What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-06 compared with 2025-08-05 · 79 added, 80 removed, 173 unchanged (48% of the section changed)

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We are a commercial-stage medical device company focused on developing, manufacturing, and commercializing innovative and minimally invasive neuromodulation solutions for patients with cardiovascular disease.

Our proprietary platform technology, Barostim, is designed to leverage the power of the brain and nervous system to address the imbalance of the Autonomic Nervous System, which causes HF with reduced Ejection Fraction (“ HFrEF”) and other cardiovascular diseases.

Our proprietary platform technology, Barostim, is designed to leverage the power of the brain and nervous system to address the imbalance of the Autonomic Nervous System, which causes HF with reduced

Ejection Fraction (“ HFrEF”) and other cardiovascular diseases.

Our second-generation product, Barostim, is the first and only commercially available neuromodulation device indicated to improve symptoms for patients with HFrEF.

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However, we consider hospitals, where the procedures are performed primarily in an outpatient setting, to be our customers, as they are the purchasing entities of Barostim in the U.S.

We intend to continue making

significant investments building our U.S.

We intend to continue making significant investments building our U.S.

commercial infrastructure by expanding and training our U.S.

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On October 31, 2022, we entered into the Loan Agreement allowing borrowing, subject to our achievement of certain milestones, up to a total of $50.0 million in a series of Term Loans described in Note 4 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

W e had $50.0 million in outstanding Term Loans under the Loan Agreement as of June 30, 2025.

W e had $50.0 million in outstanding Term Loans under the Loan Agreement as of September 30, 2025.

As a result of the planned investments to fund our commercialization efforts, we expect to continue to incur net losses for the next several years, which may require additional funding and could include future equity and debt financing.

Recent Developments

In July 2025, the Centers for Medicare & Medicaid Services (“CMS”) released the 2026 Proposed Medicare Physician Fee Schedule (“MPFS”).

This proposed rule includes the new Category I CPT codes for the Barostim implant and follow-up services.

The proposal establishes national pricing for the code series used to report procedures associated with Barostim, supporting continued access for Medicare beneficiaries.

In October 2025, the Centers for Medicare & Medicaid Services (“CMS”) released the final 2026 Medicare Physician Fee Schedule (“MPFS”).

This final rule includes the new Category I CPT codes for the Barostim implant and follow-up services.

The rule establishes national pricing for the code series used to report procedures associated with Barostim, supporting continued access for Medicare beneficiaries.

We expect the transition to Category I will eliminate the automatic denials regularly seen with Category III codes and improve prior authorization predictability to fairly pay physicians for the procedure.

The final rule is expected to be issued in the November and take effect January 1, 2026.

Also in July 2025, CMS, as part of the proposed rule for the 2026 Outpatient Prospective Payment System (“OPPS”), proposed to retain the Barostim implant procedure under New Technology Ambulatory Payment Classification (“APC”) 1580, with an associated outpatient payment rate of approximately $45,000.

CMS continues to solicit comments on the need for a Level 6 Neurostimulator APC, and we will continue to work with CMS in an effort to create this new classification.

The final rule is expected to be issued in November and take effect January 1, 2026.

The final rule will take effect January 1, 2026.

Factors affecting our performance

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The manufacturing overhead costs of Barostim are directly aligned to our production volume and therefore the cost per product is reduced if production levels increase.

period to period as we continue to introduce new or modified products and adopt new manufacturing processes and technologies.

While we expect our gross margin to be positively affected over time to the extent we are successful in selling more product through our direct sales force and by increasing our production volumes, it will likely fluctuate from period to period as we continue to introduce new or modified products and adopt new manufacturing processes and technologies.

Research and development expenses

Research and development (“R&D”) expenses consist primarily of personnel costs, including salaries, bonuses, employee benefits and stock-based compensation expenses for our R&D employees.

R&D expenses also include costs associated with product design efforts, development prototypes, testing, clinical trial programs and regulatory activities, contractors, and consultants, equipment and software to support our development, facilities, and information technology.

R&D expenses also include costs associated with product design efforts, development prototypes, testing, clinical trial programs and regulatory activities, contractors, consultants, equipment and software to support our development, facilities, and information technology.

We expense R&D costs as they are incurred.

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Results of operations

Consolidated results of operations for the three months ended June 30, 2025, compared to the three months ended June 30, 2024

Consolidated results of operations for the three months ended September 30, 2025, compared to the three months ended September 30, 2024

Three months ended

September 30,

(unaudited and in thousands)

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Three months ended

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(unaudited and in thousands)

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Total Revenue

Revenue was $13.6 million for the three months ended June 30, 2025, an increase of $1.8 million, or 15%, over the three months ended June 30, 2024.

Revenue was $14.7 million for the three months ended September 30, 2025, an increase of $1.3 million, or 10%, over the three months ended September 30, 2024.

Revenue generated in the U.S.

was $12.2 million for the three months ended June 30, 2025, an increase of $1.6 million, or 15%, over the three months ended June 30, 2024.

HF revenue in the U.S.

totaled $12.1 million and $10.5 million for the three months ended June 30, 2025 and 2024, respectively.

HF revenue units in the U.S.

totaled 387 and 339 for the three months ended June 30, 2025 and 2024, respectively.

was $13.5 million for the three months ended September 30, 2025, an increase of $1.2 million, or 10%, over the three months ended September 30, 2024.

Revenue units in the U.S.

totaled 420 and 394 for the three months ended September 30, 2025 and 2024, respectively.

The increases were primarily driven by continued growth in the U.S.

HF business as a result of the expansion into new sales territories, new accounts, and increased physician and patient awareness of Barostim.

As of June 30, 2025, we had a total of 240 active implanting centers in the U.S., as compared to 189 as of June 30, 2024.

As of September 30, 2025, we had a total of 250 active implanting centers in the U.S., as compared to 208 as of September 30, 2024.

Active implanting centers are customers that have completed at least one commercial HF implant in the last 12 months.

As of June 30, 2025, we had a total of 47 sales territories in the U.S.

as compared to 42 sales territories as of June 30, 2024.

Revenue generated in Europe was $1.3 million for the three months ended June 30, 2025, a $0.2 million increase, or 19%, compared to the three months ended June 30, 2024.

Total revenue units in Europe decreased to 61 for the three months ended June 30, 2025, as compared to 63 in the prior year period.

As of June 30, 2025 we had five sales territories in Europe as compared to six sales territories as of June 30, 2024 .

As of September 30, 2025, we had a total of 50 sales territories in the U.S.

as compared to 45 sales territories as of September 30, 2024.

Revenue generated in Europe was $1.2 million for the three months ended September 30, 2025, a $0.1 million increase, or 12%, compared to the three months ended September 30, 2024.

Total revenue units in Europe decreased to 50 for the three months ended September 30, 2025, as compared to 56 in the prior year period.

As of September 30, 2025 we had five sales territories in Europe, as compared to six sales territories as of September 30, 2024 .

Cost of goods sold and gross margin

Cost of goods sold increased $0.2 million, or 13%, to $2.1 million for the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

This increase was driven by higher sales of Barostim.

Gross profit was $11.5 million for the three months ended June 30, 2025, an increase of $1.5 million, or 16%, over the three months ended June 30, 2024.

Gross margin was 84% for each of the three months ended June 30, 2025 and 2024.

Cost of goods sold decreased $0.3 million, or 14%, to $1.9 million for the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

This decrease was driven by a lower cost per unit, primarily due to an increase in manufacturing efficiencies.

Gross profit was $12.8 million for the three months ended September 30, 2025, an increase of $1.6 million, or 15%, over the three months ended September 30, 2024.

Gross margin increased to 87% for the three months ended September 30, 2025, compared to 83% for the three months ended September 30, 2024.

Gross margin for the three months ended September 30, 2025 was higher due to an increase in the average selling price and a decrease in the cost per unit, primarily due to an increase in manufacturing efficiencies.

Research and development expenses

R&D expenses decreased $0.3 million, or 11%, to $2.5 million for the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

This change was driven by a $0.3 million decrease in compensation expenses.

R&D expenses increased $0.6 million, or 26%, to $3.1 million for the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

This change was driven by a $0.5 million increase in compensation expenses and a $0.2 million increase in consulting expenses, partially offset by a $0.2 million decrease in clinical trial expenses.

Selling, general and administrative expenses

SG&A expenses increased $2.2 million, or 11%, to $23.4 million for the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

This change was primarily driven by a $1.4 million increase in compensation expenses, a $0.8 million increase in travel expenses, and a $0.4 million increase in non-cash stock-based compensation expense, partially offset by a $0.5 million decrease in advertising expenses.

SG&A expenses increased $0.2 million, or 1%, to $21.9 million for the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

This change was primarily driven by a $0.2 million increase in consulting expenses, a $0.2 million increase in travel expenses, and a $0.2 million increase in non-cash stock-based compensation expense, partially offset by a $0.2 million decrease in advertising expenses and a $0.2 million decrease in compensation expenses.

Interest expense

Interest expense increased $0.5 million for the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

Interest expense increased $0.5 million for the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

This increase was driven by the interest expense on higher levels of borrowings under the Loan Agreement.

Other income, net

Other income, net increased $0.2 million for the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

This increase was primarily driven by more interest income on our interest-bearing accounts.

Other income, net was $0.9 million for each of the three months ended September 30, 2025 and 2024.

These balances consisted of interest income on our interest-bearing accounts.

Benefit (provision) for income taxes

Benefit (provision) for income taxes was nominal for each of the three months ended June 30, 2025 and 2024.

Consolidated results of operations for the six months ended June 30, 2025, compared to the six months ended June 30, 2024

Six months ended

Benefit (provision) for income taxes was nominal for each of the three months ended September 30, 2025 and 2024.

Consolidated results of operations for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024

Nine months ended

September 30,

(unaudited and in thousands)

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The following table provides revenue by geography:

Six months ended

Nine months ended

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Total Revenue

Revenue was $25.9 million for the six months ended June 30, 2025, an increase of $3.4 million, or 15%, over the six months ended June 30, 2024.

Revenue was $40.6 million for the nine months ended September 30, 2025, an increase of $4.7 million, or 13%, over the nine months ended September 30, 2024.

Revenue generated in the U.S.

was $23.4 million for the six months ended June 30, 2025, an increase of $2.9 million, or 14%, over the six months ended June 30, 2024.

HF revenue in the U.S.

totaled $23.2 million and $20.3 million for the six months ended June 30, 2025 and 2024, respectively.

HF revenue units in the U.S.

totaled 740 and 658 for the six months ended June 30, 2025 and 2024, respectively.

was $36.9 million for the nine months ended September 30, 2025, an increase of $4.1 million, or 13%, over the nine months ended September 30, 2024.

Revenue units in the U.S.

totaled 1,170 and 1,062 for the nine months ended September 30, 2025 and 2024, respectively.

The increases were primarily driven by continued growth in the U.S.

HF business as a result of the expansion into new sales territories, new accounts, and increased physician and patient awareness of Barostim.

Revenue generated in Europe was $2.5 million for the six months ended June 30, 2025, a $0.4 million increase, or 20%, compared to the six months ended June 30, 2024.

Total revenue units in Europe increased to 120 for the six months ended June 30, 2025, as compared to 107 in the prior year period.

Revenue generated in Europe was $3.7 million for the nine months ended September 30, 2025, a $0.5 million increase, or 17%, compared to the nine months ended September 30, 2024.

Total revenue units in Europe increased to 170 for the nine months ended September 30, 2025, as compared to 163 in the prior year period.

Cost of goods sold and gross margin

Cost of goods sold increased $0.7 million, or 19%, to $4.2 million for the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

This increase was driven by higher sales of Barostim.

Gross profit was $21.8 million for the six months ended June 30, 2025, an increase of $2.7 million, or 14%, over the six months ended June 30, 2024.

Gross margin was 84% for each of the six months ended June 30, 2025 and 2024.

Cost of goods sold increased $0.3 million, or 6%, to $6.1 million for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

This increase was driven by higher sales of Barostim, partially offset by a lower cost per unit, primarily due to an increase in manufacturing efficiencies.

Gross profit was $34.5 million for the nine months ended September 30, 2025, an increase of $4.3 million, or 14%, over the nine months ended September 30, 2024.

Gross margin increased to 85% for the nine months ended September 30, 2025, compared to 84% for the nine months ended September 30, 2024.

for the nine months ended September 30, 2025 was higher due to an increase in the average selling price and a decrease in the cost per unit, primarily due to an increase in manufacturing efficiencies.

Research and development expenses

R&D expenses decreased $0.8 million, or 14%, to $5.0 million for the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

This change was driven by a $0.4 million decrease in compensation expenses and a $0.3 million decrease in clinical trial expenses.

R&D expenses decreased $0.2 million, or 2%, to $8.1 million for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

This change was driven by a $0.4 million decrease in clinical trial expenses, partially offset by a $0.1 million increase in compensation expenses and a $0.1 million increase in consulting expenses.

Selling, general and administrative expenses

SG&A expenses decreased $4.9 million, or 10%, to $44.6 million for the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

This change was primarily driven by an $8.2 million decrease in non-cash stock-based compensation expense and a $0.5 million decrease in advertising expenses, partially offset by a $2.9 million increase in compensation expenses and a $1.1 million increase in travel expenses.

SG&A expenses decreased $4.6 million, or 6%, to $66.5 million for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

This change was primarily driven by an $8.0 million decrease in non-cash stock-based compensation expense and a $0.7 million decrease in advertising expenses, partially offset by a $2.7 million increase in cash compensation expenses and a $1.3 million increase in travel expenses.

The modification of stock options held by our former Chief Executive Officer in connection with his retirement in the first quarter of 2024 described in Note 7 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q contributed approximately $8.4 million to the decrease in non-cash stock-based compensation expense.

Interest expense

Interest expense increased $1.0 million for the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

Interest expense increased $1.5 million for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

This increase was driven by the interest expense on higher levels of borrowings under the Loan Agreement.

Other income, net

Other income, net increased $0.2 million for the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

Other income, net increased $0.2 million for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

This increase was primarily driven by increased interest income on our interest-bearing accounts.

Benefit (provision) for income taxes

Benefit (provision) for income taxes was nominal for each of the six months ended June 30, 2025 and 2024.

Benefit (provision) for income taxes was nominal for each of the nine months ended September 30, 2025 and 2024.

Liquidity, capital resources and plan of operations

We have incurred significant operating losses and negative cash flows from operations since our inception, and we anticipate that we will incur significant losses for at least the next several years.

As of June 30, 2025 and December 31, 2024, we had cash and cash equivalents of $95.0 million and $105.9 million, respectively.

F or the three months ended June 30, 2025 and 2024, our net losses were $14.7 million and $14.0 million, respectively.

For the six months ended June 30, 2025 and 2024, our net losses were $28.5 million and $36.2 million, respectively.

Our net cash used in operating activities was $20.7 million for each of the six months ended June 30, 2025 and 2024.

On October 31, 2022, we entered into the Loan Agreement under which we may borrow, subject to our achievement of certain milestones, up to a total of $50.0 million in a series of Term Loans described in Note 4 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

We had $50.0 million in outstanding Term Loans under the Loan Agreement as of June 30, 2025.

As of September 30, 2025 and December 31, 2024, we had cash and cash equivalents of $85.1 million and $105.9 million, respectively.

F or the three months ended September 30, 2025 and 2024, our net losses were $12.9 million and $13.1 million, respectively.

For the nine months ended September 30, 2025 and 2024, our net losses were $41.4 million and $49.3 million, respectively.

Our net cash used in operating activities for the nine months ended September 30, 2025 and 2024 was $30.4 million and $31.1 million, respectively.

On October 31, 2022, we entered into the Loan Agreement under which we were allowed to borrow, subject to our achievement of certain milestones, up to a total of $50.0 million in a series of Term Loans described in Note 4 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

We had $50.0 million in outstanding Term Loans under the Loan Agreement as of September 30, 2025.

On November 4, 2022, we entered into an Equity Distribution Agreement with Piper Sandler & Co., as agent, under which we may offer and sell, from time to time at our sole discretion, shares of our common stock having an aggregate offering price of up to $50.0 million in an “at-the-market” (“ATM”) offering, to or through the agent.

In January 2024, we commenced this ATM offering and, during the six months ended June 30, 2025, we issued 543,462 shares of common stock under the program for gross proceeds of $9.5 million.

We have remaining capacity to issue and sell up to $6.7 million of additional shares of common stock under this ATM offering.

In January 2024, we commenced this ATM offering and, during the nine months ended September 30, 2025, we issued 543,462 shares of common stock under the program for gross proceeds of $9.5 million.

On November 4, 2025, we and the agent mutually agreed to terminate the Equity Distribution Agreement for the ATM, effective on November 6, 2025.

In connection with the filing of this Quarterly Report on Form 10-Q, we expect to file a new registration statement on Form S-3 to replace our existing registration statement on Form S-3 that is scheduled to expire on November 15, 2025 and subsequently enter into a new sales agreement to permit continued ATM offering activity in the future.

Our future liquidity and capital funding requirements will depend on numerous factors, including:

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● the emergence of competing technologies or other adverse market developments.

We believe that our existing cash resources together with cash from operations will be sufficient to meet our forecasted requirements for operating liquidity, capital expenditures and debt services for at least the next two years when principal payments start coming due in November 2027 under our existing Innovatus Loan Agreement.

If these sources are insufficient to satisfy our liquidity requirements, or provide funding to execute or accelerate our growth strategies, however, we may seek to sell additional equity or enter into an additional loan agreement.

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The following table sets forth the primary sources and uses of cash for each of the periods presented below:

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Nine months ended

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(in thousands)

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Cash used in operating activities

Net cash used in operating activities for the six months ended June 30, 2025 was $20.7 million and consisted primarily of a net loss of $28.5 million, partially offset by a non-cash charge of $5.4 million related to stock-based compensation expense, and a change in net operating assets of $1.9 million.

Net operating assets

consisted primarily of accounts receivable, accrued expenses, accounts payable, inventory and prepaid expenses and other current assets to support the growth of our operations.

Net cash used in operating activities for the six months ended June 30, 2024 was $20.7 million and consisted primarily of a net loss of $36.2 million, partially offset by a non-cash charge of $13.7 million related to stock-based compensation expense and an increase in net operating assets of $1.4 million.

Net cash used in operating activities for the nine months ended September 30, 2025 was $30.4 million and consisted primarily of a net loss of $41.4 million, partially offset by a non-cash charge of $8.3 million related to stock-based compensation expense, and a change in net operating assets of $2.0 million.

Net operating assets consisted primarily of accounts receivable, accounts payable, inventory, prepaid expenses and other current assets, and accrued expenses to support the growth of our operations.

Net cash used in operating activities for the nine months ended September 30, 2024 was $31.1 million and consisted primarily of a net loss of $49.3 million, partially offset by a non-cash charge of $16.4 million related to stock-based compensation expense and a change in net operating assets of $1.2 million.

Net operating assets consisted primarily of accounts receivable, inventory, prepaid expenses and other current assets, accounts payable, and accrued expenses to support the growth of our operations.

Cash used in investing activities:

Cash used in investing activities was $0.2 million and $1.3 million for the six months ended June 30, 2025 and 2024, respectively, and consisted of purchases of property and equipment.

Cash used in investing activities was $0.5 million and $1.3 million for the nine months ended September 30, 2025 and 2024, respectively, and consisted of purchases of property and equipment.

Cash provided by financing activities:

Net cash provided by financing activities for the six months ended June 30, 2025 was $10.0 million and consisted of $9.2 million related to net proceeds from the issuance of common stock through the ATM offering, $0.4 million related to proceeds from the exercise of common stock options and $0.4 million related to proceeds from the ESPP.

Net cash provided by financing activities for the six months ended June 30, 2024 was $1.8 million and consisted of $0.9 million related to net proceeds from the exercise of common stock options, $0.5 million related to proceeds from the issuance of common stock through the ATM offering, and $0.4 million related to proceeds from the ESPP.

Net cash provided by financing activities for the nine months ended September 30, 2025 was $10.1 million and consisted of $9.2 million related to net proceeds from the issuance of common stock through the ATM offering, $0.6 million related to proceeds from the exercise of common stock options and $0.4 million related to proceeds from the ESPP.

Net cash provided by financing activities for the nine months ended September 30, 2024 was $42.0 million and consisted of $20.2 million related to proceeds from the issuance of common stock through the ATM offering, $20.0 million related to proceeds under the Loan Agreement, $1.6 million related to proceeds from the exercise of common stock options, and $0.4 million related to proceeds from the ESPP, partially offset by $0.2 million related to debt financing costs.

Contractual obligations and commitments

There have been no material changes to our contractual obligations as of June 30, 2025, as compared to those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024.

There have been no material changes to our contractual obligations as of September 30, 2025, as compared to those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024.

Critical accounting policies and estimates

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“Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical accounting policies and estimates" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

We have reviewed and determined that those critical accounting policies and estimates remain our critical accounting policies and estimates as of and for the six months ended June 30, 2025.

We have reviewed and determined that those critical accounting policies and estimates remain our critical accounting policies and estimates as of and for the nine months ended September 30, 2025.

JOBS Act accounting election

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis