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LENSAR, Inc. (LNSR)

CIK: 0001320350. SIC: 3841 Surgical & Medical Instruments & Apparatus. Latest 10-K as of: 2026-03-31.

SIC breadcrumb: Manufacturing > SIC Major Group 38 > SIC 3841 Surgical & Medical Instruments & Apparatus

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1320350. Latest filing source: 0001193125-26-134587.

Selected Fundamentals

MetricValueUnitFYFiled
Revenue58,435,000USD20252026-03-31
Net income-34,280,000USD20252026-03-31
Assets71,430,000USD20252026-03-31

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-31. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001320350.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Free cash flow = operating cash flow - capital expenditures. Missing metrics are omitted rather than fabricated.

Metric20182019202020212022202320242025
Revenue30,528,00026,382,00034,459,00035,358,00042,164,00053,494,00058,435,000
Net income-14,657,000-19,774,000-19,601,000-19,914,000-14,383,000-31,404,000-34,280,000
Operating income-12,714,000-18,502,000-19,652,000-20,177,000-12,229,000-10,665,000-24,578,000
Diluted EPS-2.09-1.96-1.31-2.73-2.87
Operating cash flow-12,589,000-13,791,000-8,969,000-14,856,000-9,659,000-2,275,000-14,831,000
Capital expenditures389,000366,000354,000115,000236,000156,00083,000
Assets34,536,00079,120,00066,465,00055,844,00069,585,00066,297,00071,430,000
Liabilities65,089,00011,910,00011,586,00013,860,00022,409,00047,651,00083,665,000
Stockholders' equity-20,465,000-30,553,00067,210,00054,879,00041,984,00033,429,0004,862,000-26,019,000
Cash and cash equivalents4,615,00040,599,00031,637,00014,674,00020,621,00016,263,00012,974,000
Free cash flow-12,978,000-14,157,000-9,323,000-14,971,000-9,895,000-2,431,000-14,914,000

Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

Metric20182019202020212022202320242025
Net margin-48.01%-74.95%-56.88%-56.32%-34.11%-58.71%-58.66%
Operating margin-41.65%-70.13%-57.03%-57.06%-29.00%-19.94%-42.06%
Return on assets-42.44%-24.99%-29.49%-35.66%-20.67%-47.37%-47.99%
Liabilities / equity0.180.210.330.679.80
Current ratio2.196.905.142.953.992.801.15

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-08. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001320350.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

QuarterEnd DateRevenueNet IncomeDiluted EPSMethod
2022-Q22022-06-30-0.67reported discrete quarter
2022-Q32022-09-30-0.39reported discrete quarter
2023-Q12023-03-31-0.40reported discrete quarter
2023-Q22023-03-31-4,272,000reported discrete quarter
2023-Q22023-06-3012,012,000-0.81reported discrete quarter
2023-Q32023-06-30-8,753,000reported discrete quarter
2023-Q32023-09-309,795,000-0.23reported discrete quarter
2023-Q42023-12-3112,105,000-3,926,000derived Q4 = FY annual - nine-month YTD
2024-Q12024-03-3110,588,000-2,157,000-0.19reported discrete quarter
2024-Q22024-03-31-2,157,000reported discrete quarter
2024-Q22024-06-3012,636,000-0.79reported discrete quarter
2024-Q32024-06-30-9,043,000reported discrete quarter
2024-Q32024-09-3013,539,000-0.13reported discrete quarter
2024-Q42024-12-3116,731,000-18,702,000derived Q4 = FY annual - nine-month YTD
2025-Q12025-03-3114,159,000-27,345,000-2.32reported discrete quarter
2025-Q22025-03-31-27,345,000reported discrete quarter
2025-Q22025-06-3013,935,000-0.15reported discrete quarter
2025-Q32025-06-30-1,764,000reported discrete quarter
2025-Q32025-09-3014,316,000-0.31reported discrete quarter
2025-Q42025-12-3116,025,000-1,458,000derived Q4 = FY annual - nine-month YTD
2026-Q12026-03-3113,428,00036,332,0000.00reported discrete quarter

Quarterly Charts

Macro Cross-References

Latest quarter (10-Q)

Latest 10-Q source: 0001193125-26-214571.

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Published MD&A gate trimmed front/tail over-capture. Confidence: high. Filing date: 2026-05-08. Report date: 2026-03-31.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed financial statements and the related notes included elsewhere in this Quarterly Report, as well as the audited financial statements and the related notes thereto, and the discussion under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the “Annual Report”). Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks, uncertainties and other factors that could cause actual results to differ materially from those made, projected or implied in the forward-looking statements. Please see the “Risk Factors Summary” and “Risk Factors” sections for a discussion of the uncertainties, risks and assumptions associated with these statements.

Overview

We are a commercial-stage medical device company focused on designing, developing and marketing advanced laser systems for the treatment of cataracts and the management of pre-existing or surgically induced corneal astigmatism. Our systems incorporate a range of proprietary technologies designed to assist the surgeon in obtaining better visual outcomes, efficiency and reproducibility by providing advanced imaging, simplified procedure planning, efficient design and precision. We believe the cumulative effect of these technologies results in a laser system that can be quickly and efficiently integrated into a surgeon’s existing practice, is easy to use and provides surgeons the ability to deliver improved visual outcomes more efficiently.

Our current product portfolio includes the LENSAR Laser System, or LLS, and the ALLY Robotic Cataract Laser System®, or ALLY System, (collectively, the Systems) and its associated consumable components. The consumable portion of the system consists of a disposable patient interface device kit, or PID kit, and the system also requires a procedure license. Each procedure on each system requires the use of a PID kit. The PID kit includes a suction ring, vacuum filter and fluidic connection that are designed to facilitate placement of the laser while minimizing a patient’s discomfort, intraocular pressure and trauma to the retina and maintaining corneal integrity. The procedure license is downloaded onto the system as required or as purchased by the customer. The system will not perform a procedure without a valid license. We sell licenses individually and also offer licenses in a subscription package with minimum monthly obligations and the ability to increase procedure numbers as the practice grows to address increases in demand. We believe this structure allows the surgeon to implement a budget while also providing us with a predictable revenue stream.

We are focused on continuous innovation and have launched our proprietary next generation ALLY System. The ALLY System is designed to transform premium cataract surgery by utilizing our advanced robotic technologies with the ability to perform the entire procedure in a sterile operating room or in-office surgical suite, delivering operational efficiencies and reducing overhead. Our ALLY System received clearance from the U.S. Food and Drug Administration, or FDA, in June 2022 and was certified in August 2024 under Regulation (EU) No 2017/745, or EU MDR. The ALLY System is available to all U.S. and European Union, or EU, cataract surgeons and has also received regulatory clearance in India, Taiwan, South Korea, as well as certain other countries. Our growth, market presence and ability to sell the ALLY System will depend on whether the ALLY System receives additional regulatory clearances or certifications and the timing of these clearances or certifications, among other factors. Our future revenue and cash flows will depend on, among other factors, our installed base of Systems and the timing of and applicable clearances for our ALLY System.

We have built and are continuing to grow our commercial organization, which includes a direct sales force in the United States and distributors in Europe and Asia and other targeted international markets. We believe there is significant opportunity for us to expand our presence in these countries and other markets and regions, subject to applicable regulatory clearance or certification. In the United States, we sell our products through a direct sales organization that, as of March 31, 2026, consisted of approximately 70 commercial professionals, including regional sales managers, clinical applications and outcomes specialists, field service, marketing, technical and customer support personnel. We manufacture our Systems at a facility in Orlando, Florida. We purchase custom and off-the-shelf components from a number of suppliers, including some single-source suppliers. We purchase the majority of our components and major assemblies through purchase orders with limited long-term supply agreements and generally do not maintain large volumes of finished goods. We strive to maintain enough inventory of our various component parts to avoid the impact of potential disruptions in the supply chain; however, availability of these components can be outside of our control.

Our revenue decreased from $14.2 million for the three months ended March 31, 2025 to $13.4 million for the three months ended March 31, 2026, representing a decrease of 5%, primarily due to decreased system sales. Our net income was $36.3 million for the three months ended March 31, 2026 compared to a net loss of $27.3 million for the three months ended March 31, 2025. Net income for the three months ended March 31, 2026 was primarily due to a $23.9 million decrease in the change in fair value of warrant liabilities and $10.0 million in acquisition-related income. Net loss for the three months ended March 31, 2025 was primarily due to a $21.7 million increase in the change in fair value of warrant liabilities. Our installed base of Systems is approximately 440 as of March 31, 2026.

22

Termination of Merger Agreement with Alcon

On March 23, 2025, we entered into an Agreement and Plan of Merger, or the Merger Agreement, with Alcon Research, LLC, or Alcon, and VMI Option Merger Sub, Inc., or Merger Sub, which provided that, subject to the terms and conditions set forth in the Merger Agreement, Merger Sub would merge with and into the Company, or the Merger, with the Company continuing as the surviving corporation of the Merger and as a wholly-owned subsidiary of Alcon.

On May 21, 2025, we and Alcon each received a request for additional information and documentary material from the Federal Trade Commission, or the FTC, in connection with the FTC’s review of the Merger. Following its investigation, the FTC indicated its intention to seek to enjoin the Merger. On March 16, 2026, we entered into a Termination and Mutual Release Agreement, or the Termination Agreement, with Alcon and Merger Sub, pursuant to which the parties agreed to terminate the Merger Agreement, effective immediately. Pursuant to the Termination Agreement, Alcon agreed that we will retain the $10.0 million cash deposit provided to us and being held by us pursuant to the Merger Agreement. The Merger Deposit was recorded as acquisition-related income in the condensed statements of operations and comprehensive loss for the three months ended March 31, 2026. The parties also agreed to a mutual release of claims, relating to or arising out of the Merger Agreement and the transactions contemplated therein or thereby.

During the three months ended March 31, 2026, acquisition-related costs were reduced by $4.4 million associated with previously recognized acquisition-related costs eliminated in conjunction with the terminated Merger Agreement as compared to $4.2 million of acquisition-related costs incurred during the three months ended March 31, 2025. In connection with the Merger Agreement, we incurred acquisition-related costs of approximately $12.8 million. At March 31, 2026, the Company had liabilities related to acquisition-related costs of $8.7 million, of which $3.6 million is classified as accounts payable, current, $10,000 is classified as accrued liabilities, and $5.0 million is classified accounts payable, long-term on the condensed balance sheet at March 31, 2026.

Factors to Consider

We operate in a highly competitive environment that involves a number of risks, some of which are beyond our control. We are subject to risks common to medical device companies, including risks inherent in:

•
our laser system development and commercialization efforts;

•
clinical studies;

•
uncertainty of regulatory actions and marketing approvals or certifications;

•
reliance on a network of international distributors and a network of suppliers;

•
levels of coverage and reimbursement by government or other third-party payors for procedures using our products;

•
patients’ willingness and ability to pay for procedures with significant costs not covered by or reimbursable through government or other third-party payors;

•
enforcement of patent and proprietary rights;

•
the need for future capital;

•
all safety requirements and suggestions regarding patient treatment as required or suggested by health care authorities;

•
clearance or certification by regulatory agencies, including the FDA, or notified bodies for our ALLY System;

•
supply chain shortages, labor market shifts, tariffs, and price increases resulting from various macroeconomic factors;

•
competition associated with our products; and

•
reimbursement practices in jurisdictions where procedures using our Systems are performed, such as South Korea.

We cannot provide assurance that we will generate significant revenues or achieve and sustain profitability in the future. In addition, we can provide no assurance that we will have sufficient funding to meet our future capital requirements.

Our revenues and operating expenses are also difficult to predict and depend on several factors, including the level of ongoing research and development requirements necessary to further develop and/or obtain further regulatory clearance or certification of our ALLY System, the number of Systems we manufacture, sell, and lease on an annual basis, the availability of capital and direction from regulatory agencies or notified bodies, which are difficult to predict. We may be able to control the timing and level of research and development and selling, general and administrative expenses, but many of these expenditures will occur irrespective of our actions due to contractually committed activities and payments.

23

Global economic uncertainty and other factors, including tariff policies, political instability and conflicts in foreign regions, have impeded global supply chains, resulted in longer lead times and delays in procuring component parts and raw materials, and resulted in inflationary cost increases in certain raw materials, labor and transportation. We expect these inflationary impacts to continue for the foreseeable future. A high rate of inflation in the future, whether due to actual or uncertain impacts from increased tariffs or other trade barriers or other market volatility, may have an adverse effect on our ability to maintain and increase our gross margin or decrease our operating expenses as a percentage of our revenues if our selling prices of our products do not increase as much or more than our increase in costs.

As a result of these and other factors, our historical results are not necessarily indicative of future performance, and any interim results we present are not i

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Published MD&A gate trimmed front/tail over-capture. Confidence: high. Filing date: 2026-03-31. Report date: 2025-12-31.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes included elsewhere in this Annual Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks, uncertainties and other factors that could cause actual results to differ materially from those made, projected or implied in the forward-looking statements. Please see the “Risk Factors Summary” and “Risk Factors” sections for a discussion of the uncertainties, risks and assumptions associated with these statements. A discussion of the year ended December 31, 2024 compared to the year ended December 31, 2023 has been reported previously in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on March 4, 2024, under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Overview

We are a commercial-stage medical device company focused on designing, developing and marketing advanced laser systems for the treatment of cataracts and the management of pre-existing or surgically induced corneal astigmatism. Our systems incorporate a range of proprietary technologies designed to assist the surgeon in obtaining better visual outcomes, efficiency and reproducibility by providing advanced imaging, simplified procedure planning, efficient design and precision. We believe the cumulative effect of these technologies results in a laser system that can be quickly and efficiently integrated into a surgeon’s existing practice, is easy to use and provides surgeons the ability to deliver improved visual outcomes more efficiently.

Our current product portfolio includes the LENSAR Laser System, or LLS, and the ALLY Robotic Cataract Laser System™, or ALLY System, (collectively, the Systems) and its associated consumable components. The consumable portion of the system consists of a disposable patient interface device kit, or PID kit, and the system also requires a procedure license. Each procedure on each system requires the use of a PID kit. The PID kit includes a suction ring, vacuum filter and fluidic connection that are designed to facilitate placement of the laser while minimizing a patient’s discomfort, intraocular pressure and trauma to the retina and maintaining corneal integrity. The procedure license is downloaded onto the system as required or as purchased by the customer. The system will not perform a procedure without a valid license. We sell licenses individually and also offer licenses in a subscription package with minimum monthly obligations and the ability to increase procedure numbers as the practice grows to address increases in demand. We believe this structure allows the surgeon to implement a budget while also providing us with a predictable revenue stream.

We are focused on continuous innovation and have launched our proprietary next generation ALLY System. The ALLY System is designed to transform premium cataract surgery by utilizing our advanced robotic technologies with the ability to perform the entire procedure in a sterile operating room or in-office surgical suite, delivering operational efficiencies and reducing overhead. Our ALLY System received clearance from the FDA in June 2022, and we executed a controlled and targeted initial launch of the ALLY System beginning in August 2022. The ALLY System is available to all U.S. and EU cataract surgeons and has also received regulatory clearance in India, Taiwan, South Korea, as well as certain other countries. Our growth, market presence and ability to sell the ALLY System will depend on whether the ALLY System receives additional regulatory clearances or certifications and the timing of these clearances or certifications, among other factors. Our future revenue and cash flows will depend on, among other factors, our installed base of Systems and the timing of and applicable clearances for our ALLY System.

We have built and are continuing to grow our commercial organization, which includes a direct sales force in the United States and distributors in Europe and Asia and other targeted international markets. We believe there is significant opportunity for us to expand our presence in these countries and other markets and regions, subject to applicable regulatory clearance or certification. In the United States, we sell our products through a direct sales organization that, as of December 31, 2025, consisted of approximately 70 commercial professionals, including regional sales managers, clinical applications and outcomes specialists, field service, marketing, technical and customer support personnel. We manufacture our Systems at a facility in Orlando, Florida. We purchase custom and off-the-shelf components from a number of suppliers, including some single-source suppliers. We purchase the majority of our components and major assemblies through purchase orders with limited long-term supply agreements and generally do not maintain large volumes of finished goods. We strive to maintain enough inventory of our various

78

component parts to avoid the impact of potential disruptions in the supply chain; however, availability of these components can be outside of our control.

Our revenue increased from $53.5 million for the year ended December 31, 2024 to $58.4 million for the year ended December 31, 2025, representing an increase of 9%. Our net losses were $31.4 million and $34.3 million for the years ended December 31, 2024 and 2025, respectively. A significant component of our net loss in the years ended December 31, 2025 and 2024 was the change in fair value of warrant liabilities of $10.3 million and $21.4 million, respectively. Our total installed base of LLS and ALLY Systems was approximately 435 as of December 31, 2025.

Termination of Merger Agreement with Alcon

On March 23, 2025, we entered into an Agreement and Plan of Merger, or the Merger Agreement, with Alcon Research, LLC, or Alcon and VMI Option Merger Sub, Inc., or Merger Sub, which provided that, subject to the terms and conditions set forth in the Merger Agreement, Merger Sub would merge with and into the Company, which we refer to as the Merger, with the Company continuing as the surviving corporation of the Merger and as a wholly-owned subsidiary of Alcon.

On May 21, 2025, we and Alcon each received a request for additional information and documentary material from the FTC in connection with the FTC’s review of the Merger. Following its investigation, the FTC indicated its intention to seek to enjoin the Merger. On March 16, 2026, we entered into a Termination and Mutual Release Agreement, or the Termination Agreement, with Alcon and Merger Sub, pursuant to which the parties agreed to terminate the Merger Agreement, effective immediately. Pursuant to the Termination Agreement, Alcon agreed that we will retain the $10.0 million cash deposit provided to us and being held by us pursuant to the Merger Agreement. The parties also agreed to a mutual release of claims, relating to or arising out of the Merger Agreement and the transactions contemplated therein or thereby.

In connection with the Merger Agreement, we have incurred acquisition-related costs of approximately $17.1 million in the year ended December 31, 2025. Of the $17.1 million in acquisition-related costs incurred, $13.8 million is classified as accounts payable and $0.2 million is classified as accrued liabilities on the balance sheet at December 31, 2025. Certain amounts of these acquisition-related costs were contingent upon the successful closing of the Merger. During the three months ending March 31, 2026, the Company will reduce acquisition-related costs and accounts payable by approximately $4.3 million. Furthermore, during the three months ending March 31, 2026, $5.0 million of accounts payable will be reclassified from current to long-term based upon extended payment terms provided by our acquisition advisers.

Factors to Consider

We operate in a highly competitive environment that involves a number of risks, some of which are beyond our control. We are subject to risks common to medical device companies, including risks inherent in:

•
our laser system development and commercialization efforts;

•
clinical studies;

•
uncertainty of regulatory actions and marketing approvals or certifications;

•
reliance on a network of international distributors and a network of suppliers;

•
levels of coverage and reimbursement by government or other third-party payors for procedures using our products;

•
patients’ willingness and ability to pay for procedures with significant costs not covered by or reimbursable through government or other third-party payors;

•
enforcement of patent and proprietary rights;

•
the need for future capital;

•
all safety requirements and suggestions regarding patient treatment as required or suggested by health care authorities;

79

•
clearance or certification by regulatory agencies, including the FDA, or notified bodies for our ALLY System;

•
supply chain shortages, labor market shifts, tariffs, and price increases resulting from various macroeconomic factors;

•
competition associated with our products; and

•
reimbursement practices in jurisdictions where procedures using our Systems are performed, such as South Korea.

We cannot provide assurance that we will generate significant revenues or achieve and sustain profitability in the future. In addition, we can provide no assurance that we will have sufficient funding to meet our future capital requirements.

Our revenues and operating expenses are also difficult to predict and depend on several factors, including the level of ongoing research and development requirements necessary to further develop and/or obtain further regulatory clearance or certification of our ALLY System, the number of Systems we manufacture, sell, and lease on an annual basis, the availability of capital and direction from regulatory agencies or notified bodies, which are difficult to predict. We may be able to control the timing and level of research and development and selling, general and administrative expenses, but many of these expenditures will occur irrespective of our actions due to contractually committed activities and payments.

Global economic uncertainty and other factors, including tariff policies, have impeded global supply chains, resulted in longer lead times and delays in procuring component parts and raw materials, and resulted in inflationary cost increases in certain raw materials, labor and transportation. We expect these inflationary impacts to continue for the foreseeable future. A high rate of inflation in the future, whether due to actual or uncertain impacts from increased tariffs or other trade barriers or other market volatility, may have an adverse effect on our ability to maintain and increase our gross margin or decrease our operating expenses as a percentage of our revenues if our selling prices of our products do not increase as much or more than our increase in costs.

As a result of these and other factors, our historical results are not necessarily indicative of future performance, and any interim results we present are not indicative of the results that may be expected for the full fiscal year.

Components of Our Results of Operations

Revenue

Total revenue comprises product revenue, service revenue and lease revenue. We derive product revenue from the sale of our Systems and sales of our PIDs and procedure licenses to our surgeon customers and to our distributors outside the United States. A PID and procedure license, which may also be referred to as an application license, is required to perform each procedure using our laser system. A procedure license represents a one-time right to utilize the system surgical application in connection with a surgery procedure. Service revenue is derived from the sale of extended warranties for our Systems that provide additional maintenance and service beyond our standard limited warranty. In some situations, we lease our Systems to surgeons, primarily through non-cancellable leases with a fixed

80

lease payment. The following table provides information about revenue and revenue attributable to recurring sources, which we consider to be all components of our revenue except for sales of our Systems:

Year Ended December 31,

(Dollars in thousands)

2025

2024

System

$

12,129

$

13,345

Recurring revenue:

Procedure

33,799

27,720

Lease

6,779

7,532

Service

5,728

4,897

Total recurring revenue

46,306

40,149

Total revenue

$

58,435

$

53,494

Recurring revenue %

79%

75%

Cost of Revenue

Total cost of revenue comprises cost of product revenue, cost of lease revenue and cost of service revenue. Cost of product revenue primarily consists of the raw materials used in the manufacture of our products, plant overhead, personnel costs, such as salaries and wages, including stock-based compensation and benefits, packaging costs, depreciation expense, freight and other related costs, which include shipping, inspection and excess and obsolete inventory charges. Cost of service revenue primarily consists of costs associated with providing maintenance services under our standard limited warranty as well as extended warranty contracts. Cost of lease revenue primarily consists of depreciation expense associated with leased equipment and shipping costs associated with delivery of these Systems.

Selling, General and Administrative Expense

Our selling, general and administrative expenses consist primarily of acquisition-related costs, personnel costs, such as salaries and wages, including stock-based compensation and benefits, professional fees, marketing, insurance, travel and other expenses. We are continuing to grow our sales efforts in the United States. We expect our selling, general and administrative expenses to continue to increase in association with our planned growth.

Research and Development Expense

Our research and development expenses consist primarily of engineering, product development, clinical studies to develop and support our products, personnel costs, such as salaries and wages, including stock-based compensation and benefits, regulatory expenses, and other costs associated with products and technologies that are in development. Currently, our research and development expense primarily consists of costs associated with the continued development of our next generation system, the ALLY System, which combines all of the features from our LLS with a dual-modality laser, integrated in a small, compact cataract treatment system that is designed to allow surgeons to perform a sterile laser-assisted cataract surgery in a single operating room or in-office surgical suite.

Amortization of Intangible Assets

Intangible assets with finite useful lives consist primarily of acquired trademarks, acquired technology, and customer relationships. Acquired trademarks and acquired technology are amortized on a straight-line basis over their estimated useful lives of 15 to 20 years. Customer relationships are amortized on a straight-line basis or a double declining basis over their estimated useful lives up to 20 years, based on the method that better represents the economic benefits to be obtained.

Impairment

In April 2024, the Company notified its third-party supplier of the phacoemulsification component in the ALLY System the Company would no longer pursue integration with the supplier’s phacoemulsification unit. This resulted in a triggering event impacting certain acquired technology intangible assets and contract liabilities associated with

81

the phacoemulsification component. During the three months ended June 30, 2024, the Company determined that the carrying value of the intangible assets exceeded the estimated recoverable amount of $0 and recorded an impairment of intangible assets of $3.9 million. The impairment charge was offset with the write-off of contract liabilities associated with the intangible assets of $0.2 million.

Change in Fair Value of Warrant Liabilities

The change in fair value of warrant liabilities consists of the change in estimated fair value of the warrant liabilities using recently quoted market prices of the Company's common stock and the Black-Scholes option pricing model.

Income Taxes

Changes in our tax rates or exposure to additional tax liabilities could adversely affect our earnings and financial condition. On July 4, 2025, new U.S. tax legislation was signed into law (known as the “One Big Beautiful Bill Act” or “OBBBA”) which makes permanent many of the tax provisions enacted in 2017 as part of the Tax Cuts and Jobs Act that were set to expire at the end of 2025. In addition, the OBBBA makes changes to certain U.S. corporate tax provisions, but many are generally not effective until 2026. Based on the Company’s current analysis of the provisions, the Company determined that the tax law changes do not have a material impact on the Company’s 2025 financial statements. However, the Company will continue to evaluate their impact of such tax law changes on future periods.

Seasonality

We have historically experienced seasonal variations in the sales and leases of our products, with our fourth quarter typically being the strongest and the first quarter being the slowest. We believe these seasonal variations are consistent across our industry.

Results of Operations

Comparison of the Years Ended December 31, 2025 and 2024

Year Ended December 31,

Change

from Prior

(Dollars in thousands)

2025

2024

Year %

Revenue:

Product

$

45,928

$

41,065

12

%

Lease

6,779

7,532

(10

)%

Service

5,728

4,897

17

%

Total revenue

$

58,435

$

53,494

9

%

Cost of revenue (excluding intangible amortization):

Product

$

20,561

$

18,254

13

%

Lease

3,515

2,930

20

%

Service

7,237

6,459

12

%

Total cost of revenue

$

31,313

$

27,643

13

%

Revenue

Total revenue for the year ended December 31, 2025 was $58.4 million, an increase of 9% when compared to total revenue of $53.5 million for the year ended December 31, 2024.

Product revenue for the year ended December 31, 2025 compared to the year ended December 31, 2024 increased by $4.9 million, or 12%. The increase was primarily attributable to increased procedure volume, which amounted to a $6.1 million increase, offset by lower Systems sales, which amounted to a $1.2 million decrease, during the year ended December 31, 2025. Placements of our Systems, especially outside the U.S., was negatively impacted by the twelve-month disruption we experienced while operating under the previously contemplated acquisition by Alcon. We expect to return to a more normal System placement cadence, but this may take several quarters.

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The following table provides information about procedure volume:

2025

2024

2023

Q1

52,347

39,486

31,600

Q2

52,100

42,203

35,349

Q3

46,811

42,231

32,649

Q4

54,756

45,586

37,414

Total procedure volume

206,014

169,506

137,012

Service revenue for the year ended December 31, 2025 compared to the year ended December 31, 2024 increased by $0.8 million. This increase was primarily attributable to the increased number of Systems placements.

Geographically, the United States represented 66% and 63% of product and service revenues for the years ended December 31, 2025 and 2024, respectively.

Lease revenue for the year ended December 31, 2025 compared to the year ended December 31, 2024 decreased by $0.8 million, or 10%, primarily due to decreased leased LLS. Lease revenue is generated by Systems placements, primarily in the United States.

The U.S. government has recently implemented significant changes in U.S. trade policy and taken certain actions that have impacted our business, including imposing tariffs on certain goods imported into the United States. Some of these changes have triggered retaliatory actions by affected countries that could negatively impact demand for our products in these regions. The imposition of tariffs have increased the cost of the raw materials used in our ALLY Systems and PIDs. To date, we have not increased sales prices to our customers resulting in a reduction in our gross margin.

Cost of Revenue

Total cost of revenue for the year ended December 31, 2025 was $31.3 million, an increase of 13% when compared to total cost of revenue of $27.6 million for the year ended December 31, 2024.

Cost of product revenue for the year ended December 31, 2025 compared to the year ended December 31, 2024 increased by $2.3 million, or 13%. The increase was primarily attributable to the number of Systems sales, which have a lower gross margin than procedure licenses.

We import certain raw materials for our ALLY System and PIDs from regions that have been impacted by the tariffs imposed by the U.S. government. Tariff policies have resulted in an overall increase in the cost of our products by at least 10% and had a negative impact to our gross profit margin.

Cost of service revenue for the year ended December 31, 2025 compared to the year ended December 31, 2024 increased by $0.8 million, or 12%. This increase was primarily attributable to the increased number of Systems placements.

Cost of lease revenue for the year ended December 31, 2025 compared to the year ended December 31, 2024 increased by $0.6 million, or 20%, primarily due to an increase in the number of newly leased Systems between the years, which have a higher depreciation cost than older and some fully depreciated leased Systems.

Operating Expenses

Selling, General and Administrative. Selling, general and administrative expenses for the year ended December 31, 2025 were $45.2 million, an increase of $18.7 million, or 70%, compared to $26.5 million for the year ended December 31, 2024. General and administrative expenses increased in the year ended December 31, 2025 due to acquisition-related costs of approximately $17.1 million incurred in conjunction with the previously contemplated Merger with Alcon and increased selling and marketing expenses supporting the continued ALLY System growth in placements and procedures. We expect our selling and marketing expenses will continue to increase in the future to support the continued growth in ALLY System placements.

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Research and Development. Research and development expenses were $5.6 million for the year ended December 31, 2025, an increase of $0.3 million, or 5%, compared to $5.3 million for the year ended December 31, 2024.

Amortization of Intangible Assets. Amortization of intangible assets was approximately $0.9 million for the year ended December 31, 2025, which was consistent with the year ended December 31, 2024.

Impairment of Intangible Assets. In April 2024, the Company notified its third-party supplier of the phacoemulsification component in the ALLY System the Company would no longer pursue integration with the supplier’s phacoemulsification unit. This resulted in a triggering event impacting certain acquired technology intangible assets and contract liabilities associated with the phacoemulsification component. During the year ended December 31, 2024, the Company determined that the carrying value of the intangible assets exceeded the estimated recoverable amount and recorded an impairment of intangible assets of $3.9 million. The impairment charge was offset with the write-off of contract liabilities associated with the intangible assets of $0.2 million.

Non-Operating Income and Expense, Net

Non-operating income and expenses, net for the year ended December 31, 2025 were $9.7 million as compared to $20.7 million for the year ended December 31, 2024. Non-operating income and expenses consisted primarily of the change in fair value of warrant liabilities in each period.

Non-GAAP Financial Measures

We prepare and analyze operating and financial data and non-GAAP measures to assess the performance of our business, make strategic and offering decisions and build our financial projections. The key non-GAAP measures we use, EBITDA and Adjusted EBITDA, are reconciled to net loss below for the years ended December 31, 2025 and 2024.

Year Ended December 31,

(Dollars in thousands)

2025

2024

Net loss

$

(34,280

)

$

(31,404

)

Less: Interest income

(636

)

(660

)

Add: Depreciation expense

3,581

2,961

Add: Amortization expense

921

970

EBITDA

(30,414

)

(28,133

)

Add: Stock-based compensation expense

3,143

2,665

Add: Change in fair value of warrant liabilities

10,338

21,399

Add: Acquisition-related costs

17,141

—

Add: Impairment of intangible assets

—

3,729

Adjusted EBITDA

$

208

$

(340

)

EBITDA is defined as net loss before interest expense, interest income, income tax expense, depreciation and amortization expenses. EBITDA is a non-GAAP financial measure. EBITDA is included in this filing because we believe that EBITDA provides meaningful supplemental information for investors regarding the performance of our business and facilitates a meaningful evaluation of actual results on a comparable basis with historical results. Adjusted EBITDA is also a non-GAAP financial measure. We believe Adjusted EBITDA, which is defined as EBITDA and further excluding stock-based compensation expense, change in fair value of warrant liabilities, acquisition-related costs, and impairment of intangible assets, provides meaningful supplemental information for investors when evaluating our results and comparing us to peer companies, as stock-based compensation expense and change in fair value of warrant liabilities are significant non-cash charges and impairment of intangible assets is a non-cash charge that is not indicative of our core operating results and acquisition-related costs are not recurring. We use these non-GAAP financial measures in order to have comparable financial results to analyze changes in our underlying business from quarter to quarter. However, there are a number of limitations related to the use of non-GAAP measures and their nearest GAAP equivalents. For example, other companies may calculate non-GAAP measures differently, or may use other measures to calculate their financial performance and, therefore, any non-GAAP measures we use may not be directly comparable to similarly titled measures of other companies. Investors should not consider our non-GAAP financial measures in isolation or as a substitute for an analysis of our results as reported under GAAP.

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Liquidity and Capital Resources

Overview

For the years ended December 31, 2025 and 2024, we had net losses of $34.3 million and $31.4 million, respectively, and, as of December 31, 2025, we had an accumulated deficit of $177.6 million. The change in fair value of warrant liabilities had a significant impact of $(10.3) million on net loss in the twelve months ended December 31, 2025, and it is difficult to predict how the fair value of warrant liabilities will impact our future results. The change in fair value of the warrant liability was a result of an increase in the Company’s stock price of approximately 34% during 2025. We expect to continue to incur losses and operating cash outflows for the near-term future. In addition, acquisition-related costs have been significant. As of December 31, 2025, $17.1 million in acquisition-related costs have been incurred, of which $13.8 million is classified as accounts payable and $0.2 million is classified as accrued liabilities on the balance sheet at December 31, 2025. Certain amounts of these acquisition-related costs were contingent upon the successful closing of the Merger. During the three months ending March 31, 2026, the Company will reduce acquisition-related costs and accounts payable by approximately $4.3 million. Furthermore, during the three months ending March 31, 2026, $5.0 million of accounts payable will be reclassified from current to long-term based upon extended payment terms provided by our acquisition advisers.

Our liquidity needs will be largely determined by our ability to successfully commercialize our products and the progression, additional regulatory clearances or certifications and launch of the ALLY System in additional jurisdictions in the future.

The ALLY System has received regulatory approval in the United States, India, Taiwan, South Korea, as well as certain other countries, and certification in the EU. Our growth, market presence and ability to sell the ALLY System will depend on whether the ALLY System receives additional regulatory clearances or certifications and the timing of these clearance or certifications, among other factors. In addition, our future revenue and cash flows will depend on, among other factors, our installed base of Systems, acquisition-related costs, and the timing of and applicable clearances for our ALLY System.

We expect selling, general and administrative expenses to increase from current levels to support the expansion efforts in the U.S. and internationally for the ALLY System offset by a decrease in acquisition-related costs associated with the terminated Merger Agreement. The successful commercialization of the ALLY System depends in part on the Company’s ability to produce the ALLY System in sufficient quantities, within requested timing and at an acceptable price to satisfy customer demand.

Our primary sources of liquidity are our cash and cash equivalents, cash from the sale and lease of our Systems, and the sale of our consumables. We maintain cash balances with financial institutions in excess of insured limits. As discussed above, ongoing global supply chain disruptions, inflationary pressures, acquisition-related costs, recently enacted tariffs, and other macroeconomic conditions have negatively affected our capital requirements and more operating capital may be needed to fund our operations in the future. We have also experienced reduced activity by our distributors following the announcement of the Merger, and we have adjusted our purchasing and production to manage our inventory accordingly. Our results could be adversely impacted if our distributors do not resume their sales activity to previous levels. Based on our current operating plan, we believe we have sufficient cash and cash equivalents on hand to support current operations for at least one year from the date of issuance of the financial statements included in this Annual Report.

In the future, we may need to raise additional capital through equity or debt financings, borrowings under credit facilities or from other sources to continue our operations. We may issue securities, including common stock, preferred stock, warrants, and/or debt securities through private placement transactions or registered public offerings in the future. If we issue equity securities to raise additional capital, our existing stockholders may experience dilution, and the new equity securities may have rights, preferences and privileges senior to those of our existing stockholders. Debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt. Any debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders. In addition, if we raise additional capital through collaboration, licensing or other similar arrangements, it may be necessary to relinquish valuable rights to our products, potential products or proprietary technologies, or grant licenses on terms that are not favorable to us.

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On March 11, 2026, the Company entered into a Priority Credit Line Agreement (the “PCL Agreement”), by and between the Company and Wells Fargo Bank, N.A (“Wells Fargo”). The PCL Agreement provides for a revolving, non-purpose margin credit facility, secured by a first-priority lien on a designated brokerage account maintained at Wells Fargo (the “Collateral Account”), of an amount based on the collateral value in the Collateral Account. Based on the collateral value in the Collateral Account, the Company is permitted to borrow 90-95% of the Collateral Account value under the PCL Agreement. Borrowings under the PCL Agreement bear interest, at the Company’s election, at either (i) a fixed rate based on the Treasury Yield plus an applicable margin, over a designated term, or (ii) a variable rate based on the Secured Overnight Financing Rate (SOFR) plus an applicable margin. The PCL Agreement contains customary events of default, including, without limitation, failure to make any payment upon demand or otherwise when due or deposit additional collateral when required under the PCL Agreement; initiation of a bankruptcy petition or other insolvency proceeding; any event of default under any security agreement executed in connection with the Collateral Account; or the insufficiency of the value of the financial assets in the Collateral Account.

We expect our revenue and expenses to increase in connection with our on-going operating activities, particularly as we continue to execute on our growth strategy (including expansion of our sales and customer support teams, as well as increasing our fleet of equipment under lease). The primary factors determining our cash needs are the funding of operations, which we expect to continue to expand as the business grows, and enhancing our product offerings through the commercialization of the ALLY System. Our future liquidity needs, and ability to address those needs, will largely be determined by the success of our commercial efforts and those of our distributors; the ongoing impact of global macroeconomic conditions, tariffs and other supply chain issues on our business; and the timing, scope and magnitude of our commercial and development activities.

In May 2023, we entered into a Securities Purchase Agreement, or SPA, with NR-GRI Partners, LP, or NR-GRI, whereby we sold to NR-GRI, for an aggregate purchase price of $20.0 million, an aggregate of 20,000 shares of a newly established series of preferred stock designated as “Series A Convertible Preferred Stock, par value $0.01 per share”, which has a stated value of $1,000 per share and is convertible into shares of the Company’s common stock, and warrants, the Warrants, to purchase an aggregate of 4.4 million shares of our common stock, the Private Placement. Fifty percent of the Warrants have an exercise price equal to $2.45 per share, and 50% of the Warrants have an exercise price equal to $3.0625 per share, subject in each instance to adjustments as provided under the terms of the Warrants. Net proceeds from the transaction were approximately $19.1 million after offering expenses. The Series A Redeemable Convertible Preferred Stock, if converted, would result in the issuance of 7.9 million shares of our common stock. Additionally, the terms of our Series A Redeemable Convertible Preferred Stock restrict our ability to incur debt in excess of $1.0 million or issue new shares in an amount greater than 10% of our outstanding common stock as of May 18, 2023 without the approval of the holder of the Series A Redeemable Convertible Preferred Stock (subject to certain exceptions).

Our ability to raise additional funds will depend on, among other factors, financial, economic and market conditions, many of which are outside of our control, and we may be unable to raise financing when needed, or on terms favorable to us. If the necessary funds are not available from these sources, we may have to delay, reduce or suspend the scope of our sales and marketing efforts, research and development activities, or other components of our operations. Any of these events could adversely affect our ability to achieve our business and financial goals or to achieve or maintain profitability and could have a material adverse effect on our business, financial condition and results of operations. Additionally, the extent and duration of the impact that global economic uncertainty may have on our stock price and on those of other companies in our industry is highly uncertain and may make us look less attractive to investors and, as a result, there may be a less active trading market for our common stock, our stock price may be more volatile, and our ability to raise capital could be impaired, which could in the future negatively affect our liquidity and financial position.

Our material contractual obligations and commercial commitments at December 31, 2025 primarily consist of $2.7 million in operating lease liabilities for our facility lease and $13.9 million in remaining minimum purchase obligations for inventory components for the manufacture and supply of certain components within the next 18 months. In addition, as of December 31, 2025, $17.1 million in acquisition-related costs have been incurred, of which $13.8 million is classified as accounts payable and $0.2 million is classified as accrued liabilities on the balance sheet at December 31, 2025. Certain amounts of these acquisition-related costs were contingent upon the successful closing of the Merger. During the three months ending March 31, 2026, the Company will reduce acquisition-related costs

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and accounts payable by approximately $4.3 million. Furthermore, during the three months ending March 31, 2026, $5.0 million of accounts payable will be reclassified from current to long-term based upon extended payment terms provided by our acquisition advisers.

Our contractual obligations have increased due to supply chain issues that have necessitated us to enter into longer-term and more expensive per unit contracts to build and source inventory to satisfy the expected commercial demand for the ALLY System, if approved by regulatory authorities or certified by notified bodies in the applicable regions. We expect to meet these requirements through cash and cash equivalents and cash provided by operations. Some of these amounts are based on management’s estimates and assumptions about these obligations, including their duration, timing, anticipated actions by third parties and other factors. Because these estimates and assumptions are necessarily subjective, the obligations we will actually pay in future periods may vary from those described.

Cash Flows

The following table summarizes, for the periods indicated, selected items in our statements of cash flows:

Year Ended December 31,

(Dollars in thousands)

2025

2024

Net cash used in operating activities

$

(14,831

)

$

(2,275

)

Net cash provided by (used in) investing activities

1,284

(2,161

)

Net cash provided by financing activities

10,258

78

Net decrease in cash and cash equivalents

$

(3,289

)

$

(4,358

)

Operating Activities

Net cash used in operating activities for the year ended December 31, 2025 was $14.8 million, consisting primarily of a net loss of $34.3 million and a decrease in net operating assets of $1.1 million, partially offset by non-cash charges of $18.3 million. Non-cash charges primarily consisted of depreciation, amortization, stock-based compensation, and change in fair value of warrant liabilities. Net operating assets decreased due to inventories offset with accounts payable.

Net cash used in operating activities for the year ended December 31, 2024 was $2.3 million, consisting primarily of a net loss of $31.4 million and a decrease in net operating assets of $3.0 million, partially offset by non-cash charges of $32.2 million. Non-cash charges consisted of depreciation, amortization, impairment of intangible assets, stock-based compensation, and change in fair value of warrant liabilities. Net operating assets decreased due to accounts receivable and inventories offset with accounts payable and accrued liabilities.

Investing Activities

Net cash provided by investing activities for the year ended December 31, 2025 was $1.3 million, which consisted primarily of purchases and maturities of investments.

Net cash used in investing activities for the year ended December 31, 2024 was $2.2 million, which consisted primarily of purchases and maturities of investments.

Financing Activities

Net cash provided by financing activities for the year ended December 31, 2025 was $10.3 million, consisting primarily of the acquisition-related deposit received from Alcon.

Net cash provided by financing activities for the year ended December 31, 2024 was $0.1 million, primarily due to the net proceeds from issuance of common stock under equity incentive plans.

Critical Accounting Estimates

The preparation of financial statements and related disclosures in conformity with U.S. Generally Accepted Accounting Principles, or GAAP, and the discussion and analysis of our financial condition and operating results

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require our management to make judgments, assumptions and estimates that affect the amounts reported in our financial statements. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. The impact of accounting estimates and judgments on our financial condition and results of operations due to global macroeconomic conditions has introduced additional uncertainties. We evaluate our estimates and assumptions on an ongoing basis. Actual results may differ from these estimates and such differences may be material.

We describe our significant accounting policies in Note 1, Summary of Significant Accounting Policies, of the notes to the financial statements. We believe the following accounting policies are the most critical in understanding the estimates and judgments that are involved in preparing our financial statements and the uncertainties that could impact our results of operations, financial condition, and cash flows.

Product and Service Revenue Recognition

Revenue is recognized from the sale of products and services when we transfer control of such promised products and services. The amount of revenue recognized reflects the consideration we expect to be entitled to receive in exchange for these products and services. A five-step model is utilized to achieve the core principle and includes the following steps: (1) identify the customer contract; (2) identify the contract’s performance obligations; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations; and (5) recognize revenue when the performance obligations are satisfied.

We principally derive our revenue from the sale and lease of systems and the sale of other related products and services, including PIDs, procedure licenses, and extended warranty service agreements. A procedure license represents a one-time right to utilize the system surgical application in connection with a surgery procedure. Without separately procuring procedure licenses granted by us, either together with the purchase of the system or under separate subsequent contracts, the customer does not have the right to use the surgical software application to perform surgical procedures. Typically, returns are not allowed.

Our contracts with customers often include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately may require significant judgment. Judgment is required to determine the level of interdependency between the system and the sale of other related products and services. We evaluate each product or service promised in a contract to determine whether it represents a distinct performance obligation. A performance obligation is distinct if (1) the customer can benefit from the product or service on its own or with other resources that are readily available to the customer and (2) the product or service is separately identifiable from other promises in the contract.

For contracts involving the sale or lease of a system, our performance obligations generally include the system, PID, procedure license, and extended warranty service agreements. In addition, our customer contracts contain provisions for installation and training services, which are not assessed as performance obligations as they are determined to be immaterial promises in the context of the contract and are required for a customer to use the system.

We have determined that the system, PID and procedure license are each capable of being distinct because they are each sold separately and the customer can benefit from these products with the other readily available resources that are sold by us. In addition, we have determined each are separately identifiable because the system, PID and procedure license (1) are not highly interdependent or interrelated; (2) do not modify or customize one another; and (3) do not include a significant service of integrating the promised goods into a bundled output. This is because we are able to fulfill each promise in the contract independently of the others and we would be able to fulfill our promise to transfer the system even if the customer did not purchase a PID or procedure license or to fulfill our promise to provide the PID or the procedure license even if the customer acquired the system separately.

The extended warranty, unlike our standard product warranty, is a performance obligation because it provides an incremental service that is beyond ensuring the product delivered will be consistent with stated contractual specifications.

When a contract contains multiple performance obligations, revenue is allocated to each performance obligation based on its relative standalone selling price.

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We recognize revenue as the performance obligations are satisfied by transferring control of the product or service to a customer as described below. We record a contract liability, or deferred revenue, when we have an obligation to provide a product or service to the customer and payment is received or due in advance of our performance.

Product revenue. We recognize revenue for the sale of the products at a point in time when control is transferred to customers.

Equipment. System sales are recognized as Product revenue when the Company transfers control of the system. This usually occurs after the customer signs a contract, we install the system, and we perform the requisite training for use of the system for direct customers. System sales to distributors are recognized as revenue upon shipment as they do not require training and installation.

PID and Procedure Licenses. The system requires both a PID and a procedure license to perform each procedure. We recognize Product revenue for PIDs when we transfer control of the PID. We recognize Product revenue for procedure licenses at the point in time when control of the procedure license is transferred to the customer. A procedure license represents a one-time right to utilize the system surgical application in connection with a procedure. For the sale of PIDs and procedure licenses, we may offer volume discounts to certain customers. To determine the amount of revenue that should be recognized at the time control over these products transfers to the customer, we estimate the average per unit price, net of discounts.

Service revenue. We offer an extended warranty that provides additional maintenance services beyond the standard limited warranty. We recognize Service revenue from the sale of extended warranties over the warranty period on a ratable basis as we stand ready to provide services as needed. Customers have the option of renewing the warranty period, which is considered a new and separate contract.

Lease Revenue

We lease equipment to customers under operating lease arrangements. At contract inception we perform an evaluation to determine if a lease arrangement conveys the right to control the use of an identified asset. To the extent such rights of control are conveyed, we further make an assessment as to the applicable lease classification. The identification of specified assets and determination of appropriate lease classification may require the use of management judgment.

Some of our operating leases include a purchase option for the customer to purchase the leased asset at the end of the lease arrangement, subject to a new contract. We do not believe the purchase price qualifies as a bargain purchase option.

For lease arrangements with lease and non-lease components where we are the lessor, we allocate the contract’s transaction price (including discounts) to the lease and non-lease components on a relative standalone selling price, which requires judgments. For those leases with variable lease payments, the variable lease payment is typically based upon use of the leased equipment or the purchase of procedure licenses and PIDs used with the leased equipment.

For operating leases, rental income is recognized on a straight-line basis over the lease term as lease revenue. Depreciation expense associated with the leased equipment under operating lease arrangements is reflected in cost of lease in the statements of operations.

Lessee leases

Lessee operating leases are included in other current liabilities and long-term operating lease liabilities in our balance sheets. We do not have lessee finance leases.

Operating lease ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Lease payments are discounted using our incremental borrowing rate as of the commencement date of each lease. Our remaining lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that

89

option. Lease expense for lease payments is recognized on a straight-line basis as operating expense in our statements of operations over the lease term.

Inventory

Inventory, which consists of raw materials, work-in-process and finished goods, is stated at the lower of cost or net realizable value. Inventory levels are analyzed periodically on a first-in, first-out basis and written down to their net realizable value if they have become obsolete, have a cost basis in excess of its expected net realizable value or are in excess of expected requirements. We analyze current and future product demand relative to the remaining product shelf life to identify potential excess inventory. We build demand forecasts by considering factors such as, but not limited to, overall market potential, market share, market acceptance and patient usage.

Valuation of Warrant Liabilities

We estimated the fair value of the warrant liabilities using recently quoted market prices of the Company's common stock and the Black-Scholes option pricing model. The Black-Scholes option pricing model requires the use of highly subjective and complex assumptions which impact the fair value of the warrant liabilities, including the warrant’s expected term and the implied volatility of the underlying stock. Because of our limited stock trading history, we estimated stock price volatility based on an index of the historical volatilities of a group of comparable publicly-traded medical device and other peer companies, which we believe was representative of the volatility of our common stock. We have estimated the expected term based on the remaining contractual term of the warrants. The assumptions used in calculating the fair value of the warrants represent our best estimates, however the estimates involve inherent uncertainties and judgment and the use of different values could produce materially different results.

JOBS Act Accounting Election

Section 107 of the JOBS Act provides that an “emerging growth company” may take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Therefore, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

We intend to rely on other exemptions provided by the JOBS Act so long as we remain eligible, including without limitation, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act.

We were an emerging growth company through December 31, 2025 (the fiscal year-end following the fifth anniversary of the completion of the Spin-Off).

Recently Issued Accounting Standards

See Note 2, Summary of Significant Accounting Policies, to our financial statements included elsewhere in this Annual Report for a discussion of recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of December 31, 2025.