.5 million of the principal amount of the Term Loan into shares of our Class A common stock at 120% of the Warrant Price, and they have the right to invest up to $1.0 million in our future equity offerings. In addition, as of September 30, 2026, prefunded warrants to purchase an aggregate of 3,228,326 shares of our Class A common stock were outstanding. The exercise of these warrants and the exercise of the conversion right would dilute our existing stockholders, and the down-round features of the Avenue Warrants could make it more difficult or costly to raise equity capital. Sales in the public market of shares issued on exercise or conversion, or the perception that such sales may occur, could depress the market price of our Class A common stock.

Because the Avenue Warrants, the Conversion Option and our prefunded warrants are classified as liabilities and remeasured to fair value at each reporting date, changes in the price of our Class A common stock and other valuation inputs can cause significant non-cash gains or losses in our statements of operations. For example, we recognized a gain on revaluation of warrant and derivative liabilities of $0.7 million for the three months ended September 30, 2026 and a loss of $0.8 million for the nine months ended September 30, 2026, compared to gains of $5.1 million and $12.5 million for the corresponding periods of 2025. These fluctuations may make our results difficult to compare between periods and may not reflect our operating performance.