NeuroPace Inc

1. The Company

NeuroPace, Inc., or the Company, was incorporated in the State of Delaware on November 19, 1997. The Company is a medical device company that has developed the RNS System, the only commercially available brain-responsive neuromodulation system designed for treating drug-resistant focal epilepsy by delivering personalized, real-time treatment at the seizure source. The Company began commercializing its products in the United States in 2014.

At-the-Market Equity Offering

In November 2022, the Company filed a shelf registration statement on Form S-3 with the Securities and Exchange Commission, or the SEC, for up to $150 million of securities, including up to $50 million under an at-the-market, or ATM, equity program pursuant to a sales agreement with Leerink Partners LLC, or Leerink (formerly SVB Securities LLC). The Company agreed to pay Leerink commissions of up to 3.0% of the gross proceeds. The Company’s common stock was issued at prevailing market prices. In January 2025, the Company sold 18,590 shares under the ATM program for net proceeds of $0.2 million. In February 2025, the Company terminated the Sales Agreement and the ATM program. At termination, $38.3 million remained available under the ATM program.

Follow-On Offering

In February 2025, the Company completed a follow-on offering of 7,475,000 shares of common stock, including 975,000 shares issued upon exercise of the underwriters’ option, at $10.00 per share. The net proceeds were $69.7 million after underwriting discounts, commissions and offering expenses. The Company used $49.5 million of the net proceeds to repurchase all of the 5,270,845 shares held by its significant stockholder (a related party), KCK Ltd., at $9.40 per share. The repurchased shares became authorized but unissued shares.

Liquidity and Capital Resources

The Company has incurred operating losses and negative cash flows from operations since its inception and had an accumulated deficit of $565.3 million as of June 30, 2026. For the six months ended June 30, 2026 and 2025, the Company used $9.8 million and $9.6 million of cash in its operating activities, respectively. As of June 30, 2026, the Company had cash, cash equivalents and short-term investments of $51.7 million. Historically, the Company has funded its operations principally through the sales of its products, issuances of equity securities and debt financing.

The Company’s unaudited interim condensed financial statements have been prepared on the basis of the Company continuing as a going concern for the next 12 months. Management believes that the Company’s cash, cash equivalents and short-term investments will allow the Company to continue its planned operations for at least the next 12 months from the date of the issuance of these unaudited interim condensed financial statements.

The MidCap Credit Agreement (see Note 6) financial covenants require the Company to maintain an Applicable Liquidity Threshold no less than (a) $60.0 million until June 30, 2027, and (b) $40.0 million thereafter; or provided the Company earns at least $90.0 million net revenue from the RNS System in 2026, liquidity shall be no less than $35.0 million thereafter. If liquidity falls below the Applicable Liquidity Threshold, the Company must satisfy minimum annual trailing net RNS System revenue, tested quarterly, starting from $69.2 million over a trailing 12-month period ending June 30, 2025, and increasing to $87.3 million for the trailing 12-month period ending March 31, 2030. The Company’s trailing 12-month net RNS System revenue was $89.2 million as of June 30, 2026, exceeding the $72.8 million minimum per the MidCap Credit Agreement. The MidCap Credit Agreement also requires the Company to maintain a Minimum Liquidity balance of $25.0 million. Liquidity is defined as cash and cash equivalents, short-term investments, and following the initial borrowing under the Revolver (see Note 6), the available Revolver balance. Failure to comply with these covenants could result in acceleration of the debt and requires the Company to obtain additional capital and may raise doubt about the Company’s ability to continue as a going concern. As of June 30, 2026, the Company was in compliance with all covenants of the MidCap Credit Agreement.

2. Summary of Significant Accounting Policies

Basis of Presentation

Theunaudited interim condensed financial statements have been prepared in conformity with generally accepted accounting principles in the United States, or GAAP. Certain prior period amounts have been reclassified to conform to the current period presentation of the DIXI Medical product operations as a discontinued operation. These reclassifications had no effect on previously reported net loss, total assets, total liabilities or total stockholders’ equity.

Unaudited Interim Financial Information

The condensed balance sheet as of December 31, 2025 was derived from the Company’s audited financial statements, but does not include all disclosures required by GAAP. The accompanying unaudited interim condensed financial statements as of June 30, 2026 and for the three and six months ended June 30, 2026 and 2025, have been prepared by the Company, pursuant to the rules and regulations of the SEC for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2025 and the notes thereto, which are included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the SEC on March 3, 2026. In the opinion of management, all normal recurring adjustments necessary for a fair statement have been included. The results for the three and six months ended June 30, 2026 are not necessarily indicative of the results for the year ending December 31, 2026.

Use of Estimates

The preparation ofunaudited interim condensed financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the amounts and disclosures. The Company uses significant judgments when making estimates related to the provision for excess and obsolete inventories. Actual results may ultimately materially differ from these estimates and assumptions.

Concentration of Credit Risk, and Other Risks and Uncertainties

Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents, short-term investments and accounts receivable to the extent of the amounts recorded on the balance sheets.

The Company’s accounts receivable, with the exception of $0.2 million, are due from a variety of health care organizations in the United States as of June 30, 2026. For the three and six months ended June 30, 2026 and 2025, there were no customers that represented 10% or more of revenue. As of June 30, 2026 and December 31, 2025, no customer represented 10% or more of the Company’s accounts receivable.

Remaining Performance Obligation and Contract Liabilities

The Company’s contract liabilities consist of deferred revenue of $0.1 million as of June 30, 2026 and December 31, 2025. Revenue recognized during the three months ended June 30, 2026 and 2025 that was included in the deferred revenue balance at the beginning of the year was $0.0 million and $0.4 million, respectively. Revenue recognized during the six months ended June 30, 2026 and 2025 that was included in the deferred revenue balance at the beginning of the year was $0.1 million and $0.6 million, respectively.

As of June 30, 2026, the aggregate amount of the transaction price allocated to the remaining performance obligations that are unsatisfied or partially unsatisfied was $1.6 million, which the Company expects to recognize as revenue by June 2028 pursuant to customer contract terms.

Government Programs

Through June 30, 2026, the Company received funding under the National Institutes of Health, or NIH, grant which was issued for a five-year period in May 2021, and recognized funding as a reduction in research and development expenses in an amount equal to the qualifying expenses incurred in each period up to the amount awarded by the NIH. The Company received $0.1 million in funding during the three months ended June 30, 2026 andno funding during the three months ended June 30, 2025. The Company received $0.3 million and $0.1 million in funding during the six months ended June 30, 2026 and 2025, respectively.

Qualifying expenses incurred by the Company in advance of funding by the NIH are recorded within prepaid expenses and other current assets on the balance sheets. As of June 30, 2026, the Company recorded prepaid expenses and other current assets of $0.1 million related to the fifth year of funding.

Discontinued Operations

A discontinued operation represents a component of the Company that has been disposed of or abandoned and that represents a strategic shift that has or will have a major effect on the Company’s operations and financial results, in accordance with ASC 205‑20, Presentation of Financial Statements—Discontinued Operations. During the three months ended June 30, 2026, the Company concluded that the abandonment of its DIXI Medical product operations met the criteria to be accounted for as a discontinued operation. Accordingly, the operating results related to this component are presented as discontinued operations in the Company’s condensed statements of operations and comprehensive loss, and the related assets and liabilities are presented separately as current assets of discontinued operations and current liabilities of discontinued operations in the Company’s condensed balance sheets for all periods presented in this Quarterly Report on Form 10‑Q. See Note 11 for additional information.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

The Company adopted Accounting Standards Update, or ASU, No. 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets during the three months ended March 31, 2026. The adoption of this ASU did not have an impact on the Company’s financial statements and related disclosures. The Company did not adopt any accounting pronouncements during the three months ended June 30, 2026.

Recent Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), and in January 2025, the FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. ASU 2024-03 is intended to provide more detailed information about specified categories of expenses (including employee compensation, depreciation, and amortization) included in certain expense captions presented on the face of the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted, and may be applied either prospectively to financial statements issued for reporting periods after its effective date or retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact this standard will have on its financial statement disclosures.

In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities, providing authoritative guidance on the recognition, measurement, presentation, and disclosure of government grants received by business entities. The standard introduces a framework for determining when grants should be recognized, distinguishing between asset-related and income-related grants, and allows entities to present grants either as a reduction of related expenses or as a separate income line item. Expanded disclosures about the nature, terms, and conditions of grants are required. This ASU is effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact this guidance will have on its financial statements and related disclosures.

3. Fair Value Measurements

The Company measures certain financial assets and liabilities at fair value on a recurring basis. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The Company uses the following hierarchy to classify inputs used in measuring fair value:

Level 1 Quoted prices in active markets for identical assets or liabilities.

Level 2 Observable inputs other than Level 1

Level 3 Unobservable inputs

The Company measures fair value using the market approach based on observable market data for identical or comparable instruments.

The following table summarizes the Company’s financial assets (cash equivalents and marketable securities) that are measured at fair value on a recurring basis, all of which are classified within Level 1 of the fair value hierarchy:

There wereno liabilities measured at fair value on a recurring and non-recurring basis as of June 30, 2026 and December 31, 2025.

The money market funds are highly liquid and primarily invest in short-term fixed income securities issued by the U.S. government and U.S. government agencies.

The fixed income mutual fund is a short-term investment which primarily invests in debt securities issued by the U.S. government and U.S. government agencies and corporate bonds and notes. Interest income from short-term investments is recorded in interest income. During the three months ended June 30, 2026 and 2025, the Company recognized less than $0.1 million in unrealized losses and less than $0.1 million in unrealized gains from its short-term investments, respectively. During the six months ended June 30, 2026 and 2025, the Company recognized $0.2 million and less than $0.1 million in unrealized losses from its short-term investments, respectively. The Company’s short-term investments had a cumulative unrealized net loss of less than $0.1 million and a cumulative unrealized net gain of $0.2 million as of June 30, 2026 and December 31, 2025, respectively.

4. Balance Sheet Components

Inventory

Inventories consist of the following:

Property and Equipment, net

Property and equipment, net consists of the following:

Depreciation expense for each of the three months ended June 30, 2026 and 2025 was less than $0.1 million. Depreciation expense for each of the six months ended June 30, 2026 and 2025 was $0.1 million.

Accrued Liabilities

Accrued liabilities consist of the following:

5. Commitments and Contingencies

Facility Lease

The Company leases combined office and manufacturing facilities in Mountain View, California under a non‑cancelable operating lease originally entered into in 2011 and amended most recently in 2022 to extend the term through June 2030. The lease includes an option to extend for an additional five‑year period through June 30, 2035. The renewal terms have not been included in the lease term used to calculate the right-of-use assets and lease liability as it is not reasonably certain that the Company will exercise the option. In connection with the lease, the Company maintains a letter of credit of $0.1 million in lieu of a security deposit.

The terms of the facility lease provide for rental payments on a graduated scale; however, rent expense is recognized on a straight-line basis over the lease term.

The maturities of operating lease liabilities are as follows:

Operating lease cost was $0.7 million for each of the three months ended June 30, 2026 and 2025. Operating lease cost was $1.4 million for each of the six months ended June 30, 2026 and 2025. As of June 30, 2026, the remaining term for the operating lease in Mountain View, California was 4 years, and the discount rate used to measure the lease liability for such operating lease upon recognition was 8.5%.

For each of the six months ended June 30, 2026 and 2025, cash paid for amounts included in operating lease liabilities of $1.5 million was included in cash flows from operating activities on the condensed statements of cash flows.

Distribution Agreement

In August 2022, the Company entered into an exclusive distribution agreement, or the Distribution Agreement, with DIXI Medical USA Corp., or DIXI Medical, for its stereo electroencephalography product line, with an initial term through September 30, 2025. The Distribution Agreement required annual purchase commitments, which increased by 10% each year during the term. The Company satisfied these purchase commitments.

The Distribution Agreement provided for automaticone-year renewals unless either party gave at least 180 days notice of non-renewal. In March 2025, the Company provided notice of its intent not to renew and the Distribution Agreement expired on September 30, 2025.

Following expiration, the Company was permitted to sell remaining inventory during a wind-down period, after which DIXI Medical was required to buy back, at cost, any DIXI Medical product inventory with at least six months remaining shelf life held by the Company.

In December 2025, the Company and DIXI Medical amended the Distribution Agreement to end the wind-down period and cease commercial partnership activities on December 31, 2025. The Company has completed the return of all remaining inventory and had no DIXI Medical product inventory as of June 30, 2026.

Effective June 30, 2026, the Company concluded that the abandonment of its DIXI Medical product operations represented a strategic shift that would have a major effect on the Company’s operations and financial results. Accordingly, the DIXI Medical product operations met the criteria for presentation as a discontinued operation. See Note 11 for additional information.

Indemnifications

In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and indemnification provisions. The Company’s exposure under these arrangements is unknown, as it involves potential future claims.

The Company also indemnifies its directors and officers, subject to certain limits, as permitted under Delaware law and its governing documents. These obligations extend through the duration of any related proceedings, and the maximum potential payments are not estimable. No indemnification claims are currently outstanding, and the Company believes the estimated fair value of these indemnification arrangements is minimal. As such, the Company hasnot recognized any such liabilities as of June 30, 2026 and December 31, 2025.

Contingencies

From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of business activities. The Company records a liability for contingent obligations when a loss is probable and reasonably estimable. No accrual was required as of June 30, 2026 and December 31, 2025.

Legal Proceedings

The Company is not involved in any material legal proceedings. From time to time, the Company may be involved in litigation arising in the ordinary course of business. The Company regularly evaluates current information and records accruals as appropriate. Legal costs are expensed as incurred. No material accruals were recorded as of June 30, 2026 and December 31, 2025.

6. Debt

CRG Term Loan

In September 2020, the Company entered into a Term Loan Agreement with CRG Partners IV L.P. and its affiliates, or the CRG Term Loan, and borrowed $50.0 million. The CRG Term Loan initially bore interest at a rate of 12.5% per year and was interest-only through maturity on September 30, 2025. In February 2023, the CRG Term Loan was amended which increased the annual interest rate to 13.5% effective March 1, 2023. In May 2024, the maturity date was extended to September 30, 2026. Interest was payable quarterlyat the end of each calendar quarter. The CRG Term Loan was collateralized by substantially all of the Company’s assets and included customary covenants and default provisions.

In June 2025, the Company repaid the CRG Term Loan in full using the proceeds from the MidCap Term Loan (as defined below). Total repayment amounted to $61.9 million, including principal of $56.0 million, interest of $1.4 million and a backend fee of $4.5 million, which was reduced from 10% to 8% upon repayment. The repayment was accounted for as a debt extinguishment and the Company recorded a loss on extinguishment of $0.5 million included in other income (expense), net in the condensed statements of operations and comprehensive loss.

During the three months ended June 30, 2025, the Company recorded interest expense and interest expense related to debt discount and debt issuance costs of the CRG Term Loan of $1.6 million and less than $0.1 million, respectively. During the six months ended June 30, 2025, the Company recorded interest expense and interest expense related to debt discount and debt issuance costs of the CRG Term Loan of $3.7 million and $0.1 million, respectively.

MidCap Term Loan

In June 2025, the Company entered into a credit, security and guaranty agreement (see Note 1), or MidCap Credit Agreement, with 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, or the Lenders. The MidCap Credit Agreement provides for a first lien senior secured credit facility consisting of (i) a $60.0 million term loan facility, or MidCap Term Loan, which was funded at closing of the MidCap Credit Agreement, and (ii) 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 Loans mature on June 4, 2030 with principal due at maturity. The MidCap Term Loan bears interest at an annual rate of the 30-day forward-looking term Secured Overnight Financing Rate, or SOFR, plus 5.5%, subject to a 2.0% SOFR floor. Borrowings under the Revolver will accrue interest at an annual rate of the 30-day forward-looking term SOFR plus 3.75%, subject to a 2.0% SOFR floor. Following the initial borrowing of the Revolver, the

Company 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. The date by which the Revolver must be implemented was extended from June 4, 2026 to December 31, 2026. The extension had no impact on the Company’s financial statements.

The Company may repay the Loans, in whole or in part, at any time, subject to a prepayment premium of 3.0%,2.0%, and 1.0% in the first, second and third years, respectively, and 0% thereafter. In addition, the MidCap Term Loan is subject to a 2% exit fee upon repayment. In addition, the Company shall pay an annual administrative fee, payable in advance, equal to 0.25% of the aggregate outstanding principal of the MidCap Term Loan.

The Loans are collateralized by substantially all of the Company’s assets and subject to customary covenants and default provisions (see Note 1 for its financial covenants).

The Company incurred $1.5 million of debt issuance costs, recorded as a discount on the MidCap Term Loan and amortized over the life of the loan using the effective interest method.

Interest expense on the MidCap Term Loan was $1.5 million and $0.5 million for the three months ended June 30, 2026 and 2025, respectively, including interest expense related to debt discount and debt issuance costs of the MidCap Term Loan of $0.1 million and less than $0.1 million, respectively.

Interest expense on the MidCap Term Loan was $3.0 million and $0.5 million for the six months ended June 30, 2026 and 2025, respectively, including interest expense related to debt discount and debt issuance costs of the MidCap Term Loan of $0.3 million and less than $0.1 million, respectively.

The Revolver has not been drawn upon as of June 30, 2026.

The following table sets forth the Company’s future minimum payments for the MidCap Term Loan as of June 30, 2026. Estimated future interest payments are calculated using the effective interest rate of 10.7% at June 30, 2026.

7. Common Stock

The Company’s Amended and Restated Certificate of Incorporation authorizes 200,000,000 shares of common stock with a par value of $0.001 per share.

The holders of common stock are entitled to receive dividends when declared by the Board of Directors, subject to legally available funds. No dividends had been declared as of June 30, 2026 and December 31, 2025.

The Company’s common stock reserved for future issuance is as follows:

8. Stock Plans

A summary of shares available for grant under the Company’s 2021 Equity Incentive Plan, or the 2021 Plan, is as follows:

A summary of stock option activity is set forth below:

Employee Stock Purchase Plan

In April 2021, the Company adopted the 2021 Employee Stock Purchase Plan, or ESPP. An additional 335,747 shares were added to the ESPP share reserve in January 2026 pursuant to the plan’s automatic increase provision. The terms of the ESPP are otherwise unchanged from those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

As of June 30, 2026,923,835 shares under the ESPP remain available for purchase. The Company issued 61,943 and 66,627 shares under the ESPP during the six months ended June 30, 2026 and 2025, respectively. The offering period and purchase period are determined by the Board of Directors. A new offering period ofsix months began June 7, 2026 and will end December 6, 2026.

Restricted Stock Units

Activity with respect to restricted stock units, or RSUs, is as follows:

Stock-Based Compensation

The Company recognized stock-based compensation as follows:

As of June 30, 2026, the total unrecognized stock-based compensation expense related to unvested stock options and RSUs was $22.8 million, which will be amortized on a straight-line basis over a weighted-average remaining period of 2.8 years.

As of June 30, 2026, the Company had unrecognized stock-based compensation expense relating to the ESPP awards of $0.3 million, which is expected to be recognized over a weighted-average period of 0.4 years.

9. Income Taxes

The Company did not record a federal or state income tax provision or benefit for the three and six months ended June 30, 2026 and 2025 due to cumulative net losses. Deferred tax assets, primarily related to net operating losses, are fully offset by a valuation allowance as realization is not considered more likely than not.

The Company accounts for the uncertainty in income taxes in accordance with applicable guidance. There were no changes in unrecognized tax benefits during the period.

The Company evaluated the income tax effects of the discontinued operations accounting adjustments. No additional income tax effects have been recorded because the related items do not result in the recognition of an income tax expense or benefit due to the existence of a valuation allowance with and without discontinued operations. See Note 11 for additional information.

10. Net Loss per Share Attributable to Common Stockholders

The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders:

The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted-average shares outstanding because such securities have an antidilutive impact due to the Company’s net loss, in common stock equivalent shares:

11. Discontinued Operations

The Distribution Agreement with DIXI Medical expired on September 30, 2025, after which the Company wound down and ceased all commercial activities on December 31, 2025, and completed the return of all remaining DIXI Medical product inventory by June 30, 2026. The Company concluded that the resulting abandonment of the DIXI Medical product operations represented a strategic shift that would have a major effect on the Company’s operations and financial results, and met the criteria for presentation as a discontinued operation under ASC 205‑20 effective June 30, 2026. As a result, the operating results of the DIXI Medical product operations are presented as discontinued operations in the Company’s condensed statements of operations and comprehensive loss, and the related assets and liabilities are presented separately in the Company’s condensed balance sheets for all periods presented in this Quarterly Report on Form 10‑Q.

Assets and liabilities attributable to the discontinued operations are included in our condensed balance sheets as follows:

The following table sets forth the operating results of the DIXI Medical product operations presented as discontinued operations:

The Company did not allocate research and development or general and administrative expenses to its DIXI Medical product operations. No gain or loss was recognized on the abandonment, as the Company had no DIXI Medical product inventory as of June 30, 2026.

Cash flows attributable to the discontinued operations are included in our condensed statements of cash flows as follows:

There wereno non-cash operating activities or cash flows from investing or financing activities related to the DIXI Medical product operations for the six months ended June 30, 2026 and 2025.

12. Segment Information

The Company operates asone operating and reportable segment. All of the Company’s long-lived assets, comprised of property and equipment, are based in the United States. All of the Company’s revenue, with the exception of $0.4 million, was in the United States for each of the three months ended June 30, 2026 and 2025, based on the shipping location of the external customer. All of the Company’s revenue, with the exception of $1.1 million and $0.4 million, was in the United States for the six months ended June 30, 2026 and 2025, respectively, based on the shipping location of the external customer.

The Company’s chief operating decision maker, or CODM, is its Chief Executive Officer. The CODM makes decisions on resource allocation, evaluates operating performance, and monitors budget versus actual results using net loss. Significant expense categories included within net loss include cost of goods sold, sales and marketing expense, research and development expense, and general and administrative expense, which are presented on the Company’s statements of operations and comprehensive loss. Other segment items within net loss include interest income, interest expense, and other income (expense), net.