NeuroPace Inc

Previous wording

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q. This discussion and other parts of this report contain forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions, which are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section of this report entitled “Risk Factors,” under Part II, Item 1A of this report and those discussed in our other disclosures and filings.

Current wording

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q. This discussion and other parts of this report contain forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions, which are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section of this report entitled “Risk Factors,” under Part II, Item 1A of this report and those discussed in our other disclosures and filings.

Previous wording

Our RNS System is currently indicated in the United States for use in adult epilepsy patients, meaning patients who are 18 years of age or older, with drug-resistant focal epilepsy. Primary effectiveness endpoint data from our Post-approval Study in this patient population demonstrated that the RNS System efficacy improved over time, with a 62.5% median seizure reduction at six months after implant (n=314) and an 82.0% median seizure reduction at 36 months after implant (n=255). Additionally, 42.5% of patients experienced a period of seizure-freedom for at least six months, and 22% of patients were seizure free for at least one year were presented at the American Academy of Neurology Annual Meeting in April 2025.

Current wording

Our RNS System is currently indicated in the United States for use in adult epilepsy patients, meaning patients who are 18 years of age or older, with drug-resistant focal epilepsy. Primary effectiveness endpoint data from our Post-approval Study in this patient population demonstrated that the RNS System efficacy improved over time, with a 62.5% median seizure reduction at six months after implant (n=314) and an 82.0% median seizure reduction at 36 months after implant (n=255). Additionally, 42.5% of patients experienced a period of seizure-freedom for at least six months, and 22% of patients were seizure free for at least one year. These data points from the Post-approval Study were presented at the American Academy of Neurology Annual Meeting in April 2025.

Previous wording

We are conducting studies to expand our indication for use in patients with drug-resistant generalized epilepsy and patients with drug-resistant focal epilepsy under the age of 18. In March 2025, the last patient in our NAUTILUS study for generalized epilepsy completed one year of follow up. In May 2025, we announced the preliminary results from the NAUTILUS study based on analysis of the one-year data. The study met the 12-week post-implant primary safety endpoint, demonstrating excellent safety outcomes and confirming the favorable safety profile of the RNS System. The primary effectiveness endpoint did not reach statistical significance in the overall study. However, the study data illustrates the overall value of the RNS System to individualize patient treatment over time, showing statistically significant and clinically meaningful, prespecified secondary endpoints. Patients in the NAUTILUS trial continue to participate in the study through the completion of two years after the device implant, with prespecified collection of safety and effectiveness data occurring upon completion of the two years post-implant. We continue to actively engage with the FDA to finalize a pathway to submitting an application seeking the expanded indication for patients with generalized epilepsy. There are no changes in the Company’s plan to file the expanded label submission to the FDA prior to the end of 2025.

Current wording

We are conducting studies to expand our indication for use in patients with drug-resistant idiopathic generalized epilepsy and patients with drug-resistant focal epilepsy under the age of 18. In March 2025, the last patient in our NAUTILUS study for drug-resistant idiopathic generalized epilepsy completed one year of follow up. In May 2025, we announced the preliminary results from the NAUTILUS study based on analysis of the one-year data. The study met the 12-week post-implant primary safety endpoint, demonstrating excellent safety outcomes and confirming the favorable safety profile of the RNS System. While the primary effectiveness endpoint did not reach statistical significance in the overall study, pre-specified secondary endpoints did show meaningful and clinically significant seizure reduction. In December 2025, we filed the Premarket Approval Supplement, or PMA-S, to support label expansion for our RNS System in patients who have drug-resistant idiopathic generalized epilepsy. The PMA-S is supported by pre-specified secondary endpoint data, which demonstrated robust 77% median GTC seizure reduction and a favorable safety profile in this highly refractory patient population at 18 months of therapy. Patients in the NAUTILUS trial continue to participate in the study through the completion of two years after the device implant, with prespecified collection of safety and effectiveness data occurring upon completion of the two years post-implant, and we anticipate the final patient two-year completion in the first half of 2026. We anticipate potential NAUTILUS PMA-S approval in mid-2026.

Previous wording

To support our RESPONSE study for label expansion in focal epilepsy patients under the age of 18, we are collaborating with the National Evaluation System for health Technology, or NEST, and the FDA to pursue the use of real-world data.

Current wording

In 2025, in an effort to further support the pediatric focal epilepsy label expansion efforts that we began with the RESPONSE study, we began a collaboration with the National Evaluation System for health Technology, or NEST, and the FDA to pursue the use of real-world data to support expanded labeling for patients ages 12 to 17. These efforts continue into 2026.

Previous wording

Our commercial efforts have historically been focused on growing adoption and utilization across Level 4 comprehensive epilepsy centers, or CECs, in the United States that facilitate appropriate care for drug-resistant epilepsy patients. In 2023, we received FDA approval of a Premarket Approval Supplement, or PMA-S, which updated the qualification criteria for centers and clinicians that may prescribe and implant the RNS System. We initiated a pilot program to begin our outreach to these centers and clinicians in 2024 and are expanding these efforts through 2025. We are actively addressing this opportunity in a targeted manner with incremental expansion of our sales force.

Current wording

Our commercial efforts have historically been focused on growing adoption and utilization across Level 4 comprehensive epilepsy centers, or CECs, in the United States that facilitate appropriate care for drug-resistant epilepsy patients. In 2023, we received FDA approval of a PMA-S which updated the qualification criteria for centers and clinicians that may prescribe and implant the RNS System. We initiated a pilot program to begin our outreach to these centers and clinicians in 2024 and are expanding these efforts through 2025. We are actively addressing this opportunity in a targeted manner with incremental expansion of our sales force.

Previous wording

Since our inception, we have generated significant losses. We have financed our operations primarily through sales of our products, issuance of equity securities, and debt financing. As of September 30, 2025, we had an accumulated deficit of $549.7 million, cash, cash equivalents and short-term investments of $60.0 million, and $58.7 million of outstanding debt under a term loan, net of debt discount and issuance costs.

Current wording

Since our inception, we have generated significant losses. We have financed our operations primarily through sales of our products, issuance of equity securities, and debt financing. As of March 31, 2026, we had an accumulated deficit of $559.1 million, cash, cash equivalents and short-term investments of $54.0 million, and $59.0 million of outstanding debt under a term loan, net of debt discount and issuance costs.

Previous wording

We have invested heavily and expect to continue to invest in research and development and commercial activities. Our research and development activities include clinical studies to demonstrate the safety and effectiveness of our RNS System, including in expanded indications, and to obtain, as well as retain, FDA approval. We intend to continue making significant investments in research and development, clinical studies and regulatory affairs to support ongoing and future regulatory submissions for retaining and expanding indications of our RNS System, including to patients with drug-resistant generalized epilepsy and patients under the age of 18, support continuous improvements to our RNS System, and develop future products that address neurological disorders. We have also made significant investments in building our field commercial team and intend to make significant investments in sales and marketing efforts in the future, including initiatives to drive awareness and expand our referral channel to increase the number of drug-resistant epilepsy patients referred to CECs. We may in the future seek to acquire or invest in additional businesses, products, or technologies that we believe could complement or enhance our products, enhance our technical capabilities or otherwise offer growth opportunities, although we currently have no agreements or understandings with respect to any such acquisitions or investments. Because of these and other factors, we expect to continue to incur net losses and negative cash flows for the near term. We may require additional funding to support operations and pay our obligations or may opportunistically seek to raise additional capital, which may include future equity or debt financings.

Current wording

We have invested heavily and expect to continue to invest in research and development and commercial activities. Our research and development activities include clinical studies to demonstrate the safety and effectiveness of our RNS System, including in expanded indications, and to obtain, as well as retain, FDA approval. We intend to continue making significant investments in research and development, clinical studies and regulatory affairs to support ongoing and future regulatory submissions for retaining and expanding indications of our RNS System, including to patients with drug-resistant idiopathic generalized epilepsy and patients under the age of 18, support continuous improvements to our RNS System, and develop future products that address neurological disorders. We have also made significant investments in building our field commercial team and intend to make significant investments in sales and marketing efforts in the future, including initiatives to drive awareness and expand our referral channel to increase the number of drug-resistant epilepsy patients referred to CECs. We may in the future seek to acquire or invest in additional businesses, products, or technologies that we believe could complement or enhance our products, enhance our technical capabilities or otherwise offer growth opportunities, although we currently have no agreements or understandings with respect to any such acquisitions or investments. Because of these and other factors, we expect to continue to incur net losses and negative cash flows for the near term. We may require additional funding to support operations and pay our obligations or may opportunistically seek to raise additional capital, which may include future equity or debt financings.

Previous wording

As previously announced, the exclusive distribution agreement with DIXI Medical USA Corp., or DIXI Medical, expired on September 30, 2025. In August 2022, we entered into this exclusive distribution agreement, or the Distribution Agreement, with DIXI Medical, pursuant to which we became the exclusive U.S. distributor of DIXI Medical’s stereo electroencephalography, or Stereo EEG, product line beginning in October 2022. These products are used in the epilepsy monitoring units, or EMUs, of comprehensive epilepsy centers to determine where epileptic seizures originate. The Distribution Agreement had an initial term of three years. In March 2025, we notified DIXI Medical of our intent to not renew the Distribution Agreement upon its expiration in September 2025. During the six-month wind-down period following expiration of the Distribution Agreement, we are exercising our right to sell any DIXI product inventory that we held on the date of expiration. At the end of this wind-down period, DIXI Medical is required to buy back, at cost, any DIXI product inventory held by us that has at least six months of remaining shelf life.

Current wording

As previously announced, our exclusive distribution agreement with DIXI Medical USA Corp., or DIXI Medical, expired on September 30, 2025. Under the agreement, entered into in August 2022, we served as the exclusive U.S. distributor of DIXI Medical’s stereo electroencephalography, or Stereo EEG, product line beginning in October 2022. These products are used in the epilepsy monitoring units, or EMUs, of comprehensive epilepsy centers to determine where epileptic seizures originate. The Distribution Agreement had an initial term of three years. In March 2025, we notified DIXI Medical of our intent to not renew the Distribution Agreement. Although the Distribution Agreement provided for a six-month wind down period following the expiration, the parties amended the terms to end the wind down on December 31, 2025. We sold DIXI products through December 31, 2025, have substantially completed the return of remaining inventory, and held $0.4 million DIXI inventory as of March 31, 2026. We expect to complete the return of all remaining DIXI inventory to DIXI Medical and cease all commercial partnership activities related to our Distribution Agreement with DIXI Medical by June 30, 2026. See Note 12 to our unaudited condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.

Previous wording

We derive revenue from sales of our RNS System to hospital facilities both for initial RNS System implant procedures and for replacement procedures when our implanted devices reach end of service. We launched our current neurostimulator model in 2018. This device has an average battery life of nearly eleven years, an increase from the previous model of the device. We have experienced and may continue to experience changes in the percentage of our revenue from replacement procedures over the next few years as a result of the extended replacement cycle of the newer device, which may cause variability in our gross margin. During the Distribution Agreement wind-down period, we will continue to derive revenue from sales of DIXI Medical products. As sales wind down, the product mix between sales of our RNS System and DIXI Medical products will cause variability in our gross margin.

Current wording

We derive revenue from sales of our RNS System to hospital facilities both for initial RNS System implant procedures and for replacement procedures when our implanted devices reach end of service. We launched our current neurostimulator model in 2018. This device has an average battery life of nearly eleven years, an increase from the previous model of the device. We have experienced and may continue to experience changes in the percentage of our revenue from replacement procedures over the next few years as a result of the extended replacement cycle of the newer device, which may cause variability in our gross margin. With the termination of the Distribution Agreement and cessation of DIXI product sales on December 31, 2025, there is no further revenue from DIXI product sales, reducing future variability in our gross margin.

Previous wording

Nearly all of our revenue results from sales in the United States, but we also have limited sales of our RNS System in Canada pursuant to a special program that involves case-by-case approvals of the use of our RNS System in adult patients with drug-resistant focal epilepsy.

Current wording

Nearly all of our revenue results from sales in the United States, but we also have limited sales of our RNS System in Canada pursuant to a special program that involves case-by-case approvals of the use of our RNS System in adult patients with drug-resistant focal epilepsy, and in Israel where regulatory approval has been obtained.

Previous wording

Cost of goods sold consists primarily of costs related to materials, components and subassemblies, personnel-related expenses for our manufacturing and quality assurance employees, including stock-based compensation, manufacturing overhead and charges for excess, obsolete and non-sellable inventories. Overhead costs include the cost of quality assurance, testing, material procurement, inventory control, operations supervision and management personnel, an allocation of facilities and information technology expenses, including rent and utilities, and equipment depreciation. Cost of goods sold also includes certain direct costs such as those incurred for shipping our

Current wording

Cost of goods sold consists primarily of costs related to materials, components and subassemblies, personnel-related expenses for our manufacturing and quality assurance employees, including stock-based compensation, manufacturing overhead and charges for excess, obsolete and non-sellable inventories. Overhead costs include the cost of quality assurance, testing, material procurement, inventory control, operations supervision and management personnel, an allocation of facilities and information technology expenses, including rent and utilities, and equipment depreciation. Cost of goods sold also includes certain direct costs such as those incurred for shipping our RNS System. We record adjustments to our inventory valuation for estimated excess, obsolete and non-sellable inventories based on assumptions about future demand, past usage, changes to manufacturing processes and overall market conditions.

Previous wording

Our sales and marketing expenses consist primarily of personnel-related costs for our sales and marketing employees, including stock-based compensation and sales-based variable compensation, travel expenses, consulting, public relations costs, direct marketing, customer training, trade show and promotional expenses and allocated facility and information technology expenses. We expense sales variable compensation when revenue related to the underlying sale is recognized. We intend to continue to increase our sales and marketing spending to support increased adoption of our RNS System. We expect our sales and marketing expenses will increase in absolute dollars as we hire additional personnel and add programs in order to more fully penetrate the market opportunity.

Current wording

Our sales and marketing expenses consist primarily of personnel-related costs for our sales and marketing employees, including stock-based compensation and sales-based variable compensation, travel expenses, consulting, public relations costs, direct marketing, customer training, trade show and promotional expenses and allocated facility and information technology expenses. We expense sales variable compensation when revenue related to the underlying sale is recognized. We intend to continue to increase our sales and marketing spending to support increased adoption of our RNS System. We expect our sales and marketing expenses will increase in absolute dollars as we hire additional personnel and add programs in order to more fully penetrate the market opportunity. Through December 31, 2025, sales and marketing expenses also included costs of selling DIXI Medical products.

Previous wording

Our research and development activities primarily consist of engineering and research programs associated with our products under development and clinical studies. Research and development expenses include personnel-related costs for our research and development employees, including stock-based compensation, and expenses related to consulting services, clinical trials, regulatory activities, prototyping, testing, materials and supplies, and allocated overhead including facilities and information technology expenses. Our clinical trial expenses include costs associated with clinical trial design, clinical trial site development and study costs, data management costs, related travel expenses, the cost of products used for clinical activities, and costs associated with our regulatory compliance. We expense research and development costs as they are incurred. We expect our research and development expenses will increase in absolute dollars as we continue to develop new product offerings and product enhancements and conduct studies for expanded indications for use.

Current wording

Our research and development activities primarily consist of engineering and research programs associated with our products under development and clinical studies. Research and development expenses include personnel-related costs for our research and development employees, including stock-based compensation, and expenses related to consulting services, clinical trials, regulatory activities, prototyping, testing, materials and supplies, and allocated facility and information technology expenses. Our clinical trial expenses include costs associated with clinical trial design, clinical trial site development and study costs, data management costs, related travel expenses, the cost of products used for clinical activities, and costs associated with our regulatory compliance. We expense research and development costs as they are incurred. We expect our research and development expenses will increase in absolute dollars as we continue to develop new product offerings and product enhancements and conduct studies for expanded indications for use.

Previous wording

Our general and administrative expenses consist primarily of personnel-related costs, including stock-based compensation, for administrative personnel that support our general operations such as executive management and information technology, finance, accounting, customer services, human resources and legal personnel. General and administrative expenses also include costs attributable to professional fees for legal, accounting and tax services, insurance and recruiting fees. We expect our administrative expenses will increase as we increase our headcount to support our growth. Additionally, we may incur increased expenses related to audit, legal, regulatory and tax-related services, compliance with exchange listing and Securities and Exchange Commission, or SEC, requirements, and director and officer insurance premiums. Our general and administrative expenses may fluctuate from period to period as we continue to grow.

Current wording

Our general and administrative expenses consist primarily of personnel-related costs, including stock-based compensation, for administrative personnel that support our general operations such as executive management, information technology, finance, accounting, customer services, human resources and legal personnel. General and administrative expenses also include costs attributable to professional fees for legal, accounting and tax services, insurance and recruiting fees. We expect our administrative expenses will increase as we increase our headcount to support our growth. Additionally, we may incur increased expenses related to audit, legal, regulatory and tax-related services, compliance with exchange listing and Securities and Exchange Commission, or SEC, requirements, and director and officer insurance premiums. Our general and administrative expenses may fluctuate from period to period as we continue to grow.

Previous wording

Other income (expense), net primarily consists of gain and loss from short-term investments, and loss on debt extinguishment.

Current wording

Other income (expense), net primarily consists of gain and loss from short-term investments.

Previous wording

The following table summarizes our results of operations for the periods indicated (in thousands):

Current wording

The following table summarizes our results of operations for the periods indicated:

Previous wording

Revenue increased by $6.3 million, or 30%, to $27.4 million during the three months ended September 30, 2025, compared to $21.1 million during the three months ended September 30, 2024. The increase in revenue was primarily due to an increase in the number of RNS System units sold, an increase in sales of DIXI Medical products, and an increase in service revenue. All of our revenue in the three months ended September 30, 2025 and with the exception of less than $0.1 million in the three months ended September 30, 2024, was generated from sales in the United States.

Current wording

Revenue decreased by $0.5 million, or 2%, to $22.1 million during the three months ended March 31, 2026, compared to $22.5 million during the three months ended March 31, 2025. The decrease in revenue was primarily due to the termination of the Distribution Agreement with DIXI Medical, offset by an increase in the number of RNS System units sold resulting from a higher number of initial implants and replacements. All of our revenue, with the exception of $0.7 million and $0.1 million for the three months ended March 31, 2026 and 2025, respectively, was generated from sales in the United States.

Previous wording

Cost of goods sold increased by $0.6 million, or 10%, to $6.2 million during the three months ended September 30, 2025, compared to $5.6 million during the three months ended September 30, 2024. The increase was primarily due to the increase in sales volume. Our gross margin increased from 73.2% for the three months ended September 30, 2024, to 77.4% for the three months ended September 30, 2025 primarily due to lower fixed costs per unit as a result of increased production volume of the RNS System, partially offset by the lower gross margin from distribution of DIXI Medical products.

Current wording

Cost of goods sold decreased by $1.2 million, or 22%, to $4.0 million during the three months ended March 31, 2026, compared to $5.2 million during the three months ended March 31, 2025. The decrease was primarily due to the termination of the Distribution Agreement with DIXI Medical, partially offset by increase in the number of RNS System units sold. Our gross margin increased from 77.0% for the three months ended March 31, 2025 to 81.8% for the three months ended March 31, 2026 primarily due to the lower gross margin from distribution of DIXI Medical products.

Previous wording

Sales and marketing expenses increased by $2.7 million, or 27%, to $12.6 million during the three months ended September 30, 2025, compared to $9.9 million during the three months ended September 30, 2024, primarily due to an increase of $2.0 million in personnel-related expenses resulting from increases in sales and field support personnel costs during the three months ended September 30, 2025, compared to the three months ended September 30, 2024, and an increase of $0.6 million in sales, field support and marketing costs, including travel.

Current wording

Sales and marketing expenses increased by $0.6 million, or 5%, to $11.6 million during the three months ended March 31, 2026, compared to $11.0 million during the three months ended March 31, 2025, primarily due to an increase of 0.4 million in personnel-related expenses resulting from an increase in sales and field support personnel headcount, and $0.2 million in marketing expenses, including travel.

Previous wording

Research and development expenses increased by $0.8 million, or 14%, to $6.6 million during the three months ended September 30, 2025, compared to $5.8 million during the three months ended September 30, 2024, primarily due to an increase of $0.8 million in personnel-related expenses.

Current wording

General and administrative expenses increased by $0.8 million, or 20%, to $4.8 million during the three months ended March 31, 2026, compared to $4.0 million during the three months ended March 31, 2025, primarily due to an increase of $0.8 million in personnel-related expenses.

Previous wording

Interest expense decreased by $0.6 million to $1.6 million for the three months ended September 30, 2025, compared to $2.2 million for the three months ended September 30, 2024, due to repayment of the CRG Term Loan and the lower annual effective interest rate pursuant to the MidCap Term Loan compared to the CRG Term Loan. Interest income decreased by $0.1 million for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily due to lower interest yields in the three months ended September 30, 2025.

Current wording

Interest expense decreased to $1.5 million for the three months ended March 31, 2026, compared to $2.2 million for the three months ended March 31, 2025, due to the lower annual effective interest rate pursuant to the MidCap Term Loan compared to CRG Term Loan. Interest income decreased by $0.2 million for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily due to lower cash and cash equivalents balances.

Previous wording

Other income (expense), net decreased by $0.1 million to $0.1 million during the three months ended September 30, 2025, compared to $0.2 million during the three months ended September 30, 2024, primarily due to lower unrealized gain, net on short-term investments in the three months ended September 30, 2025 compared to the three months ended September 30, 2024.

Current wording

Other income (expense), net decreased by $0.1 million to $0.2 million during the three months ended March 31, 2026, compared to less than $0.1 million during the three months ended March 31, 2025, primarily due to unrealized loss, net on short-term investments in the three months ended March 31, 2026.

Previous wording

We have financed our operations primarily through sales of our products, issuance of equity securities and debt financing. As of September 30, 2025, we had cash, cash equivalents and short-term investments of $60.0 million and $58.7 million outstanding under the MidCap Term Loan, net of debt discount and issuance costs.

Current wording

We have financed our operations primarily through sales of our products, issuance of equity securities and debt financing. As of March 31, 2026, we had cash, cash equivalents and short-term investments of $54.0 million and $59.0 million outstanding under the MidCap Term Loan, net of debt discount and issuance costs.

Previous wording

In February 2025, we completed a follow-on offering and received $69.7 million in net proceeds after deducting underwriting discounts and commissions and offering expenses from the sale of 7,475,000 shares of our common stock, including 975,000 shares from the exercise of the underwriters’ option to purchase additional shares, at a public offering price of $10.00 per share. We used $49.5 million of the net proceeds from the offering to repurchase all of the shares held by our significant stockholder, KCK Ltd. We intend to use the remaining net proceeds from the offering for general corporate purposes, which may include clinical trial and other sales and marketing, research and development, and general and administrative expenses, debt reduction and working capital.

Current wording

In February 2025, we completed a follow-on offering and received $69.7 million in net proceeds after deducting underwriting discounts and commissions and offering expenses from the sale of 7,475,000 shares of our common stock, including 975,000 shares from the exercise of the underwriters’ option to purchase additional shares, at a public offering price of $10.00 per share. We used $49.5 million of the net proceeds from the offering to repurchase all of the shares held by our significant stockholder, KCK Ltd. We are using the remaining net proceeds from the offering for general corporate purposes, including, but not limited to, sales and marketing, clinical trial and other research and development, and general and administrative expenses, debt reduction and working capital.

Previous wording

In November 2022, we entered into a Sales Agreement with Leerink Partners LLC, or Leerink, to sell shares of our common stock, from time to time, through an at-the-market, or ATM, equity offering program under which Leerink would act as our sales agent and pursuant to which we could sell common stock for aggregate gross proceeds of up to $50.0 million. During the year ended December 31, 2024, we received net proceeds of approximately $3.2 million after deducting sales commissions and offering expenses. In January 2025, we received net proceeds of approximately $0.2 million after deducting sales commissions and offering expenses. In February 2025, we terminated the Sales Agreement and the ATM program. On the date of termination, we had $38.3 million remaining under our ATM program.

Current wording

In November 2022, we entered into a Sales Agreement with Leerink Partners LLC, or Leerink, to sell shares of our common stock, from time to time, through an at-the-market, or ATM, equity offering program under which Leerink acted as our sales agent and pursuant to which we could sell common stock for aggregate gross proceeds of up to $50.0 million. In January 2025, we received net proceeds of approximately $0.2 million after deducting sales commissions and offering expenses. In February 2025, we terminated the Sales Agreement and the ATM program. On the date of termination, we had $38.3 million remaining under our ATM program.

Previous wording

In September 2020, we entered into the CRG Term Loan with CRG Partners IV L.P. and its affiliates for total borrowings of up to $60 million and borrowed $50 million. The remaining $10.0 million expired without being drawn.

Current wording

In September 2020, we entered into the CRG Term Loan with CRG Partners IV L.P. and its affiliates and borrowed $50 million. The CRG Term Loan bore interest at a rate of 13.5% per year. Payments under the loan were made quarterly at the end of each calendar quarter. The CRG Term Loan was interest-only through its original maturity of September 30, 2025. In May 2024, we amended the CRG Term Loan to extend the final maturity by one year to September 30, 2026. In June 2025, we repaid the entire obligation under the CRG Term Loan using the proceeds received from the MidCap Term Loan. At the time of repayment, the lender agreed to decrease the exit fee from 10% to 8% of the aggregate principal amount repaid.

Previous wording

In June 2025, we entered into a credit, security and guaranty agreement, or Credit Agreement, by and among the Company, MidCap Funding IV Trust, as agent, MidCap Financial Trust, as term loan servicer and the financial institutions and other entities from time to time party thereto, and borrowed $60.0 million, or MidCap Term Loan. The Credit Agreement also provided for a revolving credit facility in an aggregate principal amount not to exceed $15.0 million, or the Revolver and together with the MidCap Term Loan, the Loans. The Revolver has not been drawn upon as of September 30, 2025.

Current wording

In June 2025, we entered into a credit, security and guaranty agreement, or Credit Agreement, by and among us, MidCap Funding IV Trust, as agent, MidCap Financial Trust, as term loan servicer and the financial institutions and other entities from time to time party thereto, and borrowed $60.0 million, or MidCap Term Loan. The Credit Agreement also provided for a revolving credit facility in an aggregate principal amount not to exceed $15.0 million, or the Revolver and together with the MidCap Term Loan, the Loans. The Revolver has not been drawn upon as of March 31, 2026.

Previous wording

The Loans mature on June 4, 2030, and is due in one installment on June 4, 2030. The MidCap Term Loan bears interest at an annual rate of 30-day forward-looking term Secured Overnight Financing Rate, or SOFR, plus 5.5%, subject to a SOFR floor of 2.0%. Borrowing under the Revolver will accrue interest at an annual rate of 30-day forward-looking term SOFR plus 3.75%, subject to a SOFR floor of 2.0%. Following the initial borrowing of the Revolver, we will pay an unused line fee equal to 0.25% per annum of the average unused portion of the Revolver. Interest and unused line fee, if any, are payable monthly in arrears.

Current wording

The Loans mature on June 4, 2030, and are due in one installment on June 4, 2030. The MidCap Term Loan bears interest at an annual rate of 30-day forward-looking term Secured Overnight Financing Rate, or SOFR, plus 5.5%, subject to a SOFR floor of 2.0%. Borrowing under the Revolver will accrue interest at an annual rate of 30-day forward-looking term SOFR plus 3.75%, subject to a SOFR floor of 2.0%. Following the initial borrowing of the Revolver, we will pay an unused line fee equal to 0.25% per annum of the average unused portion of the Revolver. Interest and unused line fee, if any, are payable monthly in arrears.

Previous wording

We have future minimum payments for the MidCap Term Loan totaling $89.6 million, with $6.1 million due within twelve months. In addition, we lease our office and manufacturing facilities in Mountain View, California under a non-cancelable operating lease which expires in June 2030. Future minimum lease payments under non-cancelable operating leases were $15.1 million as of September 30, 2025. See Note 5 to our unaudited condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information about our facility lease.

Current wording

We have future minimum payments for the MidCap Term Loan totaling $85.6 million, with $5.7 million due within twelve months of March 31, 2026. In addition, we lease our office and manufacturing facilities in Mountain View, California under a non-cancelable operating lease which expires in June 2030. Future minimum lease payments under non-cancelable operating leases were $13.6 million as of March 31, 2026. See Note 5 to our unaudited condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.

Previous wording

The following table sets forth the primary sources and uses of cash and cash equivalents for the periods presented below (in thousands):

Current wording

The following table summarizes the primary sources and uses of cash and cash equivalents for the periods presented:

Previous wording

Net cash used in operating activities was $13.2 million for the nine months ended September 30, 2024. Cash used in operating activities was primarily a result of the net loss of $21.9 million, adjusted for non-cash charges of $11.2 million and change in operating assets and liabilities of $2.5 million. The non-cash charges primarily consisted of $7.7 million of stock-based compensation, $1.4 million of interest incurred but paid-in-kind, $1.2 million of amortization of right-of-use assets, $0.7 million of non-cash interest expense related to our Term Loan, offset in part by a gain on short-term investments of $0.3 million. The change in operating assets and liabilities was due to a decrease in operating lease liabilities of $1.2 million, a decrease in accrued liabilities of $1.1 million largely due to accrued payroll and related expenses, an increase in inventories of $1.1 million largely due to an increase in work-in-process inventory and raw materials, and a decrease in deferred revenue of $0.3 million, offset in part by a decrease in accounts receivable of $0.8 million, and a decrease in in prepaid expenses and other assets of $0.6 million.

Current wording

Net cash used in operating activities was $5.9 million for the three months ended March 31, 2026. Cash used in operating activities was primarily a result of the net loss of $6.7 million, adjusted for non-cash charges of $3.2 million and change in operating assets and liabilities of $2.4 million. The non-cash charges primarily consisted of $2.3 million of stock-based compensation, $0.5 million of amortization of right-of-use assets, and $0.2 million of unrealized loss on short-term investments. The change in operating assets and liabilities was primarily due to a decrease in accrued liabilities of $4.0 million largely due to accrued payroll and personnel expenses, and a decrease in operating lease liabilities of $0.5 million, partially offset by an increase in accounts payable of $2.2 million primarily due to the timing of payments to our vendors.

Previous wording

Net cash used in operating activities was $11.5 million for the nine months ended September 30, 2025. Cash used in operating activities was primarily a result of the net loss of $18.7 million, adjusted for non-cash charges of $11.2 million and change in operating assets and liabilities of $3.9 million. The non-cash charges primarily consisted of $8.5 million of stock-based compensation, $1.3 million of amortization of right-of-use assets, $0.5 million of loss on extinguishment of the CRG Term Loan, and $0.5 million of non-cash interest expense related to our term loans. The change in operating assets and liabilities was due to an increase in accounts receivable of $2.1 million primarily due to an increase in sales of our products including our RNS System and DIXI Medical products, an increase in inventories of $4.9 million largely due to an increase in raw materials and finished goods, and a decrease in operating lease liabilities of $1.4 million, offset in part by an increase in accrued liabilities of $2.5 million and an increase in accounts payable of $1.7 million primarily due to the timing of payments to our vendors.

Current wording

Net cash used in operating activities was $7.5 million for the three months ended March 31, 2025. Cash used in operating activities was primarily a result of the net loss of $6.6 million, adjusted for non-cash charges of $3.5 million and change in operating assets and liabilities of $4.4 million. The non-cash charges primarily consisted of $2.6 million of stock-based compensation, $0.4 million of amortization of right-of-use assets, and $0.2 million of non-cash interest expense related to our Term Loan. The change in operating assets and liabilities was due to an increase in accounts receivable of $2.6 million primarily due to an increase in sales of our products including our RNS System and DIXI Medical products, an increase in inventories of $0.2 million largely due to an increase in work-in-process inventory, a decrease in accrued liabilities of $2.3 million largely due to accrued payroll and related expenses, and a decrease in operating lease liabilities of $0.5 million, offset in part by an increase in accounts payable of $1.0 million primarily due to the timing of payments to our vendors, and a decrease in in prepaid expenses and other assets of $0.2 million.

Previous wording

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

Current wording

Net cash used in investing activities was $0.1 million for the three months ended March 31, 2026, and primarily consisted of purchases of property and equipment.

Previous wording

Net cash provided by financing activities was $19.0 million for the nine months ended September 30, 2025, which primarily consisted of $69.7 million in proceeds, net of underwriting discounts and commissions, from our February 2025 follow-on offering of common stock, proceeds of $58.4 million from the MidCap Term Loan, net of discounts and issuance costs, proceeds from the issuance of common stock under employee plans of $1.2 million and $0.2 million of net cash proceeds from our at-the-market offering, partially offset by repayment of the CRG Term Loan of $60.5 million, a repurchase of common stock of $49.5 million, and taxes withheld and paid related to net share settlement of equity awards of $0.5 million.

Current wording

Net cash provided by financing activities was $21.1 million for the three months ended March 31, 2025, which primarily consisted of $70.3 million in proceeds, net of underwriting discounts and commissions, from our February 2025 follow-on offering of common stock, proceeds from the issuance of common stock under employee plans of $0.4 million and $0.2 million of net cash proceeds from our at-the-market offering, partially offset by a repurchase of our common stock of $49.5 million, and taxes withheld and paid related to net share settlement of equity awards of $0.2 million.

Previous wording

Our financial statements have been prepared in accordance with GAAP. The preparation of our financial statements requires us to make estimates and assumptions that affect the amounts and disclosures in the financial statements. Our estimates are based on our historical experience, knowledge of current events and actions we may undertake in the future, and on various other factors that we believe are reasonable under the circumstances.

Current wording

Our financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP. The preparation of our financial statements requires us to make estimates and assumptions that affect the amounts and disclosures in the financial statements. Our estimates are based on our historical experience, knowledge of current events and actions we may undertake in the future, and on various other factors that we believe are reasonable under the circumstances.

Previous wording

See “Recent Accounting Pronouncements” in Note 2 to our unaudited interim condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.

Current wording

See “Recent Accounting Pronouncements” in Note 2 to our unaudited condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.