Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

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

You should read the following management's discussion and analysis of our financial condition and results of operations in conjunction with our condensed unaudited interim financial statements (the condensed financial statements) and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with our audited financial statements and notes thereto for the year ended December 31, 2025, included in our prospectus dated May 7, 2026, filed with the U.S. Securities and Exchange Commission (the "SEC") pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended on May 8, 2026.

Overview

We are a commercial-stage medical device company redefining stroke recovery for survivors living with life-altering motor impairments. Our Vivistim Paired Vagus Nerve Stimulation (Paired VNS) System is the first and only clinically-validated, FDA-approved solution for chronic ischemic stroke survivors with moderate to severe upper extremity impairments. Stroke is one of the leading causes of long-term disability in the United States. While advancements in acute stroke care over the past decade have significantly reduced mortality, innovation for chronic stroke recovery has lagged, resulting in a growing number of stroke survivors living with meaningful impairments. Our breakthrough Vivistim Paired VNS System (Vivistim System) addresses this unmet need. The Vivistim System includes an implanted pulse generator and lead that deliver stimulation to the vagus nerve when activated. During treatment (Vivistim Therapy), intentional bursts of stimulation are delivered during functional movement to increase neuroplasticity and durably restore motor function. Clinical data have demonstrated that Vivistim Therapy delivers meaningful improvements in upper limb function, which can help stroke survivors regain critical capabilities and independence and restore quality of life, regardless of the time elapsed since the patient's stroke. In July 2026, two-year follow-up data from the VNS-REHAB pivotal trial were published in Neurology. The publication reported that improvements observed following Vivistim Therapy in upper-limb motor impairment and function and certain patient-reported measures were sustained for at least two years. We believe we are setting a new standard of care in chronic stroke recovery, facilitating a new treatment pathway for chronic ischemic stroke survivors with moderate to severe upper extremity impairments.

Chronic stroke recovery presents a significant market opportunity. According to the American Heart Association (AHA), approximately 87% of the strokes in the United States are ischemic. This equates to approximately 9 million ischemic stroke survivors in the United States, of which we estimate that more than 4 million are chronic ischemic stroke survivors living with moderate to severe upper extremity impairment. This population falls within the current on-label indication for the Vivistim System. We believe that an initial market opportunity comprises approximately 1 million of those survivors that demonstrate the requisite overall health, cognition and motivation to participate in therapy and have received some amount of post-stroke therapy, which we estimate represents an initial market opportunity of over $30 billion based on the average selling price of the Vivistim System. Vivistim Therapy is effective for recent stroke survivors as well as patients who initiate treatment many years post-stroke. Based on a report published by the AHA in 2025, we estimate that each year approximately 200,000 new stroke survivors in the United States meet our indication for use, with 50,000 of these survivors representative of our initial market opportunity.

Our commercial strategy is designed to encourage Vivistim Therapy adoption at stroke centers and therapy sites through a coordinated, evidence-based approach. We sell the Vivistim System to customers, primarily stroke hospitals, in the United States, and our commercial organization is responsible for driving adoption of the Vivistim System through customer outreach, education, and relationship management activities. Our team includes Territory Managers (TMs), who support initial customer onboarding efforts at stroke centers and maintain commercial relationships with physicians and administrators, and Therapy Development Specialists (TDSs), who focus on outreach to therapy sites and provide general educational information regarding the clinical use of the Vivistim System. These activities are intended to facilitate customer adoption and utilization of the Vivistim System. Our commercial efforts are currently focused on primary and comprehensive stroke centers, which are hospitals that have cross-functional teams with the capabilities to treat acute stroke at the highest level of care and in compliance with AHA guidelines. These centers see significant volumes of acute stroke patients and are typically surrounded by a network of therapy sites with neurorehabilitation capabilities, providing the infrastructure necessary for efficient implementation of Vivistim Therapy. We work with these stroke centers to establish Vivistim Therapy as a treatment option for stroke survivors. Over time, we believe these centers will naturally integrate Vivistim Therapy into standard care pathways for stroke survivors upon discharge and establish self-sustaining care programs that use

Vivistim Therapy. According to data from the stroke center accreditation organizations, there were approximately 1,500 primary and comprehensive stroke centers in the United States as of December 2025. In addition, according to stroke claims data, approximately 70% of acute strokes in the United States are seen at 900 hospitals.

We rely on third-party contract manufacturers to manufacture the Vivistim System and accessories. We believe this strategy provides the expertise and capacity required to effectively and efficiently scale production based on demand, and helps to reduce our need for capital investment and reduce operational expenses.

To date, our primary sources of capital have been private placements of preferred stock, debt financing arrangements, revenue from sales of our Vivistim System and net proceeds from our initial public offering in May 2026 (the "IPO"). For the six months ended June 30, 2026, we generated revenue of $25.6 million, with a gross margin of 82.8%, and had a net loss of $38.8 million, compared to revenue of $12.3 million, with a gross margin of 82.2%, and a net loss of $21.1 million for the six months ended June 30, 2025. As of June 30, 2026, we had cash and cash equivalents of $177.1 million and an accumulated deficit of approximately $196.6 million. In May 2026, we completed our IPO and received net proceeds of approximately $134.0 million.

Key Factors and Trends Affecting our Business

We believe that our performance, results of operations and future success depend on several factors, including:

Components of Results of Operations

Revenue

We currently generate all of our revenue from the sale of our Vivistim System to customers, mainly primary and comprehensive stroke centers, in the United States. Our customers typically purchase an initial stocking order and then reorder replenishment product as procedures are performed. No single customer accounted for 10% or more of our revenue for the three and six months ended June 30, 2026 and 2025. We expect revenue to increase as we expand our commercial organization and sales territories, add customers and expand patient and customer awareness. We have expanded our commercial organization to help us drive and support revenue growth and intend to continue this expansion. We also expect that demand, and thus revenue growth, will be positively impacted by, and to the extent that, we obtain additional positive coverage policies with payors. While we have experienced strong revenue growth, our revenue may fluctuate from quarter to quarter due to a variety of factors.

Cost of goods sold and gross margin

Cost of goods sold primarily consists of acquisition costs of finished goods and components, warranty costs to replace aged, damaged or unusable items, product replacement costs, any outbound shipping costs and packaging costs, depreciation, and allocated

costs including facilities and information technology costs. We expect cost of goods sold to increase in absolute terms as our revenue grows.

We calculate gross margin as gross profit divided by revenue. Our gross profit has been and will continue to be affected by a variety of factors, including sales volumes, purchase volumes of inventory, cost of goods sold, tariffs, inflation, and product yields. Our gross margin will likely fluctuate from quarter to quarter.

Research and development costs

Research and development costs primarily consist of expenses related to product development, engineering, clinical studies related to new clinical indications, regulatory expenses, testing, consulting services and other costs associated with product improvements and next generation versions of our products. Other research and development expenses include salaries, employee benefits, stock-based compensation and other headcount-related costs, depreciation expense and allocated costs related to facilities and information technology. We expect our research and development costs to increase in absolute dollars in the future as we pursue product development initiatives, including product improvements and next-generation versions of our products, and continue to expand our clinical data. We expect research and development costs as a percentage of revenue to vary over time depending on the level and timing of initiating product development efforts and clinical development activities.

Selling, general and administrative expenses

Selling, general and administrative expenses primarily consist of compensation for personnel, including salaries, employee benefits, stock-based compensation, commissions associated with our commercial organization, spending related to sales and marketing, finance, information technology and human resource functions, expenses related to clinical studies and our registry for our current clinical indication, legal expenses related to regulatory matters, and training. Other expenses include travel expenses, advertising, conferences, trade shows, consulting and professional services fees, insurance costs, and general corporate expenses, including facilities-related expenses. The activities of our TMs and TDSs to facilitate customer adoption and utilization of the Vivistim System, and of our in-house market access team in facilitating the administrative prior authorization process, are included in selling, general and administrative expenses and do not represent contractual obligations or services provided to customers after product delivery. We expect selling, general and administrative expenses to continue to increase in absolute dollars as we expand our commercial organization, including with respect to TMs and TDSs, to both drive and support our planned growth in revenue, fund clinical studies and our registry for our current clinical indication, and incur additional expenses associated with operating as a public company, including costs related to legal, accounting, insurance, compliance with exchange listing and Securities and Exchange Commission requirements, and investor relations. We also expect an increase in our stock-based compensation expense with the establishment of the new equity plan in connection with our IPO and related grants thereunder. However, we expect selling, general and administrative expenses to decrease as a percentage of revenue primarily as, and to the extent, our revenue grows.

Total other income (expense), net

Other income (expense), net consists primarily of changes in the fair value of our Convertible Notes and warrant liabilities, interest expense on our debt obligations, amortization of debt issuance costs, and interest income earned on our cash and cash equivalents. The Convertible Notes converted into common stock upon the completion of our IPO in May 2026 and will therefore not result in additional fair value adjustments in future periods.

Provision for Income Taxes

Provision for income taxes consists of income taxes in the United States and includes deferred taxes on temporary differences for tax and financial statement purposes.

Results of Operations

Comparison of the three months ended June 30, 2026 and 2025

The following table summarizes our results of operations for the three months ended June 30, 2026 and 2025.

Revenue. Revenue increased by $6.8 million, or 102.4%, to $13.5 million for the three months ended June 30, 2026, compared to $6.7 million for the three months ended June 30, 2025. The increase was driven primarily by higher adoption of the Vivistim System, as units of IPGs sold, a primary component of the Vivistim System, increased comparably during the period. This revenue growth reflects our continued efforts to increase awareness and expand our commercial organization while maintaining a consistent average selling price of the Vivistim System.

Cost of goods sold and gross margin. Cost of goods sold increased by $1.1 million, or 91.5%, to $2.3 million for the three months ended June 30, 2026, compared to $1.2 million for the three months ended June 30, 2025. While the cost per unit of the underlying product remained relatively consistent year over year, the increase in cost of goods sold was primarily driven by higher sales volume of Vivistim Systems. Gross margin increased to 83.2% in the current period, from 82.3% in the three months ended June 30, 2025. The increase was primarily attributable to inbound freight and tariff costs recognized in cost of goods sold during the period, partially offset by other changes in product and warranty costs.

Research and development costs. Research and development costs increased by $0.9 million, or 60.6%, to $2.3 million for the three months ended June 30, 2026, compared to $1.4 million for the three months ended June 30, 2025. The increase was primarily due to a $0.6 million increase in personnel-related expenses associated with increased headcount and a $0.3 million increase in product development efforts, including external development services.

Selling, general and administrative expenses. Selling, general and administrative expenses increased by $12.4 million, or 85.0%, to $26.9 million for the three months ended June 30, 2026, compared to $14.5 million for the three months ended June 30, 2025. The increase was primarily due to an increase of $7.6 million in personnel-related expenses as a result of increased headcount primarily in our commercial organization, as well as higher commissions related to increased sales of Vivistim Systems. The increase also included $1.7 million in travel, meeting, marketing and branding expenses and $1.9 million in share-based compensation and professional fees.

Total other income (expense), net. Total other expense, net was $3.1 million for the three months ended June 30, 2026, compared to total other expense, net of $28,000 for the three months ended June 30, 2025. The increase in total other expenses was primarily attributable to a $4.1 million loss from the change in the fair value of our Convertible Notes, partially offset by $0.7 million of higher

interest income resulting from a higher average cash balance and a $0.2 million gain from changes in the fair value of warrant liabilities.

Comparison of the six months ended June 30, 2026 and 2025

The following table summarizes our results of operations for the six months ended June 30, 2026 and 2025.

Revenue. Revenue increased by $13.2 million, or 107.4%, to $25.6 million for the six months ended June 30, 2026, compared to $12.3 million for the six months ended June 30, 2025. The increase was driven primarily by higher adoption of the Vivistim System, as units of IPGs sold, a primary component of the Vivistim System, increased comparably during the period. This revenue growth reflects our continued efforts to increase awareness and expand our commercial organization while maintaining a consistent average selling price of the Vivistim System.

Cost of goods sold and gross margin. Cost of goods sold increased by $2.2 million, or 100.1%, to $4.4 million for the six months ended June 30, 2026, compared to $2.2 million for the six months ended June 30, 2025. While the cost per unit of the underlying product remained relatively consistent year over year, the increase in cost of goods sold was primarily driven by higher sales volume of Vivistim Systems and higher product warranty costs. Gross margin increased to 82.8% for the six months ended June 30, 2026, compared to 82.2% for the six months ended June 30, 2025. The increase was primarily attributable to inbound freight and tariff costs recognized in cost of goods sold during the period.

Research and development costs. Research and development costs increased by $1.2 million, or 43.2%, to $4.0 million for the six months ended June 30, 2026, compared to $2.8 million for the six months ended June 30, 2025. The increase was primarily due to an increase of $0.8 million in personnel related expenses associated with increased headcount and a $0.4 million increase in product and related software development expenses, including external development services.

Selling, general and administrative expenses. Selling, general and administrative expenses increased by $23.9 million, or 85.1%, to $52.1 million for the six months ended June 30, 2026, compared to $28.1 million for the six months ended June 30, 2025. The increase was primarily due to a $15.1 million increase in compensation and benefits and share-based compensation associated with increased headcount, primarily in our commercial organization, and higher commissions related to increased sales of Vivistim Systems. The increase also included $4.2 million in travel, meeting, marketing and branding expenses, including costs associated with our name change, and $2.5 million in audit, legal and other professional fees.

Total other income (expense), net. Total other expense, net was $3.9 million for the six months ended June 30, 2026, compared to total other expense, net of $0.4 million for the six months ended June 30, 2025. The increase was primarily attributable to a $4.9 million loss from changes in the fair value of our Convertible Notes and $0.1 million of higher interest expense, partially offset by $0.9 million of higher interest income resulting from a higher average cash balance and a $0.2 million gain from changes in the value of warrant liabilities.

Liquidity and Capital Resources

Overview

To date, our primary sources of capital have been private placements of preferred stock, debt financing arrangements, revenue from sales of our Vivistim System, and net proceeds from our IPO in May 2026. As of June 30, 2026, we had cash and cash equivalents of $177.1 million and an accumulated deficit of approximately $196.6 million. During the three months ended March 31, 2026, we issued Convertible Promissory Notes in an aggregate principal amount of $40.0 million. In May 2026, we completed our IPO and received proceeds of approximately $134.0 million.

Funding Requirements

We expect our operating expenses to continue to increase for the foreseeable future as we continue to make significant investments in our commercial organization, seek to expand our marketing programs to help facilitate further awareness and adoption of our Vivistim System, continue to make investments in research and development, including regulatory affairs and clinical studies, and as we continue to scale our infrastructure. Moreover, we expect to incur additional expenses associated with operating as a public company, including costs related to legal, accounting, insurance, exchange listing and SEC requirements, and investor relations.

Our future liquidity and capital requirements will depend on numerous factors, including:

Based on our current operating plan, we believe that our cash and cash equivalents, which include the net proceeds from our IPO in May 2026, will be sufficient to fund our planned operating expenses and meet our obligations for at least the next 12 months from the issuance date of the condensed financial statements. We have based this estimate on assumptions that may prove to be incorrect, and we could use our available capital resources sooner than we currently expect.

If these sources are insufficient to satisfy our liquidity requirements, we may seek additional financing or to raise any necessary additional capital through public or private equity offerings or debt financings, credit or loan facilities or a combination of one or more of these or other funding sources. Additional funds may not be available to us on acceptable terms or at all. If we fail to obtain necessary capital when needed on acceptable terms, or at all, we could be forced to delay, limit, reduce or terminate our commercial efforts, product development programs or other operations, and such failure would have a negative impact on our financial condition and our ability to execute our business plan. If we raise additional funds by issuing equity securities or convertible debt, our stockholders will suffer dilution and the terms of any financing may adversely affect the rights of our stockholders. In addition, as a condition to providing additional funds to us, future investors may demand, and may be granted, rights superior to those of existing stockholders. If we raise additional capital through collaboration agreements, licensing arrangements or marketing and distribution or other similar arrangements, we may have to relinquish valuable rights, future revenue streams, research programs or product or grant licenses that may not be favorable to us. Debt financing, if available, is likely to involve restrictive covenants limiting our flexibility in conducting future business activities, and, in the event of insolvency, debt holders would be repaid before holders of our equity securities received any distribution of our corporate assets.

Cash Flows

The following table summarizes our cash flows for the six months ended June 30, 2026 and 2025:

Operating Activities

Net cash used in operating activities was $33.4 million for the six months ended June 30, 2026, compared to $20.7 million for the six months ended June 30, 2025. Net cash used in operating activities for the six months ended June 30, 2026 was primarily due to our net loss of $38.8 million, as well as increases in accounts receivable, inventory, and other assets of $1.2 million, $1.5 million, and $1.0 million, respectively. These uses of cash were partially offset by non-cash adjustments for the change in fair value of convertible notes payable of $4.9 million and share-based compensation of $2.0 million, as well as increases in accounts payable and accrued liabilities and other of $2.1 million. Net cash used for the six months ended June 30, 2025 was primarily due to our net loss of $21.1 million and increases in inventory of $1.1 million, partially offset by non-cash adjustments for share-based compensation of $0.6 million, as well as other changes in operating assets and liabilities.

Investing activities

Net cash used in investing activities was $1.6 million for the six months ended June 30, 2026, compared to $23.0 thousand for the six months ended June 30, 2025. Net cash used in investing activities in each case consisted of purchases of property and equipment.

Financing activities

Net cash provided by financing activities was $178.5 million for the six months ended June 30, 2026, attributable primarily to $139.5 million in proceeds from the issuance of common stock in our initial public offering, net of underwriting discounts and commissions, $40.0 million in aggregate proceeds from the issuance of Convertible Notes, including $25.9 million from related parties, $0.5 million received upon the exercise of common stock options, and $0.4 million received upon the cash exercise of redeemable convertible preferred stock warrants. The proceeds were offset by the payments of $2.0 million of deferred offering costs.

Net cash provided by financing activities was $32.4 million for the six months ended June 30, 2025, attributable primarily to $29.6 million in net proceeds from the issuance of Series F redeemable convertible preferred stock, $2.6 million in net proceeds from the related party issuance of Series F redeemable convertible preferred stock, and $0.2 million received upon the exercise of common stock options.

Loan and Security Agreement with Horizon

On December 29, 2023, we entered into a Loan and Security Agreement (the "Loan and Security Agreement") with Horizon Technology Finance Corporation. On June 1, 2024, Horizon Technology Finance Corporation assigned all of its right, title and interest in and to the loans outstanding under the Loan and Security Agreement and related warrants to Horizon Funding II, LLC, its wholly-owned subsidiary (together with Horizon Technology Finance Corporation, "Horizon"). The Loan and Security Agreement provides for term loans of up to an aggregate principal amount of $30.0 million, available in four equal tranches of $7.5 million. Each tranche comprises two equal loans of $3,750,000. As of June 30, 2026, we had $7.5 million in aggregate principal outstanding under the Loan and Security Agreement. Although the Loan and Security Agreement initially provided for term loans of up to $30.0 million in four tranches of $7.5 million each, the availability period for the remaining tranches expired on December 31, 2025, and no additional amounts are available to be drawn.

The tranches are subject to various conditions and requirements set out in the Loan and Security Agreement. The availability of the first tranche was subject to, among other things, our completing an equity offering of at least $15.0 million on or before December 31, 2023. We satisfied the conditions of the first tranche and drew down $7.5 million in December 2023. The availability of the second tranche was subject to, among other things, our completing an equity offering of at least $15.0 million on or before December 31, 2024. We did not draw down this second tranche. The availability of the third tranche was subject to, among other things, (i) our achievement of at least $20.0 million of trailing 12-month revenue as of the funding date and (ii) our completing an equity offering of at least $30.0 million on or before June 20, 2025. We did not draw down this third tranche. The availability of the fourth tranche is subject to, among other things, (i) our achievement of at least $25.0 million of trailing 12-month revenue as of the funding date and (ii) our completing an equity offering of at least $30.0 million on or before December 31, 2025. We did not draw down this fourth tranche. Our ability to draw additional loans under the Loan and Security Agreement expired on December 31, 2025.

Pursuant to the Loan and Security Agreement, we are required to issue a warrant to purchase shares of our securities in the event that we draw down a tranche following satisfaction of the applicable conditions. In connection with our draw down of the first tranche under the Loan and Security Agreement, we issued first tranche warrants to purchase such number of securities representing an aggregate of $262,500 to Horizon. The first tranche warrants are exercisable, at the election of Horizon, for (i) shares of Series E-2 redeemable convertible preferred stock at an exercise price of $2.5443 per share or (ii) shares of Series F redeemable convertible preferred stock at an exercise price of $2.6317 per share, and expire ten years from the date of issuance.

The Loan and Security Agreement matures on January 1, 2029. Borrowings under the Loan and Security Agreement accrue interest at an annual rate equal to the greater of (i) The Wall Street Journal (or any successor thereto) prime rate (subject to a floor of 8.50%) plus 3.75% and (ii) 12.25%. We are required to make monthly payments of interest only through January 1, 2028. Following

such date, we are required to make monthly payments of principal and accrued interest through maturity. The unpaid balance of principal and accrued interest is due at maturity.

The Loan and Security Agreement provides that we can at any time prepay, in whole but not in part, amounts outstanding under the Loan and Security Agreement, subject to a prepayment premium on the outstanding principal amount of the loans being repaid equal to (i) 3.0% if such prepayment occurs on or prior to the second anniversary of the Loan and Security Agreement; (ii) 2.0% if such prepayment occurs after the second anniversary, and on or prior to the fourth anniversary, of the Loan and Security Agreement; and (iii) 1.0% if such prepayment occurs after the fourth anniversary of the Loan and Security Agreement and prior to maturity.

We are required to make a final payment of $131,250 for each loan funded on the earlier of (i) the date that we prepay all of the outstanding principal of such loan, (ii) the date of acceleration of the balance of such loan by the Lender, and (iii) the maturity.

Amounts outstanding under the Loan and Security Agreement are secured by substantially all of our assets, excluding intellectual property.

The Loan and Security Agreement includes customary affirmative and negative covenants and events of default. Upon the occurrence and continuance of an event of default, Horizon may demand immediate repayment of all principal and unpaid interest under the Loan and Security Agreement, and exercise remedies against us and the collateral securing our obligations under the Loan and Security Agreement. Events of default under the Loan and Security Agreement include, among other things: (i) insolvency, bankruptcy or similar proceedings subject to a certain grace period in respect of any involuntary insolvency, bankruptcy or similar proceedings; (ii) failure to pay any debts due under the Loan and Security Agreement or other indebtedness on a timely basis; (iii) failure to observe any covenant or other terms under the Loan and Security Agreement or the other Loan Documents (as defined in the Loan and Security Agreement), some of which are subject to a certain cure period; (iv) occurrence of a material adverse change; (v) material misrepresentations; and (vi) entry of certain final, non-appealable judgments against us in excess of $250,000 not paid or bonded within 10 days of such entry.

As of June 30, 2026, we were in compliance with all covenants contained in the Loan and Security Agreement.

2026 Convertible Notes

From January 30, 2026 through February 11, 2026, we issued convertible promissory notes to certain investors in an aggregate principal amount of $40.0 million (the "Convertible Notes"). The Convertible Notes were scheduled to mature on January 30, 2028 (the "Maturity Date") and bore no interest for the first six months following the date of issuance, after which they would have accrued paid-in-kind interest at 7.0% per annum. Immediately prior to the closing of our IPO in May 2026, all outstanding Convertible Notes automatically converted into an aggregate of 3,333,324 shares of our common stock in accordance with their terms. No Convertible Notes remained outstanding as of June 30, 2026.

Contractual Obligations and Commitments

As of June 30, 2026, our contractual obligations and commitments consist primarily of obligations under our Loan and Security Agreement, operating leases and purchase commitments with third-party suppliers.

As of June 30, 2026, we had approximately $7.5 million in principal outstanding under the Loan and Security Agreement. Borrowings under the Loan and Security Agreement accrue interest at an annual rate equal to the greater of (i) The Wall Street Journal (or any successor thereto) prime rate (subject to a floor of 8.50%) plus 3.75% and (ii) 12.25%. We are required to make monthly payments of interest only through January 1, 2028. Following such date, we are required to make monthly payments of principal and accrued interest through maturity. The unpaid balance of principal and accrued interest is due at maturity. Amounts outstanding under the Loan and Security Agreement are secured by substantially all of our assets, excluding intellectual property. Because the interest rate is variable, future interest obligations are not fixed. For additional information, see Note 6 - Convertible Notes and Notes Payable to our condensed financial statements included in this Quarterly Report.

We lease office and warehouse space under non-cancellable operating lease agreements. These leases require fixed monthly payments and may also include variable payments for our proportionate share of property taxes and common area operating expenses. Variable lease payments are not included in the measurement of lease liabilities and are recognized as incurred. For additional information, see Note 7 - Leases to our condensed financial statements included in this Quarterly Report.

We rely on third-party contract manufacturers and suppliers and enter into purchase commitments in the ordinary course of business. These arrangements are generally executed through purchase orders and, in certain cases, include non-cancelable purchase commitments and binding forecast obligations. As of June 30, 2026, we had approximately $9.3 million of outstanding non-cancelable purchase commitments expected to be fulfilled within the next twelve months. For additional information, see Note 13 - Commitments and Contingencies to our condensed financial statements included in this Quarterly Report.

From time to time, we may become a party to claims, legal actions and complaints arising in the ordinary course of business. As of June 30, 2026, we are not aware of any material pending legal proceedings that we believe would have a material adverse effect on our financial condition, results of operations or cash flows. For additional information, see Note 13 - Commitments and Contingencies to our condensed financial statements included in this Quarterly Report.

Off-Balance Sheet Arrangements

Through June 30, 2026, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Critical Accounting Policies, Significant Judgments and Use of Estimates

The preparation of our financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires us to make estimates and judgments that affect the amounts reported in the financial statements and related notes thereto. Critical accounting estimates are those estimates that, in accordance with GAAP, involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial statements. Management has determined that our most critical accounting estimates are those relating to share-based compensation. Although we believe that the estimates we use are reasonable, due to the inherent uncertainty involved in making these estimates, actual results reported in future periods could differ materially from those estimates. For further discussion about our accounting policies, see Note 3 to our condensed financial statements included in this Quarterly Report and the section titled "Management's Discussion and Analysis of Financial Conditions and Results of Operations" in our prospectus dated May 7, 2026. There have been no significant or material changes in our critical accounting policies since December 31, 2025, except that, following our IPO, the fair value of our common stock is based on its publicly quoted market price and is no longer determined using valuation methodologies applicable to a privately held company.

Emerging Growth Company and Smaller Reporting Company Status

The JOBS Act permits EGCs such as us to take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an EGC to delay the adoption of some accounting standards until those standards would otherwise apply to private companies. We have elected to use the extended transition period for any other new or revised accounting standards during the period in which we remain an EGC; however, we may adopt certain new or revised accounting standards early. As a result, we will not be subject to the same new or revised accounting standards as other public companies that are not EGCs and our financial statements may not be comparable to other public companies that comply with new or revised accounting pronouncements as of public company effective dates.

We will remain an emerging growth company until the earliest of: (i) the last day of the fiscal year following the fifth anniversary of the consummation of our IPO (i.e., the fiscal year ended December 31, 2031); (ii) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion; (iii) the last day of the fiscal year in which we are deemed to be a "large accelerated filer" as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),

which would occur if the market value of our common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year; or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

We are also a "smaller reporting company" as defined by Rule 12b-2 of the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an EGC. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter. We cannot predict if investors will find our shares of common stock less attractive because we may rely on these exemptions. If some investors find our shares of common stock less attractive as a result, there may be a less active trading market for shares of our common stock and our share price may be more volatile.