Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.

Forward Looking Statements

The following section of this Quarterly Report on Form 10-Q entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" contains statements that are not statements of historical fact and are forward-looking statements within the meaning of federal securities laws. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties.

In some cases, you can identify forward-looking statements by terms such as "believe," "may," "estimate," "continue," "anticipate," "intend," "should," "could," "would," "target," "seek," "aim," "believe," "predicts," "think," "objectives," "optimistic," "new," "goal," "strategy," "potential," "likely," "will," "expect," "plan" "project," "permit" and similar expressions intended to identify forward-looking statements. These statements reflect our current views with respect to future events, are based on assumptions and are subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. We discuss many of these risks in greater detail under the heading "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission (the "SEC") on March 31, 2025. You should carefully review all of these factors, as well as the comprehensive discussion of forward-looking statements on page 3 of this Quarterly Report on Form 10-Q.

Harvard Apparatus Regenerative Technology, Inc. is referred to herein as "we," "our," "us", and "the Company".

Business Overview

We are a clinical-stage biotechnology company focused on the development of regenerative medicine treatments for disorders of the gastro-intestinal system and other organs that result from cancer, trauma or birth defects.

We believe that our technology represents a next generation solution for restoring organ function because it allows the patient to regenerate their own organ, thus eliminating the need for human donor or animal transplants, the sacrificing of another of the patient's own organs or permanent artificial implants.

Our first esophageal product candidate, our esophageal implant was used in the first successful regeneration of the esophagus in a patient with esophageal cancer. This successful first-in-human experience, plus the research we have performed on over 50 pigs, led the FDA to approve our 10-patient phase 1 clinical trial. This combination trial will measure both safety and efficacy in the patient population.

We have contracted with IQVIA, a leading global provider of advanced analytics, technology solutions and clinical research services to the life sciences industry, as the contract research organization ("CRO") to manage our first clinical trial. We activated the first clinical trial site and started screening patients in the third quarter of 2023.

We have encountered delays in patient recruitment for our ongoing clinical trial, driven by several factors, including the existing comorbid conditions for clinical trial participants, the stringent eligibility criteria required by FDA for our studies, and logistical difficulties in enrolling participants across various sites.

Although we are actively implementing strategies to mitigate these challenges, such as increasing the number of trial sites and enhancing patient outreach efforts, there is a risk that these measures may not completely resolve the recruitment issues. Our product candidates are currently in development and have not yet received regulatory approval for sale anywhere in the world.

In addition to our development of regenerative medicine treatments, we also sell dietary supplements. In the second quarter of 2023, the Company's subsidiary in Hong Kong, Consumer Health Products started focusing on consumer health products. Consumer Health Products includes a broad range of products focused on personal healthcare including dietary supplements. Consumer Health Products started selling consumer health supplements in the third quarter of 2023. These products are commercially marketed to the general public and currently targeted at consumers in Asia through eCommerce (online sales).

We were incorporated and commenced operations on November 1, 2013 as a result of a spin-off from Harvard Bioscience, Inc., or Harvard Bioscience. On that date, we became an independent company that operates the regenerative medicine business previously owned by Harvard Bioscience. The spin-off was completed through the distribution of all the shares of common stock of Harvard Apparatus Regenerative Technology to Harvard Bioscience stockholders.

We continue to assess the market and regulatory approval pathway in China as to our implant products. We are not certain at this time as to which market, including U.S. or China for example, may provide the most viable initial pathway for regulatory approval to a commercial product. This will depend on a number of factors, including the approval and development processes, related costs, ability to raise capital and the terms and conditions thereof, among other factors. Any development and capital raising efforts in China may include a joint venture in relation to our Hong Kong subsidiary, and would also involve a number of commercial variables, including rights and obligations pertaining to licensing, development, and financing, among others. Our failure to receive or obtain such clearances or approvals on a timely basis or at all, whether that be in the U.S., China or otherwise, would have an adverse effect on our results of operations.

Since our incorporation, we have devoted substantially all of our resources to developing our programs, building our intellectual property portfolio, business planning, raising capital and providing selling, general and administrative support for these operations. To date, we have financed our operations with proceeds from the sales of Common Stock, Preferred Stock and warrants. In December 2017, we sold the inventory and rights to manufacture and sell research-only versions of our bioreactors to Harvard Bioscience.

Business Segments

We have two separate reportable segments. One segment, Harvard Apparatus Regenerative Technology, Inc., or Regenerative Biotech, is focused on the development and commercialization of therapies to treat cancers, injuries, and birth defects of the gastro-intestinal tract and the airways. The other segment, Consumer Health Products, is focused on personal healthcare, including dietary supplements.

Financial Condition and Need for Additional Funds

We expect to continue to incur operating losses and negative cash flows from operations during 2025 and in future years.

Operating Losses and Cash Requirements

We have incurred substantial operating losses since our inception, and as of September 30, 2025, had an accumulated deficit of approximately $104.9 million and will require additional financing to fund future operations. We expect that our operating cash on-hand as of September 30, 2025 of approximately $1.3 million will enable us to fund our operating expenses and capital expenditure requirements into the fourth quarter of 2025. We expect to continue to incur operating losses and negative cash flows from operations for 2025 and in future years. Therefore, as disclosed in Note 1 to our Condensed Consolidated Financial Statements appearing elsewhere in this Quarterly Report on Form 10-Q, these conditions raise substantial doubt about our ability to continue as a going concern.

We will need to raise additional capital to fund our current operations. In the event we do not raise additional capital from outside sources during the fourth quarter of 2025, we may be forced to curtail or cease our operations.

Cash requirements and cash resource needs will vary significantly depending upon the timing of the financial and other resource needs that will be required to complete ongoing development, pre-clinical and clinical testing of product candidates, as well as regulatory efforts and collaborative arrangements necessary for our product candidates that are currently under development. We are currently seeking and will continue to seek financings from other existing and/or new investors to raise necessary funds through a combination of public or private equity offerings. We may also pursue debt financings, other financing mechanisms, research grants, or strategic collaborations and licensing arrangements. We may not be able to obtain additional financing on favorable terms, if at all.

Our operations will be adversely affected if we are unable to raise or obtain needed funding and may materially affect our ability to continue as a going concern. Our condensed consolidated financial statements have been prepared assuming that we will continue as a going concern and therefore, the condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amount and classifications of liabilities that may result from the outcome of this uncertainty.

Components of Operating Loss

Product revenue. Product revenue consists of consumer health product sales, launched in Asia in the third quarter of 2023.

Research and development expense. Research and development expense consists of salaries and related expenses, including share-based compensation, for personnel and contracted consultants and various materials and other costs to develop our new products, primarily: synthetic scaffolds, including investigation and development of materials and investigation and optimization of cellularization, as well as studies of cells and cell behavior. Other research and development expenses include the costs of outside service providers and material costs for prototype and test units and outside laboratories and testing facilities performing cell growth and materials experiments, as well as the costs of all other preclinical research and testing including animal studies and expenses related to potential patents. We expense research and development costs as incurred.

Sales and marketing expense. Sales and marketing costs include advertising and payroll and related expenses for personnel engaged in marketing and selling activities.

General and administrative expense. Selling, general and administrative expense consists primarily of salaries and other related expenses, including share-based compensation. Other costs include professional fees for legal and accounting services, insurance, investor relations and facility costs.

Other income (expense), net. Other income (expense), net, consists primarily of interest expense on convertible debt and finance charges on insurance installment payments offset by interest income.

Critical Accounting Policies and Estimates

Our management's discussion and analysis of our financial condition and results of operations is based on our financial statements, which we have prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the expenses during the reporting periods. We evaluate these estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Our actual results may differ materially from these estimates under different assumptions or conditions.

While our significant accounting policies are discussed in more detail in Note 2 to our Condensed Consolidated Financial Statements appearing elsewhere in this Quarterly Report on Form 10-Q, we believe that the following accounting policies are the most critical for fully understanding and evaluating our financial condition and results of operations.

Share-based Compensation

We account for our share-based compensation in accordance with the fair value recognition provisions of current authoritative guidance. Share-based awards, including stock options, are measured at fair value as of the grant date and recognized as expense over the requisite service period (generally the vesting period), which we have elected to amortize on a straight-line basis. Expense on share-based awards for which vesting is performance or milestone based is recognized on a straight-line basis from the date when we determine the achievement of the milestone is probable to the vesting/milestone achievement date. Since share-based compensation expense is based on awards ultimately expected to vest, it has been reduced by an estimate for future forfeitures. We account for forfeitures as they occur. We estimate the fair value of options granted using the Black-Scholes option valuation model. Significant judgment is required in determining the proper assumptions used in this model. The assumptions used include the risk-free interest rate, expected term, expected volatility, and expected dividend yield. We base our assumptions on historical data when available or, when not available, on a peer group of companies. However, these assumptions consist of estimates of future market conditions, which are inherently uncertain and subject to our judgment, and therefore any changes in assumptions could significantly impact the future grant date fair value of share-based awards.

Results of Operations

The following table summarizes the results of our operations for the three and nine months ended September 30, 2025 and 2024 (in thousands):

		Three Months																Nine Months
		Ended								Change 2025								Ended								Change 2025
		September 30,								vs. 2024								September 30,								vs. 2024
		2025				2024				Change				%				2025				2024				Change				%
Product revenue		$	123			$	59			$	64				108	%		$	485			$	172			$	313				182	%
Operating expenses
Cost of sales			112				70				42				60	%			447				95				352				371	%
Research and development			655				557				98				18	%			1,953				2,039				(86	)			(4	%)
Sales and marketing			25				143				(118	)			(83	%)			35				455				(420	)			(92	%)
General and administrative			1,045				1,148				(103	)			(9	%)			3,267				3,944				(677	)			(17	%)
Total operating expenses			1,837				1,918				(81	)			(4	%)			5,702				6,533				(831	)			(13	%)
Other income (expense), net:
Interest income			11				10				1				10	%			31				9				22				244	%
Interest expense			(2	)			(11	)			9				(82	%)			(7	)			(36	)			29				(81	%)
Other income			5				-				5				100	%			11				-				11				100	%
Total other income (expense), net			14				(1	)			15				(1,500	%)			35				(27	)			62				(230	%)
Net loss		$	(1,700	)		$	(1,860	)		$	160				(9	%)		$	(5,182	)		$	(6,388	)		$	1,206				(19	%)

Comparison of the three months ended September 30, 2025 and 2024

Product Revenue

Product revenue was $123,000 and $59,000 for the three months ended September 30, 2025 and 2024, respectively. The $64,000 increase, representing a 108% growth, was driven by expanded distribution and new product launches within our Consumer Health segment, including CoQ-10 and sleep aid gummies, alongside continued strong performance from our existing offerings such as Liver Guard.

Cost of Sales

Cost of sales was $112,000 and $70,000 for the three months ended September 30, 2025 and 2024, respectively. The increase reflects scaling of operations to match higher sales.

Research and Development Expense

Research and development expense increased approximately $0.1 million, or 18%, to approximately $0.7 million for the three months ended September 30, 2025 as compared to approximately $0.6 million for the three months ended September 30, 2024. This increase was primarily reflecting higher clinical trial activity, partially offset by lower preclinical spend.

Sales and Marketing Expense

Selling and marketing expense decreased approximately $0.1 million, or 83%, for the three months ended September 30, 2025 as compared to approximately $0.1 million for the three months ended September 30, 2024 The reduction primarily reflects a strategic shift from direct in-house sales to a distributor-based model, which significantly lowered advertising and promotional costs, as well as a headcount reduction within the sales team implemented in the fourth quarter of 2024.

General and Administrative Expense

General and administrative expense decreased approximately $0.1 million, or 9%, to approximately $1.0 million for the three months ended September 30, 2025 as compared to approximately $1.1 million for the three months ended September 30, 2024. This decrease is mainly due to reduced insurance premiums and lower share-based compensation expense.

Interest income

During the three months ended September 30, 2025 and 2024, we recorded interest income of approximately $11,000 and $10,000, respectively, earned from our money market account.

Interest expense

During the three months ended September 30, 2025, we recorded interest expense of approximately $2,000 on insurance installment payments. During the three months ended September 30, 2024, we recorded interest expense of approximately $7,000 on convertible debt and approximately $4,000 on insurance installment payments.

Other income

For the three months ended September 30, 2025, we recorded approximately $5,000 in other income from sublease activity. These activities are part of our ongoing efforts to optimize the use of its facilities and engage with stakeholders.

Comparison of the nine months ended September 30, 2025 and 2024

Product Revenue

Product revenue was $485,000 and $172,000 for the nine months ended September 30, 2025 and 2024, respectively. The $313,000 growth, representing a 182% growth, was driven by launching new offerings and extending our market reach within our Consumer Health segment, including CoQ-10 and sleep aid gummies, alongside continued strong performance from our existing offerings such as Liver Guard.

Cost of Sales

Cost of sales was $447,000 and $95,000 for the nine months ended September 30, 2025 and 2024, respectively. The increase reflects scaling of operations to match higher sales.

Research and Development Expense

Research and development expense decreased approximately $0.1 million, or 4%, to approximately $2.0 million for the nine months ended September 30, 2025 as compared to approximately $2.0 million for the nine months ended September 30, 2024. This decrease was primarily due to reduced share-based compensation expense during the current period.

Sales and Marketing Expense

Selling and marketing expense decreased approximately $0.4 million, or 92% for the nine months ended September 30, 2025 as compared to approximately $0.5 million for the nine months ended September 30, 2024 The decrease primarily reflects a strategic shift from direct in-house sales to a distributor-based model, which significantly lowered advertising and promotional costs, as well as a headcount reduction within the sales team implemented in the fourth quarter of 2024.

General and Administrative Expense

General and administrative expense decreased approximately $0.7 million, or 17%, to approximately $3.3 million for the nine months ended September 30, 2025 as compared to approximately $3.9 million for the nine months ended September 30, 2024. This decrease was primarily due to the recognition in the prior period of one-time offering costs totaling $0.5 million related to an anticipated offering that was not completed.

Interest income

During the nine months ended September 30, 2025 and 2024, we recorded interest income of approximately $31,000 and $9,000, respectively, earned from our money market account.

Interest expense

During the nine months ended September 30, 2025, we recorded interest expense of approximately $7,000 on insurance installment payments. During the nine months ended September 30, 2024, we recorded interest expense of approximately $23,000 on convertible debt and approximately $13,000 on insurance installment payments.

Other income

For the nine months ended September 30, 2025, we recognized total other income of approximately $11,000. This amount includes $7,000 in sublease income and $4,000 generated from hosting site visits. These activities are part of our ongoing efforts to optimize the use of its facilities and engage with stakeholders. During the nine months ended September 30, 2024, we generated no other income.

Liquidity and Capital Resources

Sources of liquidity. We have incurred operating losses since inception, and as of September 30, 2025, we had an accumulated deficit of approximately $104.9 million. We are currently investing significant resources in the development and commercialization of our product candidates for use by clinicians and researchers in the fields of regenerative medicine and bioengineering. As a result, we expect to incur operating losses and negative operating cash flows for the foreseeable future. Therefore, as disclosed in Note 1 to our Condensed Consolidated Financial Statements, these conditions raise substantial doubt about our ability to continue as a going concern.

The following table sets forth the primary uses of cash for the nine months ended September 30, 2025 and 2024 (in thousands):

		Nine Months Ended
		September 30,
		2025				2024
Net cash used in operating activities		$	(3,164	)		$	(3,727	)
Net cash provided by financing activities		$	2,000			$	6,912

Comparison of the nine months ended September 30, 2025 and 2024

Operating activities. Net cash used in operating activities of approximately $3.2 million for the nine months ended September 30, 2025 was due primarily to our net loss of approximately $5.2 million offset by adjustments for non-cash items of approximately $1.6 million due to non-cash expenses for share-based compensation, depreciation and amortization, and an approximately $0.4 million increase to cash from changes in working capital due to the timing of payments for accounts receivable, inventory, prepaid expenses, long-term prepaid contracts, accounts payable, deferred revenue and accrued expenses.

Net cash used in operating activities of approximately $3.7 million for the nine months ended September 30, 2024 was due primarily to our net loss of approximately $6.4 million offset by adjustments for non-cash items of approximately $1.9 million due to non-cash expenses for share-based compensation, depreciation and amortization, and an approximately $0.8 million increase to cash from changes in working capital due to the timing of payments for accounts receivable, inventory, prepaid expenses, deferred financing costs, long-term prepaid contracts, accounts payable and accrued expenses.

Financing activities. During the nine months ended September 30, 2025, we generated approximately $2.0 million in net cash from financing activities through a private placement, resulting in the issuance of 1,250,000 shares of our Common Stock. In comparison, net cash provided by financing activities during the nine months ended September 30, 2024 totaled approximately $6.9 million. This included net proceeds of $0.5 million from debt financing, $0.4 million from stock warrant exercises, and $6.5 million from private placement transactions, which resulted in the issuance of 1,756,655 shares of our Common Stock to a group of investors. The $0.5 million in debt was repaid in August 2024.

Off-Balance Sheet Arrangements

We do not have any material off-balance sheet arrangements as of September 30, 2025.

Other Information

None.