Valion Bio, Inc.

Previous wording

Valion Bio, Inc. (the "Company" or "Valion"), formerly known as Tivic Health Systems, Inc. is a late-stage biopharmaceutical company whose lead program is Entolimod™. Entolimod is a recombinant biologic with Toll-like Receptor 5 ("TLR5") agonist activity. Entolimod has an extensive preclinical and clinical data package supporting development as a medical countermeasure (MCM) for Acute Radiation Syndrome (ARS) and it subsyndromes, as well as for adjunct therapy for oncology indications, such as neutropenia.

Current wording

Valion Bio, Inc. (the "Company" or "Valion"), formerly known as Tivic Health Systems, Inc. is a late-stage biopharmaceutical company whose lead program is Entolimod. Entolimod is a recombinant biologic with Toll-like Receptor 5 ("TLR5") agonist activity. Entolimod has an extensive preclinical and clinical data package supporting development as a medical countermeasure for Acute Radiation Syndrome (ARS) and it subsyndromes, as well as for adjunct therapy for oncology indications, such as neutropenia.

Previous 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.

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 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

The shares of Common Stock purchased pursuant to a VWAP Purchase (the "Shares”) will be purchased at the VWAP Purchase Price, which will be determined pursuant to a formula set forth in the Purchase Agreement. If we elect to use a one-trading-day valuation period in the VWAP Purchase Notice (the "One-Day Valuation Period”), the VWAP Purchase Price under the Purchase Agreement will be equal to 97% of the volume-weighted average price ("VWAP”) of our Common Stock on the one trading day during such One-Day Valuation Period, subject to adjustment as provided in the Purchase Agreement, following receipt of the Shares by the Tumim. If we elect to use a One-Day Valuation Period to determine the VWAP Purchase Price in the VWAP Purchase Notice, such VWAP Purchase Notice shall direct Tumim to purchase Shares in an amount not to exceed the lesser of (i) 15% of the daily trading volume of the Common Stock on the VWAP Purchase Exercise Date (as defined in the Purchase Agreement), or (ii) the quotient (rounded to the nearest whole number) obtained by dividing (x) $1,000,000 by (y) the VWAP on the VWAP Purchase Exercise Date (in each case to be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction during the applicable period).

Current wording

The shares of Common Stock purchased pursuant to a VWAP Purchase (the "Shares”) will be purchased at the VWAP Purchase Price, which will be determined pursuant to a formula set forth in the Purchase Agreement. If we elect to use a one-trading-day valuation period in the VWAP Purchase Notice (the "One-Day Valuation Period”), the VWAP Purchase Price under the Purchase Agreement will be equal to 97% of the volume-weighted average price ("VWAP”) of our Common Stock on the one trading day during such One-Day Valuation Period, subject to adjustment as provided in the Purchase Agreement, following receipt of the Shares by Tumim. If we elect to use a One-Day Valuation Period to determine the VWAP Purchase Price in the VWAP Purchase Notice, such VWAP Purchase Notice shall direct Tumim to purchase Shares in an amount not to exceed the lesser of (i) 15% of the daily trading volume of the Common Stock on the VWAP Purchase Exercise Date (as defined in the Purchase Agreement), or (ii) the quotient (rounded to the nearest whole number) obtained by dividing (x) $1,000,000 by (y) the VWAP on the VWAP Purchase Exercise Date (in each case to be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction during the applicable period).

Previous wording

As consideration for the Tumim’s commitment to purchase shares of Common Stock, the Company issued a pre-funded warrant to purchase 437,012 shares of Common Stock (the "Pre-Funded Warrants”), to the Tumim as a commitment fee (the "Commitment Fee”).

Current wording

As consideration for the Tumim’s commitment to purchase shares of Common Stock, the Company issued a pre-funded warrant to purchase 437,012 shares of Common Stock (the "Pre-Funded Warrants”), to the Tumim as a commitment fee (the "Commitment Fee”). In the second quarter of 2026, Tumim exercised the warrants in full.

Previous wording

In the first quarter of 2026, the Company validated the current inventory of materials for distribution and sales. As a result, the Company capitalized $750 thousand of inventory costs and recorded a liability of $750 thousand which is included in accrued expenses on the balance sheet as of March 31, 2026. The Company has discretion to pay the milestone payment in the form of cash or stock.

Current wording

In the first quarter of 2026, the Company validated the current inventory of materials for distribution and sales. As a result, the Company capitalized $750 thousand of inventory costs and recorded a liability of $750 thousand which is included in accrued expenses on the balance sheet as of June 30, 2026. In July, 2026, the Company issued an aggregate of 1,288 shares of Series A Convertible Preferred Stock to Avenue and Statera in partial settlement of the milestone obligation.

Previous wording

The Company intends to continue actively monitoring the closing bid price for the Company’s common stock between now and September 15, 2026, and will consider available options to resolve the deficiency and regain compliance with the Minimum Bid Price Requirement. If the Company does not regain compliance within the allotted compliance period, including any extensions that may be granted by Nasdaq, Nasdaq will provide notice that the Company’s common stock will be subject to delisting. The Company would then be entitled to appeal that determination to a Nasdaq hearings panel. There can be no assurance that the Company will regain compliance with the Minimum Bid Price Requirement during the 180-day compliance period, secure a second period of 180 days to regain compliance, or maintain compliance with the other Nasdaq listing requirements.

Current wording

The Company intends to continue actively monitoring the closing bid price for the Company’s common stock between now and September 15, 2026, and will consider available options to resolve the deficiency and regain compliance with the Minimum Bid Price Requirement, including by effecting a reverse stock split, a proposal for which will be voted upon by the Company’s shareholders at its Special Meeting of Shareholders to be held on August 14, 2026. If the Company does not regain compliance within the allotted compliance period, including any extensions that may be granted by Nasdaq, Nasdaq will provide notice that the Company’s common stock will be subject to delisting. The Company would then be entitled to appeal that determination to a Nasdaq hearings panel. There can be no assurance that the Company will be successful is effecting a reverse stock split, regain compliance with the Minimum Bid Price Requirement during the 180-day compliance period, secure a second period of 180 days to regain compliance, or maintain compliance with the other Nasdaq listing requirements.

Previous wording

First Quarter of 2026 and subsequent periods

Current wording

First Half of 2026 and subsequent periods

Previous wording

In the first quarter of 2026, we continued to develop our TLR5 program and invested in our CDMO operations in San Antonio, TX. Other updates include:

Current wording

In the first half of 2026, we continued to develop our TLR5 program and invested in our CDMO operations in San Antonio, TX. Other updates include:

Previous 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.

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, finance and accounting support, and legal support to carry out our operations.

Previous wording

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

Current wording

Comparison of the Three and Six Months Ended June 30, 2026*** and 2025***

Previous wording

Selling, general and administrative expenses increased to $3.8 million for the three months ended March 31, 2026, compared to $1.0 million for the three months ended March 31, 2025. The increase was primarily due to the addition of our CDMO operations, which increased expenses for the first quarter by $1.7 million. The CDMO expenses are comprised of $1.1 million of facility costs and equipment rentals, headcount related expenses of $0.3 million and professional fees of $0.2 million. Additional increased expenses were primarily $0.4 million of severance costs, $0.3 million of increased headcount related expenses and $0.2 million of increased professional fees.

Current wording

Selling, general and administrative expenses increased to $3.7 million for the three months ended June 30, 2026, compared to$1.0 million for the three months ended June 30, 2025. The increase was primarily due to the addition of our CDMO operations, which increased expenses for the second quarter by $2.3 million. The CDMO expenses for the second quarter include $1.2 million of facility costs and equipment rentals, headcount related expenses of $0.4 million, property tax accruals of $0.2 million, professional fees of $0.1 million and depreciation expense of $0.4 million. Additional increases related to legal and professional fees, including accounting and investor relations.

Previous wording

Other (expense) income, net, increased by $0.6 million for the three months ended March 31, 2026, compared to the same period in 2025. The increase was primarily related to interest expense and amortization of the debt discount and issuance costs associated with the senior convertible note payable.

Current wording

Other (expense) income, net, increased by $0.6 million and $1.2 million for the three and six months ended June 30, 2026, respectively compared to the same periods in 2025. The increases were primarily related to interest expense and amortization of the debt discount and issuance costs associated with the senior convertible note payable. The note was not outstanding during the three or six months ended June 30, 2025.

Previous wording

Net income (loss) from discontinued operations represents income and expenses related to the consumer device market which we exited in 2025. During the three months ended March 31, 2026 while winding down operations, we continued to sell ClearUP through our website. The income reported for the first quarter of 2026 represents revenue from the sale of product. Sales through our website stopped as of February 28, 2026.

Current wording

Net income (loss) from discontinued operations represents income and expenses related to the consumer device market which we exited in 2025. During the six months ended June 30, 2026 we continued to complete wind down of our ClearUp operations. The net loss during the first half of 2026 represent the net costs associated with wind down operations.

Previous 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.

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. Since December 2025 we have also focused on operating the CDMO business we began after acquiring certain assets from Scorpius. We are not profitable and have incurred net losses and negative cash flows from our operations in each year since our inception. As of June 30, 2026, we had cash and cash equivalents of $2.1 million, working capital of $336 thousand and an accumulated deficit of$66.5 million.

Previous wording

On February 6, 2026, we entered into a Common Stock Purchase Agreement with Tumim Stone Capital, LLC (the "Common Stock Purchase Agreement") whereby we have the right, but not the obligation to sell to the investor the lesser of: (a) $50,000,000 of newly issued shares of the Company’s common stock, par value $0.0001 per share (the "Common Stock”),and (b) the Exchange Cap (as defined below), from time to time, at the Company’s sole discretion (each such sale, a "VWAP Purchase”) by delivering an irrevocable written notice to the Investor (each such notice, a "VWAP Purchase Notice”). The Company shall be permitted to deliver a VWAP Purchase Notice to Investor during the period commencing on the Commencement Date (as defined in the Purchase Agreement)and the date that is the first day of the month following the 24-month anniversary of the date on which the initial Registration Statement (as defined below) has been declared effective by the SEC, subject to the terms and conditions set forth therein, and unless the Purchase Agreement is earlier terminated in accordance with its terms.

Current wording

On February 6, 2026, we entered into a Common Stock Purchase Agreement with Tumim Stone Capital, LLC (the "Common Stock Purchase Agreement") whereby we have the right, but not the obligation to sell to the investor the lesser of: (a) $50,000,000 of newly issued shares of the Company’s common stock, par value $0.0001 per share (the "Common Stock”),and (b) the Exchange Cap (as defined below), from time to time, at the Company’s sole discretion (each such sale, a "VWAP Purchase”) by delivering an irrevocable written notice to the Investor (each such notice, a "VWAP Purchase Notice”). The Company shall be permitted to deliver a VWAP Purchase Notice to Investor during the period commencing on the Commencement Date (as defined in the Purchase Agreement)and the date that is the first day of the month following the 24-month anniversary of the date on which the initial Registration Statement (as defined below) has been declared effective by the SEC, subject to the terms and conditions set forth therein, and unless the Purchase Agreement is earlier terminated in accordance with its terms. As of June 30, 2026, we have a total of $49.9 million remaining available under the Common Stock Purchase Agreement.

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. 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.

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 six months ended June 30, 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 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.

Current wording

We have generated operating losses in each period since inception. We have incurred an accumulated deficit of $66.5 million through June 30, 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

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.

Current wording

Net cash used in operating activities for the six months ended June 30, 2026 was $10.3 million, which consisted primarily of a net loss of $13.3 million, decreased by non-cash charges of $2.4 million and a net decrease of $0.6 million in our net operating assets and liabilities. The non-cash charges primarily consisted of $0.9 million of amortization of debt discount and debt issuance costs, $0.3 million of stock-based compensation, $0.4 million of non-cash interest expense, $0.4 million of amortization of the right-of-use assets associated with our facility leases and $0.4 million of depreciation expense. The change in our net operating assets and liabilities was primarily due to an increase in accounts payable and accrued expenses of $1.8 million, offset by a decrease of $0.2 million related to lease liabilities and increases in inventory of $0.8 million and prepaid expenses and other current assets of $0.2 million.

Previous 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.

Current wording

Net cash used in operating activities for the six months ended June 30, 2025 was $2.7 million, which consisted primarily of a net loss of $3.4 million, decreased by non-cash charges of $0.3 million and a net increase of $0.4 million in our net operating assets and liabilities. The non-cash charges primarily consisted of $0.3 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 and an increase in prepaid expenses and other assets of $0.1 million.

Previous 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.

Current wording

Net cash used in investing activities for the six months ended June 30, 2026 was $64 thousand for the acquisition of property and equipment. Net cash used in investing activities for the six months ended June 30, 2025 was$546 thousand, which consisted primarily of $300 thousand of cash paid for the Statera License Agreement and transactions costs of $243 thousand.

Previous wording

Cash used in financing activities during three months ended March 31, 2026 consisted of $44 thousand of offering costs paid in advance of sales of common stock.

Current wording

Cash provided by financing activities during the six months ended June 30, 2025 was $2.4 million and consisted of approximately $109 thousand from the exercise of Series A warrants, net proceeds of approximately $1.6 million related to the sale of common stock pursuant to our Equity Distribution Agreement with Maxim, the sale of common stock to Mast Hill pursuant to the equity line of credit for net proceeds of $311 thousand and the sale of 700 shares of Series B Preferred Stock and warrants to purchase shares of our common stock, for net proceeds of $585 thousand. Cash provided was offset by $158 thousand of offering costs paid in advance of sales of common stock.

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 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.

Current wording

As discussed elsewhere in this Quarterly Report, our business is subject to risks, including 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 and geopolitical factors. 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 recent economic volatility have negatively impacted our business in various ways, including as a result of global supply chain constraints. We will continue to monitor material impacts on our HCM strategies, including the potential of employee attrition, amongst other things.

Previous 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.

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 and, 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

The United States has recently implemented or threatened to implement tariffs on certain imported goods, including on certain items imported from China, Canada and other countries. In addition, China, Canada and other countries have imposed, or threatened to impose, tariffs on a wide range of American products and placed restrictions on the export of certain items in retaliation for these American tariffs. As a result, there is a concern that the imposition of additional tariffs by the United States could result in the adoption of additional tariffs or export restrictions by China, Canada and/or other countries. This has recently led to significant volatility in the capital markets and increased economic uncertainty. Additionally, any resulting trade war could negatively impact our business. The imposition of tariffs on items imported by us from China, Canada or other countries could increase our costs and could result in lowering our gross margin on products sold.

Current wording

Under the current administration, the United States' tariff policy has become increasingly aggressive, leading to the implementation or threat to implement tariffs on certain imported goods, including on certain items imported from China, Canada and other countries. In addition, China, Canada and other countries have imposed, or threatened to impose, tariffs on a wide range of American products and placed restrictions on the export of certain items in retaliation for these American tariffs. As a result, there is a concern that the imposition of tariffs by the United States could result in the adoption of retaliatory tariffs or other restrictions by other countries. Although the validity of the tariffs has been challenged, and some tariffs struck down by the Supreme Court, this has recently led to significant volatility in the capital markets and increased economic uncertainty. Additionally, any resulting trade war could negatively impact our business. The imposition of tariffs on items imported by us from China, Canada or other countries could increase our costs and could result in lowering our gross margin on products sold.

Previous wording

Although our business has not been materially impacted by the ongoing military conflict between Russia and Ukraine or the conflict between Hamas and Israel to date, it is impossible to predict the extent to which our operations, including the newly in-licensed TLR5 assets, or those of our suppliers and manufacturers, will be impacted in the short and long term, or the ways in which the conflict may impact our business. The extent and duration of the military action, sanctions and resulting market disruptions are impossible to predict, but could be substantial. We are continuing to monitor the situation in Ukraine and globally and assessing its potential impact on our business.

Current wording

Additionally, although our business has not been materially impacted by the ongoing military conflict between Russia and Ukraine or the conflict between Hamas and Israel to date, it is impossible to predict the extent to which our operations, including the newly in-licensed TLR5 assets, or those of our suppliers and manufacturers, will be impacted in the short and long term, or the ways in which the conflict may impact our business. The extent and duration of the military action, sanctions and resulting market disruptions are impossible to predict, but could be substantial. We are continuing to monitor the situation in Ukraine and globally and assessing its potential impact on our business.

Previous 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.

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. 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

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.

Current wording

Although inflation experienced a slight decline in the month of June 2026; 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 geopolitical 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 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.

Current wording

For the three and six months ended June 30, 2026 total lease costs were $0.5 million and $0.9 million, respectively. There were no lease costs recorded for the three and six months ended June 30, 2025 as there were no leases in effect at that time. Short-term rental costs for the three months ended June 30, 2026 and 2025 were $10 thousand and $11 thousand, respectively. Short-term rental costs for the six months ended June 30, 2026 and 2025 were $104 thousand and $15 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 from0 to 60 days and therefore are cancelable contracts and not included in the table of contractual obligations and commitments.

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 from 0-to-60 days and therefore are cancelable contracts and not included in the table of contractual obligations and commitments.