Nuo Therapeutics, Inc.
For the period ended Dec 31, 2024. Filed Apr 1, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Apr 1, 2025
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-04-19.
0001437749-24-012587
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-04-01.
0001437749-25-010379
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 56 previous paragraphs and 51 current paragraphs.
30 unchanged; 13 reworded; 8 added; 13 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 1 previous and 1 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (8)
Current report
Distribution Agreement with Smith+Nephew
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
See the discussion of Recent Accounting Developments inNote 2 - Liquidity and Summary of Significant Accounting Principles.
Removed paragraphs (13)
Previous report
Total operating expenses increased approximately $237,000 to approximately $3,650,000 comparing the year ended December 31, 2023 to the prior full year 2022 period. The increase was attributable to increases of (i) approximately $274,000 in compensation and benefits expense as employee headcount was not constant for the two years and employees were added during the 2022 period in preparation for re-commercialization, (ii) approximately $90,000 of distributor commissions due to increased revenues, and (iii) $160,000 bad debt provision. These increases were partially offset by a decrease of approximately $277,000 in third-party professional fees.
Previous report
Additionally, in August 2022, we entered into a Common Stock and Warrant Purchase 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. Pursuant to the Common Stock and Warrant Purchase Agreement, Pacific Med purchased 500,000 shares of the Company’s common stock for $500,000 in September 2022.
Previous report
Cash flows from financing activities for the year ended December 31, 2022 reflects (i) approximately $4.0 million of proceeds raised from two equity private placements which closed in April and May 2022. and (ii) $0.5 million of proceeds from the Common Stock and Warrant Purchase Agreement with Pacific Medical, Inc. in September 2022.
Previous report
Use of Estimates
Previous report
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, recoverability and depreciable lives of long-lived assets, deferred taxes and associated valuation allowance, and allowances for inventory obsolescence and doubtful accounts. Actual results could differ from those estimates.
Previous report
Revenue Recognition
Previous report
We analyze our 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 its performance obligations (upon transfer of control of promised goods or services to customers) in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services.
Previous report
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.
Previous report
Stock-Based Compensation
Previous report
We recognize expense in the consolidated statements of operations for the fair value of all stock-based compensation to key employees, non-employee directors and advisors, generally in the form of stock options and stock awards. We use the Black-Scholes option valuation model to estimate the fair value of stock options on the grant date. Compensation cost is amortized on a straight-line basis over the vesting period for each respective award. We account for any forfeitures as they occur.
Previous report
Basic and Diluted Earnings (Loss) per Share
Previous report
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.
Previous report
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. Because none of the Company’s equity-linked financial instruments contain non-forfeitable rights to dividends, the “two class” method results in the same diluted earnings per share as the “treasury method.”
Reworded paragraphs (13)
Previous wording
Product revenues for the year ended December 31, 2023 totaled approximately $610,000 with approximately $482,000 of associated gross profit and a resulting gross margin of approximately 79%. Product revenues for the year ended December 31, 2022 totaled approximately 112,000 as re-initiation of commercial sales activity for the Aurix product began during the three months ended September 30, 2022. Gross profit for the year ended December 31, 2022 was approximately $93,000 and a resulting gross margin of 83%.
Current wording
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.
Previous wording
Interest expense, net for the years ended December 31, 2023 and December 31, 2022 of approximately $3,200 and $2,100, respectively, represents interest expense from the financing of insurance premiums.
Current wording
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.
Previous wording
Other income for the year ended December 31, 2022 primarily represents the gain of approximately $146,000 realized from the negotiated settlement of legacy accounts payable with third-party vendors including the full release of any ongoing payment liability.
Current wording
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.
Previous wording
As of December 31, 2023, we had cash and cash equivalents of approximately $0.9 million, total current assets of approximately $1.6 million and total current liabilities of approximately $0.7 million. We have a history of losses and are not currently profitable. For the years ended December 31, 2023 and 2022, we incurred net losses of approximately $3.2 million in each year. As of December 31, 2023, our accumulated deficit was approximately $29.9 million and our stockholders’ equity was approximately $1.0 million.
Current wording
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.
Previous wording
In 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.
Current wording
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.
Previous wording
Additionally, effective January 1, 2024, pursuant to the provisions of the August 2022 Common Stock and Warrant Purchase Agreement described above, we issued to Pacific Med a warrant to purchase up to 500,000 shares of common stock at a price equal to the lower of $2.00 per share or $0.56, the 20-day volume weighted average closing price per share of our common stock ending December 31, 2023. The warrant is exercisable until June 30, 2024.
Current wording
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.
Previous wording
In 2022, we sold 3,957,757 shares of common stock to certain accredited investors pursuant to Securities Purchase Agreements in two private placements which closed in April and May 2022 for proceeds of $3,957,757.
Current wording
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.
Previous wording
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. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Current wording
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.
Previous wording
Cash used in operating activities for the year ended December 31, 2022 of approximately $3.7 million primarily reflects our net loss of approximately $3.2 million adjusted by (i) a non-cash gain of approximately $0.1 million from the negotiated settlement of legacy accounts payable obligations, (ii) approximately $0.1 million in total amortization of right of use assets, property and equipment depreciation, and stock-based compensation, and (iii) approximately $0.5 million net change in operating assets and liabilities.
Current wording
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.
Previous wording
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 approximately $0.3 million combined total for provision for doubtful accounts, depreciation and amortization expense and stock-based compensation expense.
Current wording
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.
Previous wording
We had limited investing activities for the years ended December 31, 2023 and December 31, 2022 totaling approximately $7,000 and $60,000, respectively.
Current wording
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.
Previous wording
Cash provided by financing activities for the year ended December 31, 2023 of $2.0 million represents proceeds from two equity private placements closed in August and December 2023.
Current wording
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.
Previous wording
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. We have identified the following accounting policies as critical:
Current wording
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.