CapsoVision, Inc

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited financial statements and the related notes and the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the year ended December 31, 2024 contained in the prospectus filed on July 3, 2025 with the Securities and Exchange Commission, as part of the Company’s Registration Statement (File No. 333-287148) (the “Prospectus”). In addition to historical financial information, the following discussion contains forward looking statements that reflect our plans, estimates, and beliefs that involve significant risks and uncertainties. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to those differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.”

Current wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited financial statements and the related notes and the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2025. In addition to historical financial information, the following discussion contains forward looking statements that reflect our plans, estimates, and beliefs that involve significant risks and uncertainties. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to those differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.”

Previous wording

We are a global medical technology company that develops advanced imaging and AI technologies, deployed in our capsule endoscopy solutions to identify abnormalities of the GI tract for diagnostic and screening purposes. Our capsule endoscope system, currently comprising the CapsoCam Plus single-use capsule and the CapsoCloud and CapsoView software, including 360 degree panoramic visualization of the small-bowel mucosa to investigate abnormalities such as obscure GI bleeding and Crohn’s disease, while our AI assisted pathology detection tools detect and highlight suspected abnormalities for a clinician, reducing their time to review the video and making capsule endoscopy more financially attractive to their practice. Our Cloud solution enables medical professionals to access their patients’ videos and review those videos anytime, anywhere, 24/7, without a need to have an on-site server and maintain it, while accumulating an immense data trove on the Cloud storage for AI training.

Current wording

We are a global medical technology company that develops advanced imaging and AI technologies, deployed in our capsule endoscopy solutions to identify abnormalities of the GI tract for diagnostic and screening purposes. Our capsule endoscope system, currently comprising the CapsoCam Plus single-use capsule and the CapsoCloud and CapsoView software, including 360 degree panoramic visualization of the small-bowel mucosa to investigate abnormalities such as obscure GI bleeding and Crohn’s disease, while our AI assisted pathology detection tools detect and highlight suspected abnormalities for a clinician, reducing their time to review the video and making capsule endoscopy more financially attractive to their practice. Our cloud-based solution enables medical professionals to access their patients’ videos and review those videos anytime, anywhere, 24/7, without a need to have an on-site server and maintain it, while accumulating an immense data trove on the cloud storage for AI training.

Previous wording

We sell our small bowel capsule system to our provider customers (i.e., primarily gastroenterologists practicing in clinics and/or hospitals) both internationally and in the U.S. through our global sales and marketing team. In the U.S., we sell to customers directly. Internationally we sell both directly and through qualified exclusive distributors in specified regions. Our largest international shipping destinations include France, Germany, and Canada. We currently manufacture and intend to continue manufacturing our CapsoCam capsules included in our GI-tract capsule endoscopy solution (including CapsoCam Colon capsules). To assist us in manufacturing our GI-tract capsule endoscopy products, we rely on component suppliers and assembly manufacturers based in Asia (particularly Taiwan and Japan). We were founded in 2005 and are headquartered in Saratoga, California.

Current wording

We were founded in 2005 and are headquartered in Saratoga, California. We sell our small bowel capsule system to our provider customers (i.e., primarily gastroenterologists practicing in clinics and/or hospitals) both internationally and in the U.S. through our global sales and marketing team. In the U.S., we sell to customers directly. Internationally we sell both directly and through qualified exclusive distributors in specified regions. Our largest international shipping destinations in thethree months ended March 31, 2026 include France, Germany, and Saudi Arabia. As of March 31, 2026, our CapsoCam Plus has been used in over 167,000 patients. We currently manufacture and intend to continue manufacturing our CapsoCam capsules included in our GI-tract capsule endoscopy solution (including CapsoCam Colon capsules). To assist us in manufacturing our GI-tract capsule endoscopy products, we rely on component suppliers and assembly manufacturers based in Asia (particularly Taiwan and Japan).

Previous wording

Since we continue to invest in AI to improve our existing products, we made significant progress with a clinical study to demonstrate the benefits of our incorporation of AI technology into CapsoCam Plus, our existing product for small bowel. We currently plan to submit the related 510(k) application to the FDA by year end 2025. We experienced a slight delay in submission from our previously anticipated timing due to resource constraints from our third-party biostatistician. To mitigate further delays, we have contracted with an additional biostatistical consulting group. We expect that it will take approximately 6 months for the FDA to review our application, and issue their pending clearance, commercialization is planned to begin shortly thereafter.

Current wording

Since we continue to invest in AI to improve our existing products, we completed a clinical study to demonstrate the benefits of our incorporation of AI technology into CapsoCam Plus, our existing product for the small bowel. We submitted the related 510(k) application to the FDA in December 2025. We received feedback from the FDA in March 2026 and submitted our responses to the FDA in April 2026. We will continue engaging with the FDA and expect to obtain the FDA clearance by the middle of 2026. The commercialization is planned to begin shortly thereafter.

Previous wording

Longer term, we believe our CapsoCam family of products, incorporating our panoramic imaging solution, can be adapted to address new GI medical indications. Potential new medical indications include esophageal medical conditions (such as esophageal varices) and pancreatic cancer. In connection with our efforts to address pancreatic cancer, we submitted an FDA “Breakthrough Device Designation” application for our capsule endoscopy solution on November 6, 2025. A Breakthrough Device Designation prioritizes a device in the FDA’s review queue for all future regulatory submissions and accelerates communications (i.e., negotiations and feedback) with the FDA, thereby expediting the marketing application process.

Current wording

Longer term, we believe our CapsoCam family of products, incorporating our panoramic imaging solution, can be adapted to address new GI medical indications. Potential new medical indications include esophageal medical conditions (such as esophageal varices) and pancreatic cancer. In connection with our efforts to address pancreatic cancer, we submitted an FDA “Breakthrough Device Designation” application for our capsule endoscopy solution on November 6, 2025. A response from FDA in January 2026 determined that the CapsoCam UGI does allow for visualization of the papilla and its abnormalities, for both pre-cancerous and cancerous lesions. Due to the fact that the device does not specifically define diagnostic criteria, the application was not approved. Following the FDA’s response, we initiated a study for early pancreatic cancer detection using the CapsoCam UGI system in May 2026. This study will build on established scientific literature and engage leading opinion leaders, including leadership of leading societies in the pancreatobiliary field, to define malignancy diagnosis criteria with the device. This study is expected to enroll up to 140 patients using the CapsoCam UGI system. As of May 11, 2026, the first patient has been enrolled in this study. We expect to resubmit the Breakthrough Device Designation application following the study, when additional data is available. The breakthrough designation is a part of the on-going project, potentially supplementing the regulatory pathway and approval for early pancreas cancer detection. However, additional research and studies to collect data may delay our anticipated timeline for obtaining the regulatory clearance (including obtaining the Breakthrough Device Designation) and may increase our research and development costs.

Previous wording

As of September 30, 2025, we had an accumulated deficit of $148.3 million. To date, we have funded our operations primarily through proceeds from the sale of shares of our convertible preferred stock, IPO proceeds and cash generated from the sale of CapsoCam capsules and the use of CapsoCloud or CapsoView, CapsoCloud data access, and capsule video reading service.

Current wording

As of March 31, 2026, we had an accumulated deficit of $162.7 million. To date, we have funded our operations primarily through proceeds from the sale of shares of our convertible preferred stock, IPO and Private Placement proceeds and cash generated from the sale of CapsoCam capsules and the use of CapsoCloud or CapsoView, CapsoCloud data access, and capsule video reading service.

Previous wording

Our mission is to transform lives through innovative medical solutions that improve the health of patients around the world. When used in this Quarterly Report on Form 10-Q, the terms "we," "us," "our" and "the Company" mean CapsoVision and its divisions and subsidiaries.

Current wording

Our mission is to transform lives through innovative medical solutions that improve the health of patients around the world. When used in this Quarterly Report on Form 10-Q, the terms "we," "us," "our" and "the Company" mean CapsoVision.

Previous wording

Success in further penetrating the small bowel capsule endoscopy market. Until commercialization of our CapsoCam Colon capsule (targeted forend of 2026), to grow our revenues (and, in turn, reduce our expected losses and negative cash flows), we intend to grow our small-bowel-related revenues by, among other things: (i) retaining and growing our customer base; (ii) cost-effectively increasing the size and effectiveness of our U.S. and international sales teams and our customer-support function; (iii) pursuing the pediatric market (with children comprising a significant portion of the Crohn’s disease patient population); (iv) introducing complementary products such as our (a) capsule delivery device (availability expected in the first quarter of 2026) and (b) patency capsule (for verifying a capsule endoscope can pass through the bowel without retention prior to an exam) (FDA 510(k) submission planned in the first quarter of 2026); (v) facilitating increased telemedicine adoption following recent FDA clearance of remote ingestion of our CapsoCam Plus, allowing patients to ingest our capsules in the comfort of their own homes with remote provider supervision; and (vi) following related FDA 510(k) clearance (targeted for mid-2026), commercializing our updated CapsoCam Plus which incorporates our AI assisted pathology detection technology.

Current wording

Success in further penetrating the small bowel capsule endoscopy market. Until commercialization of our CapsoCam Colon capsule (targeted for the middle of 2027), to grow our revenues (and, in turn, reduce our expected losses and negative cash flows), we intend to grow our small-bowel-related revenues by, among other things: (i) retaining and growing our customer base; (ii) cost-effectively increasing the size and effectiveness of our U.S. and international sales teams and our customer-support function; (iii) pursuing the pediatric market (with children comprising a significant portion of the Crohn’s disease patient population); (iv) introducing complementary products such as our (a) capsule delivery device with full commercialization expected in the fourth quarter of 2026, and (b) patency capsule (for verifying whether a capsule endoscope can pass through the bowel without retention prior to an exam) with tentative FDA 510(k) submission planned by the end of the second quarter of 2026; (v) facilitating increased telemedicine adoption following recent FDA clearance of remote ingestion of our

Previous wording

The U.S. government recently announced changes to its trade policies, including increasing tariffs on imports. Such changes could pose a risk to our business that could affect our revenue, cost of revenue, gross profit, and gross margin. We will continue to evaluate the potential impact of tariffs on our business and results of operations and mitigating actions we might consider implementing.

Current wording

Beginning in early 2025, the U.S. government announced changes to its trade policies, including increasing tariffs on imports. Such changes could pose a risk to our business that could adversely affect our revenue, cost of revenue, gross profit, and gross margin. We will continue to evaluate the potential impact of tariffs on our business and results of operations and mitigating actions we might consider implementing.

Previous wording

In the near term, we expect our clinical development expenses to vary as a percent of revenue as, among others, we (i) finalized the first arm of our CapsoCam Colon large-scale pivotal study and began the second arm of our CapsoCam Colon pivotal study involving the second generation of that capsule (incorporating further advanced features designed to improve the accuracy of CapsoCam Colon) with the second arm expected to involve approximately 250 patients enrolled at up to 10 sites in the U.S. and plan to refine the study based on the FDA comments to the first arm pivotal study and (ii) continued clinical development of our updated small bowel CapsoCam Plus capsule incorporating our AI assisted pathology detection technology.

Current wording

In the near term, we expect our clinical development expenses to vary as a percent of revenue as, among others, we (i) continued the second arm of our CapsoCam Colon pivotal study involving the second generation of that capsule (incorporating further advanced features designed to improve the accuracy of CapsoCam Colon) with the second arm expected to involve approximately 800 patients enrolled at up to 20 sites in the U.S. and plan to refine the study based on the FDA comments to the first arm pivotal study, (ii) continued clinical development of our updated small bowel CapsoCam Plus capsule incorporating our AI assisted pathology detection technology, and (iii) conducted additional research and studies to collect data for the development of CapsoCam UGI.

Previous wording

For the three and nine months ended September 30, 2025 and 2024, international sales accounted for 22% and 23% of total revenue.

Current wording

For the three months ended March 31, 2026 and 2025, international sales accounted for 28% and 23% of total revenue.

Previous wording

As we continued to scale our business, costs of revenue increased $0.3 million, or 24%, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024 from $1.3 million to $1.6 million. For the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024 the cost of revenue was $4.4 million and $3.7 million, respectively, which represented an increase of $0.8 million, or 21% period-over-period. The increased costs of revenue was attributable to increased unit sales of CapsoCam Plus for the small-bowel and the related services and to increased customs and tariffs due to the change in U.S. customs enforcement.

Current wording

As we continued to scale our business, costs of revenue increased $0.2 million, or 13%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025 from $1.3 million to $1.5 million. The increased costs of revenue was attributable to increased customs and tariffs due to the change in U.S. customs policy.

Previous wording

Gross profit increased $0.3 million, or 16%, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, from $1.7 million to $1.9 million. For the nine months ended September 30, 2025 and 2024, the total gross profit was $5.2 million and $4.6 million respectively, representing a gross profit increase of $0.6 million, or 12% period-over-period. For the three months ended September 30, 2025 and 2024, the gross margin was 54% and 56%, respectively. For the nine months ended September 30, 2025 and 2024, the gross margin was 54% and 56%, respectively. The increase in gross profit was a result of increased CapsoCam Plus unit sales and the related software component, while the decline of the gross margin is due to a pressure on selling prices we have when operating in a highly competitive market and changes the U.S. government made to the trade policies and tariffs at the beginning of the year resulting in increase of expenses for customs and tariffs.

Current wording

Gross profit decreased $0.2 million, or 11%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, from $1.5 million to $1.3 million. For the three months ended March 31, 2026 and 2025, the gross margin was 48% and 54%, respectively. The decrease in gross profit was a result of changes the U.S. government made to the trade policies and tariffs resulting in an increase in expenses for customs and tariffs.

Previous wording

The following tables provide a summary for our key operating expenses forthe three and nine months ended September 30, 2025 and 2024.

Current wording

The following tables provide a summary for our key operating expenses forthe three months ended March 31, 2026 and 2025.

Previous wording

Our reported net loss attributable to CapsoVision common stockholders for the three months ended September 30, 2025 and 2024 totaled approximately $7.9 million and $5.8 million, respectively, representing a period-over-period increase of $2.1 million or 37%. Our reported net loss attributable to CapsoVision common stockholders for the nine months ended September 30, 2025 and 2024 was $18 million and $15.3 million, respectively, representing a period-over-period increase of $2.7 million or 17%.

Current wording

Our reported net loss attributable to CapsoVision common stockholders for the three months ended March 31, 2026 and 2025 totaled approximately $7.0 million and $5.4 million, respectively, representing a period-over-period increase of $1.7 million or 31%.

Previous wording

To date, we have financed our operations primarily through the net proceeds we have received from the sales of our convertible preferred stock and IPO common stock as well as cash generated from sales of our CapsoCam Plus capsule endoscopy solution. We have generated losses from our operations as reflected in our accumulated deficit of $148.3 million as of September 30, 2025. Net cash used in operating activities was $5.7 million and $7.1 million for the three months ended September 30, 2025 and 2024, respectively. For the nine months ended September 30, 2025 and 2024, net cash used in operating activities was $15.2 million and $14.7 million, respectively.

Current wording

To date, we have financed our operations primarily through the net proceeds we have received from the sales of our convertible preferred stock, IPO and Private Placement as well as cash generated from sales of our CapsoCam Plus capsule endoscopy solution. We have generated losses from our operations as reflected in our accumulated deficit of $162.7 million as of March 31, 2026. Net cash used in operating activities was $6.1 million and $5.0 million for the three months ended March 31, 2026 and 2025, respectively.

Previous wording

Our interim (unaudited) financial statements for the nine months ended September 30, 2025 included in this Quarterly Report on Form 10-Q note that there is substantial doubt about our ability to continue as a going concern within one year after the date of issuance of those financial statements (see Note 2. GOING CONCERN). This means that we have expressed substantial doubt about our ability to continue our operations without an additional infusion of capital from external sources. Our interim (unaudited) financial statements have been prepared on a going concern basis and do not include any adjustments to reflect the future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may be necessary should we be unable to continue as a going concern. If we are unable to finance our operations, our business would be in jeopardy and we might not be able to continue operations and might have to liquidate our assets. In that case, investors might receive less than the value at which those assets are carried on our interim (unaudited) financial statements for the nine months ended September 30, 2025, and it is likely that investors would lose all or a part of their investment. See “Risk Factors—Risks Relating to Our Business and Industry—Our interim (unaudited) financial statements for the nine months ended September 30, 2025 include a footnote raising substantial doubt about our ability to continue as a 'going concern' and we will likely need to raise additional financing to fund our business and revenue growth plans."

Current wording

Our interim (unaudited) financial statements for the three months ended March 31, 2026 included in this Quarterly Report on Form 10-Q note that there is substantial doubt about our ability to continue as a going concern within one year after the date of issuance of those financial statements (see Note 2. GOING CONCERN). This means that we have expressed substantial doubt about our ability to continue our operations without an additional infusion of capital from external sources. Our interim (unaudited) financial statements have been prepared on a going concern basis and do not include any adjustments to reflect the future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may be necessary should we be unable to continue as a going concern. If we are unable to finance our operations, our business would be in jeopardy and we might not be able to continue operations and might have to liquidate our assets. In that case, investors might receive less than the value at which those assets are carried on our interim (unaudited) financial statements for the three months ended March 31, 2026, and it is likely that investors would lose all or a part of their investment. See “Risk Factors—Business and Industry Risks—Our Quarterly Report, our unaudited financial statements for the three months ended March 31, 2026 and our audited financial statements for the year ended December 31, 2025 include a footnote raising substantial doubt about our ability to continue as a ‘going concern’ and we will likely need to raise additional financing to fund our business and revenue growth plans."

Previous wording

As of September 30, 2025, we had approximately $17.8 million in cash and cash equivalents. From our inception through September 30, 2025, we have received aggregate gross proceeds of $143.6 million from sales of our convertible preferred stock, which were automatically converted into shares of our common stock in connection with the completion of our IPO. To provide for additional liquidity prior to the completion of our IPO, on May 28, 2025 we received $1 million as a note payable from an existing investor. The note payable, together with interest thereon (at 1% per month) was repaid shortly after completion of our IPO. In consideration for providing the note, we issued the investor 7,508 shares of our common stock.

Current wording

As of March 31, 2026, we had approximately $17.9 million in cash and cash equivalents. From our inception through March 31, 2026, we have received aggregate gross proceeds of $143.6 million from sales of our convertible preferred stock, which were automatically converted into shares of our common stock in connection with the completion of our IPO. To provide for additional liquidity prior to the completion of our IPO, on May 28, 2025 we received $1 million as a note payable from an existing investor. The note payable, together with interest thereon (at 1% per month) was repaid shortly after completion of our IPO. On July 3, 2025 we completed our IPO from which we received the net proceeds in the amount of $23.4 million. On March 16, 2026 we closed the Private Placement and received the gross proceeds in the amount of $14 million.

Previous wording

As of September 30, 2025, we had an accumulated deficit of $148.3 million and cash and cash equivalents of $17.8 million. On July 3, 2025, we completed our IPO with the net proceeds to us of approximately $23.4 million after deducting underwriting discounts and commissions, and offering expenses payable by us. Based on our current operating plan, we believe that our existing cash balances will not be sufficient to fund our operations for at least the next 12 months after the date of issuance of these financial statements.

Current wording

As of March 31, 2026, we had an accumulated deficit of $162.7 million and cash and cash equivalents of $17.9 million. On March 16, 2026, we completed the Private Placement with the gross proceeds to us of approximately $14 million. Based on our current operating plan, we believe that our existing cash balances will not be sufficient to fund our operations for at least the next 12 months after the date of issuance of these financial statements.

Previous wording

If the sources of cash together with expected cash generated from operating activities are insufficient to satisfy our liquidity requirements, we may need to engage in equity or debt financings to secure additional funds. If we raise additional funds through further issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences, and privileges superior to those of holders of our common stock. In addition, the undertaking of indebtedness would increase our fixed obligations and include covenants or other restrictions that could impede our ability to manage our operations. Our ability to raise additional funds may be adversely impacted by deteriorating global economic conditions and the disruptions to and volatility in the credit and financial markets in the U.S. and fluctuations in interest rates, resulting from factors that include but are not limited to, inflation, the conflict between Russia and Ukraine, political tensions between China and Taiwan and other factors, diminished liquidity and credit availability, tariffs, declines in consumer confidence, declines in economic growth, increases in unemployment rates and interest rates, and uncertainty about economic stability. If the equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult, more costly, and more dilutive. Further, if additional financing is needed, we may not be able to obtain additional financing on terms favorable to us or at all. Our inability to obtain adequate financing or financing on terms satisfactory to us, when we require it, could significantly limit our ability to continue supporting our business growth and responding to business challenges and opportunities.

Current wording

If the sources of cash together with expected cash generated from operating activities are insufficient to satisfy our liquidity requirements, we may need to engage in equity or debt financings to secure additional funds. If we raise additional funds through further issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences, and privileges superior to those of holders of our common stock. In addition, the undertaking of indebtedness would increase our fixed obligations and include covenants or other restrictions that could impede our ability to manage our operations. Our ability to raise additional funds may be adversely impacted by deteriorating global economic conditions and the disruptions to and volatility in the credit and financial markets in the U.S. and fluctuations in interest rates, resulting from factors that include but are not limited to, inflation, the conflict between Russia and Ukraine, escalation in Iran, political tensions between China and Taiwan and other factors, diminished liquidity and credit availability, tariffs, declines in consumer confidence, declines in economic growth, increases in unemployment rates and interest rates, and uncertainty about economic stability. If the equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult, more costly, and more dilutive. Further, if additional financing is needed, we may not be able to obtain additional financing on terms favorable to us or at all. Our inability to obtain adequate financing or financing on terms satisfactory to us, when we require it, could significantly limit our ability to continue supporting our business growth and responding to business challenges and opportunities.

Previous wording

For the nine months ended September 30, 2025, net cash used in operating activities totaled $15.2 million, primarily driven by the net loss of $17.9 million for the period. Additional contributing factors included a $0.6 million increase in inventory to support increasing demand, offset by a $2.2 million increase in accrued expenses and other current liabilities, mainly due to research and development expenses and increased headcount related expenses, as well as $0.6 million increase in stock-based compensation expenses due to new grants and stock option accelerations.

Current wording

For the three months ended March 31, 2026, net cash used in operating activities totaled $6.1 million, primarily driven by the net loss of $7.0 million for the period. Additional contributing factors included a $0.4 million increase in accrued expenses and other current liabilities, and a $0.2 million increase in accounts payable, mainly due to research and development expenses and increased clinical trial expenses, as well as $0.3 million increase in stock-based compensation expenses due to new grants.

Previous wording

For the nine months ended September 30, 2024, net cash used in operating activities was $14.7 million, primarily attributable to the net loss of $15.3 million. Cash outflows were further impacted by a $0.6 million increase in inventory to meet increased demand, a $0.5 million increase in accrued expenses and other current liabilities, mainly due to research and development expenses, including on-going clinical trials, and a $0.2 million increased in accounts payable driven primarily by on-going clinical trials.

Current wording

For the three months ended March 31, 2025, net cash used in operating activities was $5.0 million, primarily attributable to the net loss of $5.4 million. Cash outflows were further impacted by a $0.4 million increase in inventory to meet increased demand, and a $0.8 million increase in accrued expenses and other current liabilities, mainly due to research and development expenses, including on-going clinical trials.

Previous wording

Net cash used in investing activities during the nine months ended September 30, 2025 and 2024 was $0.1 million and $0.2 million, respectively, and consisted of purchases of property and equipment.

Current wording

Net cash used in investing activities during the three months ended March 31, 2026 and 2025 was immaterial and consisted of purchases of property and equipment.

Previous wording

Net cash provided by financing activities during the nine months ended September 30, 2025 consisted primarily of $23.4 million in net proceeds from the IPO, and $0.2 million in proceeds from the exercise of options on common stock and warrants. For the nine months ended September 30, 2024, net cash provided by financing activities was $10.1 million, which consisted of proceeds primarily from the sales of our preferred stocks.

Current wording

Net cash provided by financing activities during the three months ended March 31, 2026 consisted primarily of $14 million in gross proceeds from the Private Placement. For the three months ended March 31, 2025, net cash provided by financing activities was immaterial and consisted of the proceeds from exercise of stock options and warrants.

Previous wording

Our contractual obligations at September 30, 2025 include operating lease payments of $1.1 million due within 27 months and $2.5 million in outstanding purchase commitment for the development agreement with Canon Inc. due in 18 months. We expect to fund these obligations through our existing cash balances and cash flows from operations.

Current wording

Our contractual obligations at March 31, 2026 include operating lease payments of $0.9 million due within 21 months and $2.2 million in outstanding purchase commitment for the development agreement with Canon Inc. due in 12 months. We expect to fund these obligations through our existing cash balances and cash flows from operations.