ClearPoint Neuro, Inc.

Description of the Business and Financial Condition

ClearPoint Neuro, Inc. (the “Company”) is a commercial-stage medical device company focused on the development and commercialization of innovative platforms for performing minimally invasive surgical procedures in the brain. The Company deployed significant resources to fund its efforts to develop the foundational capabilities for enabling MRI-guided interventions, building an intellectual property portfolio, and identifying and building out commercial applications for the technologies it develops. Over the past several years, the Company’s efforts expanded beyond the MRI suite to encompass development and commercialization of new neurosurgical device products for the operating room setting, as well as consulting services for pharmaceutical and biotech companies, academic institutions, and contract research organizations. The Company was incorporated in the state of Delaware in March 1998, and has headquarters located in Solana Beach, California.

The Company’s initial product offering, the ClearPoint system, is an integrated system comprised of capital equipment and disposable products, designed to allow minimally invasive procedures in the brain to be performed in an MRI suite. The ClearPoint Array Neuro Navigation System and its principal disposable component, introduced in 2021, is designed to be deployed in an operating room setting while also being usable in an MRI suite. Both systems provide guidance for the placement and operation of instruments or devices during the planning and operation of neurosurgical procedures. The Company received 510(k) clearance from the U.S. Food and Drug Administration (“FDA”) in 2010 to market the ClearPoint system in the United States for general neurosurgical interventional procedures; in February 2011, the Company also obtained CE marking for its ClearPoint system. In 2011 and 2018, the Company received 510(k) clearance and CE marking, respectively, for its SmartFlow Neuro cannula which is being used, or is under evaluation, along with the Company's services, by more than 60 pharmaceutical and biotech companies, academic institutions, or contract research organizations having a focus on biologics and drug delivery. The Company provides consulting services to pharmaceutical and other medical technology customers for improving outcome predictability and optimizing preclinical and clinical workflows. The Company's expertise is concentrated in benchtop testing, preclinical studies, clinical trial support, regulatory consultation, and over-arching translation from the preclinical to the clinical setting to enhance accuracy and precision of drug delivery. In September 2022, the ClearPoint Prism Neuro Laser Therapy System, for which the Company has exclusive global commercialization rights, received 510(k) clearance through the Company’s Swedish partner CLS. The Prism laser represents the Company's first therapy product offering.

In 2025, through the acquisition of IRRAS, the Company expanded its portfolio into neurocritical care. IRRAS is a commercial-stage medical technology company focused on treatments for intracerebral hemorrhage, intraventricular hemorrhage, and other conditions requiring intracranial fluid management.

The Company has several foreign wholly owned subsidiaries, primarily established for the purpose of employing the Company’s clinical services representatives serving the Company’s customers in the United Kingdom and the EU. The activities of all subsidiaries are reflected in these consolidated financial statements.

Macroeconomic Trends

The Company continues to monitor the impacts of various macroeconomic trends, such as inflationary pressure, changes in monetary policy, decreasing consumer confidence and spending, the introduction of or changes in tariffs or trade barriers, and global or local recession. Such changes in domestic and global macroeconomic conditions may lead to increased costs for the Company's business. Additionally, these macroeconomic trends could adversely affect the Company's customers, which could impact their willingness to spend on the Company's products and services, or their ability to make payments, which could harm the Company's collection of accounts receivable and financial results. The world’s financial markets remain susceptible to significant stresses, resulting in reductions in available credit and government spending, economic downturn or stagnation, foreign currency fluctuations and volatility in the valuations of securities generally. As a result, the Company's ability to access capital markets and other funding sources in the future may not be available on commercially reasonable terms, if at all. The rapid development and fluidity of these situations precludes any prediction as to the ultimate impact they will have on the Company's business, financial condition, results of operation and cash flows, which will depend largely on future developments.

Liquidity

The Company has incurred net losses since its inception which has resulted in a cumulative deficit at December 31, 2025 of$216.9 million. In addition, the Company’s use of cash from operations amounted to$23.9 million for the year ended December 31, 2025. Since inception, the Company has financed its operations principally from the sale of equity securities and the issuance of notes payable.

In May 2025, the Company entered into the 2025 SPA (as such term is defined in Note 11) relating to the purchase and sale in a registered direct offering of an aggregate of 275,808 shares of the Company's common stock, for aggregate net proceeds totaling approximately $3.3 million after deducting offering expenses payable by the Company.

Contemporaneously with entering into the 2025 SPA, the Company entered into the 2025 NPA (as such term is defined in Note 9) under which the Company may sell to the 2025 Investor tranches of notes in an aggregate principal amount of up to$105.0 million. The Company sold the initial note thereunder upon signing the 2025 NPA and received net proceeds of approximately$28.7 million, after deducting the debt discount and debt issuance costs of$0.6 million and$0.7 million, respectively.

In connection with the signing of the merger agreement pursuant to which the Company acquired IRRAS Holdings, Inc., the Company and the 2025 Investor entered into an amendment to the 2025 NPA pursuant to which the 2025 Investor agreed to purchase a note in the principal amount of $20.0 million under the 2025 NPA. The Company issued such note in November 2025 and received net proceeds of approximately$19.4 million, after deducting debt discount and debt issuance costs.

In March 2024, the Company completed a follow-on public offering of 2,653,848 shares of its common stock for net proceeds of approximately $16.2 million after deducting payment of underwriting discounts and commissions and other offering expenses.

In November 2024, the Company entered into an At-the-Market Equity Offering Sales Agreement with an investment banking firm (the “ATM Agreement”) pursuant to which it may offer and sell, from time to time, shares of its common stock having aggregate sales proceeds of up to $50.0 million, subject to the terms and conditions of the ATM Agreement. As of December 31, 2025, the Company hadnot sold any shares of common stock under the ATM Agreement.

Additional information with respect to the stock and debt offerings described above is found in Note 11 and 9, respectively.

As required by accounting principles generally accepted in the United States (“GAAP”), the Company has evaluated its ability to continue as a going concern for at least the next twelve months from the date of issuance of these financial statements. The Company has determined that based on its current forecasts, its existing cash and cash equivalent balances at December 31, 2025 are sufficient to support the Company’s operations and meet its obligations for at least the next twelve months from the date of issuance of these financial statements.

Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.

Basis of Presentation and Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. On an ongoing basis, the Company evaluates its estimates and judgments, which are based on historical and anticipated results and trends and on various other assumptions that management believes to be reasonable under the circumstances. By their nature, estimates are subject to an inherent degree of uncertainty and, as such, actual results may differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include all highly liquid investments with an original maturity of three months or less from the date of purchase. As of December 31, 2025, cash equivalents consisted predominantly of U.S. Government debt securities.

Restricted cash

The Company has restricted cash pledged as a security deposit and collateral related to its operating leases. Amounts related to the cash pledged as collateral expected to be released within twelve months of the accompanying consolidated balance sheet is classified in other current assets. The remaining noncurrent balance is presented in other assets in the accompanying consolidated balance sheet.

Inventory

Inventory, which consists of raw materials, work in process, and finished goods available for sale, is carried at the lower of cost or net realizable value. The costs of inventory are determined using the standard cost method, which approximates actual cost based ona first-in, first-out method. The Company periodically reviews its inventory for obsolete items and provides a reserve upon identification of potential obsolete items.

Business Combinations

Under the acquisition method of accounting, the Company allocates the fair value of the total consideration transferred to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values on the date of acquisition. These valuations require the Company to make estimates and assumptions, especially with respect to intangible assets. The excess consideration over the aggregate fair value of tangible and intangible assets, net of liabilities assumed, is recorded as goodwill. Costs incurred to complete a business combination, such as legal and other professional fees, are expensed as incurred.

If the initial accounting for a business combination is incomplete by the end of a reporting period that falls within the measurement period, the Company reports provisional amounts in the financial statements. During the measurement period, the Company adjusts the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. These adjustments to the provisional amounts are recorded with a corresponding offset to goodwill. Any adjustments identified after the measurement period are recorded in the consolidated statements of operations.

Goodwill, Intangible Assets and Other Long-Lived Asset

Assets acquired, including intangible assets, and liabilities assumed are measured at fair value as of the acquisition date. Goodwill, which has an indefinite useful life, represents the excess of cost over fair value of the net assets acquired.

Goodwill is not amortized; however, it is reviewed for impairment at least annually, or more frequently if an event occurs indicating the potential for impairment. Goodwill is considered to be impaired if the carrying value of the reporting unit exceeds its respective fair value.

The Company performs the goodwill impairment analysis at the reporting unit level, which aligns with its reporting and operating segment structure and availability of discrete financial information. During the goodwill impairment review, the Company assesses qualitative factors to determine whether it is more likely than not that the fair values of the reporting unit is less than the carrying amount, including goodwill. The qualitative factors include, but are not limited to, macroeconomic conditions, industry and market considerations, and the Company's overall financial performance. If this qualitative assessment indicates that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company performs a quantitative goodwill impairment test. If the carrying amount of the reporting unit exceeds the fair value, the Company records an impairment loss based on the difference. The qualitative assessment for the reporting unit may be bypassed and instead the Company may proceed directly to the quantitative goodwill impairment test.

Intangible assets with finite lives are amortized using the straight-line method over the estimated economic lives of the assets, which range from one to ten years. The Company's intangible assets with finite lives are reviewed for impairment whenever events or change in circumstances indicate that the carrying amount of such assets may not be fully recoverable. The carrying value is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. An impairment loss is measured as the amount by which the carrying amount exceeds its fair value.

Property and Equipment

Property and equipment are recorded at cost and are depreciated on a straight-line basis over their estimated useful lives, principally three toseven years. Leasehold improvements are depreciated on a straight-line basis over the lesser of their estimated useful lives or the term of the related lease.

Revenue Recognition

The Company’s revenue is comprised primarily of: (1) product revenue resulting from the sale of disposable products related to neurosurgery navigation, therapy, neurocritical care, and biologics and drug delivery, as well as ClearPoint and IRRA flow capital equipment and ClearPoint software; and (2) service revenue resulting from development services and consultation revenue in connection with customer-sponsored preclinical and clinical trials, as well as revenue resulting from the service, installation, training, and shipping related to ClearPoint capital equipment and software. The Company recognizes revenue when (i) control of the Company’s products is transferred to its customers or (ii) services are provided to customers, each in an amount that reflects the consideration the Company expects to receive from its customers in exchange for those products and services, in a process that involves identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the distinct performance obligations in the contract, and recognizing revenue when or as the performance obligations have been satisfied. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. When a contract calls for the satisfaction of multiple performance obligations for a single contract price, the Company typically allocates the contract price among the performance obligations based on the relative stand-alone selling prices for each such performance obligation customarily charged by the Company. The Company considers a performance obligation satisfied once it has transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The Company recognizes revenue for satisfied performance obligations only when it determines there are no uncertainties regarding payment terms or transfer of control.

Lines of Business; Timing of Revenue Recognition

Product Revenue:

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Neurosurgery navigation, therapy, neurocritical care, and biologics and drug delivery product sales: Revenue from the sale of neurosurgery navigation products (consisting of disposable products sold commercially and related to cases utilizing the ClearPoint system), therapy products (consisting primarily of disposable laser-related products used in neurosurgical procedures), neurocritical care products (consisting of disposable products sold commercially and related to cases utilizing the IRRA flow system), biologics and drug delivery products (consisting primarily of disposable products related to customer-sponsored preclinical and clinical trials), is generally based on customer purchase orders, and is recognized at the point in which legal title, and risks and rewards of ownership, transfer to the customer.

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Capital equipment and software sales:

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Capital equipment and software sales preceded by evaluation periods: Revenue for capital equipment and software sales (consisting of computer hardware and software that are integral components of the ClearPoint system or the IRRA flow system) which are preceded by customer evaluation periods is recognized at the point in time that the Company is in receipt of a purchase order and all related items have been shipped to the customer. During these evaluation periods, installation of the systems has been completed, if required, training of customer personnel has been completed, and the systems have been in operation.

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Capital equipment and software sales not preceded by evaluation periods: Revenue from sales of capital equipment and software not having been preceded by an evaluation period is recognized upon delivery to the customer and installation, if required.

For both types of capital equipment and software sales described above, the determination of the point in time at which to recognize revenue represents that point at which the customer has legal title, physical possession, and the risks and rewards of ownership, and the Company has a present right to payment.

Service Revenue:

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Neurosurgery navigation and therapy services: The Company recognizes revenue for such services over time as the services are delivered to the customer based on the extent of progress towards completion of the performance obligation.

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Biologics and drug delivery services and other revenue:

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Consultation and Development Services: The Company recognizes consultation and development service revenue over time as the services are delivered to the customer based on the extent of progress towards completion of the performance obligation. The Company may use output methods, such as time elapsed, or input methods, such as labor hours expended or costs incurred, to measure progress depending on which better depicts the transfer of control to the customer.

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License fees: The Company grants licenses to customers to develop and commercialize its SmartFlow Neuro cannula devices with the customers' proprietary biologics as a combination device. License fees represent the use of functional intellectual property as it exists at the point in time at which the license is granted and does not require any significant development or customization. Accordingly, the Company recognizes license revenue at the point in time in which the license becomes effective and the intellectual property is made available to the customer.

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Milestone fees: Event-based payments which are subject to the customer's achievement of specified development or regulatory milestones are included in the transaction price if, in the Company's judgment, it is probable that these milestones will be achieved and a significant future reversal of cumulative revenue under the contract will not occur. The Company re-evaluates the probability of achievement of such milestone at the end of each reporting period and adjusts the transaction price as necessary.

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Capital equipment-related services:

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Equipment service: Revenue from service of ClearPoint capital equipment and software previously sold to customers is based on agreements with terms ranging fromone tothree years and is recognized ratably on a monthly basis over the term of the service agreement. A time-elapsed output method is used for service revenue because the Company transfers control evenly by providing a stand-ready service.

The Company may also enter into contracts with customers for capital equipment, which bundle maintenance and support services and access to software and hardware upgrades made commercially available over the term of the contract, for a single contract price, typically paid on an annual basis. The Company allocates the contract price among the performance obligations based on the relative stand-alone prices for each such performance obligation and recognizes the revenue ratably on a monthly basis. A time-elapsed output method is used as the Company is providing a stand-ready service for each of the performance obligations.

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Installation, training, and shipping: Consistent with the Company's recognition of revenue for capital equipment and software sales as described above, fees for installation, training, and shipping in connection with sales of capital equipment and software that have been preceded by customer evaluation periods are recognized as revenue at the point in time the Company is in receipt of an executed purchase order for the equipment and software. Installation, training, and shipping fees related to capital equipment and software sales not having been preceded by an evaluation period are recognized as revenue concurrent with the recognition of revenue of the related capital equipment.

Payment terms under contracts with customers generally are in a range of 30-60 days after the customers’ receipt of the Company’s invoices.

The Company's terms and conditions do not provide for a right of return unless for: (a) product defects; or (b) other conditions subject to the Company's approval.

See Note 4 for additional information regarding revenue recognition.

Research and Development Costs

Costs related to research, design and development of products are charged to research and development expense as incurred.

Income Taxes

Deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective income tax bases. Such assets and liabilities are measured using enacted tax rates expected to apply to taxable income or loss in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates is recognized in the period that includes the enactment date. The Company provides a valuation allowance against net deferred income tax assets unless, based upon available evidence, it is more likely than not the deferred income tax assets will be realized. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense. As of December 31, 2025 and 2024, the Company hadno accrued interest or penalties related to uncertain tax positions.

See Note 13 for additional information regarding income taxes.

Net Loss Per Share

The Company computes net loss per share using the weighted-average number of common shares outstanding during the period. Basic and diluted net loss per share are the same because the conversion, exercise or issuance of all potential common stock equivalents, which comprise the entire amount of the Company’s outstanding common stock options and unvested RSUs as described in Note 11, would be anti-dilutive, due to the reporting of a net loss for each of the periods in the accompanying consolidated statements of operations. For each of the years ended December 31, 2025 and 2024, approximately 3 million of common stock equivalents were excluded from the calculation of diluted net loss per common share because their effect was anti-dilutive.

Share-Based Compensation

The Company accounts for compensation for all arrangements under which employees, directors and others receive shares of stock or other equity instruments (such as restricted stock units and options) based on fair value. The fair value of each award is estimated as of the grant date and amortized as compensation expense over the requisite vesting period. Forfeitures are recognized as they occur. In the case of stock options, the fair value is estimated on the grant dates using the Black-Scholes valuation model. This valuation model requires the input of highly subjective assumptions, including the expected stock volatility, estimated award terms and risk-free interest rates for the expected terms. To estimate the expected terms, the Company utilizes the simplified method for “plain vanilla” options discussed in the Staff Accounting Bulletin 107 (“SAB 107”) issued by the SEC. The Company believes that all factors listed within SAB 107 as pre-requisites for utilizing the simplified method apply to the Company and its share-based compensation arrangements. The Company intends to utilize the simplified method for the foreseeable future until more detailed information about exercise behavior becomes available. Expected volatility is based on historical volatility of the Company's common stock. The Company utilizes risk-free interest rates based on U.S. treasury instruments, the terms of which are consistent with the expected terms of the equity awards. The Company has not paid and does not anticipate paying cash dividends on its shares of common stock; therefore, the expected dividend yield is assumed to bezero. The Company didnot grant any stock options in 2025 or 2024.

Fair Value Determination of Share-Based Transactions

The Company’s common stock is traded on the Nasdaq Capital Market under the symbol “CLPT.” Quoted closing stock prices are used as a key input in determining the fair value for share-based transactions.

Concentration Risks and Other Risks and Uncertainties

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company holds substantially all its cash and cash equivalents on deposit with financial institutions in the U.S. that are insured by the Federal Deposit Insurance Corporation or in U.S. government debt securities. At December 31, 2025, the Company had approximately$0.8 million in bank balances that were in excess of the insured limits.

At December 31, 2024, there were two customers whose accounts receivable balances aggregated to 24% of accounts receivable at that date.

One pharmaceutical customer, a related party that is a former stockholder and former noteholder, and whose chief executive officer is a member of the Company's Board of Directors, for whom the Company provides hardware, software, clinical services, and market development services in support of the customer's clinical trials, and from whom the Company earns a quarterly fee, accounted for 8% of total revenue for the year ended December 31, 2025, and of 9% total revenue for the year ended December 31, 2024. There wereno outstanding receivables from this customer at December 31, 2025 or December 31, 2024.

Prior to granting credit, the Company generally performs credit evaluations of its customers’ financial condition. In general, the Company does not require collateral from customers with an extension of credit. The accounts receivable balance is reduced by an allowance for credit losses from the potential inability of the Company's customers to make required payments. The allowance for credit losses at December 31, 2025 and 2024 was$1.2 million and$1.1 million, respectively. The Company evaluates the historic loss experience on the accounts receivable balance and also considers separately customers with receivable balances that may be negatively impacted by current economic developments and market conditions. The estimate is a result of the Company's ongoing evaluation of collectability, customer creditworthiness, historical levels of credit losses and future expectations.

The Company is subject to risks common to emerging companies in the medical device industry, including, but not limited to: new technological innovations; acceptance and competitiveness of its products; dependence on key personnel; dependence on key suppliers; its ability to maintain its third-party collaboration, license and joint development partners; changes in general economic conditions and interest rates; its ability to obtain additional funding to support its business; regulatory uncertainty; protection of proprietary technology; compliance with changing government regulations; uncertainty of widespread market acceptance of products; access to credit for capital purchases by customers; and product liability claims. Certain components used in manufacturing have relatively few alternative sources of supply and establishing additional or replacement suppliers for such components cannot be accomplished quickly. The inability of any of these suppliers to fulfill the Company’s supply requirements may negatively impact future operating results.

Recent Accounting Standards Adopted

Beginning in its 2025 annual reporting, the Company adopted Accounting Standards Update (“ASU”) No.2023-09, “Improvements to Income Tax Disclosures,” on a prospective basis. This standard requires the disclosure of additional income tax information, primarily related to the rate reconciliation and income taxes paid. The provisions of the ASU are intended to enhance the transparency and decision usefulness of income tax disclosures. The adoption of this new standard didnot have a material impact on the consolidated financial statements. For additional information, see Note 13.

Recent Accounting Standards Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,” which requires disclosure about the types of costs and expenses included in certain expense captions presented on the income statement. The new disclosure requirements are effective for the Company's annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this pronouncement on its related disclosures.

In September 2025, the FASB issued ASU 2025-06, “Intangibles - Goodwill and Other - Internal Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software,” which improves the operability of the accounting for internal-use software by removing all references to software development project stages so that the guidance is neutral to different software development methods. This standard is effective for annual periods beginning after December 15, 2027, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the potential impact of the new pronouncement.

In December 2025, the FASB issued ASU 2025-11, “Interim Reporting (Topic 270): Narrow-Scope Improvements,” which clarifies the guidance in Topic 270 to improve the consistency of interim financial reporting. ASU 2025-11 provides a comprehensive list of required interim disclosures and introduces a disclosure principle requiring entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. This standard is effective for fiscal years beginning December 15, 2027, including interim periods within those fiscal years, with early adopted permitted. The Company is currently evaluating the potential impact of the new pronouncement.

Reclassification

The accompanying consolidated statement of operations for the year ended December 31, 2025 contains income tax expense formerly classified as general and administrative expense as a separate line on the consolidated statement of operations. Additionally, the Company reports interest income and interest expense separately within the consolidated statement of operations. The accompanying consolidated statement of operations for the year ended December 31, 2024 has been adjusted to conform to the 2025 presentation.

Business Combination

On November 20, 2025, the Company acquired all of the outstanding equity interests of IRRAS Holdings, Inc., or IRRAS, a medical technology company focused on neurocritical care. The total consideration for the acquisition, payable as of closing, was $5.0 million in cash and 1,325,000 shares of the Company's common stock, subject to certain adjustments including for indebtedness, working capital, and the satisfaction of indemnification obligations. As described below, the former equityholders of IRRAS are also eligible for earnout cash payments.

Of the total consideration, payable as of closing, (i) the Company paid $5.0 million on behalf of IRRAS directly to third parties to satisfy IRRAS' outstanding liabilities, (ii) the Company paid the former equityholders of IRRAS cash consideration of $0.02 million, and (iii) the Company paid or will pay the former equityholders of IRRAS equity consideration of$17.8 million in the form of 1,319,010 shares of the Company's common stock, subject to adjustment for the satisfaction of indemnification obligations. As the cash paid on behalf of IRRAS to satisfy its outstanding liabilities was paid directly to third parties, such amount is not reflected as consideration transferred to the former equityholders of IRRAS for purposes of the purchase price allocation.

Of the $17.8 million of equity consideration, up to 0.4 million shares of the Company's common stock remain to be issued, consisting of (i) shares issuable to the extent not applied to satisfy the indemnification obligations of the former equityholders of IRRAS, which shares may be issued, in whole or in part, sixteen months following the closing of the acquisition, subject to the terms of the merger agreement, and (ii) shares that will be issued as soon as practicable following receipt of documentation required to complete the issuances from the parties entitled to such shares.

The Company also agreed to pay the former equityholders of IRRAS a contingent cash payment equal to 25% of that portion of net sales of IRRAS products that exceeds (a) $13.0 million in 2026, (b) $17.0 million in 2027, and (c) $22.0 million in 2028, in each case, within 90 days after the end of the applicable year. The Company determined that the fair value of the earnout liability is nominal as of the acquisition date of closing and as of December 31, 2025.

The Company recognized transaction costs related to legal fees, of$0.4 million in the year ended December 31, 2025. These costs are reported in general and administrative expenses in the consolidated statements of operations.

The components of preliminary fair value of consideration transferred are as follows (in thousands):

The acquisition of IRRAS was accounted for as a business combination using the acquisition method of accounting. The acquisition method requires, among other things, that assets acquired, and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date. The following table summarizes the preliminary purchase price allocation as of the acquisition date (in thousands):

Goodwill represents the excess of the purchase price over the identifiable tangible and intangible assets acquired in addition to liabilities assumed arising from the business combination. The Company believes the goodwill related to the acquisition was attributable to the expected synergies, value of the assembled workforce, and the collective experience of the management team with regards to its operations, customers, and industry.

The estimated fair values of identifiable intangible assets were determined using the “income approach” which is a valuation technique that provides an estimate of the fair value of an asset based on market participant expectations of the cash flows an asset would generate over its remaining useful life. Some of the more significant assumptions inherent in the development of these asset valuations include the estimated net cash flows for each year for each asset or product, the appropriate discount rate necessary to measure the risk inherent in each future cash flow stream, the life cycle of each asset, the potential regulatory and commercial success risk, and competitive trends impacting the assets.

The following table summarizes the preliminary valuation of acquired intangible assets and estimated useful lives as of the acquisition date ($ in thousands):

The Company's financial results for the year ended December 31, 2025 reflect inclusion of the business operations of IRRAS from the closing date of the acquisition, November 20, 2025. The Company’s consolidated results of operations since the closing date include$1.2 million of revenue and $2.5 million in net loss attributable to IRRAS' operations.

Pro Forma Financial Information

The unaudited pro forma combined financial information was prepared using the acquisition method of accounting and was based on the historical financial information of the Company and the acquired assets of IRRAS. In order to reflect the occurrence of the acquisition on January 1, 2024 as required, the unaudited pro forma financial information includes adjustments to reflect (i) incremental amortization expense incurred based on the fair values of the identifiable intangible assets acquired, (ii) the additional interest expense associated with the issuance of debt to finance the acquisition, and (iii) the additional cost associated with the fair value adjustment to inventory.

The unaudited pro forma financial information is not necessarily indicative of what the consolidated results of operations would have been, had the acquisition been completed on January 1, 2024. In addition, the unaudited pro forma financial information is not a projection of future results of operations of the combined company nor does it reflect the expected realization of any synergies or cost savings associated with the acquisition.

The following table presents the unaudited pro forma combined results of the Company and the acquired assets of IRRAS for the years ended December 31, 2025 and 2024, as if the acquisition had occurred on January 1, 2024:

4. Revenue Recognition

Revenue by Service Line

Contract Balances

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Contract assets – The timing of revenue recognition may differ from the time of billing to the Company's customers. In most cases, customers are billed upon shipment of such products or delivery of such services and the related contract assets, which represent an unconditional right to consideration and comprise the accounts receivable balance. When revenue is recognized in advance of its right to bill and receive consideration, the Company records this unbilled receivable as a contract asset, which is classified as other current assets in the accompanying consolidated balance sheets. Additionally, at December 31, 2025, the Company recorded as a contract asset up-front costs for direct materials incurred to fulfill a customer contract.

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Contract liabilities –Contract liabilities consist of amounts that have been invoiced and for which the Company has the right to bill, but that have not been recognized as revenue as the related goods or services have not been transferred. The Company's contract liabilities are generally comprised of the following (1) capital equipment and software-related service fees that are typically billed and collected at the inception of the service agreements, which have terms ranging fromone tothree years; (2) annual fees for agreements with customers that bundle the capital equipment and software-related service fees with software and hardware upgrades that are made commercially available over the term of the contract; and (3) up-front payments from customers made in connection with consulting services.

During the years ended December 31, 2025 and 2024, the Company recognized capital equipment and software-related service revenue of approximately$2.1 million and$2.3 million, respectively, which was previously included in contract liabilities in the accompanying consolidated balance sheets at December 31, 2024 and 2023, respectively.

Transaction price allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue that will be recognized as revenue in future periods. The majority of the remaining performance obligations relate to capital equipment and software-related service agreements and the upfront payments discussed under the heading “Contract Balances” above, which amounted to approximately$2.1 million at December 31, 2025. The Company expects to recognize approximately 72% of this revenue over the next twelve months and the remainder thereafter.

Fair Value Measurement

Fair value measurements are based on a three-tier hierarchy that prioritizes the inputs used to measure fair value. These tiers include: Level 1, defined as observable inputs such as quoted market prices in active markets; Level 2, defined as inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The fair value of cash and cash equivalents of$45.9 million and$20.1 million as of December 31, 2025, and December 31, 2024, respectively, is derived using Level 1 inputs. The cash equivalents are comprised of short-term bank deposits, money market funds, and U.S. Government debt securities with original maturities of three months or less, for which the Company believes that the carrying value is a reasonable estimate of fair value.

Inventory

Inventory consists of the following as of December 31:

Inventory acquired in a business combination is recorded at acquisition date fair value and is recorded as a component of cost of goods sold as the inventory is sold.

Property and Equipment

Property and equipment consist of the following as of December 31:

Depreciation expense related to property and equipment for the years ended December 31, 2025 and 2024 was$0.4 million and$0.2 million, respectively. Loaned systems are ClearPoint systems that are in operation at customer sites on an evaluation basis.

Goodwill and Intangible Assets

Goodwill

On November 20, 2025, the Company acquired all outstanding equity interests of IRRAS. A goodwill balance of$7.5 million was recognized for the excess of the consideration transferred over the net assets acquired and represents the expected synergies, value of the assembled workforce, and the collective experience of the management team with regards to its operations, customers, and industry.

A summary of the activity impacting goodwill is presented below (in thousands):

Intangible Assets

The acquired intangible assets are amortized using the straight-line method over their estimated useful lives ofone toten years. The following table shows the cost, accumulated amortization, and weighted average remaining life for the acquired intangible assets as of December 31, 2025 (in thousands):

The table below sets forth amortization expense (in thousands):

The estimated future annual amortization of finite-lived intangible assets is shown in the following table. Actual amortization expense to be reported in future periods could differ from these estimates as a result of acquisitions, divestitures, and asset impairments, among other factors.

Notes Payable

On May 12, 2025, the Company entered into a note purchase agreement (the “2025 NPA”) with TPC Investments III, LP, an affiliate of Oberland Capital Management LLC (the “2025 Investor”), and CALW SA LLC, as purchaser agent, under which the Company may sell to the 2025 Investor tranches of notes (“Notes”) in an aggregate principal amount of up to$105.0 million. Under the terms of the 2025 NPA, (a) the Company sold a Note in the principal amount of$30.0 million (the “First Purchase Note”) to the 2025 Investor upon signing of the 2025 NPA, (b) at the option of the Company, the Company may sell an additional$25.0 million in principal amount of Notes, in up totwo increments of$12.5 million each, at any time prior to December 31, 2026, and (c) at the option of the Company and the 2025 Investor, the Company may sell up to$50.0 million in principal amount of Notes, at any time prior to December 31, 2026 (the “Third Tranche of Notes”).

In connection with the signing of the merger agreement pursuant which the Company acquired IRRAS, the Company and the 2025 Investor entered into an amendment to the 2025 NPA pursuant to which the 2025 Investor agreed to purchase$20.0 million in principal amount of the Third Tranche of Notes under the 2025 NPA following the closing of the IRRAS acquisition (the “Third Tranche Note”). The Third Tranche Note was sold to the 2025 Investor on November 20, 2025.

The purchase price of the Notes is, in each case,98% of the principal amount thereof. The net proceeds from the sale of the First Purchase Note, after deducting the debt discount and debt issuance costs of$0.6 million and$0.7 million, respectively, was approximately$28.7 million. The net proceeds from the sale of the Third Tranche Note, after deducting the debt discount and debt issuance costs, was approximately$19.4 million.

The outstanding principal amount of the Notes bears interest at a rate per annum equal to the sum of: (i) the greater of the Term SOFR (as defined in the 2025 NPA) and 4.30%; and (ii)3.95%, with a minimum rate of 8.25% and a cap of 9.50%, payable quarterly in arrears. For the first six quarters following the purchase date for each sale of Notes (each, a “Purchase Date”),50% of the interest due shall be paid-in-kind and added to the then-outstanding principal balance of the Notes, which may be extended by two quarters at the Company’s option.

The Notes mature on the sixth anniversary of their Purchase Date or the date on which all amounts owing to the 2025 Investor have been paid in full (the “Maturity Date”). Upon the occurrence and during the continuance of an Event of Default (as defined in the 2025 NPA) under the 2025 NPA, the then-applicable interest rate on all outstanding obligations will increase by 4.00%.

Beginning on January 1, 2027 and continuing until the Maturity Date of the First Purchase Note, the 2025 Investor will receive 0.375% of Net Revenue (as defined in the 2025 NPA) for any fiscal quarter (of up to $50,000,000 of Net Revenue for each fiscal year), payable quarterly. As a result of the sale of the Third Tranche Note, this percentage increased by 0.15% and is payable beginning on January 1, 2027 and continuing until the Maturity Date of the Third Tranche Note. The outstanding principal amount of the Notes, interest accrued thereon and any other amounts owing to the 2025 Investor under the 2025 NPA, will be due and payable on the applicable Maturity Date.

All of the Notes may be redeemed prior to the Maturity Date at the option of the Company, subject to payment of the Repayment Amount (as defined in the 2025 NPA). The 2025 Investor may demand redemption of the Notes prior to the Maturity Date in the event of a Change of Control (as defined in the 2025 NPA) of the Company or an Event of Default. The Repayment Amount will be: (a) if redemption occurs before the first anniversary of the date of issuance of a Note,117.5% of the principal amount of such Note; (b) if redemption occurs after the first anniversary and prior to the second anniversary of the date of issuance of a Note,125% of the principal amount of such Note; (c) if redemption occurs after the second anniversary and prior to the third anniversary of the date of issuance of a Note,135% of the principal amount of such Note; (d) if redemption occurs after the third anniversary and prior to the fourth anniversary of date of issuance of a Note, an amount that would generate an internal rate of return to the Purchasers of such Note of 11.50%; (e) if redemption occurs after the fourth anniversary of the date of issuance of a Note and prior to the sixth anniversary of the date of issuance of a Note, an amount that would generate an internal rate of return to the Purchasers of such Note of 10.50%; (f) if redemption occurs on the sixth anniversary of the date of issuance of a Note, an amount that would generate an internal rate of return to the Purchasers of such Note of 9.50%, minus, in each case, the sum of regularly scheduled interest paid in cash, payments of proceeds of insurance policies pursuant to the terms of the NPA, and payments of revenue participation in cash prior to such redemption date.

For the year ended December 31, 2025, the Company recognized interest expense of$2.4 million which is recorded in the consolidated statements of operations. The effective interest rate on the Notes is 11.3%.

The 2025 NPA contains no financial covenants. The Company’s obligations under the 2025 NPA are subject to customary covenants, including limitations on the Company’s ability to dispose of assets, undergo a change of control, merge with or acquire other entities, incur debt, incur liens, pay dividends or other distributions to holders of its capital stock, repurchase stock and make investments, in each case subject to certain exceptions. The Company’s obligations under the 2025 NPA are secured by a security interest on substantially all of the Company’s assets, including its intellectual property. The obligations of the 2025 Investor to purchase Notes are subject to certain customary conditions precedent.

The Company assessed the provisions of the 2025 NPA to determine if the agreement included any embedded derivative features by evaluating each feature against the nature of the host instrument. The only embedded feature which was determined to meet the characteristics of a derivative and require bifurcation and separate accounting was the 2025 Investor's right to demand redemption prior to the Maturity Date in the event of a Change of Control or an Event of Default. The fair value of the identified derivative was determined to be nominal as the probability of Change of Control or Event of Default was negligible at inception and December 31, 2025. For each subsequent reporting period, the Company will evaluate the probability of the Investor's right to demand redemption and record the applicable fair value as of the end of each reporting period.

Scheduled principal payments as of December 31, 2025 with respect to the Notes is summarized as follows:

The estimated fair value of the Notes, developed based on inputs classified as Level 3 within the fair value hierarchy, was approximately$48.8 million as of December 31, 2025.

Commitments and Contingencies

Operating Leases

The Company subleases office space in Solana Beach, California that serves as its corporate headquarters and houses certain management and personnel. The sublease term commenced on December 15, 2020, is set to expire on December 31, 2026, and is renewable for an additional five-year period, at the Company’s option, provided that the Company’s landlord has entered into an extension of its prime lease for the office space that encompasses the Company’s office space for at least five years.

The Company also leases space in Carlsbad, California, that houses office space and a manufacturing facility under a lease that commenced on June 1, 2023 and ends on May 31, 2033. The Company hastwo options to extend the lease term forthirty-six orsixty months, at the fair market rental value.

On June 16, 2025, the Company entered into a lease agreement to expand into approximately 30,171 square feet within a life science building located in San Diego, California. The Company will use the facility for office, research and development, and laboratory purposes. The building will be occupied in three phases, the first of which (6,818 square feet) was made available upon lease signing. The next two phases (9,833 and 13,520 square feet, respectively) are expected to be made available by March 2026 and July 2026, respectively. The lease agreement expires 132 months (11 years) from the date on which the last phase is made available, subject to the Company's right toextend the lease term for one additional five-year period, at the then fair market rental value. The initial monthly base rent is $5.95 per square foot, subject to annual increases of 3%, with payment for the first and second phases to commence after occupation of the second phase and the payment for the third phase to commence after occupation of the third phase. The monthly base rent will be abated: (i) for the second through thirteenth months after the second phase occupation for the first and second phases; and (ii) for the first through twelfth months after the third phase occupation solely for the third phase. The Company determined that the three phases of the lease agreement constitute separate lease components, and calculated the right-of-use asset and lease liability of the first phase of $3.3 million. Given the second and third phases of this lease have not yet commenced, the lease liability is excluded from the table below.

In connection with the IRRAS acquisition, the Company assumed an operating lease for 21,200 square feet used for manufacturing and office purposes located in San Diego, California. The lease is set to expire in April 2031, with theoption to extend the lease for one additional five year term, at the then fair market rental rate.

The optional renewal periods for all leases are not considered in the determination of the right-of-use asset or the lease liability as the Company does not consider it reasonably certain that it would exercise either of such options. The lease arrangements contain lease components and non-lease components which are accounted for as a single lease component as the Company has elected the practical expedient to group lease and non-lease components for all leases.

Operating lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term. In determining the present value of lease payments, the Company used the published U.S. High Yield CCC corporate bond rates at the lease commencement date of the Solana Beach lease and the current estimate of the Company's incremental borrowing rate at the lease commencement date of the remaining leases. The weighted average remaining lease term of the Company's operating leases was 8.02 years and 6.81 years, and the weighted average discount rate used to determine the operating lease liability was 10.4% and 12.0%, as of December 31, 2025 and 2024, respectively.

The lease cost was$1.3 million and$0.9 million for the years ended December 31, 2025 and 2024, respectively.

As of December 31, 2025, future minimum lease payments are as follows:

Purchase Commitments

The Company is a party to various purchase arrangements related to its manufacturing and research and development activities. At December 31, 2025 there was approximately$4.8 million of open purchase orders and contractual obligations in the ordinary course of business, the majority of which are due withinone year. Additionally, the Company is also a party to a license and collaboration agreement which requires minimum purchase commitments for aseven-year period starting in 2023. The total remaining minimum purchase commitments related to this agreement is$4.2 million over the next four years.

Legal Contingencies

The Company previously disclosed that it was namedas a defendant to a lawsuit filed by a patient who suffered an adverse outcome in connection with a surgical procedure in which the Company’s ClearPoint system was used. In August 2025, the Company settled this matter. The settlement amount was paid by insurance, and did not have a material impact on the Company's consolidated financial statements.

11. Stockholders' Equity

2025 Stock Purchase Agreement

On May 12, 2025, the Company entered into a Stock Purchase Agreement (the “2025 SPA”) with the 2025 Investor relating to the purchase and sale in a registered direct offering of an aggregate of 275,808 shares of the Company’s common stock at a price of$12.69 per share, based on the trailing 30-trading day volume-weighted average price of the Company’s common stock. The aggregate net proceeds to the Company from the offering totaled approximately$3.3 million after deducting offering expenses payable by the Company.

2024 Public Offering

In March 2024, the Company completed a follow-on public offering of 2,653,848 shares of its common stock, composed of 2,307,694 shares of common stock offered at a public offering price of $6.50 per share and an additional 346,154 shares of common stock pursuant to the exercise of the underwriters' option to purchase additional shares at the public offering price.

Net proceeds from the offering total approximately $16.2 million after deducting underwriting discounts and commissions, and other offering expenses paid by the Company.

The underwriting agreement contains representations, warranties, agreements and indemnification obligations by the Company that are customary for this type of transaction.

2024 At-The-Market (“ATM”) Equity Offering

In November 2024, the Company entered into At-The-Market Equity Offering Sales Agreement with Stifel, Nicolaus & Company, Incorporated, as sales agent (the “ATM Agreement”) to, from time to time, sell shares of its common stock having aggregate sales proceeds of up to $50.0 million, subject to the terms and conditions of the ATM Agreement. As of December 31, 2025, the Company didnot issue any shares of common stock under the ATM Agreement.

Equity Compensation Plans

The Sixth Amended and Restated 2013 Incentive Compensation Plan (the “2013 Plan”) became effective in May 2025, which amended the previous plan to increase the number of shares of common stock available for awards by 700,000 shares. The plan permits the issuance of stock options, restricted stock awards(“RSAs”), restricted stock units (“RSUs”) and other awards to selected employees, directors, and consultants of the Company. The total number of shares of the Company’s common stock reserved for issuance under the 2013 Plan is 6,806,250 of which unvested awards covering 2,528,939 shares were outstanding as of December 31, 2025 and 1,340,527 shares remained available for grants under the 2013 Plan as of that date.

Share-Based Compensation Expense

The Company records share-based compensation expense on a straight-line basis over the related vesting period and recognizes forfeitures as they occur. The following table sets forth share-based compensation expense included in the consolidated statements of operations:

Share-based compensation expense by type of share-based award:

Total unrecognized compensation expense by type of award and the weighted-average remaining requisite service period over which such expense is expected to be recognized (in thousands, unless otherwise noted):

Stock Option Activity

Options granted under the 2013 Plan must have an exercise price equal to at least 100% of fair market value of the Company's common stock on the date of grant. The options generally have a maximum contractual term often years and vest in accordance with the individual award agreements.

Stock option activity under all of the Company’s Plans as of and for the year ended December 31, 2025 is summarized below:

(1)

Intrinsic value is calculated as the estimated fair value of the Company’s stock at December 31, 2025 less the option exercise price of in-the-money options.

A summary of the status of the Company’s non-vested stock options for the year ended December 31, 2025 is presented below:

There wereno stock options granted during 2025 or 2024.

The total intrinsic value of stock options exercised during the years ended December 31, 2025 and 2024 was$0.4 million and$0.1 million, respectively, and represents the difference between the exercise price of the option and the fair value of the common stock on the dates exercised. The total grant-date fair value of stock options vested during each of the years ended December 31, 2025 and 2024 was$0.6 million and$0.8 million, respectively.

The exercise price of stock options granted is equal to the closing price of the common stock on the date of grant. The fair value of each stock option is estimated on the date of grant using the Black-Scholes valuation model.

Restricted Stock Activity

The Company issues RSAs and RSUs. RSAs are grants that entitle the holder to acquire shares of the Company's common stock at zero cost. The shares covered by a RSA cannot be sold, transferred, pledged, assigned or otherwise disposed of until the award vests. A RSU is a promise by the Company to issue a share of its common stock upon vesting of the award. Both RSAs and RSUs vest in annual installments over atwo tothree-year period, contingent on the holder's continued employment with the Company.

RSUs are granted to the Company’s non-employee directors on the day following an annual meeting of stockholders and they vest on the earlier of the first anniversary of the grant date or the day immediately preceding the next annual meeting of stockholders.

RSA activity as of and for the year ended December 31, 2025 is summarized below (no RSAs were granted in 2025 or 2024):

RSU activity as of and for the year ended December 31, 2025 is summarized below:

The estimated fair value of both RSAs and RSUs is based on the closing market value of the Company's common stock on the date of grant. The total fair value of RSAs and RSUs that vested during the years ended December 31, 2025 and 2024 was$6.1 million and$4.9 million, respectively.

Employee Stock Purchase Plan

In June 2021, the Company's stockholders adopted and approved the ClearPoint Neuro, Inc. Employee Stock Purchase Plan (the “ESPP”). In May 2025, the ESPP was amended to increase the number of shares of common stock reserved for issuance from 400,000 to 700,000 shares. The ESPP provides eligible employees the opportunity to purchase shares of common stock at the lower of 85% of the fair market value on either the first day or the last day of the applicable offering period, by having withheld from their salary an amount up to 15% of their compensation. No employee may purchase more than $25,000 worth of common stock (calculated at the time the purchase right is granted) in any calendar year, nor may any employee purchase more than 3,500 shares in anysix-month purchase period. There are 382,463 shares remaining available for grant under the ESPP as of December 31, 2025.

The ESPP is deemed to be compensatory, and therefore, ESPP expense has been included in share-based compensation expenses in the consolidated statements of operations for the years ended December 31, 2025 and 2024.

During the year ended December 31, 2025,56,535 shares were purchased under the ESPP at an average per share price of$9.88.

The fair value of the purchase options under the ESPP are estimated at the beginning of the purchase period using the Black-Scholes valuation model utilizing the following assumptions:

The weighted-average fair value per ESPP purchase right during the years ended December 31, 2025 and 2024 was$5.02 per share and$2.10 per share, respectively.

12. Segment Disclosures

The Company is a medical device company offering precise navigation to the brain, and provides clinical products and preclinical development services for controlled drug and device delivery. Even with the acquisition of IRRAS, the Company's operations are based in, and revenues are derived predominantly in, the United States, and business activities are managed on a consolidated basis. The Company operates inone reportable segment.

The Company's Chief Executive Officer is the Chief Operating Decision Maker (“CODM”). The CODM regularly reviews disaggregated revenue data by product line as disclosed in Note 4; however, consolidated net income is utilized as the measure of profit and loss to assess performance of the business and determination on how to allocate resources. Significant expenses within net income include cost of revenue, research and development, sales and marketing, and general and administrative expenses, which are each separately presented on the Company's Consolidated Statements of Operations. Segment asset information is not used by the CODM to allocate resources.

13. Income Taxes

The Company adopted ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” on a prospective basis beginning with the year ended December 31, 2025. The following table presents required disclosures pursuant to ASU 2023-09 and reconciles the U.S. federal statutory tax amount to the actual global effective amount and rate for the year ended December 31, 2025.

The following table presents the required disclosures prior to adoption of ASU 2023-09 and reconciles the U.S. federal statutory income tax rate to the actual global effective amount and rate for the year ended December 31, 2024.

The tax effect of temporary differences and carryforwards that give rise to significant portions of the deferred income tax assets are as follows:

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Generally, the ultimate realization of deferred tax assets is dependent on the generation of future taxable income during the periods in which those temporary differences become deductible. Based on all relevant factors, a valuation allowance of$64.2 million has been established against deferred tax assets as of December 31, 2025, as management determined that it is more likely than not that sufficient taxable income will not be generated to realize those temporary differences.

The net deferred tax liability of$0.4 million as of December 31, 2025 relates to the acquisition of IRRAS, primarily related to book intangibles (with finite useful lives for book purposes and carryover tax basis) partially offset by tax net operating losses. As of December 31, 2024, the Company had no material net deferred tax liability and maintained a full valuation allowance against its net deferred income tax assets due to uncertainties surrounding their realization in future periods. Due to the timing of the acquisition late in 2025, any partial release of the valuation allowance would be reflected in the year ended December 31, 2025, and future periods as evidence of realizability evolves. The Company is subject to multiple state minimum income tax expenses for the years ended December 31, 2025 and 2024. If it is determined in the future that it is more likely than not that any deferred income tax assets are realizable, the valuation allowance will be reduced by the estimated net realizable amounts.

At December 31, 2025, the Company had net operating loss carryforwards of approximately$258.2 million and$163.1 million available to reduce future taxable income, if any, for federal and state income tax purposes, respectively. The federal net operating loss carryforwards begin expiring in 2026, and the state net operating loss carryforwards will begin expiring in 2028. It is possible that the Company will not generate taxable income in time to use these net operating loss carryforwards before their expiration. In addition, under Section 382 of the Internal Revenue Code of 1986 (the “Code”), as amended, if a corporation undergoes an “ownership change” (as defined in the Code), the corporation’s ability to use its pre-change tax attributes to offset its post-change income may be limited. In general, an “ownership change” occurs if there is a cumulative change in a “loss corporation’s” (as defined in the Code) ownership by 5% shareholders that exceeds 50 percentage points over a rolling three-year period.

Management has evaluated the effect of guidance provided by GAAP regarding accounting for uncertainty in income taxes and determined the Company has no uncertain tax positions that could have a significant impact on its consolidated financial statements. The Company’s federal income tax return for 2022 and subsequent years remain open for examination.