13. Convertible Notes Payable

Series A Convertible Notes

On February 10, 2026, the Company issued $1,797 thousand aggregate principal amount of Series A Senior Secured Convertible Note (the “Series A Convertible Note”) for cash proceeds of $1,618 thousand. The Series A Convertible Note matures on February 10, 2028, which is two years from issuance, unless earlier converted, redeemed or repurchased, and bears interest at 10% per annum. Interest is payable in arrears on the first trading date of each calendar month beginning May 1, 2026.

The holder may convert the Series A Convertible Note or any portion of the Series A Convertible Note, at their option, into common shares of the Company. The number of common shares to be issued will equal 110% of outstanding principal and accrued unpaid interest converted at the conversion price of $1.244 per share (the “initial conversion price”). The conversion price is subject to adjustment if certain conditions are met.

The Series A Convertible Note was issued at a $180 thousand discount, representing the difference between the principal amount and cash proceeds received. This discount is being amortized to interest expense over the contractual term of the Series A Convertible Note using the effective interest method. For the six month period ended June 30, 2026, the Company recognized contractual coupon interest of $21 thousand and amortization of debt discount of $100 thousand, for total interest expense related to the Series A Convertible Note of $121 thousand. The effective interest rate is approximately 10.5%.

During the six months ending June 30, 2026, the holder converted $1,000 thousand of principal amount and unpaid interest of the note into 1,536,564 shares of common stock pursuant to the contractual conversion terms. The Company accounted for the transaction as a debt conversion and reclassified the carrying amount of the converted portion of the Series A Convertible Note, including the related unamortized discount, to stockholders’ equity, and no gain or loss was recognized on the conversion.

As of June 30, 2026, the Series A Convertible Note, after considering the partial conversion to common shares, had principal outstanding of $797 thousand and unamortized discount of $64 thousand resulting in a net carrying amount of $733 thousand.

Subsequent to June 30, 2026, the holder converted an additional $26 thousand of principal amount and unpaid interest of the Series A Senior Convertible Note into an additional 47,641 shares of common stock.

On August 12, 2026, the remaining restricted cash was applied to the outstanding obligations under the Series A Note. As a result, the Series A Note has been paid in full and the Company no longer has any obligation to make payments or issue shares of common stock. The Security Documents have terminated in accordance with their terms, and the related security interests have been released.

As of June 30, 2026, the carrying amount of the Series A Convertible Note approximates its fair value.

Convertible Promissory Notes

As discussed in Footnote 1, in April and May 2026, to fund the license and acquisition of Celularity Inc’s portfolio of commercial-stage regenerative biomaterials, the Company issued $13,885 thousand aggregate principal amount of convertible promissory notes that bear interest at 10% per annum, payable quarterly in cash or, at the holder’s election, in shares of the Company’s common stock at the applicable conversion price. The notes mature 18 months from their issuance date. Upon an event of default, interest accrues at the lesser of 18% per annum or the maximum rate permitted by law.

The notes are convertible at the option of the holder into shares of the Company’s common stock at an initial conversion price of $0.60 per share, subject to customary anti-dilution adjustments, including stock splits, stock dividends, recapitalizations, and full-ratchet anti-dilution protection for certain dilutive issuances. In addition, the conversion price is subject to automatic resets on the twelve-month anniversary of issuance and at maturity based on the lower of the then-current conversion price or the five-day volume-weighted average market price immediately preceding the applicable measurement date.

The notes contain customary events of default, mandatory prepayment provisions from certain financing proceeds, and optional prepayment provisions requiring payment of a premium. The financing agreements also include registration rights, rights of first refusal, restrictions on certain future financing transactions, and other customary investor protections.

The Company is aware that potential events of default may exist under the Notes issued in April and May 2026, relating to (i) the Company’s not having filed the registration statement required under the related Registration Rights Agreement within the time period specified therein, (ii) the Company’s not having timely filed a Current Report on Form 8-K/A containing certain financial statements required under Item 9.01 of Form 8-K in connection with the Celularity Transaction, and (iii) the sufficiency of the Company’s reserve of authorized and unissued shares of common stock for issuance upon conversion of the Notes and exercise of the related warrants. No holder of the Notes has declared an acceleration of the Notes or the amounts payable thereunder. The Company is taking steps intended to address these matters, including filing a registration statement on Form S-1 covering the resale of the shares underlying the Notes and related warrants by August 17, 2026, continuing to work with the staff of the Securities and Exchange Commission regarding the Form 8-K/A, and seeking stockholder approval of an increase in the Company’s authorized shares of common stock and a reverse stock split at a special meeting of stockholders expected to be held on or before September 25, 2026. There can be no assurance that these matters will be resolved on terms satisfactory to the Company, or at all.

In connection with the issuance of the convertible notes, the Company also issued 11,570,823 of 5five-year warrants with an exercise price of $0.80 per share. The warrants entitle the holders to purchase shares equal to 50% of the shares underlying the principal amount of notes purchased and contain customary anti-dilution adjustments. The warrants may be exercised on a cashless basis under certain circumstances.

The Company evaluated the warrants under ASC 815-40 and concluded that they meet the requirements for equity classification. Accordingly, the warrants were recorded in additional paid-in capital and are not subsequently remeasured.

The Company evaluated the conversion feature of the notes under ASC 815, Derivatives and Hedging, and determined that the conversion feature does not qualify for the scope exception in ASC 815-40 due primarily to the full-ratchet anti-dilution provisions and automatic conversion price reset features, which could result in a settlement amount that is not indexed solely to the Company’s own stock.

Accordingly, the Company bifurcated the embedded conversion feature from the host debt instrument and recorded it as a derivative liability at fair value on the issuance date. The initial fair value assigned to the derivative reduced the carrying amount of the host debt and is subsequently remeasured to fair value at each reporting date, with changes in fair value recognized in the consolidated statements of operations until the derivative is exercised, expires, or is otherwise extinguished. Upon initial recognition, the Company recognized a day-one loss of $56 thousand, representing the excess of the fair value of the embedded derivative liabilities over the net proceeds allocated to the host debt instruments.

In connection with the issuance of the convertible debt, the Company issued a placement agent warrant to purchase 404,248 shares of the Company’s common stock at an exercise price of $0.80 per share. The warrant has a term of five years and was issued as compensation for placement agent services. The placement agent warrants were evaluated separately and determined to be equity-classified instruments, and accordingly, the Company recognized a day-one loss of $184 thousand, with the fair value recorded in additional paid-in capital as a cost of the financing and $182 thousand as a placement fee.

As of June 30, 2026, the Convertible Promissory Notes had principal outstanding of $13,885 thousand, accrued interest of $256 thousand and unamortized discount of $11,820 thousand resulting in a net carrying amount of $2,321 thousand.

Subsequent to June 30, 2026 one of the Qualified Note Holders accelerated their commitment to purchase an additional $1,000 thousand in Notes. In consideration for this acceleration the buyer received a reduction in the purchase price of the principal to $938 thousand, warrants to purchase 833,334 shares of Common Stock, being 50% of the number of shares of Common Stock underlying the $1,000 thousand in principal amount of the Additional Notes, on the same terms and conditions as the Warrants issued at the initial closing, including an exercise price of $0.80 per share, and a separate additional warrant to purchase 30,000 shares of Common Stock as additional consideration for the Buyer’s agreement to accelerate funding. The Additional Warrant was issued on the same terms and conditions as the original Warrant, including an exercise price of $0.80 per share.

The components of the Company’s outstanding convertible debt as of June 30, 2026 were as follows ($ in thousands):

 Schedule of Outstanding Convertible Debt