What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-12 compared with 2025-05-13 · 68 added, 42 removed, 75 unchanged (59% of the section changed)

35 unchanged sentences

Cost of revenues consists primarily of our direct manufacturing costs which include the cost of components and sub-systems, assembling, packaging, shipping and testing components at our facility, direct labor and associated overhead, warranty, royalty and amortization of intangible assets and depot service costs.

For certain of our products, we are responsible for the cost of the fully assembled product that is manufactured by a third-party.

For certain of the Company's products, the Company responsible for the cost of the fully assembled product that is manufactured by a third-party.

Research and development expenses consist primarily of personnel costs, materials to support new product development and research support provided to clinicians at medical institutions developing new applications, which utilize our products and regulatory expenses.

4 unchanged sentences

Current macroeconomic conditions exhibit challenges that can affect capital equipment purchasing demand and timing, including recessionary fears, inflation concerns, tariffs and retaliatory responses, trade wars, heightened interest rates as a result of government actions to combat inflation, and uncertainty in the global banking and financial services market, as well as other geopolitical developments, have impacted and may continue to impact business spending and the economy as a whole.

As a result, we have seen customers extend purchase decision cycles.

We have also experienced some demand softness due to pricing effects from the strength of the U.S.

Dollar that have impacted and may continue to impact our operations.

As a result, the Company has seen customers extend purchase decision cycles.

dollar strengthens again, the Company could experience some demand softness due to pricing effects from the strength of the U.S.

The macroeconomic conditions on our business and operations remain uncertain, and it is not possible for us to predict the duration and extent to which they will affect our business, future results of operations, and financial condition.

3 unchanged sentences

Three Months Ended

March 29, 2025

March 30, 2024

Six Months Ended

June 28, 2025

June 29, 2024

June 28, 2025

June 29, 2024

Cost of revenues

5 unchanged sentences

Loss from operations

Other income, net

Other expense, net

Loss from operations before provision for income taxes

Provision for income taxes

The following comparisons are between the three months ended March 29, 2025 and March 30, 2024 (in thousands):

The following comparisons are between the three months ended June 28, 2025 and June 29, 2024 (in thousands):

Three Months Ended

March 29, 2025

March 30, 2024

June 28, 2025

June 29, 2024

Total revenues

Our total revenues increased by $0.9 million, or 7.4%, from $12.6 million to $13.6 million.

The increase was driven by an increase in our glaucoma product group and in services and other revenue, partially offset by a decrease in our retina products.

The increase was driven by an increase in our retina product group and in services and other revenue, partially offset by a decrease in our glaucoma product group.

While we believe that the market for our products remains strong, the overall capital expenditure landscape within hospitals, surgical centers and physician offices may continue to be negatively impacted by persistent macroeconomic concerns, including those from ongoing geopolitical uncertainty, tariffs and trade wars.

Gross Profit and Gross Margin

Gross profit increased $0.6 million, or 13.4% from $4.5 million to $5.1 million.

Gross margin increased by 4.6% from 37.9% to 42.5%.

The increase in gross margin was the result of lower manufacturing expenses and a more favorable product mix.

Gross profit decreased $0.4 million, or 8.8% from $5.1 million to $4.7 million.

Gross margin decreased by 6.2% from 40.7% to 34.5%.

The decrease in gross margin was driven primarily by an increase in overall manufacturing costs, product mix weighing toward capital system sales and geographic mix weighting toward international sales, partially offset by increases in average selling prices.

Gross margins may fluctuate due to changes in the relative proportion of domestic and international sales, the product mix of sales, introduction of new products, manufacturing variances, total unit volume changes, responses to the evolving macroeconomic and geopolitical uncertainty, including tariffs and trade wars, and other factors.

5 unchanged sentences

Sales and marketing expenses decreased $1.0 million, or 27.3%, from $3.5 million to $2.5 million.

The decrease was related to our cost savings measures, including reductions in workforce that resulted in lower headcount expenses, lower consulting expenses, travel expenses, lower tradeshows and public relations expenses, and lower clinical studies expenses.

The decrease was related to our cost savings measures, resulting in lower headcount expenses, consulting expenses, travel expenses, tradeshows and public relations expenses, and clinical studies expenses.

General and Administrative

General and administrative expenses decreased by $0.6 million, or 20.4% from $2.8 million to $2.2 million.

The decrease is a primarily due to a decrease in consulting costs and deal related legal expenses.

Other Income (Expense), Net

Other expense, net, was $1.5 million for the three months ended March 29, 2025, driven primarily by the costs associated with the Lind Note payable settlement.

Other expense, net, was $0.1 million for the three months ended March 30, 2024, consisting primarily of interest and amortization of loan expenses related to the Lind Note transaction.

We recorded an income tax provision of $12 thousand and $38 thousand for the three months ended March 29, 2025 and March 30, 2024, respectively.

The decrease was a primarily due to a decrease in consulting costs and deal related legal expenses.

Other Expense, Net

Other expense, net was $33 thousand for the three months ended June 28, 2025 compared to other expense, net, of $22 thousand for the three months ended June 29, 2024.

Other expense, net, consisted primarily of interest income or expense and foreign currency gain or loss.

The Company recorded an income tax provision of $21 thousand and $19 thousand for the three months ended June 28, 2025 and June 29, 2024, respectively.

The following comparisons are between the six months ended June 28, 2025 and June 29, 2024 (in thousands):

Six Months Ended

June 28, 2025

June 29, 2024

Total revenues

Our total revenues increased by $1.1 million, or 4.4%, from $24.4 million to $25.5 million.

All of our product groups increased, with the retina product group seeing the largest increase.

Gross Profit and Gross Margin

Gross profit increased $0.1 million, or 1.5%, from $9.6 million to $9.7 million.

Gross margin decreased by 1.1% from 39.3% to 38.2%.

Research and Development

Research and development expenses decreased by $1.3 million, or 42.5%, from $3.0 million to $1.7 million.

The decrease was related to our cost savings measures we implemented, resulting in lower headcount expenses.

Spending on investment in new and expanded products was also curtailed.

Sales and Marketing

Sales and marketing expenses decreased by $2.2 million, or 31.0%, from $7.2 million to $5.0 million.

General and Administrative

General and administrative expenses decreased by $1.2 million, or 21.1%, from $5.3 million to $4.1 million.

The decrease was a primarily due to a decrease in consulting costs and deal related legal expenses.

Other Expense, Net

Other expense, net, was $1.5 million for the six months ended June 28, 2025, driven primarily by the costs associated with the settlement of the Lind Note.

Other expense, net, was $0.2 million for the six months ended June 29, 2024, consisting primarily of interest and amortization of loan expenses related to the Lind Note transaction.

The Company recorded an income tax provision of $33 thousand and $57 thousand for the six months ended June 28, 2025 and June 29, 2024, respectively.

Liquidity, Capital Resources and Management Plans

1 unchanged sentence

In addition, liquidity includes the ability to obtain appropriate financing or to raise capital.

As of March 29, 2025, we had cash and cash equivalents of $7.2 million and working capital of $14.3 million compared to cash and cash equivalents of $2.4 million and working capital of $7.0 million as of March 30, 2024.

Net cash used in operating activities was $1.1 million in the three months ended March 29, 2025 compared to net cash used in operating activities of $1.6 million in the three months ended March 30, 2024.

The increase in net cash provided by operating activities was primarily due to reduction in net loss and reduction in inventory, offset by decreases in collections of accounts receivable and a paydown of liabilities.

For the three months ended March 29, 2025, net cash used in investing activities was $11 thousand, which consisted of capital expenditures.

For the three months ended March 30, 2024, net cash used in investing activities was $3 thousand, which consisted of capital expenditures.

For the three months ended March 29, 2025, net cash from financing activities was $6.0 million.

We received $10 million in issuance of convertible preferred shares and convertible debt, offset by $4.0 million in early prepayment of convertible debt.

For the three months ended March 30, 2024, no net cash was used in financing activities.

We have historically funded our operations primarily through sales of our products to customers, sales of our common stock and borrowing arrangements.

As of March 29, 2025, our principal sources of liquidity consisted of cash and cash equivalents of $7.2 million.

We have incurred net losses over the last several years, and as of March 29, 2025, have an accumulated deficit of approximately $89.6 million.

On March 19, 2025, the Company entered into the Novel Securities Agreement and a Note Purchase Agreement and the Novel Note Purchase Agreement with Novel.

Pursuant to the Novel Securities Agreement and the Novel Note Purchase Agreement, Novel

has the right to purchase additional convertible promissory notes (the “Growth Notes”) in an aggregate principal amount of $10,000,000.

The Growth Notes are issuable in three installments, with one third of the aggregate principal amount issuable upon each yearly anniversary of the March 19, 2025.

Notwithstanding any provision in the Transaction Documents (as defined in the Initial Novel Note) to the contrary, in no circumstance shall the Company be required to deliver to Novel any shares of Series B Preferred Stock or common stock pursuant to the terms of the Transaction Documents to the extent that (i) the aggregate of all such shares issued by the Company would exceed 19.99% of either (a) the total number of shares of common stock outstanding as of March 19, 2025 or (b) the total voting power of the Company’s securities outstanding as of March 19, 2025 that are entitled to vote on a matter being voted on by holders of the common stock, or (ii) such delivery would cause the holder to become, directly or indirectly, a “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of more than 19.99% of either (a) the total number of shares of common stock outstanding as of such date or (b) the total voting power of the Company’s securities outstanding as of such date that are entitled to vote on a matter being voted on by holders of the common stock, in each case, unless shareholder approval has been obtained

We believe our existing cash and cash equivalents will be sufficient to meet our anticipated cash needs over the next 12 months.

Our future capital requirements will depend on many factors, including our growth rate, the timing and extent of our spending to support research and development activities, the timing and cost of establishing additional sales and marketing capabilities, the introduction of new and enhanced products and our costs to implement new manufacturing technologies.

Any debt financing obtained by us in the future could also involve restrictive covenants relating to our capital-raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions.

Additionally, if we raise additional funds through further issuances of equity, our existing stockholders could suffer significant dilution in their percentage ownership of our company, and any new equity securities we issue could have rights, preferences and privileges senior to those of holders of our common stock.

As of June 28, 2025, the Company had cash and cash equivalents of $6.8 million and working capital of $13.2 million compared to cash and cash equivalents of $2.4 million and working capital of $7.0 million as of December 28, 2024.

Net cash used in operating activities was $1.5 million in the six months ended June 28, 2025 compared to net cash used in operating activities of $3.0 million in the six months ended June 29, 2024.

The decrease in net cash used in operating activities was primarily due to reduction in net loss and reduction in inventory, offset by decreases in collections of accounts receivable and a paydown of liabilities.

For the six months ended June 28, 2025 and June 29, 2024, net cash used in investing activities was $24 thousand and $3 thousand, respectively, which consisted of capital expenditures.

For the six months ended June 28, 2025, net cash provided by financing activities was $6.0 million.

The Company received $10 million in issuance of convertible preferred shares and convertible debt, offset by $4.0 million in early prepayment of convertible debt and taxes paid related to net share settlements of equity awards.

For the six months ended June 29, 2024, no net cash was used in financing activities.

The Company has historically funded our operations primarily through sales of our products to customers, sales of our common stock and borrowing arrangements.

As of June 28, 2025, our principal sources of liquidity consisted of cash and cash equivalents of $6.8 million.

The Company has incurred net losses over the last several years, and as of June 28, 2025, have an accumulated deficit of approximately $90.7 million.

On March 19, 2025, the Company entered into the Novel Securities Agreement and the Novel Note Purchase Agreement with Novel.

Pursuant to the Novel Securities Agreement and the Novel Note Purchase Agreement, Novel has the right to purchase additional convertible promissory notes (the “Growth Notes”) in an aggregate principal amount of $10,000,000.

The Growth Notes are issuable in three installments, with one third of the aggregate principal amount issuable upon each yearly anniversary after March 19, 2025.

The Company believes its existing cash and cash equivalents will be sufficient to meet its anticipated cash needs over the next 12 months.

The Company's future capital requirements will depend on many factors, including its growth rate, the timing and extent of its spending to support research and development activities, the timing and cost of establishing additional sales and marketing capabilities, the introduction of new and enhanced products and its costs to implement new manufacturing technologies.

financing obtained by the Company in the future could also involve restrictive covenants relating to its capital-raising activities and other financial and operational matters, which may make it more difficult for the Company to obtain additional capital and to pursue business opportunities, including potential acquisitions.

Additionally, if the Company raises additional funds through further issuances of equity, its existing stockholders could suffer significant dilution in their percentage ownership of the Company, and any new equity securities the Company issue could have rights, preferences and privileges senior to those of holders of our common stock.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Quantitative and Qualitat ive Disclosure about Market Risk

As a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information called for by this Item.

As a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act, the Company is not required to provide the information called for by this Item.

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