Valion Bio, Inc.

Previous wording

Tivic Health’s Toll-like Receptor 5 (“TLR5”) program’s lead product candidate is the late-stage TLR5 agonist, Entolimod™, to treat acute radiation syndrome (“ARS”) and for remediating side effects of medical radiation and chemotherapy. Tivic Health holds investigational new drug (“IND”) applications for Entolimod for ARS and advanced cancer applications. The U.S. Federal Drug Administration (“FDA”) has granted Fast Track and Orphan Drug designations to Entolimod™ for the treatment of ARS. The Company has licensed the rights to Entolimod and Entolasta as they related to the neutropenia indication and plans, over time, to undertake Phase 2 clinical studies for Entolimod and/or Entolasta for the treatment of neutropenia and other oncology-related indications.

Current wording

The cornerstone of Valion’s portfolio is its TLR5 program, led by Entolimod™, a late-stage recombinant biological agonist designed to mitigate or treat acute radiation syndrome ("ARS”) and mitigate or treat the systemic toxicities associated with medical radiation and chemotherapy. Entolimod is a versatile therapeutic with both prophylactic and mitigative capabilities, effectively preventing or treating the cellular damage caused by genotoxic treatments. The clinical significance of Entolimod has been recognized by the U.S. Food and Drug Administration ("FDA"), which has granted the candidate both Fast Track and Orphan Drug designations for the treatment of ARS. Furthermore, the Company holds Investigational New Drug ("IND") applications for Entolimod in both ARS and advanced oncology, with plans to advance Entolimod and its optimized variant, Entolasta™, into Phase 2 clinical studies for neutropenia and other oncology-related indications.

Previous wording

On February 11, 2025, we entered into the License Agreement with Statera, as amended and restated in June 2025 (the "A&R License Agreement"), pursuant to which we acquired (i) an exclusive worldwide license to the Licensed Molecules as it relates to the Initial Indication and (ii) the Exclusive Option to acquire the exclusive worldwide license to the Subsequent Indications and to the TLR5 agonist follow-on program of Statera known as Entolasta. Additionally, on March 28, 2025, we notified Statera of our election to exercise the Neutropenia Option. As partial consideration for the license, we made certain cash payments and issued certain shares of common stock and Series A Preferred Stock to Statera and Avenue.

Current wording

On February 11, 2025, we entered into the License Agreement with Statera, whereby we acquired (i) an exclusive worldwide license to the proprietary TLR5 agonist program of Statera known as Entolimod (the "Licensed Molecules”) as it relates to the ARS indication (the "Initial Indication”)and (ii)an exclusive option (the "Exclusive Option”) to acquire the exclusive worldwide license to additional indications, including Lymphocyte Exhaustion, Immunosenescence, Neutropenia and/or Vaccine Adjuvant (the "Subsequent Indications”) and to the TLR5 agonist program of Statera known as Entolasta, in each case as described in more detail below. The License Agreement transaction was consummated concurrently therewith on February 11, 2025 (the "Closing Date”). On February 11, 2025, in connection with, and as consideration for the License Agreement, the Company also entered into a Securities Purchase Agreement with Statera, pursuant to which the Company issued and sold to Statera an aggregate of (i) 55,635 shares of Company common stock and (ii) approximately 360 shares of Series A Preferred Stock for an aggregate price of approximately $1.2 million.

Previous wording

Pursuant to the A&R License Agreement, we will be liable to Statera for certain royalty payments on net sales for the ARS indication as a single agent and the neutropenia indication, and, if we exercise the Exclusive Option with respect to other indications, net sales for all Subsequent Indications, within certain royalty period. Additionally, the A&R License Agreement obligates us to develop and commercialize the licensed products, at our own cost and expense, inclusive of licensed products with respect to any Subsequent Indications obtained upon exercise of an Exclusive Option. In the development and commercialization process, we are obligated to meet certain milestones, and must provide Statera and Avenue certain milestone payments, payable in either the form of cash or Company stock (at our sole discretion), upon accomplishing each milestone, as discussed in additional detail in Note 7 to the unaudited condensed financial statements filed with this Quarterly Report.

Current wording

The License Agreement obligates us to develop and commercialize the licensed products, at our own cost and expense, inclusive of licensed products with respect to any Subsequent Indications obtained upon exercise of an Exclusive Option. In the development and commercialization process, we are obligated to meet certain milestones, and must provide Statera with certain milestone payments, payable in either the form of cash or Company stock (at our sole discretion), upon accomplishing each milestone as outlined below, none of which have been met this quarter.

Previous wording

We have continued to intentionally maintain a small core team at this stage of the Company, including managing our headcount to reduce operating expenses; however, as we progress in the clinical development of our product candidates, we expect that we will increase our headcount to address our needs. We have relied, and continue to rely, heavily on third-party service providers, including consultants, marketing agencies, contract manufacturing organizations, software-as-a-service platforms, clinical research organizations, academic research partnerships, finance and accounting support, quality and regulatory support and legal support to carry out our operations. As we integrate new services associated with the ramp-up in biologic development and commercialization, we may experience unexpected delays and incur additional expenses.

Current wording

We have expanded our headcount to support our growth and reduce reliance on third-party service providers in areas where the benefits outweigh the costs. We have relied, and continue to rely, heavily on third-party service providers, including software-as-a-service platforms, clinical research organizations, finance and accounting support, and legal support to carry out our operations.

Previous wording

Comparison of the Three and Nine Months Ended September 30, 2025*** and 2024***

Current wording

Comparison of the Three Months Ended*** March 31, 2026 and 2025***

Previous wording

General and administrative expenses include D&O insurance, personnel costs, expenses for outside professional services and other expenses. Personnel costs consist of salaries, bonuses, benefits and stock-based compensation expense. Outside professional services consist of legal, finance, accounting and audit services, and other consulting fees. We expect general and administrative expenses to increase moderately as we implement compliance programs related to potential government customers.

Current wording

Selling, general and administrative expenses include personnel costs, consulting expenses related to business development, D&O insurance, outside professional services and other expenses. Personnel costs consist of salaries, bonuses, benefits and stock-based compensation expense. Outside professional services consist of legal, finance, accounting and audit services, and other consulting fees. Beginning in the second quarter of 2025, we began to incur costs associated with business development and government relations efforts related to Entolimod. We expect selling, general and administrative expenses to vary as we expand our business development efforts related to Entolimod.

Previous wording

Since our formation in September 2016, we have devoted substantially all of our efforts to research and development, to regulatory clearance and to early market development and testing for our first product, released September 2019 in the United States, investments in product candidates deriving from our work in vagus nerve stimulation, entry into biologic therapeutics with our TLR5 program, and evaluation and conducting diligence on inorganic growth opportunities. Our focus has substantively shifted from growing the ClearUP business to advancing our biologic and bioelectronic pipeline towards commercial outcomes as we wind down the ClearUP business by the end of the year. We are not profitable and have incurred net losses and negative cash flows from our operations in each year since our inception. As of September 30, 2025, we had cash and cash equivalents of $3.5 million, working capital of $3.1 million and an accumulated deficit of $49.6 million.

Current wording

Since our formation in September 2016 and until early 2025, we have devoted substantially all of our efforts to research and development, to regulatory clearance and to early market development and testing for our first product, released September 2019 in the United States. Since early 2025, we have focused our efforts on entry into biologic therapeutics with our TLR5 program and the development of our lead product candidate, Entolimod. We are not profitable and have incurred net losses and negative cash flows from our operations in each year since our inception. As of March 31, 2026, we had cash and cash equivalents of $7.2 million, working capital of $5.3 million and an accumulated deficit of $59.0 million.

Previous wording

Although we continuously monitor operating expenses, we expect that our operating expenses may increase significantly as we discover, acquire, validate and develop our current product candidates and new product candidates; seek regulatory approval and, if approved, proceed to commercialization of new products, including near-term investments in validation of our biologic manufacturing process, preparation of regulatory submissions to domestic and international bodies, and further activities supporting sales and commercialization of Entolimod and, in the future, Entolasta; obtain, maintain, protect and enforce our intellectual property portfolio; and hire additional personnel. Furthermore, we have incurred and will continue to incur additional costs associated with operating as a public company. Management expects to incur substantial additional operating losses for the foreseeable future to conduct pre-clinical and clinical trials, complete development or acquisition of new product lines, obtain regulatory approvals, launch and commercialize our products and continue research and development programs. Based on the Company’s current cash levels and burn rate, amongst other things, the Company believes its cash and financial resources may be insufficient to meet the Company’s anticipated needs for the twelve months following the date of issuance of the financial statements for the nine months ended September 30, 2025, included elsewhere in this Quarterly Report, which raises substantial doubt about the Company’s ability to continue as a going concern within one year from the issuance date of the financial statements.

Current wording

Although we continuously monitor operating expenses, we expect that our operating expenses may increase significantly as we discover, acquire, validate and develop our current product candidates and new product candidates; seek regulatory approval and, if approved, proceed to commercialization of new products, including near-term investments in validation of our biologic manufacturing process, preparation of regulatory submissions to domestic and international bodies, and further activities supporting sales and commercialization of Entolimod and, in the future, Entolasta; obtain, maintain, protect and enforce our intellectual property portfolio; and hire additional personnel. Our expenses have increased as a result of the asset acquisition that took place in December 2025 and our entry into the CDMO market. We will incur significant costs associated with the CDMO business until and unless such time as we can attract customers and derive revenues to offset such expenses. Furthermore, we have incurred and will continue to incur additional costs associated with operating as a public company. Management expects to incur substantial additional operating losses for the foreseeable future to conduct pre-clinical and clinical trials, complete development or acquisition of new product lines, obtain regulatory approvals, launch and commercialize our products and continue research and development programs. Based on the Company’s current cash levels and burn rate, amongst other things, the Company believes its cash and financial resources may be insufficient to meet the Company’s anticipated needs for the twelve months following the date of issuance of the financial statements for the three months ended March 31, 2026, included elsewhere in this Report, which raises substantial doubt about the Company’s ability to continue as a going concern within one year from the issuance date of the financial statements.

Previous wording

We have used our capital resources primarily, to date, to fund marketing and advertising for ClearUP, development of both our trigeminal and our vagus nerve platforms and product candidates, our entry into biologic therapeutics through our License Agreement with Statera, evaluating and conducting diligence on potential licensing and acquisition candidates, and the establishment of public company operating infrastructure and general operations. Although we have taken measures to manage our operating expenses, we expect that our operating expenses may increase as we advance product candidates, as well as, over time, discover, acquire, validate or develop additional product candidates; seek regulatory approval and, if approved, proceed to commercialization of new products; obtain, maintain, protect and enforce our intellectual property portfolio; hire additional personnel; and maintain compliance with material government (in addition to environmental) regulations. We may increase our research and development investments in clinical studies to advance additional indications for our licensed TLR5 agonists, Entolimod and Entolasta, during the remainder of 2025 and 2026. We also plan to increase investments in manufacturing and regulatory processes for these product candidates as we prepare to seek a Biologics License, via a BLA, from the FDA.

Current wording

We have used our capital resources primarily, to date, to fund marketing and advertising for ClearUP, development of both our trigeminal and our vagus nerve platforms and product candidates, our entry into biologic therapeutics through our License Agreement with Statera, evaluating and conducting diligence on potential licensing and acquisition candidates, and the support of public company operating infrastructure and general operations. Although we have taken measures to manage our operating expenses, including the wind down of ClearUP, we expect that our operating expenses may increase as we advance product candidates, seek regulatory approval and, if approved, proceed to commercialization of new products, obtain, maintain, protect and enforce our intellectual property portfolio, hire additional personnel; maintain compliance with material government (in addition to environmental) regulations, and operate the CDMO business. We may increase our research and development investments in clinical studies to advance additional indications for our licensed TLR5 agonists, Entolimod and Entolasta, in 2026. We also plan to increase investments in manufacturing and regulatory processes for these product candidates as we prepare to seek a Biologics License, via a BLA, from the FDA.

Previous wording

Furthermore, we have incurred, and will continue to incur, significant costs associated with operating as a public company. We expect to continue to incur losses for the foreseeable future. At this time, due to the inherently unpredictable nature of research and new product adoption, the regulatory approval process, as well as other macroeconomic factors, we cannot reasonably estimate the costs we will incur and the timelines that will be required to complete development, obtain marketing approval and commercialize future product candidates, if at all. We expect to reduce our costs for advertising and marketing of ClearUP as we wind down our consumer health business and shift our capital resources to the advancement of our TLR5 agonist programs. As a result, we expect revenue to decline and eventually cease altogether until such time, if ever, that we obtain regulatory approval and are able to commercialize and derive revenue from the sale of our product candidates. Although we have explored alternative monetization strategies for ClearUP, our efforts have been unsuccessful and we have determined to move forward with the wind down of our consumer health business.

Current wording

Furthermore, we have incurred, and will continue to incur, significant costs associated with operating as a public company. We expect to continue to incur losses for the foreseeable future. At this time, due to the inherently unpredictable nature of research and new product adoption, the regulatory approval process, as well as other macroeconomic factors, we cannot reasonably estimate the costs we will incur and the timelines that will be required to complete development, obtain marketing approval and commercialize future product candidates, if at all. We expect to dedicate our capital resources to the advancement of our TLR5 agonist programs. We do not expect revenues until such time, if ever, that we obtain regulatory approval and are able to commercialize and derive revenue from the sale of our product candidates. We do not expect significant revenues from our CDMO business in the near term as we are still in the process of qualifying the facilities and equipment so we will be able to develop and manufacture recombinant biological drugs for other companies.

Previous wording

Manufacturing of biologics is inherently unpredictable, and costs and timelines associated with development of the manufacturing processes may vary materially from our expectations, particularly as we rely on collaboration with outside suppliers. Additionally, clinical and preclinical development timelines, the probability of success, and costs can differ materially from expectations. We cannot forecast which product candidates may be best developed and/or monetized through future collaborations, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements.

Current wording

Manufacturing of biological drugs is inherently unpredictable due to cell variability. As a result, costs and timelines associated with development of the manufacturing processes may vary materially from our expectations. Additionally, clinical and preclinical development timelines, the probability of success, and costs can differ materially from expectations. We cannot forecast which product candidates may be best developed and/or monetized through future collaborations, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements.

Previous wording

In addition to the foregoing, we may, from time to time, consider opportunities for strategic acquisitions, licensing or business combinations that we believe will align with our growth plan, complement our product offerings and be in the best interest of the Company and our shareholders, including pursuant to the our Exclusive Option to license other indications for Entolimod pursuant to the A&R License Agreement or our Buyout Option pursuant thereto. If any such strategic transactions are identified and pursued, a substantial portion of our cash reserves may be required to complete such transactions. If we identify an attractive opportunity that would require more cash to complete than we are willing or able to use from our cash reserves, we will consider financing options to complete the acquisition, including through equity and/or debt financings.

Current wording

In addition to the foregoing, we may, from time to time, consider opportunities for strategic acquisitions, licensing or business combinations that we believe will align with our growth plan, complement our product offerings and be in the best interest of the Company and our shareholders. If any such strategic transactions are identified and pursued, a substantial portion of our cash reserves may be required to complete such transactions. If we identify an attractive opportunity that would require more cash to complete than we are willing or able to use from our cash reserves, we will consider financing options to complete the acquisition, including through equity and/or debt financings.

Previous wording

We have generated operating losses in each period since inception. We have incurred an accumulated deficit of $49.6 million through September 30, 2025. We expect to incur additional losses in the future as we expand both our research and development activities. Based on our current cash levels and burn rate, amongst other things, we believe our cash and financial resources may be insufficient to meet our anticipated needs for the next twelve months. As a result, we expect that we will need to raise additional capital to continue operating our business and fund our planned operations, including research and development, clinical trials and, if regulatory approval is obtained, commercialization of future product candidates.

Current wording

We have generated operating losses in each period since inception. We have incurred an accumulated deficit of $59.0 million through March 31, 2026. We expect to incur additional losses in the future as we expand our research and development activities. Based on our current cash levels and burn rate, amongst other things, we believe our cash and financial resources may be insufficient to meet our anticipated needs for the next twelve months. As a result, we expect that we will need to raise additional capital to continue operating our business and fund our planned operations, including research and development, clinical trials and, if regulatory approval is obtained, commercialization of future product candidates.

Previous wording

Until such time, if ever, as we can generate substantial revenue from product sales or licensing, we expect to fund our operations and capital funding needs through equity and/or debt financings. We may also consider entering into collaboration arrangements or selectively partnering with third parties for clinical development and commercialization. The sale of additional equity would result in additional dilution to our stockholders. The incurrence of additional debt would result in debt service obligations, and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations or our ability to incur additional indebtedness or pay dividends, among other items. If we raise additional funds through governmental funding, collaborations, strategic partnerships and alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If we are not able to secure adequate additional funding, we may be forced to make reductions in spending, reprioritize investments, extend payment terms with suppliers, liquidate assets where possible, and/or suspend or curtail planned programs. Any of these actions could materially and adversely affect our business, financial condition, results of operations and prospects.

Current wording

Until such time, if ever, as we can generate substantial revenue from product sales and/or development and manufacturing contracts, we expect to fund our operations and capital funding needs through equity and/or debt financings. We may also consider entering into collaboration arrangements or selectively partnering with third parties for clinical development and commercialization. The sale of additional equity would result in additional dilution to our stockholders. The incurrence of additional debt would result in debt service obligations, and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations or our ability to incur additional indebtedness or pay dividends, among other items. If we raise additional funds through governmental funding, collaborations, strategic partnerships and alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If we are not able to secure adequate additional funding, we may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, and/or suspend or curtail planned programs. Any of these actions could materially and adversely affect our business, financial condition, results of operations and prospects.

Previous wording

Net cash used in operating activities for the nine months ended September 30, 2024 was $4.4 million, which consisted primarily of a net loss of $4.2 million, decreased by non-cash charges of $266 thousand and increased by a net decrease of $448 thousand in our net operating assets and liabilities. The non-cash charges primarily consisted of stock-based compensation of $166 thousand and amortization of right-of-use assets of $76 thousand. The change in our net operating assets and liabilities was primarily due to a decrease in accounts payable and accrued expenses of $648 thousand, a decrease in accounts receivable of $160 thousand, a decrease in prepaid and other current assets of $93 thousand, and a decrease of $96 thousand in lease liabilities.

Current wording

Net cash used in operating activities for the three months ended March 31, 2026 was $5.0 million, which consisted primarily of a net loss of $6.2 million, decreased by non-cash charges of $1.0 million and a net decrease of $0.2 million in our net operating assets and liabilities. The non-cash charges primarily consisted of $0.4 million of amortization of debt discount and debt issuance costs, $0.2 million of stock-based compensation, $0.2 million of non-cash interest expense and $0.2 million of amortization of the right-of-use assets associated with our facility leases. The change in our net operating assets and liabilities was primarily due to an increase in accounts payable and accrued expenses of $1.5 million, offset by an increases in inventory of $0.8 million and prepaid expenses and other current assets of $0.3 million.

Previous wording

Net cash used in operating activities for the nine months ended September 30, 2025 was $4.7 million, which consisted primarily of a net loss of $6.0 million, decreased by non-cash charges of $857 thousand and a net increase of $460 thousand in our net operating assets and liabilities. The non-cash charges primarily consisted of $415 thousand of stock-based compensation, $230 thousand of inventory reserves for excess and obsolete ClearUP inventory, a $117 thousand loss recorded on the disposal of property and equipment related to ClearUP, and $93 thousand of warrants issued to consultants for services. The change in our net operating assets and liabilities was primarily due to an increase in accounts payable and accrued expenses of $366 thousand.

Current wording

Net cash used in operating activities for the three months ended March 31, 2025 was $0.9 million, which consisted primarily of a net loss of $1.5 million, decreased by non-cash charges of $0.1 million and a net increase of $0.4 million in our net operating assets and liabilities. The non-cash charges primarily consisted of $0.1 million of stock-based compensation. The change in our net operating assets and liabilities was primarily due to an increase in accounts payable and accrued expenses of $0.5 million.

Previous wording

Net cash used in investing activities for the nine months ended September 30, 2025 was $556 thousand, which consisted primarily of $300 thousand of cash paid for the Statera License Agreement and transactions costs of $243 thousand. There were no investing activities for the nine months ended September 30, 2024.

Current wording

Net cash used in investing activities for the three months ended March 31, 2026 was $7 thousand for the acquisition of property and equipment. Net cash used in investing activities for the three months ended March 31, 2025 was $526 thousand, which consisted of $300 thousand of cash paid for the Statera License Agreement and transactions costs of $226 thousand.

Previous wording

As discussed elsewhere in this Quarterly Report, the world has continued to be affected by the ongoing conflict between Russia and Ukraine and the more recent conflict between Israel and Hamas, economic uncertainty in human capital management (“HCM”) and certain other macroeconomic factors, including evolving trade barriers and tariffs. The general consensus among economists continues to suggest that we should expect a higher recession risk to continue for the near term. Uncertainty with respect to the federal budget and debt ceiling, including the recent prolonged shutdown of the U.S. federal government, has negatively impacted the capital markets and the industries that we operate in. Climate change continues to be an intense topic of public discussion and is adding additional challenges and financial burden due to impending preparations and changes in the customer mindset. These factors, amongst other things, could result in further economic uncertainty and volatility in the capital markets in the near term, and could negatively affect our operations. Effects of the pandemic and recent economic volatility have negatively impacted our business in various ways over recent years, including as a result of global supply chain constraints at least partially attributable to the pandemic. We will continue to monitor material impacts on our HCM strategies, including the potential of employee attrition, amongst other things.

Current wording

As discussed elsewhere in this Quarterly Report, the world has continued to be affected by the ongoing conflict between Russia and Ukraine and the more recent conflict among the U.S., Israel, Hamas and Iran, economic uncertainty in human capital management ("HCM”) and certain other macroeconomic factors. The general consensus among economists continues to suggest that we should expect a higher recession risk to continue for the near term. Climate change continues to be an intense topic of public discussion and is adding additional challenges and financial burden due to impending preparations and changes in the customer mindset. These factors, amongst other things, could result in further economic uncertainty and volatility in the capital markets in the near term, and could negatively affect our operations. Effects of the pandemic and recent economic volatility have negatively impacted our business in various ways over the last three years, including as a result of global supply chain constraints at least partially attributable to the pandemic. We will continue to monitor material impacts on our HCM strategies, including the potential of employee attrition, amongst other things.

Previous wording

As a result of the foregoing, it is possible that we may face a supply shortage with respect to Entolimod in the near term. We are in close communication with our contract manufacturer and certain of their stakeholders to establish stability and are also considering our options with respect to alternative contract manufacturers in an effort to mitigate the risk of delays in our clinical development timeline and any additional costs that we may incur in connection therewith. As a matter of business, we evaluate alternative manufacturers and secondary source suppliers in order to ensure that we are able to source sufficient materials to manufacture our product candidates. Global supply chain shortages (especially when coupled with inflation, tariffs, and other economic factors) could result in an increase in the cost of the materials used in our product candidates. Additionally, if we are unable to develop relationships with suppliers or source sufficient materials needed to develop and manufacture our product candidates, we may experience delays in production and will seek to develop relationships with alternative suppliers. If we are unable to manufacture enough of our product candidates to satisfy demand, we may have to cease or slow down production and our business operations and financial condition may be materially harmed and we may need to alter our plan of operation.

Current wording

Although we currently do not anticipate supply shortages, they will continue to pose a material risk for the Company in the near term, as a matter of business, we evaluate alternative and secondary source suppliers in order to ensure that we are able to source sufficient components and materials to manufacture our products. Global supply chain shortages (especially when coupled with inflation, tariffs, and other economic factors) could result in an increase in the cost of the components and other materials used in our products and product candidates, which could result in a decrease of our gross margins or in us having to increase the price at which we sell our products until supply chain constraints are resolved. Additionally, in the event that the price of our components or other materials increases significantly or we are unable to source sufficient components and materials from our current suppliers, or to develop relationships with additional suppliers, to manufacture enough of our products to satisfy demand, we may have to cease or slow down production and our business operations and financial condition may be materially harmed and we may need to alter our plan of operation.

Previous wording

Recently, the current administration has implemented, and continues to implement, significant budget cuts, eliminated grant programs and terminated a significant number of employees throughout many different sectors of the federal government. There is still significant uncertainty regarding the ultimate effects these actions may have on the industries in which we operate or our business. Disruptions at the FDA and other agencies may slow the time necessary for new devices and drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. Disruptions in NIH funding and other programs supporting early stage companies may negatively impact business relationships and/or opportunities to source additional growth opportunities.

Current wording

Recently, the current administration has implemented, and continues to implement, significant budget cuts, eliminated grant programs and terminated a significant number of employees throughout many different sectors of the federal government. There is still significant uncertainty regarding the ultimate effects these actions may have on the industries in which we operate or our business. Disruptions at the FDA and other agencies may slow the time necessary for new devices and drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business.

Previous wording

As a result of these global issues and other macroeconomic factors, including the recent prolonged shutdown of the U.S. federal government and the impact that it has had on the industry in which we operate, as well as recent changes to our business in connection with the A&R License Agreement with Statera, it has been difficult to accurately forecast our future revenues or financial results, especially given the geopolitical issues, recent change in administration, inflation, changes in the Federal Reserve interest rate and the potential for a recession. In addition, while the potential impact and duration of these issues on the economy and our business may be difficult to assess or predict, these world events have resulted in, and may continue to result in, significant disruption of global financial markets, and may reduce our ability to access additional capital, which could negatively affect our liquidity in the future. Our results of operations could be materially below our forecasts as well, which could adversely affect our results of operations, disappoint analysts and investors, or cause our stock price to decline. Furthermore, a decrease in orders in a given period could negatively affect our revenues in future periods.

Current wording

As a result of these global issues and other macroeconomic factors, it has been difficult to accurately forecast our revenues or financial results, especially given the geopolitical issues, recent change in administration, inflation, changes in the Federal Reserve interest rate and the potential fora recession. In addition, while the potential impact and duration of these issues on the economy and our business may be difficult to assess or predict, these world events have resulted in, and may continue to result in, significant disruption of global financial markets, and may reduce our ability to access additional capital, which could negatively affect our liquidity in the future. Our results of operations could be materially below our forecasts as well, which could adversely affect our results of operations, disappoint analysts and investors, or cause our stock price to decline. Furthermore, a decrease in orders in a given period could negatively affect our revenues in future periods.

Previous wording

These global issues and events, as well as changes in our core business, may also have the effect of heightening many risks associated with our customers and supply chain. We may take further actions that alter our operations as may be required by federal, state, or local authorities from time to time, or which we determine are in our best interests. In addition, we may decide to postpone or abandon planned investments in our business in response to changes in our business, which may impact our ability to attract and retain customers and our rate of innovation, either of which could harm our business.

Current wording

These global issues and events may also have the effect of heightening many risks associated with our customers and supply chain. We may take further actions that alter our operations as may be required by federal, state, or local authorities from time to time, or which we determine are in our best interests. In addition, we may decide to postpone or abandon planned investments in our business in response to changes in our business, which may impact our ability to attract and retain customers and our rate of innovation, either of which could harm our business.

Previous wording

Inflation increased significantly in 2024; although it has decreased recently. Inflationary factors, such as increases in the cost of our products (and components thereof), interest rates, overhead costs and transportation costs may adversely affect our operating results. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may experience some effect in the near future (especially if inflation rates begin to rise again) due to supply chain constraints, consequences associated with the ongoing conflicts between Russia and Ukraine, employee availability and wage increases, trade tariffs imposed on certain products from China and other countries and increased component and services pricing.

Current wording

Although inflation experienced a slight decline in 2025; it has remained relatively high and future rates are unknown. Inflationary factors, such as increases in the cost of our products, interest rates, overhead costs and transportation costs may adversely affect our operating results. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may experience some effect in the near future (especially if inflation rates continue to rise) due to supply chain constraints, consequences associated with the ongoing conflicts between Russia and Ukraine, employee availability and wage increases, trade tariffs imposed on certain products from China and increased component and services pricing.

Previous wording

Lease costs recorded during the nine months ended September 30, 2024 were $84 thousand. There were no lease costs recorded for the nine months ended September 30, 2025 as the lease was terminated in 2024.

Current wording

Lease costs recorded during the three months ended March 31, 2026 were $0.4 million. There were no lease costs recorded for the three months ended March 31, 2025 as there were no leases in effect at that time. Short-term rental costs for the three months ended March 31, 2026 and 2025 were $94 thousand and $4 thousand, respectively.

Previous wording

We enter into contracts in the normal course of business with our contract manufacturer and other vendors to assist in the manufacturing of our products and performance of our research and development activities and other services for operating purposes. These contracts generally provide for termination for convenience after expiration of an advance notice period ranging from 0 to 60 days, and therefore are cancelable contracts and not included in the table of contractual obligations and commitments. Except as set discussed elsewhere in this Quarterly Report, there have been no material changes to our previously disclosed business strategy with respect to our contractual obligations as disclosed under Management’s Discussion and Analysis of Financial Condition and Results of Operations - Contractual Obligations in our Annual Report.

Current wording

We enter into contracts in the normal course of business with our contract manufacturer and other vendors to assist in the manufacturing of our products and performance of our research and development activities and other services for operating purposes. These contracts generally provide for termination for convenience after expiration of an advance notice period ranging from0 to 60 days and therefore are cancelable contracts and not included in the table of contractual obligations and commitments.

Previous wording

Our condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of the condensed financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of expenses during the reporting period. On an ongoing basis, management evaluates its estimates and judgments, including those related to inventory reserves, sales return reserves, stock-based compensation, and going concern. Management bases its estimates and judgments on historical experience and on various other factors, including the macro-economic factors, that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The methods, estimates, and judgments used by us in applying these critical accounting policies have a significant impact on the results we report in our condensed consolidated financial statements. Our significant accounting policies and estimates are included in our Annual Report, filed with the SEC on March 21, 2025.

Current wording

The preparation of our condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States (U.S. GAAP) requires us to make estimates and judgments that affect the amounts reported in those financial statements and accompanying notes. Although we believe that the estimates we use are reasonable, due to the inherent uncertainty involved in making those estimates, actual results reported in future periods could differ from those estimates. The methods, estimates, and judgments used by us in applying these critical accounting policies have a significant impact on the results we report in our condensed consolidated financial statements. Our significant accounting policies and estimates are included in our Annual Report, filed with the SEC on March 30, 2026.

Previous wording

Information regarding our significant accounting policies and estimates can also be found in Note 2 to our condensed financial statements included in Part I, Item 1 of this Quarterly Report.

Current wording

Information regarding our significant accounting policies and estimates can also be found in Note 2 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report.