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

Risks related to operational, regulatory, commercial and manufacturing matters

Our business currently depends primarily on our ability to successfully market our RNS System, which includes increasing the number of patients treated at CECs, increasing adoption of our RNS System across CECs and in the community setting, as well as driving utilization by clinicians within CECs and in the community setting. Currently, our RNS System can only be marketed for use in adults with drug-resistant focal epilepsy in the United States. Historically our RNS System was primarily recommended and implanted at Level 4 CECs, which provide advanced diagnosis and management of epilepsy. We only recently beganare expanding our commercial efforts to target and be able to qualify the additional 1,800 epileptologists outside of Level 4 CECs and the entire population of functional neurosurgeons as a result of the FDA approval of a PMA-S in 2023, which updated the qualification criteria for centers and clinicians that may prescribe and implant the RNS System. Therefore, we have been dependent on widespread market adoption of our RNS System within a limited number of accounts. We are aiming to increase awareness about our RNS System, including earlier in the diagnostic process through our partnership with DIXI Medical, expand the population of patients we can treat with our RNS System, and increase utilization and adoption across physicians that prescribe and implant our RNS System both within Level 4 CECs and outside of Level 4 CECs, in the community setting, but there can be no assurance that we will succeed.

•the actual and perceived effectiveness, safety and reliability, and clinical benefit, of our RNS System, especially relative to alternative neuromodulation devices such as VNSVagus Nerve Stimulation, or VNS, or Deep Brain Stimulation, or DBS;

•our ability to provide earlier awareness of and education about our RNS System to patients and clinicians, including through our partnership with DIXI Medicalclinicians;

•the strength of our marketing and distribution infrastructure, including our ability to driveincrease adoption and utilization of our RNS System, our ability to expand referral pathways to CECs and beyond, and our ability to grow the market outside of Level 4 CECs, in the community;

•our ability to continue to maintain a commercially viable manufacturing process at our manufacturing facility that is compliant with current Good Manufacturing Practices, or cGMP,Practices and Quality Systems Regulations, or QSRQMSR;

Our commercial success will continue to depend on attaining significant market acceptance of our products and increasing the number of patients treated. If we are unable to successfully achieve substantial market acceptance and driveincrease adoption of our RNS System both within Level 4 CECs and in the community, our sales, business, financial condition and results of operations would be harmed.

Our commercial success will depend in large part on the further acceptance by clinicians, patients and hospital facilities of our RNS System as safe, useful, and cost-effective, and increasing the number of patients treated at Level 4 CECs and in the community setting. We cannot predict how quickly, if at all, additional clinicians, patients, and hospital facilities will adopt our RNS System over continued noninterventional therapies or competing neuromodulation devices or surgical treatment options. For example, clinicians may be reluctant to use our RNS System due to familiarity with neuromodulation devices that are more established. Alternatively, in the community setting, neuromodulation may not be a common practice, if it is done at all. Clinicians, patients, and hospital facilities may continue to prefer noninvasive therapeutic options, resective or ablative surgery, or alternative neuromodulation therapies such as VNS and DBS. Moreover, we cannot predict how quickly, if at all, those currently living with epilepsy but who are not being treated will seek treatment. Our ability to grow sales of our RNS System and driveincrease market acceptance will depend on successfully educating clinicians, patients, and hospital facilities of the relative benefits of our RNS System.

Additionally, patients rely on their healthcare providers, including epileptologists and neurosurgeonsneurosurgeons, to recommend a course of treatment. If we are unable to successfully achieve substantial market acceptance and adoption of our RNS System by additional clinicians, patients, and hospital facilities, or to expand the clinicians’ perspective as to the types of patients that can benefit from our RNS System, patients may be reluctant to use our products over alternative neuromodulation therapies. If we are unable to successfully driveincrease patient interest in our RNS System, including through our partnership with DIXI Medical, our business, financial condition and results of operations would be harmed.

Our commercial success will depend on a continued flow of patient referrals to CECs from treating primary care physicians, neurologists, and other healthcare providers and from caregiver support andof encouragementsuch around physician referrals and self-referrals to CECs.referrals. If we are unable to successfully expand our referral pathways to achieve an increased patient referral pipeline into CECs or develop opportunities outside of Level 4 CECs, in the community setting, our sales, business, financial condition and results of operations would be harmed.

Our commercial success will depend in large part on continued referrals of appropriate patients from treating primary care physicians, neurologists, and other healthcare providers to epileptologists, neurosurgeons, and other clinicians, primarily at Level 4 CECs. We cannot predict how quickly, if at all, we can grow utilization and adoption at the Level 4 CECs and in the community setting to build a pipeline through our sales and marketing efforts and whether primary care physicians, neurologists, and other healthcare providers, as well as whether caregivers will support use of our RNS System in the community setting or patient referrals to epileptologists and neurosurgeons at CECs over other therapy options.

Our manufacturing and distribution operations are subject to regulatory requirements of the FDA’s Quality System Regulation, or QSR, for medical devices sold in the United States. Manufacturers of medical device products often encounter difficulties in production, including difficulties with production costs and yields, quality control, quality assurance testing, shortages of qualified personnel, as well as compliance with strictly enforced FDA requirements, other federal and state regulatory requirements, and foreign regulations, to the extent applicable. IfOur manufacturing and distribution operations are subject to the regulatory requirements of the FDA’s Quality Management System Regulation, or QMSR, for medical devices sold in the United States. The QMSR superseded the QSR on February 2, 2026, amending the current good manufacturing practice requirements of the Quality System Regulation under 21 CFR 820 to align more closely with the international consensus standard for Quality Management Systems for medical devices used by many other regulatory authorities around the world. We believe that we are sufficiently compliant with the QMSR. However, if we fail to manufacture our products in compliance with QSR,the QMSR, or if our manufacturing facility suffers disruptions, supply chain issues, machine failures, slowdowns or disrepair, we may not be able to fulfill customer demand and our business would be harmed. Further, we typically do not maintain more than several months of inventory on hand and we manufacture our products using near-term demand forecasts. As a result, deviations from our forecasts could cause us to fail to meet demand for our products.

•inability of suppliers to comply with applicable provisions of the QSRQMSR or other applicable laws or regulations enforced by the FDA and other Federal and state regulatory authorities;

These components, materials, and services, which also include silicone adhesive, integrated circuits and other components, are criticalcritical, and there are relatively few alternative sources of supply. We believe our single-source suppliers are capable of continuing to meet our specifications and maintaining quality, but any significant problem experienced by one of our single-source suppliers may result in a delay or interruption in the supply of components, materials, or services to us. Our suppliers may experience manufacturing delays or issues, stop producing our components, materials, or services, increase the prices they charge us, or elect to terminate their relationships with us. In any of these cases, we could face a delay of several months to identify, perform appropriate testing, and qualify alternative suppliers and service providers with regulatory authorities, as we do not currently have supplier transition plans. In addition, the failure of our third-party suppliers and service providers to maintain acceptable quality requirements could result in the recall of our products. If one of our suppliers fails to maintain acceptable quality requirements, we may have to identify and qualify a new supplier. Although we require our third-party suppliers to supply us with materials, components and services that meet our specifications and comply with applicable provisions of the FDA’s QSRQMSR and other applicable legal and regulatory requirements in our agreements and contracts, and we perform incoming inspection, testing or other acceptance activities to ensure the materials and components meet our requirements, there is a risk that our suppliers will not always act consistentconsistently with our best interests, and may not always supply components that meet our requirements or supply components in a timely manner.

We do not maintain large amounts of excess inventory at any given time. To ensure adequate supply, we must forecast inventory needs and manufacture our products based on our estimates of future demand. Our ability to accurately forecast demand for our products, including our sales of DIXI Medical products, could be negatively affected by many factors, including our failure to accurately manage our expansion strategy, product introductions by competitors, our inability to forecast the lifecycle of our products, an increase or decrease in customer demand for our products or for competitor products, our failure to accurately forecast customer adoption of new products, unanticipated changes in general market conditions or regulatory matters and weakening of economic conditions or consumer confidence in future economic conditions. Inventory levels in excess of customer demand may result in inventory write-downs or write-offs, which would cause our gross margin to be adversely affected and could impair the strength of our brand. Conversely, if we underestimate customer demand for our products, our manufacturing team, or that of DIXI Medical,team may not be able to deliver products to meet our requirements, and this could result in damage to our reputation and customer relationships. In addition, if we experience a significant increase in demand, additional supplies of components, materials, or services, or additional manufacturing capacity may not be available when required on terms that are acceptable to us, or at all, which may negatively affect our business, financial condition, and results of operations.

We are actively expanding our presence in the United States through additional salessales, education, and educationdirect to customer marketing efforts to drive awareness of our RNS System amongst patients, clinicians and hospital facilities, to driveincrease adoption of our RNS System at Level 4 CECs and in the community setting and to increase utilization and adoption of our RNS System within new and existing accounts. We also plan to explore regulatory and reimbursement approval pathways to expand our presence in international territories.

We dedicate significant financial and other resources to our customer outreach and training programs, which may require us to incur significant upfront costs. For example, we may need to conduct additional physician trainings across hospital facilities, both at CECs and as we expand into the community setting. Our sales force may also need to develop additional efficiencies and approaches to address potential growth as we expand referral pathways, expand into additional existing Level 4 CECs as well as new CECs, grow our presence in the community setting, offer new products, including those distributed through our partnership with DIXI Medical, increase the number of epileptologists recommending, and neurosurgeons implanting, our RNS System, and increase the numbers and types of patients being prescribed and implanted with the RNS System by current clinicians. Our business would be harmed if our programs and associated expenditures do not generate a corresponding increase in revenue.

Our industry is competitive and has been evolving rapidly with not only existing treatment options, but also the introduction of new products and technologies as well as the market activities of industry participants. Our RNS System is indicated for adult patients with drug-resistant focal epilepsy in the United StatesStates, and we have historically primarily marketed our device to clinicians within Level 4 CECs that treat these patients. As a result of the recent approval of a PMA-S, we are now able to expand our commercial efforts to the additional epileptologists and functional neurosurgeons practicing outside of Level 4 CECs, in the community setting. In our target patient population, there are two primary treatment options (i) an ablative or resective surgery, or (ii) implantation of a neuromodulation device. Patients may also choose not to actively seek additional treatment for epilepsy or may choose to try new therapeutic drugs that become available from time to time. We estimate that approximately 80% of drug-resistant focal epilepsy patients are either not ideal candidates for ablative or resective surgery or are unwilling to undergo a destructive surgical procedureprocedure, and we compete primarily with two manufacturers of neuromodulation devices for the treatment of these patients. Our primary competitors are LivaNova plc, which manufactures the VNS System, and Medtronic plc, which manufactures the DBS System. Third-party payors may encourage the use of competitors’ products or other neuromodulation therapies due to lower costs of competing products or alternatives. Additionally, treating physicians, including epileptologists and neurosurgeons may promote the use of other competitors’ products or alternative therapies. Further, as existing competitors and other companies develop new or improved products, we cannot predict what the standard of care will be in the future.

•continue to demonstrate safety and efficacy in ourongoing Post-Approvalclinical Studytrials and in ongoing commercial use;

The rate of adoption and sales of our products are heavily influenced by clinical data. Although we have positive clinical data across four multi-center FDA-approved prospective clinical studies going out as far as nine years, there can be no assurance that clinical data will continue to be positive for our ongoing studies,studies. suchFor asexample, the one-year results from our Post-ApprovalNAUTILUS Study.study to evaluate neuromodulation therapy for idiopathic generalized epilepsy did not reach statistical significance for the primary effectiveness endpoint in the overall study population, but did reach statistical significance for prespecified secondary endpoints including median seizure reduction. Additionally, there can be no assurance that future clinical studies, including those to continue demonstrating the efficacy of our products in currently approved patient populations and those to support label retention and expansion for our products will demonstrate safety and effectiveness. Unfavorable or inconsistent clinical data from ongoing or future clinical studies conducted by us, our competitors, or third parties, the negative interpretation of our clinical data internally and externally, including by customers, competitors, patients, and regulators, or findings of new or more frequent adverse events, could harm our business, financial condition, and results of operations.

We expect our RNS System will continue to be purchased by hospital facilities who will then seek reimbursement from third-party payors for brain-responsive neuromodulation for drug resistant focal epilepsy. While third-party payors currently cover and provide reimbursement for both implant procedures of our RNS System as well as for clinicians providing ongoing patient care, we can give no assurance that these third-party payors will continue to provide coverage and adequate reimbursement, or that current reimbursement levels for diagnostic, implant or replacement procedures as well as clinician-provided ongoing patient care will continue.

Use of our RNS System requires appropriate neurosurgeon training for implantation and epileptologist training for prescribing, programming and ongoing patient care, and inadequate training may lead to negative patient outcomes, which could harm our business, financial condition, and results of operations.

The successful use of our RNS System depends in part on the training and skill of the neurosurgeon performing the implant procedure as well as the clinician, typically an epileptologist, prescribing the RNS System, performing the subsequent programming of our RNS System and monitoring the patient response. Clinicians, including those practicing outside of Level 4 CECs and in the community setting, could experience difficulty with the technique necessary to successfully implant and program our RNS System, and monitor patients if they do not receive appropriate training. Moreover, clinicians rely on their previous medical training and experience when recommending or implanting our RNS System, and we cannot guarantee that all neurosurgeons will have the necessary implantation skills to properly perform the procedure. We cannot be certain that physicians or healthcare providers that use our RNS System have received sufficient training, and physicians or healthcare providers who have not received adequate training may nonetheless attempt to use our RNS System with their patients. If clinicians implant or utilize our RNS System incorrectly, or without adhering to or completing all relevant training, their patient outcomes may not be consistent with the outcomes achieved in our clinical studies. Adverse safety outcomes that arise from improper or incorrect use of our RNS System may negatively impact the perception of patient benefit and safety of our RNS System, notwithstanding results from our clinical studies. These results could limit adoption of our RNS System in treatment for drug-resistant focal epilepsy, which would harm our sales, business, financial condition, and results of operations.

As demand for our RNS System increases, we will need to continue to scale our capacity at our manufacturing facility, expand customer service, billing and systems processes and enhance our internal quality assurance program. We cannot be certain that any increases in scale, related improvements and quality assurance will be successfully implemented or that appropriate personnel will be available to facilitate the growth of our business. If we encounter difficulty meeting market demand, quality standards or physician expectations, our reputation will be harmed and our business will suffer. Additionally,Furthermore, additional growth may result in higher fixed costs and may slow our ability to reduce costs in the face of a sudden decline in demand for our products.

If our clinicalNAUTILUS studiesStudy and collaborationsour collaboration with the National Evaluation System for health Technology to pursue the use of real-world data from the Pediatric Epilepsy Research Consortium do not produce results necessary to support regulatory clearance or approval to expand our indications to include patients with generalized drug-resistant epilepsy as well as patients age 12 to 17 with drug-resistant focal epilepsy, we will be unable to obtain and maintain necessary approvals to expand our indications to include these patients in accordance with our expected timelines, which could harm our growth potential. Furthermore, we could incur substantial costs and the attention of management could be diverted throughout this process. Recent cutsCuts and staffing changes at the FDA could further delay our efforts to expand indications by creating significant and costly delays in the review process for our regulatory submissions; these delays would negatively impact our growth potential and ability to expand our market reach according to our financial plans.

In November 2023, we entered into a collaboration with Rapport to leverage our RNS System’s unique biomarker monitoring and data analysis capabilities.capabilities, and in June 2025, we entered into a subsequent agreement to extend this work on behalf of Rapport. We mayplan to continue to seek to leverage our unique data asset or our data monitoring and analysis capabilities by entering into similar collaborations with other entities in the future. If we are unable to continue to build our data asset and our monitoring and analysis capabilities, either internally or through further collaborations, or if our expectations with respect to our ability to leverage our unique data asset prove to be incorrect, our growth prospects may be harmed.

State and federal regulatory and enforcement agencies continue to actively investigate violations of healthcare laws and regulations, and the U.S. Congress continues to strengthen the arsenal of enforcement tools. Most recently, the Bipartisan Budget Act of 2018, or the BBA, increased the criminal and civil penalties that can be imposed for violating certain federal health care laws, including the Anti-Kickback Statute. Enforcement agencies also continue to pursue novel theories of liability under these laws. In particular, government agencies have increased regulatory scrutiny and enforcement activity with respect to manufacturer reimbursement support activities and patient care programs, including bringing criminal charges or civil enforcement actions under the Anti-Kickback Statute, federal civil FCA and HIPAA’s healthcare fraud and privacy provisions.

The FDA also regulates the advertising and promotion of our RNS System to ensure that the claims we make are consistent with our regulatory clearances and approvals, that there are adequate and reasonable data to substantiate the claims and that our promotional labeling and advertising is neither false nor misleading in any respect. If the FDA determines that any of our advertising or promotional claims are misleading, not substantiated or not permissible, we may be subject to enforcement actions, including warning letters, and we may be required to revise our promotional claims and make other corrections or restitutions. Additionally, our manufacturing facility is required to comply with extensive requirements imposed by the FDA, including ensuring that quality control and manufacturing procedures conform to the QSR.QMSR. As such, we will be subject to continual review and inspections to assess compliance with the QSRQMSR and adherence to commitments made in any 510(k) or PMA application.

If any of our products or products that we distribute cause or contribute to a death or a serious injury or malfunction in certain ways, we will be required to report under applicable medical device reporting regulations, or MDRs,regulations which can result in voluntary corrective actions or agency enforcement actions and harm our reputation, business, financial condition and results of operations.

Under MDRs,medical device reporting regulations, medical device manufacturers are required to report to the FDA information that a device has or may have caused or contributed to a death or serious injury or has malfunctioned in a way that would likely cause or contribute to death or serious injury if the malfunction of the device or one of our similar devices were to recur. If we fail to report events required to be reported to the FDA within the required timeframes, or at all, the FDA could take enforcement action and impose sanctions against us. Any such adverse event involving our products also could result in future voluntary corrective actions, such as recalls or customer notifications, or agency action, such as inspection or enforcement action. Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, would be costly, distract management from operating our business, could be used by competitors against us, and may harm our reputation, business, financial condition and results of operations.

There likely will continue to be legislative and regulatory proposals at the federal and state levels directed at containing or lowering the cost of healthcare. For example, on July 4, 2025, the One, Big, Beautiful Bill Act, or OBBBA, was signed into law, which is expected to reduce Medicaid spending and enrollment by implementing work requirements for some beneficiaries, capping state-directed payments, reducing federal funding, and limiting provider taxes used to fund the program. OBBBA also narrowed access to Affordable Care Act marketplace exchange enrollment and declined to extend the Affordable Care Act enhanced advanced premium tax credits that expired at the end of 2025, which, among other provisions in the law, are anticipated to reduce the number of Americans with health insurance. Congress is considering proposed legislation intended to further reduce healthcare costs with alternatives to replace the expired Affordable Care Act subsidies. We cannot predict the initiatives that may be adopted in the future or their full impact. The continuing efforts of the government, insurance companies, managed care organizations and other payors of healthcare services to contain or reduce costs of healthcare may harm:

Further, recently there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several U.S. Congressional inquiries and proposed and enacted federal legislation designed to bring transparency to product pricing and reduce the cost of products and services under government healthcare programs, such as the recently enacted Inflation Reduction Act of 2022. Additionally, individual states in the United States have also increasingly passed legislation and implemented regulations designed to control product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures. Moreover, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what products to purchase and which suppliers will be included in their healthcare programs. Adoption of price controls and other cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures may prevent or limit our ability to generate revenue and attain profitability.

Various new healthcare reform proposals are emerging at the federal and state level. Any new federal and state healthcare initiatives that may be adopted couldcould, among other things, limit the amounts that federal and state governments will pay for healthcare products and services, and could harm our business, financial condition and results of operations.

We currently do not market and sell our products outside the United States. However, if we choose to conduct business outside the United States, our business will be subject to various heavily-enforced anti-bribery and anti-corruption laws, such as the FCPA and similar laws around the world. These laws generally prohibit U.S. companies and their employees and intermediaries from directly or indirectly offering, providing, promising, authorizing or making improper payments or providing anything of value to foreign government officials and other persons for the purpose of obtaining or retaining business or gaining any advantage. The FCPA also requires public companies to make and keep books and records that accurately and fairly reflect the transactions of a company and to devise and maintain an adequate system of internal accounting controls. We face significant risks if we, which includes our third-party business partners and intermediaries, fail to comply with the FCPA or other anti-corruption and anti-bribery laws. In many foreign countries, particularly in countries with developing economies, it may be a local custom that businesses engage in practices that are prohibited by the FCPA or other applicable laws and regulations. To that end, we may have to incur substantial costs to enhance our controls if we begin doing business outside the United States, and even so, such compliance measures ultimately may not be effective in prohibiting our employees, contractors, business partners, intermediaries or agents from violating or circumventing our policies and/or the law.

In the course of our operations, we receive, collect, use, generate, store, disclose, transfer, make accessible, protect, secure, dispose of, transmit, share and otherwise process (collectively, process) an increasing volume of sensitive and personal information, including proprietary and confidential business data, trade secrets, intellectual property, data we collect about trial participants in connection with clinical trials, and detailed recordings of iEEGsintracranial electroencephalograms, or iEEGs, from patients as well as information from our employees and third parties with whom we conduct business. Our data processing activities subject us to numerous data privacy and security obligations, such as various laws, rules, regulations, guidance and industry standards, external and internal privacy and security policies, contractual requirements, and other obligations relating to data privacy and security.

In the United States, various federal and state regulators have adopted, or are considering adopting, laws and regulations concerning personal information and data security, including data breach notification laws. Numerous U.S. states have enacted comprehensive privacy laws that impose certain obligations on covered businesses, including providing specific disclosures in privacy notices and affording residents with certain rights concerning their personal information. As applicable, such rights may include the right to access, correct, or delete certain personal information, and to opt-out of certain data processing activities, such as targeted advertising, profiling, and automated decision-making. The exercise of these rights may impact our business and ability to provide our products and services. Certain states also impose stricter requirements for processing certain personal information, including sensitive information, such as conducting data privacy impact assessments. These state laws allow for statutory fines for noncompliance. For example, the CCPACalifornia Consumer Privacy Act, or CCPA, applies to personal information of consumers, business representatives, and employees, and requires businesses to provide specific disclosures in privacy notices and honor requests of California residents to exercise certain privacy rights. The CCPA provides for fines per intentional violation and allows private litigants affected by certain data breaches to recover significant statutory damages. Although the CCPA exempts some data processed in the context of clinical trials, the CCPA increases compliance costs and potential liability with respect to other personal information we maintain about California residents. In addition, the California Privacy Rights Act of 2020, or CPRA, expands the CCPA’s requirements, including by adding a new right for individuals to correct their personal information and establishing a new regulatory agency to implement and enforce the law. While the laws and regulations of other states also exempt some data processed in the context of clinical trials, these developments further complicate compliance efforts, and increase legal risk and compliance costs for us, and the third parties with whom we work. Additionally, our customers may be subject to additional federal and state privacy and security laws, rules, regulations and standards, including HIPAA, that they require us to comply with through contractual obligations. This patchwork of obligations may give rise to conflicts or differing views of personal privacy rights.

We use artificial intelligence, or AI, including generative AI, and machine learning, or ML, technologies in our productsproduct development activities and serviceshave (collectively,incorporated AI/ML). tools into our future product iterations, including SeizureID, the application for which is currently under review by the FDA. The development and use of AI/ML present various privacy and security risks that may impact our business. AI/ML are subject to privacy and data security laws, as well as increasing regulation and scrutiny. Several jurisdictions around the globe, including Europe and certain U.S. states, have proposed, enacted, or are considering laws governing the development and use of AI/ML, such as the EU’s AI Act and Colorado’s AI Act. We expect other jurisdictions will adopt similar laws. Additionally, certain privacy laws extend rights to consumers (such as the right to delete certain personal data) and regulate automated decision making, which may be incompatible with our use of AI/ML. These obligations may make it harder for us to conduct our business using AI/ML, lead to regulatory fines or penalties, require us to change our business practices, retrain our AI/ML, or prevent or limit our use of AI/ML. For example, the FTCFederal Trade Commission has required other companies to turn over (or disgorge) valuable insights or trainings generated through the use of AI/ML where they allege the company has violated privacy and consumer protection laws. If we cannot use AI/ML or that use is restricted, our business may be less efficient, or we may be at a competitive disadvantage.

Disruptions in our information technology systems or data or those of third parties with whom we work, whether through breaches or failures of our systems, ransomware, unauthorized access or otherwise, may result in both an adverse impact to our products, as well as the unauthorized use, disclosure, modification or misappropriation of patient or other personal or sensitive information, the occurrence of fraudulent activity, or other information security-related incidents, all of which could result in adverse consequences, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse consequences, which could have a material and adverse impact on our business, financial condition and results of operations.

WeAfter obtaining appropriate patient consents, we may maintain, use, and share sensitive health information that we receive directly from patients that use our products, throughout the clinical study process, in the course of our research collaborations, and from healthcare providers in the course of using our products and systems. Most healthcare providers, including hospitals from which we obtain patient health information, are subject to privacy and security regulations promulgated under HIPAA, as amended by the Health Information Technology for Economic and Clinical Health, or HITECH. We are not currently classified as a covered entity or business associate under HIPAAHIPAA, and thuswhile we voluntarily implement safeguards in a manner consistent with HIPAA, we are not subject to its requirements or penalties. However, any person may be prosecuted under HIPAA’s criminal provisions either directly or under aiding-and-abetting or conspiracy principles. Consequently, depending on the facts and circumstances, we could face substantial criminal penalties if we knowingly receive, maintain, use, or transfer individually identifiable health information from a HIPAA-covered healthcare provider or research institution that has not satisfied HIPAA’s requirements for disclosure of individually identifiable health information. Furthermore, certain health privacy laws, data breach notification laws, consumer protection laws and genetic testing laws may apply directly to our operations or those of our collaborators and may impose restrictions on our collection, use and dissemination of individuals’ health information. As such, we may be subject to state laws requiring notification of affected individuals and state regulators in the event of a breach of personal information, including certain health information, which is a broader class of information than the health information protected by HIPAA.

Litigation may be necessary to defend against these and other claims challenging inventorship of our patents, trade secrets or other intellectual property. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, intellectual property that is important to our products. If we were to lose exclusive ownership of such intellectual property, other owners may be able to license their rights to other third parties, including our competitors. We also may be required to obtain and maintain licenses from third parties, including parties involved in any such disputes. Such licenses may not be available on commercially reasonable terms, or at all, or may be non-exclusive. If we are unable to obtain and maintain such licenses, we may need to cease the development, manufacture and commercialization of one or more of our products. The loss of exclusivity or the narrowing of our patent claims could limit our ability to stop others from using or commercializing similar or identical technology and products. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees. Any of the foregoing could harm our business, financial condition and results of operations.

In addition, our patents or the patents of our licensing partners also may become involved in inventorship, priority or validity disputes. For example, although we try to ensure that our employees, consultants and advisors are not in breach of any past contractual obligations and do not use the proprietary information or know-how of others in the work that they do for us, we may in the future become subject to claims that we or these individuals have, inadvertently or otherwise, used or disclosed intellectual property, including trade secrets or other proprietary information, of their former university or employer. Additionally, we may be subject to claims from third parties challenging intellectual property rights we regard as our own, based on claims that our agreements with employees or consultants obligating them to assign intellectual property to us are ineffective or in conflict with prior or competing contractual obligations to assign inventions to a previous employer, or to another person or entity. Furthermore, while it is our policy to require all employees and contractors to execute agreements assigning relevant intellectual property to us, we may also be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops intellectual property that we regard as our own. These assignment agreements may not be self-executing or adequate in scope, and may be breached or challenged, and we may be forced to bring claims against third parties, or defend claims that they may bring against us, to determine the ownership of what we regard as our intellectual property. We may not have adequate remedies for any such breaches, and such claims could harm our business, financial condition and results of operations.

We have incurred losses since our inception and expect to continue to incur losses for the foreseeable future. For the years ended December 31, 20242025 and 2023,2024, we reported net losses of $27.1$21.5 million and $33.0$27.1 million, respectively. As a result of these losses, as of December 31, 2024,2025, we had an accumulated deficit of approximately $531.0$552.4 million. We expect to continue to incur significant business expenses as we continue to enhance our efforts to promote our brand, increase sales, improve therapy effectiveness, enhance the patient and provider experience, and expand the population of eligible patients. In addition, we expect our selling, general and administrative expenses to increase as we continue to operate as a public company. The net losses that we incur may fluctuate significantly from period to period. We will need to generate significant additional revenue and improve our gross margins in order to achieve and sustain profitability. It is possible that we will not achieve profitability or that, even if we do achieve profitability, we may not remain profitable for any substantial period of time. Our failure to achieve or maintain profitability could negatively impact the value of our common stock.

WeOur are party to an existingMidCap Term Loan Agreement, which contains restrictive covenants as well as financial maintenance covenants, and if we are unable to comply with these covenants then the lenders could declare an event of default and we may need to immediately repay the amounts due under the MidCap Term Loan Agreement.Loan.

In SeptemberJune 2020,2025, we entered into athe MidCap Term Loan Agreement, or the Term Loan, pursuant to which we borrowed $50.0 million. The Term Loan contains customary affirmative and restrictivenegative covenants, including with respect to our ability to enter into fundamental transactions, incur additional indebtedness, grant liens, pay any dividend or make any distributions to our holders,equity holders or repurchase our equity interests, enter into restrictive agreements, make investments, merge or consolidate with any other person or engage in transactions with our affiliates, among other things, as well as a minimum liquidity covenant and annuala quarterly revenue covenants.covenant. If we fail to comply with the covenants or payments specified in the MidCap Term Loan, to make payments when due under the MidCap Term Loan, or if we otherwise breach the MidCap Term Loan, the lenders could declare an event of default, which would give it the right to declare all borrowingsoutstanding outstanding,indebtedness, together with accrued and unpaid interest and fees, to be immediately due and payable. In addition, borrowings under the MidCap Term Loan are secured by substantially all of our properties, rights and assets, including intellectual property. Any declaration by our lender of an event of default could significantly harm our business and could cause the price of our common stock to decline.

IfWith the expiration of our exclusive distribution agreement with DIXI Medical is not renewed or we fail to negotiate a new agreement,Medical, our revenue growth, financial condition and results of operations may be materially affected.

In general, under Section 382 of the U.S. Internal Revenue Code of 1986, as amended, or the Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change net operating losses, or NOLs, to offset future taxable income. A Section 382 “ownership change” generally occurs if one or more stockholders or groups of stockholders who own at least 5% of our stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Similar rules may apply under state tax laws. As of December 31, 2024,2025, we had $152.5$166.6 million of federal net operating loss carryforwards and $162.7$181.5 million of state net operating loss carryforwards. The federal and state NOL carryforwards beganbegin expiring in 2026 and 2029, respectively.2026. As of December 31, 2024,2025, the amount of federal NOL carryforwards that does not expire is $114.0$129.2 million (subject to certain utilization limitations). We have conducted Section 382 studies and determined that we experienced ownership changes in 2016 and in 2021 which resulted in permanent limitation of our pre-change NOL and research and development credit carryforwards. In addition, future changes in our stock ownership, some of which are outside of our control, could result in an additional ownership change under Section 382 of the Code, further limiting our ability to utilize NOLs arising prior to such ownership change in the future. There is also a risk that due to statutory or regulatory changes, such as suspensions on the use of NOLs (including California legislation enacted in June 2020 that limited the ability to use California NOLs to offset California income for tax years beginning after 20192023 and before 20232027), or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities.

In addition, our projections related to being the exclusive U.S. distributor of DIXI Medical products have been based on a number of estimates and assumptions, including, without limitation, information obtained from DIXI Medical related to historical performance and future projections, and annual extensions of the current distribution agreement, which occur automatically unless one of the parties notifies the other of its intention to not renew the agreement or otherwise negotiate a new agreement. While we believe our assumptions and the data underlying our estimates are reasonable, these assumptions and estimates may not be correct and the conditions supporting our assumptions or estimates may change at any time, thereby reducing the predictive accuracy of these underlying factors. As a result, our estimates of the annual total addressable market for our RNS System may prove to be incorrect. If the actual annual total addressable market for our RNS System is smaller than we have estimated, it may impair our sales growth and have an adverse impact on our business. Alternatively, if the actual annual total addressable market for our RNS System is bigger than we have estimated, we may not be ready to manage such growth, which may impair our sales and have an adverse impact on our business. Additionally, if our projections regarding the revenue we anticipate receiving from our collaboration with Rapport are inaccurate, we may not attain our revenue projections, which could harm our business, result in investors losing confidence in our financial reporting, and our stock price may decline.

Our RNS System is currently indicated in the United States for use in adult epilepsy patients, meaning patients who are 18 years of age or older, with drug-resistant focal epilepsy. We recently announced our primaryPrimary effectiveness endpoint data infrom our Post-approval Study in this patient population.population The data showeddemonstrated that the RNS System efficacy improved over time, with a 62.5% median seizure reduction at six months after implant (n=314) and an 82.0% median seizure reduction at 36 months after implant (n=255). Additionally, 42.5% of patients experienced a period of seizure-freedom for at least six months, and 22% of patients were seizure free for at least one year.year Results will bewere presented at the American Academy of Neurology Annual Meeting,Meeting heldin April 5 through 9, 2025.

Our commercial efforts have historically been focused on growing adoption and utilization across Level 4 comprehensive epilepsy centers, or CECs, in the United States that facilitate appropriate care for drug-resistant epilepsy patients. In 2023, we received FDA approval of a Premarket Approval Supplement, or PMA-S,PMA-S which updated the qualification criteria for centers and clinicians that may prescribe and implant the RNS System. We initiated a pilot program to begin our outreach to these centers and clinicians in 2024 and haveare commencedexpanding programthese expansion that will continueefforts through 2025. We planare toactively addressaddressing this opportunity in a targeted manner with incremental expansion of our sales force.

We have invested heavily and expect to continue to invest in research and development and commercial activities. Our research and development activities include clinical studies to demonstrate the safety and effectiveness of our RNS System, including in expanded indications, and to obtain, as well as retain, FDA approval. We intend to continue making significant investments in research and development, clinical studies and regulatory affairs to support ongoing and future regulatory submissions for retaining and expanding indications of our RNS System, including to patients with drug-resistant idiopathic generalized epilepsy and patients under the age of 18, support continuous improvements to our RNS System, and develop future products that address neurological disorders. We have also made significant investments in building our field commercial team and intend to make significant investments in sales and marketing efforts in the future, including initiatives to drive awareness and expand our referral channel to increase the number of drug-resistant epilepsy patients referred to CECs. We may in the future seek to acquire or invest in additional businesses, products, or technologies that we believe could complement or enhance our products, enhance our technical capabilities or otherwise offer growth opportunities, although we currently have no agreements or understandings with respect to any such acquisitions or investments. Because of these and other factors, we expect to continue to incur net losses and negative cash flows for the nextnear several years.term. We may require additional funding to support operations and pay our obligations or may opportunistically seek to raise additional capital, which may include future equity or debt financings.

In November 2023, we entered into a collaboration agreement with Rapport Therapeutics, Inc., or Rapport, a clinical-stage biotechnology company, to leverage our data as well as our RNS System’s unique biomarker monitoring and data analysis capabilities. The collaboration evaluatesevaluated biomarker changes in currently implanted RNS System patients that enroll in Rapport’s Phase 2a clinical trial of its product candidate. Pursuant to this agreement, we provideprovided information to Rapport that willto help evaluate the impact of their product candidate on certain biomarkers of patients with focal onset seizures. In June 2025, we executed an agreement to extend our collaboration with Rapport and to continue providing differentiated data, monitoring and data analysis services for the next phase of Rapport’s clinical trial of its product candidate. We expect this work to continue through first half of 2028.

We derive revenue from sales of our RNS System to hospital facilities both for initial RNS System implant procedures and for replacement procedures when our implanted devices reach end of service. We launched our current neurostimulator model in 2018. This device has an average battery life of nearly eleven years, an increase from the previous model of the device. We have experienced and may continue to experience changes in the percentage of our revenue from replacement procedures over the next few years as a result of the extended replacement cycle of the newer device, which may cause variability in our gross margin. WeWith alsothe derivetermination of the Distribution Agreement and cessation of DIXI product sales on December 31, 2025, there will be no further revenue from sales of DIXI Medical products. A change in product mixsales, betweenreducing sales of our RNS System and DIXI Medical products would causefuture variability in our gross margin.

Beginning in the fourth quarter of 2023, we also began to derive revenue from services provided to Rapport pursuant to our collaboration agreement with Rapport. Our revenue from this collaboration fluctuates due to the timing of services provided and other factors.

Nearly all of our revenue results from sales in the United States, but we also have limited sales of our RNS System in Canada pursuant to a special program that involves case-by-case approvals of the use of our RNS System in adult patients with drug-resistant focal epilepsy.epilepsy, and in Israel where regulatory approval has been obtained.

Cost of goods sold consists primarily of costs related to materials, components and subassemblies, personnel-related expenses for our manufacturing and quality assurance employees, including stock-based compensation, manufacturing overhead and charges for excess, obsolete and non-sellable inventories. Overhead costs include the cost of quality assurance, testing, material procurement, inventory control, operations supervision and management personnel, an allocation of facilities and information technology expenses, including rent and utilities, and equipment depreciation. Cost of goods sold also includes certain direct costs such as those incurred for shipping our RNS System. We record adjustments to our inventory valuation for estimated excess, obsolete and non-sellable inventories based on assumptions about future demand, past usage, changes to manufacturing processes and overall market conditions. Cost of goods sold also includes costs of procuring and shipping DIXI Medical products. We expect cost of goods sold to increase in absolute dollars as more of our RNS Systems andare sold, with no contribution from DIXI Medical productsproduct aresales sold.after December 31, 2025.

Our operating expenses consist of sales and marketing costs, research and development costscosts, and selling, general and administrative costs.

Our research and development activities primarily consist of engineering and research programs associated with our products under development and clinical studies. Research and development expenses include personnel-related costs for our research and development employees, including stock-based compensation, and expenses related to consulting services, clinical trials, regulatory activities, prototyping, testing, materials and supplies, and allocated overhead including facilitiesfacility and information technology expenses. Our clinical trial expenses include costs associated with clinical trial design, clinical trial site development and study costs, data management costs, related travel expenses, the cost of products used for clinical activities, and costs associated with our regulatory compliance. We expense research and development costs as they are incurred. We expect our research and development expenses will increase in absolute dollars as we continue to develop new product offerings and product enhancements and conduct studies for expanded indications for use.

Selling, General and Administrative Expenses

WeOur intendgeneral and administrative expenses consist primarily of personnel-related costs, including stock-based compensation, for administrative personnel that support our general operations such as executive management, information technology, finance, accounting, customer services, human resources and legal personnel. General and administrative expenses also include costs attributable to continueprofessional tofees increasefor ourlegal, salesaccounting and marketingtax spendingservices, to support increased adoption of our RNS System. We expect our salesinsurance and marketingrecruiting expenses will increase in absolute dollars as we hire additional personnel and add programs in order to more fully penetrate the market opportunity.fees. We expect our administrative expenses, including stock-based compensation expense,expenses will increase as we increase our headcount to support our growth. Additionally, we may incur increased expenses related to audit, legal, regulatory and tax-related services, compliance with exchange listing and Securities and Exchange Commission, or SEC, requirements, and director and officer insurance premiums. Our selling, general and administrative expenses may fluctuate from period to period as we continue to grow.

Other income (expense), net primarily consists of gain and loss from short-term investments.investments, and loss on debt extinguishment.

The following table summarizes our results of operations for the periods indicated (in thousands):

Revenue increased by $14.5$20.1 million, or 22%,25%, to $100.0 million during the year ended December 31, 2025, compared to $79.9 million during the year ended December 31, 2024, compared to $65.4 million during the year ended December 31, 2023. The increase in revenue was primarily due to an increase in the number of RNS System units sold andsold, an increase in sales of DIXI Medical products.products, and an increase in service revenue. Revenue from sales of DIXI Medical products represented approximately 17%16% of our total revenue for the year ended December 31, 2024,2025, as compared to approximately 15%17% for the year ended December 31, 2023.2024. All of our revenue, with the exception of $0.2$0.9 million and less than $0.1$0.2 million for the years ended December 31, 20242025 and 2023,2024, respectively, was generated from sales in the United States.

Cost of goods sold increased by $3.5$2.0 million, or 20%,9%, to $22.8 million during the year ended December 31, 2025, compared to $20.8 million during the year ended December 31, 2024, compared to $17.3 million during the year ended December 31, 2023. The increase was primarily due to an increase in the number of RNS Systems sold and the costs of distributing DIXI Medical products. Our gross margin increased from 73.6% for the year ended December 31, 2023 to 73.9% for the year ended December 31, 2024 to 77.2% for the year ended December 31, 2025, primarily due to lower fixed costs per unit as a result of increased production volume of the RNS System, partially offset by the lower gross margin from distribution of DIXI Medical products.System.

Research and development expenses increased by $2.9$4.2 million, or 14%,18%, to $27.9 million during the year ended December 31, 2025, compared to $23.7 million during the year ended December 31, 2024, compared to $20.8 million during the year ended December 31, 2023. The increase in research and development expenses was primarily due to an increase of $2.4$2.5 million in personnel-related expenses, including employee bonus and stock-based compensation, driven by an increase in personnel during the year ended December 31, 2024,headcount, and ana increasedecrease of $1.2 million in product development expenses. The increases were offset in part by an increase of $0.5 million in grant funds received primarily under the NIHNational Institutes of Health funding agreement which are recognized as a reduction in research and development expenses, and an increase of $0.5 million in product development expenses.

Selling, General and Administrative Expenses

Other income (expense), net increaseddecreased by 0.6$0.8 million to $(0.5) million during the year ended December 31, 2025, compared to $0.3 million during the year ended December 31, 2024, compared to ($0.3) million during the year ended December 31, 2023, primarily due to unrealizeda gain, netloss on short-termextinguishment investments inof the yearCRG endedTerm DecemberLoan 31,of 2024.$0.5 million.

We have financed our operations primarily through sales of our products, issuance of equity securities and debt financing. As of December 31, 2024,2025, we had cash, cash equivalents and short-term investments of $52.8$61.1 million and $59.5$58.9 million outstanding under the MidCap Term Loan, net of debt discount and issuance costs.

In February 2025, we completed a follow-on offering and received approximately $69.8$69.7 million in net proceeds after deducting underwriting discounts and commissions and offering expenses from the sale of 7,475,000 shares of our common stock, including 975,000 shares from the exercise of the underwriters’ option to purchase additional shares, at a public offering price of $10.00 per share. We used $49.5 million of the net proceeds from the offering to repurchase all of the shares held by our significant stockholder, KCK Ltd. We intendare to useusing the remaining net proceeds from the offering for general corporate purposes, whichincluding, maybut includenot limited to, sales and marketing, clinical trial and other research and developmentdevelopment, expenses, selling,and general and administrative expenses, debt reduction and working capital.

In November 2022, we entered into a Sales Agreement with Leerink Partners LLC, or Leerink, to sell shares of our common stock, from time to time, through an at-the-market, or ATM, equity offering program under which Leerink will actacted as our sales agent and pursuant to which we maycould sell common stock for aggregate gross sales proceeds of up to $50.0 million. During the year ended December 31, 2023, we received net proceeds of approximately $7.6 million from the sale of shares of common stock pursuant to our ATM offering program, after deducting sales commission and offering expenses. During the year ended December 31, 2024, we received net proceeds of approximately $3.2 million after deducting sales commissions and offering expenses. OnIn January 2025, we received net proceeds of approximately $0.2 million after deducting sales commissions and offering expenses. In February 20, 2025, we terminated the Sales Agreement and closed the ATM program. On the date of termination, we had $38.3 million remaining under our ATM program.

CRG Term Loan

In September 2020, we entered into the CRG Term Loan with CRG Partners IV L.P. and its affiliates for total borrowings of up to $60 million and borrowed $50 million. The remaining $10.0 million expired without being drawn.

The CRG Term Loan currently bearsbore interest at a rate of 13.5% per year. Payments under the loan arewere made quarterly with payment dates fixed at the end of each calendar quarter. From JanuaryMarch 2023 through June 2025,2024, we had the option to pay interest as follows: 8.5% per annum in cash and 5.0% per annum PIKpaid-in-kind, or PIK, by increasing the principal of the CRG Term Loan. For each payment date from JanuaryMarch 2023 through June 2024, we elected the PIK option.

The CRG Term Loan was interest-only through its original final maturity of September 30, 2025. Following the interest-only period, principal payment would have been due in one installment on September 30, 2025. In May 2024, we amended the CRG Term Loan to extend the final maturity by one year to September 30, 2026 and eliminate the PIK interest option after June 30, 2024. The CRG Term Loan includesincluded aan exit fee upon repayment of the loan equal to 10% of the aggregate principal amount being prepaid or repaid.

The TermLoans Loan isare collateralized by substantially all of our assets. The loanCredit agreementAgreement contains customary representations and warranties, covenants, events of default and termination provisions. The financial covenants require that we achieve minimum annual revenue thresholds and maintain a minimum balance of cash and cash equivalents. See Notes 1 and 6 to our financial statements included elsewhere in this Annual Report on Form 10-K for additional information.

We have future minimum payments for the MidCap Term Loan totaling $75.0$87.5 million, with $7.7$5.9 million due within twelve months. In addition, we lease our office and manufacturing facilities in Mountain View, California under a non-cancelable operating lease which expires in June 2030. Future minimum lease payments under non-cancelable operating leases were $17.3$14.4 million as of December 31, 2024.2025. See Note 5 to our financial statements included elsewhere in this Annual Report on Form 10-K for additional information.information about our facility lease.

The following table sets forth the primary sources and uses of cash and cash equivalents for the periods presented below (in thousands):

Net cash used in operating activities was $17.9$11.0 million for the year ended December 31, 2024.2025. Cash used in operating activities was primarily a result of the net loss of $27.1$21.5 million, adjusted for non-cash charges of $14.6$14.5 million and change in operating assets and liabilities of $5.4$4.0 million. The non-cash charges primarily consisted of $10.3$11.1 million of stock-based compensation, $1.6$1.7 million of amortization of right-of-use assets, $1.4$0.5 million of interestloss incurredon butextinguishment paid-in-kind,of $1.0the CRG Term Loan, and $0.5 million of non-cash interest expense related to our Termterm Loan, and $0.3 million of inventory write-downs.loans. The change in operating assets and liabilities was due to an increase in inventories of $2.4$3.7 million largely due to an increase in work-in-processraw inventorymaterials and finished goods, an increase in accounts receivable of $1.8 million primarily due to an increase in sales of our products including our RNS System and DIXI Medical products, a decrease in operating lease liabilities of $1.6$1.9 million, a decrease in accruedaccounts liabilitiespayable of $1.4$0.7 million largelyprimarily due to accruedthe payroll and related expenses, an increase in accounts receivabletiming of $0.5payments million,to our vendors and a decrease in deferred revenue of $0.5$0.4 million, offset in part by an increase in accountsaccrued payableliabilities of $0.7$3.6 million,million and aan decreaseincrease in prepaid expenses and other assets of $0.4$0.9 million.

Net cash used in operating activities was $19.7$17.9 million for the year ended December 31, 2023.2024. Cash used in operating activities was primarily a result of the net loss of $33.0$27.1 million, adjusted for non-cash charges of $15.7$14.6 million and change in operating assets and liabilities of $2.5$5.4 million. The non-cash charges primarily consisted of $9.6$10.3 million of stock-based compensation, $2.7 million of interest incurred but paid-in-kind, $1.4$1.6 million of amortization of right-of-use assets, $1.1$1.4 million of interest incurred but PIK, $1.0 million of non-cash interest expense related to our Term Loan, $0.3 million of amortization of debt discount and issuance costs and $0.3 million of lossinventory from short-term investments.write-downs. The change in operating assets and liabilities was due to an increase in accounts receivable of $4.9 million primarily due to an increase in sales of our products, including our RNS System and DIXI Medical products, an increase in inventories of $1.7$2.4 million largely due to an increase in rawwork-in-process materialsinventory and finished goods, partially offset by a reduction in work-in-process inventory, a decrease in operating lease liabilities of $1.6 million, a decrease in accrued liabilities of $1.4 million largely due to cashaccrued paidpayroll forand rentrelated netexpenses, an increase in accounts receivable of the$0.5 accretionmillion, and a decrease in deferred revenue of imputed$0.5 interest,million, offset in part by an increase in accounts payable of $0.7 million, and a decrease in prepaid expenses and other assets of $0.4 million, an increase in accrued liabilities of $3.8 million primarily due to an increase in accrued employee bonuses and payroll related expenses, and an increase in deferred revenue of $1.1 million related to our collaboration agreement with Rapport.million.

Cash Flows (Used in) Provided by Investing Activities

Net cash provided by financing activities was $4.3$19.6 million for the year ended December 31, 2024,2025, which primarily consisted of $3.3$69.7 million ofin proceeds, net cashof proceedsunderwriting discounts and commissions, from our At-the-MarketFebruary 2025 follow-on offering of common stock, proceeds of $58.4 million from the MidCap Term Loan, net of discounts and issuance costs, proceeds from the issuance of common stock under employee plans of $1.9 million,million and $0.2 million of net cash proceeds from our ATM offering, partially offset by repayment of the CRG Term Loan of $60.5 million, a repurchase of common stock of $49.5 million, and taxes withheld and paid related to net share settlement of equity awards of $0.9$0.5 million.

Net cash provided by financing activities was $8.1$4.3 million for the year ended December 31, 2023,2024, which primarily consisted of $7.9$3.3 million of net cash proceeds from our At-the-MarketATM offering and proceeds from the issuance of common stock under employee plans of $0.8$1.9 million, partially offset by taxes withheld and paid related to net share settlement of equity awards of $0.3 million and payment of deferred offering costs of $0.3$0.9 million.

Our financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP. For information on our significant accounting policies, see Note 2 to our financial statements included elsewhere in this Annual Report on Form 10-K. The preparation of our financial statements requires us to make estimates and assumptions that affect the amounts and disclosures in the financial statements. Our estimates are based on our historical experience, knowledge of current events and actions we may undertake in the future, and on various other factors that we believe are reasonable under the circumstances. Our most critical accounting estimates subsequent to our IPO are those affecting the provision for excess and obsolete inventories.

We regularly review inventory quantities in consideration of actual loss experiences, projected future demand, and remaining shelf life to record a provision for excess and obsolete inventory when appropriate. We write down inventory that has become obsolete, inventory that has a cost basis in excess of its expected lower of cost or net realizable value, and inventory in excess of expected requirements. The estimate of excess quantities is judgmental and primarily depends on our estimate of future demand for a particular product. If our estimate of future demand is too high, we may have to write-down excess inventory for the product and record a charge to cost of goods sold, which could have a material adverse effect on our results of operations. Inventory write-downs were $0.3$0.2 million and $0.2$0.3 million for the years ended December 31, 20242025 and December 31, 2023,2024, respectively.

Investing in our common stock involves a high degree of risk and uncertainty. You should carefully read, consider, and evaluate the risks described below, as well as all of the other information contained in this Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” our unaudited interim condensed financial statements and related notes, and our other disclosures and filings. While we believe that the risks and uncertainties described below are the material risks currently facing us, additional risks that we do not yet know of or that we currently think are immaterial may also arise and materially affect our business. If any of the following risks materialize, our business, financial condition and results of operations could be materially and adversely affected. In that case, the market price of our common stock could decline, and you may lose some or all of your investment.

•We may be unable to compete successfully with other treatment options for drug-resistant focal epilepsy, which could harm our sales, business, financial condition and results of operations;

•We are seeking expanded FDA labeling for our RNS System to be able to treat patients with drug-resistant idiopathic generalized epilepsy,epilepsy (“IGE”), as well as patients between the ages of 12 and 17 with drug-resistant focal epilepsy, but if we are unable to broaden the indications for our RNS System to include these patients, our growth potential could be harmed;

We currently rely on our RNS System, which can only be marketed in the United States for use in adults with drug-resistant focal epilepsy,System as our primary source of revenue. If we fail to successfully market and sell our RNS System cost effectively and maintain and expand our market share, our sales, business, financial condition and results of operations will be negatively affected.

The rate of adoption and sales of our products are heavily influenced by clinical data. Although we have positive clinical data across four multi-center FDA-approved prospective clinical studies going out as far as nine years, there can be no assurance that clinical data will continue to be positive for our ongoing studies. For example, the one-year results from our NAUTILUS study to evaluate neuromodulation therapy for idiopathic generalized epilepsy did not reach statistical significance for the primary effectiveness endpoint in the overall study population, but did reach statistical significance for prespecified secondary endpoints including median seizure reduction. Additionally, there can be no assurance that future clinical studies, including those to continue demonstrating the efficacy of our products in currently approved patient populations and those to support label retention and expansion for our products will demonstrate safety and effectiveness. Unfavorable or inconsistent clinical data from ongoing or future clinical studies conducted by us, our competitors, or third parties, the negative interpretation of our clinical data internally and externally, including by customers, competitors, patients, and regulators, or findings of new or more frequent adverse events, could harm our business, financial condition, and results of operations.

If adequate reimbursement becomes unavailable for the procedures to implant our RNS System and for clinicians to provide ongoing care for patients treated with our RNS System, or if third-party payors are slow to issue favorable coverage determinations for expanded indications, it could diminish our sales or affect our ability to sell our RNS System profitably.

We expect our RNS System will continue to be purchased by hospital facilities who will then seek reimbursement from third-party payors for brain-responsive neuromodulation for drug resistant focal epilepsy.epilepsy in adults. While third-party payors currently cover and provide reimbursement for both implant procedures of our RNS System as well as for clinicians providing ongoing patient care, we can give no assurance that these third-party payors will continue to provide coverage and adequate reimbursement,reimbursement or that current reimbursement levels for diagnostic, implant or replacement procedures as well as clinician-provided ongoing patient care will continue.

Furthermore, the overall amount of reimbursement available for brain-responsive neuromodulation for drug resistant focal epilepsyepilepsy, and future approved indications, could decrease in the future. Changes in reimbursement may not necessarily impact our sales. Additionally, we cannot be sure that the reimbursement amounts available for brain-responsive neuromodulation for drug resistant focal epilepsy will not reduce or otherwise negatively impact the demand for our marketed RNS System. Failure by users of our RNS System to obtain coverage and adequate reimbursement for the implant procedures or for clinicians providing ongoing patient care would cause our business, financial condition, and results of operations to suffer. Additionally, a third-party payor’s decision to provide coverage for a brain-responsive neuromodulation for drug resistant focal epilepsy and future approved indications, does not imply that an adequate reimbursement rate will be approved. Further, coverage policies and third-party reimbursement rates may change at any time. Even if favorable coverage and reimbursement status is attained, less favorable coverage policies and reimbursement rates may be implemented in the future.

As of MarchJune 31,30, 2026, we had 220 employees. As our sales and marketing strategies evolve and as we continue operating as a public company, we may need additional managerial, operational, sales, marketing, financial and other personnel. Future growth would impose significant added responsibilities on members of management, including:

We are seeking expanded FDA labeling for our RNS System to be able to treat patients with generalized drug-resistant epilepsyepilepsy, asand wellwe ascontinue to seek expanded FDA labeling for our RNS System to be able to treat patients between the age of 12 and 17 with drug-resistant focal epilepsy, but if we are unable to broaden the indications for our RNS System to include these patients, or if the recent FDA staffing changes delay reviews of our applications for indication expansion, our growth potential could be harmed.

If our NAUTILUS Study and our collaboration with the National Evaluation System for health Technology to pursue the use of real-world data do not produce results necessary to support regulatory clearance or approval to expand our indications to include patients with generalized drug-resistant epilepsyIGE as well as patients age 12 to 17 with drug-resistant focal epilepsy, we will be unable to obtain and maintain necessary approvals to expand our indications to include these patients in accordance with our expected timelines, which could harm our growth potential. Furthermore, we could incur substantial costs and the attention of management could be diverted throughout this process. Cuts and staffing changes at the FDA could further delay our efforts to expand indications by creating significant and costly delays in the review process for our regulatory submissions; these delays would negatively impact our growth potential and ability to expand our market reach according to our financial plans.

Achieving and sustaining compliance with applicable federal and state anti-fraud and abuse laws may prove costly. If we or our employees are found to have violated any of the above laws we may be subjected to substantial criminal, civil and administrative penalties, including imprisonment, exclusion from participation in federal healthcare programs, such as Medicare and Medicaid, and significant fines, monetary penalties, forfeiture, disgorgement and damages, contractual damages, reputational harm, administrative burdens, diminished profits and future earnings and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our financial results. Any action or investigation against us for the violation of these healthcare fraud and abuse laws, even if successfully defended, could result in significant legal expenses and could divert our management’s attention from the operation of our business. Companies settling federal civil FCA, Anti-KickbackAnti- Kickback Statute or civil monetary penalties law cases also may be required to enter into a Corporate Integrity Agreement with the Office of Inspector General, or OIG, in order to avoid exclusion from participation (such as loss of coverage for their products) in federal healthcare programs such as Medicare and Medicaid. Corporate Integrity Agreements typically impose substantial costs and operational burdens on companies to ensure compliance. Defending against any such actions can be detrimental to our reputation and brand and can otherwise be costly, time-consuming and may require significant personnel resources, and may harm our business, financial condition and results of operations.

We use artificial intelligence, or AI, including generative AI, and machine learning, or ML, technologies in our business activities and product development activities and have incorporated AI/ML tools into our future product iterations, including ECoG Assistant™, the application for which is currently under review by the FDA.FDA recently approved. The development and use of AI/ML present various privacy and security risks that may impact our business. AI/ML are subject to privacy and data security laws, as well as increasing regulation and scrutiny. Several jurisdictions around the globe, including Europe and certain U.S. states, have proposed, enacted, or are considering laws governing the development and use of AI/ML, such as the EU’s AI Act and Colorado’s AI Act. We expect other jurisdictions will adopt similar laws. Additionally, certain privacy laws extend rights to consumers (such as the right to delete certain personal data) and regulate automated decision making, which may be incompatible with our use of AI/ML. These obligations may make it harder for us to conduct our business using AI/ML, lead to regulatory fines or penalties, require us to change our business practices, retrain our AI/ML, or prevent or limit our use of AI/ML. For example, the Federal Trade Commission has required other companies to turn over (or disgorge) valuable insights or trainings generated through the use of AI/ML where they allege the company has violated privacy and consumer protection laws. If we cannot use AI/ML or that use is restricted, our business may be less efficient, or we may be at a competitive disadvantage.

We are also bound by contractual obligations related to data privacy and security, and our efforts to comply with such obligations may not be successful. For example, certain privacy laws, such as the GDPR and the CCPA, require our customersus to impose specific contractual restrictions on their service providers. We publish privacy policies, marketing materials, and other statements regarding data privacy and security. If these policies, materials or statements are found to be deficient, lacking in transparency, deceptive, unfair, misleading, or misrepresentative of our practices, we may be subject to investigation, enforcement actions by regulators, or other adverse consequences. In addition to data privacy and security laws, we are contractually subject to industry standards adopted by industry groups and, we are or may become subject to such obligations in the future.

Disruptions in our information technology systems or data or those of third parties with whom we work, whether through breaches or failures of our systems, ransomware, unauthorized access or otherwise, may result in both an adverse impact to our products, as well as the unauthorized use, disclosure, modification or misappropriation of patient or other personal or sensitive information, the occurrence of fraudulent activity, or other information security-related incidents, all of which could result in adverse consequences, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse consequences, which could have a material and adverse impact on our business, financial condition and results of operations.

We and the third parties with whom we work are subject to a variety of evolving threats, including but not limited to social-engineering attacks (including through deep fakes, which are increasingly more difficult to identify as fake, and phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks (such as credential stuffing), credential harvesting, personnel misconduct or error, ransomware attacks, supply-chain attacks, software and zero-day vulnerabilities, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, telecommunications failures, earthquakes, fires, floods, and other similar threats. In particular, severe ransomware attacks are becoming increasingly prevalent and can lead to significant interruptions in our operations, loss of sensitive data and income, reputational harm, and diversion of funds. Extortion payments may alleviate the negative impact of a ransomware attack, but we may be unwilling or unable to make such payments due to, for example, applicable laws or regulations prohibiting such payments. Remote work has increased risks to our information technology systems and data, as our employees utilize network connections, computers and devices outside our premises or network, including working at home, while in transit and in public locations.

Patent litigation is prevalent in the medical device and diagnostic sectors. Our commercial success depends in part upon our ability and that of our suppliers to manufacture, market, sell, and use our proprietary products without infringing, misappropriating or otherwise violating the intellectual property or proprietary rights of third parties. We may in the future become party to, or be threatened with, adversarial proceedings or litigation regarding intellectual property rights with respect to our products. Additional third parties may assert infringement claims against us based on existing or future intellectual property rights, regardless of merit. If we are found to infringe a third party’s intellectual property rights, we could be required to incur costs to obtain a license from such third party to continue developing and marketing our products. We may also elect to enter into such a license in order to settle pending or threatened litigation. However, we may not be able to obtain any required license on commercially reasonable terms, or at all. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors access to the same technologies licensed to us, and could require us to pay significant royalties and other fees. We could be forced, including by court order, to cease commercializing the infringing product. In addition, we could be found liable for monetary damages, which may be significant. If we are found to have willfully infringed a third-party patent, we could be required to pay treble damages and attorneys’ fees. A finding of infringement could prevent us from commercializing our planned products in commercially important territories, or force us to cease some of our business operations, which could harm our business and cause brand and reputational harm. We could also be forced to redesign those products that contain the allegedly infringing intellectual property, which could be costly, disruptive and infeasible. Many of our employees were previously employed at, and many of our current advisors and consultants are employed by, universities or other biotechnology, medical device, healthcare, or pharmaceutical companies, including our competitors or potential competitors. Although we try to ensure that our employees, advisors and consultants do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we, or these employees, have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such employee’s former employer. Furthermore, although these agreements may be difficult to enforce, we may in the future be subject to claims that these individuals are violating non-compete agreements with their former employers. These and other claims that we have misappropriated the confidential information or trade secrets of third parties can have a similar negative impact on our business to the infringement claims discussed above.

In addition, our patents or the patents of our licensing partners also may become involved in inventorship, priority or validity disputes. For example, although we try to ensure that our employees, consultants and advisors are not in breach of any past contractual obligations and do not use the proprietary information or know-how of others in the work that they do for us, we may in the future become subject to claims that we or these individuals have, inadvertently or otherwise, used or disclosed intellectual property, including trade secrets or other proprietary information, of their former university or employer. Additionally, we may be subject to claims from third parties challenging intellectual property rights we regard as our own, based on claims that our agreements with employees or consultants obligating them to assign intellectual property to us are ineffective or in conflict with prior or competing contractual obligations to assign inventions to a previous employer, or to another person or entity. Furthermore, while it is our policy to require all employees and contractors to execute agreements assigning relevant intellectual property to us, we may also be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops intellectual property that we regard as our own. These assignment agreements may not be self-executing or adequate in scope, and may be breached or challenged, and we may be forced to bring claims against third parties, or defend claims that they may bring against us, to determine the ownership of what we regard as our intellectual property. We may not have adequate remedies for any such breaches, and such claims could harm our business, financial condition and results of operations.

We have incurred losses since our inception and expect to continue to incur losses for the foreseeable future. For the threesix months ended MarchJune 31,30, 2026 and 2025, we reported net losses of $6.7$12.9 million and $6.6$15.2 million, respectively. As a result of these losses, as of MarchJune 31,30, 2026, we had an accumulated deficit of approximately $559.1$565.3 million. We expect to continue to incur significant business expenses as we continue to enhance our efforts to promote our brand, increase sales, improve therapy effectiveness, enhance the patient and provider experience, and expand the population of eligible patients. In addition, we expect our general and administrative expenses to increase as we continue to operate as a public company. The net losses that we incur may fluctuate significantly from period to period. We will need to generate significant additional revenue and improve our gross margins in order to achieve and sustain profitability. It is possible that we will not achieve profitability or that, even if we do achieve profitability, we may not remain profitable for any substantial period of time. Our failure to achieve or maintain profitability could negatively impact the value of our common stock.

As previously announced in April 2025, our exclusive distribution relationship with DIXI Medical terminatedexpired on September 30, 2025. The winding down of the relationship concluded on December 31, 2025, and DIXI Medical has repurchased all but $0.4 million of the inventory that remained in our possession and met specifications for repurchase. While we continue to believe that we have the ability to achieve cash flow breakeven on our expected timeline without revenue from this distribution agreement, our revenue growth, financial condition and results of operations may be materially affected by its expiration, including our ability to achieve cash flow breakeven and our expected long-range revenue growth.

Our operations have consumed substantial amounts of cash since inception and we intend to continue to make significant investments to support our continued business operations and growth, respond to business challenges or opportunities, enhance our products, expand the population of eligible patients, and potentially acquire complementary businesses and technologies. For the threesix months ended MarchJune 31,30, 2026 and 2025, our net cash used in operating activities was $5.9$9.8 million and $7.5$9.6 million, respectively. As of MarchJune 31,30, 2026, we had $54.0$51.7 million of cash, cash equivalents and short-term investments and $16.2$17.4 million in current liabilities.

In general, under Section 382 of the U.S. Internal Revenue Code of 1986, as amended, or the Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change net operating losses, or NOLs, to offset future taxable income. A Section 382 “ownership change” generally occurs if one or more stockholders or groups of stockholders who own at least 5% of our stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Similar rules may apply under state tax laws. As of December 31, 2025, we had $166.6 million of federal net operating loss carryforwards and $181.5 million of state net operating loss carryforwards. The federal and state NOL carryforwards begin expiring in 2026. As of December 31, 2025, the amount of federal NOL carryforwards that does not expire is $129.2 million (subject to certain utilization limitations). We have conducted Section 382 studies and determined that we experienced ownership changes in 2016 and in 2021 which resulted in permanent limitation of our pre-change NOL and research and development credit carryforwards. The most recent Section 382 study was completed at December 31, 2024. In addition, future changes in our stock ownership, some of which are outside of our control, could result in an additional ownership change under Section 382 of the Code, further limiting our ability to utilize NOLs arising prior to such ownership change in the future. There is also a risk that due to statutory or regulatory changes, such as suspensions on the use of NOLs (including California legislation that limited the ability to use California NOLs to offset California income for tax years beginning after 2023 and before 2027), or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities.

As of MarchJune 31,30, 2026, there were 3.84.0 million shares of common stock issuable upon the exercise of outstanding stock options or subject to vesting of outstanding restricted stock units, or RSU, awards. We have registered all of the shares of common stock issuable upon exercise of outstanding stock options and upon the settlement of RSU awards for public resale under the Securities Act. Accordingly, these shares will be able to be freely sold in the public market upon issuance subject to compliance with applicable securities laws. Including the aforementioned outstanding equity awards, as of MarchJune 31,30, 2026, there were approximately 8.58.1 million shares of common stock reserved for future issuance under our equity incentive plans which may become available for public resale to the extent we issue future equity incentive awards pursuant to these plans and such awards vest and are exercised or settle according to their terms.

Based on the number of shares of common stock outstanding as of MarchJune 31,30, 2026, our executive officers, directors and current beneficial owners of 5% or more of our common stock, in the aggregate, beneficially own, approximately 50.0%56.9% of our common stock. These stockholders, acting together, will be able to significantly influence all matters requiring stockholder approval, including the election and removal of directors and any merger or other significant corporate transactions. The interests of this group of stockholders may not coincide with the interests of other stockholders and they may want us to pursue strategies that deviate from the interests of other stockholders.

Historically, our stock price has been volatile. During the threesix months ended MarchJune 31,30, 2026, our stock traded as high as $17.90$19.60 per share and as low as $12.47 per share. An active or liquid market in our common stock may not be sustainable and the market price of our common stock may continue to be highly volatile and may fluctuate or decline substantially as a result of a variety of factors, some of which are beyond our control or are related in complex ways, including:

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited interim condensed financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q. This discussion and other parts of this report contain forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions, which are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section of this report entitled “Risk Factors,” under Part II, Item 1A of this report and those discussed in our other disclosures and filings.

Our RNS System is currently indicated in the United States for use in adult epilepsy patients, meaning patients who are 18 years of age or older, with drug-resistant focal epilepsy. Primary effectiveness endpoint data from our Post-approval Study in this patient population demonstrated that the RNS System efficacy improved over time, with a 62.5% median seizure reduction at six months after implant (n=314) and an 82.0% median seizure reduction at 36 months after implant (n=255). Additionally, 42.5% of patients experienced a period of seizure-freedom for at least six months, and 22% of patients were seizure free for at least one year. These data pointsresults from the Post-approval Study were presented at the American Academy of Neurology Annual Meetingpublished in April 2025.2026 in Neurology.

We are conducting studies to expand our indication for use in patients with drug-resistant idiopathic generalized epilepsy and patients with drug-resistant focal epilepsy under the age of 18. In March 2025, the last patient in our NAUTILUS study for drug-resistant idiopathic generalized epilepsy completed one year of follow up. In May 2025, we announced the preliminary results from the NAUTILUS study based on analysis of the one-year data. The study met the 12-week post-implant primary safety endpoint, demonstrating excellent safety outcomes and confirming the favorable safety profile of the RNS System. While the primary effectiveness endpoint did not reach statistical significance in the overall study, pre-specified secondary endpoints did show meaningful and clinically significant seizure reduction. In December 2025, we filed the Premarket Approval Supplement, or PMA-S, to support label expansion for our RNS System in patients who have drug-resistant idiopathic generalized epilepsy. The PMA-S is supported by pre-specified secondary endpoint data, which demonstrated robust 77% median GTC seizure reduction and a favorable safety profile in this highly refractory patient population at 18 months of therapy. PatientsIn June 2026, this data was published in theEpilepsia. NAUTILUSThe trialfinal continueparticipant to participate incompleted the study through the completion of two years afterof the devicestudy, implant,and withall prespecified collection of safety and effectiveness data occurringhas uponbeen completionconcluded. ofAs disclosed on July 28, 2026, the twoCompany yearsreceived post-implant,correspondence from the FDA notifying it that the PMA-S is not approvable in its current form and werequesting anticipateadditional information and further interactive communication. The Company will submit a Submission Issue Request to the finalFDA to further discuss its planned approach with the FDA, and it intends to amend its PMA-S with supplemental information, including additional data and context regarding the patient two-yearpopulations completionevaluated in the first half of 2026. We anticipate potential NAUTILUS PMA-Sclinical approval in mid-2026.trial.

Since our inception, we have generated significant losses. We have financed our operations primarily through sales of our products, issuance of equity securities, and debt financing. As of MarchJune 31,30, 2026, we had an accumulated deficit of $559.1$565.3 million, cash, cash equivalents and short-term investments of $54.0$51.7 million, and $59.0 million of outstanding debt under a term loan, net of debt discount and issuance costs.

Based on our current planned operations, we believe our existing cash, cash equivalents and short-term investments will allow us to continue our operations for at least the next 12 months. See “Liquidity and Capital Resources - —Future Funding Requirements” for additional information.

As previously announced, our exclusive distribution agreement with DIXI Medical USA Corp., or DIXI Medical, expired on September 30, 2025. Under the agreement, entered into in August 2022, we served as the exclusive U.S. distributor of DIXI Medical’s stereo electroencephalography, or Stereo EEG, product line beginning in October 2022. These products are used in the epilepsy monitoring units, or EMUs, of comprehensive epilepsy centers to determine where epileptic seizures originate. The Distribution Agreement hadexpired anon initialSeptember term30, of three years. In March 2025, we notified DIXI Medical of our intent to not renew the Distribution Agreement.2025. Although the Distribution Agreementit provided for a six-month wind downwind-down period following the expiration, the parties amended the terms to end the wind downwind-down on December 31, 2025. We sold DIXI Medical products through December 31, 2025, have substantially completed the return of remaining inventory, and helddid $0.4not millionhold any DIXI Medical product inventory as of March 31, 2026. We expect to complete the return of all remaining DIXI inventory to DIXI Medical and cease all commercial partnership activities related to our Distribution Agreement with DIXI Medical by June 30, 2026. We determined that the abandonment of our DIXI Medical product operations represented a strategic shift that is expected to have a major effect on our operations and financial results. As a result, the operating results, assets and liabilities of the DIXI Medical product operations are presented as discontinued operations for all periods presented in this Quarterly Report on Form 10‑Q. See Note 1211 to our unaudited interim condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.

We continue to perform under our collaboration agreement with Rapport Therapeutics, Inc., or Rapport, including the extension executed in June 2025, to provide data, biomarker monitoring, and analysis services in support of Rapport’s clinical trial. The arrangement is expected to continue through the first half of 2028. There were no material changes to the agreement during the three and six months ended MarchJune 31,30, 2026.

We have made significant investments in, and will continue to invest in, recruiting, training and retaining our experienced and specialized direct sales team, which includes Therapy Consultants and Field Clinical Engineers. Significant education and training isare required for our team to achieve the level of technical competency with our products that is expected by clinicians and to gain experience building demand for our RNS System. Upon completion of initial training, our personnel typically require time in the field to grow their network of accounts, build relationships with clinicians and increase their productivity to the levels we expect. We believe successfully training, developing and retaining our Therapy Consultants and Field Clinical Engineers will be required to achieve growth. In addition, the loss of any productive sales personnel would have a negative impact on our ability to grow our business.

We derive revenue from sales of our RNS System to hospital facilities both for initial RNS System implant procedures and for replacement procedures when our implanted devices reach end of service. We launched our current neurostimulator model in 2018. This device has an average battery life of nearly eleven years, an increase from the previous model of the device. We have experienced and may continue to experience changes in the percentage of our revenue from replacement procedures over the next few years as a result of the extended replacement cycle of the newer device, which may cause variability in our gross margin. With the terminationexpiration of the Distribution Agreement and cessation of DIXI Medical product sales on December 31, 2025, there is no further revenue from DIXI Medical product sales, reducing future variability in our gross margin.

WeIn addition, from the fourth quarter of 2022 through the fourth quarter of 2025, we derived revenue from sales of DIXI Medical products, primarily to our current customer base. The Distribution Agreement expired on September 30, 2025, and under an amendment to the agreement, we exercised our right to continue to sell DIXI Medical products in our inventory through December 31, 2025, after which DIXI Medical iswas contractually obligated to repurchase remaining DIXI Medical product inventory held by us that hashad at least six monthmonths of remaining shelf life at cost. As of June 30, 2026, we did not hold any DIXI Medical product inventory.

Cost of goods sold consists primarily of costs related to materials, components and subassemblies, personnel-related expenses for our manufacturing and quality assurance employees, including stock-based compensation, manufacturing overhead and charges for excess, obsolete and non-sellable inventories. Overhead costs include the cost of quality assurance, testing, material procurement, inventory control, operations supervision and management personnel, an allocation of facilities and information technology expenses, including rent and utilities, and equipment depreciation. Cost of goods sold also includes certain direct costs such as those incurred for shipping our RNS System. We record adjustments to our inventory valuation for estimated excess, obsolete and non-sellable inventories based on assumptions about future demand, past usage, changes to manufacturing processes and overall market conditions. Through December 31, 2025, cost of goods sold also included costs of procuring and shipping DIXI Medical products. These amounts have been reclassified to discontinued operations for all periods presented.

Our sales and marketing expenses consist primarily of personnel-related costs for our sales and marketing employees, including stock-based compensation and sales-based variable compensation, travel expenses, consulting, public relations costs, direct marketing, customer training, trade show and promotional expenses and allocated facility and information technology expenses. We expense sales variable compensation when revenue related to the underlying sale is recognized. We intend to continue to increase our sales and marketing spending to support increased adoption of our RNS System. We expect our sales and marketing expenses will increase in absolute dollars as we hire additional personnel and add programs in order to more fully penetrate the market opportunity. Through December 31, 2025, sales and marketing expenses also included costs of selling DIXI Medical products. These amounts have been reclassified to discontinued operations for all periods presented.

Comparison of the Three Months Ended MarchJune 31,30, 2026 and 2025

Revenue decreasedincreased by $0.5$3.3 million, or 2%,17%, to $22.1$22.8 million duringfor the three months ended MarchJune 31,30, 2026, compared to $22.5$19.5 million duringfor the three months ended MarchJune 31,30, 2025. The decreaseincrease in revenue was primarily due to the termination of the Distribution Agreement with DIXI Medical, offset by an increase in the number of RNS System units sold resulting from a higher number of initial implants and replacements.replacements, partially offset by a $0.6 million decrease in service revenue. All of our revenue, with the exception of $0.7 million and $0.1$0.4 million for each of the three months ended MarchJune 31,30, 2026 and 2025, respectively, was generated from sales in the United States.

Cost of goods sold decreasedincreased by $1.2$0.6 million, or 22%,19%, to $4.0$3.9 million duringfor the three months ended MarchJune 31,30, 2026, compared to $5.2$3.3 million duringfor the three months ended MarchJune 31,30, 2025. The decreaseincrease was primarily due to the termination of the Distribution Agreement with DIXI Medical, partially offset byan increase in the number of RNS System units sold. Our gross margin increaseddecreased from 77.0%83.1% for the three months ended MarchJune 31,30, 2025 to 81.8%82.8% for the three months ended MarchJune 31,30, 2026 primarily due to theslightly lowerhigher grossmaterial margincosts frompartially distributionoffset ofby DIXIfavorable Medical products.pricing.

Sales and marketing expenses increased by $0.6 million, or 5%,6%, to $11.6$12.1 million duringfor the three months ended MarchJune 31,30, 2026, compared to $11.0$11.5 million duringfor the three months ended MarchJune 31,30, 2025, primarily due to an increase of 0.4$0.6 million in personnel-related expenses resulting from an increase in sales and field support personnel headcount,costs, including sales commissions and $0.2 millionincrease in marketing expenses, including travel.headcount.

Research and development expenses decreasedincreased by $0.3$0.1 million, or 3%,1%, to $7.2$6.9 million duringfor the three months ended MarchJune 31,30, 2026, compared to $7.4$6.8 million duringfor the three months ended MarchJune 31,30, 2025, primarily due to a decrease of $0.5 million in clinical trial studies and other expenses, offset by an increase of $0.3 million in personnel-relatedproduct expense,development drivenexpenses, partially offset by an increase of $0.2 million in headcount.grant funds received primarily from the National Institutes of Health which are recognized as a reduction in research and development expenses.

General and administrative expenses increaseddecreased by $0.8$1.0 million, or 20%,17%, to $4.8$5.0 million duringfor the three months ended MarchJune 31,30, 2026, compared to $4.0$6.1 million duringfor the three months ended MarchJune 31,30, 2025, primarily due to a decrease of $1.6 million in one-time severance and transition costs, partially offset by an increase of $0.8$0.5 million in personnel-related expenses.expenses from headcount increase and bonus.

Interest expense decreased to $1.5 million for the three months ended MarchJune 31,30, 2026, compared to $2.2$2.1 million for the three months ended MarchJune 31,30, 2025, due to the lower annual effective interest rate pursuant to the MidCap Term Loan compared to the CRG Term Loan. Interest income decreased by $0.2 million for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025, primarily due to lower cash and cash equivalents balances.

Other income (expense), net decreased by $0.1$0.4 million to $0.2less than $0.1 million duringfor the three months ended MarchJune 31,30, 2026, compared to less than $0.1$0.5 million duringfor the three months ended MarchJune 31,30, 2025, primarily due to unrealizeda loss, netloss on short-termextinguishment investmentsof the CRG Term Loan of $0.5 million in the three months ended MarchJune 31,30, 2026.2025.

We have financed our operations primarily through sales of our products, issuance of equity securities and debt financing. As of MarchJune 31,30, 2026, we had cash, cash equivalents and short-term investments of $54.0$51.7 million and $59.0 million outstanding under the MidCap Term Loan, net of debt discount and issuance costs.

In June 2025, we entered into a credit, security and guaranty agreement, or Credit Agreement, by and among us, MidCap Funding IV Trust, as agent, MidCap Financial Trust, as term loan servicer and the financial institutions and other entities from time to time party thereto, and borrowed $60.0 million, or MidCap Term Loan. The Credit Agreement also provided for a revolving credit facility in an aggregate principal amount not to exceed $15.0 million, or the RevolverRevolver, and together with the MidCap Term Loan, the Loans. The Revolver has not been drawn upon as of MarchJune 31,30, 2026.

The Loans mature on June 4, 2030, and are due in one installment on June 4, 2030. The MidCap Term Loan bears interest at an annual rate of 30-day forward-looking term Secured Overnight Financing Rate, or SOFR, plus 5.5%, subject to a SOFR floor of 2.0%. Borrowing under the Revolver will accrue interest at an annual rate of 30-day forward-looking term SOFR plus 3.75%, subject to a SOFR floor of 2.0%. Following the initial borrowing of the Revolver, we will pay an unused line fee equal to 0.25% per annum of the average unused portion of the Revolver. Interest and unused line fee, if any, are payable monthly in arrears. The date by which the Revolver must be implemented was extended from June 4, 2026 to December 31, 2026. The extension had no impact on our financial statements.

The Loans are collateralized by substantially all of our assets. The Credit Agreement contains customary representations and warranties, covenants, events of default and termination provisions. See Notes 1 and 6 to our unaudited interim condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.

We have future minimum payments for the MidCap Term Loan totaling $85.6$83.9 million, with $5.7 million due within twelve months of MarchJune 31,30, 2026. In addition, we lease our office and manufacturing facilities in Mountain View, California under a non-cancelable operating lease which expires in June 2030. Future minimum lease payments under non-cancelable operating leases were $13.6$12.9 million as of MarchJune 31,30, 2026. See Note 5 to our unaudited interim condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.

Based on our current planned operations, we expect that our cash, cash equivalents and short-term investments will enable us to fund our operating expenses for at least twelve months from the issuance of our unaudited interim condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q. We have based these estimates on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect.

Net cash used in operating activities was $5.9$9.8 million for the threesix months ended MarchJune 31,30, 2026. Cash used in operating activities was primarily a result of the net loss of $6.7$12.9 million, adjusted for non-cash charges of $3.2$6.3 million and change in operating assets and liabilities of $2.4$3.2 million. The non-cash charges primarily consisted of $2.3$4.6 million of stock-based compensation, $0.5$0.9 million of amortization of right-of-use assets, and $0.2 million of unrealized loss on short-term investments. The change in operating assets and liabilities was primarily due to a decrease in accrued liabilities of $4.0$2.5 million largely due to accrued payroll and personnel expenses, and a decrease in operating lease liabilities of $0.5$1.0 million, partially offset by an increase in accounts payable of $2.2$2.0 million primarily due to the timing of payments to our vendors.

Net cash used in operating activities was $7.5$9.6 million for the threesix months ended MarchJune 31,30, 2025. Cash used in operating activities was primarily a result of the net loss of $6.6$15.2 million, adjusted for non-cash charges of $3.5$7.9 million and change in operating assets and liabilities of $4.4$2.3 million. The non-cash charges primarily consisted of $2.6$5.9 million of stock-based compensation, $0.4$0.8 million of amortization of right-of-use assets, $0.5 million of loss on extinguishment of the CRG Term Loan, and $0.2$0.4 million of non-cash interest expense related to our Termterm Loan.loans. The change in operating assets and liabilities was due to an increase in accounts receivable of $2.6$0.7 million primarily due to an increase in sales of our products including our RNS System and DIXI Medical products, an increase in inventories of $0.2$3.1 million largely due to an increase in work-in-processraw inventory, a decrease in accrued liabilities of $2.3 million largely due to accrued payrollmaterials and relatedfinished expenses,goods, and a decrease in operating lease liabilities of $0.5$0.9 million, offset in part by an increase in accounts payable of $1.0$1.7 million primarily due to the timing of payments to our vendors, and a decrease in in prepaid expenses and other assets of $0.2$0.7 million.

Net cash used in investing activities was $0.1$0.2 million for the threesix months ended MarchJune 31,30, 2026, and primarily consisted of purchases of property and equipment.

Net cash used in investing activities was less than less than $0.1$0.2 million for the threesix months ended MarchJune 31,30, 2025, and primarily consisted of purchases of property and equipment.

Cash Flows (Used in) Provided by Financing Activities

Net cash usedprovided inby financing activities was $0.2$1.0 million for the threesix months ended MarchJune 31,30, 2026, which primarily consisted of proceeds from the issuance of common stock under employee plans of $1.4 million, partially offset by taxes withheld and paid related to net share settlement of equity awards.awards of $0.2 million and annual debt fee of $0.2 million.

Net cash provided by financing activities was $21.1$19.2 million for the threesix months ended MarchJune 31,30, 2025, which primarily consisted of $70.3$69.7 million in proceeds, net of underwriting discounts and commissions, from our February 2025 follow-on offering of common stock, proceeds of $58.6 million from the MidCap Term Loan, net of discounts and issuance costs, proceeds from the issuance of common stock under employee plans of $0.4$1.2 million and $0.2 million of net cash proceeds from our at-the-market offering, partially offset by repayment of the CRG Term Loan of $60.5 million, a repurchase of our common stock of $49.5 million, and taxes withheld and paid related to net share settlement of equity awards of $0.2$0.4 million.

Our critical accounting policies and estimates are described in “Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations - —Critical Accounting Estimates” in our Annual Report on Form 10-K filed with the SEC on March 3, 2026. There were no material changes to these accounting policies during the three months ended MarchJune 31,30, 2026.

See “Recent Accounting Pronouncements” in Note 2 to our unaudited interim condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.