CARLSMED, INC.

1. Organization

Description of Business

Carlsmed, Inc. (the “Company”) is a medical technology company pioneering artificial intelligence ("AI")-enabled personalized spine surgery solutions with a mission to improve outcomes and decrease the cost of healthcare for spine surgery and beyond. The Company was incorporated in Delaware in June 2018 and is headquartered in Carlsbad, California. The Company designs, manufactures, and markets theaprevo® Technology Platform for spine fusion surgery procedures that are performed at hospitals and ambulatory surgical centers.

This platform (the “aprevo Technology Platform”) includes proprietary surgical planning software, using outcomes-based algorithms that are aided with artificial intelligence, and resulting patient-specific implants for spine surgery. This platform provides each patient with personalized alignment to address their unique pathology and anatomy.

The U.S. Food and Drug Administration (“FDA”) cleared the aprevo lumbar interbody implants through its 510(k) regulatory pathway for the correction of adult lumbar spinal deformity in December 2020 and several degenerative conditions of the lumbar spine in August 2022. The Company commenced its limited clinical release with its first U.S. patient implant in February 2021, and in October 2021, the Company commenced its U.S. commercial launch of aprevo.

In November 2024, the FDA 510(k) cleared the aprevo interbody implants for cervical spine fusion surgery as part of the FDA-cleared aprevo Technology Platform, and in December 2025, the Company commenced the U.S. launch of aprevo Technology Platform for cervical fusion surgeries. Also in December 2025, the Company received FDA 510(k) clearance for accompanying personalized cervical plating solutions. In February 2026, the Company completed the first personalized corra cervical plating procedure and expects to commercially launch the corra Cervical Plating System by December 2026.

Reverse Stock Split

On July 10, 2025, the Company effectuated a 1-for-5.58 reverse stock split of the Company’s issued and outstanding shares of common stock, Series A, Series B, and Series C convertible preferred stock, as well as stock option awards to purchase shares of common stock, restricted stock units (“RSUs”), and warrants to purchase shares of common stock, Series B convertible preferred stock, and Series C convertible preferred stock. Consequently, all issued and outstanding shares of stock, stock option awards, RSUs, warrants, and per share data have been retroactively adjusted in these Condensed Financial Statements to reflect the reverse stock split for all periods presented. The par value of the common stock and convertible preferred stock remain unchanged. As the number and issuance price of all outstanding convertible preferred stock were adjusted, the conversion ratios for each series of the Company’s convertible preferred stock were unchanged. Stockholders entitled to fractional shares as a result of the reverse stock split received cash payment in lieu of receiving fractional shares.

Initial Public Offering

On July 24, 2025, the Company completed its initial public offering of 6,700,000 shares of its common stock, at a price to the public of$15.00 per share (the “IPO”). The total net proceeds received by the Company from the IPO were$93.5 million, after deducting underwriting discounts and commissions and before additional offering expenses of $5.4 million paid by the Company. Immediately prior to the closing of the IPO on July 24, 2025, all shares of the Company’s convertible preferred stock converted into shares of the Company’s common stock. In connection with this conversion, all warrants to purchase convertible preferred stock became exercisable into common stock.

Liquidity and Capital Resources

As of June 30, 2026, the Company had$89.3 million of cash, cash equivalents, restricted cash, short-term investments, and marketable securities,$15.6 million debt outstanding under its loan and security agreement with Customers Bank (the “Customers Loan Agreement”), and an accumulated deficit of$120.0 million.

The Company expects to continue to generate operating losses for the foreseeable future as it continues to expand commercial oper ations and develop its product portfolio. The Company believes that its existing cash on hand will be sufficient to meet anticipated capital requirements for its operations for at least 12 months from the date of the issuance of the accompanying unaudited Condensed Financial Statements.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited Condensed Financial Statements have been prepared by management in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and as required by S-X, Rule 10-1. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for a complete set of Financial Statements. In the opinion of the Company’s management, the accompanying unaudited Condensed Financial Statements and notes have been prepared on the same basis as the audited Financial Statements for the year ended December 31, 2025, and include all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the interim periods presented.

The accompanying unaudited Condensed Financial Statements should be read in conjunction with the Company’s audited annual Financial Statements and notes as of and for the year ended December 31, 2025 thereto included in the Company’s Annual Report on Form 10-K, filed with the SEC on February 25, 2026. The Company’s results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the results to be expected for the year ending December 31, 2026 or for any other interim period.

Use of Estimates

The preparation of the unaudited Condensed Financial Statements in conformity with GAAP requires management to make informed estimates that require assumptions that affect the reported amounts in the accompanying unaudited Condensed Financial Statements. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that it believes to be reasonable under the circumstances. Actual results could differ materially under different assumptions and conditions.

Reclassifications

Certain amounts in the notes to the Condensed Financial Statements for the prior period have been reclassified to conform to the current period presentation. These reclassifications had no effect on the Company's previously reported Condensed Balance Sheets, Condensed Statements of Operations and Comprehensive Loss, Condensed Statements of Convertible Preferred Stock and Stockholders' Equity (Deficit), or the Condensed Statements of Cash Flows.

Cash and Cash Equivalents

“Cash and cash equivalents” in the accompanying Condensed Balance Sheets consist of bank deposits and highly liquid investments, including money market fund accounts, U.S. Treasury securities, corporate bonds, commercial paper, and certificates of deposit, with original maturities of three months or less from the purchase date. The carrying amounts reported in the accompanying Condensed Balance Sheets for cash and cash equivalents are valued at cost, which approximate their fair value.

Restricted Cash

“Restricted cash” in the accompanying Condensed Balance Sheets as of June 30, 2026 and December 31, 2025 represents cash held as collateral for the Company’s facility leases.

Short-Term Investments

“Short-term investments” in the accompanying Condensed Balance Sheets represent investments in certificates of deposit which are carried at amortized cost, which approximates fair value, and have original maturities of greater than 90 days but within one year. Accrued interest earned on short-term investments is recorded within “prepaid expenses and other current assets” on the accompanying Condensed Balance Sheets.

Marketable Securities

“Marketable securities” in the accompanying Condensed Balance Sheets represents investments in U.S. Treasury securities, corporate bonds, and commercial paper. The Company determines the appropriate classification of its investments at the time of purchase and reevaluates such designation at each balance sheet date. The Company has classified and accounted for its marketable securities as available-for-sale debt securities. The Company may sell these securities at any time for use in its current operations or for other purposes, including prior to maturity. As a result, the Company has classified its marketable securities within current assets on the accompanying Condensed Balance Sheets. Debt securities with original maturities of three months or less are classified as cash equivalents.

Available-for-sale debt securities are recorded at fair value each reporting period. Premiums and discounts are amortized or accreted over the life of the related available-for-sale debt security as an adjustment to yield using the effective interest method. Interest income is recognized when earned. Accrued interest earned on marketable securities is recorded within “prepaid expenses and other current assets” on the accompanying Condensed Balance Sheets. Unrealized gains and losses on these marketable securities are reported as a separate component of accumulated other comprehensive loss until realized. Realized gains and losses are determined based on the specific identification method and are reported in other income, net in the Condensed Statements of Operations and Comprehensive Loss.

For available-for-sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell the security or it is more likely than not that the Company will be required to sell the security before the recovery of its entire amortized cost basis. If either of these criteria is met, the security’s amortized cost basis is written down to fair value through other income, net in the Condensed Statements of Operations and Comprehensive Loss. If neither of these criteria are met, the Company evaluates whether the decline in fair value below amortized cost is due to credit or non-credit-related factors. In making this assessment, the Company considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and any adverse conditions specifically related to the security, among other factors. Credit-related unrealized losses are recognized as an allowance for expected credit losses of available-for-sale securities on the Condensed Balance Sheets with a corresponding charge in other income, net in the Condensed Statements of Operations and Comprehensive Loss. Non-credit-related unrealized losses are included in accumulated other comprehensive loss in the Condensed Statements of Operations and Comprehensive Loss.

Accounts Receivable and Allowance for Credit Losses

“Accounts receivable, net of allowances” in the accompanying Condensed Balance Sheets are presented net of allowances for credit losses. The Company maintains an allowance for expected credit losses for accounts receivable, which is recorded as an offset to accounts receivable. Changes in this allowance are recorded as “general and administrative” expense in the Condensed Statements of Operations and Comprehensive Loss. The allowance represents our estimate of uncollectible customer accounts based on specific customer circumstances, historical loss rates and the aging of outstanding receivables.

The Company maintained an allowance for credit losses on accounts receivable of$2.8 million and$1.7 million as of June 30, 2026 and December 31, 2025, respectively. The Company recorded a provision for credit losses of$0.7 million and$0.3 million for the three months ended June 30, 2026 and 2025, respectively, and$1.1 million and$0.3 million for the six months ended June 30, 2026 and 2025, respectively.

Concentrations of Financial Instrument Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents in deposits at financial institutions that may exceed federally insured limits and certain accounts receivable balances. Risks associated with cash and cash equivalents are mitigated by banking with creditworthy institutions with platforms that administer deposits across multiple banks within federally insured limits. Additionally, the Company invests cash in certificates of deposit through the Certificate of Deposit Account Registry Service (“CDARS”) account. Under the CDARS program, large deposits are allocated among multiple FDIC (“Federal Deposit Insurance Corporation”) insured member banks in increments of less than $250,000 per institution. As a result, substantially all such deposits are eligible for FDIC insurance coverage. The Company also invests in U.S. Treasury securities, corporate bonds, commercial paper, and money market funds through a managed investment account. The Company limits its credit risk related to these investments by investing in highly rated securities in accordance with its investment policy.

The Company mitigates potential losses from uncollectible accounts receivable through its credit approval and ongoing collection and customer monitoring activities. To date, the Company has not experienced any losses on its financial instruments and believes that it has adequately recorded allowances for uncollectible accounts receivable in each reported period.

As of June 30, 2026 and December 31, 2025, the Company didnot have accounts receivable balances from any one customer exceeding 10% of total accounts receivable. The Company didnot have revenue from any one customer exceeding 10% of total revenue for thethree and six months ended June 30, 2026 and the three and six months ended June 30, 2025.

Fair Value of Financial Instruments

Assets and liabilities are recorded at fair value on a recurring basis in the accompanying Condensed Balance Sheets. These accounts are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative accounting guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:

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Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that are publicly accessible at the measurement date.

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Level 2: Observable prices that are based on inputs not quoted on active markets, but that are corroborated by market data. These inputs may include quoted prices for similar assets or liabilities or quoted market prices in markets that are not active to the general public.

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Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The carrying amounts of the Company’s financial instruments consisting of cash, cash equivalents, short-term investments, marketable securities, accounts receivables, prepaid expenses, accounts payable, and accrued liabilities approximate fair value due to the short maturities for each.

Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurements. The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels for certain assets or liabilities within the fair value hierarchy. The Company did not have any transfers of assets and liabilities between the levels of the fair value hierarchy during the periods presented.

The following tables summarize the estimated fair value of the Company's available-for-sale debt securities and the gross unrealized gains and losses (in thousands):

The Company didnot have available-for-sale debt securities as of December 31, 2025. As of June 30, 2026, all marketable securities had contractual maturities of less thanone year.

The Company periodically reviews the available-for-sale securities for other-than-temporary impairment loss. For available-for-sale securities in an unrealized loss position, the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases. Accordingly, during the three and six months ended June 30, 2026, the Company didnot recognize any other-than-temporary impairment losses.

Inventory

Production is initiated upon surgeon approval of the digital surgical plan for each patient, and implant inventory is not made-to-stock, allowing the Company to maintain minimal inventory. Work-in-process inventory consists of titanium alloy implants for spine fusion surgical procedures, pending sterilization and packaging. Finished goods inventory is ready for shipment to the customer for use in a spine fusion surgical procedure.

Inventories are valued at the lower of cost or net realizable value, determined by the specific identification method. At each balance sheet date, the Company evaluates its inventories for obsolescence, based on notification of permanently canceled surgeries and ongoing estimates of permanent cancellations. The Company records the corresponding charge for obsolete inventory through “cost of sales.”

The components of reported “inventory” are as follows:

Warrant Liabilities

Prior to the closing of the IPO on July 24, 2025, the Company had issued warrants to purchase convertible preferred stock in conjunction with the Customers Loan Agreement (see Note 4). The Company accounted for its issued convertible preferred stock warrants as liabilities in accordance with ASC 480. The liability-classified warrants were initially measured at fair value, resulting in an implied discount on the related financing arrangement that was deferred as an asset as it relates to tranches of the Customers Loan Agreement. The deferred asset was recorded within “other assets” on the Condensed Balance Sheet and was amortized into interest expense using the straight-line method over the period in which the Company could draw on the remaining tranches of the credit facility. Changes in fair value of the warrant liabilities were recognized in the Condensed Statements of Operations and Comprehensive Loss.

Immediately prior to the IPO, the Series B Warrant and Series C Warrants were exercisable into up to 58,420 and 20,375 of Series B convertible preferred stock and Series C convertible preferred stock, respectively. In conjunction with the IPO, all of the outstanding shares of convertible preferred stock were converted into common stock. As a result, the Series B Warrant and Series C Warrant that had previously been exercisable for convertible preferred stock became exercisable for common stock. Upon the closing of the IPO on July 24, 2025, the Series B Warrant that was exercisable into 52,776 shares of common stock and the Series C Warrant that was exercisable into 5,093 shares of common stock met the criteria for equity classification and accordingly were reclassified from liabilities to equity. The remainder of shares under each warrant were contingently exercisable on specified revenue and loan draw milestones and remained classified as liabilities because they did not meet the criteria for equity classification.

On September 30, 2025, the Company achieved a revenue milestone, causing 5,095 additional shares of common stock underlying the Series C Warrant to become exercisable and accordingly were reclassified from liabilities to equity as they met the criteria for equity classification.

On October 29, 2025, as a part of the Fifth Amendment to the Customers Loan Agreement, the Series B Warrant and Series C Warrant were amended and restated and the respective remaining 5,644 and 10,187 shares of common stock that were exercisable contingent on loan draw milestones were canceled. On the effective date of the Fifth Amendment, the Company remeasured the warrants for the final time and recognized the change in fair value within the Condensed Statements of Operations and Comprehensive Loss.

As of December 31, 2025, the Company no longer had any warrants outstanding that were classified as liabilities. During the six months ended June 30, 2026, Customers Bank exercised the Series B Warrant and Series C Warrant on a cashless basis, resulting in the issuance of 30,366 shares of common stock. As a result of the exercise, the Series B Warrant and Series C Warrant are no longer outstanding.

The fair value of the warrant liabilities was determined based on significant inputs not observable in the market, which represents a “Level 3” measurement within the fair value hierarchy. Prior to the IPO, the fair values of the warrant liabilities were measured using the “hybrid method.” The hybrid method is often used when a company is expecting a liquidity event in the near future and is a combination of the option-pricing and probability-weighted expected return methods. Estimates and assumptions impacting the fair value measurement included the fair value per share of the underlying shares of convertible preferred stock, the remaining contractual term of the warrants, and probability of number of shares the warrants will become exercisable into. The most significant assumption in the model impacting the fair value of the warrants was the fair value of the Company’s convertible preferred stock as of each remeasurement date. Subsequent to the IPO, the fair value of the warrant liabilities was measured using the Black-Scholes option pricing model.

There were no warrant liabilities outstanding as of or during the six months ended June 30, 2026. A summary of the changes in the total fair value of the warrant liabilities for the six months ended June 30, 2025, is as follows:

Comprehensive Loss

Comprehensive loss encompasses all changes in equity other than those arising from transactions with stockholders. The Company’s other comprehensive loss consists of unrealized gains and losses on available-for-sale debt securities which are excluded from the reported net loss and presented in the Condensed Statements of Comprehensive Loss.

Recent Accounting Pronouncements

Recently Adopted Accounting Standards

Financial Instruments - Credit Losses - In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”). This ASU provides entities with the option to elect a practical expedient that assumes that the current conditions as of the balance sheet date will remain unchanged for the remaining life of the asset when developing a reasonable and supportable forecast as part of estimating expected credit losses on these assets. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025 and interim periods within those fiscal years. The Company adopted ASU 2025-05 on January 1, 2026. The adoption of ASU 2025-05 did not have a material impact on the Company's Condensed Financial Statements.

Recently Issued Accounting Standards Not Yet Effective

Expense Disaggregation Disclosures - In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses(“ASU 2024-03”). This ASU requires new financial statement disclosures disaggregating prescribed expense categories within relevant income statement expense captions. ASU 2024-03 will be effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of adopting the standard.

Internal-Use Software- In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software(“ASU 2025-06”). This ASU is intended to simplify the capitalization guidance by removing all references to prescriptive and sequential software development stages. This ASU also requires entities to begin capitalizing software costs when management authorizes and commits to funding the software project, and it is probable that the project will be completed and the software will be used for its intended purpose. ASU 2025-06 will be effective for fiscal years beginning after December 15, 2027 and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of adopting the standard.

Derivatives and Share-Based Consideration from a Customer - In September 2025, the FASB issued ASU 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract ("ASU 2025-07"). This ASU provides for a new scope exception to the derivatives guidance for underlyings based on the operations or activities specific to one of the parties to the contract, and also clarifies that share-based noncash consideration received from a customer as consideration for the transfer of goods or services in a revenue contract is subject to the revenue guidance and not the financial instruments guidance unless and until the company's right to receive or retain the share-based noncash consideration is unconditional as defined in ASU 2025-07. The amendments are effective for annual reporting periods beginning after December 15, 2026, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of adopting the standard.

3. Balance Sheet Account Detail

The composition of selected captions within the accompanying Condensed Balance Sheets are summarized below:

Property and Equipment, Net

The components of “property and equipment, net” as of June 30, 2026 and December 31, 2025 are as follows:

“Depreciation expense” for the three months ended June 30, 2026 and 2025 was$0.1 million and$0.1 million, respectively. “Depreciation expense” for the six months ended June 30, 2026 and 2025 was$0.2 million and$0.1 million, respectively. The Company hasnot recognized any impairment loss for any long-lived assets for thethree and six months ended June 30, 2026 and 2025.

Accrued Liabilities

The components of “accrued liabilities” as of June 30, 2026 and December 31, 2025 are as follows:

4. Debt

Customers Bank Credit Facility

In December 2022, the Company entered into a loan and security agreement with Signature Bank, which was subsequently succeeded by Customers Bank, (the “Customers Loan Agreement”). Under various amendments to the Customers Loan Agreement, the Company issued the lender a warrant that was exercisable for up to 58,420 shares of Series B convertible preferred stock at an exercise price of $6.93 per share (the “Series B Warrant”) and a warrant that was exercisable for up to 20,375 shares of Series C convertible preferred stock at an exercise price of $10.74 per share (“Series C Warrant”). The number of shares exercisable under the Series B Warrant and Series C Warrant were subject to certain revenue and debt draw milestones. In connection with the close of the Company's IPO on July 24, 2025, all of the outstanding shares of convertible preferred stock were converted into common stock. As a result, the warrants to purchase convertible preferred stock became exercisable into shares of common stock. Refer to Note 2 for additional information regarding the reclassification of certain warrants from liability classified to equity classified during the year ended December 31, 2025 as well as the exercise of the Series B Warrant and Series C Warrant during the six months ended June 30, 2026.

On October 29, 2025, the Company amended the Customers Loan Agreement (the “Fifth Amendment”) to expand the credit facility to include (i) a term loan in the principal amount of up to $50.0 million (the “Term Loan”), $17.5 million of which is contingent upon the achievement of requisite revenue milestones, and (ii) a $10.0 million non-formula revolving line of credit (the “Non-Formula Revolving Line”), provided that the aggregate borrowings under the Term Loan and the Non-Formula Revolving Line may not exceed $50.0 million. The maturity date of the Term Loan was extended to October 15, 2030, with an interest-only period through October 15, 2027, followed by principal repayment over 36 months thereafter. Upon achievement of a certain revenue milestone in June 2026, the interest-only period and repayment terms of the Term Loan were extended through April 15, 2028 followed by principal repayment over 30 months and the available borrowing capacity under the Term Loan increased by $7.5 million. Upon achievement of an additional revenue milestone, the interest-only period and repayment terms of the Term Loan may be further extended through October 15, 2028, followed by principal repayment over 24 months thereafter. The Non-Formula Revolving Line will mature on October 15, 2028. The applicable per annum interest rate did not change as a result of the Fifth Amendment and remains as the greater of (a) WSJ Prime Rate +0.25% or (b)5.25%, and resulted in a 7.00% interest rate as of June 30, 2026.

On December 23, 2025, the Company amended the Customers Loan Agreement (the “Sixth Amendment”) to permit the Company to maintain certain limited deposit accounts outside of Customers Bank. No other terms of the Customers Loan Agreement were affected by the Sixth Amendment.

On May 29, 2026, the Company entered into a letter agreement with Customers Bank (the “Letter Agreement”) in connection with the Customers Loan Agreement. The Letter Agreement provides that certificates of deposit held through the CDARS program and linked to a deposit account with Customers Bank are considered accounts maintained at the bank and qualifies as unrestricted cash for purposes of compliance with the Customers Loan Agreement. The Letter Agreement also increased the maximum amount of permitted credit card indebtedness and related cash collateral accounts from $0.5 million to $1.0 million. The Letter Agreement did not modify the interest rate, maturity date, repayment terms or other material economic terms.

The Fifth and Sixth Amendments and Letter Agreement were accounted for as debt modifications with no gain or loss recognized. The carrying value of amounts outstanding under the Customers Loan Agreement approximates its fair value as of June 30, 2026. The fair value of the Term Loan is classified as a Level 2 measurement as it is based on observable market inputs, including interest rates charged for similar financial instruments with comparable terms and maturities.

As of June 30, 2026,$15.6 million of principal was outstanding under the Term Loan that will mature on October 15, 2030 andthere were no borrowings outstanding under the Non-Formula Revolving Line. As of June 30, 2026, an aggregate$34.4 million remained available for borrowing under the Term Loan and the Non-Formula

Revolving Line, net of amounts outstanding of $15.6 million. The Company was in compliance with all applicable Customers Loan Agreement covenants.

Interest expense on the Customers Loan Agreement was$0.3 million and$0.4 million for the three months ended June 30, 2026 and 2025, respectively. Of these amounts, less than $0.1 million and$0.1 million were related to amortization of the debt discount and issuance costs for the three months ended June 30, 2026 and 2025, respectively. Interest expense on the Customers Loan Agreement was$0.6 million and$0.7 million for the six months ended June 30, 2026 and 2025, respectively. Of these amounts,$0.1 million and$0.1 million were related to amortization of the debt discount and issuance costs for the six months ended June 30, 2026 and 2025, respectively. The effective interest rate was 7.56% as of June 30, 2026.

The following table summarizes contractual principal payments as of June 30, 2026:

5. Common Stock

In accordance with the Company’s Amended and Restated Certificate of Incorporation dated July 24, 2025, the Company is authorized to issue two classes of capital stock—common stock and preferred stock. The Company shall have authority to issue 600,000,000 shares of common stock with par value of$0.00001 per share and 10,000,000 shares of preferred stock with par value of$0.00001 per share. As of June 30, 2026, the Company does not have any issued or outstanding shares of preferred stock.

Common stock reserved for future issuance as of June 30, 2026, consisted of the following:

(1)Revenue-Based PSUs and TSR-Based PSUs, as defined in Note 6, are presented at the maximum 200% of target. Actual shares issued for the Revenue-Based PSUs and TSR-Based PSUs may range from 0% to 200% of target based on achievement of applicable revenue performance and share price performance (see Note 6). The PSUs outstanding include Tranche 2 Revenue-Based PSUs that have been legally awarded but are not considered granted from an accounting perspective as the respective performance measures have not yet been established.

SVB Common Stock Warrant

In April 2021, in connection with its entry into a loan and security agreement (the “SVB Loan Agreement”) with Silicon Valley Bank (“SVB”), the Company issued a warrant to purchase up to an aggregate of 10,338 shares of common stock at an exercise price of $0.34 per share (the “SVB Common Stock Warrant”). In July 2021, pursuant to the terms of the SVB Common Stock Warrant, the SVB Common Stock Warrant became exercisable for an additional 10,349 shares of common stock at an exercise price of $0.34 per share in connection with a principal draw. In February 2022, the Company amended the SVB Loan Agreement to draw additional principal and the SVB Common Stock Warrant became exercisable for an additional 5,176 sharesof common stock at an exercise price of

$0.40 per share. In December 2022, the Company terminated and repaid in full all amounts outstanding under the SVB Loan Agreement. On August 14, 2025, the Company issued 25,184 shares of common stock in conjunction with a net cashless exercise of the SVB Common Stock Warrant. As a result of the exercise, the SVB Common Stock Warrant is no longer outstanding.

6. Stock-Based Compensation

The recognition of compensation cost in the Company’s accompanying Condensed Statements of Operations and Comprehensive Loss for all stock-based compensation arrangements is as follows:

Overview of Stock Plans and Award Terms

On July 10, 2025, the Board of Directors adopted, and the Company’s stockholders approved, the Carlsmed, Inc. 2025 Equity Incentive Plan (the “2025 Plan”), which became effective on July 21, 2025. The 2025 Plan replaced the Carlsmed, Inc. 2019 Equity Incentive Plan (the "2019 Plan"). The Board of Directors determined to not make any further equity award grants under the 2019 Plan following the closing of the IPO, though the 2019 Plan will continue to govern outstanding awards granted under it.

The 2025 Plan allows the Company to grant mstock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards and other awards. As of June 30, 2026, there were 2,135,449 remaining shares available for issuance under the 2025 Plan.

The exercise price of a share subject to a stock option may not be less than the fair market value of a share of the Company’s common stock at the grant date. Stock options granted to employees typically vest over four years, with 25% vesting on the first anniversary of the grant date and the remainder vesting ratably on a monthly or quarterly basis thereafter. The vesting of stock option awards are subject to continued employment and have a maximum term of 10 years. Expense is recognized in the accompanying Condensed Statements of Operations and Comprehensive Loss on a straight-line basis over each award’s vesting period. Stock option awards may be subject to vesting acceleration in connection with a “Change in Control” or “Corporate Transaction,” as defined in the respective 2025 and 2019 Plans.

Certain stock options granted under the 2019 Plan allowed for their exercise prior to vesting (“early exercise”). For these awards, in the event of employee termination, the Company has the right, but not the obligation, to repurchase the portion of unvested stock at thelower of the exercise price or the then-current fair value. A liability is recorded within “accrued liabilities” on the accompanying Condensed Balance Sheets that is equal to the cash received for these early exercises, and this liability is reduced as vesting occurs. Unvested shares that have been early exercised are reflected in “common shares issued” but excluded from “common shares outstanding” on the accompanying Condensed Financial Statements. As of June 30, 2026,41,816 shares of early exercised stock options were outstanding, representing an immaterial early exercise liability. As of December 31, 2025,59,738 shares of early exercised stock options were outstanding, representing an early exercise liability of$0.1 million.

RSUs typically have three-year vesting schedules and the related expense is recognized in the accompanying Condensed Statements of Operations and Comprehensive Loss on a straight-line basis over each award’s vesting period.

PSUs are RSUs in form and vest based on the achievement of performance and/or market conditions, subject to continuous service through the applicable vesting date. Related expense is recognized in the accompanying

Condensed Statements of Operations and Comprehensive Loss. For awards with performance conditions, applicable compensation cost is recognized over the requisite service period to the extent the achievement of each performance condition is considered probable. For awards with market conditions, compensation cost is recognized over the service period, regardless of whether the market condition is ultimately achieved.

Stock Options

The follo wing summarizes stock option activity for the Company for the six months ended June 30, 2026:

The Company didnot grant any stock options during the three months ended June 30, 2026. The weighted average grant date fair value of options granted during the three months ended June 30, 2025 was$2.90 per share. The weighted average grant date fair value of options granted during the six months ended June 30, 2026 and 2025 was$6.23 and$2.19 per share, respectively. The total fair value of options that vested during the three months ended June 30, 2026 and 2025 was$0.6 million and$0.1 million, respectively, based on the grant date fair value. For the six months ended June 30, 2026 and 2025, the total fair value of options that vested was$1.2 million and$0.1 million, respectively, based on the grant date fair value.

The aggregate intrinsic values in the above table is calculated as the difference between the fair value of the Company’s common stock and the exercise price of the stock options. The aggregate intrinsic value of stock options exercised during the three months ended June 30, 2026 and 2025 was$0.1 million and$0.1 million, respectively. For the six months ended June 30, 2026 and 2025, the aggregate intrinsic value of stock options exercised was$6.5 million and$1.8 million, respectively, based on the grant date fair value.

The Company recorded stock-based compensation expense for stock options of$0.6 million and$0.3 million for the three months ended June 30, 2026 and 2025, respectively. The Company recorded stock-based compensation expense for stock options of$1.2 million and$0.4 million for the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, there was$6.9 million of unrecognized compensation for unvested stock options and the weighted-average period over which this remaining compensation cost will be recognized is 2.6 years.

The grant date fair value of the options is determined using an option pricing model. The assumptions that were used in estimating the grant date fair value of stock options under the option pricing method for thethree and six months ended June 30, 2026 and 2025 were as follows:

(1)

Based on the median stock price volatility for peer public companies over a historic timeframe similar to the expected term, with adjustments for differences in size and capital structure.

(2)

Based on the U.S. Treasury yield curve in effect as of the valuation date.

(3)

The Company has not paid and does not currently anticipate paying a cash dividend on its common stock.

(4)

The expected term of stock options granted to employees represents the weighted average period the stock options are expected to be outstanding. The Company uses thesimplified method for estimating the expected term, which calculates the expected term as the average time-to-vesting and the contractual life of the options for stock options issued to employees and non-employees.

Restricted Stock Units

The Company did not have any RSUs granted or outstanding during the six months ended June 30, 2025.

The follo wing summarizes the RSU activity for the Company for the six months ended June 30, 2026:

The Company recorded stock-based compensation expense for RSUs of$1.1 million and$1.8 million for the three and six months ended June 30, 2026, respectively. As of June 30, 2026, there was$11.3 million of unrecognized compensation for unvested RSUs, and the weighted-average period over which this remaining compensation cost will be recognized is 2.5 years.

Performance Stock Units (RSUs with performance and/or market conditions)

During the six months ended June 30, 2025, the Company granted 112,478 PSUs to an employee that have a contractual term offour years and vest upon the satisfaction of performance, market, and service conditions. The performance conditions required either (1) the completion of an initial public offering where the Company’s stock is listed on an established stock exchange or (2) the occurrence of a corporate transaction, such as a merger, acquisition, or similar liquidity event. The market condition is based on the achievement of share price targets following the completion of an initial public offering or on the date of a corporate transaction. The service condition requires the employee to provide continued service through the achievement of both the performance and market conditions. The grant date fair value of such PSUs was determined using a Monte Carlo simulation methodology, which takes into consideration the probability of achievement of the market conditions.

Expense for the PSUs began on the grant date and is recognized over the derived requisite service period of the award. However, no compensation expense was recognized until the performance-based vesting condition was probable of being achieved. Accordingly, no compensation expense was recognized during the six months ended June 30, 2025 as the performance condition was not probable of being achieved. On July 24, 2025, the Company completed its IPO, satisfying the performance condition of the PSUs. Consequently, compensation expense has been recognized proportionally for the completed portion of the requisite service period up to the IPO. The remaining unrecognized expense will be amortized over the remaining derived requisite service period associated with the market condition, regardless of whether the market condition is ultimately satisfied.

During the six months ended June 30, 2026, the Company awarded PSUs under the 2025 Plan that vest based on the achievement of performance or market conditions, subject to continued service through the applicable vesting date. The PSUs are comprised of (i) Revenue-Based PSUs, which vest based on the achievement of specified annual revenue targets over stated performance periods and continued service, and (ii) TSR-Based PSUs, which vest based on the Company’s total shareholder return relative to the S&P Healthcare Equipment Select Industry Index over a three-year performance period ending December 31, 2028, with continued service required through January 1, 2029. Payouts for both the Revenue-Based PSUs and TSR-Based PSUs range from 0% to 200%of target depending on achievement of the applicable vesting conditions. The Revenue-Based PSUs are comprised of two equal tranches.

Thefirst tranche of the Revenue-Based PSUs (“Tranche 1 Revenue-Based PSUs”) contains a performance condition based on specified revenue targets evaluated over a one year performance period from January 1, 2026 through December 31, 2026 and continued service through January 1, 2028. The second tranche of Revenue-Based PSUs (“Tranche 2 Revenue-Based PSUs”) contains a performance condition based on specified revenue targets evaluated over a one year performance period from January 1, 2027 through December 31, 2027 and continued service through January 1, 2029. Although the Tranche 2 Revenue-Based PSUs have been legally awarded, the performance measures have not yet been established and therefore are not considered granted from an accounting perspective. Accordingly, no compensation cost is recorded for the Tranche 2 Revenue-Based PSUs until such time the performance measures are established and the awards are considered granted from an accounting perspective.

The grant-date fair value of the Tranche 1 Revenue-Based PSUs is based on the underlying stock price on the grant date. The grant-date fair value of the TSR-Based PSUs was determined using a Monte Carlo simulation and was determined based on significant inputs not observable in the market, which represents a “Level 3” measurement within the fair value hierarchy. The significant inputs are listed below:

The follo wing summarizes the PSU activity for the Company for the six months ended June 30, 2026:

(1)

Revenue-Based PSUs and TSR-Based PSUs are presented at the maximum 200% of target. Actual shares issued for Revenue-Based PSUs and TSR-Based PSUs may range from 0% to 200% of target based on achievement of applicable performance and market conditions. Tranche 2 Revenue-Based PSUs that have been legally awarded but contain performance measures that have not yet been established are not considered granted from an accounting perspective and therefore are excluded until such time that the performance measures are established.

The Company recorded stock-based compensation expense for PSUs of$0.5 million and$0.8 million for the three and six months ended June 30, 2026, respectively. As of June 30, 2026, there was$3.7 million of unrecognized compensation for unvested PSUs, and the weighted-average period over which this remaining compensation cost will be recognized is 2.1 years.

Employee Stock Purchase Plan

In July 2025, the Company’s Board of Directors adopted, and its stockholders approved, the 2025 Employee Stock Purchase Plan (the “ESPP”), which became effective immediately prior to, and contingent upon, the effectiveness of the Company's initial public offering (“IPO”) on July 22, 2025. The ESPP enables eligible employees to purchase shares of the Company's common stock at a discount through accumulated payroll deductions.

A total of 398,749 shares of common stock were initially reserved for issuance under the ESPP. The number of shares reserved for issuance will increase automatically on January 1 of each year, for a period of up to ten years, with such period having commenced on January 1, 2026 and ending on (and including) January 1, 2035, by a number of shares equal to 1% of the total number of shares of capital stock outstanding on December 31 of the immediately preceding calendar year, unless the Board of Directors acts prior to the first day of a given calendar year to provide that there will be no increase, or a lesser increase, for such year. Pursuant to this provision, the number of shares reserved for issuance under the ESPP increased by 266,642 shares on January 1, 2026.

Under the ESPP, eligible employees may elect to contribute up to 15% of their eligible earnings to purchase shares of common stock during each offering period. The purchase price per share is equal to 85% of the lesser of the fair market value of the Company's common stock on the first trading day of the offering period and the fair market value on the applicable purchase date.

The Company's first offering period under the ESPP was athree‑month period that commenced on April 1, 2026 and ended on June 30, 2026, with a single purchase date on June 30, 2026.

The Company accounts for the ESPP as a compensatory plan under ASC 718, Compensation — Stock Compensation. The fair value of the purchase rights granted under the ESPP is estimated on the offering date using the Black‑Scholes option‑pricing model, and the related stock‑based compensation expense is recognized on a straight‑line basis over the offering period. The following weighted‑average assumptions were used to estimate the fair value of purchase rights granted during the offering period that commenced on April 1, 2026:

During the three and six months ended June 30, 2026, the Company recognized stock‑based compensation expense related to the ESPP of$0.1 million. On June 30, 2026,25,278 shares of common stock were purchased and issued under the ESPP at a weighted‑average purchase price of$8.19 per share. Accumulated employee payroll contributions of$0.2 million were applied to the purchase of these shares and reclassified to additional paid‑in capital upon issuance; accordingly, no material ESPP‑related payroll deduction liability remained outstanding as of June 30, 2026. As of June 30, 2026,640,113 shares remained available for issuance under the ESPP. Because the offering period ended on the June 30, 2026 purchase date, there wasno unrecognized ESPP‑related stock‑based compensation expense as of that date.

7. Convertible Preferred Stock

In January 2025, the Company issued a total of 1,117,743 shares of Series C convertible preferred stock at a price of$10.74 per share for gross cash proceeds of$12.0 million. The January 2025 issuance of Series C convertible preferred stock was completed below the fair value of the shares as of the issuance date. The Company recorded the excess of fair value over the issuance price as a “deemed dividend” within additional paid-in-capital (“APIC”) in the amount of$0.6 million. The deemed dividend reflects the distribution of value from common stockholders to preferred stockholders due to the implicit discount on these shares issued in January 2025. Since the Company remained in an accumulated deficit position at the issuance date, this deemed dividend was recorded directly to APIC rather than retained earnings.

The Company closed the IPO on July 24, 2025 and all of the outstanding shares of convertible preferred stock were converted into 15,245,731 shares ofcommon stock.

8. Net Loss Per Share

Basic net loss per share is calculated bydividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding, net of the weighted-average unvested restricted stock subject to repurchase by the Company, if any, during the period. Diluted loss per share is calculated bydividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding, adjusted for the effects of potentially dilutive common stock, which are comprised of stock options, RSUs, PSUs, and stock warrants using the “treasury-stock method,” and convertible preferred stock, using the “if-converted method.”

Because the Company reported net losses for the periods presented, stock options, RSUs, PSUs, stock warrants, and convertible preferred stock are antidilutive for each of these periods, and therefore, basic and diluted net loss per common share are the same. Convertible preferred stock is considered a "participating security";

however it was excluded from the computation of basic loss per share in the prior year period as there is no contractual obligation for the holders to share in the losses of the Company.

The foll owing table presents the number of anti-dilutive shares excluded from the calculation of diluted net loss per share as of June 30, 2026 and 2025:

(1)

879,088 stock options vested and exercisable as of June 30, 2026.

(2)

Convertible preferred stock was eligible to convert to common stock on a 1:1 basis upon the holder’s election or upon a Deemed Liquidation Event. Convertible preferred stock was converted into common stock on the IPO (see Note 7).

(3)

No RSUs are vested as of June 30, 2026.

(4)

No PSUs are vested as of June 30, 2026. Revenue-Based PSUs and TSR-Based PSUs are presented at the maximum 200% of target. Actual shares issued for Revenue-Based PSUs and TSR-Based PSUs may range from 0% to 200% of target based on achievement of applicable performance and market conditions (see Note 6). Tranche 2 Revenue-Based PSUs that have been legally awarded but contain performance measures that have not yet been established are not considered granted from an accounting perspective and therefore are excluded until such time that the performance measures are established.

(5)

On March 4, 2026, the Series B and Series C Warrant were exercised (see Note 2).

(6)

On August 14, 2025, the SVB Common Stock Warrant was exercised (see Note 5).

9. Commitments and Contingencies

Legal Matters

The Company from time to time is involved in legal matters incidental to the conduct of its business. In the opinion of management, there areno claims outstanding that would have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

Operating Lease

In theordinary course of business, the Company enters into lease agreements with unaffiliated third parties for its facilities and office equipment. As of June 30, 2026, the Company had two active operating leases for an approximate combined 41,000 square feet of administrative, operational, engineering, and research and development space located in Carlsbad, California.

The first lease encompasses 16,000 square feet and commenced on May 1, 2021, and was originally set to expire on April 30, 2024. On December 4, 2023, the Company entered into a first amendment to the original lease agreement which resulted in the lease term extending to June 30, 2028.

On May 15, 2025, the Company entered into a second amendment to its original lease agreement, which modified the lease terms to lease an additional suite comprising an additional 7,300 square feet of space with an expiration date of June 30, 2028. The May 2025 lease was accounted for as a separate contract. This additional suite was terminated under the third amendment discussed below.

On April 10, 2026, the Company entered into a third amendment to its original lease agreement, which modified the lease terms to terminate certain previously leased office space, lease an additional suite comprising an additional 25,000 square feet of space with an expiration date of June 30, 2031, and extended the term of the first lease to June 30, 2031. The terminated leased office space was effective May 31, 2026 at which time the related lease liability and right-of-use asset were written off, with the difference of $0.1 million recorded as a gain on termination. The additional suite added through the third amendment was accounted for as a separate contract which resulted in the recognition of a right-of-use asset of $3.4 million in exchange for lease liability. The extended term of the first lease to June 30, 2031 was accounted for as a modification. As such, the Company remeasured the lease liability and adjusted the carrying amount of the right of use asset by the amount of the remeasurement of the lease liability on the date of modification which resulted in the incremental recognition of a right-of-use asset of $1.6 million in exchange for lease liability.

Total lease expenses for the three months ended June 30, 2026 and 2025 were$0.3 million and$0.2 million, respectively. Total lease expenses for the six months ended June 30, 2026 and 2025 were$0.5 million and$0.3 million, respectively.

The Company’s real estate taxes, insurance costs, and common area maintenance, are included in monthly rent and not separately itemized. Rent expense is allocated to cost of sales, research and development, sales and marketing, and general and administrative expenses in the accompanying Condensed Statements of Operations and Comprehensive Loss.

The weighted-average lease terms and discount rates are as follows:

The aggregate future minimum lease payments under this lease as of June 30, 2026, are as follows:

The operating cash outflows included in the measurement of the operating lease liabilities was$0.4 million and$0.3 million for the six months ended June 30, 2026 and 2025, respectively.

10. Segment Reporting

The following table provides the operating financial results of the Company’s single reportable segment. It includes the significant expense categories regularly provided to the Company’s "chief operating decision maker", its Chief Executive Officer, computed under GAAP and reconciled to the Company’s total “net loss” as presented in the Condensed Statements of Operations and Comprehensive Loss:

• Other segment expenses primarily include corporate, compliance, and research and development support expenses.

11. Income Taxes

In determining quarterly provisions for income taxes, the Company uses the annual estimated effective tax rate applied to the actual year-to-date income (loss), adjusted for discrete items, if any, that are taken into account in the relevant period. The Company’s annual estimated effective tax rate differs from the statutory rate primarily as a result of state taxes and changes in the Company’s valuation allowance.

The Company didnot record income tax expense for thethree and six months ended June 30, 2026 and 2025. The Company maintains a full valuation allowance on its net deferred tax assets, as it is more likely-than-not that it will not be monetized through offsetting future taxable income.

There wereno material changes to the Company’s unrecognized tax benefits in thethree and six months ended June 30, 2026 and 2025. The Company didnot have any interest or penalties related to its uncertain tax positions for thethree and six months ended June 30, 2026 and 2025.