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

We have incurred annual net losses since our formation in 2010. For the years ended December 31, 20242025 and 2023,2024, we had net losses of $51.5$38.4 million and $55.5$51.5 million, respectively. As of December 31, 2024,2025, we had an accumulated deficit of $346.3$384.7 million. To date, we have financed our operations primarily through equity and debt financings and from product sales. Our net losses and accumulated deficit have primarily been due to the substantial investments we have made to develop our products, costs related to our sales and marketing efforts, general research and development expenses, including costs related to clinical trials and regulatory initiatives to obtain marketing clearance, and infrastructure improvements, and costs related to intellectual property development, protection and enforcement.enforcement, including our ongoing litigation intellectual property litigation against Alcon Inc., Alcon Vision, LLC and their affiliates (collectively “Alcon”). In addition, as a public company, we incur significant legal, accounting and other expenses that we did not incur as a private company.

We began selling VISCO360 and TRAB360, commercial predicate devices to OMNI, in 2015, TearCare in 2019 and SION in 2022, and therefore do not have a long history operating as a commercial company. Currently, we are highly dependent on the success of OMNI.OMNI and TearCare. We also derive revenue from sales of OMNI and SION, our other commercially available SurgicalInterventional Glaucoma product,products, and our TearCare system and related accessories, which comprise our commercial Interventional Dry Eye products, and we expect substantially all of our revenue in at least the next 12 months to be derived from the sale of these OMNI, SION and TearCare products. We believe that OMNI sales will continue to account for the large majority of our revenue over the next fewtwelve years.months. In the longer term, our growth strategy is dependent in large upon achievingexpanding adequate and sustainable reimbursement for TearCare to help drive Interventional Dry Eye revenue growth. Because we devote substantially all of our resources to developing, marketing and selling these products and rely on the sale of our products as our sole source of revenue, any factors that negatively impact our products, particularly OMNI,factors negatively affecting OMNI or resultTearCare inrevenue agrowth decreaseor inappropriately sales,reimbursed access to our TearCare procedure, could have a material adverse effect on our business, financial condition and results of operations.

In JuneNovember 2023, for instance, five of the seven Medicare Administrative Contractors (“MACs”) published proposed local coverage determinations (the “Prior LCDs”) that identified certain non-implantable MIGS procedures as investigational and not reasonable and necessary in the jurisdictions where these MACs administer Medicare Part B benefits, including adult canaloplasty in combination with trabeculotomy (ab interno), a procedure performed with OMNI and for which it is indicated. The Prior LCDs may also have categorized our SION technology as investigational and thus non-covered with respect to goniotomy procedures. The Prior LCDs were withdrawn in late December 2023 prior to becoming effective, and replaced with updated LCDs (the “Final LCDs”) that became effective in November 2024. The Final LCDs allow for continued coverage of canaloplasty and goniotomy procedures performed with our OMNI and SION technologies in these five MAC jurisdictions. However, each of the Final LCDs adopted a non-coverage policy when an aqueous shunt or stent procedure is performed with another surgical MIGS procedure, such as canaloplasty or goniotomy, at the same time in the same patient eye. WeThis estimatenon-coverage thatpolicy approximatelyhas 15% of total MIGS codes billedresulted in thea nine months ended September 30, 2024 were donereduction in combination with another MIGS code and expect the non-coverage determination for multiple MIGS procedures will reduce overall MIGS claims volumes, which mayhas adversely impactimpacted our business, revenue and prospects. If the remaining two MACs also publish LCDs with the same coverage restriction, we expect an even further decline in MIGS claims volumes. Moreover, it is possible that one or more MACspayors will publish new or updated LCDspolicies or other determinations in the future that could (i) characterize procedures associated with our products as non-covered, or as covered under more limited parameters.parameters; or (ii) establish lower reimbursement for procedures performed with our products. The publication and effectiveness of any such future determinations would adversely affect our business and results of operations.

Over the next several years, we expect to continue to devote substantial resources to expand our commercialization efforts, drive increased adoption of our products and continue to develop new and improved products. Our limited commercialization experience and number of products make it difficult to evaluate our current business and predict our future prospects. For example, we believe OMNI procedures can be highly effective in reducing IOP in adult POAG patients when performed ason a standalone basis without concomitant cataract surgery (“Standalone Procedure.Procedure”). However, we have limited commercial experience with the Standalonestandalone Marketprocedure Segment,market segment, and the extent to which we are able to penetrate and grow this market is unknown. If we and other market participants are unable to effectively drive the use of MIGS devices in Standalone Procedures, then our total addressable market will be significantly reduced, which will adversely affect our sales and growth strategy. In addition, a number of factors, including some outside of our control, may render our products less competitive, economically impracticable or obsolete and contribute to fluctuations in our financial results, including:

Changes in reimbursement rates or coverage restrictions instituted by government or commercial payors, such as the coverage limitations on multiple MIGS procedures done at the same time as a cataract surgery included in the Final LCDsLCDs, or coverage limitations on our TearCare procedure;

Lack of adequate, equitable third-party payor coverage or reimbursement, or changes in (or new) third-party payor coverage or reimbursement policies or determinations that adversely affect coverage for Interventional Glaucoma and Interventional Dry Eye procedures involving OMNI;

Availability of lower-priced competitive products, especially competitive products with equivalent or superior reimbursement;

Lack of experience with our products and concerns that we are relatively new to market;

Competitive activities, including new product introductions, pricingpricing, coding and coverage tactics, and negative selling efforts from providers of equivalent or alternative treatments;

Challenges of integrating TearCare into established ophthalmologic and optometric practices in light of ECP practice patterns and preferences, lack of awareness of our TearCare system and its capabilities, and lack of appropriate, equitable reimbursement for procedures involving our TearCare system; and Perceptions regarding the time commitment and skill development that may be required to gain familiarity and proficiency with our OMNIInterventional Glaucoma and TearCareInterventional Dry Eye products.

In addition, some physicians may choose to utilize our products on only a subset of their total patient population or may not adopt our products at all. Further, if procedures in which our products are used do not receive and maintain favorable third-party reimbursement coverage, particularly as compared to procedures in which competitive products are used, adoption of our products by ECPs and patients willmay suffer.be slower or more limited than expected. Similarly, if competitive products are priced significantly lower than our products or are considered to offer greater ease of use than our products, then ECPs may elect to use these competitive products, even if we believe that other considerations such as clinical efficacy favor our products. Also, if ECPs prioritize alternative ophthalmic procedures to the procedures in which our products are currently used, whether for clinical, reimbursement or other reasons, then there will be less available surgical capacity to perform procedures using our products. We cannot assure you that our products will achieve broad market acceptance among payors, physicians and patients. Any failure of our products to satisfy demand or to achieve meaningful market acceptance and penetration will harm our future prospects and have a material adverse effect on our business, financial condition and results of operations.

We may not be able to secure or maintain adequate levels of third-party coverage and reimbursement for procedures in which our SurgicalInterventional Glaucoma or Interventional Dry Eye products are used, and third parties may rescind or modify their coverage or delay payments related to these products, which would adversely affect our business, financial condition, and results of operations.

We derive revenue from sales of OMNI and SION to physicians, ASCs, and HOPDs, which typically bill all or a portion of the costs and fees associated with our products to various third-party payors, including Medicare, Medicaid, foreign governmental payors, private commercial insurance companies, health maintenance organizations and other healthcare-related organizations, and then bill patients for any applicable deductibles or co-payments. Historically, we have sold our TearCare system components to customers on a limited cash-pay basis to drive customer awareness and acceptance in advance of reimbursement. We are pursuing broad reimbursement coverage for TearCare so that ECPs can bill all or a portion of the costs and fees associated with this product to variousa larger swath of third-party payors, including Medicare, Medicaid, private commercial insurance companies, health maintenance organizations, and other healthcare-related organizations, and then bill patients for any applicable deductibles or co-payments. Only recently have payors started establishing more appropriate payment values for CPT code 0563T, the code associated with TearCare procedures. ECPs have begun to havereceive individual claims-madeclaim-by-claim reimbursements for theseTearCare services. As a result, access to adequate coverage and reimbursement for procedures in which our SurgicalInterventional Glaucoma and Interventional Dry Eye products are used by third-party payors is essential to their broad acceptance and adoption by patients and ECPs.

Internationally, medical reimbursement systems vary significantly from country to country, with some countries limiting medical centers’ spending through fixed budgets, regardless of levels of patient treatment, and other countries requiring application for, and approval of, government or third-party reimbursement. For example, in the third quarter of 2024, certain reimbursement advice published by the United Kingdom’s National Health Service has(NHS) had rendered untenable the code that had previously been relied upon as applicable to procedures performed with our OMNI technology. This shift has resulted in reduced reimbursement for OMNI procedures as compared to historic reimbursement levels, which in turn couldhas materially affectaffected our business, results of operations and prospects in the United Kingdom. Though we are working to establish appropriate reimbursement by NHS for the OMNI procedure, there is no guarantee that we will be successful in addressing this or other reimbursement challenges that we may encounter in the United Kingdom or other international markets in which we market and sell our products.

These third-party payors continually review new and existing technologies for possible coverage and can deny or reverse coverage for new or existing products and procedures, and there can be no assurance that third-party payor policies provide coverage, or will continue to provide coverage, for procedures in which OMNI or our other products are used. For example, in the U.S., CMS,the Centers for Medicare & Medicaid Services (“CMS”), MACs or commercial payors could require or issue coverage policies that could restrict or eliminate coverage for the patient populations eligible for treatment with our productsproducts, or that are otherwise unfavorable to our business. In June 2023, for instance, five MACs published the Prior LCDs, which proposed to identifyidentified certain non-implantable MIGS procedures as investigational and not reasonable and necessary in the jurisdictions where these MACS administer Medicare Part B benefits, including but not limited to adult canaloplasty in combination with trabeculotomy ab interno, a procedure performed with OMNI and for which it is indicated. The Prior LCDs may also have categorized our SION technology as investigational and thus non-covered with respect to goniotomy procedures. Although the Prior LCDs were withdrawn in late December 2023 and replaced with the now-effective Final LCDs which allow for continued coverage of standalone canaloplasty and goniotomy procedures performed with our OMNI and SION technologies in these five MAC jurisdictions, in the future, governmental or private payors may issue coverage policies or guidance that may establish non-coverage, materially restrict coverage, or reduce reimbursement levels for one or more procedures involving our products. Any such policies, determinations or guidance could in turn influence coverage determinations by other third-party payors.

In addition, each of the Final LCDs adopted aLCDs’ non-coverage policypolicies when an aqueous shunt or stent procedure is performed with another surgical MIGS procedure, such as canaloplasty or goniotomy,procedure at the same time in the same patient eye.eye Wehas estimatealso thatadversely approximatelyaffected 15%the ofmarket totalfor MIGS codesdevices, billedincluding inour products. . If the nineremaining monthstwo endedMACs Septemberalso 30,publish 2024 were done in combinationLCDs with anotherthe MIGSsame codecoverage andrestriction, we expect thean non-coverageeven determinationfurther fordecline multiple MIGS procedures will reduce overallin MIGS claims volumes,volumes. whichAdverse maycoding, adverselycoverage impactor payment determination such as these are not within our business, revenue and prospects.control. If we are not successful in reversing any proposed non-coverage policies, or if third-party payors that currently cover or reimburse procedures in which our products are used reverse or limit their coverage in the future, or if other third-party payors issue similar policies,policies negatively impacting reimbursement for our products, it wouldcould have a material adverse effect on our business, financial condition, and results of operations. Moreover, any uncertainty with respect to coverage or coding may impact management’s ability to accurately forecast results.

We also derive revenue from sales of TearCare to ECPs and eye care clinics, which bill all or a portion of the costs and fees associated with treatments and products to patients or, on a limited basis, to third-party payors. We believe that access to adequate coverage and reimbursement for procedures in which TearCare is used by third-party payors is important to the broad acceptance and adoption of TearCare. Currently, notwo MACsMACs, FCSO and Novitas, have formalestablished policiesfee establishing coverageschedules for code 0563T that more closely reflect the cost and value of the TearCare procedure;procedure. however,There is no guarantee that other MACs will establish similar fee schedule amounts, or that FCSO and Novitas will maintain their fee schedules for CPT code 0563T at their current levels. Further, MACs from time to time may include, and we are currently aware of threetwo MACs that have included,included low payment rates for TearCare procedures in their fee schedulesschedules. that,If ifthese low payment rates are not removed or increased to what we believe is an appropriate reimbursement level, they could adversely impact our efforts to achieve reimbursement for TearCare that is sufficient to support its broad commercial growth and adoption. Further,While commercialwe payorswill may from timecontinue to time make “no coverage” or similar determinationsengage with respectthose toMACs ourthat currently maintain low fee schedules for the TearCare product that could hamper our efforts to drive broad commercial adoption of TearCare. These determinations could be made with reference to a variety of factors, including our legacy TearCare component pricing practices, perceived clinical efficacy compared to other treatment alternatives and similar considerations. We are pursuing a comprehensive long-term market development and patient access plan for TearCare and focusing our efforts on partnering with key strategic accounts to pursue prior authorization approvals and reimbursement claims for procedures in which TearCare is used, butprocedure, there is no guarantee that wethese MACs will remove these low payment values and replace them with payment values that are sufficient to support widespread customer adoption. It may not be successful.commercially Thisfeasible strategyfor us to market and sell TearCare in those jurisdictions where reimbursement is dependent,not amongsufficient otherfor things,TearCare onadoption, ECPs’ willingness to submit, and successwhich in submitting, TearCare procedure claims with invoicing that supports appropriate reimbursement, as well as their success in appealing these claims with payors as needed. If patients are not willing to pay for procedures in which TearCare is used, or if third-party payors continue to decline to provide coverage and reimbursement, or provide insufficient levels of coverage and reimbursement, itturn would have a negative impact on ECPs’ adoption of TearCare and sales of TearCare, which could adversely affect our business and results of operations.

Third-party payors, whether foreign or domestic, or governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs. In addition, no uniform policy of coverage and reimbursement for procedures using our products exists among third-party payors. Therefore, coverage and reimbursement for procedures using our products can differ significantly from payor to payor. Obtaining and maintaining coverage and reimbursement can be a time-consuming process that could require us to provide supporting scientific, clinical and cost-effectiveness data for the use of our products. We may not be able to provide data sufficient to satisfy governmental and third-party payors that procedures using our products should be covered and reimbursed. The majority of potential TearCare patients are insured by commercial payors, If the Company is unsuccessful in establishing formal coverage policies with adequate reimbursement for the TearCare procedure, reimbursed market access for TearCare will be materially limited. With regard to our international sales efforts, even if and as we succeed in bringing our products to market in foreign countries, uncertainties regarding future healthcare policy, legislation and regulation, as well as private market practices, could affect our ability to sell our products in commercially acceptable quantities at acceptable prices.

In the United States, the American Medical Association (“AMA”) generally assigns specific billing codes for procedures under a coding system known as Current ProcedureProcedural Terminology (“CPT”), which surgeons use to bill third-party payors and receive reimbursement. Once a permanent CPT code ("Category I CPT code") is established for a service, CMS establishes national payment levels under Medicare, while other payors may establish rates and coverage rules independently. Canaloplasty followed by trabeculotomy procedures using OMNI are typically billed using the Category I CPT code 66174, which describes canaloplasty. ECPs may also bill for procedures in which our OMNI product is used under Category I CPT Code 65820, which describes goniotomy procedures. Coding for ophthalmic surgical procedures is complex, and changes to the codes used to report services performed with our products may result in significant changes in reimbursement, which could negatively impact our revenue. For example, in 2021 the RVS Update Committee ("RUC") of the AMA has regularly reevaluated the physician work associated with CPT code 66174. As a result of thisthese RUC reviewreviews and further conversion factor reductions, CMS has reduced the Medicare Physician Fee Schedule amount associated with this service multiple times from approximately $950 in 2021,2021 to $761$545 in 2022,2026. These reductions in physician reimbursement have made the use of CPT code 66174 less attractive to $622ECPS, which in 2023,turn tohas $608adversely inaffected 2024,our business and toresults $600of in 2025.operation. Many of the factors considered by the RUC, and many of the factors evaluated by payors and other payor advisory bodies, in assessing the costs of, and payments with respect to, procedures associated with our products are not within our control. For instance, with respect to determination of hospital, ASC and physician payment associated with CPT code 66174, evaluation of procedure costs may include the costs of competitive products that are priced well below our products and may also reflect reduced physician work with respect to procedures that are less comprehensive than the procedures performed with OMNI. This, in turn, may adversely affect our ability to obtain and maintain adequate and appropriate levels of reimbursement for the comprehensive procedure enabled by our OMNI technology, which could adversely affect our financial condition and results of operations. Further, if and to the extent that CPT code 65820 or another code describing a goniotomy procedure is established, modified, or revalued by the RUC so as to reduce the payment amount associated with goniotomy procedures, our business and results of operation may be adversely affected.

The AMA maintains a subset of temporary CPT codes ("Category III CPT codes") used for new and emerging technologies. For example, TearCare was assigned a Category III CPT code effective beginning January 1, 2020. Coverage for Category III CPT codes is often limited. Medicare does not generally establish national payment rates for Category III CPT codes on the Medicare Physician Fee Schedule ("MPFS"). As a result, individual Medicare contractors and private payors may establish their own payment rates for services described by Category III CPT codes, as has been the case with TearCare,TearCare. whichThese payment rates are subject to change, may be variable across Medicare contractors, or may be materially below the final reimbursement rates that we are currently targeting,targeting orfor code 0563T. Payors may also determine not to reimburse any services described by Category III CPT codes.codes Inin 2024,the various commercial insurance carriers paid small numberabsence of TearCarea claimsformal, onpositive coverage policy for a case-by-casespecific basis, but these reimbursement amounts varied materially and no formal coverage policies were established.service.

Further, we believe that future coverage and reimbursement may be subject to increased restrictions, such as additional prior authorization requirements, both in the United States and in international markets. Third-party coverage and reimbursement for procedures using our products or any of our products in development for which we may receive regulatory clearance, certification or approval may not be available or adequate in either the United States or international markets. Further, other devices or treatments that compete with our products may be more widely coveredcovered, paid at more favorable rates, or subject to different co-pay policies and requirements, which could impact demand for our products. If hospital, surgical center, ECP and/or patient demand for our products is adversely affected by third-party reimbursement policies and decisions, it could have a material adverse effect on our business, financial condition and results of operations.

The market for our products is highly competitive and could grow increasingly competitive as new glaucoma and dry eye technologies are introduced in our industry. Our competitors may have longer operating histories, more established products and distribution networks, lower product prices or greater resources than we do, and may be able to develop or market treatmentsproducts that are safer, more effective or gain greater acceptance in the marketplace than our products.

The medical device industry is highly competitive, subject to rapid change and significantly affected by the introduction of new products and technologies and the other activities of industry participants. We compete, or plan to compete, with medical device and pharmaceutical companies that develop and commercialize products for eye conditions, including Glaukos, AbbVie, Novartis, Alcon, Johnson & Johnson, Iantrek, Nova Eye Medical, and New World Medical. These companies, or other entrants into the market, may have or develop competing technologies, other products that are in or that enter clinical trials, new devices or additional indications for existing devices that could demonstrate better safety, effectiveness, clinical results, ease of use, lower costs or greater ECP and market acceptance than our products. For example, there hashave been aintermittent recent increaseincreases in ECP trialing of new, alternative productsproducts, thatsome of which are offered at lower prices than OMNI,OMNI. This trialing has led in certain instances to adoption of these alternatives products which we believe has hadadversely a near-term adverse impact onimpacted utilization of OMNI.OMNI and OMNI revenue growth.

Though in the past we have viewed such ECP trialing and use of alternative devices as temporary and not material to the continued growth of OMNI sales, weWe cannot guarantee that OMNI utilization will normalize relativereturn to historicalhigh periods or growgrowth in the future pursuant to our strategic initiatives. Sustained increases in ECP use of alternative MIGS devices could result in reduced OMNI sales and revenue growth or even loss of market share, which would adversely impact our competitive position, business and results of operations.

In addition, despite what we believe to be the strong safety profile of our products for their intended uses, patients may experience adverse events following canaloplasty or trabeculotomy with OMNI, including hyphema, mild anterior chamber inflammation and spikes in intraocular pressure. Similarly, patients may experience adverse events following use of the SION surgical instrument, including anterior chamber shallowing and prolonged,prolonged or persistent intraocular inflammation, or application of localized heat with TearCare, including discomfort, pain or erythema of the eyelids. Any failure to meet customer and patient expectations and any resulting negative perceptions or publicity could harm our reputation and future sales and therefore adversely affect our business, financial condition and results of operations.

Established treatment patterns pursuant to which prescription medications, selective laser trabeculoplasty, traditional glaucoma surgery or more conventional MIGS procedures are generally first-line therapies for the treatment of glaucoma and eye drops or warm-compresses are first-line therapies for the treatment of MGD;

Established relationships with ECPs who are familiar with their products and procedures for the treatment of glaucoma or MGDMGD-associated DED;

Established relationships with key stakeholders, industry associations, including hospital outpatient departments, ambulatory surgery centers, optometrists and ophthalmologists, general practitioners and administrators;

One of the major hurdles to adoption of our Interventional Glaucoma products will be overcoming established treatment patterns, which will require educating ECPs and supportive clinical data. For instance, we believe strongly in the efficacy of OMNI in Standalone Procedures, but concerted ongoing ECP education on the benefits of this approach is needed to alter surgeon perceptions and to convince them of the benefits of performing a MIGS procedure other than in conjunction with cataract surgery. Because of the size of the market opportunity for devices used in procedures to address MIGS and MGD, especially with the recent establishment of the FCSO and Novitas fee schedules with respect to CPT code 0563T, we believe current and potential future competitors willmay dedicate significant resources to aggressively promote their products or develop new products or treatments,treatments. Our Interventional Glaucoma products compete with products such as Glaukos’ iStent® technologies, iPRIME™ Viscodelivery System,technologies and iDose® TR intraocular implant; Alcon’s Hydrus® MicroStent; Iantrek’s C-Rex and Alloflo, various canaloplasty devices including Nova Eye’s iTrack™ Advance and New World’s Streamline® and Via360™ surgical systems. TearCare competes with numerous DED product offerings, including J&J’s Lipiflow® Thermal Pulsation System and numerous other treatment alternatives.

WhereasIn we have historically competed in the MIGS marketplace against stent technologies, such as the iStent family of products and the Hydrus® MicroStent, we are facing increasing competition from other microcatheter systems marketed for canaloplasty and goniotomy, and we expect this competition to increase in the future. Further,addition, new treatment options may be developed that could compete more effectively with our products due to the prevalence of glaucoma and MGD,MGD-associated DED, and the research and technological progress that exist within the market. Also, even if competitor products do not have indications for use or clinical data that are comparable to ours, ECPs can still choose these competitor products for a variety of reasons, including those discussed above. For instance, competitors may price their products significantly below ours,ours or bundle their products in a manner that is attractive to ECPs, which may result in decreased use or adoption of our products by ECPs, notwithstanding that our products may offer superior safety and efficacy.

The success of our products depends in part on the skill of the ECPs utilizing and administering products to treat patients and on their adherence to our stated patient selection criteria and the proper techniques that we provide in training sessions. We train ECPs on the correct use of OMNIour andInterventional SION.Glaucoma products. However, ECPs rely on their previous medical training and experience when performing ophthalmic surgical procedures and may deviate from the techniques we provide in training sessions. Furthermore, we cannot guarantee that all such ECPs who use OMNIour andInterventional SIONGlaucoma products will have the necessary skills or experience to safely and effectively perform these procedures. We have experienced recent declines in the number of ECPs undergoing training on the use of OMNI, which means that fewer physicians than we had anticipated are being trained regarding appropriate patient selection and OMNI surgical techniques. If we are not able to stabilize and return our physician training rates to a robust growth trajectory, our business could suffer. Similarly, though we train ECPs to ensure correct use of TearCare,our Interventional Dry Eye products, including placement of TearCare SmartLids on patients’ eyelids and the expression of the patients' meibomian glands, we cannot guarantee that all such ECPs will have the necessary skills or experience to safely and effectively use these devices. If ECPs utilize our products in a manner that is inconsistent with our labeled indications or with components that are not part of our products, the patient outcomes may be negative. This could negatively impact the perception of patient benefits and safety associated with our products and limit their adoption, which would have a material adverse effect on our business, financial condition and results of operations.

Development of our products for expanded indications depends upon positive clinical data, and applicable regulatory authorities may determine that the safety and efficacy of our products for the intended uses for which we intend to seek clearance, certification or approval are not yet supported by long-term clinical data, which could delay or prevent clearance by the FDA (or other foreign authorities or notified bodies) or limit sales, and our products might prove to be less safe or effective than initially thought.

We are conducting and intend to continue conducting additional clinical trials or investigations to develop our pre-commercial and commercial devices for expandednew indications, including clinical trials to increase clinical evidence for OMNI and develop TearCare foror expanded indications.indications.. Historical clinical results, including interim results, are not necessarily predictive of future clinical results, and we cannot assure you that the results reported in these studies will be consistent with, or better than, currently available clinical data. In addition, our competitors and other third parties may conduct clinical trials of our products without our participation. If future patient studies or clinical testing do not support our belief that our products are advantageous for their intended uses, market acceptance of our products could fail to increase or could decrease and our business could be harmed.

Our products will be adopted and compete, in part, based on long-term data regarding patient outcomes and the risk of our products relative to other treatment options. The long-term clinical outcomes of the use of our products for their FDA-cleared uses are not known and, due to the novelty of our products, there is no long-term data regarding patient outcomes beyond our clinical trials or investigations. The results of short-term clinical experience of our products do not necessarily predict long-term clinical outcomes. We believe ECPs and third-party payers will compare the rates of long-term clinical outcomes for procedures using our products for their authorized uses against alternative procedures and treatment options. We also believe that ECPs and payers will give added weight to outcomes data derived from randomized controlled trials, which are considered to be the “gold standard” for proving efficacy of a treatment or intervention; while our TearCare SAHARA trial is an RCT, we have not completed an RCT for our OMNI technology, which may prove tocan be a reimbursement and competitive disadvantage as compared to competitive products with positive RCT data. If the nature and quality of the long-term data does not meet ECPs’ expectations, or if the long-term data indicates that our products are not as safe or effective as other treatment options or as current short-term data would suggest, physicians may recommend alternative treatments for their patients and our products may not become widely adopted, which will negatively affect our business, financial condition and results of operations. Further, if we choose to, or are required to, conduct additional studies, equivocal or unfavorable results from such studies or experience could lead to a reduction in the rate of coverage and reimbursement by both public and private third-party payors for procedures that are performed with our products, slow market adoption of our products by ECPs, significantly reduce our ability to achieve expected revenue and prevent us from being profitable.

We rely on third parties to manufacture and supply all of our products.products, and a substantial portion of our products and components are manufactured in China. A number of theseour suppliers are also single-source providers, and certain key suppliers are located outside of the U.S.providers. We are subject to numerous risks relating to our reliance on such thirdthird-party parties.suppliers, including the impact of tariffs on products imported from China.

Our business strategy depends on our ability to manufacture our current and future products in sufficient quantities, on terms that are acceptable to us, and on a timely basis to meet customer demand, while adhering to product quality standards, complying with regulatory quality system requirements, and managing manufacturing and import costs. We do not havehave, and do not currently intend to develop, any internal manufacturing capabilities or infrastructureinfrastructure, and we rely on a limited number of third-party manufacturers, many of which are single-source suppliers, and certain of which are located outside the U.S., for the components, accessories, materials and assembly that we utilize in our products. TheseSpecifically, itemsmost of our OMNI and SION products, as well as our TearCare SmartLids, are critical,currently and,produced forand certainassembled items,by therea aresingle relativelyTaiwan-based fewmanufacturer orin noChina. readilyThese availablecommercial alternativeproducts sourcescomprise substantially all of supply.our Thesecurrent single-sourcerevenue. Our suppliers may be unwilling or unable to supply theseproducts itemsor components to us reliably and at the levels we anticipate or that are required by theour market,customers, or we may be unable to purchase these items on terms that are acceptable to us, or at all. In an effort to diversify our manufacturing footprint and have product readily available from multiple manufacturing facilities, we are expanding our manufacturing to include additional facilities outside of China in 2026.

For our business strategy to be successful, ourOur suppliers must be able to provide us with products inand sufficient quantities,components in compliance with regulatory requirements, including the FDA’s QualityQMSR System Regulation (“QSR”) orand other applicable laws or regulations enforced by the FDA, state and foreign regulatory authorities,regulations, in accordance with agreed-upon specifications, at acceptable costs and on a timely basis,basis. and current and future tariffs or trade wars could materially and adversely impactIf our ability to do so. If wesuppliers are unable or unwilling to meet our demand requirements on a timely basis,requirements, we may not have enough of our products available for delivery to support ECPs that utilize our products as part of their treatment. For instance, if ourthe supply of OMNI,our SION,products and certain TearCare productscomponents from our manufacturer in China was interrupted or suspended for any significant period, or tariffs that materially affect our products or components were imposed at a significantly high enough level by the United States, we may be unable to meet customer demand for our OMNI, SION, and TearCarethese products during that time. Our ability to obtain products and components in sufficient quantities and on a timely basis from our suppliers may be limited for several reasons, including quality issues at their manufacturing facilities, damage to their manufacturing equipment or facilities, problems with their own suppliers, inability to obtain components required for our products, their financial difficulties, our relative importance as a customer to each supplier, or prohibitive cost increases associated with importing items from certain regions where our suppliers are located. Any shortfall in the supply of our products may result in lower adoption and usageutilization rates of our products andby ECPs, as well as harm to our reputation, either of which could have a material adverse effect on our business, financial condition and results of operations.

The process of identifying and qualifying alternativeadditional manufacturing facilities for any other reason could be time-consuming and expensive, may result in interruptions in our operationsoperations, andcause productdelays delivery,in andthe couldsupply of our products, or affect the quality or performance specifications of our products. We cannot assure you that we will be able to identify and engage alternativeadditional contract manufacturers on terms similar to our current arrangements,arrangements or withoutthat delay.are otherwise favorable to us. In addition, we cannot guarantee that the costs associated with obtaining products and components from an additional manufacturer, including any associated tariffs, will be lower than the costs associated with obtaining products from our current manufacturers, or that any reduction in the costs will be sufficient to offset the cost of adding new manufacturers. Furthermore, any change in our contract manufacturers could require that their manufacture and assembly of our products be moved to another of their production facilities, which would require us to complete another re-qualificationqualification process at the newmanufacturer’s facility, withand there is no guarantee that the new facility would pass our quality audit. The occurrence of any of these events could increase our operating costs or harm our ability to meet the demand for our products in a timely andmanner, cost-effectiveeither manner,of which could have a material adverse effect on our business, financial condition and results of operations.

We are also subject to numerous other risks relating to our reliance on third parties, including potential quality issues at our suppliers' manufacturing facilities with respect to our products or logistics operations, and our potential inability to renew or extend contracts and arrangements with such third parties or renew any such contracts or arrangements on terms that are favorable to us, and price fluctuations due to a lack of long-term supply agreements with certain of our suppliers. These risks are likely to be exacerbated by our limited experience with our current products and manufacturing processes. If demand for our products increases, we will have to invest additional resources to manage the manufacturing process. If we fail to secure increased production capacity efficiently, we may not be able to fillrespond to customer ordersdemand on a timely basis, our sales may not increase in line with our expectationsexpectations, and our operating margins could fluctuate or decline. In addition, the manufacture of future products may require modification of theour current production processes or unique production processes, the identification of new suppliers for specific components, sub-assemblies and materialsmaterials, or the development of new manufacturing processes or technologies. It may not be possible for our current third-party manufacturers to produce these products at a cost or in quantities sufficient to make these products commercially viable or to maintain current operating margins, all of which could have a material adverse effect on our business, financial condition and results of operations.

In the United States, we currently rely on our direct sales force and any failure to maintain and grow our sales force could harm our business. In Europe, we currently rely on a combination of direct sales personnel and independent distributors to sell our OMNI product, and we intend to grow our international sales through a combination of direct and distributor sales. In order to generate future growth, we plan to continue to expand and leverage our commercial infrastructure to increase our customer base and increase adoption by existing customers to drive our growth. Identifying and recruiting qualified sales and marketing professionals and training them on our products, on applicable federal and state laws and regulations and on our internal policies and procedures requires significant time, expense and attention. Our direct sales force may subject us to higher fixed costs than those of companies with competing products or treatments that rely more heavily on independent third parties, placing us at a competitive disadvantage. Our business may be harmed if our efforts to expand and train our sales force and distribution chain do not generate a corresponding increase in product sales and revenue, and our higher fixed costs may slow our ability to reduce costs in the face of a sudden decline in demand for our products. Any failure to hire, develop and retain effective sales personnel, to identify and train distributors and independent sales representatives in targeted international territories, to achieve desired productivity levels in a reasonable period of time or timely reduce fixed costs, could have a material adverse effect on our business, financial condition and results of operations.

We have sold our TearCare products on a limited basis since 2019, initially targeting the cash pay market.2019. We do not have experience selling TearCare on a national basis with a large sales force and concerted sales initiatives. Thus, the number of eligible ECPs trained on TearCare remains relatively modest. If we are unable to expand and enhance our training efforts to target and effectively train existing and new ECP customers on our TearCare products, adoption of TearCare will be adversely impacted. Further, we have limited experience with marketing TearCare. Our marketing and sales campaigns have been limited in scope and have continued to evolve as we better understand the needs and preferences and knowledge gaps of our existing and prospective TearCare customers, and as we expand our library of clinical evidence supporting the TearCare procedure’s safety and efficacy, but these efforts may not be successful in driving TearCare adoption.

Further, in parallel with publication of the positive results of our SAHARA RCT, we have commenced a comprehensive effort to establish sustainable and equitable third-party reimbursement of the TearCare procedure. If we are successful in obtaining favorable payment decisions, whether under or outside of formal coverage policies, we expect that demand for our TearCare products will escalate. Our ability to maintain this demand will depend in part on our ability to timely and effectively train new ECP customers. Further, we do not havelimited experience marketing and selling TearCare for use in procedures that are reimbursed by Medicare and other governmental payers. If we are unable to effectively train our personnel on, and to otherwise comply with, laws, regulations and guidelines applicable to federally reimbursed products, including regulations pertaining to kickbacks, false claims, interactions with ECPs and direct-to-consumer advertising, our business may suffer.

Our long-term growth depends on our ability to continue to capture market share, enhance our products, maintain appropriate product reimbursement, expand our indications and develop and commercialize additional products in a timely manner. If we fail to identify, acquire and develop other products,products as needed, we may be unable to grow our business.

The markets for our products are highly competitive, dynamic, and marked by rapid and substantial technological development and product innovation. New entrants or existing competitors could attempt to develop products that compete directly with ours. Demand for our products and future related products could be diminished by equivalent or superior products and technologies offered by competitors, by competitive products offered at lower prices, or by material changes in reimbursement affecting our products. Our continued growth will be driven in large part by growth of TearCare revenues in reimbursed jurisdictions, and capture of market share from our competitors through a combination of factors, including competitive positioning, increasing ECP acceptance and use of OMNI for Standalone Procedures, re-engagement of customer accounts that decrease or cease utilization of our products, engagement of new customer accounts, and robust ECP training on our products to drive product awareness and acceptance. If we are unable to execute on these initiatives, our ability to increase our market share may be compromised, which would adversely affect our business and results of operations. Also, if we are unable to innovate successfully or offer our products at prices that are deemed competitive by our customers, our products could become obsolete and our revenue would decline as our customers purchase our competitors’ products. Developing and improving products is expensive and time-consuming and could divert management’s attention away from our existing products. The success of any new product offering or product enhancements to our solutions will depend on several factors, including our ability to:

Healthcare costs have risen significantly over the past decade, which has resulted in or led to numerous cost reform initiatives by legislators, regulators and third-party payors. Cost reform has triggered a consolidation trend in the healthcare industry to aggregate purchasing power, which has and may create additional requests for pricing concessions in the future. Additionally, GPOs, IDNs and large single accounts may continue to use their market power to consolidate purchasing decisions for hospitals. We expect that market demand, government regulation, third-party coverage and reimbursement policies and societal pressures will continue to change the healthcare industry worldwide, resulting in further business consolidations and alliances among our customers, which may exert further downward pressure on the prices of our products. Any decline in the amount that payors reimburse our customers for procedures that use our SurgicalInterventional Glaucoma products or in the amount that customers are willing to pay or that payors reimburse for procedures that use TearCare in the future, could make it difficult for customers to continue using, or to adopt, our products and could create additional pricing pressure for us. If we are forced to lower the price we charge for our products or add more components to our products, our gross margins will decrease, which will adversely affect our ability to invest in and grow our business.

We may be unable to manage the anticipated growth of our business, including anticipated growth in our Interventional Dry Eye business.

In order to grow, we need to expand our commercial team and general and administrative infrastructure. In addition to the need to scale our organization, any future growth will impose significant added responsibilities on management, including the need to identify, recruit, train and integrate additional employees. Rapid expansion in personnel could mean that less experienced people market and sell our products, which could result in inefficiencies and unanticipated costs, reduced quality and disruptions to our operations. In addition, rapid and significant growth may strain our administrative and operational infrastructure. Our ability to manage our business and growth will require us to continue to improve our operational, financial and management controls, reporting systems and procedures. For example, we currentlyare relyin onthe a combinationprocess of direct sales personnel and independent distributors to sell our products in Europe, and we intend to grow our international sales through a combination of direct and distributor sales. In addition, we are seeking reimbursement from MACs and private payers for our procedure enabled by our TearCare technology, and if we are successful in obtaining such reimbursement, we will need to scalescaling our TearCare commercial infrastructure rapidly.in response to the establishment by FCSO and Novitas of jurisdiction-wide pricing for procedures billed under CPT code 0563T, the code that describes the procedure performed by TearCare. If we are unable to identify, hire and train enough personnel to educate and train customers in these jurisdictions on use and clinical benefits of TearCare, and to otherwise increase our commercial infrastructure capacity to support anticipated growth, we may not be able to fully realize the attendant revenue opportunities. If we are unable to manage our growth effectively, it may be difficult for us to execute our business strategy and our business could be harmed.

Our initial product development has focused on the treatment of two of the world’s most prevalent and underserved eye diseases, glaucoma and dry eye disease (“DED”). We have commercialized products in each of our two reportable operating segments, SurgicalInterventional Glaucoma and Interventional Dry Eye. Our SurgicalInterventional Glaucoma revenue consists of sales of theour OMNI® Surgical System family of products ("“OMNI"”), currently comprised of our Ergo Series OMNI Surgical System and OMNI Edge Surgical System, and the SION® Surgical Instrument ("“SION"”), while our Interventional Dry Eye revenue consists of sales of the TearCare® System ("“TearCare"”), and related components and accessories. Each product is primarily sold through a highly involved direct sales model that offers intensive education, training and customer service. We believe this model not only enables us to differentiate our products and company from competitors, but also expands our addressable market by educating ECPs, patients and other stakeholders on our products and evolving treatment paradigms. Outside of the U.S., we have established direct commercial operations in the United Kingdom and Germany. We also sell OMNI directly in the United Kingdom and Germany, and indirectly in several other countries in Europe through distributors.

We sell OMNI and SION to facilities where ophthalmic surgeons perform outpatient procedures, such as ambulatory surgery centers ("“ASCs"”) and hospital outpatient departments ("“HOPDs"”), which are typically reimbursed by Medicare (or similar foreign governmental reimbursement entity) or private payors for procedures using our products. We are focused on educating surgeons on the clinical benefits of earlier interventions with the comprehensive OMNI and TearCare procedures, driving TearCare revenue growth in the jurisdictions where appropriate payment values have been established for the TearCare procedure, re-engagementexpanding equitable reimbursed access to the TearCare procedure in other jurisdictions, engagement efforts with accounts highlighting reimbursement clarity,accounts, enhanced competitive counter selling, investments in targeted commercial resources,resources including growth of our TearCare commercial infrastructure, and development of the OMNI pseudophakic standalone market development, and an upcoming new product launch.market.

We do not have, and do not currently haveintend to develop, any internal manufacturing capabilitycapabilities or infrastructureinfrastructure, and rely on a limited number of third-party manufacturers, many of which are single source suppliers, for the components, accessories and materials that are utilized in the assembly of our production requirements.products. We believe the manufacturing capacity provided by our current suppliers will be adequate to meet our current and anticipated manufacturing needs across all of our product lines. However, as part of our long-term manufacturing strategy, we are actively expanding third party manufacturing capacity and options for our products, which we expect to be available to us starting in 2026 for certain products. We plan to continue to utilize third partythird-party contract manufacturers for our products and any related components.

Revenue in our SurgicalInterventional Glaucoma segment for the years endedyears-ended December 31, 20242025 and 20232024 was $75.9$75.7 million and $74.3$75.9 million, respectively, with gross margins for the same periods of 87.6%86.8% and 88.1%,87.6%, respectively. Revenue in our Interventional Dry Eye segment for the years endedyear-ended December 31, 20242025 and 20232024 was $4.0$1.6 million and $6.7$4.0 million, respectively, with gross margins for the same periods of 46.2%59.3% and 54.8%,46.2%, respectively. For the yearyears ended December 31, 2025 and 2024, we generated approximatelymore 95%than 90% of our revenue from customers in the U.S.

Our SurgicalInterventional Glaucoma revenue was relativelydown flatslightly for the yearsyear ended December 31, 2025 compared to the same period in 2024 and 2023 due to a number of factors, including reimbursement challengescoverage changes and increased competition from other minimally invasive glaucoma surgery (“MIGS”) devices. WeThese expectreimbursement tochanges continuewere to experience near-term revenue challenges arising out of theprimarily restrictions on the performance of multiple MIGS procedures in combination with cataract surgery for Medicare patients in the jurisdictions administered by the five MACSMACs that issued the local coverage determinations (“LCDs”) containing such restrictions. We believe that these restrictions, which restrictions became effective in the fourth quarter of 2024. We believe that these restrictions have2024, led to a decrease in the number of overall MIGS devices used in procedures that are being performed, including procedures utilizing our OMNI technology. In addition, our Surgical Glaucoma gross margins will be adversely impacted in 2025 by the tariffs imposed by the U.S. on China, as our primary supplier manufacturers OMNI and SION products as well as SmartLids out of its China-based manufacturing facility.

further demonstrate our products’ clinical effectiveness and safety to potential customers, patients, payors and regulators, including (i) establishing OMNI and SION as standards of care of interventionalInterventional glaucomaGlaucoma treatment among MIGS-trained surgeons, (ii) developing thea Standalonestandalone MarketInterventional SegmentGlaucoma market segment with a focus on pseudophakic patients whose IOP is not well-controlled on two or more medications and who are at risk of disease progression, and (iii) increasing customer advocacy and pursuing reimbursement including expanding coverage and/or equitable reimbursementpayment for TearCare;

developenhance and improve upon our existing internationalproduct markets and expand into new international marketstechnologies; and allow us to create transformational and interventional technology innovation with new products, devices or drugs, in glaucoma and ocular surface disease or in new eye disease areas.

As a result, we intend to continue to invest in product development, market access, sales and marketing, clinical studies, and education initiatives. Because of these and other factors, we expect to continue to incur net losses for at least the next several years, and we may seek additional debt and/or equity financing to fund our operations and planned growth.

We intend to add to the OMNI family and bringbrought OMNI Edge to the market in the first half of 2025. The addition of OMNI Edge iswas intendeddone to accommodate varying physician preferences and patient needs in today’s evolving MIGS marketplace. OMNI Edge is designed to increase the amount of viscoelastic delivered with our patented motion synchronized delivery system to ensure the consistency, reproducibility, and safety surgeons have come to trust in the OMNI procedure. With this product, we are further advancing procedural intervention and reinforcing our commitment to best serving both our surgeon customers and the patients they care for. The addition of OMNI Edge reflects our ongoing dedication to enhancing outcomes and supporting the evolving needs of the eye care community.

In JuneNovember 2023, for instance,2024, five of the seven MACs published draft local coverage determinations (the “Draft LCDs”), which identified certain procedures as investigational in patients over the age of 18 for glaucoma management, including canaloplasty in combination with trabeculotomy (ab interno), which is a procedure associated with OMNI. The Draft LCDs, as amended, were published in final form during the quarter ended December 31, 2023, with a future effective date of January 29, 2024, and subsequently withdrawn in late December 2023. Had the Draft LCDs, as amended, not been withdrawn, canaloplasty followed by trabeculotomy (ab interno) would have been rendered non-covered as of January 29, 2024 with respect to Medicare Part B beneficiaries in the states administered by these MACs. Further, each of the Final LCDs that became effective in November 2024 adopted a non-coverage policy when an aqueous shunt or stent procedure is performed with another surgical MIGS procedure, such as canaloplasty or goniotomy, at the same time in the same patient eye. We estimate that approximately 15% of total MIGS codes billed in the nine months ended September 30, 2024 were done in combination with another MIGS code and expectbelieve the non-coverage determination for multiple MIGS procedures willreduced and may continue to reduce overall MIGS procedure claims volumes, which may adversely impact our business, revenue and prospects. Any updated or new local coverage determinations or other coverage policies that may establish a policy of Medicare non-coverage, or materially restrict coverage, for one or more of our products would have materially and adversely impacted our business, financial condition, and results of operations.

Demand for our products will be highly dependent on our ability to develop their potential addressable markets and maximize the breadth of patients our products can serve. OMNI is indicated for canaloplasty followed by trabeculotomy to reduce elevated intraocular pressure (“IOP”) in adult patients with primary open-angle glaucoma (“POAG”) in the U.S. and with open-angle glaucoma (“OAG”) in the EU. We believe OMNI is the only device that is authorized by the FDA as an ab interno procedure to: reduce IOP in adult patients with POAG across the spectrum of disease severity; be used in mild-to-moderate Combination Cataract or Standalone Procedures; access 360 degrees of the diseased conventional outflow pathway through a single clear corneal incision; and facilitate two consecutive procedures, canaloplasty and trabeculotomy, to comprehensively treat all three known areas of resistance in the conventional outflow pathway in a single operating room visit. Our ability to establish OMNI as a standard of care for all POAG patients by continuing to grow its adoption and utilization in Combination Cataract Procedures and by pioneering the development of the market for interventional Standalone Procedures, with a focus on pseudophakic patients, will have a substantial impact on our future growth.

We aim to achieve operating and financial milestones with optimal capital efficiency, and focus on our market value relative to invested capital as a key measurement of our performance. ToUtilizing date,the we havecapital raised $402.4through million in net proceeds fromour equity and debt financings, including $252.2 million from our IPO. With a portion of these net proceedsfinancings (our December 31, 20242025 cash and equivalents was $120.4$92.0 million), we have developed and commercially launched twomultiple clinically differentiated products, funded multiple completed and ongoing clinical trials, and built our management team and company infrastructure to support the continued growth of our business. We believe this level of operational and commercial progress relative to our total capital investment to date compares favorably to medical technology peers and we seek to design products that can achieve attractive long-term gross margins.

However, duringDuring the year ended December 31, 2024 and in the first months of 2025, global and regional economies, as well as the markets we serve, have experienced significant volatility, including as a result of the impacts of macroeconomic conditions, such as tariffs, inflation, supply shortages, and geopolitical pressures. For example, in February and March 2025, the United States imposed additional tariffs on products from China. A significant portion of our OMNI and SION products, and certain of our TearCare system components, are produced and assembled in China by a single Taiwan-based manufacturer. TheseWhile we plan to diversify our third-party suppliers, these tariffs, as well as any future tariffs, by the United States or other countries could significantly increase the cost of our products and components, and willcould have a negative impact on our gross margins. However, the impact of any such tariffs will depend upon various factors, including the timing, amount, scope, and nature of the tariffs, as well as any mitigating actions we implement, including by diversifying our third-party suppliers.tariffs.

We currently derive the majority of our U.S. revenue from the sale of our OMNI and SION products to ASCs and HOPDs and from the salessale of our TearCare products to ECPs. To date, the revenue from our SurgicalInterventional Glaucoma segment has accounted for overthe 90%vast majority of our total revenue, substantially all of which was generated from sales within the U.S. Our SurgicalInterventional Glaucoma customers place orders based on their expected procedure volume and reorder as needed, typically on a biweekly, monthly or bimonthly basis.volume. Our TearCare customers typically purchase a TearCare System which consists of one or more TearCare SmartHubs® (“SmartHubs”), multiple single-use TearCare SmartLids® (“SmartLids”) and other accessories. After utilizing their initial inventory, customers can reorder SmartLids as needed. No single customer accounted for 10% or more of our revenue for the years ended December 31, 20242025 and 2023.2024.

The growth of our revenue is primarily drivendependent byupon the demand for elective surgery and in-office treatment utilizing our products in the United States and Europe, product reimbursement rates and coverage criteria, and competition. Such demand iscan oftenbe subject to seasonality patterns such as lower demand during summer months because of ECP vacations and lower demand in winter months because of fewer business or surgery days due to holidays and adverse weather conditions.

Our components and products are produced by third-party suppliers and manufacturers. Our cost of goods sold consists primarily of amounts paid for our products to third-party manufacturers, and our manufacturing overhead costs, which consist primarily of personnel expenses, including salaries, benefits and stock-based compensation, and reserves for excess, obsolete and non-sellable inventory. Cost of goods sold also includes depreciation expenses for production equipment which we provide to our third-party manufacturersmanufacturers, and certain direct costs, such as shipping and handling costs.costs and tariffs on imported products and components.

We calculate gross profit as revenue minus cost of goods sold. We calculate gross margin as gross profit divided by revenue. Our gross profit and gross margin hashave been, and we believe itthey will continue to be, affected by a variety of factors, including differences in segment gross profit and gross margins, changes in average selling prices, changes in product reimbursement rates, product sales mix, production and ordering volumes, manufacturingmanufacturing, tariff and freight costs, product yields, and headcount. In general, we expect our gross profit to increase over time as our revenue increases, and we expect our gross margins to increase over the long term to the extent our production and ordering volumes increase and as we spread the fixed portion of our overhead costs over a larger number of units produced. We intend to use our design, engineeringproduced and manufacturing know-how and capabilities to further advance and improve the efficiency of our suppliers’ manufacturing processes, which we believe will reduce costs and increase our gross margins. However, our gross margins could fluctuate from quarter to quarter due to a number of factors, including variations in product mix, changes in product reimbursement rates, transitions to new suppliers, introduction of new products by us or our competitors, adoption of new manufacturing processes and technologies, and responses to evolving macroeconomic, and geopolitical conditions, including the adoption of tariffs by the United States and China.sold.

Research and development ("R&D") expenses consist primarily of costs associated with engineering, product development, clinical studies to develop and support our products, including clinical trial design, clinical trial site initiation and study costs, internal and external costs associated with our regulatory compliance and quality assurance functions, medical affairs, cost of products used for clinical trials and other costs associated with products and technologies – either new or enhancements of existing platforms – that are in development. These expenses also include personnel expenses, including salaries, benefits and stock-based compensation,compensation related to R&D functions, supplies, consulting, prototyping, testing, materials, travel expenses, depreciation expenses for equipment and an allocation of information technology ("IT") and facility overhead expenses. Our R&D expenses as a percentage of revenue may vary over time depending on the level and timing of new product development efforts, as well as clinical development, clinical trial and other related activities. We expect our R&D expenses to increase for the next several years as we continue to invest in our active clinical trial programs, develop new products, and improve our existing products.

Interest expense consists primarily of interest incurred on our outstanding indebtedness and non-cash interest related to the accretion of debt discount and amortization of debt issuance costs associated with ourthe termTerm loan agreements.Loans.

The loss on debt extinguishment is associated with our termination and settlement of the indebtedness under our prior secured credit facility with MidCap TermFinancial Loan.Trust and certain of its affiliates (the “Prior Lender”) that was initiated and completed during the year ended December 31, 2024.

Other Income (Expense),Expense, Net

Other income (expense),expense, net primarily consists of income and expenses that do not originate from our primary business.

Cost of Goods Sold. Cost of goods sold during the year ended December 31, 2024,2025, decreased $0.3$0.9 million, or 2.5%,7.6%, compared to the prior year. Our SurgicalInterventional Glaucoma cost of goods sold increased $0.6 million compared to 2023.2024. The increase was primarily driven by tariffs, higher overhead costs per unit, and product sales mixmix. and higher per unit cost, partially offset by higher scrap charges in the prior year.Interventional Dry Eye cost of goods sold decreased $0.9$1.5 million compared to the prior year, primarily driven by higher overhead costs per unit and lower sales volumes.

Research and Development Expenses. R&D expenses were $18.0$14.6 million for the year ended December 31, 2024,2025, ana increasedecrease of $0.4$3.4 million, or 2.5%,18.8%, compared to the prior year. The increasedecrease was primarily attributable to a $1.0$2.7 million increasedecrease in personnel costs includingrelated payrollto our August 2025 reduction in force. Clinical studies and relatedgeneral benefitsR&D andexpenses professionalalso and outside services, which were partially offsetdecreased by a$1.6 decreasemillion during the current year. R&D expenses during the year ended December 31, 2025 included $1.0 million of $0.7restructuring millioncosts related to this reduction in clinical study expenses.force.

Selling, General, and Administrative Expenses. SG&A expenses were $100.8$89.2 million for the year ended December 31, 2024,2025, a decrease of $8.1$11.7 million, or 7.4%,11.6%, compared to the prior year. The decrease was primarily attributable to a $5.3 million decrease in personnel expenses, including payroll and related benefits, commissions, and incentive compensation. In addition, the Company saw a $1.7 million decrease in marketing expenses, a $1.6$5.4 million decrease in legal expenses, andas well as a $0.9$1.0 million decrease in facilitiessales expenses.training, Theseevents, decreasesand weredemos. partiallyIn offsetaddition, our personnel expenses decreased by a$4.7 $2.4million, primarily driven by our August 2025 reduction in force. SG&A expenses during the year ended December 31, 2025 included $1.8 million increaseof inrestructuring stock-based compensation expense, and a $0.6 million increase in accounting andcosts related expenses.to this reduction.

Investment Income. Investment income was $5.9$4.0 million for the year ended December 31, 2024,2025, a decrease of $1.4$1.9 million, or 18.8%,32.9%, from $7.3$5.9 million in the prior year period. The decline was primarily due to lower investment balances as well as lower yield on held-to-maturity investments during the current year.

Interest Expense. Interest expense was $4.7$5.1 million in the year ended December 31, 2024,2025, aan decreaseincrease of $0.7$0.5 million, or 13.8%,10.3%, compared to the prior year period due to lowera lendinghigher ratesoutstanding associatedprincipal withbalance under the Hercules Loan Agreement. See the section titled “Hercules Capital Loan Agreement” below, for additional information.

OtherLoss Expense,on Net.Debt OtherExtinguishment. expense,There netwere no extinguishments of debt in the current year. Loss on debt extinguishment was expense of less than $0.1$2.0 million for both the yearsyear ended December 31, 2024 and 2023.2024.

Net cash used in operating activities for the year ended December 31, 20242025 was $22.4$29.7 million, consisting primarily of a net loss of $51.5 million, partially offset by non-cash charges of $20.1$38.4 million and a net change in our operating assets and liabilities of $9.0$6.4 million, partially offset by non-cash charges of $15.1 million. The $9.0$6.4 million change in our net operating assets and liabilities included decreasesincreases of $3.5$1.4 million in accounts receivableinventory and $1.60.7 million in inventory,prepaid expenses and other current assets, as well as increasesdecreases of $5.2$3.6 million in accrued compensation and $0.3$1.4 million in accounts payable.payable and accrued and other current liabilities. These changes were partially offset by a $1.6$0.9 million decrease in otheraccounts noncurrent liabilities.receivable. The non-cash charges primarily consisted of $17.1$13.1 million related to stock-based compensation, $1.0 million of noncash loss on debt extinguishment, $0.8$0.9 of accretion of debt discount and debt issuance costs, $0.7$0.5 million of depreciation and amortization, and $0.6$0.5 million of noncash operating lease expense.

Net cash provided by financing activities for the year ended December 31, 2025 was $1.8 million, consisting primarily of proceeds from the exercise of stock options and proceeds from employee stock plan purchases. Net cash provided by financing activities for the year ended December 31, 2024 was $5.0 million, consisting primarily of proceeds from the Hercules Loan Agreement, partially offset by costs associated with refinancing the term loan agreement. Net cash provided by financing activities for the year ended December 31, 2023 was $1.1 million, which primarily related to proceeds from the exercise of common stock options and proceeds from employee stock purchase plan purchases.

We are not aware of any material changes to the risks and uncertainties described under the heading “"Risk Factors”" in our Annual Report, which information is incorporated herein by reference. The risks described in our Annual Report are not the only ones we face. Additional risks we currently do not know about or that we currently believe to be immaterial may also impair our business, financial condition, operating results, liquidity, and future prospects.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the related notes and other financial information included inunder Partthe I, Item 1,heading “Financial Statements,” withinin this Quarterly Report and our audited consolidated financial statements and related notes included inunder Partthe II, Item 8,heading “Financial Statements and Supplementary Data,” in our Annual Report. Certain statements included in this discussion and analysis constitute “forward-looking statements” that are subject to considerable risks and uncertainties. Please see the information under the heading “Special Note Regarding Forward-Looking Statements” in this Quarterly Report.

Sight Sciences’ mission is to develop transformative, interventional technologies that allow eyecare providers to procedurally elevate the standards of care – empowering people to keep seeing. We are passionate about improving patients’ lives by helping them preserve their sight. Our objective is to develop and market products for use in new treatment paradigms and to create an interventional mindset in eyecare whereby our products may be used in procedures which supplant conventional outdated approaches. Our business philosophy is grounded in the following principles comprehensively understanding disease physiology;:

Our initial product development has focused on the treatment of two of the world’s most prevalent and underserved eye diseases, glaucoma and dry eye disease (“"DED”"). We have commercialized products in each of our two reportable operating segments, Interventional Glaucoma and Interventional Dry Eye. Our Interventional Glaucoma revenue consists of sales of our OMNI® Surgical System family of products (“"OMNI”"), currently comprised of our Ergo Series OMNI Surgical System and OMNI Edge Surgical System, and the SION® Surgical Instrument (“"SION”"), while our Interventional Dry Eye revenue consists of sales of the TearCare® System (“"TearCare”"), and related components and accessories. Each product is primarily sold through a highly involved direct sales model that offers intensive education, training and customer service. We believe this model not only enables us to differentiate our products and our company from competitors, but also expands our addressable market by educating ECPs, patients and other stakeholders on our products and evolving treatment paradigms. Outside of the U.S., we have established direct commercial operations in the United Kingdom and Germany. We sell OMNI directly in the United Kingdom and Germany, and indirectly in several other countries in Europe through distributors.

We are continuing our TearCare commercial launch while focusing on our comprehensive, clinical data-driven, long-term market development plan that aims to improve awareness and patient access to TearCare. In addition, in the areas where appropriate fee schedules have been established for the TearCare procedure, we are focusing our commercial resources on supporting providers in these specific geographies to drive utilization. Our strategy is focused on driving adoption and utilization through our experienced sales, marketing, and customer support teams who are already dedicated to the dry eye market, and the ECP customers who have previously purchased TearCare SmartHubs in these states. WeFurthermore, we are also targeting new ECP customers in these states based on their current treatment approaches to DEDDED, andwhile also focusfocusing on our current Interventional Glaucoma customers in these statescustomers, who may also benefit from adding TearCare to their current treatment offerings.

We do not have, and do not currently intend to develop, any internal manufacturing capabilities or infrastructure, and rely on a limited number of third-party manufacturers, many of which are single source suppliers, for the components, accessories and materials that are utilized in the assembly of our products. We believe the manufacturing capacity provided by our current suppliers will be adequate to meet our current and anticipated manufacturing needs across all of our product lines. However, as part of our long-term manufacturing strategy, we are actively expanding third party manufacturing capacity and options for our products, which we expect towill be available to us starting in the secondcurrent quarter of 2026year for certain products. We plan to continue to utilize third party contract manufacturers for our products and any related components.

further demonstrate our products’ clinical effectiveness and safety to potential customers, patients, payors and regulators, including (i) establishing OMNI and SION as standards of care of Interventional Glaucoma treatment among MIGS-trained surgeons, (ii) developing a standalone Interventional Glaucoma market segment with a focus on pseudophakic patients whose IOP is not well-controlled on two or more medications and who are at risk of disease progression, and (iii) increasing customer advocacy and utilization of TearCare while also pursuing reimbursement including expandingexpanded coverage and/or payment for TearCare;

enhance and improve upon our existing product technologies; and allow us to create innovative, transformational and interventional technology innovation with new products, devices or drugs, in glaucoma and ocular surface disease or in new eye disease areas.

We believe there are several important factors that have impacted and that will continue to impact our business, financial condition, and results of operations. There have been no material changes to such factors from those described in our Annual Report under the heading "Factors Affecting Our Business and Results of Operations."

Comparison of the Three and Six Months Ended MarchJune 31,30, 2026 and 2025 (dollars in thousands)

Revenue. We currently derive the majority of our U.S. revenue from the sale of our OMNI and SION products to ASCs and HOPDs and from the sale of our TearCare products to ECPs. To date, the revenue from our Interventional Glaucoma segment has accounted for the vast majority of our total revenue, substantially all of which was generated from sales within the U.S. Our Interventional Glaucoma customers place orders based on their expected procedure volume.volumes. Our TearCare customers typically purchase a TearCare System which consists of one or more TearCare SmartHubs® (“"SmartHubs”"), multiple single-use TearCare SmartLids® (“"SmartLids”") and other accessories. After utilizing their initial inventory, customers can reorder SmartLids as needed. No single customer accounted for 10% or more of our revenue for the three and six months ended MarchJune 31,30, 2026 and 2025.

The growth of our revenue is primarily driven by the demand for elective surgery and treatment utilizing our products in the United States and Europe, product reimbursement rates and coverage criteria, and competition. Such demand is often lower during summer months because of ECP vacations and in winter months because of fewer business or surgery days due to holidays and adverse weather conditions. For the three and six months ended MarchJune 31,30, 2026, we generated more than 90% of our revenue from customers in the U.S.

Revenue was $19.7$23.4 million during the three months ended MarchJune 31,30, 2026, an increase of $2.2$3.8 million, or 12.5%19.6% compared to $17.5$19.6 million in the prior year comparable period,period. For the six months ended June 30, 2026, revenue was $43.1 million, an increase of $6.0 million, or 16.2% compared to $37.1 million in the prior year comparable period. The increase in revenue for the three- and six-month periods was primarily as a result of the following:

Interventional Glaucoma segment revenue for the three months ended MarchJune 31,30, 2026 wasincreased $18.3by million, an increase of $1.2$1.5 million, or 7.2%,7.7%, fromto $20.7 million, compared to $19.2 million for the priorthree yearmonths comparableended period.June The30, 2025. Interventional Glaucoma revenue for the six months ended June 30, 2026 increased by $2.7 million, or 7.5%, to $39.1 million, compared to $36.3 million for the six months ended June 30, 2025. For both the three and six months ended June 30, 2026, the overall increase in Interventional Glaucoma revenue was primarily attributable to an increase in the number of OMNI units sold in the comparable periodsperiods, andas well as an increase in average selling prices.

Interventional Dry Eye segment revenue for the three months ended MarchJune 31,30, 2026 wasincreased $1.4by million, an increase of $1.0$2.3 million, or 244%,703.3%, fromto $2.7 million, compared to $0.3 million for the priorthree yearmonths comparableended period.June The30, 2025. Interventional Dry Eye revenue for the six months ended June 30, 2026 increased by $3.3 million, or 454.1%, to $4.0 million, compared to $0.7 million for the six months ended June 30, 2025. For both the three- and six-month periods ended June 30, 2026, the overall increase in Interventional Dry Eye revenue compared to the prior year comparable periods was primarily due to increased average selling prices and an increased volume of SmartLids sold afteras well as increased average selling prices. The Company made reimbursement progress in the fourth quarter of 2025 inwith the form of establishment of fee schedules for CPT code 0563T, the code specifically associated with the TearCare procedure, by two Medicare Administrative Contractors.Contractors, which has led to the increased volume.

Cost of goods sold was $2.7$2.0 million during the three months ended MarchJune 31,30, 2026, ana increasedecrease of $0.3$1.0 million, or 12.7%,32.3%, from $2.4$3.0 million in the prior year comparable period,period. Cost of goods sold for the six months ended June 30, 2026, was $4.7 million, a decrease of $0.7 million or 12.2% from $5.4 million in the prior year comparable period. The decrease in cost of goods sold was primarily as a result of the following:

Interventional Dry EyeGlaucoma segment cost of goods sold increaseddecreased $0.3$1.2 million and $1.1 million in the three and six months ended MarchJune 31,30, 2026, respectively, compared to the prior year comparable period,periods, primarily drivendue to $1.2 million of tariff refunds received in the second quarter of 2026. For the six months ended June 30, 2026, this decrease was partially offset by higherthe volumeincreased of SmartLids sold.volume.

Our total gross profit was $17.0$21.4 million in the three months ended MarchJune 31,30, 2026, an increase of $1.9$4.8 million from the prior year comparable period. Our gross profit was $38.4 million in the six months ended June 30, 2026, an increase of $6.7 million from the prior year comparable period. Our gross margin for the three and six months ended MarchJune 31,30, 2026 was flat at 86.2%, comparedincreased to 91.4% and 89.0%, respectively, up from 84.8% and 85.5% in the prior year comparable period,periods. These increases were primarily as athe result of the following:

Interventional Glaucoma segment gross margin was 87.2%92.3% and 89.9% for the three and six months ended MarchJune 31,30, 2026, respectively, an increase from 86.6%85.6% and 86.1% for the prior year comparable period,periods. This increase in margin was primarily duedriven toby $1.2 million of tariff refunds received in the second quarter of 2026, as well as higher average selling prices,prices and changes in product sales mix partially offset by overhead costs per unit.mix.

Interventional Dry Eye segment gross margin increasedwas to84.7% 72.1%and 80.5% for the three and six months ended MarchJune 31,30, 20262026, respectively, an increase from 70.6%38.3% and 55.8%, respectively, for the threeprior monthsyear endedcomparable Marchperiods. 31, 2025, primarily driven by anThe increase in both periods was due to increased average selling pricesprice, higher volumes, and sales$0.1 volume.million Weof expecttariff refunds received. Interventional Dry Eye grossmargins marginare expected to continue to improve over time as equitably reimbursed market access and volume expands.

Our R&D expenses as a percentage of revenue may vary over time depending on the level and timing of new product development efforts, as well as clinical development, clinical trial and other related activities. While we expect to continue to make key investments in our R&D initiatives including active clinical trials, we implemented a targeted plan during the third quarter of 2025 intended to reduce operating expenses, improve cost efficiencies, and better align our operating structure for long-term profitability growth. This targeted plan has and is expected to continue to reduce R&D costs in the near term.

R&D expenses were $2.5 million for the three months ended MarchJune 31,30, 2026, a decrease of $1.9 million from the prior year comparable period. The decrease in R&D expenses was driven by a $1.7$1.4 million decrease in payroll expensesexpenses, due to a reduced headcount, and a $0.4$0.2 million decrease in clinical studies expenses. The decrease in payroll expenses included decreases in bonus and stock-based compensation expenses compared to the prior year period.

SG&A expenses were $26.8$22.8 million for the three months ended MarchJune 31,30, 2026, ana increasedecrease of $2.3$1.1 million from the prior year comparable period. The increasedecrease was primarily driven by a $5.2 million increase in legal expenses, which includes a $5.4 million success fee charge associated with the final judgment in the Alcon litigation. Partially offsetting the increase was a $1.5$0.6 million decrease in payroll-related expenses, including stock-based compensation expenses, driven by lowerreduced headcount following the Company’s restructuring in the third quarter of 2025.2025, Additionally,as therewell wasas a $1.1$0.6 million decrease in expenditures on marketing and sales training and events. Partially offsetting these decreases was a $0.5 million increase in legal expenses.

Investment Income. Investment income primarily consists of interest and amortization on held-to-maturity investments in U.S. treasury debt securities and money market funds.

Investment income was $0.7 million for the three months ended MarchJune 31,30, 2026, a decrease of $0.4$0.3 million from the prior year comparable period,period. Investment income was $1.4 million for the six months ended June 30, 2026, a decrease of $0.8 million from the prior year comparable period. The decrease in the three and six month periods ended June 30, 2026 was due to lower investment balances on held-to-maturity investments during the current period.

Interest expense was flat during the three and six months ended MarchJune 31,30, 2026, compared to the prior year comparable period.periods.

Other Expense,Income (Expense), Net. Other expense,income (expense), net primarily consists of income and expenses that do not originate from our primary business.

Other expense,income (expense), net was lessincome thanof $0.1 million for the three and six months ended MarchJune 31,30, 2026,2026. comparedOther toincome other(expense) expense,was netincome of less than $0.1 million and expense of $0.1 million for the priorthree yearand comparablesix period.months ended June 30, 2025, respectively.

Net Cash Used in Operating Activities. Net cash used in operating activities for the threesix months ended MarchJune 31,30, 2026 was $7.0$12.7 million, consisting primarily of a net loss of $13.0$17.4 million, as well as a net change in our operating assets and liabilities of $2.8$1.9 millionmillion. andPartially offsetting these were non-cash charges of $3.2$6.6 million. The net change in our operating assets and liabilities was primarily due to a $5.6$1.6 million increase toin accounts receivable, a $1.4 million decrease in accrued compensation, and a $1.3 million increase in prepaid expenses and other current liabilities and a $0.8 million decrease to our inventory balance.assets. These changes were partially offset by a $2.4$2.1 million decrease in accruedinventory compensation,and a $0.7$0.6 million increase in accounts receivable, and a $0.7 million increase in prepaid expenses.payable. The non-cash charges primarily consisted of a $2.9$5.8 million charge related to stock-based compensation expense.

Net cash used in operating activities for the threesix months ended MarchJune 31,30, 2025 was $11.6$19.1 million, consisting primarily of a net loss of $14.2$26.1 million, as well as a net change in our operating assets and liabilities of $2.2 million, partially offset by non-cash charges of $4.8$9.1 million. The net change in our operating assets and liabilities was primarily due to a $4.6$4.5 million decrease in accrued compensation,compensation. andThis achange $0.6 million increase in prepaid expenses and other current assets,was partially offset by a $1.3$1.1 million decrease in accounts receivable, a $1.1$0.4 million increase in accounts payable, and a $0.5$0.1 million decrease in our inventory balance. The non-cash charges primarily consisted of $4.2$8.1 million related to stock-based compensation expense, $0.2$0.5 million of accretion of debt discount and debt issuance costs, $0.1$0.3 million of depreciation and amortization, and $0.1$0.2 million of noncash operating lease expense.

Net Cash Used in Investing Activities. Net cash used in investing activities for both the threesix months ended MarchJune 31,30, 2026 and 2025 was $0.1 million and $0.0$0.2 million, respectively. The cash used in both periods was for purchases of property and equipment.

Net Cash Provided by Financing Activities. Net cash provided by financing activities for the threesix months ended MarchJune 31,30, 2026 and 2025 was $0.1$0.6 million and $0.5 million, respectively, consisting primarily of proceeds from the exercise ofemployee stock optionspurchase plan purchases and partiallystock offsetoption by taxes paid on settlement of vested RSUs. Net cash used in financing activities for the three months ended March 31, 2025 was less than $0.1 million.exercises.

To date, our primary sources of capital have been private placements of redeemable convertible preferred stock, the sale of common stock in our IPO, debt financing arrangements, and revenue from the sale of our products. In January 2024, we entered into a Loan and Security Agreement (the “"Hercules Loan Agreement”") with Hercules Capital, Inc (“"Hercules”") and certain of its affiliates (collectively with Hercules, the “"Lenders”"), which provides for a senior secured term loan facility in the aggregate principal amount of up to $65.0 million. We used the proceeds from an initial $35.0 million tranche (the “Initial Loan”) funded under the Hercules Loan Agreement (the "Initial Loan") to discharge our indebtedness under our previous credit facility (the “"Prior Loan Agreement”") with MidCap Financial Trust and certain of its affiliates. In December 2024, we consummated the drawdown of the $5.0 million Tranche I(b) term loan advance (the "Tranche I(b) Loan") contemplated by the Hercules Loan Agreement.

As of MarchJune 31,30, 2026, we had cash and cash equivalents of $85.0$79.8 million, an accumulated deficit of $397.7$402.1 million, and an outstanding term loan balance of $40.0 million plus a $2.4 million fee final payment due at maturity under the Hercules Loan Agreement (excluding unamortized debt discount and amortized debt issuance costs). Based on our current planned operations, we expect our cash and cash equivalents balance, as well as other sources of liquidity, will enable us to fund our operations for at least the next 12 months and the foreseeable future.

In addition to the Initial Loan and the Tranche 1I(b) Loan, the Hercules Loan Agreement provides additional tranches available to us (the “"Tranche Loans,”" and together with the Initial Loan and the Tranche I(b) Loan, the “"Term Loans"). Tranche 2 originally consisted of $10.0 million available to draw through September 15, 2025, contingent upon the achievement of certain performance milestones prior to June 30, 2025, which milestones were not met and thus this Tranche 2 was not available to the Company.met. Tranche 3 consisted of $15.0 million available to draw through the interest onlyinterest-only period in increments of $5.0 million, subject to the sole approval of Hercules' investment committee.

The Hercules Loan Agreement originally provided for a maturity date of July 1, 2028, with an interest onlyinterest-only period running for the first 30 months of the agreement term. This interest-only period was extendable for an additional six months for a total of 36 months upon the achievement of certain performance milestones prior to June 30, 2025; thesewhich milestones were not met by the June 30, 2025 deadline and thus the six-month extension of the interest only period was not available to the Company.met.

In September 2025, the Company and Hercules entered into a third amendment (the “"Amendment”") to itsthe Hercules Loan and Security Agreement. The Amendment provided for an additional six-month extension of the interestinterest-only onlyperiod period, to now extend tothrough February 1, 2027. The Amendment also amended the Hercules Loan Agreement to reallocatereallocated the undrawn and unavailable $10.0 million tranche by increasing the amount available to draw through the interest onlyinterest-only period from $15.0 million to $25.0 million, thereby maintaining the maximum $65.0 million credit facility. The additional $25.0 million may be drawn in minimum increments of $5.0 million, subject in each case to the sole approval of Hercules’ investment committee.

The Term Loans accrue interest at a floating annual rate equal to the greater of 10.35%, or the Wall Street Journal prime rate (the “"Prime Rate”") plus 2.35%, with the interest rate equal to 10.35% at MarchJune 31,30, 2026. The final payment fee is set at 5.95% of the funded balance, which is recognized as a debt discount and is being accreted into the amortization of debt issuance costs using the effective interest rate method over the term of the loan.

The obligations under the Hercules Loan Agreement are guaranteed by us and our future subsidiaries, subject to exceptions for certain foreign subsidiaries. The obligations under the agreement are secured by substantially all of our assets, including its material intellectual property. Additionally, we are subject to customary affirmative and negative covenants, including covenants that limit or restrict our ability to, among other things, incur indebtedness, grant liens, merge or consolidate, make investments, dispose of assets, make acquisitions, pay dividends or make distributions, repurchase stock and enter into certain transactions with affiliates, in each case subject to certain exceptions. We are also subject to certain minimum cash and revenue covenants under the Hercules Loan Agreement. We were in compliance with all covenants as of MarchJune 31,30, 2026.

Our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report have been prepared in accordance with accounting principles generally accepted in the United States of America.States. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities, and the reported amounts of revenue and expense during the reporting period. We evaluate our estimates and assumptions on an ongoing basis using historical experience, existing and known circumstances, authoritative accounting guidance, and various other factors we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions and any such differences may be material.

There have been no material changes to our critical accounting estimates as compared to the critical accounting estimates described inunder Partthe II,heading Item"Critical 7,Accounting “Management’s Discussion and Analysis of Financial Condition and Results of Operations”Estimates" in our Annual Report under the heading “Critical Accounting Estimates."Report.