HRGN 10-K & 10-Q changes, risk factors and insider trading

We ended the year 20242025 with approximately $2.5$1.4 million of operating cash on-hand and will need to raise additional capital inbefore or during the second quarter of 2026 and beyond to fund operations. If we do not raise additional capital from outside sources before or during the second quarter of 2025,2026, we may be forced to further curtail or cease our operations. Based on these circumstances, our ability to continue as a going concern is at risk and our independent registered public accounting firm included a “going concern” explanatory paragraph as to our ability to continue as a going concern in their audit report dated March 31,19, 2025,2026, included in this Form 10-K. Our cash requirements and cash resources will vary significantly depending upon the timing, and the financial and other resources that will be required to complete ongoing development and pre-clinical and clinical testing of our product candidates, regulatory efforts and collaborative arrangements necessary for our product candidates that are currently under development. In addition to development and other costs, we expect to incur capital expenditures from time to time. These capital expenditures will be influenced by our regulatory compliance efforts, our success, if any, at developing collaborative arrangements with strategic partners, our needs for additional facilities and capital equipment and the growth, if any, of our business in general. We will require additional funding to continue our anticipated operations and support our capital and operating needs. 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, strategic collaborations and licensing arrangements. We may not be able to obtain additional financing on terms favorable to us, if at all. In addition, general market conditions, including the effects of the ongoing war between Russia and Ukraine as well as the military conflict in the Middle East and attendant economic sanctions, high inflation, governmental, monetary and fiscal policies including tariffs and rising interest rates on financial markets, as well as the effects of laws and regulations on foreign investment in the United States under the jurisdiction of the Committee on Foreign Investment in the United States (CFIUS), and other agencies and related regulations, including the Foreign Investment Risk Review Modernization Act (FIRRMA), adopted in August 2018, may make it difficult for us to seek financing from the capital markets.

The Company started sellingsells consumer health supplements through Consumer Health Products in the third quarter of 2023.Products. These products are commercially marketed to the general public and initially targeted at consumers in Asia through eCommerce (online sales).

In addition to our development of regenerative medicine treatments, we also sell dietary supplements. In the second quarter of 2023, theThe Company’s subsidiary in Hong Kong, Consumer Health Products started focusingfocuses on consumer health products. Consumer Health Products plans to include 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 initially targeted at consumers in Asia through eCommerce (online sales).

Product revenue. Product revenue consists of consumer health product sales, launched in Asiasales in the thirdAsia quarter of 2023. We had not generated any revenue prior to the launch of our consumer health products.region.

Cost of sales was $270,000$646,000 and $24,000$270,000 for the year ended December 31, 20242025 and 2023,2024, respectively. Cost of sales consists of the purchase price of consumer products, taxes, inbound and outbound shipping costs. The gross profit margin on our products decreased in 20242025 primarily due to discounteda change from direct sales aimedto atconsumers achievingto marketdirect penetrationsales forwith our newly introduced product.distributor.

Research and development expense decreasedincreased approximately $0.8$0.3 million, or 25%,15%, to approximately $2.7 million for the year ended December 31, 2025 as compared to approximately $2.3 million for the year ended December 31, 2024 as compared to approximately $3.1 million for the year ended December 31, 2023.2024. This decreaseincrease was due primarily toreflecting significant initialhigher clinical trial activitiesactivity in theChina prior period resulting in our first site activation inand the third quarter of 2023.USA.

The Consumer Health Products business was launched in the Asia region in the third quarter of 2023. Selling and marketing expense was $0.6$0.07 million for the year ended December 31, 20242025 as compared to $0.3$0.6 million for the comparable period. The Consumerreduction Healthprimarily Productsreflects businessa wasstrategic launchedshift 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 Asia region in the thirdfourth quarter of 2023.2024.

General and administrative expense decreased approximately $0.7$0.8 million, or 12%,15%, to approximately $4.3 million for the year ended December 31, 2025 as compared to approximately $5.0 million for the year ended December 31, 2024 as compared to approximately $5.7 million for the year ended December 31, 2023.2024. This decrease was primarily due to share-based compensation expense of $1.3 million from the vesting of performance based awardsrecognition in the first half of 2023 offset by the recording of expense in the currentprior period of one-time offering costs oftotaling $0.5 million relatingrelated to thean initial registeredanticipated offering that didwas not occur in the prior year.completed.

During the year ended December 31, 2025, we recorded interest expense of approximately $8,000 on insurance installment payments. During the year ended December 31, 2024, we recorded interest expense of approximately $23,000 on convertible debt and approximately $15,000 on insurance installment payments. During the year ended December 31, 2023, we recorded interest expense of approximately $14,000 on insurance installment payments.

Operating Activities. Net cash used in operating activities of approximately $4.9$3.8 million for the year ended December 31, 20242025 was due primarily to our net loss of approximately $7.7$6.9 million offset by adjustments for non-cash items of approximately $2.6$2.1 million due to non-cash expenses for share-based compensation, depreciation and amortization, and an approximately $0.3$0.9 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 payablepayable, deferred revenue and accrued expenses.

Net cash used in operating activities of approximately $6.9$4.9 million for the year ended December 31, 20232024 was due primarily to our net loss of approximately $8.9$7.7 million offset by adjustments for non-cash items of approximately $3.6$2.6 million due to non-cash expenses for share-based compensation, depreciation and amortization, and an approximately $1.6$0.3 million decreaseincrease 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. Net cash generated from financing activities was approximately $2.7 million during the year ended December 31, 2025 and consisted of net proceeds from private placement transactions, which resulted in the issuance of 1,250,000 shares of our Common Stock to a group of investors. Net cash generated from financing activities was approximately $6.9 million during the year ended December 31, 2024 and 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. Net cash generated from financing activities was approximately $6.1 million during the year ended December 31, 2023 and consisted of net proceeds received from a private placement transaction for the issuance of common stock and stock option exercises.

We have incurred substantial operating losses since our inception, and as of MarchJune 31,30, 2026, had an accumulated deficit of approximately $108.2$109.9 million and will require additional financing to fund future operations. We expect that our operating cash on-hand as of MarchJune 31,30, 2026 of approximately $0.4 million andtogether with gross proceeds of approximately $0.2 million from debt financing and cash advances of $0.5approximately $0.4 million received in grossJuly proceedsand receivedAugust subsequent2026 in connection with a private placement expected to Marchclose 31,in 2026the third quarter of 2026, will enablebe ussufficient to fund our operating expenses and capital expenditure requirements into the secondfourth quarter of 2026. The cash advances were received from a group of new and existing investors and remain the property of the respective investors; such funds are being held in escrow by the Company pending the execution of a common stock purchase agreement, which is expected to occur in the third quarter of 2026. We expect to continue to incur operating losses and negative cash flows from operations for 2026 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 secondthird quarter of 2026, we may be forced to curtail or cease our operations.

The following table summarizes the results of our operations for the three and six months ended MarchJune 31,30, 2026 and 2025 (in thousands):

Comparison of the three months ended MarchJune 31,30, 2026 and 2025

Product revenue was $226,000$414,000 and $45,000$317,000 for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The $181,000$97,000 increase, representing a 402%31% 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 was $206,000$391,000 and $33,000$302,000 for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The increase reflects scaling of operations to match higher sales.

Research and development expense decreasedincreased approximately 6%,36%, to approximately $0.56$0.9 million for the three months ended MarchJune 31,30, 2026 as compared to approximately $0.60$0.7 million for the three months ended MarchJune 31,30, 2025. This decreaseincrease was primarily reflectingattributable lowerto preclinicalhigher spend.costs associated with clinical activities and grant application activities.

Selling and marketing expense increasedwas approximately 80%, to approximately $18,000$16,000 for the three months ended MarchJune 31,30, 20262026. asWe compareddid tonot approximatelyincur $10,000selling and marketing expense during the three months ended MarchJune 31,30, 20252025. This increase included advertising and promotional costs.

General and administrative expense decreased approximately 2%,35%, to approximately $1.0$0.8 million for the three months ended MarchJune 31,30, 2026 as compared to approximately $1.1$1.2 million for the three months ended MarchJune 31,30, 2025. This decrease iswas mainlyprimarily dueattributable to one-timelower employeeshare-based relatedcompensation costsexpense following the full vesting of certain awards in the prior period.

During the three months ended MarchJune 31,30, 2026 and 2025, we recorded2026, interest income ofwas de minimis, as compared to approximately $2,000 and $13,000, respectively,$7,000 earned from our money market account.account during the three months ended June 30, 2025.

During the three months ended MarchJune 31,30, 2026 and 20252025, we recorded interest expense of approximately $2,000$8,000 and $3,000, respectively, consisting of finance charges on insurance installment payments.payments and, in the 2026 period, interest accrued on the related-party bridge notes.

For the three months ended MarchJune 31,30, 2026,2026 and 2025, we recorded approximately $5,000 and $6,000, respectively, in other income from sublease activity. These activities are part of our ongoing efforts to optimize the use of our facilities and engage with stakeholders.

Sources of liquidity. We have incurred operating losses since inception, and as of MarchJune 31,30, 2026, we had an accumulated deficit of approximately $108.2$109.9 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 threesix months ended MarchJune 31,30, 2026 and 2025 (in thousands):

Comparison of the threesix months ended MarchJune 31,30, 2026 and 2025

Operating activities. Net cash used in operating activities of approximately $0.9$1.5 million for the threesix months ended MarchJune 31,30, 2026 was due primarily to our net loss of approximately $1.6$3.3 million offset by adjustments for non-cash items of approximately $0.7$0.9 million due to non-cash expenses for share-based compensation, depreciation and amortization, and aan negligibleapproximately change$0.9 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 $0.8$1.7 million for the threesix months ended MarchJune 31,30, 2025 was due primarily to our net loss of approximately $1.7$3.5 million offset by adjustments for non-cash items of approximately $0.5$1.1 million due to non-cash expenses for share-based compensation, depreciation and amortization, and an approximately $0.4$0.7 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.

We do not have any material off-balance sheet arrangements as of MarchJune 31,30, 2026.