Stereotaxis, Inc.

Previous wording

Our primary clinical focus has been electrophysiology, specifically cardiac ablation procedures for the treatment of arrhythmias. Cardiac ablation has become a well-accepted therapy for arrhythmias and a multi-billion-dollar medical device market with expectations for substantial long-term growth. We have shared our aspiration and a product strategy to expand the clinical focus of our technology to several additional endovascular indications including coronary, neuro, and peripheral interventions.

Current wording

Our primary clinical focus has been electrophysiology, specifically cardiac ablation procedures for the treatment of arrhythmias. Cardiac ablation has become a well-accepted therapy for arrhythmias and a multi-billion-dollar medical device market with expectations for substantial long-term growth. We have shared our aspirations and a product strategy to expand the clinical focus of our technology to several additional endovascular indications including coronary, neuro, and peripheral interventions.

Previous wording

We pursue arrangements with fluoroscopy system manufacturers to provide such systems in a bundled purchase offer for hospitals establishing robotic interventional operating rooms. An integrated x-ray system is critical for customer adoption of RMN systems, and when offered as a bundled purchase offer with the RMN System, may reduce the cost of acquisition, the ongoing cost of ownership, and the complexity of installation of a robotic electrophysiology practice.

Current wording

We pursue arrangements with fluoroscopy system manufacturers to provide such systems in a bundled purchase offer for hospitals establishing robotic interventional operating rooms. An integrated x-ray system is critical for customer adoption of RMN systems, and when offered as a bundled purchase with the RMN System, it may reduce the cost of acquisition, the ongoing cost of ownership, and the complexity of installation of a robotic electrophysiology practice.

Previous wording

We have received regulatory clearances and approvals necessary for us to market theGenesis RMN System in the U.S., Europe, and China, and we are in the process of obtaining necessary registrations for extending our markets in other countries. TheGenesisX RMN System,the latest generation of the Genesis RMN System has received regulatory clearances and approvals in Europe, and we are in the process of obtaining necessary registrations in the US and other countries, TheNiobe System, our prior generation robotic magnetic navigation system, theOdyssey Solution,Cardiodrive, e-Contact, and various disposable interventional devices, including the Map-iT family of devices, have received regulatory clearances and approvals in the U.S., Europe, Canada, China, Japan and various other countries. We have regulatory clearances and approvals that allow us to market theVdrive andVdrive Duo Systems with theV-CASdevice in the U.S., Canada, and Europe. We have obtained the CE marking for us to market the Stereotaxis MAGiC catheter in Europe and are pursuing regulatory approval in the U.S. and various other global geographies. Approval processes can be lengthy and uncertain, submissions may require revised or additional non-clinical and clinical data, and regulatory applications could be denied.

Current wording

We have received regulatory clearances and approvals necessary for us to market theGenesis RMN System in the U.S., Europe, and China, and we are in the process of obtaining necessary registrations for extending our markets in other countries. TheGenesisX RMN System,the latest generation of the Genesis RMN System, has received regulatory clearances and approvals in Europe, and we are in the process of obtaining necessary registrations in the US and other countries. TheNiobe System, our prior generation robotic magnetic navigation system, theOdyssey Solution,Cardiodrive, e-Contact, and various disposable interventional devices, including the Map-iT family of devices, have received regulatory clearances and approvals in the U.S., Europe, Canada, China, Japan and various other countries. We have regulatory clearances and approvals that allow us to market theVdrive andVdrive Duo Systems with theV-CASdevice in the U.S., Canada, and Europe. We have regulatory clearances and approvals that allow us to market theSynX networking solution in the U.S. and Europe. We have obtained the CE marking for us to market the Stereotaxis MAGiC catheter in Europe and are pursuing regulatory approvals in the U.S. and various other global geographies. Approval processes can be lengthy and uncertain, submissions may require revised or additional non-clinical and clinical data, and regulatory applications could be denied.

Previous wording

In the first quarter of 2025, Stereotaxis has continued to advance development and regulatory approval of its Robotic Magnetic Navigation systems and proprietary interventional devices. In the third quarter of 2024, we attained CE Mark for theGenesisX RMN System and are working towards FDA 510(k) regulatory clearance within the United States. This latest generation of the RMN System is designed to significantly enhance the accessibility of Robotic Magnetic Navigation by eliminating the lengthy construction cycle necessary to install prior generation RMN systems. In November 2024, theGenesis RMN system, our current generation system, received regulatory approval from China’s National Medical Products Administration (NMPA), and our partner MicroPort received the regulatory clearances for their integrated mapping system and novel ablation catheter making available the most current advanced minimally-invasive robotic technology to physicians and patients in China.

Current wording

Stereotaxis has continued to advance development and regulatory approval of its Robotic Magnetic Navigation systems and proprietary interventional devices. In the third quarter of 2024, we attained CE Mark for theGenesisX RMN System and are working towards FDA 510(k) regulatory clearance within the United States. This latest generation of the RMN System is designed to significantly enhance the accessibility of Robotic Magnetic Navigation by eliminating the lengthy construction cycle necessary to install prior generation RMN systems. In November 2024, theGenesis RMN system, our current generation system, received regulatory approval from China’s National Medical Products Administration (NMPA), and our partner MicroPort received the regulatory clearances for their integrated mapping system and novel ablation catheter making available the most current advanced minimally invasive robotic technology to physicians and patients in China.

Previous wording

The Stereotaxis MAGiC catheter, a robotically navigated magnetic ablation catheter designed to perform minimally invasive cardiac ablation procedures, obtained the CE marking in Europe during the first quarter, 2025, and we are in the process of obtaining necessary approvals in the U.S. and other countries. We are also currently seeking FDA clearances for other devices including the MAGiC Sweep™ catheter, the first high-density EP mapping catheter developed to be robotically navigated using Stereotaxis’ Robotic Magnetic Navigation system, and the EMAGIN 5F catheter guide designed to robotically navigate tortuous venous and arterial vasculature.

Current wording

The Stereotaxis MAGiC catheter, a robotically navigated magnetic ablation catheter designed to perform minimally invasive cardiac ablation procedures, obtained the CE marking in Europe during the first quarter, 2025, and the MAGiC Sweep™ catheter, the first robotically navigated high-density EP mapping catheter, received U.S. Food and Drug Administration (FDA) 510(k) clearance in July 2025. We are in the process of obtaining necessary approvals in other geographies. We are also currently seeking regulatory clearances for the EMAGIN 5F catheter guide designed to robotically navigate tortuous venous and arterial vasculature.

Previous wording

On February 1, 2025, the United States announced a 25 percent tariff on most imports from Mexico and Canada. Goods meeting the rules of origin under the United States-Mexico-Canada Agreement (“USMCA”) are expressly exempt. All sub-assemblies we source from Mexico qualify under USMCA; therefore, these items were not subject to the tariff, and the effect on our cost of revenues for the three months ended March 31, 2025 was immaterial.

Current wording

On February 1, 2025, the United States announced a 25 percent tariff on most imports from Mexico and Canada. Goods meeting the rules of origin under the United States-Mexico-Canada Agreement (“USMCA”) are expressly exempt. All sub-assemblies we source from Mexico qualify under USMCA; therefore, these items were not subject to the tariff, and the effect on our cost of revenues for the six months ended June 30, 2025, was immaterial. An Executive Order dated July 31, 2025, raised the general tariff rate on non-USMCA Canadian imports from 25 % to 35 %. Because our Canadian and Mexican sub-assemblies continue to qualify under USMCA, we do not expect a material impact.

Previous wording

On April 2, 2025, the United States imposed a 10 percent universal tariff on all imports that do not qualify under USMCA and announced additional country-specific tariffs that are presently suspended for 90 days. We procure certain specialty metals and other raw materials from suppliers in Japan and several European countries that are subject to the new 10 percent tariff. We expect some vendors to pass the incremental duty through price increases, which could elevate our cost of revenues and research and development (“R&D”) expenses in the second half of 2025.

Current wording

On April 2, 2025, the United States imposed a 10 percent universal ‘baseline” tariff on all imports that do not qualify under USMCA and announced additional country-specific tariffs. Higher “reciprocal” country-specific rates, which were initially suspended for 90 days, became effective as of August 7, 2025, under the July 31, 2025, Executive Order. We procure certain specialty metals and other raw materials from suppliers in Japan and several European countries that remain subject to the 10 percent baseline tariff. We expect some vendors to pass the incremental duty through price increases, which could elevate our cost of revenues and research and development (“R&D”) expenses in the second half of 2025.

Previous wording

On April 7, 2025, the United States increased tariffs on imports from the People’s Republic of China (“China”) to rates of up to 145 percent, and China imposed a 125 percent retaliatory tariff on U.S.-origin goods. We import limited quantities of R&D consumables and manufacturing inputs from China and, through our partner MicroPort Scientific Corporation, sell U.S.-manufactured Robotic Magnetic Navigation (“RMN”) systems into China. Both inbound materials and outbound finished products are now subject to these reciprocal tariffs.

Current wording

On April 7, 2025, the United States increased tariffs on imports from the People’s Republic of China (“China”) to rates of up to 145 percent, and China imposed a 125 percent retaliatory tariff on U.S.-origin goods. On May 12, 2025, following negotiations in Geneva, the United States and China issued a Joint Statement suspending most of the reciprocal tariff increases while talks continued. The initial 90-day period expired on August 12, 2025, and then renewed to November 10, 2025. Under the agreement, (i) U.S. duties on Chinese goods have been reduced to a base rate of approximately 30 percent, down from the prior 145 percent ceiling, and (ii) China has lowered its duty on U.S. goods to approximately 10 percent, down from 125 percent. All other non-tariff counter-measures announced since April 2025 have been suspended until August 12, 2025. We import limited quantities of R&D consumables and manufacturing inputs from China and, through our partner MicroPort Scientific Corporation, sell U.S.-manufactured Robotic Magnetic Navigation (“RMN”) systems into China. Both inbound materials and outbound finished products are now subject to these reciprocal tariffs. If the reduced rates remain in place, we anticipate a less than one percent increase in expenses for the second half of 2025. If the higher tariffs are reinstated, the impact could be more material, particularly to sales of RMN systems in China. We are actively pursuing mitigation strategies.

Previous wording

The ultimate effect of any tariff or trade barrier will depend on factors outside our control, including the duration of the current 90-day pause, the outcome of ongoing negotiations, potential extensions or escalations, and the responses of our suppliers and customers.

Current wording

The ultimate effect of any tariff or trade barrier will depend on factors outside our control, including, potential extensions, escalations, or reciprocal tariff responses, as well as the reactions of our suppliers and customers.

Previous wording

Future results of operations and liquidity could be materially adversely impacted by uncertainties in macroeconomic and geopolitical factors. In the first quarter, the Company continued to experience difficulties with periodic worldwide supply chain disruptions, including shortages and inflationary pressures, tariffs and other trade regulations that are or may be imposed, and logistics delays which make it difficult for us to source parts and ship our products. We continue to evaluate the macroeconomics business environment, taking action to increase inventory levels where appropriate and engaging in discussions with our vendors on contractual obligations, but we cannot guarantee that our business activities will not be impacted more severely in the future. Our suppliers and contract manufacturers have experienced, and may continue to experience, similar difficulties. If our manufacturing operations or supply chains are materially interrupted, it may not be possible for us to timely manufacture or service our products at required levels, or at all. Changes in economic conditions, tariff escalation, retaliatory measures and new import restrictions could lead to higher inflation than previously experienced or expected, which could, in turn create supply shortages as companies seek alternative sources of supply and adjust their logistics and transportation routes. As a result of these factors, we may be unable to raise the prices of our products sufficiently to keep up with the rate of inflation, especially tariff induced inflation. A material reduction or interruption in any of our manufacturing processes or a substantial increase in costs would have a material adverse effect on our business, operating results, and financial condition.

Current wording

Future results of operations and liquidity could be materially adversely impacted by uncertainties in macroeconomic and geopolitical factors. The Company continued to experience difficulties with periodic worldwide supply chain disruptions, including shortages and inflationary pressures, tariffs and other trade regulations that are or may be imposed, market disruptions stemming from conflicts, such as in the Middle East, including Israel and Iran, and logistics delays which make it difficult for us to source parts and ship our products. We continue to evaluate the macroeconomics business environment, taking action to increase inventory levels where appropriate and engaging in discussions with our vendors on contractual obligations, but we cannot guarantee that our business activities will not be impacted more severely in the future. Our suppliers and contract manufacturers have experienced, and may continue to experience, similar difficulties. If our manufacturing operations or supply chains are materially interrupted, it may not be possible for us to timely manufacture or service our products at required levels, or at all. Changes in economic conditions, tariff escalation, retaliatory measures and new import restrictions could lead to higher inflation than previously experienced or expected, which could, in turn create supply shortages as companies seek alternative sources of supply and adjust their logistics and transportation routes. As a result of these factors, we may be unable to raise the prices of our products sufficiently to keep up with the rate of inflation, especially tariff induced inflation. A material reduction or interruption in any of our manufacturing processes or a substantial increase in costs would have a material adverse effect on our business, operating results, and financial condition.

Previous wording

In addition to the aforementioned macroeconomic factors, the COVID-19 pandemic or similar occurrences may negatively affect demand for both our systems and our disposable products. In the past, we have experienced business disruptions, including travel restrictions on us and our third-party distributors, which negatively affected our complex sales, marketing, installation, distribution and service network relating to our products and services. We also experienced reductions in demand for our disposable products as our healthcare customers (physicians and hospitals) re-prioritized the treatment of patients and diverted resources away from non-pandemic areas, leading to the performance of fewer procedures in which our disposable products are used. The impact varied widely over time by individual geography. For instance, in 2022, procedure volumes were challenged by periodic resurgences of COVID-19, ongoing hospital staffing issues and other factors. In the first quarter of 2023, COVID-19 resurgences in China continued to negatively impact our procedure volumes in that region, but as infections and hospitalization decreased, we saw a recovery of procedure volumes with no further impacts in the year. Significant decreases to our capital or recurring revenues could have a material adverse effect on our business, operating results, and financial condition. We continue to anticipate periodic disruptions to our manufacturing operations, supply chains, procedures volumes, service activities, and capital system orders and placements relating to new or ongoing periodic resurgences of pandemic-related issues, any of which could have a material adverse effect on our business, financial condition, results of operations, or cash flows.

Current wording

In addition to the macroeconomic factors, occurrences similar to the COVID-19 pandemic or may negatively affect demand for both our systems and our disposable products. In the past, we have experienced business disruptions, including travel restrictions on us and our third-party distributors, which negatively affected our complex sales, marketing, installation, distribution and service network relating to our products and services. We also experienced reductions in demand for our disposable products as our healthcare customers (physicians and hospitals) re-prioritized the treatment of patients and diverted resources away from non-pandemic areas, leading to the performance of fewer procedures in which our disposable products are used. The impact varied widely over time by individual geography. For instance, in 2022, procedure volumes were challenged by periodic resurgences of COVID-19, ongoing hospital staffing issues and other factors. In the first quarter of 2023, COVID-19 resurgences in China continued to negatively impact our procedure volumes in that region, but as infections and hospitalization decreased, we saw a recovery of procedure volumes with no further impacts in the year. Significant decreases to our capital or recurring revenues could have a material adverse effect on our business, operating results, and financial condition. We continue to anticipate periodic disruptions to our manufacturing operations, supply chains, procedures volumes, service activities, and capital system orders and placements relating to new or ongoing periodic resurgences of pandemic-related issues, any of which could have a material adverse effect on our business, financial condition, results of operations, or cash flows

Previous wording

As a result of the acquisition, we will be managing APT’s ongoing business of manufacturing, commercializing, development and sales of APT’s catheters and related products and services. The manufacturing process of catheters is complex, highly technical, and our prior experience in this field is dated. The process can be subject to periodic worldwide supply chain disruptions, including labor shortages and inflationary pressures, tariffs or other trade restrictions, and logistics delays which make it difficult for us to source parts and ship our products. We may require a higher level of overhead than currently anticipated. Our ability to successfully manage this new aspect of our business will depend, in part, upon management’s ability to design and implement strategic initiatives that address not only the integration of APT into us, but also the increased scope of the combined business with its associated increased costs and complexity. We are still integrating the businesses and implementing safeguards to minimize any negative impacts on our financial position, results of operations and cash flows post-acquisition.

Current wording

As a result of the July 2024 acquisition of APT EP, Inc., we are managing APT’s ongoing business of manufacturing, commercializing, development and sales of APT’s catheters and related products and services. The manufacturing process of catheters is complex, highly technical, and our prior experience in this field is dated. The process can be subject to periodic worldwide supply chain disruptions, including labor shortages and inflationary pressures, tariffs or other trade restrictions, and logistics delays which make it difficult for us to source parts and ship our products. We may require a higher level of overhead than currently anticipated. Our ability to successfully manage this new aspect of our business will depend, in part, upon management’s ability to design and implement strategic initiatives that address not only the integration of APT into us, but also the increased scope of the combined business with its associated increased costs and complexity. We are still integrating the businesses and implementing safeguards to minimize any negative impacts on our financial position, results of operations and cash flows post-acquisition.

Previous wording

Since our inception, we have generated significant losses. As of March 31, 2025, we have incurred cumulative net losses of approximately $567.5 million. In 2025, the Company plans to advance adoption of its robotic magnetic navigation systems and its propriety devices in those markets where regulatory clearance has been received and to work with regulatory approval authorities in those geographies where approval is pending, with the goal of furthering clinical adoption and new system placements. We expect to incur additional losses in 2025 as we continue the development and commercialization of our products, conduct our research and development activities, advance new products into clinical development from our existing research programs and fund additional sales and marketing initiatives. During the remainder of 2025, we will continue to monitor the impact of the macroeconomic environment on our project timing, regulatory approvals, customer and supplier operations, and our operating results. While we believe our existing cash and cash equivalents will be sufficient to fund our operating expenses and capital equipment requirements through the next twelve months, in light of the macroeconomic environment, we cannot guarantee that we will not need additional funding. We may be required to delay projects, raise capital or pursue other financing strategies to continue our operations. Until we can generate significant cash flow from our operations, we expect to continue to fund our operations with cash resources primarily generated from the proceeds of our past and future public offerings, and private sales of our equity securities. We continue to explore financing alternatives, which may include the sale of equity securities or non-core assets, strategic collaboration agreements, debt financings, or distribution rights. We cannot accurately predict the timing and amount of our utilization of capital, which will depend on several factors outside of our control.

Current wording

Since our inception, we have generated significant losses. As of June 30, 2025, we have incurred cumulative net losses of approximately $571.4 million. In 2025, the Company plans to advance adoption of its robotic magnetic navigation systems and its propriety devices in those markets where regulatory clearance has been received and to work with regulatory approval authorities in those geographies where approval is pending, with the goal of furthering clinical adoption and new system placements. We expect to incur additional losses in 2025 as we continue the development and commercialization of our products, conduct our research and development activities, advance new products into clinical development from our existing research programs and fund additional sales and marketing initiatives. During the remainder of 2025, we will continue to monitor the impact of the macroeconomic environment on our project timing, regulatory approvals, customer and supplier operations, and our operating results. Until we can generate significant cash flow from our operations, we expect to continue to fund our operations with cash resources primarily generated from the proceeds of our past and future public offerings, and private sales of our equity securities. We cannot accurately predict the timing and amount of our utilization of capital, which will depend on several factors outside of our control.

Previous wording

We cannot assure you that additional financing will be available on acceptable terms or that such financing will not be dilutive to our stockholders. If adequate funds are not available to us, we could be required to delay development or commercialization of new products, to license to third parties the rights to commercialize products or technologies that we would otherwise seek to commercialize ourselves, or to reduce the sales, marketing, customer support or other resources devoted to our products, any of which could have a material adverse effect on our business, financial condition, and operational results. In addition, we could be required to cease operations.

Current wording

While we believe our existing cash and cash equivalents, including the proceeds from our July 2025 equity raise, will be sufficient to fund our operating expenses and capital equipment requirements, in light of the macroeconomic environment, we cannot guarantee that we will not need additional funding in the future. We will continue to explore financing alternatives, and we cannot assure you that additional financing will be available on acceptable terms or that such financing will not be dilutive to our stockholders. If adequate funds are not available to us, we could be required to delay development or commercialization of new products, to license to third parties the rights to commercialize products or technologies that we would otherwise seek to commercialize ourselves, or to reduce the sales, marketing, customer support or other resources devoted to our products, any of which could have a material adverse effect on our business, financial condition, and operational results. In addition, we could be required to cease operations.

Previous wording

Contracts related to the sale of systems typically contain separate obligations for the delivery of system(s), installation, service-type warranty, and an implied obligation to provide software enhancements if and when available for one year following installation. Revenue is recognized when the Company transfers control to the customer, which is generally at the point when acceptance occurs that indicates customer acknowledgment of delivery or installation, depending on the terms of the arrangement. Revenue from service-type warranties and the implied obligation to deliver software enhancements if and when available is included in Other Recurring Revenue and is recognized ratably typically over the first year following installation of the system as the customer receives the service-type warranty and right to software updates throughout the period. The Company’s system contracts generally do not provide a right of return. Systems may be covered by a one-year assurance-type warranty in lieu of a service-type warranty. Assurance-type warranty costs were less than $0.1 for the three months ended March 31, 2025 and 2024.

Current wording

Contracts related to the sale of systems typically contain separate obligations for the delivery of system(s), installation, service-type warranty, and an implied obligation to provide software enhancements if and when available for one year following installation. Revenue is recognized when the Company transfers control to the customer, which is generally at the point when acceptance occurs that indicates customer acknowledgment of delivery or installation, depending on the terms of the arrangement. Revenue from service-type warranties and the implied obligation to deliver software enhancements if and when available is included in Other Recurring Revenue and is recognized ratably typically over the first year following installation of the system as the customer receives the service-type warranty and right to software updates throughout the period. The Company’s system contracts generally do not provide a right of return. Systems may be covered by a one-year assurance-type warranty in lieu of a service-type warranty. Assurance-type warranty costs were less than $0.1 million for the six months ended June 30, 2025, and 2024.

Previous wording

Revenue from sales of disposable products is recognized when control is transferred to the customers, which generally occurs at the time of shipment, but can also occur at the time of delivery depending on the customer arrangement. Disposable products are covered by an assurance type warranty that provides for the return of defective products. Warranty costs were not material for the three months ended March 31, 2025, and 2024.

Current wording

Revenue from sales of disposable products is recognized when control is transferred to the customers, which generally occurs at the time of shipment, but can also occur at the time of delivery depending on the customer arrangement. Disposable products are covered by an assurance type warranty that provides for the return of defective products. Warranty costs were not material for the six months ended June 30, 2025, and 2024.

Previous wording

Revenue. Revenue increased from $6.9 million for the three months ended March 31, 2024, to $7.5 million for the three months ended March 31, 2025, an increase of 9%. Revenue from the sales of systems decreased to $2.0 million for the three months ended March 31, 2025, from $2.6 million for the three months ended March 31, 2024, driven by volume changes in system related products in the current year period. Revenue from sales of disposable interventional devices, service, and accessories increased to approximately $5.5 million for the three months ended March 31, 2025, from $4.3 million for the three months ended March 31, 2024, an increase of approximately 29%. The increase was primarily driven by the impact of post-acquisition non-magnetic disposable device sales recorded in the current year period partially offset by timing of service contract renewals.

Current wording

Revenue. Revenue increased from $4.5 million for the three months ended June 30, 2024, to $8.8 million for the three months ended June 30, 2025, an increase of 95%. Revenue from the sales of systems increased to $3.0 million for the three months ended June 30, 2025, from $0.2 million for the three months ended June 30, 2024, driven by increased sales volume in the current year period. Revenue from sales of disposable interventional devices, service, and accessories increased to approximately $5.8 million for the three months ended June 30, 2025, from $4.3 million for the three months ended June 30, 2024, an increase of approximately 35%. The increase was primarily driven by the impact of post-acquisition non-magnetic disposable device sales recorded in the current year period.

Previous wording

Cost of Revenue. Cost of revenue increased from $2.9 million for the three months ended March 31, 2024, to $3.4 million for the three months ended March 31, 2025, an increase of approximately 17%. As a percentage of our total revenue, overall gross margin decreased to 54% for the three months ended March 31, 2025, from 58% for the three months ended March 31, 2024, primarily due to changes in product mix. Cost of revenue for systems sold decreased from $1.9 million for the three months ended March 31, 2024, to $1.7 million for the three months ended March 31, 2025, driven by product mix in the current year period. Gross margin for systems was $0.7 million for the three months ended March 31, 2024, compared to $0.3 million for the three months ended March 31, 2025. Cost of revenue for disposables, service, and accessories increased from $1.0 million for the three months ended March 31, 2024, to $1.7 million for the three months ended March 31, 2025. Gross margin for disposables, service, and accessories was 68% for the three months ended March 31, 2025, compared to 76% for the three months ended March 31, 2024. Gross margin for disposables, service, and accessories was depressed by acquisition related accounting which required the valuation of acquired finished good inventory to fair value and by change in product mix in the current period.

Current wording

Cost of Revenue. Cost of revenue increased from $1.2 million for the three months ended June 30, 2024, to $4.2 million for the three months ended June 30, 2025, an increase of approximately 255%. As a percentage of our total revenue, overall gross margin decreased to 52% for the three months ended June 30, 2025, from 74% for the three months ended June 30, 2024, primarily due to changes in product mix. Cost of revenue for systems sold increased from $0.2 million for the three months ended June 30, 2024, to $2.4 million for the three months ended June 30, 2025, driven by increased system sales volume in the current year period. Gross margin for systems was less than $0.1 million for the three months ended June 30, 2024, compared to $0.7 million for the three months ended June 30, 2025. Cost of revenue for disposables, service, and accessories increased from $1.0 million for the three months ended June 30, 2024, to $1.9 million for the three months ended June 30, 2025. Gross margin for disposables, service, and accessories was 68% for the three months ended June 30, 2025, compared to 76% for the three months ended June 30, 2024. Gross margin for disposables, service, and accessories continues to be depressed by acquisition related accounting which required the valuation of acquired finished good inventory to fair value and by changes in product mix in the current period.

Previous wording

Research and Development Expenses. Research and development expenses increased from $2.2 million for the three months ended March 31, 2024, to $2.3 million for the three months ended March 31, 2025, an increase of approximately 5%. This increase was primarily driven by additional headcount from our acquisition partially offset by project timing in the current year period*.*

Current wording

Research and Development Expenses. Research and development expenses decreased from $2.3 million for the three months ended June 30, 2024, to $1.8 million for the three months ended June 30, 2025, a decrease of approximately 22%. This decrease was primarily driven by the capitalization of GenesisX into inventory

Previous wording

Sales and Marketing Expenses. Sales and marketing expenses increased from $3.0 million for the three months ended March 31, 2024, to $3.1 million for the three months ended March 31, 2025, an increase of approximately 5%. The increase was primarily driven by tradeshow expenses in the current year period.

Current wording

Sales and Marketing Expenses. Sales and marketing expenses increased from $6.3 million for the six months ended June 30, 2024, to $6.4 million for the six months ended June 30, 2025, an increase of approximately 2%. This increase was primarily driven by tradeshow expenses in the current year period.

Previous wording

General and Administrative Expenses. General and administrative expenses include finance, information systems, legal, and general management expenses, amortization of acquisition related intangible assets, and the gain or loss associated with the remeasurement of the acquisition related contingent consideration. General and administrative expenses increased from $3.5 million for the three months ended March 31, 2024, to $4.5 million for the three months ended March 31, 2025, an increase of approximately 30%. This increase was primarily driven by the acquisition related contingent consideration, amortization of the acquisition related intangible assets, and higher administrative expenses and professional service fees in the current year period.

Current wording

General and Administrative Expenses. General and administrative expenses include finance, information systems, legal, and general management expenses, amortization of acquisition related intangible assets, and the gain or loss associated with the remeasurement of the acquisition related contingent consideration. General and administrative expenses increased from $7.2 million for the six months ended June 30, 2024, to $8.5 million for the six months ended June 30, 2025, an increase of approximately 18%. This increase was primarily driven by the acquisition related contingent consideration, amortization of the acquisition related intangible assets, and higher professional service fees in the current year period.

Previous wording

Interest Income (Expense). Net interest income was approximately $0.2 million for the three months ended March 31, 2024, compared to $0.1 million for the three months ended March 31, 2025. The decrease was driven by lower invested balances and lower interest rates in the current year period.

Current wording

Interest Income (Expense). Net interest income was approximately $0.4 million for the six months ended June 30, 2024, compared to $0.2 million for the six months ended June 30, 2025. The decrease was driven by lower invested balances and interest rates in the current year period partially offset by interest received with payment of the employee retention tax credit in the current year period.

Previous wording

As of March 31, 2025, we had $10.7 million of cash and cash equivalents, inclusive of restricted cash. We had working capital of $1.7 million as of March 31, 2025, compared to $4.8 million as of December 31, 2024.

Current wording

As of June 30, 2025, we had $7.0 million of cash and cash equivalents. We had working capital of $1.2 million as of June 30, 2025, compared to $4.8 million as of December 31, 2024.

Previous wording

The following table summarizes our cash flow by operating, investing and financing activities for the three months ended March 31, 2025, and 2024 (in thousands):

Current wording

The following table summarizes our cash flow by operating, investing and financing activities for the six months ended June 30, 2025, and 2024 (in thousands):

Previous wording

Net cash used in operating activities. We used approximately $1.8 million and $2.3 million of cash for operating activities during the three months ended March 31, 2025, and 2024, respectively. The decrease in cash used in operating activities was driven by changes in working capital partially offset by the increased operating loss.

Current wording

Net cash used in operating activities. We used approximately $5.5 million and $5.4 million of cash for operating activities during the six months ended June 30, 2025, and 2024, respectively. The increase in cash used in operating activities was driven by changes in working capital partially offset by a lower net loss.

Previous wording

Net cash provided by financing activities. We generated less than $0.1 million of cash from financing activities during the three months ended March 31, 2025, and 2024. The cash generated in both periods was driven by the proceeds from issuance of stock from the exercise of options, net of issuance costs, and from our employee stock purchase program.

Current wording

Net cash provided by financing activities. We generated less than $0.1 million of cash from financing activities during the six months ended June 30, 2025, and 2024. The cash generated in both periods was driven by the proceeds from issuance of stock from the exercise of options, net of issuance costs, and from our employee stock purchase program.