Harvard Bioscience(HBIO) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION This part presents the unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, financial performance, and financial position changes for the periods ended June 30, 2025 and 2024 Condensed Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific points in time Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change | % Change | | :-------------------------- | :------------ | :---------------- | :----- | :------- | | Total assets | $80,093 | $126,644 | $(46,551) | -36.76% | | Total liabilities | $64,360 | $63,304 | $1,056 | 1.67% | | Total stockholders' equity | $15,733 | $63,340 | $(47,607) | -75.16% | | Cash and cash equivalents | $7,442 | $4,108 | $3,334 | 81.16% | | Goodwill | $10,152 | $56,324 | $(46,172) | -82.00% | | Debt | $34,864 | $36,956 | $(2,092) | -5.66% | Condensed Consolidated Statements of Operations This section outlines the company's financial performance over specific periods, including revenues, expenses, and net loss Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $20,450 | $23,097 | $42,224 | $47,609 | | Gross profit | $11,533 | $13,218 | $23,717 | $27,990 | | Operating loss | $(819) | $(2,069) | $(50,487) | $(4,348) | | Net loss | $(2,282) | $(2,927) | $(52,622) | $(7,621) | | Basic and diluted loss per share | $(0.05) | $(0.07) | $(1.19) | $(0.18) | | Goodwill impairment | $- | $- | $47,951 | $- | Condensed Consolidated Statements of Comprehensive Loss This section presents the net loss and other comprehensive income or loss components, reflecting changes in equity from non-owner sources Condensed Consolidated Statements of Comprehensive Loss Highlights (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(2,282) | $(2,927) | $(52,622) | $(7,621) | | Foreign currency translation adjustments | $2,622 | $(128) | $3,914 | $(911) | | Other comprehensive income (loss) | $2,659 | $(94) | $3,968 | $(678) | | Comprehensive income (loss) | $377 | $(3,021) | $(48,654) | $(8,299) | Condensed Consolidated Statements of Stockholders' Equity This section details changes in the company's equity accounts, including common stock, additional paid-in capital, accumulated deficit, and other comprehensive loss Stockholders' Equity Changes (in thousands) | Metric | Balance at Dec 31, 2024 | Net Loss (6 months) | Other Comprehensive Loss (6 months) | Balance at June 30, 2025 | | :---------------------- | :---------------------- | :------------------ | :---------------------------------- | :----------------------- | | Common Stock | $441 | $4 | $- | $445 | | Additional Paid-in Capital | $236,579 | $1,072 | $- | $237,622 | | Accumulated Deficit | $(158,010) | $(52,622) | $- | $(210,632) | | Accumulated Other Comprehensive Loss | $(15,670) | $- | $3,968 | $(11,702) | | Total Stockholders' Equity | $63,340 | $(52,622) | $3,968 | $15,733 | Condensed Consolidated Statements of Cash Flows This section summarizes the cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Cash Flow Highlights (Six Months Ended June 30, in thousands) | Cash Flow Activity | 2025 | 2024 | | :------------------------------------ | :----- | :----- | | Net cash provided by operating activities | $5,741 | $557 | | Net cash (used in) provided by investing activities | $(916) | $233 | | Net cash used in financing activities | $(2,462) | $(878) | | Increase (decrease) in cash and cash equivalents | $3,334 | $(235) | | Cash and cash equivalents at end of period | $7,442 | $4,048 | Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and additional information supporting the condensed consolidated financial statements 1. Basis of Presentation and Summary of Significant Accounting Policies The financial statements are unaudited and prepared in accordance with SEC rules, with certain disclosures condensed or omitted. The Company's ability to continue as a going concern is in substantial doubt due to outstanding debt obligations and the uncertainty of refinancing by December 5, 2025. Estimates are used in financial reporting, and actual results may differ - Substantial doubt exists about the Company's ability to continue as a going concern due to outstanding debt and uncertain refinancing by December 5, 2025[20][21][22] Other Operating Expenses (in thousands) | Expense Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Employee retention tax credit fees | $170 | $- | $341 | $472 | | Unclaimed property audits expense | $- | $(147) | $- | $347 | | Restructuring expenses | $30 | $396 | $123 | $396 | | Total other operating expenses | $200 | $249 | $464 | $1,215 | - The Company is assessing the impact of recently issued accounting pronouncements: ASU No. 2023-09 (Income Taxes, effective Dec 2025) and ASU No. 2024-03 (Expense Disaggregation, effective Dec 2026)[24][25] 2. Earnings (Loss) per Share Basic and diluted loss per share calculations are presented, showing a significant increase in loss per share for the six months ended June 30, 2025, compared to the prior year Basic and Diluted Loss Per Share (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(2,282) | $(2,927) | $(52,622) | $(7,621) | | Weighted average shares outstanding - basic | 44,303 | 43,486 | 44,200 | 43,443 | | Basic loss per share | $(0.05) | $(0.07) | $(1.19) | $(0.18) | | Diluted loss per share | $(0.05) | $(0.07) | $(1.19) | $(0.18) | 3. Revenues Revenue decreased across most categories and geographic regions for both the three and six months ended June 30, 2025, primarily driven by lower sales of instruments, equipment, software, and accessories, and reduced customer advances Revenues by Type (in thousands) | Revenue Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Instruments, equipment, software and accessories | $18,178 | $21,292 | $38,043 | $44,051 | | Service, maintenance and warranty contracts | $2,272 | $1,805 | $4,181 | $3,558 | | Total revenues | $20,450 | $23,097 | $42,224 | $47,609 | Revenues by Geographic Region (in thousands) | Region | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | United States | $9,656 | $10,805 | $19,483 | $21,788 | | Americas - Other | $422 | $663 | $1,251 | $1,424 | | Europe, Middle East and Africa | $6,588 | $6,599 | $12,618 | $13,222 | | China | $2,451 | $3,249 | $5,185 | $7,631 | | Asia - Other | $1,333 | $1,781 | $3,687 | $3,544 | | Total | $20,450 | $23,097 | $42,224 | $47,609 | Contract Liabilities (in thousands) | Contract Liability Type | June 30, 2025 | December 31, 2024 | Change | Percentage Change | | :------------------------------------ | :------------ | :---------------- | :----- | :---------------- | | Deferred revenue (Service, maintenance, warranty) | $1,434 | $1,560 | $(126) | -8% | | Installation and training | $611 | $806 | $(195) | -24% | | Customer advances | $1,098 | $1,440 | $(342) | -24% | | Total short-term contract liabilities | $3,143 | $3,806 | $(663) | -17% | | Long-term service, maintenance and warranty contracts | $258 | $- | $258 | 100% | | Total contract liabilities | $3,401 | $3,806 | $(405) | -11% | 4. Goodwill and Long-Lived Assets The Company recorded a significant goodwill impairment charge of $48.0 million for the three months ended March 31, 2025, triggered by a sustained decrease in stock price, recent operating results, liquidity risk, and macroeconomic conditions. No further impairment was required as of June 30, 2025 - A goodwill impairment charge of $48.0 million was recorded for the three months ended March 31, 2025, due to a sustained decrease in stock price, operating results, liquidity risk, and macroeconomic conditions[32][34] Goodwill Carrying Amount (in thousands) | Metric | Amount | | :-------------------------- | :------- | | Carrying amount at Dec 31, 2024 | $56,324 | | Goodwill impairment | $(47,951) | | Effect of change in currency translation | $1,779 | | Carrying amount at June 30, 2025 | $10,152 | Intangible Assets, Net (in thousands) | Intangible Asset Type | June 30, 2025 Net | December 31, 2024 Net | | :-------------------------- | :---------------- | :-------------------- | | Customer relationships | $4,749 | $5,153 | | Technology and software development | $3,419 | $4,841 | | Trade names and patents | $753 | $943 | | Total amortizable intangible assets | $8,921 | $10,937 | | Indefinite-lived intangible assets | $218 | $195 | | Total intangible assets | $9,139 | $11,132 | 5. Balance Sheet Information This section provides details on inventories and other current liabilities, highlighting the increase in employee retention tax credit funds held as liabilities due to received refunds Inventories (in thousands) | Inventory Type | June 30, 2025 | December 31, 2024 | | :--------------- | :------------ | :---------------- | | Finished goods | $5,935 | $5,222 | | Work in process | $1,556 | $2,754 | | Raw materials | $14,764 | $15,269 | | Total | $22,255 | $23,245 | Other Current Liabilities (in thousands) | Liability Type | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Compensation | $2,124 | $1,714 | | Employee retention tax credit funds | $5,420 | $3,154 | | Total | $12,473 | $9,409 | - The Company received $2.2 million in ERTC refunds during the six months ended June 30, 2025, and $3.2 million in 2024, which are included in other current liabilities[39] 6. Marketable Equity Securities The Company sold all its remaining Harvard Apparatus Regenerative Technology, Inc. (HRGN) shares during the six months ended June 30, 2024, resulting in a $1.6 million loss on equity securities. No HRGN stock was held in the current period - The Company sold all remaining HRGN shares during the six months ended June 30, 2024, generating $1.9 million in proceeds and recording a $1.6 million loss on equity securities. No HRGN shares were held as of June 30, 2025[42] 7. Leases The Company's operating lease liabilities increased to $8.45 million as of June 30, 2025, with a weighted average remaining lease term of 4.6 years and a discount rate of 8.0% Operating Lease Information (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Operating lease right-of-use assets | $7,131 | $6,132 | | Total operating lease liabilities | $8,450 | $7,539 | | Weighted average remaining lease term (years) | 4.6 | 5.2 | | Weighted average discount rate | 8.0% | 8.9% | Future Minimum Lease Payments for Operating Leases (in thousands) | Year Ending December 31, | Amount | | :----------------------- | :----- | | 2025 (remainder of year) | $997 | | 2026 | $2,216 | | 2027 | $2,200 | | 2028 | $2,138 | | 2029 | $1,899 | | Thereafter | $808 | | Total lease payments | $10,258 | | Less imputed interest | $(1,808) | | Total operating lease liabilities | $8,450 | 8. Debt The Company's total debt decreased slightly to $34.86 million as of June 30, 2025. The Company was not in compliance with refinancing milestones and financial covenants, leading to the August 2025 Amendment which waived defaults but increased the interest rate to SOFR plus 700 bps and requires refinancing or repayment by December 5, 2025 Debt Breakdown (in thousands) | Debt Type | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Term loan | $22,700 | $24,700 | | Revolving line | $12,650 | $12,650 | | Less: unamortized deferred financing costs | $(486) | $(394) | | Total debt | $34,864 | $36,956 | - The Company was not in compliance with refinancing milestones and quarterly financial covenants as of June 30, 2025. The August 2025 Amendment waived these defaults but increased the interest rate margin to SOFR plus 700 bps and requires refinancing or repayment by December 5, 2025[51][52] - The effective interest rate on borrowings increased to 8.8% for the three months ended June 30, 2025 (from 7.9% in 2024) and 8.7% for the six months ended June 30, 2025 (from 7.8% in 2024)[48] 9. Derivatives The Company uses an interest rate swap contract to hedge against variable SOFR-based debt, effectively converting $18.9 million of debt to a fixed annual rate of 4.75%. This swap is treated as an effective cash flow hedge - An interest rate swap contract with a notional amount of $18.9 million (as of June 30, 2025) converts SOFR-based variable interest to a fixed annual rate of 4.75%, maturing on December 22, 2025[54][55] Effect of Cash Flow Hedge on OCI and Earnings (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Gain recognized in OCI on derivatives | $37 | $34 | $54 | $233 | | Amounts reclassified from AOCI to interest expense | $(17) | $44 | $(34) | $91 | 10. Fair Value Measurements The Company's interest rate swap agreement is measured at fair value using the market approach technique, classified as Level 2 in the fair value hierarchy Fair Value of Interest Rate Swap Agreement (in thousands) | Asset (Liability) | Fair Value as of June 30, 2025 | Fair Value as of December 31, 2024 | | :------------------------ | :----------------------------- | :--------------------------------- | | Interest rate swap agreement | $(44) | $(99) | 11. Stock-Based Compensation Stock-based compensation expense decreased for both the three and six months ended June 30, 2025, compared to 2024. As of June 30, 2025, $2.2 million in compensation costs for unvested awards remains unrecognized, expected to be recognized over approximately 1.4 years Stock-Based Compensation Expense Allocation (in thousands) | Expense Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of revenues | $31 | $66 | $61 | $118 | | Sales and marketing expenses | $106 | $159 | $224 | $289 | | General and administrative expenses | $240 | $927 | $599 | $1,698 | | Research and development expenses | $95 | $126 | $188 | $221 | | Total stock-based compensation | $472 | $1,278 | $1,072 | $2,326 | - Total unrecognized compensation costs related to unvested awards were $2.2 million as of June 30, 2025, with a weighted average recognition period of approximately 1.4 years[59] - The aggregate fair value of RSUs that vested during the six months ended June 30, 2025, was $0.2 million, down from $0.5 million in 2024[60] 12. Income Tax The Company reported an income tax expense for the three months ended June 30, 2025, and a benefit for the six months, with effective tax rates significantly lower than the U.S. statutory rate primarily due to the tax effect of goodwill impairment and changes in valuation allowances Income Tax Expense (Benefit) and Effective Tax Rates | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income tax expense (benefit) | $28 | $(353) | $(426) | $(143) | | Effective tax rate | 1.2% | 10.8% | 0.8% | 1.8% | - The lower effective tax rate for the six months ended June 30, 2025, was primarily due to the tax effect of goodwill impairment and the release of reserves related to uncertain tax positions[64][101] 13. Commitments and Contingent Liabilities The Company is subject to routine claims and lawsuits, which management does not expect to have a material adverse effect. An unclaimed property audit was completed in Q2 2024, resulting in a credit for the three months ended June 30, 2024 - Management believes that the outcome of current legal matters will not have a material adverse effect on the Company's business, results of operations, financial condition, or cash flows[66] - A credit of $(0.1) million was recorded during the three months ended June 30, 2024, related to the completion of an unclaimed property audit[67] 14. Restructuring Costs The Company initiated additional restructurings during the first half of 2025, expecting to incur $0.1 million in severance costs primarily from headcount reductions in North America and Europe, with completion anticipated by year-end 2025 - Additional restructurings initiated in H1 2025 are expected to incur $0.1 million in severance costs due to headcount reductions in North America and Europe, with completion by December 31, 2025[70] Changes in Accrued Liability for Restructuring (in thousands) | Metric | Severance | | :-------------------------- | :-------- | | Balance at December 31, 2024 | $82 | | Restructuring costs | $123 | | Cash payments | $(176) | | Effect of change in currency translation | $2 | | Balance at June 30, 2025 | $31 | 15. Segment Information The Company operates as a single operating segment, with the chief operating decision maker (CODM) allocating resources and assessing performance based on consolidated net income (loss) and available liquidity - The Company conducts business as a single operating segment, with consolidated net income (loss) as the key measure for resource allocation and performance assessment[72] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial performance, condition, and liquidity, highlighting revenue declines due to market conditions and tariffs, significant goodwill impairment, and ongoing challenges with debt compliance and refinancing Overview This section introduces Harvard Bioscience, Inc. as a global developer and manufacturer of life science technologies, products, and services - Harvard Bioscience, Inc. is a leading global developer, manufacturer, and seller of technologies, products, and services for life science applications, serving academic institutions, government laboratories, and pharmaceutical/biotechnology organizations[74] Trends and Developments This section discusses key factors impacting the company's performance, including declining demand, government funding uncertainties, tariffs, and debt covenant non-compliance - Revenue has been negatively impacted by softening worldwide demand from academic research institutions and CROs, uncertainties in government funding (e.g., NIH), and increased tariffs on international trade, particularly between the U.S. and China[75] - As of June 30, 2025, the Company was not in compliance with certain refinancing milestones and financial covenants under its Credit Agreement, though a waiver was obtained via the August 2025 Amendment[77] Selected Results of Operations The Company experienced a decline in revenues and gross profit for both the three and six months ended June 30, 2025, primarily due to reduced demand and tariffs. Operating expenses decreased due to compensation reductions, but a significant goodwill impairment charge led to a substantial net loss for the six-month period Selected Results of Operations (Three Months Ended June 30, in thousands) | Metric | 2025 | % of revenue | 2024 | % of revenue | | :-------------------------- | :----- | :----------- | :----- | :----------- | | Revenues | $20,450 | 100.0% | $23,097 | 100.0% | | Gross profit | $11,533 | 56.4% | $13,218 | 57.2% | | Sales and marketing expenses | $4,539 | 22.2% | $5,395 | 23.4% | | General and administrative expenses | $4,262 | 20.8% | $5,686 | 24.6% | | Research and development expenses | $2,189 | 10.7% | $2,626 | 11.4% | | Interest expense | $791 | 3.9% | $749 | 3.2% | | Loss on equity securities | $- | 0.0% | $281 | 1.2% | | Income tax expense (benefit) | $28 | 0.1% | $(353) | -1.5% | Selected Results of Operations (Six Months Ended June 30, in thousands) | Metric | 2025 | % of revenue | 2024 | % of revenue | | :-------------------------- | :----- | :----------- | :----- | :----------- | | Revenues | $42,224 | 100.0% | $47,609 | 100.0% | | Gross profit | $23,717 | 56.2% | $27,990 | 58.8% | | Sales and marketing expenses | $9,510 | 22.5% | $11,299 | 23.7% | | General and administrative expenses | $9,447 | 22.4% | $11,649 | 24.5% | | Research and development expenses | $4,510 | 10.7% | $5,511 | 11.6% | | Goodwill impairment | $47,951 | 113.6% | $- | 0.0% | | Interest expense | $1,593 | 3.8% | $1,500 | 3.2% | | Loss on equity securities | $- | 0.0% | $1,593 | 3.3% | | Income tax benefit | $(426) | -1.0% | $(143) | -0.3% | - Revenues decreased by 11.5% for the three months and 11.3% for the six months ended June 30, 2025, primarily due to softening worldwide demand from academic research institutions and CROs, and the impact of reciprocal tariffs[80][91] - Gross profit decreased by 12.7% for the three months and 15.3% for the six months ended June 30, 2025, with gross margin declining to 56.4% and 56.2% respectively, due to lower revenues, under-absorption of fixed manufacturing costs, and a higher mix of lower-margin products[81][92] - Operating expenses (Sales & Marketing, G&A, R&D) decreased across the board for both periods, primarily due to reduced compensation costs[82][83][84][93][94][95] - A non-cash goodwill impairment charge of $48.0 million was recorded for the six months ended June 30, 2025, triggered by a sustained decrease in stock price, recent operating results, liquidity risk, and macroeconomic conditions[97] Liquidity and Capital Resources The Company's cash and cash equivalents increased, but it faces substantial doubt about its ability to continue as a going concern due to non-compliance with debt covenants. An August 2025 amendment waived defaults but requires refinancing or repayment by December 5, 2025, with increased interest rates. Operating cash flow significantly improved, while investing and financing activities used more cash - Cash and cash equivalents increased to $7.4 million as of June 30, 2025, from $4.1 million at December 31, 2024[102] - The Company received $5.4 million in Employee Retention Tax Credit (ERTC) refunds as of June 30, 2025, with $1.1 million received in Q2 2025[103] - Substantial doubt exists about the Company's ability to continue as a going concern due to non-compliance with debt covenants and the uncertainty of refinancing or repaying the Credit Agreement by December 5, 2025[106] - Net cash provided by operating activities significantly increased to $5.7 million for the six months ended June 30, 2025, from $0.6 million in 2024, driven by inventory reduction and ERTC refunds[108] - Net cash used in investing activities was $0.9 million for the six months ended June 30, 2025, a shift from $0.2 million provided in 2024, primarily due to capital expenditures[109] - Net cash used in financing activities increased to $2.5 million for the six months ended June 30, 2025, from $0.9 million in 2024, mainly due to debt repayments and issuance costs[110] Impact of Foreign Currencies This section analyzes the effects of foreign currency exchange rate fluctuations on the company's revenues, expenses, and comprehensive loss - Changes in foreign currency exchange rates had a favorable effect on revenues ($0.4 million for Q2 2025, $0.2 million for H1 2025) and an unfavorable effect on expenses ($0.4 million for Q2 2025, $0.3 million for H1 2025)[112] - A significant gain of $2.6 million (Q2 2025) and $3.9 million (H1 2025) was recognized in other comprehensive loss due to foreign equity translation adjustments, compared to losses in the prior year[113] Critical Accounting Policies This section confirms no material changes to critical accounting policies since the last annual report - There have been no material changes to the critical accounting policies since the Annual Report on Form 10-K for the fiscal year ended December 31, 2024[115] Recent Accounting Pronouncements This section directs to Note 1 for details on recently issued accounting pronouncements - Information on recent accounting pronouncements is detailed in Note 1 to the Condensed Consolidated Financial Statements[116] Item 3. Quantitative and Qualitative Disclosures about Market Risk This item is marked as not applicable for the reporting period - This section is not applicable for the current reporting period[117] Item 4. Controls and Procedures The Company's disclosure controls and procedures were deemed ineffective as of June 30, 2025, due to previously reported material weaknesses in controls over the order-to-cash cycle and physical inventory counts. Remediation efforts are ongoing and expected to continue throughout fiscal year 2025 - The Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were not effective as of June 30, 2025[119] - Material weaknesses were previously identified in internal control over financial reporting related to controls over (i) the order-to-cash cycle and (ii) physical inventory counts[120] - Remediation efforts for the material weaknesses are ongoing and expected to continue throughout fiscal year 2025, with effectiveness demonstrated after a sufficient period of operation and testing[121] PART II - OTHER INFORMATION This part covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits Item 1. Legal Proceedings Information regarding legal proceedings is incorporated by reference from Note 13 to the Condensed Consolidated Financial Statements, indicating no material adverse effects are expected - Information on legal proceedings is incorporated by reference from Note 13 of the financial statements[125] Item 1A. Risk Factors The Company faces significant risks including substantial debt and non-compliance with credit agreement covenants, which could lead to immediate repayment demands. Additionally, the Company is non-compliant with Nasdaq's minimum bid price requirement, risking delisting and negative impacts on its business and stock liquidity - The Company has substantial debt and was non-compliant with certain covenants as of June 30, 2025. While a waiver was granted, failure to comply with future terms or refinance by December 5, 2025, could result in immediate debt repayment[127][128][129] - The Company received a Nasdaq notice for non-compliance with the $1.00 minimum bid price requirement and has until October 1, 2025, to regain compliance, potentially requiring a reverse stock split[130][131][132] - Delisting from Nasdaq would negatively impact the Company's ability to raise capital, stock liquidity, and could lead to loss of confidence from employees, customers, and investors[133] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities during the reporting period - No unregistered sales of equity securities occurred during the period covered by this report[134] Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities[135] Item 4. Mine Safety Disclosures This item is marked as not applicable - This section is not applicable[135] Item 5. Other Information The Company regained compliance with Nasdaq's Audit Committee composition rule on July 17, 2025, but remains non-compliant with the Minimum Bid Price Requirement - As of July 17, 2025, the Company regained compliance with Nasdaq Listing Rule 5605(c)(2)(A) regarding Audit Committee composition[136] - The Company has not yet regained compliance with the Nasdaq Minimum Bid Price Requirement[136] Item 6. Exhibits This section lists all exhibits filed with the 10-Q report, including various agreements, certifications, and XBRL documents - The exhibits include Letter Agreements, Incentive Plans, Employment Agreements, Certifications (302 and 906), and Inline XBRL documents[138] SIGNATURES The report is duly signed on behalf of Harvard Bioscience, Inc. by its Chief Executive Officer, John Duke, and Interim Chief Financial Officer, Mark Frost, as of August 11, 2025 - The report was signed by John Duke, Chief Executive Officer, and Mark Frost, Interim Chief Financial Officer, on August 11, 2025[141][142]