Annual Report for Fiscal Year Ending 12-31, 2025 (Form 10-K)

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

Objective

The following discussion and analysis are intended to help you understand our business, financial condition, results of operations, liquidity, and capital resources. You should read this discussion in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report. In addition to historical financial analysis, this discussion and analysis contains forward-looking statements based upon current expectations that involve risks, uncertainties, and assumptions, as described under the heading "Cautionary Note Regarding Forward-Looking Statements." Actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of various factors, risks and uncertainties, including those set forth under "Risk Factors" included elsewhere (or incorporated by reference) in this Annual Report.

Unless the context otherwise requires, references in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" to "SeaStar Medical", "we", "us", and "our", are intended to mean the business and operations of SeaStar Medical Holding Corporation and its consolidated subsidiaries (the "Company", "We", "SeaStar Medical" or "Us") following the October 28, 2022, merger between LMF Acquisition Opportunities Inc. ("LMF"), and SeaStar Medical, Inc. (the "Predecessor") (the transaction herein defined as the "Business Combination" or "Merger"). In connection with the Business Combination, the Predecessor was determined to be the accounting acquirer.

Overview

On October 28, 2022, LMAO consummated a series of transactions that resulted in the combination of LMF Merger Sub, Inc. and the Predecessor pursuant to an Agreement and Plan of Merger. Immediately upon consummation of the Business Combination, LMAO was renamed SeaStar Medical Holding Corporation (as defined above).

We are a commercial-stage healthcare company focused on transformational treatments for critically ill patients facing organ failure and potential loss of life. Our Selective Cytopheretic Device ("SCD") is designed as a disease-modifying device that neutralizes over active immune cells and stops the cytokine storm that yields destructive hyperinflammation and creates a cascade of events that wreak havoc in the patient's body. It has broad potential applications for patients suffering from both acute and chronic kidney diseases as well as cardiovascular and other serious inflammatory diseases.

We received Food and Drug Administration ("FDA") approval on February 21, 2024, under a Humanitarian Device Exemption ("HDE") for our pediatric SCD therapy. It is the only FDA-approved product for use in pediatric patients with acute kidney injury ("AKI") due to sepsis or a septic condition requiring continuous renal replacement therapy ("CRRT"). We shipped our first commercial pediatric SCD ("QUELIMMUNE") in July 2024. In addition, we are currently conducting a pivotal clinical trial ("NEUTRALIZE-AKI") to assess the safety and efficacy of the SCD therapy in critically ill adult patients with AKI requiring CRRT.

Our SCD therapy has been awarded Breakthrough Device Designation ("BDD") for six therapeutic indications by the FDA, including the use of the SCD therapy for adult patients with AKI, patients with cardiorenal syndrome awaiting left ventricular assist device ("LVAD") implantation, patients with hepatorenal syndrome, patients with end stage renal disease ("ESRD") and adult and pediatric patients undergoing cardiac surgery. The BDD enables the potential for a speedier pathway to approval and the ability to have more frequent and flexible meetings with the FDA.

The inflammatory response is essential to the healing process of critical organs; however, the overactivation of inflammatory cells, which can be triggered by many different bodily insults such as trauma, surgery or infection, can send the body into shock and cause severe damage to a variety of critical organs such as the heart, lungs and kidney. Central to inflammation are the cells within blood and lymph circulatory systems, called white blood cells (primarily neutrophils and monocytes). In a normal inflammatory response, neutrophils are the first immune cells to arrive at the site and are key to the entire immune response that kills pathogens and promotes tissue repair. These inflammatory cells release chemicals (cytokines) that trigger the immune system to eliminate foreign pathogens or damaged tissue, enhancing the immune response.

If the inflammatory response becomes excessive and dysregulated (referred to as proinflammatory), the inflammatory cells will continue to produce cytokines and other damaging molecules, further enhancing the dysregulated immune response, and altering feedback mechanisms that regulate the immune system. This results in damaging hyperinflammation spreading uncontrollably to other parts of the body, often leading to acute chronic solid organ dysfunction or failure, including the heart, lung, kidney, liver, and even death. This hyperinflammatory response is also known as the "cytokine storm," referring to the body's reaction to the category of small-secreted proteins released by hyperinflammatory cells that affect communication between cells. Currently, there are no therapeutic options that specifically neutralize the white blood cells that are primarily responsible for the destructive hyperinflammatory response.

Currently, few therapeutics are available to clinicians to address hyperinflammation and for those options that do exist, such options are either immunosuppressive or only target one cytokine. We believe our technology has the potential to overcome limitations in existing anti-inflammatory treatments and address the challenge of selectively targeting activated neutrophils and monocytes.

We are leveraging our patent protected and scalable SCD technology platform to develop proprietary therapies that are organ agnostic and target both acute and chronic indications. Preclinically, our SCD was tested in various animal models, which include acute myocardial infarction, intracranial hemorrhage, chronic heart failure, sepsis, and acute respiratory distress syndrome. The animal models demonstrated the inflammatory response and how it was modified by our SCD. We will continue to explore the application of our SCD technology across a broad range of markets and indications where proinflammatory activated neutrophils and monocytes may contribute to disease progression or severity in both acute and chronic indications.

We are using our SCD initially to clinically validate several acute organ injury indications, including kidneys and lungs. Our investigational SCD for adults is an extracorporeal synthetic membrane device that is currently being evaluated in a pivotal clinical trial in the U.S. for premarket clearance by the FDA. The SCD for adults is designed to be easily integrated into existing CRRT systems that are commonly installed in hospitals, including in ICUs throughout the United States. Similar to QUELIMMUNE, once approved and commercialized, our adult SCD is expected to initially target acute kidney injury in adults on CRRT. In addition, we are developing our SCD to address inflammation associated with liver disease, acute respiratory distress syndrome, chronic dialysis and chronic heart failure in adult populations. See Part I, Item 1A "Risk Factors" for additional information.

We have incurred net losses in each year since our inception in 2007. As of December 31, 2025 and 2024, we had an accumulated deficit of approximately $151.7 million and $139.6 million, respectively. Our net losses were $12.2 million and $24.8 million for the years ended December 31, 2025 and 2024, respectively. The majority of our net losses for the years-ended December 31, 2025 and 2024, respectively, resulted from costs incurred in connection with our research and development programs and from general and administrative costs associated with our operations. The remaining net losses primarily resulted from non-cash, non-operating changes in fair value of our financial instruments recognized in our statement of operations for the same two fiscal years. For the year ended December 31, 2025, these non-cash, non-operating losses related to change in fair value of convertible notes, change in fair value of liability classified warrants, and interest expense, which were partially offset by interest income.

As of December 31, 2025, we had cash of approximately $12.0 million. The Company does not hold any cash equivalents

The recurring losses, working capital deficiency, the need for capital to fund our operations, including clinical trial costs and regulatory approval expenses, and the amount of cash reserve are factors that raise substantial doubt about our ability to continue as a going concern for the twelve-month period following the issuance date for the consolidated financial statements for the year ended December 31, 2025. See Note 1 to our audited consolidated financial statements for the year ended December 31, 2025, included elsewhere in this Annual Report for additional information on our assessment.

Our accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liabilities in the normal course of business. Our consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should we be unable to continue as a going concern.

Our need for additional capital will depend in part on the scope and costs of our development activities. To date, we have not generated significant revenue from the sale of commercialized products. Our ability to generate significant product revenue will depend on the successful development of our adult SCD and eventual ongoing commercialization of QUELIMMUNE. Until such time, if ever, we expect to finance our operations through the sale of equity or debt, borrowings under credit facilities, potential collaborations, other strategic transactions or government and other grants. Adequate capital may not be available to us when needed or on acceptable terms. If we are unable to raise capital, we could be forced to delay, reduce, suspend or cease our research and development programs or any future commercialization efforts, which would have a negative impact on our business, prospects, operating results and financial condition. See Part I, Item 1A "Risk Factors" for additional information.

Key Components of Results of Operations

Revenue

Our pediatric SCD therapy, QUELIMMUNE, received HDE approval from the FDA in February 2024. Since that time, we have been building out our commercial operations, developing our customer base and growing commercial sales of QUELIMMUNE. We shipped our first commercial QUELIMMUNE units in July 2024. We recognized $1.2 million and $0.1 million of revenue from the sale of QUELIMMUNE for the years ended December 31, 2025 and 2024, respectively. Historically, prior to 2024, revenue has been primarily derived from government and other grants. We will continue to focus our efforts on generating revenue in the future based on product sales of QUELIMMUNE, as well as potential future payments from license or collaboration agreements and government and other grants.

We expect that any revenue we generate will fluctuate from quarter to quarter as we continue to advance our sales of QUELIMMUNE to pediatric hospital customers. We also continue to develop our adult SCD for which we are currently enrolling patients in a pivotal study to support FDA approval. If we fail to complete the development of, or fail to obtain regulatory approval to commercialize our adult SCD in a timely manner, our ability to generate additional future revenue, and our results of operations and financial position, could be materially adversely affected.

Research and Development Expenses

Since inception, we have focused our resources on research and development activities, including conducting preclinical studies and clinical trials, and developing our process and activities related to regulatory filings for our products. Subject to the availability of additional funding, we plan to further increase our research and development expenses for the foreseeable future as we continue the development of our SCD as well as a next generation SCD. Research and Development expenses also include salaries and related costs for employees in clinical and medical affairs roles, which include stock-based compensation expenses and benefits for such employees.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and related costs for employees in executive and finance roles, which also include stock-based compensation expenses and benefits for such employees.

Other significant general and administrative expenses include facilities costs, professional fees for accounting and legal services, sales and marketing expenses, and expenses associated with obtaining and maintaining patents and obtaining financing, and expenses related to SEC reporting and compliance. As we continue to expand and grow our operations, we expect that our general and administrative expenses will increase, including additional expenses relating to new hires, travel, an enterprise resource planning platform, and branding.

Loss from Operations and Operating Margin

Loss from operations consists of our gross profit less our operating expenses. Operating margin is loss from the operations as a percentage of our net sales.

Other Income (Expense), Net

Total other income (expense), net primarily consists of (i) interest expense relating to interest incurred on notes payable, (ii) a one-time charge for a financing fee related to our standby equity purchase agreement, (iii) changes in the fair value of liability classified warrants, and (iv) interest income derived from cash balances maintained at a commercial financial institution.

Net Loss

Net loss consists of our loss from operations, offset by other income, net and taxes.

Factors Affecting Our Operating Results

We believe that our performance and future success depend on several factors that present significant opportunities for us but also pose risks and challenges. Please see the factors discussed elsewhere in this Annual Report, including those discussed in Part I, Item 1A, "Risk Factors," for additional information.

Results of Operations

Comparison of Year Ended December 31, 2025 to Year Ended December 31, 2024

The following table sets forth a summary of our results of operations. This information should be read together with our consolidated financial statements and related Notes included elsewhere in this Annual Report.

		Year Ended
		December 31,								Change
($ in thousands)		2025				2024				$						%
Revenue		$	1,234			$	135			$	1,099				814	%
Cost of goods sold			53			$	-				53				*
Gross profit			1,181				135				1,046				775	%
Operating expenses
Research and development			7,518				9,105				(1,587	)			(17	)%
General and administrative			5,838				8,872				(3,034	)			(34	)%
Total operating expenses			13,356				17,977				(4,621	)			(26	)%
Loss from operations			(12,175	)			(17,842	)			5,667				(32	)%
Total other income (expense)			28				(6,985	)			7,013				(100	)%
Loss before income tax provision			(12,147	)			(24,827	)			12,680				(51	)%
Income tax provision			3				3				-				-
Net loss		$	(12,150	)		$	(24,830	)		$	12,680				(51	)%

(*) - revenue or expenses which were new to the year ended December 31, 2025, compared to the year ended December 31, 2024.

Revenue

Net revenue increased $1.1 million to $1.2 million for the year-ended December 31, 2025, compared to $0.1 million net revenue for the year-ended December 31, 2024. The increase is primarily attributable to (i) increased adoption of QUELIMMUNE, resulting in ten customers as of December 31, 2025, an increase from three as of December 31, 2024, and (ii) a full year of sales activity during the 2025 fiscal year compared to only six months of sales activity during the 2024 fiscal year, as sales did not commence until July 1, 2024.

Research and Development Expenses

The following table discloses the breakdown of research and development expenses:

		Year Ended
		December 31,								Change
($ in thousands)		2025				2024				$				%
Clinical trials		$	3,904			$	4,391			$	(487	)			(11	)%
External services			602				1,254				(652	)			(52	)%
Payroll and personnel expenses			2,695				3,184				(489	)			(15	)%
Other research and development expenses			317				276				41				15	%
		$	7,518			$	9,105			$	(1,587	)			(17	)%

Research and development expenses for the years ended December 31, 2025 and 2024 were approximately $7.5 million and $9.1 million, respectively. The decrease in research and development expenses of $1.6 million was primarily driven by (i) a $1.0 million decline in consulting expenses as the Company both made a concerted effort to reduce usage of consultants and hiring key employees to bring certain critical skillsets in-house, (ii) a $0.6 million decline in pre-clinical expenses as we started the NEUTRALIZE-AKI study in 2024, resulting in limited pre-clinical activities in 2025, (iii) a $0.5 million decline in compensation and benefits as a result of certain voluntary recissions of accrued bonuses accrued, (iv) a $0.4 million reduction in outside services as we switched clinical research organizations, and (v) $0.4 million in contra-expenses were recognized in 2025 as we agreed to provide clinical research organization services to a third-party, for which the Company will be able to utilize the results of this study.

These decreases described above were partially offset by (i) a $1.0 million increase in clinical trial costs, mostly driven by the increased activity relating to the NEUTRALIZE-AKI study, (ii) a $0.2 million increase in the adult SCD related supply costs due to both the NEUTRLAIZE-AKI study and device development efforts, and (iii) a $0.1 million increase in medical affairs.

General and Administrative Expenses

General and administrative expenses for the years ended December 31, 2025 and 2024 were $5.8 million and $8.9 million, respectively. The decrease of $3.1 million in general and administrative expenses is due primarily to (i) a $1.0 million decline in accounting and legal related activities, primarily driven by the 2024 restatement of previously filed financial statements, with no such expense in the 2025 fiscal year, (ii) a $0.6 million decline in Board compensation due to the voluntary recission of accrued director fees, (iii) a decrease of $0.5 million in compensation and benefits primarily due to the voluntary recission of accrued bonuses, (iv) a $0.5 million decline in other professional fees, and (v) a $0.3 million reduction in costs as we had a one-time settlement in 2024 with a former distributor , and (vi) a $0.2 million decline in travel and conference activity.

These decreases were partially offset by the increase of $0.1 million due to due diligence fees paid to a third-party financial institution for a standby equity purchase agreement that we entered into during the fiscal year ended December 31, 2025.

Other Income (Expense)

Other income (expense) for the years ended December 31, 2025 and 2024 was other income, net of $28 thousand and other expense, net of $7.0 million, respectively. The change was the result of (i) interest income increasing $0.2 million as a result of our increased cash during the 2025 fiscal year compared to the 2024 fiscal year, (ii) $0.2 million decline in interest expense due to the reduction in our outstanding notes and convertible notes, (iii) a $6.1 million loss on the change in fair value of convertible notes in the fiscal year ended December 31, 2024, with no such charge during the year ended December 31, 2025, and (iv) we recognized a $32 thousand gain on the change in fair value of liability classified warrants for the year ended December 31, 2025, compared to a loss of $0.7 million for the year ended December 31, 2024.

This was offset by a $0.3 million financing charge related to the standby equity purchase agreement that we entered into during the year ended December 31, 2025.

Income Tax Provision (Benefit)

We recorded a provision for income taxes of $3 thousand for each of the years ended December 31, 2025, and 2024, respectively.



Under Accounting Standards Codification ("ASC") 740-10-30-5, Income Taxes, deferred tax assets should be reduced by a valuation allowance if, based on the weight of available evidence, it is more-likely-than-not (i.e., a likelihood of more than 50%) that some portion or all of the deferred tax assets will not be realized. We consider all positive and negative evidence available in determining the potential realization of deferred tax assets including, primarily, the recent history of taxable earnings or losses. Based on operating losses reported during 2025 and 2024, we concluded there was not sufficient positive evidence to overcome this recent operating history. As a result, we believe that a valuation allowance continues to be necessary based on the more-likely-than-not threshold noted above. A valuation allowance of $32.0 million and $28.5 million was recorded as of and for the years ended December 31, 2025 and 2024, respectively.

Net Loss

During the year ended December 31, 2025, we had a net loss of $12.2 million compared to a net loss of $24.8 million for the year ended December 31, 2024. The decline in net loss of $12.7 million primarily resulted from (i) a $1.0 million increase in revenue in 2025 compared to 2024, (ii) $4.6 million decrease in operating expenses in 2025 compared to 2024, and (iii) $7.0 million favorable change in other income or expense in 2025 compared to 2024.

Liquidity and Capital Resources

To date, we have financed our operations primarily through the sale of equity securities and convertible debt and, to a lesser extent, through grants from governmental and other agencies. Since our inception, we have incurred significant operating losses and negative cash flows. As of December 31, 2025 and 2024, we had an accumulated deficit of $151.7 million and $139.6 million, respectively.

As of December 31, 2025, we had cash of $12.0 million. We expect that our existing cash will be insufficient to fund our operations for the twelve months from the filing date of this Annual Report for the year ended December 31, 2025, including clinical trial expenses and capital expenditure requirements. We believe that this raises substantial doubt about our ability to continue as a going concern. To finance our operations beyond that point, we would need to raise additional capital, and there is no guarantee that we will be able to secure additional funding on favorable terms, or at all. We have concluded that these circumstances raise substantial doubt about our ability to continue as a going concern within one year after the issuance date of this Annual Report. See Note 1 to our audited consolidated financial statements for the year ended December 31, 2025.

Cash Flows

The following table shows a summary of our cash flows for each of the periods shown below:

		Year Ended
		December 31,
($ in thousands)		2025				2024
Statement of cash flow data:
Total cash (used in)/provided by:
Operating activities		$	(13,599	)		$	(16,007	)
Investing activities			-				-
Financing activities			23,760				17,650
Net increase in cash		$	10,161			$	1,643

Cash Flow from Operating Activities

Net cash used in operating activities for the fiscal year ended December 31, 2025 was $13.6 million compared to $16.0 million for the fiscal year ended December 31, 2024. The decrease in cash used for operating activities of $2.4 million is primarily due to the decline in consulting, legal and accounting related activities (see Results of Operations above).

Cash Flow from Financing Activities

Net cash provided by financing activities for the fiscal year ended December 31, 2025, was $23.8 million, primarily related to proceeds from the issuance of common stock from certain registered direct offerings and ATM issuances, and proceeds from the issuance of pre-funded warrants.

Net cash provided by financing activity for the fiscal year ended December 31, 2024, was $17.7 million, primarily related to proceeds from the issuance of common stock from certain registered direct offerings and ATM issuances, proceeds from the issuance of convertible notes, and proceeds from the issuance of certain pre-funded warrants.

Capital Resources

Sources of Liquidity

We finance our operations from a combination of sales of common stock and warrants, through registered direct or public offerings, our at-the-market program, and our standby equity purchase agreement. We finance certain insurance needs through a short-term note payable.

Shelf Registration

On December 8, 2023, we filed a shelf registration statement on Form S-3 (File No. 333-275968), which was declared effective by the SEC on December 22, 2023. This shelf registration statement covered the offering, issuance and sale of up to an aggregate of $100.0 million of our common stock, preferred stock, debt securities, warrants, rights and units (the "2023 Shelf").

Since the date of effectiveness and through December 31, 2025, we have raised approximately $44.1 million under the 2023 Shelf and have approximately $55.9 million remaining for future offerings. However, actual availability for primary offerings is limited by the "baby shelf" restrictions applicable to our use of Form S-3.

At-The-Market Offering

On August 20, 2024, we entered into an At-The-Market Offering Agreement (the "ATM Agreement") with Wainwright as sales agent, to sell shares of Common Stock, from time to time, through an "at the market offering" program under which Wainwright will act as sales agent. As of December 31, 2025, approximately $1.2 million remained available for issuance under our ATM program as a result of baby shelf limitations, which is a component of the 2023 Shelf.

Standby Equity Purchase Agreement

On April 25, 2025, we entered into a standby equity purchase agreement ("SEPA") with Lincoln Park Capital, LLC ("Lincoln Park") pursuant to which we have the right to sell to Lincoln Park shares of Common Stock, subject to certain limitations, from time to time over the 36-month period commencing on the Commencement Date. As of December 31, 2025, approximately $15.0 million in aggregate capacity remained available under the SEPA.

2025 Offering Activity

During the year ended December 31, 2025, we raised under the 2023 Shelf: (i) approximately $14.4 million through three registered direct offerings and concurrent private placements of Common Stock, pre-funded warrants, warrants and placement agent warrants, and (ii) approximately $6.1 million through our ATM Agreement. We also raised outside the 2023 Shelf: (i) approximately $4.0 million through a best-efforts public offering of Common Stock, pre-funded warrants, warrants and placement agent warrants, and (ii) approximately $40 thousand from the SEPA.

Future Funding Requirements

We expect to incur significant expenses in connection with our ongoing activities as we seek to (i) continue clinical development of our SCD product for approval by the FDA, and (ii) if regulatory approval is obtained, to launch and commercialize our products in the U.S. markets. We will need additional funding in connection with these activities. Our future funding requirements, both short-term and long-term, will depend on many factors, including:

•

conditions in the capital markets;

•

our ability to receive cash proceeds from our existing funding instruments, including our equity line of credit;

•

the progress and results of our clinical trials and interpretation of those results by the FDA and other regulatory authorities;

•

the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; and

•

the costs of operating as a public company, including hiring additional personnel as well as increased director and officer insurance premiums, audit and legal fees, investor relations fees and expenses related to compliance with public company reporting requirements under the Securities Exchange Act of 1934, as amended, and rules implemented by the SEC and Nasdaq.

Until such time, if ever, as we are able to successfully develop and fully commercialize our products, we expect to continue financing our operations through the sale of equity, issuance of debt, borrowings under credit facilities or through potential collaborations with other companies, other strategic transactions or government or other grants. Adequate capital may not be available when needed or on acceptable terms.

Based on our results of operations and liquidity as of December 31, 2025, we believe our cash is not sufficient to meet our operations, working capital and capital expenditure requirements for a period of at least twelve months from the date of our audited consolidated financial statements for the fiscal year ended December 31, 2025. In addition, we do not expect to receive significant cash proceeds from the exercise of warrants in the near term, because the trading price of our common stock is currently below the exercise price of the majority of the warrants. We will require additional cash to fund our growth through future debt or equity financing transactions; however, there can be no assurance that we will be able to obtain additional capital on terms acceptable to us, if at all, or that we will generate sufficient future revenues and cash flows to fund our operations. Our estimates of our results of operations, working capital and capital expenditure requirements may be different than our actual needs, and those estimates may need to be revised if, for example, our actual revenue is lower, and our net operating losses are higher than we project and our cash position is reduced faster than anticipated.

We do not currently have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures. Debt financing would also result in fixed payment obligations. If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, reduce, suspend or cease our research and development programs or any future commercialization efforts, which would have a negative impact on our business, prospects, operating results and financial condition. See the section titled "Risk Factors" for additional risks associated with our substantial capital requirements.

Critical Accounting Policies and Estimates

The preparation of the consolidated financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and income and expenses during the periods reported. Although actual results could materially differ from those estimates, such estimates are developed based on the best information available to management and management's best judgments at the time.

Significant estimates include the valuation of the (i) incurred-but-not-billed clinical trial site costs, (ii) liability classified warrants, and (iii) stock-based compensation expense.

While our significant accounting policies are described in Note 2 - Summary of Significant Accounting Policies to the notes to our audited consolidated financial statements included elsewhere in the Annual Report on Form 10-K, we believe the following accounting policies to be critical to the judgments and estimates used in the preparation of our annual consolidated financial statements.

Incurred-But-Not-Billed Clinical Trial Site Costs. Our NEUTRALIZE-AKI clinical trial is being conducted at multiple qualified healthcare facilities as of December 31, 2025. We are responsible to cover the costs of these clinical trial efforts, including the cost of patient care relating to the adult SCD. It is common practice that the costs incurred by the clinical trial sites are incurred, but not billed until months after the event giving rise to the unbilled activity. Accordingly, we estimate the value of these "incurred-but-not-billed" activities at the end of each reporting period. Any impact to the consolidated statement of operations is recognized as a component of research and development expense and included as a component of accrued expenses on the consolidated balance sheet.

Liability Classified Warrants. We have entered into or assumed various financial instruments in the form of warrant agreements that require classification as liabilities. This classification requires us to measure the warrants at fair value at inception and then remeasure the fair value of the warrants at each reporting period. The liability classified warrants consist of the following (see Note 8 for more information):

	•	Private Placement Warrants. We assumed 22,952 Private Placement warrants as part of the Business Combination.
	•	PIPE Warrants. We issued PIPE Warrants concurrent with the Business Combination, and the PIPE Warrants include features similar to the Private Placement Warrants.

We use a Black-Scholes option pricing model to fair value liability classified warrants, using standard option pricing inputs such as the strike price of each warrant tranche, estimated volatility, time to maturity, and the risk-free interest rate. The risk-free interest rate is the U.S. Treasury rate at the date of issuance, and the time to maturity is based on the contractual life at the date of issuance. The change in fair value of liability classified warrants each reporting period is recorded to the change in fair value of warrants liability in the consolidated statement of operations.

Stock-Based Compensation Expense. We estimate the grant date fair value of all grants of equity-based awards (which has historically consisted of either stock options or restricted stock units). We use a Black-Scholes option pricing model to fair value of stock options, and use the price of our stock on the grant date for restricted stock units.

Emerging Growth Company Status

We are an emerging growth company ("EGC"), as defined in the JOBS Act. The JOBS Act permits companies with EGC status to take advantage of an extended transition period to comply with new or revised accounting standards, delaying the adoption of these accounting standards until they apply to private companies. We have elected to use this extended transition period to enable us to comply with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an EGC or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our consolidated financial statements may not be comparable to companies that comply with the new or revised accounting standards as of public company effective dates.

In addition, we intend to rely on the other exemptions and reduced reporting requirements provided by the JOBS Act. Since we intend to rely on such exemptions, we are not required to, among other things: (i) provide an auditor's attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act; (iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the consolidated financial statements (auditor discussion and analysis); and (iv) disclose certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive Officer's compensation to median employee compensation.

We will remain an EGC under the JOBS Act until the earliest of (i) the last day of our first fiscal year following the fifth anniversary of the closing of the Business Combination, (ii) the last date of our fiscal year in which we have total annual gross revenue of at least $1.235 billion, (iii) the date on which we are deemed to be a "large-accelerated filer" under the rules of the SEC with at least $700.0 million of outstanding securities held by non-affiliates, or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the previous three years.

Contractual Obligations and Commitments

The following table summarizes our contractual obligations as of December 31, 2025:

($ in thousands)		Total				Less than 1 year				1-3 years				3-5 years				More than 5 years
Contractual Obligations:
Insurance Financing			525				525				-				-				-
Total contractual obligations		$	525			$	525			$	-			$	-			$	-

Insurance Financing

In October 2025, we entered into a financing arrangement with a lender to finance a portion of the annual premium of an insurance policy in the amount of $0.7 million. It is to be paid down in 10 monthly installments through August 2026. This financing arrangement is recorded as a note payable on our consolidated balance sheet.