Pulmonx Corp 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Pulmonx Corporation INDEX TO THE FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm (BDO USA, P.C., San Francisco, California, PCAOB ID# 243 ) F- 1 Financial Statements Consolidated Balance Sheets F- 3 Consolidated Statements of Operations and Comprehensive Loss F- 4 Consolidated Statements of Stockholders’ Equity F- 5 Consolidated Statements of Cash Flows F- 6 Notes to Consolidated Financial Statements F- 8 Table of Contents Report of Independent Registered Public Accounting Firm Shareholders and Board of Directors Pulmonx Corporation Redwood City, California Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Pulmonx Corporation (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years then ended , in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Inventory Classification Inventory totaled approximately $19.4 million at December 31, 2025, including approximately $3.6 million classified as long-term inventory. As described in Note 2 to the Company’s consolidated financial statements, the value of inventories not expected to be realized in cash, sold or consumed during the next 12 months are classified F-1 Table of Contents as long-term inventory. Management considers forecasted demand and other expected usage of inventory on hand when estimating long-term inventory. We identified management’s estimation of forecasted demand for products used in the determination of long-term inventory classification, to be a critical audit matter. Management is required to make significant judgments and assumptions with respect to future demand for the Company’s products that affect the estimation of long-term inventory. Auditing these elements involved especially challenging and subjective auditor judgment and an increased extent of effort. The primary procedures we performed to address this critical audit matter included: • Evaluating management’s ability to accurately forecast the future demand for products by performing a retrospective comparison of the Company’s prior forecasts to actual results for the same period. • Evaluating the reasonableness of management’s forecasted demand for products, by comparing forecasts to (i) historical sales of the Company’s products, and (ii) forecasted information included in Company’s press releases. • Evaluating whether forecasted demand for products is consistent with evidence obtained in other areas of the audit. • Assessing whether any known of knowable factors occurred subsequent to year end that impact management’s forecast of future inventory usage. /s/ BDO USA, P.C. We have served as the Company's auditor since 2011. San Francisco, California March 10, 2026 F-2 Table of Contents Pulmonx Corporation Consolidated Balance Sheets (in thousands, except share and per share amounts) December 31, 2025 December 31, 2024 Assets Current assets Cash and cash equivalents $ 69,751 $ 70,905 Restricted cash 258 257 Short-term marketable securities — 30,577 Accounts receivable, net 12,072 13,120 Inventory 15,845 16,915 Prepaid expenses and other current assets 3,758 4,474 Total current assets 101,684 136,248 Long-term inventory 3,604 1,681 Property and equipment, net 2,220 2,907 Goodwill 2,333 2,333 Right of use assets 18,028 18,545 Other long-term assets 1,422 1,136 Total assets $ 129,291 $ 162,850 Liabilities and Stockholders’ Equity Current liabilities Accounts payable $ 3,905 $ 3,827 Accrued liabilities 14,556 16,472 Income taxes payable 263 49 Deferred revenue 18 135 Short-term debt 106 3,176 Current lease liabilities 1,210 778 Total current liabilities 20,058 24,437 Deferred tax liability 69 87 Long-term lease liabilities 18,059 18,515 Long-term debt 36,989 34,002 Total liabilities 75,175 77,041 Commitments and contingencies (Note 8) Stockholders’ Equity Preferred stock, $ 0.001 par value, 10,000,000 shares authorized; no shares issued and outstanding as of December 31, 2025 and December 31, 2024 — — Common stock, $ 0.001 par value, 200,000,000 shares authorized; 41,673,648 shares and 39,785,969 shares issued and outstanding as of December 31, 2025 and December 31, 2024, respectively 42 40 Additional paid-in capital 573,272 551,211 Accumulated other comprehensive income 2,360 2,113 Accumulated deficit ( 521,558 ) ( 467,555 ) Total stockholders’ equity 54,116 85,809 Total liabilities and stockholders’ equity $ 129,291 $ 162,850 The accompanying notes are an integral part of these consolidated financial statements. F-3 Table of Contents Pulmonx Corporation Consolidated Statements of Operations and Comprehensive Loss (in thousands, except share and per share amounts) Years Ended December 31, 2025 2024 Revenue $ 90,497 $ 83,789 Cost of goods sold 23,358 21,788 Gross profit 67,139 62,001 Operating expenses Research and development 19,491 17,570 Selling, general and administrative 101,311 102,135 Total operating expenses 120,802 119,705 Loss from operations ( 53,663 ) ( 57,704 ) Interest income 2,651 5,061 Interest expense ( 3,155 ) ( 3,507 ) Other income, net 790 256 Net loss before tax ( 53,377 ) ( 55,894 ) Income tax expense 626 500 Net loss ( 54,003 ) ( 56,394 ) Other comprehensive income (loss) Currency translation adjustment 269 ( 466 ) Change in unrealized losses on marketable securities ( 22 ) ( 61 ) Total other comprehensive income (loss) 247 ( 527 ) Comprehensive loss $ ( 53,756 ) $ ( 56,921 ) Net loss per share attributable to common stockholders, basic and diluted $ ( 1.33 ) $ ( 1.44 ) Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted 40,685,934 39,111,073 The accompanying notes are an integral part of these consolidated financial statements. F-4 Table of Contents Pulmonx Corporation Consolidated Statements of Stockholders’ Equity (in thousands, except share amounts) Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income Accumulated Deficit Total Stockholders’ Equity Shares Amount Balances at December 31, 2023 38,516,383 $ 39 $ 526,797 $ 2,640 $ ( 411,161 ) $ 118,315 Issuance of common stock upon vesting of restricted stock units 987,828 1 ( 1 ) — — — Issuance of common stock upon exercise of stock options 107,817 — 218 — — 218 Issuance of shares pursuant to employee stock purchase plan 173,941 — 1,240 — — 1,240 Stock-based compensation expense — — 22,957 — — 22,957 Currency translation adjustment — — — ( 466 ) — ( 466 ) Change in unrealized losses on marketable securities — — — ( 61 ) — ( 61 ) Net loss — — — — ( 56,394 ) ( 56,394 ) Balances at December 31, 2024 39,785,969 40 551,211 2,113 ( 467,555 ) 85,809 Issuance of common stock upon vesting of restricted stock units 1,492,336 2 ( 2 ) — — — Issuance of common stock upon exercise of stock options 145,435 — 249 — — 249 Issuance of shares pursuant to employee stock purchase plan 249,908 — 754 — — 754 Stock-based compensation expense — — 21,060 — — 21,060 Currency translation adjustment — — — 269 — 269 Change in unrealized losses on marketable securities — — — ( 22 ) — ( 22 ) Net loss — — — — ( 54,003 ) ( 54,003 ) Balances at December 31, 2025 41,673,648 $ 42 $ 573,272 $ 2,360 $ ( 521,558 ) $ 54,116 The accompanying notes are an integral part of these consolidated financial statements. F-5 Table of Contents Pulmonx Corporation Consolidated Statements of Cash Flows (in thousands) Years Ended December 31, 2025 2024 Cash flows from operating activities Net loss $ ( 54,003 ) $ ( 56,394 ) Adjustments to reconcile net loss to net cash used in operating activities Stock-based compensation expense 21,233 22,955 Impairment of capitalized software development costs — 1,717 Change in allowance for credit losses — 40 Inventory write-down (recovery), net 143 75 Depreciation and amortization expense 1,054 1,493 Amortization of debt discount and debt issuance costs 53 52 Net accretion of discounts on marketable securities ( 379 ) ( 1,616 ) Non-cash lease expense 1,448 1,844 Net changes in operating assets and liabilities: Accounts receivable 1,075 ( 1,308 ) Inventory ( 765 ) ( 229 ) Prepaid expenses and other current assets 813 ( 436 ) Other assets ( 142 ) ( 546 ) Accounts payable 270 2,278 Accrued liabilities ( 2,279 ) 462 Income taxes payable 194 ( 38 ) Lease liabilities ( 955 ) ( 1,870 ) Deferred tax liability ( 15 ) ( 50 ) Deferred revenue ( 121 ) 34 Net cash used in operating activities ( 32,376 ) ( 31,537 ) Cash flows from investing activities Purchases of investments ( 5,651 ) ( 27,914 ) Maturities of investments 36,585 46,837 Purchases of property and equipment ( 452 ) ( 1,447 ) Net cash provided by investing activities 30,482 17,476 Cash flows from financing activities Repayment of credit agreement ( 100 ) ( 95 ) Debt issuance cost ( 70 ) — Proceeds from exercise of common stock options 249 218 Proceeds from issuance of common stock under the employee stock purchase plan 754 1,240 Net cash provided by financing activities 833 1,363 Effect of exchange rate changes on cash, cash equivalents, and restricted cash ( 92 ) 76 Net decrease in cash, cash equivalents, and restricted cash ( 1,153 ) ( 12,622 ) Cash, cash equivalents, and restricted cash at beginning of year 71,162 83,784 Cash, cash equivalents, and restricted cash at end of year $ 70,009 $ 71,162 Reconciliation of cash, cash equivalents, and restricted cash to consolidated balance sheets: Cash and cash equivalents $ 69,751 $ 70,905 Restricted cash 258 257 Cash, cash equivalents, and restricted cash in consolidated balance sheets $ 70,009 $ 71,162 Supplemental non-cash items: Purchases of property and equipment in accounts payable and accrued liabilities $ 8 $ 218 Supplemental disclosure of cash flow information: F-6 Table of Contents Cash paid for income taxes $ 468 $ 556 Cash paid for interest $ 3,113 $ 3,482 The accompanying notes are an integral part of these consolidated financial statements. F-7 Pulmonx Corporation Notes to Consolidated Financial Statements 1. Formation and Business of the Company The Company Pulmonx Corporation (the “Company”) was incorporated in the state of California in December 1995 as Pulmonx and reincorporated in the state of Delaware in December 2013. The Company is a commercial-stage medical technology company that provides a minimally invasive treatment for patients with severe emphysema, a form of chronic obstructive pulmonary disease (“COPD”). The Company’s solution, which is comprised of the Zephyr Endobronchial Valve (“Zephyr Valve”), the Chartis Pulmonary Assessment System (“Chartis System”) and the LungTraX Platform, is designed to treat a broad pool of patients for whom medical management has reached its limits and either do not want or are ineligible for surgical approaches. The Company has subsidiaries in Germany, Switzerland, Australia, the United Kingdom, Italy, France, Hong Kong and Japan. Liquidity and Going Concern The Company has incurred operating losses and negative cash flows from operations to date and has an accumulated deficit of $ 521.6 million as of December 31, 2025. During the years ended December 31, 2025 and December 31, 2024, the Company used $ 32.4 million and $ 31.5 million of cash in its operating activities, respectively. As of December 31, 2025, the Company had cash and cash equivalents of $ 69.8 million. Historically, the Company’s activities have been financed through the sale of its products, the sale of equity securities, and debt financing arrangements. The Company’s consolidated financial statements have been prepared on the basis of the Company continuing as a going concern for the next 12 months. Management believes that the Company’s existing cash and cash equivalents, and the refinancing of debt described in Note 14, “Subsequent Events⸺Perceptive Credit Agreement”, will allow the Company to continue its planned operations for at least the next 12 months from the date of the issuance of these consolidated financial statements. 2. Summary of Significant Accounting Policies Basis of Presentation The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results may ultimately materially differ from these estimates and assumptions. Significant estimates and assumptions include reserves and write-downs related to inventories, classification of short-term and long-term inventories, the recoverability of long-term assets, stock-based compensation, goodwill, deferred tax assets and related valuation allowances and impact of contingencies. F-8 Pulmonx Corporation Notes to Consolidated Financial Statements Fair Value of Financial Instruments The carrying amounts of the Company’s financial instruments consisting of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair value due to their relatively short maturities. Based on the borrowing rates currently available to the Company for debt with similar terms and consideration of default and credit risk, the carrying value of the term loan approximates its fair value. The fair value of marketable debt securities is estimated using Level 1 and Level 2 inputs (Note 4). Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less at the time of purchase to be cash equivalents, which include money market funds, commercial paper and corporate bonds. Restricted Cash Restricted cash is comprised of cash that is restricted as to withdrawal or use under the terms of certain contractual agreements. Restricted cash for years ended December 31, 2025 and December 31, 2024 consists of collateral for letters of credit issued in connection with the real estate lease in Redwood City, California. Marketable Securities The Company determines the appropriate classification of its investments in marketable securities at the time of purchase and reevaluates such designation at each balance sheet date. The Company has classified and accounted for its marketable securities as available-for-sale. After consideration of the Company’s risk versus reward objectives and liquidity requirements, the Company may sell these securities prior to their stated maturities. As the Company views these securities as available to support current operations, the Company classifies highly liquid securities with original maturities greater than three months at the time of purchase, and remaining maturities of less than one year, as short-term marketable securities and those with remaining maturities greater than twelve months as long-term marketable securities on the consolidated balance sheets. These securities are carried at fair value as determined based upon quoted market prices or pricing models for similar securities. Unrealized gains and losses on available for sale marketable securities, which consist of debt securities, if any, are excluded from earnings and are reported as a component of other comprehensive income (loss). The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity, which is included in interest income on the consolidated statements of operations and comprehensive loss. Realized gains and losses, if any, on available-for-sale securities are included in other income, net. The cost of securities sold is based on the specific identification method. Interest and dividends on securities classified as available-for-sale are included in interest income. For marketable securities in an unrealized loss position, the Company periodically assesses its portfolio for impairment. The assessment first considers the intent or requirement to sell the marketable security. If either of these criteria are met, the amortized cost basis is written down to fair value through earnings. If the criteria above are not met, the Company evaluates whether the decline resulted from credit losses or other factors by considering the extent to which fair value is less than amortized cost, any changes to the rating of the marketable security by a rating agency, and any adverse conditions specifically related to the marketable security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the marketable security is compared to the amortized cost basis of the marketable security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive loss. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of risk consist principally of cash, cash equivalents and accounts receivable. The Company maintains its cash and cash equivalents balances with established financial institutions and, at times, such balances with any one financial institution may be in excess of the Federal F-9 Pulmonx Corporation Notes to Consolidated Financial Statements Deposit Insurance Corporation (“FDIC”) insured limits. As of December 31, 2025 and December 31, 2024, the Company also had cash on deposit with foreign banks of approximately $ 13.4 million and $ 5.8 million, respectively, that was not federally insured. The Company earns revenue primarily from the sale of its products to hospitals and other customers such as distributors. Sales of Zephyr Valves and delivery catheters accounted for most of the Company’s revenue for the years ended December 31, 2025 and December 31, 2024. The Company’s accounts receivable are derived from revenue earned from customers. The Company performs ongoing credit evaluations of its customers’ financial conditions and generally requires no collateral from its customers. As of December 31, 2025 and December 31, 2024, no customer accounted for more than 10% of accounts receivable. For the years ended December 31, 2025 and December 31, 2024, no customer accounted for more than 10% of revenue. The Company relies on single source suppliers for the components, sub-assemblies and materials for its products. These components, sub-assemblies and materials are critical and there are no or relatively few alternative sources of supply. The Company’s suppliers have generally met the Company’s demand for their products and services on a timely basis in the past. Accounts Receivable and Allowances Accounts receivable are recorded at the amounts billed less estimated allowances for credit losses for any potential uncollectible amounts. The Company continually monitors customer payments and maintains an allowance for estimated losses resulting from a customer’s inability to make required payments. The Company considers factors such as historical experience, credit quality, age of the accounts receivable balances, geographic related risks and economic conditions that may affect a customer’s ability to pay. Accounts receivable are written-off and charged against an allowance for credit losses when the Company has exhausted collection efforts without success. As of December 31, 2025 and December 31, 2024, accounts receivable is presented net of an allowance for credit losses of less than $ 0.1 million and less than $ 0.1 million, respectively. Inventories Inventories are valued at the lower of cost to purchase or manufacture the inventory or net realizable value. Cost is determined using the first-in, first-out method (“FIFO”) for all inventories. Net realizable value is determined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The Company records write-downs of inventories which are obsolete or in excess of anticipated demand or market value based on consideration of product lifecycle stage, technology trends, product development plans and assumptions about future demand and market conditions. Inventory write-downs reduce the carrying value of inventory to its net realizable value. The Company reviews its inventories for classification purposes. The value of inventories not expected to be realized in cash, sold or consumed during the next 12 months are classified as long-term inventory. The Company considers forecasted demand and other expected usage of inventory on hand when estimating long-term inventory. Internal-Use Software The Company capitalizes certain costs in connection with obtaining or developing software for internal use. Amortization of such costs begins when the project is substantially complete and ready for its intended use. Capitalized software development costs are classified as property and equipment, net on the consolidated balance sheets and are amortized using the straight-line method over the estimated useful life of the applicable software. Property and Equipment, Net Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets, generally between three to five years . Leasehold improvements are amortized using the straight-line method over the shorter F-10 Pulmonx Corporation Notes to Consolidated Financial Statements of the lease term or useful economic life of the asset. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the balance sheet, and any resulting gain or loss is reflected in operations in the period realized. Impairment of Long-lived Assets The Company evaluates its long-lived assets for indicators of possible impairment by comparison of the carrying amounts to future net undiscounted cash flows expected to be generated by such assets when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Should an impairment exist, the impairment loss would be measured based on the excess carrying value of the asset over the asset’s fair value or discounted estimates of future cash flows. In the second quarter of 2024, the Company recorded a non-cash impairment charge of $ 1.7 million related to certain previously capitalized software development costs that reduced the carrying value of those assets to zero . See Note 5, “Balance Sheet Components” in the accompanying notes to the consolidated financial statements for further information. No other impairment losses were recognized for the years ended December 31, 2025 and December 31, 2024. Goodwill Goodwill represents the excess of the purchase price over the fair value of net tangible and identified intangible assets acquired in a business combination. Goodwill is not amortized but is evaluated at least annually for impairment or when a change in facts and circumstances indicate that the fair value of the goodwill may be below its carrying value. The Company tests goodwill for impairment at the reporting unit level (“reporting unit”). The Company has determined that it has one operating segment and one reporting unit. The operating results are reviewed only on a consolidated basis to make decisions about resources to be allocated and assess performance. Prior to performing the impairment test, the Company assesses qualitative factors to determine whether the existence of events or circumstances would indicate that it is more likely than not that the fair value of the reporting unit was less than the carrying amount. If after assessing the totality of events or circumstances, the Company were to determine that it is more likely than not that the fair value of the reporting unit is less than the carrying amount, then the Company would perform a quantitative impairment test. The quantitative impairment test involves comparing the fair value of the reporting unit to the carrying value. If the fair value of the reporting unit exceeds the carrying value of the net assets, goodwill is not impaired, and no further testing is required. If the fair value of the reporting unit is less than the carrying value, the Company measures the amount of impairment loss, if any, as the excess of the carrying value over the fair value of the reporting unit. Estimations and assumptions regarding the future performance and results of the Company’s operations, including estimates related to future sales growth, gross margin and operating expenses, and the fair value of the Company’s common stock are used in the impairment assessment. Circumstances that could reasonably be expected to negatively affect the key assumptions related to the impairment assessment include but are not limited to, (1) a significant adverse change in legal factors affecting our existing and future products or in business climate, (2) unanticipated competition, (3) an adverse action or assessment by a regulator, or (4) an adverse change in market conditions that are indicative of a decline in the fair value of the assets. Intangible Assets Intangible assets consist of developed technology and trademarks. Intangible assets were recorded at their fair values at the date of acquisition and were amortized using the straight-line method over a 15-year useful life. The intangible assets were fully amortized as of December 31, 2024. Leases The Company leases facilities and vehicles and meets the requirements to account for these leases as operating leases. The Company recognizes rent expense on a straight-line basis over the non-cancelable lease term. Where leases contain escalation clauses, rent abatements or concessions, such as rent holidays and landlord or tenant F-11 Pulmonx Corporation Notes to Consolidated Financial Statements incentives or allowances, the Company applies them in the determination of straight-line rent expense over the lease term. The Company determines if an arrangement is a lease, or contains a lease, at inception. The asset component of the Company’s operating leases is recorded as right-of-use (“ROU”) assets, and the liability component is recorded as current lease liabilities and long-term lease liabilities in the Company’s consolidated balance sheets. As of December 31, 2025 and December 31, 2024, the Company did not record any finance leases. ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate, which is the estimated rate the Company would be required to pay for a fully collateralized borrowing equal to the total lease payments over the term of the lease, to determine the present value of future minimum lease payments. The ROU asset also includes any lease payments made to the lessor at or before the commencement date, minus lease incentives received, and initial direct costs incurred. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Variable lease payments are expenses as incurred. The Company does not recognize lease liabilities and ROU assets for short-term leases with terms of twelve months or less. Assumptions made by the Company at the commencement date are re-evaluated upon occurrence of certain events, including a lease modification. A lease modification results in a separate contract when the modification grants the lessee an additional right of use not included in the original lease and when lease payments increase commensurate with the standalone price for the additional right of use. When a lease modification results in a separate contract, it is accounted for in the same manner as a new lease. Revenue Recognition The Company’s revenue is generated primarily from the sale of its products to hospitals and distributors in the United States and international markets. Under ASC 606, Revenue from Contracts with Customer s, revenue is recognized when the customer obtains control of promised goods or services, in an amount that reflects consideration which the entity expects to receive in exchange for those goods or services. The Company determines revenue recognition by applying the following five steps as prescribed by ASC 606: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies performance obligations. A contract with a customer exists when (i) the Company enters into a legally enforceable contract with a customer that defines each party’s rights regarding the products or services to be transferred and identifies the payment terms related to these products or services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for products or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company identifies performance obligations in contracts with customers, which may include its products and implied promises to provide free products and analysis services for patient scans. The transaction price is determined based on the amount expected to be entitled to in exchange for transferring the promised services or product to the customer. The Company is entitled to the total consideration for the products ordered by customers, net of early pay discounts, volume rebate adjustments and other transaction price adjustments. The Company’s payment terms to customers generally range from 30 to 60 days. F-12 Pulmonx Corporation Notes to Consolidated Financial Statements Payment terms fall within the one-year guidance for the practical expedient which allows the Company to forgo adjustment of the promised amount of consideration for the effects of a significant financing component. The Company excludes taxes assessed by governmental authorities on revenue-producing transactions from the measurement of the transaction price. Assuming all other revenue recognition criteria are met, revenue is recognized when control of the Company’s products transfers to the customer. For sales where the Company’s sales representative hand delivers product directly to the hospital or medical center, control transfers to the customer upon this delivery. For sales where products are shipped, control is transferred either upon shipment or delivery of the products to the customer, depending on the shipping terms and conditions. For consignment sales, control is transferred when the products are used by the customer in procedures. The Company defers revenue relating to any remaining performance obligations by the Company to the customer after delivery, such as free products and free analysis services of patient scans to determine suitability of the patients for the treatment using the Company’s Zephyr Valves. As permitted under the practical expedient, the Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. The Company accepts product returns at its discretion or if the product is defective as manufactured. Historically, the actual product returns have been immaterial to the Company’s financial statements. The Company elected to treat shipping and handling costs as a fulfillment cost and include them in the cost of goods sold as incurred. In those cases where the Company bills shipping and handling costs to customers, it will classify the amounts billed within revenue. The Company disaggregates its revenue by major geographic region, which is disclosed in Note 12, “Segment Information.” Cost of Goods Sold The Company manufactures certain products at its facility and purchases other products from third party manufacturers. Cost of goods sold consists primarily of costs related to materials, components and subassemblies, third-party costs, manufacturing overhead costs, direct labor, reserves for excess, obsolete and non-sellable inventories and distribution-related expenses. A significant portion of the Company’s cost of goods sold consists of manufacturing overhead costs. These overhead costs include the cost of quality assurance, material procurement, inventory control, facilities, equipment and operations supervision and management. Cost of goods sold also includes depreciation expense for production equipment and certain direct costs such as shipping costs. Costs associated with product sales include commissions. The Company applies the practical expedient and recognizes commissions as expense when incurred because the expense is incurred at a point in time and the amortization period is less than one year. Commissions are recorded as selling expense. Research and Development Research and development expenses consist of compensation costs, stock-based compensation, engineering and research expenses, clinical trials and related expenses, regulatory expenses, manufacturing expenses incurred to build products for testing, allocated facilities costs, consulting fees and other expenses incurred to sustain the Company’s overall research and development programs. All research and development costs are expensed as incurred. Clinical trial costs are a significant component of the Company’s research and development expenses. The Company has a history of contracting with third parties that perform various clinical trial activities on the Company’s behalf in the ongoing development of its product candidates. The financial terms of these contracts are subject to negotiations and may vary from contract to contract and may result in uneven payment flow. The Company accrues and expenses costs for its clinical trial activities performed by third parties, including clinical research organizations and other service providers, based upon estimates of the work completed over the life of the individual study in accordance with associated agreements. The Company determines these estimates through discussion with internal personnel F-13 Pulmonx Corporation Notes to Consolidated Financial Statements and outside service providers as to progress or stage of completion of trials or services pursuant to contracts with clinical research organizations and other service providers and the agreed-upon fee to be paid for such services. Advertising Costs The Company expenses the costs of advertising as incurred. Advertising expenses were $ 10.1 million and $ 7.9 million for the years ended December 31, 2025 and December 31, 2024, respectively. Foreign Currency Translation and Transaction Gains and Losses The functional currencies of the Company’s wholly owned subsidiaries in Switzerland, Germany, Australia, the United Kingdom, France and Hong Kong are the Swiss franc. The functional currency of the Company’s subsidiaries in Italy and Japan is the Euro and Yen, respectively. Accordingly, asset and liability accounts of Switzerland, France, Germany, Australia, the United Kingdom, Italy, Hong Kong and Japan operations are translated into U.S. dollars using the current exchange rate in effect at the balance sheet date and equity accounts are translated into U.S. dollars using historical rates. The revenues and expenses are translated using the average exchange rates in effect during the period, and gains and losses from foreign currency translation adjustments are included as a component of accumulated other comprehensive income in the consolidated balance sheet. Foreign currency translation adjustments are recorded in other comprehensive income (loss) in the consolidated statements of operations and comprehensive loss and was $ 0.3 million and $( 0.5 ) million during the years ended December 31, 2025 and December 31, 2024, respectively. Foreign currency transaction gains and losses are included in other income, net in the consolidated statements of operations and comprehensive loss and was $ 0.7 million and $ 0.1 million during the years ended December 31, 2025 and December 31, 2024, respectively. Stock-Based Compensation The Company accounts for stock-based compensation arrangements with employees and non-employees in accordance with ASC 718, Compensation—Stock Compensation , using a fair-value based method. The Company determines the fair value of all stock options and the 2020 Employee Share Purchase Plan (“ESPP”) awards on the date of grant using the Black-Scholes option pricing model. The Company’s determination of the fair value is impacted by its common stock price as well as assumptions regarding a number of variables. These variables include, but are not limited to, the expected term that options will remain outstanding, expected common stock price volatility over the term of the option awards, risk-free interest rates and expected dividends. Changes in the assumptions can materially affect the fair value and ultimately how much stock-based compensation expense is recognized. These inputs are subjective and generally require significant analysis and judgment to develop. The fair value of time-based awards is recognized over the period during which an option holder is required to provide services in exchange for the option award, known as the requisite service period, which is typically the vesting period using the straight-line method. The fair value of performance-based awards, is recognized over the requisite service period using the graded vesting method. Refer to Note 10, “Stockholders’ Equity” for additional information on performance-based and market-based awards. The Company accounts for forfeitures as they occur. The Company issued stock options in exchange for the receipt of goods or services from non-employees. Costs for such equity instruments are measured at the fair value of the equity instruments issued on the measurement date as the Company believes that the fair value of the equity instrument is more reliably measured than the fair value of the services received. Income Taxes The Company accounts for income taxes under the asset and liability method, whereby deferred tax assets and liabilities are determined based on the difference between the consolidated financial statements and tax bases of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to affect F-14 Pulmonx Corporation Notes to Consolidated Financial Statements taxable income. A valuation allowance is established when necessary to reduce deferred tax assets when management estimates, based on available objective evidence, that it is more likely than not that the benefit will not be realized for the deferred tax assets. The Company also follows the provisions of ASC 740-10, Accounting for Uncertainty in Income Taxes . ASC 740-10 prescribes a comprehensive model for the recognition, measurement, presentation and disclosure in financial statements of any uncertain tax positions that have been taken or expected to be taken on a tax return. No liability related to uncertain tax positions is recorded on the consolidated financial statements. It is the Company’s policy to include penalties and interest expense related to income taxes as part of the provision for income taxes. Net Loss per Share Attributable to Common Stockholders Basic net loss per common share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common stock outstanding during the period, without consideration of potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common stock and potentially dilutive securities assuming the dilutive effect of outstanding stock options, unvested restricted stock units, and shares issuable related to the employee stock purchase plan. Because the Company has reported a net loss for all periods presented, diluted net loss per common share is the same as basic net loss per common share for those periods. Comprehensive Loss The Company is required to report all components of comprehensive loss, including net loss, in the financial statements in the period in which they are recognized. Comprehensive gain or loss is defined as a change in equity of a business enterprise during a period, resulting from transactions and other events and circumstances from non-owner sources. The Company’s currency translation adjustment and unrealized gains and losses from marketable securities are the components of other comprehensive income (loss) that are excluded from the reported net loss for all periods presented. 3. Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. The standard is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted ASU 2023-09 as of January 1, 2025 and the update enhances the disclosure requirements related to tax rate reconciliations and income taxes paid. See Note 11, Income Taxes” for additional information. Recent Accounting Pronouncements Not Yet Adopted In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses , which requires disclosure in the notes to the financial statements of specified information about certain costs and expenses. The amendments are effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments should be applied either prospectively to financial statements issued for reporting periods after the effective date of this ASU, or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating F-15 Pulmonx Corporation Notes to Consolidated Financial Statements the new guidance to determine the impact it may have on its consolidated financial statements and related disclosures. In September 2025, the FASB issued ASU 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted improvements to the Accounting for Internal-Use Software , to modernize the accounting for software costs that are accounted for under Subtopic 350-40. ASU 2025-06 removes all references to prescriptive and sequential software development stages throughout Subtopic 350-40. Therefore, an entity is required to start capitalizing software costs when both of the following occur: 1) Management has authorized and committed to funding the software project and 2) It is probable that the project will be completed and the software will be used to perform the function intended. The amendments in ASU 2025-06 are effective for fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the new guidance to determine the impact it may have on its consolidated financial statements and related disclosures. In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements . This ASU clarifies and improves existing interim reporting guidance by consolidating disclosure requirements within Topic 270 and introducing a disclosure principle requiring entities to disclose events and changes occurring after the most recent annual reporting period that are expected to have a material effect on the entity’s financial condition or results of operations. The ASU does not introduce significant changes to recognition or measurement guidance. This ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact the adoption of this ASU will have on disclosures in its consolidated financial statements. In December 2025, the FASB issued ASU 2025-12, Codification Improvements . This ASU addresses suggestions received from stakeholders regarding the ASC and makes other incremental improvements to GAAP. The update represents changes to the ASC that clarify, correct errors in or make other improvements to a variety of topics that are intended to make it easier to understand and apply. This ASU is effective for fiscal years beginning after December 15, 2026 and interim periods within those fiscal years. Entities are required to apply the amendments to ASC 260 retrospectively. All other amendments may be applied prospectively or retrospectively. The Company is currently evaluating the impact the adoption of this ASU will have on disclosures in its consolidated financial statements. All other newly issued accounting pronouncements not yet effective have been deemed either immaterial or not applicable. 4. Fair Value Measurements Assets and liabilities recorded at fair value in the consolidated financial statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels which are directly related to the amount of subjectivity associated with the inputs to the valuation of these assets or liabilities are as follows: Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date. Level 2—Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities. Level 3—Unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date. This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. F-16 Pulmonx Corporation Notes to Consolidated Financial Statements Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis —Financial assets and liabilities held by the Company measured at fair value on a recurring basis include money market funds and marketable securities. Assets and Liabilities Measured and Recorded at Fair Value on a Nonrecurring Basis —The Company determines the fair value of long-lived assets held and used by reference to independent appraisals, quoted market prices (e.g. an offer to purchase) and other factors. An impairment charge is recorded when the carrying value of the asset exceeds its fair value. There have been no impairment charges recorded to date. Based on the borrowing rates currently available to the Company for debt with similar terms and consideration of default and credit risk, the carrying value of the term loan approximates the fair value. The fair value of the term loan is estimated using Level 2 inputs. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. The following tables summarizes the types of assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands): December 31, 2025 Level 1 Level 2 Level 3 Total Assets: Cash equivalents: Money market funds $ 1,038 $ — $ — $ 1,038 Total cash equivalents 1,038 — — 1,038 Total financial assets $ 1,038 $ — $ — $ 1,038 December 31, 2024 Level 1 Level 2 Level 3 Total Assets: Cash equivalents: Money market funds $ 6,616 $ — $ — $ 6,616 Total cash equivalents 6,616 — — 6,616 Marketable securities: U.S. Government agency bonds 6,235 11,968 — 18,203 Commercial paper — 12,374 — 12,374 Total marketable securities 6,235 24,342 — 30,577 Total financial assets $ 12,851 $ 24,342 $ — $ 37,193 There were no liabilities measured at fair value on a recurring and non-recurring basis as of December 31, 2025 and December 31, 2024. F-17 Pulmonx Corporation Notes to Consolidated Financial Statements As of December 31, 2025, the Company did not hold any marketable securities. The following table summarizes the cost, unrealized gains and losses and fair value of marketable securities as of December 31, 2024 (in thousands): December 31, 2024 Amortized Cost Unrealized Losses Unrealized Gains Fair Value U.S. Government agency bonds $ 18,178 $ — $ 25 $ 18,203 Commercial paper 12,376 ( 8 ) 6 12,374 Total $ 30,554 $ ( 8 ) $ 31 $ 30,577 The following table summarizes the marketable securities with unrealized losses as of December 31, 2024, aggregated by major security type and the length of time that individual securities have been in a continuous loss position (in thousands): December 31, 2024 Less than 12 months 12 months or greater Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Commercial paper $ 5,659 $ ( 8 ) $ — $ — $ 5,659 $ ( 8 ) Total $ 5,659 $ ( 8 ) $ — $ — $ 5,659 $ ( 8 ) The unrealized losses for marketable securities relate to changes in interest rates. During the years ended December 31, 2025 and December 31, 2024, the Company did not consider any of its marketable securities to be other-than-temporarily impaired. No allowance for credit losses was recorded as of December 31, 2024, and no impairment losses were recognized for the years ended December 31, 2025 and December 31, 2024. At December 31, 2025 and December 31, 2024, accrued interest receivable of less than $ 0.1 million and $ 0.1 million was included in prepaid expenses and other current assets on the consolidated balance sheets, respectively. The Company elected to exclude accrued interest receivable from the estimation of expected credit losses on its marketable securities and reverse accrued interest receivable through interest income (expense) when amounts are determined to be uncollectible. The Company did no t write off any accrued interest receivable during the years ended December 31, 2025 and December 31, 2024. The Company’s securities classified as short-term marketable securities mature within one year or less of the balance sheet date. Marketable securities that mature greater than one year from the balance sheet date are classified as long-term. 5. Balance Sheet Components Cash and Cash Equivalents The Company’s cash and cash equivalents consist of the following (in thousands): December 31, 2025 2024 Cash $ 68,713 $ 64,289 Cash equivalents: Money market funds 1,038 6,616 Total cash and cash equivalents $ 69,751 $ 70,905 F-18 Pulmonx Corporation Notes to Consolidated Financial Statements Inventory Inventory consists of the following (in thousands): December 31, 2025 2024 Raw materials $ 4,872 $ 3,406 Work in process 529 457 Finished goods 14,048 14,733 Total inventory $ 19,449 $ 18,596 Reported as: Inventory $ 15,845 $ 16,915 Long-term inventory 3,604 1,681 Total inventory $ 19,449 $ 18,596 Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist of the following (in thousands): December 31, 2025 2024 Prepaid expenses $ 1,927 $ 1,827 Prepaid insurance 749 847 VAT and other receivable 591 671 Other current assets 491 1,129 Total prepaid expenses and other current assets $ 3,758 $ 4,474 Capitalized Implementation Costs of a Hosting Arrangement The Company has several software systems that are cloud-based hosting arrangements with service contracts. The Company accounts for costs incurred in connection with the implementation of these various software systems under ASU 2018-15, Intangibles—Goodwill and Other—Internal Use Software (Subtopic 350–40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract . The Company expenses all costs (internal and external) that are incurred in the planning and post-implementation operation stages. As of December 31, 2025 and December 31, 2024, the Company has capitalized approximately $ 0.9 million and $ 0.5 million in implementation costs, net of amortization, respectively. The capitalized costs are amortized on a straight-line basis over the non-cancelable contract terms, which are generally three to five years . As of December 31, 2025, the capitalized costs of $ 0.2 million and $ 0.7 million were included in prepaid expenses and other current assets, and other long-term assets, respectively. Amortization expense, which was included in selling, general and administrative expenses, was $ 0.1 million and $ 0.1 million for the years ended December 31, 2025 and December 31, 2024, respectively. F-19 Pulmonx Corporation Notes to Consolidated Financial Statements Property and Equipment, Net Property and equipment, net consist of the following (in thousands): December 31, 2025 2024 Machinery and equipment $ 2,547 $ 2,345 Computer equipment and software 3,600 3,468 Furniture and fixtures 336 294 Leasehold improvements 2,336 2,318 Construction in progress 51 206 Total 8,870 8,631 Less: accumulated depreciation ( 6,650 ) ( 5,724 ) Property and equipment, net $ 2,220 $ 2,907 In 2024, the Company recorded a non-cash impairment charge of $ 1.7 million related to certain previously capitalized software development costs that reduced the carrying value of those assets to zero . The impairment charge was recorded in research and development expenses on the Company’s consolidated statements of operations and comprehensive loss. This impairment charge was primarily driven by the Company’s strategic decision to adopt a more cost-efficient solution in place of completing the development of the internally developed software. Depreciation expense for the years ended December 31, 2025 and December 31, 2024 was $ 1.1 million and $ 1.1 million, respectively. Goodwill Goodwill was $ 2.3 million as of December 31, 2025 and December 31, 2024. No goodwill impairment losses have been recognized since the acquisition. There were no acquisitions or dispositions of goodwill for the years ended December 31, 2025 or December 31, 2024. The Company performed an annual test for goodwill impairment in the fourth quarter of the fiscal years ended December 31, 2025 and December 31, 2024 and determined that goodwill was no t impaired. Accrued Liabilities Accrued liabilities consist of the following (in thousands): December 31, 2025 2024 Accrued employee bonuses and commissions $ 3,549 $ 6,894 Accrued vacation 2,846 2,555 Other accrued personnel related expenses 3,181 2,727 Accrued professional fees 3,022 2,455 Sales taxes, franchise tax and VAT 1,011 827 Other 947 1,014 Total accrued liabilities $ 14,556 $ 16,472 F-20 Pulmonx Corporation Notes to Consolidated Financial Statements 6. Long Term Debt CIBC Loan In February 2020, the Company executed a Loan and Security Agreement with Canadian Imperial Bank of Commerce (“CIBC”), which the Company subsequently amended in April 2020 and December 2020 (as amended, the “CIBC Agreement”). The CIBC Agreement originally provided the Company with the ability to borrow up to $ 32.0 million in debt financing (“CIBC Loan”) consisting of $ 17.0 million advanced at the closing of the agreement (“Tranche A”), with the option to draw up to an additional $ 8.0 million (“Tranche B”) and an additional financing tranche (“Tranche C”) of up to $ 7.0 million on or prior to February 20, 2022. Neither Tranche B nor Tranche C was drawn before the option expired. In March 2021, the Company entered into an Amended and Restated Loan and Security Agreement with CIBC (as amended, the “Amended and Restated CIBC Agreement”) which, among other things, extended the loan maturity date of the CIBC Loan from March 15, 2022 to February 20, 2025, and modified certain financial covenants. In October 2021, the Company entered into a Second Amendment to the Amended and Restated CIBC Agreement, which extended the interest only period of the loan from 24 months to 36 months. Under the amended terms, principal repayment will begin in February 2023. In October 2022, the Company entered into a Third Amendment to the Amended and Restated CIBC Agreement (the “Third Amendment”) with CIBC, which, among other things, extended the maturity date of the CIBC Loan to October 31, 2027; provided a commitment for a new $ 20.0 million tranche of term loans that may be drawn at our option through October 31, 2023, subject to the satisfaction of certain conditions; and provided for a new interest only period of 24 months from the signing date of the Third Amendment, with the possibility of an additional extension of such interest only period of up to 12 months, subject to satisfaction of certain conditions. In February 2023, the Company drew $ 20.0 million of the Amended Tranche B which has the same interest rate and repayment terms as Tranche A of the CIBC Loan. In May 2024, as a result of satisfying certain conditions set forth in the Third Amendment, the Company extended the interest-only period of the CIBC Loan from 24 months to 36 months. There was no change to the loan interest rate, maturity date, or other terms of the loan. In April 2025, the Company further amended the terms of the CIBC Loan (the “Fifth Amendment”) to extend the interest-only period through maturity, with full principal repayment due in October 2027. There was no change to the interest rate or the maturity date of the loan. The Fifth Amendment was accounted for as a debt modification. The Fifth Amendment contains a financial covenant that, when cash and cash equivalents of the Company is less than $ 80.0 million, revenue for the trailing twelve-month period be at least 10.0 % greater than the amount of revenue for the corresponding trailing twelve-month period in the prior year. Further, the Company is required to maintain unrestricted cash in an aggregate amount equal to the greater of $ 20.0 million and the absolute value of Adjusted EBITDA loss as defined in the Amended and Restated CIBC Agreement for the six-month period ending on any date of determination. In January 2026, the Company further amended the terms of the CIBC Loan to 1) to modify the Company’s obligations regarding cash such that the Company is required to maintain cash in an aggregate amount equal to or greater than (i) 1.25 multiplied by (ii) the then outstanding principal balance of the CIBC Loan and 2) to require regular updates to CIBC on our efforts to refinance the CIBC Loan. In addition, CIBC agreed not to test one of the financial covenants as of December 31, 2025. The Company paid to CIBC an amendment fee of less than $ 0.1 million. As of December 31, 2025, the Company was in compliance with all other covenants contained in the Amended and Restated CIBC Agreement. As of December 31, 2025 and December 31, 2024, the CIBC Loan had an annual effective interest rate of 8.2 % and 9.0 % per year. F-21 Pulmonx Corporation Notes to Consolidated Financial Statements The CIBC Loan consists of the following (in thousands) as of December 31, 2025 and December 31, 2024, respectively: December 31, 2025 2024 Term loan $ 37,000 $ 37,000 Less: debt issuance costs ( 116 ) ( 99 ) Term loan $ 36,884 $ 36,901 Reported as: Short-term debt $ — $ 3,083 Long-term debt 36,884 33,818 Total term loan $ 36,884 $ 36,901 The Company paid $ 0.5 million fees to the lender and third parties, which is reflected as a discount on the CIBC Loan and is being accreted over the life of the term loan using the effective interest method. During the years ended December 31, 2025 and December 31, 2024, the Company recorded interest expense related to debt discount and debt issuance costs of CIBC Loan of $ 0.1 million and $ 0.1 million, respectively. Interest expense on the CIBC Loan amounted to $ 3.1 million and $ 3.5 million during the years ended December 31, 2025 and December 31, 2024, respectively. The Company repaid the CIBC Loan in full, and terminated the Amended and Restated CIBC Agreement, in connection with the closing of the Perceptive Credit Agreement. See the section entitled “Subsequent Events⸺Perceptive Credit Agreement”. Credit Agreement In May 2020, Pulmonx International Sàrl, a wholly owned subsidiary of the Company, received 0.5 million Swiss Francs ($ 0.5 million U.S. dollar equivalent) from a COVID-19 Credit Agreement under a Swiss Federal Government program. The COVID-19 Credit Agreement currently bears interest at a rate of 1.5 % per year, payable at the end of each calendar quarter. The loan principal is being repaid in twelve equal installments, paid semi-annually, which began in March of 2022. Interest expense was immaterial during the years ended December 31, 2025 and December 31, 2024. Pulmonx International Sàrl repaid $ 0.1 million and $ 0.1 million to the lender during the years ended December 31, 2025 and December 31, 2024, respectively. Contractual Maturities of Financing Obligations As of December 31, 2025, the aggregate future payments under the CIBC Loan and Credit Agreement (including interest payments) are as follows (in thousands): Fiscal Year Ending December 31, Amount 2026 $ 2,977 2027 39,494 Total $ 42,471 Less: unamortized debt discount ( 116 ) Less: interest ( 5,260 ) Term loan and credit agreement $ 37,095 F-22 Pulmonx Corporation Notes to Consolidated Financial Statements 7. Revenue Recognition The Company’s contract liabilities consist of deferred revenue for remaining performance obligations to customers after delivery, which was less than $ 0.1 million as of December 31, 2025. This amount is expected to be recognized as revenue in fiscal year 2026. The deferred revenue as of December 31, 2024 was $ 0.1 million, which was recognized as revenue during the year ended December 31, 2025. The deferred revenue as of December 31, 2023 was $ 0.2 million, which was recognized as revenue during the year ended December 31, 2024. The Company disaggregates its revenue by major geographic region, which has been disclosed in Note 12, “Segment Information.” 8. Leases, Lease Commitments and Contingencies The Company has a lease for its headquarters location in Redwood City, California, which consists of approximately 24,591 square feet of office space (the “existing premises”) and was scheduled to expire on July 31, 2025 (the “Office Lease”). The Company leases additional facilities in Redwood City, California, under a sublease agreement, which consist of approximately 25,254 square feet of office space (the “expansion premises”) and was scheduled to expire on September 30, 2024 (the “Sublease”). In the second quarter of 2024, the Company entered into a third amendment to Sublease (the “Third Amendment to Sublease”) to extend the lease term of the expansion premises through May 31, 2028. The Third Amendment to Sublease contains a rent-free period between November 1, 2024 and February 28, 2025, after which rent is approximately $ 0.1 million per month and is subject to an annual increase of approximately 3 %. The Company also entered into a third amendment to Office Lease (the “Third Amendment to Office Lease”) to extend the lease term of the existing premises through July 31, 2035. The Third Amendment to Office Lease contains a rent-free period, as further described below, after which rent is approximately $ 0.1 million per month and is subject to an annual increase of approximately 3.5 %. Additionally, under the Third Amendment to Office Lease, the Company and the landlord have agreed to expand the existing premises to include the expansion premises, effective as of June 1, 2028, through July 31, 2035 (conterminous with the existing premises as referenced above). Commencing on June 1, 2028, the monthly base rent for the expansion premises will be $ 0.1 million per month and is subject to an annual increase of approximately 3.5 %. Under the Third Amendment to Office Lease, the Company has two options to extend the lease term on the leased premises for a period of five years , respectively. The Company did not include the renewal options in the lease terms for calculating lease liability, as it was not reasonably certain that the Company will exercise these renewal options. The amendments were accounted for as modifications that resulted in additional right of use assets in exchange for lease liabilities of $ 16.3 million. In the fourth quarter of 2024, the Company entered into an amendment to the Third Amendment to Office Lease, which modified the rent-free period from the original dates of August 1, 2025 through November 30, 2025, to a new period from October 1, 2024 through December 31, 2024. There was no change to the other terms of the lease agreement that would materially impact the consolidated financial statements. The amendment was accounted for as a modification that resulted in additional right of use assets in exchange for lease liabilities of $ 0.4 million. In the fourth quarter of 2024, the Company entered into a five-year lease for a new office facility in Switzerland. The lease commenced in the first quarter of 2025, with total future minimum rent payments of $ 0.5 million. The Company recognized right of use assets in exchange for lease liabilities of $ 0.4 million related to this new lease in the first quarter of 2025. As of December 31, 2025, the Company has leases on 21 vehicles with an average lease term of 3.0 years. F-23 Pulmonx Corporation Notes to Consolidated Financial Statements Operating lease cost consists of the following (in thousands): Years Ended December 31, 2025 2024 Operating lease cost $ 3,291 $ 3,111 Short-term lease cost 33 40 Variable lease cost 495 714 Total lease cost $ 3,819 $ 3,865 The following table summarizes a maturity analysis of the Company’s lease liabilities showing the aggregate lease payments as of December 31, 2025 (in thousands): Fiscal Year Ending December 31, Amount 2026 $ 3,001 2027 3,023 2028 2,934 2029 2,948 2030 2,941 Thereafter 14,840 Total minimum lease payments $ 29,687 Less: Amount of lease payments representing interest 10,418 Present value of future minimum lease payments $ 19,269 Reported as: Current lease liabilities $ 1,210 Long-term lease liabilities 18,059 Total lease liabilities $ 19,269 The following table summarizes additional information related to the Company’s operating leases (in thousands, except weighted average data): December 31, 2025 2024 Right of use asset $ 18,028 $ 18,545 Weighted average remaining lease term (years) 9.31 10.46 Weighted average discount rate 9.9 % 9.9 % The following table summarizes other supplemental information related to the Company’s operating leases (in thousands): Years Ended December 31, 2025 2024 Cash paid for amounts included in the measurement of lease liabilities included in cash flows used in operating activities $ 2,817 $ 3,133 Right-of-use assets obtained in exchange for lease liabilities $ 925 $ 17,016 F-24 Pulmonx Corporation Notes to Consolidated Financial Statements Contingencies From time to time, the Company may be a party to various litigation claims in the normal course of business. Legal fees and other costs associated with such actions are expensed as incurred. The Company assesses, in conjunction with legal counsel, the need to record a liability for litigation and contingencies. Accrual estimates are recorded when and if it is determinable that such a liability for litigation and contingencies are both probable and reasonably estimable. In December 2022, the Company received a civil investigative demand (“CID”) from the U.S. Department of Justice (“US DOJ”), in connection with an investigation under the False Claims Act. The CID requested information and documents regarding our relationships with certain health care providers, medical practices, and hospitals in connection with the sales and marketing of the Zephyr Valves and related products and services. Subsequently, on or about January 27, 2025 the DOJ filed on behalf of itself and certain states attorneys general, a Notice of Election to Decline Intervention in and to unseal the underlying action that was the basis of the CID, filed by an individual (the “Relator”) in U.S. District Court for the Northern District of California (the “Qui Tam Action”). In December 2025, the Company entered into a settlement agreement with the Relator, with approval by the US DOJ and the various states’ attorneys general who were parties to the Qui Tam Action. The Qui Tam Action was dismissed on December 22, 2025. 9. Income Taxes Loss before the provision for income taxes consists of the following (in thousands): Years Ended December 31, 2025 2024 Domestic $ ( 57,077 ) $ ( 57,570 ) Foreign 3,700 1,676 Total loss before provision for taxes $ ( 53,377 ) $ ( 55,894 ) The components of income tax expense are as follows (in thousands): Years Ended December 31, 2025 2024 Current: Federal $ — $ — State 45 53 Foreign 600 471 Total current expense $ 645 $ 524 Deferred: Federal $ ( 5 ) $ 7 State 5 8 Foreign ( 19 ) ( 39 ) Total deferred expense ( 19 ) ( 24 ) Total income tax expense $ 626 $ 500 The table below provides the updated requirements of ASU 2023-09 for 2025. See Notes to Financial Statements - Income Taxes for additional details on the adoption of ASU 2023-09. The effective tax rate differs from the federal statutory income tax rate applied to the loss before provision for income taxes and tax due to the following: F-25 Pulmonx Corporation Notes to Consolidated Financial Statements Year Ended December 31, 2025 $ % U.S. federal statutory tax rate $ ( 11,209 ) 21.0 % State and local income taxes, net of federal (1) 50 ( 0.1 ) % Foreign tax effects ( 203 ) 0.4 % Enactment of new tax laws — 0.0 % Effect of cross-border tax laws Global Intangible Low-Tax Income 199 ( 0.4 ) % Tax credits ( 170 ) 0.3 % Valuation allowances 8,273 ( 15.5 ) % Nontaxable or nondeductible items Stock-based compensation (2) 2,936 ( 5.5 ) % Other 269 ( 0.5 ) % Changes in unrecognized tax benefits 26 0.0 % Other adjustments Expiring attributes 559 ( 1.1 ) % Other ( 104 ) 0.2 % Total $ 626 ( 1.2 ) % (1) State taxes in Texas made up the majority (greater than 50%) of the tax effect in this category. (2) Includes amounts related to non-deductible stock-based compensation, including non-deductible executive compensation, in addition to excess tax benefits or shortfalls from stock-based compensation. As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the effective income tax rate differs from the statutory federal income tax rate as follows: Years Ended December 31, 2024 2023 Federal statutory rate 21.0 % 21.0 % State taxes, net of federal benefit ( 0.1 ) % ( 0.1 ) % Foreign earnings at different rates 0.1 % ( 0.5 ) % Tax credits 1.3 % ( 0.9 ) % Permanent differences ( 5.7 ) % ( 4.6 ) % Prior year true-up ( 0.2 ) % 0.6 % Change in valuation allowance ( 16.8 ) % ( 16.4 ) % Other rate impacts ( 0.5 ) % — % Effective tax rate ( 0.9 ) % ( 0.9 ) % Income taxes paid (net of refunds) exceeded 5 percent of total income taxes paid (net of refunds) in the following jurisdictions: F-26 Pulmonx Corporation Notes to Consolidated Financial Statements Year Ended December 31, 2025 Income taxes paid: Federal $ — State 45 Foreign: Switzerland 138 France 80 United Kingdom 60 Germany 59 Italy 34 Spain 32 Other 20 Total $ 468 Cash paid for income taxes, net of refunds, during the years ended December 31, 2024 and 2023 was $ 0.6 million and $ 0.5 million, respectively. Deferred income taxes arise from temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting purposes, as well as operating losses and tax credit carryforwards. Significant components of the Company’s deferred tax assets and liabilities for federal and state income taxes are as follows (in thousands): December 31, 2025 2024 Deferred tax assets: Net operating loss carryforwards $ 76,653 $ 65,515 Tax credit carryforwards 7,620 7,331 Accruals and reserves 1,401 1,993 Depreciation 380 303 Intangible assets 3,065 3,527 Right of use liability 4,464 4,568 Capitalized research costs 6,309 7,754 Other 5,261 4,467 Total deferred tax assets 105,153 95,458 Less: valuation allowance ( 100,491 ) ( 90,598 ) Total deferred tax assets, net of valuation allowance $ 4,662 $ 4,860 Deferred tax liabilities: Right of use asset $ ( 4,162 ) $ ( 4,358 ) Goodwill ( 569 ) ( 589 ) Total deferred tax liabilities $ ( 4,731 ) $ ( 4,947 ) Net deferred tax liabilities $ ( 69 ) $ ( 87 ) F-27 Pulmonx Corporation Notes to Consolidated Financial Statements The Company has established a full valuation allowance against its U.S. net deferred tax assets due to the uncertainty surrounding the realization of such assets. Realization of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Accordingly, the U.S. net deferred tax assets have been fully offset by a valuation allowance of $ 100.5 million as of December 31, 2025. The valuation allowance increased by $ 9.9 million and $ 11.2 million for the years ended December 31, 2025 and December 31, 2024, respectively. As of December 31, 2025, the Company had a total net operating loss carryforwards for federal income tax purposes of approximately $ 330.3 million. For net operating loss carryforwards generated prior to 2018, if not utilized, these net federal operating loss carryforwards will begin to expire in 2026. The Company also had a state and city net operating loss carryforward of approximately $ 207.1 million which will begin to expire in 2026. For tax years beginning on January 1, 2018 onwards, any federal net operating losses generated will be allowable for carry forward indefinitely, as opposed to the original expiration of 20 years. As of December 31, 2025, the Company had $ 262.4 million of federal net operating losses that can be carryforward indefinitely. The Company also had federal and state research and development (“R&D”) tax credit carryforwards of approximately $ 4.6 million and $ 5.5 million, respectively. The federal tax R&D credit carryforwards will expire beginning in the year 2026 while the state tax credit carryforwards have no expiration date. Utilization of the net operating loss carryforwards and R&D tax credit carryforwards may be subject to annual limitations due to the ownership change limitations provided by the Internal Revenue Code, as defined in Section 382, and other similar state provisions. The annual limitation may result in the expiration of net operating losses and credits before utilization. The Company completed a section 382 study for the year ended December 31, 2022 for which the Company had no change in ownership and do not expect any changes from that analysis through December 31, 2025. Additionally, based on the Company’s analysis, no further material net operating losses or credits have expired unused due to the section 382 limitations as of December 31, 2025. Annually, the Company determines whether it is “more likely than not” that a tax position will be sustained upon examination by the appropriate taxing authorities in considering whether any tax benefit can be recorded in the consolidated financial statements. As of December 31, 2025, the Company had unrecognized tax benefits of approximately $ 9.1 million, none of which will affect the effective tax rate if recognized. The following table summarizes the activity related to the Company’s gross unrecognized tax benefits (in thousands): Balance at December 31, 2023 $ 8,662 Additions for tax positions related to prior year 170 Additions for tax positions related to current year 40 Balance at December 31, 2024 $ 8,872 Additions for tax positions related to prior year 158 Decreases for tax positions related to prior year ( 8 ) Additions for tax positions related to current year 51 Balance at December 31, 2025 $ 9,073 It is the Company's policy to include penalties and interest expense related to income taxes as a component of other income, net and interest expense, respectively, as necessary. The Company’s major tax jurisdictions are the United States and California, and Switzerland and Neuchâtel. The Company’s tax years will remain open for examination by the federal and state tax authorities from 2005 for federal and 1999 for states because of the net operating losses and R&D credit carryover. The Company does not have any tax audits or other issues pending. F-28 Pulmonx Corporation Notes to Consolidated Financial Statements Beginning in 2022, the Tax Cuts and Jobs Act (the "Tax Act") requires taxpayers to capitalize research and development expenses with amortization periods over five years for domestic research and developments costs and fifteen years for foreign research and development costs. The One Big Beautiful Bill Act (the “OBBBA”) was signed into law on July 4, 2025, and contains significant tax law changes, including allowing for the immediate expensing in 2025 and forward of domestic research and development costs. Because of the Company's valuation allowance on its deferred tax assets, the change did not impact the Company's financial statements. 10. Stockholders’ Equity Common Stock As of December 31, 2025 and December 31, 2024, the Company’s certificate of incorporation authorized the Company to issue up to 200,000,000 shares of common stock. Common stockholders are entitled to dividends as and when declared by the Board of Directors, subject to the rights of holders of all classes of stock outstanding having priority rights as to dividends. There have been no dividends declared to date. The holder of each share of common stock is entitled to one vote. In March and May 2024, the Company granted stock-based awards outside of the existing stock plans to its new Chief Executive Officer and new Chief Financial Officer, respectively. These awards were granted as a material inducement for accepting employment with the Company. The inducement awards consisted of a total of 997,681 shares of the Company’s common stock, which includes an aggregate of 331,156 shares of common stock issuable upon the vesting of restricted stock unit awards and 666,525 shares of common stock issuable upon the exercise of nonqualified stock option grants generally subject to the same terms and conditions as grants that are made under the 2020 Equity Incentive Plan. Shares Reserved for Future Issuance The Company has reserved shares of common stock for future issuances as follows: December 31, 2025 2024 Common stock options issued and outstanding 3,067,088 3,627,606 Common stock restricted stock units issued and outstanding 6,667,812 2,728,599 Common stock available for future grants 2,204,802 3,006,773 Common stock available for ESPP 1,795,996 1,648,046 Total 13,735,698 11,011,024 Stock Options As of December 31, 2025, the Company reserved 17,381,487 shares of its common stock under its 2000 Stock Plan (the “2000 Stock Plan”), the 2010 Stock Plan (the “2010 Stock Plan”), the 2020 Stock Plan (the “2020 Stock Plan”), and the 2020 Equity Incentive Plan (the “2020 Equity Incentive Plan” and, together with the 2000 Stock Plan, the 2010 Stock Plan and the 2020 Stock Plan, the “Stock Plans”). Options granted under the Stock Plans may be either incentive stock options or nonqualified stock options. Incentive stock options (“ISO”) may be granted only to the Company employees (including officers and directors). Nonqualified stock options (“NSO”) may be granted to the Company employees and consultants. In January 2026, the number of shares of common stock available for issuance under the 2020 Equity Incentive Plan was increased by 1,666,945 shares as a result of the automatic increase provision in the 2020 Equity Incentive Plan. Options to purchase the Company’s common stock may be granted at a price not less than 100 % of the fair market value in the case of ISO or NSO, except for an employee or non-employee with options who owns more than 10% of F-29 Pulmonx Corporation Notes to Consolidated Financial Statements the voting power of all classes of stock of the Company in which case the exercise price shall be no less than 110 % of the fair market value per share on the grant date. Options vest ranging from immediately upon grant to a rate of 25 % per annum over four years from the grant date. Options expire but not more than ten years after the date of grant. In November 2025, the Company’s Compensation Committee of the Board of Directors approved the 2025 Inducement Plan (the “Inducement Plan”). The terms of the Inducement Plan are similar to the terms of the 2020 Equity Incentive Plan with the exception that incentive stock options may not be issued under the Inducement Plan and awards under the Inducement Plan may only be issued to eligible recipients under the applicable Nasdaq rules. The Inducement Plan was adopted by the Company’s Compensation Committee of the Board of Directors without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Listing Rules. As of December 31, 2025, the Company reserved 3,200,000 shares of its common stock for issuance pursuant to awards granted under the Inducement Plan. The Company issued 1,625,000 restricted stock units during the year ended December 31, 2025. Activity with respect to stock options was as follows: Outstanding Options Number of Shares Weighted Average Exercise Price Balance, December 31, 2023 3,142,981 $ 16.40 Options granted 928,125 9.00 Options exercised ( 107,817 ) 2.02 Options canceled ( 335,683 ) 21.96 Balance, December 31, 2024 3,627,606 $ 14.42 Options granted 128,395 8.29 Options exercised ( 145,435 ) 1.71 Options canceled ( 543,478 ) 9.05 Balance, December 31, 2025 3,067,088 $ 15.72 The aggregate intrinsic value of options exercised during the years ended December 31, 2025 and December 31, 2024 was $ 0.3 million and $ 0.7 million, respectively. The aggregate intrinsic value of options outstanding as of December 31, 2025 and December 31, 2024 was $ 0.1 million and $ 3.7 million, respectively. The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock options and the fair value of the Company’s common stock for stock options that were in-the-money as of December 31, 2025 and December 31, 2024. December 31, 2025 Number of Shares Weighted Average Exercise Price Weighted Average Contractual Life (in Years) Options vested 2,666,070 $ 16.35 4.94 Options vested and expected to vest 3,067,088 $ 15.72 5.26 The aggregate intrinsic value of options exercisable as of December 31, 2025 and December 31, 2024 was $ 0.1 million and $ 3.7 million, respectively. Service-Based Restricted Stock Units F-30 Pulmonx Corporation Notes to Consolidated Financial Statements The Company estimates the fair value of service-based restricted stock units based on the closing price of the Company’s common stock on the grant date. Activity with respect to service-based restricted stock units was as follows: Number of Shares Underlying Outstanding Restricted Stock Weighted Average Grant Date Fair Value Outstanding at December 31, 2023 2,244,903 $ 15.74 Granted 1,848,908 8.70 Vested ( 987,828 ) 15.19 Forfeited ( 377,384 ) 14.31 Outstanding at December 31, 2024 2,728,599 $ 11.11 Granted 4,793,547 4.49 Vested ( 1,492,336 ) 11.44 Forfeited ( 754,498 ) 8.85 Outstanding at December 31, 2025 5,275,312 $ 5.33 The fair value as of the respective vesting dates of restricted stock units that vested for the years ended December 31, 2025 and December 31, 2024 was $ 5.4 million and $ 7.5 million. Performance-Based and Market-Based Restricted Stock Units In fiscal year 2025, the Company granted 326,848 performance-based restricted stock units (“PSUs”) to employees. The final number of PSUs awarded will be determined based on the Company’s consolidated cumulative revenue over a two-year performance period and may vest at a rate ranging from 0 % to 200 % of the target number of shares. Any PSUs awarded at the end of the performance period will vest in equal installments over the following four quarters. The Company estimates the fair value of these performance-based restricted stock units based on the closing price of its common stock on the grant date. Compensation expense for these awards is calculated based on the expected achievement of the target revenue metrics and is recognized over the requisite service period. In December 2025, the Company granted 1,200,000 restricted stock units with service and market conditions to certain employees. The vesting of the market-based restricted stock units will be met 33 % after one year and the remainder thereunder in equal installments quarterly over the following two years subject to continued employment. Vesting is also contingent on the average closing price of the Company’s common stock being greater than $ 4.00 over a period of 60 consecutive trading days within three years . The Company estimates the fair value of these market-based restricted stock units on the date of grant using a Monte Carlo simulation including the following assumptions: expected volatility of 100.0 %; a risk-free rate of 3.6 %; and a cost of equity of 16 %. Compensation expense for these awards is recognized over the requisite service period for each tranche based on the graded vested method. The requisite service period is the longer of the explicit service period or the derived service period based on the market condition for each tranche. The derived service period was estimated to be 0.98 years. Activity with respect to performance-based and market-based restricted stock units was as follows: F-31 Pulmonx Corporation Notes to Consolidated Financial Statements Number of Shares Underlying Outstanding Restricted Stock Weighted Average Grant Date Fair Value Outstanding at December 31, 2024 — $ — Granted 1,526,848 2.87 Vested — — Forfeited (1) ( 134,348 ) 8.29 Outstanding at December 31, 2025 1,392,500 $ 2.34 (1) Forfeited PSUs Stock-Based Compensation for Employees and Non-Employees The weighted average grant-date fair value of the stock options granted during the years ended December 31, 2025 and December 31, 2024 was $ 5.86 and $ 6.02 per share, respectively. The Company uses the Black-Scholes Merton option-pricing model to determine the fair value of stock options. The determination of the fair value of stock-based payment awards on the date of grant is affected by the stock price as well as assumptions regarding a number of variables. These variables include expected stock price volatility over the term of the awards, risk-free interest rates and expected dividends. The estimated grant date fair values of employee stock options were calculated using the following assumptions: Years Ended December 31, 2025 2024 Weighted average expected term (in years) 6.0 6.0 - 6.1 Volatility 79.1 % 71.3 % - 72.8 % Risk-free interest rate 4.0 % 4.1 % - 4.5 % Dividend yield — — Expected Term The expected term is calculated using the simplified method, which is available where there is insufficient historical data about exercise patterns and post-vesting employment termination behavior. The simplified method is based on the vesting period and the contractual term for each grant, or for each vesting-tranche for awards with graded vesting. The mid-point between the vesting date and the maximum contractual expiration date is used as the expected term under this method. For awards with multiple vesting-tranches, the periods from grant until the mid-point for each of the tranches are averaged to provide an overall expected term. Volatility The expected stock price volatility assumptions for the Company’s stock options for the years ended December 31, 2025 and December 31, 2024 were determined using the Company’s historical volatility and the historical volatilities of industry peers, referred to as “guideline” companies, as the Company had limited trading history for the Company’s common stock. In evaluating similarity, the Company considered factors such as industry, stage of life cycle and size. The expected stock price volatility assumptions for the purchase rights under the employee share purchase plan for the years ended December 31, 2025 and December 31, 2024 were determined using the historical volatility of the Company’s common stock. F-32 Pulmonx Corporation Notes to Consolidated Financial Statements Risk-Free Rate The risk-free interest rate assumption is based on the U.S. Treasury instruments whose term was consistent with the expected term of the Company’s stock options. Dividend Yield The expected dividend assumption is based on the Company’s history and expectation of dividend payouts. Fair Value of Common Stock The fair value of the Company’s common stock is determined based on its closing market price on the date of grant. 2020 Employee Share Purchase Plan The Company adopted the ESPP in September 2020, with a total of 720,000 shares of common stock initially reserved for issuance. The ESPP permits eligible employees to acquire shares of the Company’s common stock through periodic payroll deductions of up to 15 % of base compensation. No employee may purchase more than 2,500 shares during an offering period. In addition, no employee may purchase more than $ 25,000 worth of stock, determined by the fair market value of the shares at the time such option is granted, in one calendar year. At the end of each purchase period, employees are able to purchase shares at 85 % of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the last trading day of the offering period. The Company entered into a new offering period beginning August 18, 2025 and ending February 20, 2026. The Company issued 249,908 and 173,941 shares under the ESPP for the years ended December 31, 2025 and December 31, 2024, respectively. As of December 31, 2025, there were 1,795,996 shares authorized for future purchase under the ESPP. In January 2026, the number of shares of common stock available for issuance under the ESPP was increased by 416,736 shares as a result of the automatic increase provision in the ESPP. Compensation expense is calculated using the fair value of the employees' purchase rights under the Black-Scholes model. Years Ended December 31, 2025 2024 Weighted average expected term (in years) 0.5 0.5 Volatility 64.0 % - 122.6 % 54.7 % - 69.7 % Risk-free interest rate 4.1 % - 4.3 % 5.0 % - 5.3 % Dividend yield — — Total Stock-Based Compensation Stock-based compensation expense is reflected in the statements of operations and comprehensive loss as follows (in thousands): Years Ended December 31, 2025 2024 Cost of goods sold $ 1,944 $ 1,873 Research and development 2,635 2,708 Selling, general and administrative 16,654 18,374 Total $ 21,233 $ 22,955 F-33 Pulmonx Corporation Notes to Consolidated Financial Statements The above stock-based compensation expense related to the following equity-based awards (in thousands): Years Ended December 31, 2025 2024 Stock options and restricted stock units $ 20,937 $ 22,460 ESPP 296 495 Total $ 21,233 $ 22,955 Stock-based compensation of $ 1.7 million and $ 1.7 million was capitalized into inventory for the years ended December 31, 2025 and December 31, 2024, respectively. Stock-based compensation capitalized in prior periods of $ 1.9 million and $ 1.8 million was recognized as cost of sales in the years ended December 31, 2025 and December 31, 2024, respectively. As of December 31, 2025, there was $ 30.6 million of unrecognized compensation costs related to non-vested common stock options and restricted stock units, expected to be recognized over a weighted-average period of 2.4 years. The total grant date fair value of shares vested during the years ended December 31, 2025 and December 31, 2024 was $ 17.4 million and $ 15.0 million, respectively. As of December 31, 2025, the Company had unrecognized employee stock-based compensation relating to ESPP awards of less than $ 0.1 million, which is expected to be recognized over a weighted-average period of 0.1 years. Stock Modification In February 2024, the Company’s former Chief Executive Officer, Glendon French, resigned as President and Chief Executive Officer, effective as of March 15, 2024. Following this date, Mr. French continued as a full-time employee of the Company in the capacity of Senior Advisor to the new President and Chief Executive Officer until May 1, 2024, when his employment ceased. Thereafter, Mr. French has continued to serve as a member of the Company’s board of directors, and his outstanding equity awards have continued to vest in accordance with their terms, subject to his continued service to the Company. The Company evaluated the change in status in accordance with ASC 718 and determined that there was a modification to the unvested awards expected to vest after March 15, 2024. The total stock-based compensation expense related to the modification, evaluated as of the modification date, was $ 6.3 million, to be recognized over the remaining vesting periods. The Company recorded $ 2.1 million and $ 2.3 million in stock-based compensation expenses related to the modification for the years ended December 31, 2025 and December 31, 2024, respectively. F-34 Pulmonx Corporation Notes to Consolidated Financial Statements 11. Net Loss per Share Attributable to Common Stockholders The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders which excludes shares which are legally outstanding, but subject to repurchase by the Company (in thousands, except share and per share amounts): Years Ended December 31, 2025 2024 Numerator Net loss attributable to common stockholders $ ( 54,003 ) $ ( 56,394 ) Denominator Weighted-average common stock outstanding 40,685,934 39,111,106 Less: weighted-average common shares subject to repurchase — ( 33 ) Weighted-average common shares used to compute basic and diluted net loss per share 40,685,934 39,111,073 Net loss per share attributable to common stockholders, basic and diluted $ ( 1.33 ) $ ( 1.44 ) The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted average shares outstanding because such securities have an antidilutive impact due to the Company’s net loss, in common stock equivalent shares: Years Ended December 31, 2025 2024 Options to purchase common stock 3,067,088 3,627,606 Unvested restricted stock units 6,667,812 2,728,599 Shares committed under ESPP 150,156 80,791 Total Shares 9,885,056 6,436,996 12. Segment Information The chief operating decision maker for the Company is the Chief Executive Officer. The Company’s Chief Executive Officer reviews financial information presented on a consolidated basis, accompanied by information about revenue by geographic region, for purposes of allocating resources and evaluating financial performance. The Company has one business activity and there are no segment managers who are held accountable for operations, operating results or plans for levels or components below the consolidated unit level. Accordingly, the Company has determined that it has a single reportable and operating segment structure. The Company’s Chief Executive Officer evaluates performance based primarily on revenue in the geographic locations in which the Company operates. Revenue by geographic area is based on the billing address of the customer. The following table sets forth our revenue by geographic area (in thousands): Years Ended December 31, 2025 2024 United States $ 57,023 $ 56,465 Europe, Middle-East and Africa (“EMEA”) 26,985 22,329 Asia Pacific 6,229 4,439 Other International 260 556 Total $ 90,497 $ 83,789 F-35 Pulmonx Corporation Notes to Consolidated Financial Statements The CODM also utilizes the Company’s long-range plan as a key input for resource allocation. The CODM makes decisions on resource allocation, assesses performance of the business, and monitors budget versus actual results using consolidated net loss. Significant expenses within consolidated net loss include cost of goods sold, research and development, and selling, general and administrative expenses, which are each separately presented on the Company’s Consolidated Statements of Operations and Comprehensive Loss. In addition, the CODM is provided with the stock-based compensation expense included in research and development expenses and selling, general and administrative expenses. See FN 10, “Stockholders’ Equity” for more information. Other segment items included in consolidated net loss are interest income, interest expense, and other income, net, and income tax expense. Long-lived assets by geographic area are based on physical location of those assets. The following table sets forth our long-lived assets by geographic area (in thousands): December 31, 2025 2024 United States $ 2,144 $ 2,824 Europe, Middle-East and Africa 59 44 Asia Pacific 17 39 Total $ 2,220 $ 2,907 13. Employee Benefit Plan Effective October 1997, the Company implemented a retirement savings plan (the “Savings Plan”) which is intended to qualify as a deferred savings plan under Section 401(k) of the Internal Revenue Code. Participants are allowed to contribute up to 100 % of the total compensation, not to exceed the amount allowed by the applicable statutory prescribed limit. There have been no contributions made to the Savings Plan by the Company since inception. 14. Subsequent Events Perceptive Credit Facility Subsequent to December 31, 2025, on March 2, 2026 (the “Closing Date”), the Company entered into a Credit Agreement and Guaranty (the “Credit Agreement”) and a Security Agreement (the “Security Agreement”), with Perceptive Credit Holdings V, LP (“Perceptive”), as the initial lender, administrative agent and collateral agent. The Perceptive Credit Agreement provides for a senior secured term loan facility in an aggregate principal amount of up to $ 60.0 million (the “Loan Facility”). On the Closing Date, the Company borrowed an initial loan under the Credit Agreement in an aggregate principal amount of $ 40.0 million. The Loan Facility permits the Company to borrow up to an additional $ 20 million, in two additional equal tranches. The first $ 10.0 million tranche becomes available if the Company reaches at least $ 92.5 million in revenue for any trailing twelve-month period ending as of the end of last day of any fiscal quarter through, and including, the fiscal quarter ending September 30, 2027, and the second $ 10.0 million tranche becomes available if the Company reaches at least $ 100.0 million in revenue for any trailing twelve-month period ending as of the end of last day of any fiscal quarter through, and including, the fiscal quarter ending December 31, 2027. The Loan Facility has a maturity date of March 2, 2031 (the “Maturity Date”). The Loan Facility accrues interest, payable monthly in arrears, at an annual rate equal to the sum of (a) an applicable margin of 7.00 % (the “Applicable Margin”) plus (b) the greater of (i) one-month term SOFR and (ii) 3.75 %. Upon the occurrence and during the continuance of an event of default under the Credit Agreement, the Applicable Margin will increase by an additional 3.00 % per annum at Perceptive’s election (retroactive to the date of such event of default), or automatically in the case of a payment or bankruptcy event of default. F-36 Pulmonx Corporation Notes to Consolidated Financial Statements The loans under the Loan Facility may be prepaid at any time, subject to a prepayment premium ranging from 2 % to 10 % if such prepayment occurs on or prior to the fourth anniversary of the Closing Date. On the Closing Date, the Company paid an upfront fee of $ 750,000 , which is equal to 1.25 % of the aggregate principal amount of the Loan Facility. On each date when any outstanding principal under the Loan Facility is repaid, the Company will be required to pay an exit fee equal to 1.50 % of such principal amount. The Credit Agreement contains certain representations and warranties, affirmative covenants, negative covenants, and events of default that are customarily required for similar financings. In addition, the Credit Agreement contains financial covenants requiring the Company to (i) at all times prior to the Maturity Date, maintain minimum Liquidity (as defined in the Credit Agreement) of at least $ 4.0 million and (ii) as of each calculation date set forth in the Credit Agreement, maintain Revenue (as defined in the Credit Agreement) that is not less than the amounts specified in the Credit Agreement. The occurrence of an event of default under the Credit Agreement could result in, among other things, the declaration that all outstanding principal and interest thereunder are immediately due and payable in whole or in part. In connection with the Company’s entry into the Loan Facility, on March 2, 2026, the Company repaid all outstanding indebtedness under the Amended and Restated CIBC Agreement, and terminated all its obligations and commitments thereunder. Perceptive Warrant On the Closing Date, the Company issued to Perceptive a warrant to purchase up to 1,000,000 shares of the Company’s common stock, par value $ 0.001 per share, with an exercise price of $ 1.92 per share, which is a 25 % premium to the 10 -day volume weighted average price of the common stock for the period ending on the business day immediately preceding the Closing Date. On the date of the funding of each delayed draw term loan under the Credit Agreement, the Company will issue to Perceptive additional warrants to purchase a number of shares of common stock equal to 0.025 times the dollar amount of delayed draw term loans funded on such date (which number of shares will be adjusted for any stock splits, stock combinations and the like that take place after the Closing Date and prior to the applicable funding date), with an exercise price equal to a 25 % premium to the 10 -day volume weighted average price of the common stock for the period ending on the business day immediately preceding such date. All the warrants, regardless of issuance date, will have an expiration date of March 2, 2033, may be exercised on a cashless or “net” basis, are freely transferable, and will be automatically exercised, on a cashless basis, prior to their expiration if the value of the shares underlying the respective warrant is greater than the then-applicable exercise price. F-37 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.