What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2026-03-03 compared with 2025-03-04 · 300 added, 283 removed, 563 unchanged (51% of the section changed)

28 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Emphasis of Matter

As disclosed in Note 6 to the financial statements, the Company has a term loan maturing in September 2026.

Management’s evaluation of the events and conditions related to this matter are described in Note 1.

/s/ PricewaterhouseCoopers LLP

4 unchanged sentences

Balance Sheets

(in thousands, except share and per share amounts) 2024

(in thousands, except for share and per share amounts) 2025

Current assets:

23 unchanged sentences

Stockholders’ equity:

Preferred stock, $ 0.001 par value, 10,000,000 shares authorized and no shares issued and outstanding as of December 31, 2024 and December 31, 2023

Preferred stock, $ 0.001 par value, 10,000,000 shares authorized and no shares issued and outstanding as of December 31, 2025 and 2024

Common stock, $ 0.001 par value, 200,000,000 shares authorized as of December 31, 2025 and December 31, 2024;

30,145,039 and 27,823,465 shares issued and outstanding as of December 31, 2024 and December 31, 2023, respectively

33,574,759 and 30,145,039 shares issued and outstanding as of December 31, 2025 and 2024, respectively

Additional paid-in-capital 571,412 538,933

6 unchanged sentences

Year Ended December 31,

(in thousands, except share and per share amounts) 2024

(in thousands, except for share and per share amounts) 2025

Revenue $ 99,986 $ 79,906

2 unchanged sentences

Operating expenses:

Sales and marketing 46,580 39,669

Research and development 27,888 23,653

Selling, general and administrative 57,103 54,518

General and administrative 19,090 17,434

Total operating expenses 93,558 80,756

9 unchanged sentences

Statements of Stockholders’ Equity

Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders’ Equity

(in thousands, except share amounts) Shares Amount

Common Stock Additional Paid-In Capital Accumulated Deficit Total Stockholders’ Equity

(in thousands, except for share amounts) Shares Amount

Balances at January 1, 2024 27,823,465 $ 28 $ 524,435 $ ( 503,809 ) $ 20,654

Net loss — — — ( 27,141 ) ( 27,141 )

Unrealized loss adjustment for short-term investment — — — 1,108 — 1,108

Issuance of common stock pursuant to stock option exercises 556,718 1 809 — 810

10 unchanged sentences

Net loss — — — ( 21,465 ) ( 21,465 )

Issuance of common stock pursuant to stock option exercises 556,718 1 809 — — 810

Issuance of common stock pursuant to Employee Stock Purchase Plan 202,616 — 1,121 — — 1,121

Issuance of ordinary shares in follow-on offering, net of underwriting discounts and commissions and offering expenses of $ 5,365

7,475,000 7 69,377 — 69,384

Repurchase of common stock from KCK Ltd.

( 5,270,845 ) ( 5 ) ( 49,541 ) — ( 49,546 )

Issuance of common stock as part of At-the-Market offering, net of sales commission and offering expenses of $ 15

18,590 — 224 — 224

Issuance of common stock pursuant to stock option exercises 199,638 — 593 — 593

Issuance of common stock pursuant to Employee Stock Purchase Plan 126,835 — 1,282 — 1,282

Issuance of common stock upon vesting of restricted stock units 920,717 2 ( 2 ) — —

Shares withheld for taxes ( 40,215 ) — ( 543 ) — ( 543 )

Repurchase of common stock ( 1,282 ) — — — — —

Change in early exercise liability — — 1 — — 1

Stock-based compensation — — 11,089 — 11,089

14 unchanged sentences

PIK interest incurred but not paid on term loan — 1,389

Loss on debt extinguishment 527 —

Amortization of right-of-use asset 1,710 1,562

(Gain) loss on short-term investments ( 229 ) 315

Gain on short-term investments ( 41 ) ( 229 )

Inventory write-downs 159 251

Loss on disposal of property and equipment 14 —

Changes in operating assets and liabilities:

10 unchanged sentences

Proceeds from sale of short-term investments — 9,300

Net cash provided by investing activities 8,994 23,027

Net cash (used in) provided by investing activities ( 332 ) 8,994

Cash flows from financing activities

Proceeds from issuance of common stock in follow-on offering, net of underwriting discounts and commissions 69,654 —

Repurchase of common stock from KCK Ltd.

Proceeds from issuance of common stock under employee plans 1,875 1,931

1 unchanged sentence

Proceeds from At-the-Market offering, net of sales commission 232 3,277

Payment of deferred offering costs — ( 305 )

Proceeds from debt, net of discounts and issuance costs 58,435 —

Repayment of debt ( 60,507 ) —

Net cash provided by financing activities 19,600 4,327

Net (decrease) increase in cash and cash equivalents ( 4,628 ) 11,453

Cash, cash equivalents and restricted cash

Beginning of year 18,180 6,727

End of year $ 13,552 $ 18,180

Net increase (decrease) in cash and cash equivalents 8,262 ( 4,628 )

Cash, cash equivalents and restricted cash at the Beginning of Period 13,552 18,180

Cash, cash equivalents and restricted cash at the End of Period $ 21,814 $ 13,552

Reconciliation of cash, cash equivalents and restricted cash to balance sheets:

1 unchanged sentence

Restricted cash 122 122

Total cash, cash equivalents and restricted cash $ 13,552 $ 18,180

Cash, cash equivalents and restricted cash in balance sheets $ 21,814 $ 13,552

Supplemental disclosure of cash flow information:

Cash paid for interest $ 6,226 $ 4,476

Supplemental disclosures of non-cash investing and financing information:

The accompanying notes are an integral part of these financial statements.

1 unchanged sentence

Statements of Cash Flows

Net change in accrued liabilities from early exercise of options $ ( 1 ) $ ( 1 )

Purchase of property and equipment included in accounts payable $ 19 $ 69

Cash paid for interest $ 6,196 $ 6,226

Supplemental disclosures of non-cash investing and financing information:

Deferred offering costs offset against additional paid-in capital $ 277 $ 110

Purchase of property and equipment included in accounts payable $ 13 $ 19

Net change in accrued liabilities from early exercise of options $ — $ ( 1 )

The accompanying notes are an integral part of these financial statements.

9 unchanged sentences

During the year ended December 31, 2024, the Company sold 444,555 shares of common stock under the Sales Agreement for gross proceeds of $ 3.4 million, or $ 3.2 million after deducting sales commissions and offering expenses.

As of December 31, 2024, the Company has $ 38.5 million remaining under its ATM program.

Refer to Note 12 for information on the termination of the ATM program in February 2025.

In January 2025, the Company sold 18,590 shares of common stock under the Sales Agreement for gross proceeds of $ 0.2 million, or $ 0.2 million after deducting sales commissions and offering expenses.

In February 2025, the Company terminated the Sales Agreement and the ATM program.

On the date of termination, the Company had $ 38.3 million remaining under the ATM program.

Follow-On Offering

In February 2025, the Company completed a follow-on offering of 7,475,000 shares of the Company’s common stock, including 975,000 shares from the exercise of the underwriters’ option to purchase additional shares, at an offering price of $ 10.00 per share.

The aggregate net proceeds to the Company from the follow-on offering were $ 69.7 million after deducting underwriting discounts and commissions and offering expenses.

The Company used $ 49.5 million of the net proceeds to repurchase all of the 5,270,845 shares held by its significant stockholder (a related party), KCK Ltd., at $ 9.40 per share.

The repurchased shares became authorized but unissued shares.

Liquidity and Capital Resources

5 unchanged sentences

Management believes that the Company’s cash, cash equivalents and short-term investments will allow the Company to continue its planned operations for at least the next 12 months from the date of the issuance of these financial statements.

In connection with the Term Loan described in Note 6, the Company will need to be in compliance with a minimum annual net revenue covenant determined in accordance with generally accepted accounting principles of $ 70.0 million in each of the years ending December 31, 2024 and December 31, 2025 and maintain a minimum cash and cash equivalents balance of $ 5.0 million.

If the Company cannot generate sufficient revenue in the future, the Company may not be in compliance with the annual net revenue covenant and the lender may call the debt resulting in the Company immediately needing additional capital, and resulting in a going concern.

The MidCap Credit Agreement (see Note 6) financial covenants require the Company to maintain an Applicable Liquidity Threshold no less than (a) $ 60.0 million until June 30, 2027, and (b) $ 40.0 million thereafter;

or (c) provided the Company earns at least $ 90.0 million net revenue from the RNS System in 2026, liquidity shall be no less than $ 35.0 million thereafter.

In the event liquidity falls below the Applicable Liquidity Threshold, the Company is required to achieve minimum annual trailing net RNS System revenue, tested on a quarterly basis, starting from $ 69.2 million over a trailing 12-month period ending June 30, 2025, and increasing to $ 87.3 million for the trailing 12-month period ending March 31, 2030.

The Company’s trailing 12-month net RNS System revenue was $ 81.7 million as of December 31, 2025, exceeding the $ 71.0 million minimum per the MidCap Credit Agreement.

In addition to the Applicable Liquidity Threshold, the MidCap Credit Agreement requires the Company

NeuroPace, Inc.

Notes to Financial Statements

to maintain a Minimum Liquidity balance of $ 25.0 million.

The MidCap Credit Agreement defines liquidity to include cash and cash equivalents, short-term investments, and following the initial borrowing under the Revolver (see Note 6), the available Revolver balance.

If the Company does not meet the financial covenants, the lenders may call the debt, which will result in the Company immediately needing additional capital and may raise doubt about the Company’s ability to continue as a going concern.

The Company’s ability to raise additional capital may be adversely impacted by global economic conditions and disruptions to, and volatility in, the financial markets in the United States and worldwide.

If the Company is unable to raise capital when needed, it will need to delay, limit, reduce or terminate planned commercialization or product development activities in order to reduce costs.

As of December 31, 2024, the Company was in compliance with all covenants of the Term Loan.

As of December 31, 2025, the Company was in compliance with all covenants of the MidCap Credit Agreement.

Summary of Significant Accounting Policies

1 unchanged sentence

The financial statements have been prepared in conformity with generally accepted accounting principles in the United States, or GAAP, as defined by the Financial Accounting Standards Board, or the FASB.

NeuroPace, Inc.

Notes to Financial Statements

Reclassifications

Certain reclassifications have been made to the prior year footnote to conform to the presentation used in the current year.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the amounts and disclosures reported in the financial statements.

The Company uses significant judgment when making estimates related to the provision for excess and obsolete inventories.

The Company uses significant judgments when making estimates related to the provision for excess and obsolete inventories.

The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

2 unchanged sentences

The Company derives most of its revenue from sales of RNS Systems to hospital facilities (typically comprehensive epilepsy centers, or Level 4 CECs) that implant its products.

Beginning in the fourth quarter of 2022, the Company also derives revenue from sales of DIXI Medical products, primarily to its current customer base.

In addition, from the fourth quarter of 2022 through the fourth quarter of 2025, the Company derived revenue from sales of DIXI Medical products, primarily to its current customer base.

Beginning in the fourth quarter of 2023, the Company also derives revenue from services provided to Rapport Therapeutics, Inc., or Rapport.

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers .

The Company recognizes revenue in accordance with Accounting Standards Codification, or ASC, 606, Revenue from Contracts with Customers .

Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services.

5 unchanged sentences

recognize revenue when (or as) the entity satisfies a performance obligation.

NeuroPace, Inc.

Notes to Financial Statements

At contract inception, the Company assesses the products or services promised within each contract and determines those that are performance obligations.

7 unchanged sentences

The Company typically delivers its RNS System and related products to a hospital on the date of the scheduled procedure.

There is no commitment or contract until the delivery of the product and the procedure may be canceled

NeuroPace, Inc.

Notes to Financial Statements

There is no commitment or contract until the delivery of the product and the procedure may be canceled at any time.

Once the device has been implanted in or otherwise provided to a patient, the customer is considered to have accepted the delivery (i.e., has approved the contract) and both parties are committed to perform their respective obligations.

10 unchanged sentences

Revenue related to data analysis is recognized upon completion of the serv ices.

The Company’s contract with Rapport commenced during the fourth quarter of 2023.

The related revenue recognized for the years ended December 31, 2025 and 2024 were $ 2.4 million and $ 1.2 million, respectively.

2 unchanged sentences

Payment terms are typically 30 days from the fulfillment of the orders and 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.

Sales taxes that are collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from net sales, however, most of the Company’s sales are tax exempt.

Sales taxes that are collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from net sales, however, most

NeuroPace, Inc.

Notes to Financial Statements

of the Company’s sales are tax exempt.

The Company believes that collection is probable as it has no history of uncollectible accounts and the customers are large, creditworthy institutions.

1 unchanged sentence

Costs associated with product sales include commissions, where the Company applies the practical expedient and recognizes commissions as expense when incurred because the expense is incurred over a period of time of less than one year.

Commissions are reported in selling, general and administrative expense in the statements of operations and comprehensive loss.

The Company’s contract balances were accounts receivable of $ 12.9 million and $ 12.3 million as of December 31, 2024, and December 31, 2023, respectively.

Commissions are reported in sales and marketing expense and general and administrative expense in the statements of operations and comprehensive loss.

The Company’s contract assets were accounts receivable of $ 14.7 million and $ 12.9 million as of December 31, 2025 and 2024, respectively.

The Company’s contract liabilities consist of deferred revenue of $ 0.1 million and $ 0.6 million as of December 31, 2025 and 2024, respectively.

The Company’s deferred revenue balance was $ 0.6 million as of December 31, 2024, which is expected to be recognized as revenue in 2025.

The Company’s deferred revenue balance was $ 0.1 million at December 31, 2025, which is expected to be recognized as revenue in 2026.

Revenue recognized during the year ended December 31, 2025 that was included in the deferred revenue balance at the beginning of the year was $ 0.6 million.

As of December 31, 2025, the aggregate amount of the transaction price allocated to the remaining performance obligations that are unsatisfied or partially unsatisfied was $ 1.5 million, which the Company expects to recognize as revenue by December 2027.

NeuroPace, Inc.

Notes to Financial Statements

Fair Value of Financial Instruments

Carrying amounts of certain of the Company’s financial instruments, including cash equivalents, accounts receivable, accounts payable and accrued liabilities, approximate fair value because of the short-term nature of these instruments.

The Company has a short-term investment in a fixed income mutual fund, which is classified as equity security and carried at fair value based on quoted market prices.

The Company has a short-term investment in a fixed income mutual fund, which is classified as an equity security and carried at fair value based on quoted market prices.

Changes in the fair value of the short-term investment are recorded in income or loss.

5 unchanged sentences

Cash equivalents that are available-for-sale investments are recorded at fair value, based on quoted market prices.

As of December 31, 2024 and December 31, 2023, the Company’s cash equivalents are entirely comprised of investments in money market funds.

As of December 31, 2025 and 2024, the Company’s cash equivalents are entirely comprised of investments in money market funds.

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 the years ended December 31, 2024 and December 31, 2023 consists of collateral for the amended letter of credit that was issued in connection with the Company’s facility lease (see Note 5).

Restricted cash for the years ended December 31, 2025 and 2024 consists of collateral for the amended letter of credit that was issued in connection with the Company’s facility lease (see Note 5).

Concentration of Credit Risk, and Other Risks and Uncertainties

3 unchanged sentences

The Company’s cash equivalents are invested in money market funds.

NeuroPace, Inc.

Notes to Financial Statements

The Company’s accounts receivable, with the exception of $ 0.1 million, are due from a variety of health care organizations in the United States.

For the years ended December 31, 2024 and December 31, 2023, there were no customers that represented 10% or more of revenue.

As of December 31, 2024 and December 31, 2023, no customer represented 10% or more of the Company’s accounts receivable.

For the years ended December 31, 2025 and 2024, there were no customers that represented 10% or more of revenue.

As of December 31, 2025 and 2024, no customer represented 10% or more of the Company’s accounts receivable.

Accounts Receivable

2 unchanged sentences

The Company uses its judgment, based on the best available facts and circumstances, and records an allowance against amounts due to reduce the receivable to the amount that is expected to be collected.

The Company determined that no allowance was required as of December 31, 2024 and December 31, 2023.

The Company determined that no allowance was required as of December 31, 2025 and 2024.

To date, the Company has not experienced any material credit-related losses.

3 unchanged sentences

The Company regularly reviews inventory quantities in consideration of actual loss experiences, projected future demand, and remaining shelf life to record a provision for excess and obsolete inventory when appropriate.

The Company’s policy is to

NeuroPace, Inc.

Notes to Financial Statements

write down inventory that has become obsolete, inventory that has a cost basis in excess of its expected lower of cost or net realizable value, and inventory in excess of expected requirements.

The Company’s policy is to write down inventory that has become obsolete, inventory that has a cost basis in excess of its expected lower of cost or net realizable value, and inventory in excess of expected requirements.

The estimate of excess quantities is judgmental and primarily dependent on the Company’s estimates of future demand for a particular product.

If the estimate of future demand is too high, the Company may have to increase the reserve for excess inventory for that product and record a charge to the cost of goods sold.

Inventory write-downs were $ 0.3 million and $ 0.2 million for the years ended December 31, 2024 and December 31, 2023, respectively.

Inventory write-downs were $ 0.2 million and $ 0.3 million for the years ended December 31, 2025 and 2024, respectively.

Property and Equipment, net

8 unchanged sentences

Impairment, if any, is measured as the amount by which the carrying amount of the long-lived assets exceeds their fair value.

The Company did no t record any impairment of long-lived assets for the years ended December 31, 2024 and December 31, 2023.

The Company did no t record any impairment of long-lived assets for the years ended December 31, 2025 and 2024.

The Company determines if an arrangement is a lease, or contains a lease, at inception.

1 unchanged sentence

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.

Since the Company’s lease does not provide an implicit rate, the Company uses its incremental borrowing rate based on the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term and in a similar economic environment at commencement date in determining the present value of future payments.

Since the Company’s lease does not provide a readily determinable implicit rate, the Company uses its incremental borrowing rate based on the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term and in a similar economic

NeuroPace, Inc.

Notes to Financial Statements

environment at commencement date in determining the present value of future 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.

6 unchanged sentences

Should a planned equity financing be abandoned, terminated or significantly delayed, the deferred offering costs are immediately written off to operating expenses.

Upon issuing shares under the ATM offering during the years ended December 31, 2024 and 2023, $ 0.1 million and $ 0.3 million, respectively, of deferred offering costs were recorded against the proceeds from the ATM offering and recorded in stockholders

NeuroPace, Inc.

Notes to Financial Statements

equity as a reduction of additional paid-in capital.

Upon issuing shares under the ATM offering during the years ended December 31, 2025 and December 31, 2024, $ 0.3 million and $ 0.1 million, respectively, of deferred offering costs were recorded against the proceeds from the ATM offering and recorded in stockholders equity as a reduction of additional paid-in capital.

As of December 31, 2025 and 2024, $ 0.0 million and $ 0.3 million of deferred offering costs related to the ATM offering were recorded on the balance sheets, respectively.

10 unchanged sentences

On July 22, 2024, the Company received funding approval for year four in the amount of $ 1.7 million, which includes $ 1.0 million for subawards.

On August 20, 2025, the Company received funding approval for year five in the amount of $ 1.6 million, which includes $ 0.8 million for subawards.

For funds received under the NIH funding agreement, the Company recognizes a reduction in research and development expenses in an amount equal to the qualifying expenses incurred in each period up to the amount awarded by the NIH.

The Company received $ 0.7 million and $ 1.7 million in funding during the years ended December 31, 2025 and 2024, respectively.

Through December 31, 2024, $ 3.8 million of qualifying expenses have been incurred and funded by the NIH related to the first to fourth year of funding.

Through December 31, 2025, $ 4.5 million of qualifying expenses have been incurred and funded by the NIH related to the first to fifth year of funding.

Qualifying expenses incurred by the Company in advance of funding by the NIH are recorded within prepaid expenses and other current assets on the balance sheets.

As of December 31, 2024, the Company recorded prepaid expenses and other current assets of less than $ 0.1 million related to the fourth year of funding.

As of December 31, 2025, the Company recorded prepaid expenses and other current assets of less than $0.1 million related to the fifth year of funding.

Warranty costs are accrued based on the Company’s best estimates when management determines that it is probable a charge or liability has been incurred and the amount of loss can be reasonably estimated.

While the Company believes that historical experience provides a reliable basis for estimating such warranty cost, unforeseen quality issues or component failure rates could result in future costs in excess of such estimates.

The warranty liability as of December 31, 2024 and December 31, 2023 was immaterial.

While the Company believes that historical experience provides a reliable basis for estimating such warranty costs, unforeseen

NeuroPace, Inc.

Notes to Financial Statements

quality issues or component failure rates could result in future costs in excess of such estimates.

The warranty liability as of December 31, 2025 and 2024 was immaterial.

Cost of Goods Sold

9 unchanged sentences

Research and development expenses include employee compensation, including stock-based compensation, supplies, consulting, prototyping, testing, materials, travel expenses, depreciation and an allocation of facility overhead expenses.

Additionally, research and development expenses

NeuroPace, Inc.

Notes to Financial Statements

include costs associated with clinical studies including clinical trial design, clinical site reimbursement, data management, travel expenses, the cost of products used for clinical trials and costs associated with regulatory compliance and submitting and maintaining regulatory filings.

Additionally, research and development expenses include costs associated with clinical studies including clinical trial design, clinical site reimbursement, data management, travel expenses, the cost of products used for clinical trials and costs associated with regulatory compliance and submitting and maintaining regulatory filings.

Advertising Costs

The Company expenses advertising costs as incurred.

The Company expenses advertising costs as incurred and records such costs in sales and marketing expenses.

Advertising costs include design and production costs, including website development, physician and patient testimonial videos, written media campaigns, and other items.

10 unchanged sentences

As of each balance sheet date, unresolved uncertain tax positions must be reassessed, and the Company will determine whether (i) the factors underlying the sustainability assertion have changed and (ii) the amount of the recognized tax benefit is still appropriate.

The recognition and measurement of tax benefits requires significant judgment.

The recognition and measurement of tax benefits requires significant judgments.

Judgments concerning the recognition and measurement of a tax benefit might change as new information becomes available.

NeuroPace, Inc.

Notes to Financial Statements

Net Loss per Share Attributable to Common Stockholders

1 unchanged sentence

Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock and potentially dilutive securities outstanding for the period.

For purposes of the diluted net loss per share calculation, stock options, common stock subject to repurchase related to early exercise of stock options, and restricted stock units are considered to be potentially dilutive securities.

Basic and diluted net loss attributable to common stockholders per share is presented in conformity with the two-class method required for participating securities.

The Company considers the shares issued upon the early exercise of stock options subject to repurchase to be participating securities, because holders of such shares have non-forfeitable dividend rights in the event a dividend is paid on common stock.

The holders of the shares issued upon early exercise of stock options subject to repurchase do not have a contractual obligation to share in the Company’s losses.

As such, the net loss was attributed entirely to common stockholders.

For purposes of the diluted net loss per share calculation, stock options, restricted stock units and common stock committed under employee stock purchase plan are considered to be potentially dilutive securities.

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.

NeuroPace, Inc.

Notes to Financial Statements

JOBS Act Accounting Election

5 unchanged sentences

Recently Adopted Accounting Pronouncements

In accordance with Accounting Standards Codification, or ASC, 280, Segment Reporting , the Company operates as one operating and reportable segment.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

The amended guidance requires all public entities, including public entities with a single reportable segment, to disclose in interim and annual periods significant segment expenses that are regularly provided to the chief operating decision maker, or CODM, to allocate resources and assess performance, as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss.

The Company adopted this ASU effective for the fiscal year ended December 31, 2024 on a retrospective basis.

Refer to Note 11 for further information on the Company’s reportable segment.

Recent Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures .

In December 2023, the FASB issued Accounting Standards Update, or ASU, 2023-09, Improvements to Income Tax Disclosures .

This ASU requires greater disaggregation of information about a reporting entity's effective tax rate reconciliation as well as information on income taxes paid.

1 unchanged sentence

This ASU is effective for annual periods beginning after December 15, 2024, with early adoption permitted, and should be applied on a prospective basis although retrospective application is permitted.

The Company adopted this ASU effective for the fiscal year ended December 31, 2025 on a prospective basis, which did not have an impact on our financial statements, although it did result in expanded income-tax related disclosures.

Refer to Note 9, Income Taxes, for inclusion of new disclosures required.

Recent Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), and in January 2025, the FASB issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosure (Subtopic 220-40):

Clarifying the Effective Date .

ASU 2024-03 is intended to provide more detailed information about specified categories of expenses (including employee compensation, depreciation, and amortization) included in certain expense captions presented on the face of the income statement.

ASU 2024-03, as clarified by ASU 2025-01, is 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, and may be applied either prospectively to financial statements issued for reporting periods after its effective date or retrospectively to all prior periods presented in the financial statements.

The Company is currently evaluating the impact this standard will have on its financial statement disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) .

This ASU is intended to provide more detailed information about specified categories of expenses (including employee compensation, depreciation, and amortization) included in certain expense captions presented on the face of the income statement.

This ASU is 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.

This ASU may be applied either prospectively to financial statements issued for reporting periods after its effective date or retrospectively to all prior periods presented in the financial statements.

The Company is currently assessing the impact this standard will have on its financial statement disclosures.

In July 2025, the FASB issued ASU No.

2025-05, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets , providing a practical expedient to measure credit losses on current accounts receivable and current contract assets under Accounting Standards Codification 606, Revenue from Contracts with Customers .

The practical expedient assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset.

This ASU is effective for annual

NeuroPace, Inc.

Notes to Financial Statements

reporting periods beginning after December 15, 2025 and interim reporting periods within those annual reporting periods and should be applied prospectively.

The Company is currently evaluating the impact this guidance will have on its financial statements and related disclosures.

In December 2025, the FASB issued ASU No.

2025-10, Government Grants (Topic 832):

Accounting for Government Grants Received by Business Entities , providing authoritative guidance on the recognition, measurement, presentation, and disclosure of government grants received by business entities.

The standard introduces a framework for determining when grants should be recognized, distinguishing between asset-related and income-related grants, and allows entities to present grants either as a reduction of related expenses or as a separate income line item.

Expanded disclosures about the nature, terms, and conditions of grants are required.

This ASU is effective for annual reporting periods beginning after December 15, 2028 and interim reporting periods within those annual reporting periods, with early adoption permitted.

The Company is currently evaluating the impact this guidance will have on its financial statements and related disclosures.

Fair Value Measurements

4 unchanged sentences

Level 1 Quoted prices in active markets for identical assets or liabilities.

NeuroPace, Inc.

Notes to Financial Statements

Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices 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 assets or liabilities.

2 unchanged sentences

The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

The following table summarizes the Company’s financial assets (cash equivalents and marketable securities) at fair value as of December 31, 2024 (in thousands):

Fair Value as of December 31, 2024

The following tables summarize the Company’s financial assets (cash equivalents and marketable securities) at fair value:

As of December 31, 2025

Basis for Fair Value Measurements

(Level 1) (Level 2) (Level 3)

(in thousands) Level 1 Level 2 Level 3

Money market funds, included in cash and cash equivalents $ 18,965 $ 18,965 $ — $ —

1 unchanged sentence

Total $ 58,331 $ 58,331 $ — $ —

The following table summarizes the Company’s financial assets (cash equivalents and marketable securities) at fair value as of December 31, 2023 (in thousands):

Fair Value as of December 31, 2023

NeuroPace, Inc.

Notes to Financial Statements

As of December 31, 2024

Basis for Fair Value Measurements

(Level 1) (Level 2) (Level 3)

(in thousands) Level 1 Level 2 Level 3

Money market funds, included in cash and cash equivalents $ 13,349 $ 13,349 $ — $ —

1 unchanged sentence

Total $ 52,674 $ 52,674 $ — $ —

There were no liabilities measured at fair value on a recurring and non-recurring basis as of December 31, 2024 and December 31, 2023.

There were no liabilities measured at fair value on a recurring and non-recurring basis as of December 31, 2025 and 2024.

The money market funds are highly liquid and primarily invest in short-term fixed income securities issued by the U.S.

5 unchanged sentences

Interest income from short-term investment is recorded in interest income.

During the years ended December 31, 2024 and 2023, the Company recognized $ 0.2 million and $ 1.0 million in unrealized gains from its short-term investment, respectively.

As of December 31, 2024, the Company’s short-term investment had a cumulative unrealized net gain of $ 0.1 million.

As of December 31, 2023, the Company’s short-term investment had a cumulative unrealized net loss of $ 0.1 million, which included an adjustment of $ 1.1 million unrealized loss recorded in other income (expense), net in the year ended December 31, 2023.

The adjustment was not material to any previously issued financial statements.

NeuroPace, Inc.

Notes to Financial Statements

During the years ended December 31, 2025 and 2024, the Company recognized less than $ 0.1 million and $ 0.2 million in unrealized gains from its short-term investment, respectively.

As of December 31, 2025 and 2024, the Company’s short-term investment had a cumulative unrealized net gain of $ 0.2 million and $ 0.1 million, respectively.

Balance Sheet Components

Inventories consist of the following (in thousands):

Inventories consist of the following:

(in thousands) 2025

Raw materials $ 6,209 $ 3,872

3 unchanged sentences

Property and Equipment, net

Property and equipment, net consists of the following (in thousands):

Property and equipment, net consists of the following:

(in thousands) 2025

Machinery, equipment, furniture and fixtures $ 4,917 $ 4,659

1 unchanged sentence

Leasehold improvements 2,435 2,435

Total 9,331 9,026

Accumulated depreciation ( 8,206 ) ( 7,974 )

Property and equipment, net $ 1,125 $ 1,052

Depreciation expense for the years ended December 31, 2024 and December 31, 2023 was $ 0.2 million and $ 0.2 million, respectively.

Depreciation expense for each of the years ended December 31, 2025 and December 31, 2024 was $ 0.2 million.

NeuroPace, Inc.

Notes to Financial Statements

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

Accrued liabilities consist of the following:

(in thousands) 2025

Payroll and related expenses $ 10,492 $ 8,310

Inventory purchases 874 575

Interest payable 484 —

Professional fees 374 50

Vendor-related expenses 256 320

Other 859 532

$ 9,787 $ 11,180

Total $ 13,339 $ 9,787

Commitments and Contingencies

5 unchanged sentences

The Company has an option to extend the lease for a period of five years , commencing on July 1, 2030 and expiring on June 30, 2035.

The renewal terms have not been included in the lease term used to calculate the ROU assets and lease liability as it is not reasonably certain that the Company will exercise the option.

In conjunction with the original lease agreement, the Company obtained a letter of credit for $ 0.9 million in lieu of a security deposit.

1 unchanged sentence

In June 2021, the letter of credit was amended and further reduced to $ 0.2 million.

NeuroPace, Inc.

Notes to Financial Statements

The terms of the facility lease provide for rental payments on a graduated scale;

1 unchanged sentence

Rental payments range from $ 2.8 million to $ 3.3 million per year over the extended term of the lease.

The maturities of operating lease liabilities as of December 31, 2024 are as follows (in thousands):

Thereafter 1,704

The maturities of operating lease liabilities are as follows:

(in thousands) December 31,

Total undiscounted lease payments 14,384

3 unchanged sentences

Operating lease liability, net of current portion $ 9,836

Operating lease cost was $ 2.8 million and $ 2.8 million for the years ended December 31, 2024 and 2023, respectively.

Operating lease cost was $ 2.8 million for each of the years ended December 31, 2025 and 2024.

As of December 31, 2025, the remaining term for the operating lease in Mountain View, California was 4.5 years, and the discount rate used to measure the lease liability for such operating lease upon recognition was 8.5 %.

During the years ended December 31, 2024 and 2023, cash paid for amounts included in operating lease liabilities of $ 2.9 million and $ 2.8 million, respectively, was included in cash flows from operating activities on the statements of cash flows.

NeuroPace, Inc.

Notes to Financial Statements

During each of the years ended December 31, 2025 and 2024, cash paid for amounts included in operating lease liabilities of $ 2.9 million was included in cash flows from operating activities on the statements of cash flows.

Distribution Agreement

1 unchanged sentence

distributor of DIXI Medical’s stereo electroencephalography product line.

The Distribution Agreement has an initial term of three years , which expires September 30, 2025.

The Distribution Agreement automatically renews for additional one-year terms, unless either party provides written notice to the other party of its intention to not renew at least 180 days prior to the expiration of the then-current term.

The current Distribution Agreement will automatically renew unless either party provides notice of intent not to renew by April 3, 2025.

To maintain the distribution rights, the Company is required to purchase a minimum of $ 2.4 million of DIXI Medical’s products during the twelve months beginning October 2022, and to increase the minimum purchase by 10 % for each of the two subsequent years.

The Company met the purchase commitment for the first two years and expects to meet the purchase commitment for the third year, which is through September 2025.

The Distribution Agreement had an initial term of three years , which expired on September 30, 2025.

During the initial term, to maintain the distribution rights, the Company was required to purchase a minimum of $ 2.4 million of DIXI Medical’s products during the twelve months beginning October 2022, and to increase the minimum purchase by 10 % for each of the two subsequent years.

The Company met the purchase commitment for every year of the Distribution Agreement.

The Distribution Agreement would have automatically renewed for additional one-year term, if neither party provided written notice to the other party of its intention to not renew at least 180 days prior to the expiration of the then-current term.

In March 2025, the Company notified DIXI Medical of its intent to not renew the Distribution Agreement upon expiration and, as a result, the Distribution Agreement terminated on September 30, 2025.

The Distribution Agreement included a wind-down period following the termination date during which the Company had the right to sell any DIXI product inventory that it held on the date of expiration.

At the end of the wind-down period, DIXI Medical is required to buy back, at cost, any DIXI product inventory with at least six months remaining shelf life held by the Company.

In December 2025, the Company and DIXI Medical entered into an amendment to the Distribution Agreement to end the wind-down period and cease commercial partnership activities on December 31, 2025.

Under the amended wind-down plan, the Company is currently selling back, at cost, the remaining DIXI inventory to DIXI Medical, which is expected to be completed prior to the close of the first quarter of 2026.

As of December 31, 2025, the Company had $ 2.0 million related to the DIXI product inventory.

Indemnifications

3 unchanged sentences

The Company indemnifies each of its directors and officers for certain events or occurrences, subject to certain limits, while the director or officer is or was serving at the Company’s request in such capacity, as permitted under Delaware law and in accordance with its certificate of incorporation and bylaws.

The term of the indemnification period lasts as long as the director or officer may be subject to any proceeding arising out of acts or omissions of

NeuroPace, Inc.

Notes to Financial Statements

such individual in such capacity.

The term of the indemnification period lasts as long as the director or officer may be subject to any proceeding arising out of acts or omissions of such individual in such capacity.

The maximum amount of potential future indemnification is unlimited.

The Company believes that the fair value of these indemnification obligations is minimal.

Accordingly, the Company has no t recognized any liabilities relating to these obligations as of December 31, 2024 and December 31, 2023.

Accordingly, the Company has no t recognized any liabilities relating to these obligations as of December 31, 2025 and 2024.

Contingencies

1 unchanged sentence

The Company accrues a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated.

The Company determined that no accrual related to contingencies was required as of December 31, 2024 and December 31, 2023.

The Company determined that no accrual related to contingencies was required as of December 31, 2025 and 2024.

Legal Proceedings

The Company is not involved in any pending legal proceedings that it believes could have a material adverse effect on its business, results of operations, financial condition, or cash flows.

From time to time, the Company may pursue litigation to assert its legal rights and such litigation may be costly and divert the efforts and attention of its management and technical personnel which could adversely affect its business.

From time to time, the Company may

NeuroPace, Inc.

Notes to Financial Statements

pursue litigation to assert its legal rights and such litigation may be costly and divert the efforts and attention of its management and technical personnel which could adversely affect its business.

The Company regularly evaluates current information to determine whether any accruals should be adjusted and whether new accruals are required.

1 unchanged sentence

Legal costs are expensed as incurred.

There were no contingent liabilities requiring accrual as of December 31, 2024 and 2023.

There were no material contingent liabilities requiring accrual as of December 31, 2025 and 2024.

CRG Term Loan

In September 2020, the Company entered into a Term Loan Agreement with CRG Partners IV L.P.

and its affiliates for total borrowings of up to $ 60.0 million, or the Term Loan, and borrowed $ 50.0 million.

The remaining $ 10.0 million of the Term Loan was available to the Company for borrowing until March 31, 2022 if the Company achieved a revenue-based milestone in 2021.

The revenue-based milestone was not achieved, and the remaining $ 10.0 million of the Term Loan expired without being drawn.

The Term Loan initially bore interest at a rate of 12.5 % per year.

In February 2023, the Term Loan was amended which increased the annual interest rate from 12.5 % to 13.5 % effective March 1, 2023.

The amendment was accounted for as a debt modification in accordance with ASC 470, Debt and the Term Loan’s effective interest rate increased from 15.7 % to 16.8 %.

Payments under the Term Loan are made quarterly with payment dates fixed at the end of each calendar quarter.

Through December 2020, the Company had the option to pay the entire interest paid-in-kind, or PIK, by increasing the principal of the Term Loan.

and its affiliates for total borrowings of up to $ 60.0 million, or the CRG Term Loan, and borrowed $ 50.0 million.

The CRG Term Loan initially bore interest at a rate of 12.5 % per year.

In February 2023, the CRG Term Loan was amended which increased the annual interest rate from 12.5 % to 13.5 % effective March 1, 2023.

The amendment was accounted for as a debt modification in accordance with ASC 470, Debt and the CRG Term Loan’s effective interest rate increased from 15.7 % to 16.8 %.

Interest p ayments under the CRG Term Loan were made quarterly at the end of each calendar quarter.

Through December 2020, the Company had the option to pay the entire interest paid-in-kind, or PIK, by increasing the principal of the CRG Term Loan.

From January 2021 through December 2022, the Company had the option to pay interest as follows:

7.5 % per annum paid in cash and 5.0 % per annum PIK by increasing the principal of the Term Loan.

7.5 % per annum paid in cash and 5.0 % per annum PIK by increasing the principal of the CRG Term Loan.

From January 2023 through June 2025, the Company had the option to pay interest as follows:

8.5 % per annum paid in cash and 5.0 % per annum PIK by increasing the principal of the Term Loan.

For each payment date from April 2022 through June 2024, the Company elected the PIK option, increasing the principal of the Term Loan by $ 6.0 million.

The Term Loan was interest-only through September 2023, which could be extended through September 2025 at the Company’s option if the Company completed its initial public offering, or IPO, on or prior to September 30, 2023.

In connection with closing the IPO in April 2021, the Company extended the interest-only period to September 30, 2025.

Following the interest-only period, principal payment was to be due in one installment on September 30, 2025.

In May 2024, the Term Loan was amended to extend the final maturity by one year to September 30, 2026 and eliminate the PIK interest option after June 30, 2024.

8.5 % per annum paid in cash and 5.0 % per annum PIK by increasing the principal of the CRG Term Loan.

For each payment date from April 2022 through June 2024, the Company elected the PIK option, increasing the principal of the CRG Term Loan by $ 6.0 million.

The CRG Term Loan was interest-only through maturity on September 30, 2025.

In May 2024, the CRG Term Loan was further amended to extend the final maturity by one year to September 30, 2026 and eliminate the PIK interest option after June 30, 2024.

The amendment was accounted for as a troubled debt restructuring in accordance with ASC 470 and no gain or loss was recognized.

The Term Loan includes a fee upon repayment of the loan equal to 10 % of the aggregate principal amount being prepaid or repaid, or the backend fee.

As of December 31, 2024, the Term Loan had an annual effective interest rate of 15.5 % per year.

The Term Loan is collateralized by substantially all of the Company’s assets.

The Term Loan Agreement contains customary representations and warranties, covenants, events of default and termination provisions.

The CRG Term Loan included a fee upon repayment of the loan equal to 10 % of the aggregate principal amount being prepaid or repaid, or the backend fee.

The CRG Term Loan was collateralized by substantially all of the Company’s assets.

The Term Loan Agreement contained customary representations and warranties, covenants, events of default and termination provisions.

The financial covenants required that the Company achieve minimum annual revenue thresholds commencing in 2021 and maintain a minimum balance of cash and cash equivalents.

In February 2023, the CRG Term Loan was amended to reduce the minimum annual net revenue covenant to $ 45.0 million for the year ended December 31, 2023.

The Company paid $ 1.0 million in fees to the lender and third parties which was reflected as a discount on the loan and was being accreted over the life of the loan using the effective interest method.

Also, the Company issued warrants to the lender for a total of 346,823 shares of Series B’ redeemable convertible preferred stock which was converted into 213,941 shares of common stock.

The warrants had a fair value of $ 0.6 million as of the issuance date, which was accounted for as debt issuance costs.

In June 2025, the Company repaid its entire obligation under the CRG Term Loan amounting to $ 61.9 million, including principal of $ 56.0 million, interest of $ 1.4 million and backend fee of $ 4.5 million, using the proceeds from MidCap Term Loan (as defined below).

At the time of repayment, the lender agreed to decrease the backend fee from 10 % to 8 % of the aggregate principal amount being prepaid or repaid.

The repayment of the obligation under the CRG Term Loan was accounted for as a debt extinguishment and the Company recorded a loss on extinguishment of $ 0.5 million included in other income (expense), net in the statements of operations and comprehensive loss.

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 the CRG Term Loan of $ 0.1 million and $ 0.2 million, respectively.

NeuroPace, Inc.

Notes to Financial Statements

financial covenants require that the Company achieve minimum annual revenue thresholds commencing in 2021 and maintain a minimum balance of cash and cash equivalents (see Note 1).

In February 2023, the Term Loan was amended to reduce the minimum annual net revenue covenant to $ 45.0 million for the year ended December 31, 2023.

The Company paid $ 1.0 million in fees to the lender and third parties which is reflected as a discount on the loan and is being accreted over the life of the loan using the effective interest method.

Also, the Company issued warrants to the lender for a total of 346,823 shares of Series B’ redeemable convertible preferred stock.

The warrants had a fair value of $ 0.6 million as of the issuance date, which was accounted for as debt issuance costs.

During the years ended December 31, 2024 and December 31, 2023, the Company recorded interest expense related to debt discount and debt issuance costs of the Term Loan of $ 0.2 million and $ 0.3 million, respectively.

Interest expense on the Term Loan was $ 8.8 million and $ 8.5 million during the years ended December 31, 2024 and December 31, 2023, respectively.

As of December 31, 2024, future minimum payments for the Term Loan are as follows (in thousands):

Interest expense on the CRG Term Loan was $ 3.7 million and $ 8.8 million during the years ended December 31, 2025 and December 31, 2024, respectively.

MidCap Term Loan

In June 2025, the Company entered into a credit, security and guaranty agreement (see Note 1), or MidCap Credit Agreement, with MidCap Funding IV Trust, as agent, MidCap Financial Trust, as term loan servicer and the financial institutions and other entities from time to time party thereto, or the Lenders.

The MidCap Credit Agreement provides for a first lien senior secured credit facility consisting of (i) a $ 60.0 million term loan facility, or MidCap Term Loan, which was funded at closing of the MidCap Credit Agreement, and (ii) a revolving credit facility in an aggregate principal amount not to exceed $ 15.0 million, or the Revolver, and together with the MidCap Term Loan, the Loans.

The Loans mature on June 4, 2030, and the principal is due in one installment on June 4, 2030.

The MidCap Term Loan bears interest at an annual rate of the 30-day forward-looking term Secured Overnight Financing Rate, or SOFR, plus 5.5 %, subject to a 2.0 % SOFR floor.

Borrowings under the Revolver will accrue interest at an annual rate of the 30-day forward-looking term SOFR plus 3.75 %, subject to a 2.0 % SOFR floor.

Following the initial borrowing of the Revolver, the Company will pay an unused line fee equal to 0.25 % per annum of the average unused portion of the Revolver.

Interest and unused line fee, if any, are payable monthly in arrears.

The Company may voluntarily prepay the Loans in whole or in part and terminate the respective commitments thereunder prior to the maturity date.

Each of the MidCap Term Loan and the Revolver is subject to a prepayment premium equal to 3.0 % of the amount terminated during the first year, 2.0 % in the second year, 1.0 % in the third year, and 0 % thereafter.

In addition, the MidCap Term Loan is subject to an exit fee of 2 % of the amount borrowed upon prepayment or repayment.

The Loans are collateralized by substantially all of the Company’s assets.

The MidCap Credit Agreement contains customary representations and warranties, covenants, events of default and termination provisions.

See Note 1 for its financial covenants.

The Company incurred $ 1.5 million in fees to the lender and third parties which is reflected as a discount on the MidCap Term Loan and is being accreted over the life of the loan using the effective interest method.

In addition, the Company shall pay an annual administrative fee, payable in advance, equal to 0.25 % of the aggregate outstanding principal of the MidCap Term Loan.

As of December 31, 2025, the MidCap Term Loan had an annual effective interest rate of 11.0 %.

Interest expense on the MidCap Term Loan was $ 3.7 million during the year ended December 31, 2025, including interest expense related to debt discount and debt issuance costs of the MidCap Term Loan of $ 0.3 million.

The Revolver has not been drawn upon as of December 31, 2025.

NeuroPace, Inc.

Notes to Financial Statements

The following table sets forth the Company’s future minimum payments for the MidCap Term Loan as of December 31, 2025.

Estimated future interest payments are calculated using the effective interest rate of 11.0 % at December 31, 2025.

(in thousands) Estimated Interest and Administrative Fee Principal and Exit Fee Total

2026 $ 5,852 $ — $ 5,852

2027 5,852 — 5,852

2028 5,867 — 5,867

2029 5,852 — 5,852

2030 2,905 61,200 64,105

Total 26,328 61,200 87,528

Unamortized debt discount and issuance cost ( 2,916 )

Unaccreted backend fee ( 1,690 )

Interest ( 25,728 )

Term Loan $ 59,525

Long-term Debt $ 58,884

The Company’s Amended and Restated Certificate of Incorporation authorizes the Company to issue 200,000,000 shares of $ 0.001 par value common stock.

The holders of common stock are entitled to receive dividends whenever funds and assets are legally available and when declared by the Board of Directors.

As of December 31, 2024 and December 31, 2023, no dividends had been declared.

As of December 31, 2024 and December 31, 2023, the Company had reserved common stock for future issuance as follows:

As of December 31, 2025 and 2024, no dividends had been declared.

The Company’s common stock reserved for future issuance is as follows:

Year Ended December 31,

Outstanding options under the 2021 Plan 1,987,784 2,208,341

Shares available for future grant under the 2021 Plan 2,201,012 1,314,502

Outstanding options under the 2021 Equity Incentive Plan 2,218,352 1,987,784

Shares available for future grant under the 2021 Equity Incentive Plan 2,700,057 2,201,012

Outstanding options under the 2023 Inducement Plan 380,424 380,424

Outstanding restricted stock units under the 2021 Plan 1,480,338 2,430,803

Common stock available for ESPP 475,416 399,798

Outstanding restricted stock units under the 2021 Equity Incentive Plan 1,177,836 1,480,338

Common stock available for Employee Stock Purchase Plan 650,031 475,416

Total 7,126,700 6,524,974

NeuroPace, Inc.

Notes to Financial Statements

2020 Stock Plan

In August 2020, the Company adopted the 2020 Stock Plan, or the 2020 Plan, which provides for the granting of stock options to employees, directors and consultants of the Company.

Stock options granted under the 2020 Plan may be either incentive stock options, or ISOs, nonqualified stock options, or NSOs, stock appreciation rights, restricted stock awards, restricted stock unit awards or other stock awards.

ISOs may only be granted to Company employees (including officers and directors who are also employees).

Stock awards other than ISOs may be granted to company employees, directors and consultants.

The maximum term of each stock option grant is ten years .

The exercise price of ISOs and NSOs granted to a 10% stockholder shall not be less than 110 % of the estimated fair value of the shares on the date of grant as determined by the Company’s board of directors.

2021 Equity Incentive Plan

In April 2021, prior to the IPO closing, the Company’s board of directors and stockholders approved the 2021 Equity Incentive Plan, or the 2021 Plan, which became effective upon the IPO closing.

The Company initially reserved 2,900,000 shares of common stock for issuance of share-based compensation awards, including ISOs, NSOs, stock appreciation rights, restricted stock units and other stock-based awards.

The Company initially reserved 2,900,000 shares of common stock for issuance of share-based compensation awards, including incentive stock options, or ISOs, nonqualified stock options, or NSOs, stock appreciation rights, restricted stock units and other stock-based awards.

ISOs may be granted only to Company employees (including officers and directors who are also employees).

Shares of common stock subject to awards granted under the 2020 Plan that are forfeited or lapse unexercised will be available for issuance under the 2021 Plan.

Once the 2021 Plan became effective, no further grants were made under the 2020 Plan.

Options under the 2021 Plan may be granted for periods of up to 10 years at exercise prices no less than the fair market value of the Company’s common stock on the date of grant;

provided, however, that the exercise price of an ISO granted to a 10% stockholder may not be less than 110 % of the fair market value of the shares on the date of grant and such option may not be exercisable after the expiration of five years from the date of grant.

Vesting conditions determined by the plan administrator may apply to stock options and other stock-based awards and may include continued service, performance and/or other conditions.

Vesting conditions determined by the plan administrator may apply to stock options and other stock-based awards and may

NeuroPace, Inc.

Notes to Financial Statements

include continued service, performance and/or other conditions.

Generally, options and restricted stock units vest over a three or four-year period.

In January 2025, the number of shares of common stock available for issuance under the 2021 Plan was increased by 1,507,251 shares as a result of the automatic increase provision in the 2021 Plan.

In January 2026, the number of shares of common stock available for issuance under the 2021 Plan was increased by 1,342,990 shares as a result of the increase provision in the 2021 Plan.

A summary of shares available for grant under the 2021 Plan is as follows:

6 unchanged sentences

Shares available for grant as of December 31, 2025

Authorized 1,391,173

Granted/Awarded ( 1,157,793 )

Canceled 587,813

Withheld for taxes 65,317

Shares available for grant as of December 31, 2024

2023 Inducement Plan

NeuroPace, Inc.

Notes to Financial Statements

In July 2023, the Company’s Compensation Committee of the Board of Directors approved the 2023 Inducement Plan, or the Inducement Plan.

2 unchanged sentences

The Company has initially reserved 380,424 shares of its common stock for issuance pursuant to awards granted under the Inducement Plan, and granted an option to purchase 380,424 shares of its common stock to its Chief Executive Officer, or CEO, as a material inducement for the CEO to join the Company.

A summary of stock option activity for the years ended December 31, 2024 and 2023 is set forth below:

Options Outstanding

Number of Shares Weighted-Average Exercise Price Weighted Average Remaining Contractual Term (in Years)

Balances as of January 1, 2023 3,446,583 $ 3.61 8.06

Granted 695,225 $ 3.85

Exercised ( 889,968 ) $ 0.17

Canceled ( 663,075 ) $ 5.00

Balances as of December 31, 2023

2,588,765 $ 4.51 7.17

A summary of stock option activity is set forth below:

Number of Shares Weighted-Average Exercise Price Weighted Average Remaining Contractual Term (in Years) Aggregate Intrinsic Value (in thousands)

Outstanding as of January 1, 2025 2,368,208 $ 6.01 7.27

Granted 486,422 $ 11.14

1 unchanged sentence

Canceled ( 56,216 ) $ 11.27

Balances as of December 31, 2024

Outstanding as of December 31, 2025

2,598,776 $ 7.09 7.10 $ 22,510

5 unchanged sentences

The total intrinsic value of stock options exercised was $ 2.2 million and $ 6.0 million during the years ended December 31, 2025 and December 31, 2024, respectively, determined at the date of each stock option exercise.

Early Exercise of Stock Options

The terms of the Company’s 2020 Plan and 2021 Plan permit the exercise of options granted under the plans prior to vesting, subject to required approvals.

The shares of common stock issued from the early exercise of unvested stock options are restricted and continue to vest over the original implied service period.

The Company has the option to repurchase any unvested shares at the original purchase price upon any voluntary or involuntary termination.

The shares purchased by the employees and non-employees pursuant to the early exercise of stock options are not deemed, for accounting purposes, to be outstanding until those shares vest.

The cash received in exchange for exercised and unvested shares related to stock options granted is recorded as a liability for the early exercise of stock options in accrued liabilities on the accompanying balance sheet and will be transferred into common stock and additional paid-in capital as the shares vest.

As of December 31, 2024 and December 31, 2023 there were 0 and 30,211 shares of common stock, respectively, issued pursuant to early exercised options and subject to repurchase.

Employee Stock Purchase Plan

6 unchanged sentences

In January 2026, the number of shares of common stock available for issuance under the ESPP was increased by 335,747 shares as a result of the automatic increase provision in the ESPP.

The Company issued 202,616 and 280,599 shares under the ESPP for the years ended December 31, 2024 and December 31, 2023, respectively.

The Company issued 126,835 and 202,616 shares under the ESPP for the years ended December 31, 2025 and 2024, respectively.

As of December 31, 2025, 650,031 shares under the ESPP remain available for purchase.

The offering period and purchase period is determined by the board of directors.

The offering period and purchase period are determined by the board of directors.

A new offering period of six months has been authorized beginning December 7, 2025 through June 6, 2026.

9 unchanged sentences

Restricted Stock Units

Activity with respect to restricted stock units, or RSUs, was as follows:

Number of Shares Underlying Outstanding Restricted Stock Units Weighted Average Grant Date Fair Value

Activity with respect to restricted stock units, or RSUs, is as follows:

Number of Shares Underlying Outstanding RSUs Weighted Average Grant Date Fair Value

Unvested, January 1, 2025 1,480,338 $ 8.92

4 unchanged sentences

1,177,836 $ 11.42

Granted 647,139 $ 13.00

Vested ( 1,184,284 ) $ 6.65

Canceled ( 413,320 ) $ 7.68

Unvested, December 31, 2024

1,480,338 $ 8.92

The fair value of RSUs is based on the Company’s closing stock price on the date of grant.

Stock-Based Compensation

The Company recognized stock-based compensation as follows (in thousands):

The Company recognized stock-based compensation as follows:

Year Ended December 31,

(in thousands) 2025

Cost of goods sold $ 694 $ 723

Sales and marketing 3,052 3,072

Research and development 3,406 3,270

Selling, general and administrative 6,289 6,203

General and administrative 3,937 3,217

Total stock-based compensation $ 11,089 $ 10,282

The above stock-based compensation expense related to the following equity-based awards (in thousands):

NeuroPace, Inc.

Notes to Financial Statements

The above stock-based compensation expense related to the following equity-based awards:

Year Ended December 31,

Stock options and restricted stock units $ 9,745 $ 9,271

(in thousands) 2025

Stock options and RSUs $ 10,506 $ 9,745

Total stock-based compensation $ 11,089 $ 10,282

As of December 31, 2024, the total unrecognized stock-based compensation expense related to unvested stock options and restricted stock units was $ 15.0 million, which will be amortized on a straight-line basis over a weighted average remaining period of 2.1 years.

As of December 31, 2025, the total unrecognized stock-based compensation expense related to unvested stock options and RSUs was $ 15.8 million, which will be amortized on a straight-line basis over a weighted average remaining period of 2.5 years.

As of December 31, 2025, the Company had unrecognized stock-based compensation expense relating to the ESPP awards of approximately $ 0.3 million, which is expected to be recognized over a weighted-average period of 0.4 years.

The total fair value of options that vested during the years ended December 31, 2024 and December 31, 2023 was $ 8.8 million and $ 7.8 million, respectively.

The total fair value of RSUs that vested during the years ended December 31, 2025 and December 31, 2024 was $ 8.1 million and $ 8.8 million, respectively.

The options granted during the years ended December 31, 2025 and December 31, 2024 had a weighted average grant date fair value of $ 7.83 per share and $ 8.13 per share, respectively.

1 unchanged sentence

The fair value of employee stock options is being amortized on a straight-line basis over the requisite service period of the awards.

The fair value of employee stock options was estimated using the following assumptions for the years ended December 31, 2024 and December 31, 2023:

The fair value of employee stock options was estimated using the following assumptions for the years ended December 31, 2025 and 2024:

Year Ended December 31,

15 unchanged sentences

The Company accounts for forfeitures as they occur.

The Company’s operations and income tax components are solely in the United States.

From inception through 2024 , the Company has only generated pretax losses in the United States and has not generated any pretax income or

NeuroPace, Inc.

Notes to Financial Statements

loss outside of the United States.

The Company’s operations and income tax components are solely in the United States.

From inception through 2025 , the Company has only generated pretax losses in the United States and has not generated any pretax income or loss outside of the United States.

The Company did not record a provision (benefit) for income taxes for the years ended December 31, 2025 and 2024 .

1 unchanged sentence

Because of the Company's recent history of operating losses, management believes that recognition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not likely to be realized and, accordingly, has provided a full valuation allowance.

A reconciliation of the statutory U.S.

federal rate to the Company’s effective tax rate is as follows:

Upon adoption of ASU 2023-09, Improvements to Income Tax Disclosures , as described in Note 2, Summary of Significant Accounting Policies, the reconciliation of taxes at the federal statutory rate to our effective tax rate for the year ended December 31, 2025 was as follows:

(in thousands, except for percentages) Amount Percent

Federal Statutory Tax Rate $ ( 4,579 ) 21.0 %

Research and development tax credit ( 1,187 ) 5.4 %

Change in valuation allowance 5,826 ( 26.7 ) %

Nondeductible items:

Executive compensation - Section 162(m) limitation 254 ( 1.2 ) %

Stock-based compensation ( 556 ) 2.6 %

Nondeductible interest expense 95 ( 0.4 ) %

Other 147 ( 0.7 )%

Effective tax rate $ — — %

A reconciliation of the federal statutory rate to the Company’s effective tax rate for the year ended December 31, 2024 in accordance with the guidance prior to the adoption of ASU 2023-09 was as follows:

Tax at federal statutory rate 21.0 %

3 unchanged sentences

Nondeductible interest expense ( 2.0 ) %

( 2.0 ) % ( 0.5 ) %

FIN 48 reserve ( 1.2 ) %

2 unchanged sentences

Other ( 2.8 ) %

Total — % — %

The tax effects of temporary differences that give rise to significant components of the deferred tax assets and liabilities are as follows (in thousands):

Effective tax rate — %

NeuroPace, Inc.

Notes to Financial Statements

The tax effects of temporary differences that give rise to significant components of the deferred tax assets and liabilities are as follows:

(in thousands) 2025

Deferred tax assets:

10 unchanged sentences

Operating lease right-of-use asset ( 2,607 ) ( 3,014 )

Fixed assets and inventory ( 53 ) —

Total deferred tax liabilities ( 2,660 ) ( 3,014 )

3 unchanged sentences

The capitalized expenses are amortized over a 5-year period for domestic expenses and a 15-year period for foreign expenses.

As a result of this provision of the Tax Act, deferred tax assets related to capitalized research expenses increased by $ 12.3 million.

We recognize deferred income taxes for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes, as well as for tax attribute carryforwards.

We regularly evaluate the

NeuroPace, Inc.

Notes to Financial Statements

positive and negative evidence in determining the realizability of our deferred tax assets.

Based upon the weight of available evidence, which includes our historical operating performance and reported cumulative net losses since inception, we maintained a full valuation allowance on the net deferred tax assets as of December 31, 2024 and 2023.

We intend to maintain a full valuation allowance on our deferred tax assets until sufficient positive evidence exists to support reversal of the valuation allowance.

On July 4, 2025, the One, Big, Beautiful Bill Act, or OBBBA, was enacted in the United States.

The OBBBA includes several significant tax provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of certain business provisions.

The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027.

The Company will no longer be required to capitalize its domestic research and development expenditures under Section 174 of the Internal Revenue Code beginning with the tax year ended December 31, 2025.

The Company evaluated the impact of the OBBBA and determined that it did not have a material impact on the Company’s consolidated financial statements for the year ended December 31, 2025 other than the change in domestic research and experimental costs.

The Company recognizes deferred income taxes for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes, as well as for tax attribute carryforwards.

The Company regularly evaluates the positive and negative evidence in determining the realizability of its deferred tax assets.

Based upon the weight of available evidence, which includes the Company’s historical operating performance and reported cumulative net losses since inception, the Company maintained a full valuation allowance on the net deferred tax assets as of December 31, 2025 and 2024.

The Company intends to maintain a full valuation allowance on its deferred tax assets until sufficient positive evidence exists to support reversal of the valuation allowance.

The valuation allowance increased by $ 7.5 million during the year ended December 31, 2025 primarily resulting from $ 7.2 million increase in gross deferred tax assets net of a $ 0.3 million decrease in deferred tax liabilities.

1 unchanged sentence

As of December 31, 2025, the Company had net operating loss, or NOL, carryforwards of $ 166.6 million and $ 181.5 million available to reduce future taxable income, if any, for federal and state income tax purposes, respectively.

The federal and state NOL carryforwards begin expiring in 2026 and 2029, respectively.

As of December 31, 2024, the amount of federal NOL carryforwards that does not expire is $ 114.0 million (subject to certain utilization limitations).

The federal and state NOL carryforwards begin expiring in 2026.

As of December 31, 2025, the

NeuroPace, Inc.

Notes to Financial Statements

amount of federal NOL carryforwards that does not expire is $ 129.2 million (subject to certain utilization limitations).

As of December 31, 2025, the Company had research and development credit carryforwards of $ 6.8 million and $ 15.2 million available to reduce future taxable income, if any, for federal and state income tax purposes, respectively.

The federal credit carryforwards begin expiring in 2037 and the state credits carryforward indefinitely.

The federal credit carryforwards begin expiring in 2036 and the state credits carry forward indefinitely.

Utilization of the Company’s NOL and tax credit carryforwards may be subject to a substantial annual limitation due to the ownership change provisions included in the Internal Revenue Code, or Section 382, and similar state provisions.

6 unchanged sentences

The gross deferred tax assets disclosed above exclude NOL and credit carryforwards that are expected to expire due to the Section 382 limitation.

The American Rescue Plan Act of 2021 was signed into law on March 11, 2021 expanding the definition of covered employees as defined under Section 162(m).

The provisions under the expanded definition of covered employees did not have a material impact on the Company’s tax positions for the year ended December 31, 2023 or 2024.

California Assembly Bill 85 (AB 85) was signed into law by Governor Gavin Newsom on June 29, 2020.

The legislation suspends the California NOL deductions for 2020, 2021, and 2022 for certain taxpayers and imposes a limitation on certain California tax credits for 2020, 2021, and 2022.

The legislation disallows the use of California NOL deductions if the taxpayer recognizes business income and its adjusted gross income is greater than $1,000,000.

The carryover periods for NOL deductions disallowed by this provision will be extended.

Additionally, any business credit will only offset a maximum of $5,000,000 of California tax.

Given the Company’s taxable loss position, this legislation did not impact the tax provision for the years ended December 31, 2023 or 2024.

California Senate Bill 113 (SB 113), was signed into law by Governor Newsom on February 9, 2022.

The legislation contains important California tax law changes, including reinstatement of business tax credits and net NOL deductions limited by AB 85 mentioned above.

The new tax law should be accounted for under ASC 740 in the period of enactment (2022) but is not expected to have a material impact on the Company’s tax provision due to its taxable loss position.

On August 16, 2022, the President signed into law H.R.

5376, or the Inflation Reduction Act of 2022.

The primary tax provisions in the new law include an alternative minimum tax on certain large corporations, a tax on stock buybacks and certain energy-related tax credits, each of which become effective after December 31, 2022.

NeuroPace, Inc.

Notes to Financial Statements

provisions of the Inflation Reduction Act of 2022 does not have a material impact on the Company’s financial statements and related disclosures.

As of December 31, 2025, the Company had unrecognized tax benefits of $ 2.3 million related to $ 6.8 million and $ 15.2 million of federal and state research and development tax credit carryforwards, respectively.

2 unchanged sentences

No liability related to uncertain tax positions is recorded in the financial statements.

A reconciliation of the beginning and ending unrecognized tax benefit amount is as follows (in thousands):

A reconciliation of the beginning and ending unrecognized tax benefit amount is as follows:

Year Ended December 31,

(in thousands) 2025

Beginning balance $ 2,085 $ 1,730

Increase in balance related to tax positions taken during the current year 232 355

Decrease in balance related to tax positions taken during prior years — ( 7 )

Ending balance $ 2,317 $ 2,085

It is the Company’s policy to include penalties and interest expense related to income taxes as a component of other expense and interest expense, respectively, as necessary.

The Company determined that no accrual for interest and penalties related to unrecognized tax benefits was required as of December 31, 2024 and December 31, 2023.

The Company determined that no accrual for interest and penalties related to unrecognized tax benefits was required as of December 31, 2025 and 2024.

All of the Company’s tax years will remain open for examination by the federal and state authorities for 3 and 4 years, respectively, from the date of utilization of its tax attributes.

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 (in thousands, except for share and per share amounts):

The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders:

Year Ended December 31,

(in thousands, except for share and per share amounts) 2025

Net loss attributable to common stockholders $ ( 21,465 ) $ ( 27,141 )

1 unchanged sentence

Net loss per share attributable to common stockholders, basic and diluted $ ( 0.66 ) $ ( 0.93 )

NeuroPace, Inc.

Notes to Financial Statements

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:

Options to purchase common stock 2,598,776 2,368,208

Unvested restricted stock units 1,480,338 2,430,803

Unvested RSUs 1,177,836 1,480,338

Shares committed under ESPP 62,136 68,138

Unvested early exercised common stock options — 30,211

Total Shares 3,838,748 3,916,684

NeuroPace, Inc.

Notes to Financial Statements

Segment Information

1 unchanged sentence

All of the Company’s long-lived assets, comprised of property and equipment, are based in the United States.

All of the Company’s revenue, with the exception of $ 0.2 million and less than $ 0.1 million, was in the United States for the years ended December 31, 2024 and 2023, respectively, based on the shipping location of the external customer.

The Company’s CODM is our Chief Executive Officer.

Our CODM makes decisions on resource allocation, evaluates operating performance, and monitors budget versus actual results using net loss.

In addition to the significant expense categories included within net loss presented on the Company’s Statements of Operations and Comprehensive Loss, disaggregated amounts that comprise selling, general and administrative expenses are as follows (in thousands):

Year Ended December 31,

Sales and marketing expense $ 39,669 $ 35,487

General and administrative expense 17,434 19,031

Total selling, general and administrative expense $ 57,103 $ 54,518

All of the Company’s revenue, with the exception of $ 0.9 million and $ 0.2 million, was in the United States for the years ended December 31, 2025 and 2024, respectively, based on the shipping location of the external customer.

The Company’s chief operating decision maker, or CODM, is its Chief Executive Officer.

The CODM makes decisions on resource allocation, evaluates operating performance, and monitors budget versus actual results using net loss.

Significant expense categories included within net loss include cost of goods sold, sales and marketing expense, research and development expense, and general and administrative expense, which are presented on the Company’s statements of operations and comprehensive loss.

Other segment items within net loss include interest income, interest expense, and other income (expense), net.

Subsequent Events

The aggregate net proceeds to the Company from the follow-on offering were approximately $ 69.8 million after deducting underwriting discounts and commissions and estimated offering expenses.

The Company used $ 49.5 million of the net proceeds to repurchase all of the 5,270,845 shares held by our significant stockholder, KCK Ltd., at $ 9.40 per share.

The repurchased shares became authorized but unissued shares.

In February 2025, the Company terminated its Sales Agreement with Leerink and closed the ATM program.

On the date of termination, the Company had $ 38.3 million remaining under the ATM program.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data