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

We have a limited operating history upon which you can evaluate our business and prospects. In addition, we have limited experience and have not yet demonstrated an ability to successfully overcome many of the risks and uncertainties frequently encountered by companies in new and rapidly evolving fields, particularly in the medical device industry. To date, we have not generated any revenue from the sale of the Acclaim CI. See the Item 7.section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations ” for additional information. We have incurred losses in each year since our inception, including net losses of approximately $23.8 million and $20.8 million andfor $29.9 million for the years ended December 31, 20242025 and 2023,2024, respectively. AsWe had accumulated deficits of approximately $313.4 million and $284.7 million as of December 31, 20242025 and 2023, we had an accumulated deficit of approximately $284.7 million and $257.3 million,2024, respectively. Substantially all of our operating losses in such years resulted resulted from costs incurred in connection with the development of the Acclaim CI and from general and administrative costs associated with our operations.

To date, we have completed initial patient implants of the Acclaim CI as part of our early feasibility study, and we received approval from the FDA to begin our pivotal trial, which we began in the first quarter of 2025.study. As the Acclaim CI has no history of commercial operation, we have a limited frame of reference from which to evaluate its long-term performance. There can be no assurance that we will be able to detect and fix any defects in the Acclaim CI in time to maintain our FDA trial schedule. Once we have commenced with implantation in additional patients, we may discover latent defects in design, manufacture or construction that may cause our systems not to perform as expected or to cause side effects. The Acclaim CI also requires software to operate, which may need to be modified and updated over time.

The expenses we were obligated to pay in relation to the Business Combination were substantial. As result, weWe will require substantial additional capital to commercialize the Acclaim CI. This additional capital may come from the exercise of Class A Warrants issued in the February 2026 Offering, for which we would receive an aggregate of $48 million in proceeds upon exercise. Provided, however, that there can be no guarantee that such Series A Warrants will be exercised. In addition, our operating plans may change as a result of many factors that may currently be unknown to us, and we may need to seek additional funds sooner than planned. Our future funding requirements will depend on many factors, including but not limited to:

Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize the Acclaim CI. In addition, we cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all. Moreover, the terms of any financing may adversely affect the holdings or the rights of holders of our securities and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the value of our securities to decline. The incurrence of indebtedness could result in increased fixed payment obligations, and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business.

Raising additional capital would cause dilution to our existing stockholders,stockholders whichand may adversely affect the rights of existing stockholders.

We rely extensively on information technology systems to conduct our business. These systems affect, among other things, ordering and managing materials from suppliers, summarizing and reporting results of operations, complying with regulatory, legal or tax requirements, data security,security and other processes necessary to manage our business. Our information technology systems and those of our third-party service providers, vendors, strategic partners and other contractors or consultants are vulnerable to damage or interruption from computer viruses and malware (e.g., ransomware), natural disasters, terrorism, war, telecommunication and electrical failures, hacking, cyberattacks, phishing attacks and other social engineering schemes, malicious code, employee theft or misuse, human error, fraud, denial or degradation of service attacks, sophisticated nation-state and nation-state-supported actors or unauthorized access or use by persons inside our organization, or persons with access to systems inside our organization. The risk of a security breach or disruption, particularly through cyberattacks or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased and evolved. As a result of the COVID-19rise pandemic,in remote work, we and our our third-party service providers and partners may also face increased cybersecurity risks due to our reliance on internet technology and and the number of our employees who are working remotely, which may create additional opportunities for cybercriminals to exploit vulnerabilities. Although we have implemented cybersecurity protections to safeguard our data, including our patient and subject data, we can provide no no assurances that these protections will prevent all cybersecurity breaches. We primarily use common off-the-shelf software systems, such such as Microsoft 365, which receive frequent security updates from the software providers. We also utilize a third-party vendor to maintain our IT system networks, and as a result of limited internal IT resources, we are only able to perform limited due diligence on our third-party IT vendors. We receive periodic security monitoring from our cybersecurity insurance provider.

Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets. The global financial crisis caused extreme volatility and disruptions in the capital and credit markets. Factors such as geopolitical events (including the ongoing war in Ukraine and the military conflict in Israel and Gaza),events, inflationary pressures, impacts from the COVID-19 pandemic, and the U.S. election cycles have contributed to this volatility. Recently, among other effects, volatile economic conditions have caused high levels of inflation, increases in interest rates by central banks with the intent of slowing inflation, and a reduction of available capital following increased interest rates. These global economic conditions could result in a variety of risks to our business, including difficulty in raising funding from capital markets and increased interest rates on loans used to finance our business. Such impacts would materially and adversely affect our financial condition, liquidity and the value of our securities.

Recent increases in interest rates may also affect our ability to finance the continued development of the Acclaim CI, the cost of FDA trials, and additional costs costs of commercializing the Acclaim CI. In recent years, we have financed our operations through convertible loans from a related party, which which we believe to have been favorable to us at below market interest rates.rates However,and we do not expect thatto loansbe onable suchto borrow at favorable terms will norates longer be available to us now thatin the Business Combination has been consummated, and increased interest rates would make borrowing more expensive and may reduce the availability of equity financing.future. Our inability to raise additional funds on favorable terms, or at all, would materially and adversely affect our results of operations, financial condition, liquidity, the trading price of our securities, and our growth prospects.

AsIf we haveare begunable producingto proceed additionalto unitsFDA oftrials ourfor the Acclaim CI forand, if the clinicalAcclaim trialCI process,obtains FDA approval and eventual commercialization, we aremay be exposed to the risk of supply chain disruptions from events such as tariffsthe wars and tradeother wars,armed theconflicts, ongoing war in Ukraine and the military conflict in Israel and Gaza,pandemics, and other global, national, regional, and local events that cannot yet be predicted. Our supply chain risk will be increased if we are able to obtain FDA approval for the Acclaim CI and begin commercial scale production. Supply constraints resulting from such events may also cause or exacerbate inflation. If such events prevent us from obtaining necessary components for production of Acclaim CI devices, or substantially raise the prices for such components, we may be delayed in the FDA trial process, or we may be unable to produce sufficient Acclaim CI devices to meet demand, which would materially and adversely affect our results of operations and financial condition.

In connection with the preparation and audit of our consolidated financial statements as of and for the years ended December 31, 2024, 20232025 and 2022,2024, material weaknesses weaknesses were identified in our internal control over financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis. The following material weaknesses were identified:

We have begun the process of conducting a formal risk assessment and implementation of a plan to remediate these material weaknesses. These remediation measures are ongoing and include the following steps:

AsOur describedindependent inregistered accounting ourfirm accompanying financialhas statements, our audited financial statements as of December 31, 2024 containincluded an explanatory paragraph regardingin its report expressing substantial doubt about our ability to continue as a going concern. This going concern opinion could materially limit our ability to raise additional funds through the issuance of equity or debt securities or otherwise. Future financial statements may include an explanatory paragraph with respect to our ability to continue as a going concern. Until we can generate significant recurring revenues, we expect to satisfy our future cash needs through debt or equity financing. We cannot be certain that additional funding will be available to us on acceptable terms, if at all. If funds are not available, we may be required to delay, reduce the scope of, or eliminate research or development plans for, or commercialization efforts with respect to our products. This continues tomay raise substantial doubtdoubts about our ability to continue as a going concern.

The FDA trial process is uncertain. Clinical failure can occur at any stage of clinical development. Our clinical experience to date does not necessarily predict future results and may not have revealed certain potential limitations of the technology or potential complications from the Acclaim CI and may require further further clinical validation. Any product version we advance through clinical trials may not have favorable results in later clinical trials or receive regulatory approval. We cannot predict the timing of clinical trial results, availability of regulatory personnel, or delays, constraints or outcomes of any regulatory submissions or approvals.

Clinical failure can occur at any stage of clinical development. We havereceived receivedapproval for our IDE on October 31, 2024. However, FDA approved our IDE based on a staged clinical study that will require approval from the FDA to beginmove our pivotal trial, which we began infrom the first quarter ofstage 2025.to the second stage. As we have limited clinical experience, our ability to identify potential problems and/or inefficiencies concerning current and future versions of the Acclaim CI in advance of its use in general and expanded groups of patients may be limited, and we cannot assure you that actual clinical performances will be satisfactory to support proposed indications and regulatory approvals and clinical acceptance and adoption, or that its use will not result in unanticipated complications. If the results of our feasibility study are not satisfactory, our U.S. pivotal study could be delayed or may not occur. Furthermore, there can be no assurance that the implementation of our plan will be successful. In addition, the results of our clinical trials are subject to human analyses and interpretation of the data accumulated, which could be affected by various errors due to, among other factors, lack of sufficient clinical experience with the Acclaim CI, assumptions used used in the statistical analysis of results, interpretation errors in the analysis of the clinical trials results, or uncertainty in the actual actual efficacy of the Acclaim CI in its current clinical stage. Therefore, the safety and efficacy of the Acclaim CI and the clinical results results to date will require further independent professional validation and clinical study. If the Acclaim CI does not function as expected over time, we may not be able to develop the Acclaim CI at the rate or to the stage we desire, we could be subject to liability claims, our reputation may be harmed, the Acclaim CI may not achieve regulatory clearances, and the Acclaim CI may not be widely adopted by healthcare providers and patients. If the Acclaim CI is not widely adopted, our business, financial condition, and results of operations will be materially and adversely affected.

At any time, these competitors and other potential market entrants may develop new products, procedures or treatment alternatives that could render our products obsolete or uncompetitive. In addition, one or more of such competitors may gain a market advantage by developing and patenting competitive products, procedures or treatment alternatives earlier than we can, obtaining regulatory clearances or approvals more rapidly than we can or selling competitive products at prices lower than ours. If medical research were to lead to the discovery of alternative therapies or technologies that better treat or cure hearing loss, our profitability could suffer through a reduction in sales or a loss in market share to a competitor. Many of our current and potential competitors have substantially greater sales and financial resources than we do. These competitors may may also have more established distribution networks, a broader offering of products, entrenched relationships with physicians and distributors or greater experience in launching, marketing, distributing and selling products or treatment alternatives. Similarly, we cannot currently anticipate whether or how artificial intelligence may cause significant change in our industry, but our competitors will likely have greater resources than us to implement proprietary artificial intelligence solutions in their businesses, which may give them significant competitive advantages.

However, we expect that we we will need to significantly increase our production rates to meet the supply of Acclaim CI devices needed for our clinical trials and, and, if the Acclaim CI obtains FDA approval, for eventual commercialization, which we are targeting to obtain in late 2027/ or early 2028. We also expect that some of the critical materials and components used in manufacturing the Acclaim CI may be sourced from single suppliers, which which may expose us to greater risks as we increase production of Acclaim CI devices than if our supplier base were more diversified. For example, our suppliers may encounter problems during manufacturing for a variety of reasons, including, for example, failure to follow specific specific protocols and procedures, failure to comply with applicable legal and regulatory requirements, equipment malfunction and environmental factors, failure to properly conduct their own business affairs, and infringement of third-party intellectual property rights, any of which could delay or impede their ability to meet our increased requirements. An interruption in the supply of a key component could significantly significantly delay our production of the Acclaim CI or increase our production costs.

We will depend on third parties to manage our pre-clinical studies and clinical trials, perform related data collection and analysis, and to enroll patients for our clinical trials, and, as a result, we may face costs and delays that are beyond our control.

We rely upon third-party vendors, vendors, including Contract Research Organization (“CROs”), to monitor and manage data for our ongoing preclinical studies and will rely on them to manage our clinical trial.trials. We also rely on CROs for execution of our preclinical studies and will rely on them for execution of our clinical trial.trials. Although we control only certain aspects of their activities, we are and will be responsible for for ensuring that each of our studies is conducted in accordance with the applicable protocol, legal, regulatory and scientific standards, and our reliance on the vendors and CROs does not relieve us of our regulatory responsibilities. We and our CROs and other vendors are required to comply with good clinical practice (“GCP”), cGMP, the Helsinki Declaration, the International Conference on Harmonization Guideline for Good Clinical Practice, applicable European Commission Directives on Clinical Trials, laws and regulations applicable to clinical trials conducted in other territories, and good laboratory practices, which are regulations and guidelines enforced by the FDA, the Competent Authorities of the Member States of the EEA, and comparable foreign regulatory authorities for all of our product candidates candidates in clinical development. Regulatory authorities enforce these regulations through periodic inspections of study sponsors, principal investigators, investigators, study sites and other contractors. If we or any of our CROs or vendors fail to comply with applicable regulations, including GCP and cGMP regulations, the clinical data generated in our clinical studies may be deemed unreliable and the FDA, European Medicines Agency Agency (“EMA”), or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving approving our marketing applications. Our failure to comply with these regulations may require us to repeat clinical trials, which would delay delay the regulatory approval process.

See Partthe I,section Itementitled “Business 3.— Legal Proceedings” for more information on these lawsuits.

As of MarchDecember 24,31, 2025, Mr.Glen A. Taylor, a former member of the Board, holds approximately 48.2%37.8% of the currently outstanding shares of Class A Common Stock and approximately 24.2% of the outstanding shares of our Series A Preferred Stock. As a result of these holdings, Mr. Taylor has the ability to exert significant influence influenceover overcertain matters submitted to a vote of our shareholders. Mr.Brent. Lucas, a member of the Board and the Chief Executive Officer, has interest in continued employment with the Company that is different from other holders of Class A Common Stock.

For additional information regarding related party transactions and potential conflicts of interest, see Item 13. “Certain Relationships and Related Transactions, andParty Director Independence.Transactions.”

As of March 10,2, 2025,2026, weour exclusively-owned had rightspatent toportfolio 35included 40 issued U.S.patents patents,in whichthe areUnited estimated to expire between 2025States and 2043 assuming all required fees are paid, 13 pending U.S. patent applications, 3348 issued foreign patents andin 32other pending foreign and international patent applications.countries. We cannot assure you that our intellectual property position will not be challenged or that all patents for which we have applied will be granted. The validity and breadth of claims in patents involve complex legal and factual questions and, therefore, may be highly uncertain. Uncertainties and risks that we face include the following:

Many of our employees and consultants were previously employed at or engaged by other medical device companies, including our competitors or potential competitors. Some of these employees, consultants and contractors may have executed proprietary rights, non-disclosure and non-competition agreements in connection with such previous employment. Although we try to ensure that our employees and consultants do not use the intellectual property, proprietary information, know-how or trade secrets of others in their work for us, we may be subject to claims that we or these individuals have, inadvertently or otherwise, misappropriated the intellectual property or disclosed the alleged trade secrets or other proprietary information of these former employers, competitors or other third parties. Additionally, we may be subject to claims from third parties challenging our ownership interest in or inventorship of intellectual property we regard as our own, for example, based on claims that our agreements with employees or consultants obligating them to assign intellectual property to us are ineffective or in in conflict with prior or competing contractual obligations to assign inventions to another employer, to a former employer, or to another person or entity. Litigation may be necessary to defend against claims, and it may be necessary or we may desire to enter into a license to settle any such claim; however, there can be no assurance that we would be able to obtain a license on commercially reasonable terms, if at all. If our defense to those claims fails, in addition to paying monetary damages or a settlement payment, a court could prohibit us from using technologies, features or other intellectual property that are essential to our products, if such technologies or features are found to incorporate or be derived from the trade secrets or other proprietary information of the former employers, competitors or third parties. An inability to incorporate technologies, features or other intellectual property that are important or essential to our products could have a material adverse effect on our business and competitive positionposition, and may prevent us from selling our products. In In addition, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against these claims, litigation could result in substantial costs and could be a distraction to management. Any litigation or the threat thereof may adversely affect our ability to hire employees or contract with independent sales representatives. A loss of key personnel or their work product could hamper or prevent our ability to commercialize our products, which could materially and adversely affect our business, financial condition, operating results, cash flows and prospects.

Our Charter provides that, unless we consent in writing to the selection of an alternative forum, the (i) Court of Chancery of the State of Delaware (the “Court of Chancery”) shall, to the fullest extent permitted by law, be the sole and exclusive forum for: (a) any derivative action action or proceeding brought on behalf of us, (b) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, stockholders, officers or other employees to us or our stockholders, (c) any action asserting a claim against us, our directors, officers or employees arising pursuant to any provision of the Delaware General Corporation Law,DGCL, our Bylaws or our Charter (as either may be amended from time time to time), and (d) any action asserting a claim against us, our directors, officers or employees governed by the internal affairs doctrine; and (ii) subject to the foregoing, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. Notwithstanding the foregoing, such forum selection provisions shall not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal courts of the United States have exclusive jurisdiction. The choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, and may potentially increase costs for investors to bring such a claim, both of which may discourage such lawsuits against us and our directors, officers, and other employees. Alternatively, if a court were to find the choice of forum provision contained in the Charter to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations, and financial condition.

The following analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the notes included elsewhere in this Report, and other filings with the SEC. Unless otherwise indicated or the context otherwise requires, references in this section to the “Company,” “Envoy Medical,” “we,” “us,” “our” and other similar terms refer (i) prior to the Closing Date, to Envoy Medical Corporation and (ii) after the Closing Date, to Envoy Medical, Inc. The following discussion contains forward-looking statements based upon Envoy Medical’s current expectations that involve risks, risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as as a result of various factors, including those set forth under the section of this Report titled “Risk Factors” and/or elsewhere in this Report. Our historical results are not necessarily indicative of the results that may be expected for any period in the future. All dollar amounts are expressed in thousands of United States dollars (“$”), unless otherwise indicated.

We are a hearing health company company focused on providing innovative medical technologies across the hearing loss spectrum. Our technologies are designed to shift the paradigm within the hearing industry and bring both providers and patients the hearing devices they desire. FoundedWe inare 1995,dedicated ourto visionpushing beyond the status quo to provide patients with improved access, usability, independence, and quality of life. We believe leveraging the ear’s natural anatomy, rather than the external or sub-dermal artificial microphone, is to create fully implanted hearing devices that leverage the naturalideal earway -for not an artificial microphone -people to pick up sound.hear. In recent years, we have focused almost exclusively on developing the fully implanted Acclaim® cochlear implant (the “Acclaim CI”), our lead product candidate.

We believe that the Acclaim CI is a first-of-its-kind cochlear implant. Our fully implanted technology includes a sensor designed to leverage the natural anatomy of the ear instead of a microphone to capture sound. The Acclaim CI is designed to address severe to profound sensorineural hearing loss that is not adequately addressed by hearing aids. TheAs part of the clinical trial, the Acclaim CI willis only be indicatedintended for adults with severe-to-profound sensorineural hearing loss who have been deemed adequate candidates by a qualified physician. The Acclaim CI received the Breakthrough Device Designation from the United States Food and Drug Administration (the “FDA”) in 2019.

Our first product, the Esteem ® Fully Implanted Active Middle Ear Implant (“Esteem FI-AMEI”), received FDA approval in 2010. The Esteem FI-AMEI is a fully fully implanted active middle ear hearing device and remains the only FDA approved fully implanted active hearing deviceimplant in the USU.S. market. Unfortunately, Unfortunately, the Esteem FI-AMEI failed to gain commercial traction, primarily due to a lack of reimbursement or insurance coverage from third-party payors.

We had a net loss of $20.8$23,756 million and $29.9 million$20,795 for the years ended December 31, 20242025 and December 31, 2023,2024, respectively, and had an accumulated deficit of $284.7 million$313,396 and $257.3 million$284,734 as of December 31, 20242025 andand, December 31, 2023,2024, respectively. We have funded our operations to date primarily through the issuance of equity securities, term debt securities and convertible debt and in September 2023, we received $11.7 million proceeds from the Business Combination (see Note 1, “Nature of the Business and Basis of Presentation” of the accompanying consolidated financial statements for the years ended December 31, 2024 and 2023 included elsewhere in this Report).debt. We expect to continue to incur net losses for the foreseeable future, and expect our research and development expenses, sales and marketing expenses, general and administrative expenses, and capital expenditures will continue to increase. In particular, we expect our expenses to increase as we continue our development of the Acclaim CI and seek the necessary regulatory approvals for our product candidate, as well as hire additional personnel, pay fees to outside consultants, attorneys and accountants, and incur other increased costs associated with being a public company. In addition, if and when we seek and obtain regulatory approval to commercialize the Acclaim CI in the United States, we will also incur increased expenses in connection with commercialization and marketing of such product. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials, if any, and our expenditures on other research and development activities. We anticipate that our expenses will increase significantly in connection with our ongoing activities, if and as we:

The Acclaim CI has not yet been approved for sale. We do not expect to generate any product sales from the Acclaim CI unless and until we successfully complete development and obtain regulatory approval for our product candidate. If we obtain regulatory approval for the Acclaim CI, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution. As a result, until such time, if ever, that we can generate substantial product revenue, we expect to finance our cash needs through equity offerings, debt financings or other capital sources, including collaborations, licenses or similar arrangements. However, we may be unable to raise additional funds or enter into such other arrangements when needed or on favorable terms, if at all. Any failure to raise capital as and when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies, including our research and development activities. If we are unable to raise capital, we will need to delay, reduce, or terminate planned activities to reduce costs.

Our business and financial performance are impacted by macroeconomic conditions. Global macroeconomic challenges, such as the effects of the ongoing war between Russiawars and Ukraine,armed the Middle East conflict,conflicts, supply chain constraints, tariffs and trade wars, market uncertainty, volatility in exchange rates, inflationary trends, interest rates, and evolving dynamics in the global trade environment have impacted our business, financial financial performance, and our ability to raise capital.

Furthermore, a recession or market correction resulting from macroeconomic factors could materially affect our business and the value of our Class A common stock (“Common Stock”). Stock. The occurrence of any such events may lead to reduced disposable income which could adversely affect the number of Esteem FI-AMEI implants and replacement components sold as a result of customer and patient reluctance to seek treatment due to financial considerations.

Currently, we derive substantially all our revenue from the sale of the Esteem FI-AMEI implants and replacement components to Esteem FI-AMEI implants. We enter arrangements with patients to provide them with the Esteem FI-AMEI device, personal programmer devices, sound processor / battery assembly (“Battery ”) replacements, and/or an optional Care Plan, each of which are outputs of our ordinary activities in exchange for consideration. Revenue from product sales is recognized upon transfer of control of the product to a customer, which occurs at a point in time, when we are notified the product has been implanted or used by the customer in a surgical procedure. New implantations of the Esteem FI-AMEI are not expected to be more than a few per year and may be as low as zero. Although we believe it to be unlikely, Esteem FI-AMEI implantations could potentially increase with favorable reimbursement policy and coverage changes. We will continue our efforts to pursue positive reimbursement changes for fully implanted active middle ear implants. There will be continued nominal revenue from replacement of sound processors for patients who need a new Battery.

Upon commercialization of our Acclaim CI product, we expect that Acclaim CI revenues will more than exceed our Esteem FI-AMEI revenue. We are targeting FDA approval on our PMA application for the Acclaim CI in 2027.the second half of 2027 or first half of 2028, depending on the FDA’s review process and timeline.

Our R&D expenses are currently tracked on a program-by-programproject basis. The majority of our R&D expenses incurred during the years ended December 31, 2025 and 2024 and 2023 were for the development of the Acclaim CI.

R&D activities are central to our business model. We expect that our R&D expenses will continue to increase for the foreseeable future as we initiate clinical trials for the Acclaim CI product and prepare the product for possible commercialization, should it gain regulatory approval(s). If the Acclaim CI product enters later stages of clinical trials and ongoing development, the product will generally incur higher R&D expenses than those in earlier stages of research and development, primarily due to simultaneously running clinical trials while also iterating the product for commercialization and preparing for the needs of commercialization. We will need to determine when we believe the product is ready for commercial production and then certain expenses will no longer be classified as R&D. There are numerous factors associated with the successful commercialization of the Acclaim CI product or any products we may develop in the future, including future trial design and various regulatory requirements, many of which cannot be determined with accuracy at this time based on our stage of development. Additionally, future commercial and regulatory factors beyond our control will impact our clinical development program and plans.

General and administrative expenses consist primarily of salaries, benefits, and other related costs for personnel in our executive, operations, legal, human resources, finance, insurance premiums, and administrative functions. Administrative expenses also include professional fees for legal, patent, consulting, consulting, accounting, taxtax, and audit services, travel expenses and facility-related expenses, which include direct depreciation costs and allocated expenses for rent and maintenance of facilities, technology, and other operating costs.

We recognized the forward purchase agreement put option liability at fair value at each reporting period. The liability iswas subject to re-measurement at each balance sheet date, and any change in fair value iswas recognized in our consolidated statements of operations and comprehensive loss during each reporting period.loss. The forward purchase agreement put option liability has been derecognized as of DecemberMarch 31, 2024 due to the sale of the shares associated with the Forward forwardPurchase purchase agreementAgreement during the first quarter of 2024.

Interest expense, related party consists of accrued interest for the 2024term Term Loansloans held by a related party,party (the “Term Loans”), as well as amortization of the debt discount recorded as a result of the warrants issued with the 2024 Term Loans. Amortization of the debt discount is recorded over the respective terms of the 2024 Term Loans. On August 25, 2025, the Term Loans were extinguished resulting in the Company no longer recognizing interest expense on the Term Loans.

Other IncomeExpense, Net

Net revenues decreasedincreased $91$16 thousand for the year ended December 31, 2024,2025, compared to the year ended December 31, 2023,2024. primarilyRevenues dueare not significant to the decrease in the numberresults of Battery replacement sales due to supply chain limitations.our operations.

Cost of goods sold decreasedincreased $47 thousand$132 for the year ended December 31, 20242025, compared to the year ended December 31, 2023.2024. The decreaseincrease is alignedprimarily withdue to an increase the decrease in revenuescrap resultingand fromnon-recurring the reduced numberexpenses of Battery$190 replacementpartially sales.offset by lower fees for third-parties performing work related to our products of $77.

The following table summarizes the components of our R&D expenses for the yearsyear ended December 31, 20242025 and 20232024:

Sales and marketing expenses increaseddecreased $68 thousand$514 for the year ended December 31, 20242025, compared to the year ended December 31, 2023.2024. The increasedecrease is primarily due to increaseda reduction of legal and professional fees toassociated securewith securing insurance reimbursement for the Esteem FI-AMEI product, partially offset by a reduction in headcount.product.

The gain from changeschange in the fair value of the forward purchase agreement put option liability was $103 thousandzero for the year ended December 31, 20242025 compared to a lossgain of $69 thousand$103 for the year ended December 31, 2023.2024. During the first quarter of 2024, the shares associated with the forward purchase agreement put option were sold.

The gain from changesthe change in the fair value of the forward purchase agreement warrant liability was $411 thousand$534 for the year ended December 31, 20242025 compared to $842a thousandgain of $411 for the year ended December 31, 2023.2024. The change is primarily due to fewer warrants outstanding as of December 31,2025 compared to the prior period as well as a decrease in stock price.

Change in Fair Value of Forward Purchase Agreement Warrant Liability Due to ModificationExtension

The loss from changes in the fair value of the forward purchase agreement warrant liability due to modificationextension was $24 and $881 thousand for the year ended December 31, 20242025 comparedand to2024, $0 for the year ended December 31, 2023. The loss wasrespectively, due to a modification toamending the forward purchase agreement in December 2025 and 2024 to extend the term of the warrants. There was a decreased loss for the year ended December 31, 2025 compared to the prior period due to there being fewer warrants outstanding and a lower stock price.

The following analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes included elsewhere in this Quarterly Report on Form 10-Q (this “Report”), as well as the information contained in the Company’s Annual Report on Form 10-K, dated and filed with the Securities and Exchange Commission (the “SEC”) on March 23, 2026 (the “Form 10-K”), which is accessible on the SEC’s website at www.sec.gov. Unless otherwise indicated or the context otherwise requires, references in this section to the “Company,” “Envoy Medical,” “we,” “us,” “our” and other similar terms refer (i) prior to the Closing Date, to Envoy Medical Corporation and (ii) after the Closing Date, to Envoy Medical, Inc.

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements as of MarchJune 31,30, 2026 and December 31, 2025, and the three and six months ended MarchJune 31,30, 2026 and 2025, together with the notes thereto thereto included elsewhere in this Report. It should also be read in conjunction with the audited consolidated financial statements as of and for the years ended December 31, 2025 and 2024, together with related notes thereto included in the Form 10-K, which is accessible on on the SEC’s website at www.sec.gov.

We are a hearing health company focused on development of fully implanted hearing solutions and providing innovative medical technologies across the hearing loss spectrum. Our technologies are designed to shift the paradigm within the hearing industry and bring both providers and patients the hearing devices they desire. We are dedicated to pushing beyond the status quo to provide patients with improved access, usability, independence, and quality of life. We believe leveraging the ear’s natural anatomy, rather than thean external or sub-dermal artificial microphone, is is the ideal way for people to hear. In recent years, we have focused almost exclusively on developing the fully implanted Acclaim® cochlear cochlear implant (the “Acclaim CI”), our lead product candidate.

The IDE was approved as a “staged” clinical trial. The first stage allowed for enrollment of 10 study participants (“First Stage”) prior to the Companyus having to formally request FDA approval to expand enrollment to the full subject cohort of 56 patients.patients The(“Second CompanyStage”). collectedOnce andthe First Stage completed their 3-month follow-up visits, we submitted this preliminary clinical data after the three-month follow up visit that adequately characterized device effectiveness of the first 10 study participants to justify study expansion into the second and final stage. EnvoyThe Medical’sFDA agreed that this data adequately characterized device effectiveness and our expansion request to the FDA was formally approved by the FDA on October 3, 2025. We completed enrollment of all 56 patients on March 10, 2025 and all 56 patients havecompleted been throughtheir activation visits, visits, when a patient’s device is initially turned on for the first time.time, by April 16, 2026. On July, 21, 2026, we announced that all 56 patients enrolled in the clinical trial have surpassed the 3-month milestone.

Each implanted study participant will be followed through their 12-month visit. After all 56 patients have been through their 12-month visits, the data will be collected and analyzed in accordance with the clinical study protocol and statistical analysis plan. Upon finalization of the results, Envoywe Medicalintend intends to submit a Premarket Approval (“PMA”) application to the FDA. As of MarchJune 31,30, 2026, the first three10 pivotal trial patients implanted at the start of 2025 have reached the 12-month follow-up evaluation point. We expect all Stage 2 participants to complete their 12-month data collection by early Q2 2027, with a PMA submission to the FDA planned to follow a few months thereafter.

The FDA will have at least 180 days to review the PMA application unless a panel review is requested. If a panel review is requested, it may add several months of additional additional review time to the PMA application. As a result, Envoy Medicalwe currently anticipatesanticipate obtaining the FDA’s decision on our PMA application at some point within the second half of 2027 assuming that no panel review is requested. If a panel review is requested, the FDA’s decision could extend to the first half of 2028.

We had a net losslosses of $4,351$5,982 and and $4,998$5,690 for the three months ended MarchJune 31,30, 2026 and 2025, respectively, $10,333 and $10,688 for the six months ended June 2026 and 2025, respectively, and had an accumulated deficit of $319,097$326,369 and $313,396 as of MarchJune 31,30, 2026 and December 31, 2025, respectively. We have funded our operations to date primarily through the issuance of equity securities and debt. We expect to continue to incur net losses for the foreseeable future, and expect our research and development expenses, sales and marketing expenses, general and administrative expenses, and capital expenditures will continue to increase. In particular, we expect our expenses to increase as we continue ourthe developmentclinical trial of theforthe Acclaim CI and seek the necessary regulatory approvals for our product candidate, as well as hire additional personnel, pay fees to outside consultants, attorneys and accountants, and incur other increased costs associated with being a public company.candidate. In addition, if and when we seek and obtain regulatory approval to commercialize the Acclaim CI in the United States, we will also incur increased expenses in connection with commercialization and marketing of such product. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials, if any, and our expenditures on other research and development activities. We anticipate that our expenses will increase significantly in connection with our ongoing activities, if and as we:

Our R&D expenses are currently tracked on a project basis. The majority of our R&D expenses incurred during the three and six months ended MarchJune 31,30, 2026 and 2025 were for the development of the Acclaim CI, including expenses for clinical trial activities and patient enrollment for the Acclaim CI CI pivotal clinical trial.

Other income (expense), net consists of interest income as well interest incurred on insurance financing loans as well as interest income and other expenses.

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

Net revenues decreased $7by $27 for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025. RevenuesRevenue arewas not significant to theour results of our operations.

Cost of goods sold increased $87by $44 for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025. The increase is duewas primarily attributable to an increase in scrap and materials usage of $56 andhigher fees paid to third-partiesthird parties performing work related to our products of $35.$60 and increased scrap and materials usage of $19, partially offset by decreases in other product-related costs.

The following table summarizes the components of our R&D expenses for the three months ended MarchJune 31,30, 2026 and 2025:

Sales and marketing expenses decreased $194by $180 for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025. The decrease iswas primarily dueattributable to the reallocation of our field clinical engineers to research and development activities in support of the clinical trialtrial. During during the three months ended MarchJune 31, 2026 compared to their involvement in broader business development activities in the prior period. For the three months ended March 31,30, 2025, we incurred $147$188 of sales and marketing expenses related to these employees, who no longer support support sales and marketing activities.

General and administrative expenses increaseddecreased $58by $39 for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025. The increasedecrease iswas primarily primarily dueattributable to increaseda investor$315 relationsseverance and legal expenses, primarilyaccrual related to litigation,our offormer $151andChief $57,Financial respectively,Officer recorded during the three months ended June 30, 2025. The decrease was partially offset by reducedhigher salariesconsulting and other professional services.service fees during the three months ended June 30, 2026.

The lossgain from the change in the fair value of the forward purchase agreement warrant liability was $13$23 for the three months ended MarchJune 31,30, 2026 compared to a gain of $421 $37 for the three months ended MarchJune 31,30, 2025. The change primarilyin reflectsfair differencesvalue during both periods was driven by changes in valuationthe assumptionsprobability betweenof the periods applicable Exercise Price Floor being achieved for the threeShortfall monthsWarrants ended March 31, 2026, (as welldefined asin Note 9 to the decreaseunaudited incondensed consolidated financial statements). During both periods, our stock price remained below the applicable Exercise Price Floor. Additionally, the lower number of warrants outstanding during the prior2026 period.period reduced the magnitude of the warrant liability.

The gainloss from the change in fair value of the private warrant liability was $2,005$838 for the three months ended MarchJune 31,30, 20262026. asThe aloss resultresulted offrom the remeasurement of of the Investor Warrants (as defined in Note 9 ofto the unaudited condensed consolidated financial statements), which were issued on September 23, 2025 and October 9, 2025. TheNo changeInvestor primarilyWarrants reflectswere updatesoutstanding to valuation assumptions, includingduring the effectthree ofmonths theended shorterJune remaining30, term.2025.

The lossgain from the change in the fair value of the publicly traded warrant liability was $390$236 for the three months ended MarchJune 31,30, 2026 compared to a gainloss of $194$32 for the three months ended MarchJune 31,30, 2025. The fluctuationchange iswas dueattributable to a decrease in the trading price of the Company’s publicly traded warrants during 2026, compared to an increase in the stock price for those warrants during the 2026 period compared to a decrease for the 2025 period.2025.

Interest expense (related party) decreased $495by $1,119 for the threesix months ended MarchJune 31,30, 2026, compared to the threesix months ended MarchJune 31,30, 2025. OnThe decrease was due to the settlement of the Term Loans on August 25, 2025, the Termafter Loanswhich wereno settledfurther andrelated accordingly,party interest expense iswas no longer recognized.incurred.

Other income (expense), net increased by $17$184 for the threesix months ended MarchJune 31,30, 2026 compared to the threesix months ended MarchJune 31,30, 2025.2025 The increase isprimarily due to higher interest interest income for the three months ended March 31, 2026 compared to the prior period.income.

Since inception, we have incurred significant operating losses. We expect to continue to incur significant expenses and operating losses for the foreseeable future as we advance the clinical development of our products and fund the process of clinical FDA trials. We have funded our operations to date primarily with proceeds from issuing equity securities, term loans, convertible notes and proceeds from thea Business2023 Combination.business combination. As of of MarchJune 31,30, 2026 and December 31, 2025 we had $25,251$19,679 and $3,739 of cash, respectively.

We proactively manage our access to capital to support liquidity and continued growth. Our sources of capital include issuances of our Class A Common Stock, Series A Preferred Stock, warrants, convertible debt, term debt and other financing agreements such as the Forward Purchase Agreement and proceeds from the sales of the Esteem FI-AMEI implants and replacement components. See Note 1, “Nature of the Business and Basis of Presentation”, of the accompanying unaudited condensed consolidated financial statements included elsewhere in this Report.

We may seek to raise any necessary necessary additional capital through a combination of public or private equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements and other marketing and distribution arrangements. There can be no assurance that we will be successful in acquiring additional funding at levels sufficient to fund our operations or on terms favorable to us. Based on our cash position as of MarchJune 31,30, 2026, and assuming there is no additional funding through the exercise of any outstanding warrants and no material change to our operating expenses, we expect to have sufficient funds for our operations intothrough the secondfirst quarter of 2027. Proceeds from the exercise of any any outstanding warrants or other sources, which we expect,sources will provide us with funding beyond this timeframe. We have based our estimates as to how long we expect we will be able to fund our operations on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect, in which case we would be required to obtain additional financing sooner than currently projected, which may not be available to us on acceptable terms, or at all. If we are unable to raise sufficient financing when needed or events or circumstances occur such that we do not meet our strategic plans, we may be required to reduce certain discretionary spending, be unable to develop new or enhanced production methods, or be unable to fund capital expenditures, which could have a material adverse effect on our financial position, results of operations, cash flows, and ability to achieve our intended business objectives. These matters raise substantial doubt about our ability to continue as a going concern. To the extent that we raise additional capital through additional collaborations, collaborations, strategic alliances, or licensing arrangements with third parties, we may have to relinquish valuable rights to our Acclaim CI, future revenue streams, research programs or to grant licenses on terms that may not be favorable to us. If we do raise additional capital through public or private equity or convertible debt offerings, the ownership interest of our existing stockholders may be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our stockholders’ rights. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends.

Net cash used in operating activities for the threesix months ended MarchJune 31,30, 20252026 was $3,725 and$11,517, primarily used to fundreflecting a net loss of $4,998$10,333 and $922$1,437 of cash inflowsoutflows from net changes in the levels of operating assets and liabilities,liabilities. adjusted for non-cashNon-cash expenses intotaled an aggregate amount of $351.$253.

Net cash used in investing activities for the threesix months ended MarchJune 31,30, 20252026 was $6 and consisted of purchases of computerproduction equipment.