Profusa, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations This discussion and analysis should be read in conjunction with our financial statements and accompanying notes included elsewhere in this report. Operating results are not necessarily indicative of results that may occur in future periods. This report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other Securities and Exchange Commission (“SEC”) filings. Business Overview We are a clinical-stage digital health and medical technology company focused on developing biosensing solutions to improve health outcome for patients in a variety of different diseases and conditions. Our first product is Lumee Oxygen, which enables physicians to ascertain the extent of perfusion, or passage of blood through the circulatory system to an organ or tissue, in patients with Critical Limb Ischemia (“CLI”) both during and after endovascular revascularization procedures. Lumee Oxygen received regulatory approval in Europe through the attainment of a CE mark which subsequently lapses in 2020. The Company is working to obtain a renewed CE Mark for commercialization in Europe. In addition, prior to commercialization in the U.S., Lumee Oxygen must obtain FDA clearance or approval. The latest version of Lumee Oxygen is called Wireless Lumee Oxygen System. It has multiple components, one of which is a microsensor that is injected into the tissue of the patient using a hypodermic needle. The sensor is designed so it does not need to be removed as it overcomes the foreign body response that usually inhibits the ability of permanent implants to function. The sensor contains no electronics, utilizing luminescence to send a light signal to a reader that is placed over the incision site, which in turn can send a signal to an app on a smartphone. We are in clinical trials for Lumee Glucose, our sensing solution being developed for use in continuous glucose monitoring (“CGM”). This system targets diabetics and pre-diabetics to allow them realtime access to their glucose data, at a price point that our management thinks is comparable or lower to existing systems. In 2024, we started to sell our oxygen sensor for research use only applications, namely animal models and in vitro testing. Management is targeting the European market (those jurisdictions that accept CE mark) for early launch for both Lumee Oxygen and Lumee Glucose. Lumee Oxygen’s launch in Europe occurred in 2023 and Lumee Glucose launch is expected to occur in 2026, subject to regulatory approval. We have access to key opinion leaders (“KOLs”) in both Europe and the United States, who deal with peripheral arterial disease (“PAD”) and CLI. We will sell directly to facilities based on the endorsement of these KOLs. In Germany, Austria and France, some KOLs have already used Lumee Oxygen on a trial basis. We have worked with reimbursement consultants to develop potential Category I Current Procedural Terminology (“CPT”) codes for Lumee Oxygen use. Additionally, we have entered into commercial and clinical collaboration agreements with practitioners and hospital departments in Austria, Belgium and France. Regarding Lumee Glucose, if and when we obtain marketing authorization, we plan to embark on a dual strategy of both direct to hospital sales, for our professional-use and personal-use CGM product, and direct to pharmacy sales for our personal use product only, thereby maximizing flexibility for the consumer. By aiming for coverage under a user’s pharmacy benefit, we believe we can diversify our user base, while accounting for any risk related to unlikely delay of attainment of a category I CPT code for sensor insertion. We feel a difference between other insertable or implantable CGMs and Lumee Glucose, is that the latter can be simply inserted with a hypodermic needle and does not require a surgical implantation, similar to how pharmacists use these needles to administer flu shots and other vaccines. At the same time, physicians can still leverage existing CPT codes related to interpretation of CGM data and we have, in parallel, initiated steps for CPT codes related to our sensor insertion. We will target both public and private payors for coverage. 27 Since our launch, we have devoted significantly all of our resources to research and development, as well as all clinical study activities related but not limited to Lumee Oxygen, Lumee Glucose and prototypes for sensors of at least eight other analytes. We have also invested, on a smaller scale, in making sales of Lumee Oxygen for research- use only clients, which include entities working with animal models. Furthermore, we also performed research and development under government grants. Significant Risks and Uncertainties The Company operates in a dynamic and highly competitive industry and believes that changes in any of the following areas could have a material adverse effect on the Company’s future financial position, results of operations, or cash flows: ability to obtain future financing; advances and trends in new technologies and industry standards; results of clinical trials; regulatory approval and market acceptance of the Company’s products; development of sales channels; certain strategic relationships; litigation or claims against the Company based on intellectual property, patent, product, regulatory, or other factors; and the Company’s ability to attract and retain employees necessary to support its growth. Products developed by the Company require approvals from the U.S. Food and Drug Administration (“FDA”) or other international regulatory agencies prior to commercial sales. There can be no assurance that the products will receive the necessary approvals. If the Company is denied approval, approval is delayed or the Company is unable to maintain approval, it could have a materially adverse impact on the Company. The Company has expended and will continue to expend substantial funds to complete the research, development and clinical testing of product candidates. The Company also will be required to expend additional funds to establish commercial-scale manufacturing arrangements and to provide for the marketing and distribution of products that receive regulatory approval. As of March 31, 2026, the Company may be required to seek additional equity or debt financing to commercialize its products. If adequate funds are unavailable on a timely basis from operations or additional sources of financing, the Company may have to delay, reduce the scope of, or eliminate one or more of its research or development programs which would materially and adversely affect its business, financial condition and results of operations. Recent Developments Inflation, Monetary Response, and Economic Impacts The world economy is experiencing stubbornly high inflation, a challenge not faced for decades. Following the global financial crisis, with inflationary pressures muted, interest rates were extremely low for years and investors became accustomed to low volatility. The resulting easing of financial conditions supported economic growth, but it also contributed to a buildup of financial vulnerabilities. With inflation at multi-decade highs, monetary authorities in advanced economies are accelerating the pace of policy normalization. Policymakers have continued to tighten policy against a backdrop of rising inflation and currency pressures, albeit with notable differences across regions. Global financial conditions have tightened notably this year, leading to capital outflows. Amid heightened economic and geopolitical uncertainties, investors have aggressively pulled back from risk-taking and adjusted their investment preferences generally. Key gauges of systemic risk, such as higher dollar funding costs and counterparty credit spreads, have risen. There is a risk of a disorderly tightening of financial conditions that may be amplified by vulnerabilities built over the years. In addition, our business, growth, financial condition or results of operations could be materially adversely affected by instability or changes in a country’s or region’s economic conditions; inflation; changes in laws or regulations or in the interpretation of existing laws or regulations, whether caused by a change in government or otherwise; increased difficulty of conducting business in a country or region due to actual or potential political or military conflict; or action by the U.S. or foreign governments that may restrict our ability to transact business in a foreign country or with certain foreign individuals or entities. A possible slowdown in global trade caused by increasing tariffs or other restrictions could decrease consumer or corporate confidence and reduce consumer, government and corporate spending in countries inside or outside the U.S., which could adversely affect our operations. Climate-related events, including extreme weather events and natural disasters and their effect on critical infrastructure in the U.S. or internationally, could have similar adverse effects on our operations, users, or third-party suppliers. 28 Nasdaq Continued Listing and Reverse Stock Split As previously disclosed, on September 11, 2025, we received written notice from the staff at Nasdaq (the “Staff”) stating that we were not in compliance with the Minimum Bid Price Requirement and the MVLS Requirement. The Staff provided us an initial compliance period of 180 calendar days, or until March 10, 2026, to regain compliance with each of the Minimum Bid Price Requirement and the MVLS Requirement. On February 9, 2026, we effected a 1-for-75 reverse stock split of our common stock (the “Reverse Stock Split”). The Reverse Stock Split did not change the par value of the common stock or the authorized number of shares of common stock. All share and per share information has been retroactively adjusted to reflect the Reverse Stock Split for all periods presented. Also as previously disclosed, on October 27, 2025, we received a letter from the Staff notifying us that, for the previous 30 consecutive business days, the market value of our publicly held shares was below the Market Value Requirement. The Staff provided us with an initial period of 180 calendar days, or until April 27, 2026, to regain compliance with the Market Value Requirement. On March 11, 2026, we were notified by Nasdaq of our continued non-compliance with both the Minimum Bid Price Requirement and the MVLS Requirement by the March 10, 2026 deadline, and that our securities were therefore subject to delisting from The Nasdaq Global Market on both grounds. We appealed the delisting determination, and attended the hearing before the Nasdaq Hearings Panel on April 21, 2026. On April 28, 2026, Nasdaq notified us that we had not regained compliance with Nasdaq Listing Rule 5450(b)(1)(C), which requires us to maintain a minimum market value of publicly held shares of $15.0 million for continued listing on The Nasdaq Global Market (the “MVPHS Requirement”), by the applicable compliance deadline of April 27, 2026. Nasdaq further notified us that the failure to regain compliance with the MVPHS Requirement serves as an additional basis for delisting our securities from Nasdaq and that the Nasdaq Hearings Panel will consider this additional deficiency in connection with its determination regarding the our continued listing on The Nasdaq Global Market. We intend to present our views with respect to this additional deficiency to the Nasdaq Hearings Panel within the required timeframe. There can be no assurance that the Nasdaq Hearings Panel will grant our request for continued listing, that the we will regain compliance with the MVPHS Requirement within any extension period that may be granted, or that we will otherwise maintain compliance with Nasdaq’s continued listing standards. On May 6, 2026, Nasdaq notified us that the Nasdaq Hearings Panel had granted our request for continued listing on Nasdaq, subject to certain conditions. The Nasdaq Hearings Panel granted us an exception to cure our listing deficiencies, including noncompliance with Nasdaq Listing Rule 5550(a)(2), which requires a minimum bid price of $1.00 per share, and Nasdaq Listing Rule 5550(b)(2), which requires a minimum market value of listed securities for continued listing on The Nasdaq Capital Market. As a condition to the exception, we are required to: (i) on or before May 11, 2026, file an application with Nasdaq’s Listing Qualifications Staff to transfer our listing to The Nasdaq Capital Market; (ii) on or before June 5, 2026, obtain stockholder approval for a reverse stock split and advise the Nasdaq Hearings Panel within 24 hours if such approval is not obtained; (iii) on or before July 6, 2026, demonstrate compliance with the minimum bid price requirement; and (iv) on or before July 6, 2026, demonstrate compliance with Nasdaq’s stockholders’ equity requirement by filing a timely public disclosure describing the transactions undertaken by us to achieve compliance and demonstrate long-term compliance with the equity requirement, and by providing an indication of our equity following such transactions. The Nasdaq Hearings Panel also required us to provide prompt notification of any significant events that occur during the exception period that may affect our compliance with Nasdaq requirements. The Nasdaq Hearings Panel reserved the right to reconsider the terms of the exception based on any event, condition or circumstance that, in its opinion, would make continued listing of our securities on Nasdaq inadvisable or unwarranted. There can be no assurance that we will timely satisfy the conditions of the exception, regain compliance with Nasdaq’s continued listing standards, maintain compliance with Nasdaq’s continued listing standards thereafter, or otherwise maintain the listing of our securities on Nasdaq. On May 13, 2026, we received notice that we will be transferred to The Capital Market as of May 15, 2026. 29 Mayo Clinic License Agreement On February 11, 2026, we entered into a know-how License Agreement (the “License Agreement”) with Mayo Foundation for Medical Education and Research (“Mayo”), pursuant to which Mayo granted us an exclusive license to certain patent rights, which the parties plan to file for and obtain during the term of the License Agreement, and a non-exclusive license to specified know-how in the fields of continuous oxygen measurement and critical limb-threatening ischemia, with the right to sublicense such rights. Mayo retains customary reserved rights for educational, research and clinical programs of Mayo. As consideration, beginning with the first commercial sale of a licensed product, we are required to pay royalties on net sales of licensed products in amounts that vary depending on the applicable field and intellectual property coverage. We are also obligated to make milestone payments upon the achievement of specified commercial, regulatory and clinical events. In connection with the License Agreement, we will collaborate with Mayo to investigate high impact clinical applications of our technologies for new product development and commercialization. The License Agreement contains customary provisions regarding confidentiality, representations, warranties, disclaimers and indemnifications, and termination rights. The term of the License Agreement extends for a period tied to the life of the licensed patent rights and a post-commercialization period, unless earlier terminated. Paycheck Protection Program (“PPP”) Loan Forgiveness We applied for loan forgiveness for the remaining PPP loan in December 2025. On February 11, 2026, we received approval for forgiveness from the Small Business Administration for the full $1.4 million principal loan balance. We recognized a gain on the extinguishment of the PPP Loan of $1.4 million within Gain on extinguishment of PPP loan during the three months ended March 31, 2026. Sale of Digital Assets On March 11, 2026, we made the determination to terminate our Bitcoin treasury reserve strategy in light of current market conditions and our capital allocation priorities. During the three months ended March 31, 2026, we sold 16.51 Bitcoins for an aggregate amount of $1.2 million, resulting in realized losses of $0.3 million. Amendments on Related-party Convertible Promissory Note On March 20, 2026, we entered into an amendment for our related-party promissory note to extend the maturity date from January 11, 2026 to December 31, 2026. On April 6, 2026, we amended the note to update the conversion price to $0.76 per share and concurrently approved the conversion of the entire outstanding principal balance of $1.9 million into 2,460,257 shares of our common stock to the holders. 30 On April 24, 2026, the Company entered into a Note Modification and Conversion Agreement with NorthView Sponsor I LLC, amending that certain Promissory Note to establish an outstanding non-interest-bearing principal balance of $1.9 million, extend the maturity date to December 31, 2026, and provide the holder with the option to convert the outstanding principal into shares of the Company’s common stock. Subsequently, on April 29, 2026, the Company entered into Amendment No. 1 to the Note Modification and Conversion Agreement, adding a covenant that restricts the issuance of conversion shares in excess of 19.99% of the issued and outstanding common stock unless and until prior stockholder approval is obtained. Amendment No. 4 on the PIPE Subscription Agreement On April 2, 2026, we entered into Amendment No. 4 to our PIPE Subscription Agreement and related Pledge Agreement with Ascent. Under Amendment No. 4, we may request additional funding with an aggregate principal amount of up to $12.2 million, subject to the terms and conditions of the amended agreements. Amendment No. 4 also modified certain terms of the related Pledge Agreement, including revising the release condition to provide that the applicable release condition will be satisfied upon payment in full, whether in cash or through conversion, of an aggregate principal amount of $1.7 million of notes issued in the additional closings expected to occur on or shortly after April 2, 2026. In addition, we have agreed with Ascent that any mandatory prepayment amounts received under the notes will first be applied to obligations related to such additional notes and thereafter to certain previously issued secured convertible promissory notes. In connection with the additional closings on April 2, 2026 and April 20, 2026, we issued Ascent PIPE Notes with an aggregate principal amount of $0.6 million and $1.1 million, respectively, and a warrant to purchase 3,333,333 shares of our common stock at an initial exercise price of $0.50 per share (the “Warrant”) that is exercisable on a cash or cashless basis through April 20, 2031, and is subject to a 9.99% beneficial ownership limitation and customary anti-dilution adjustments. The notes mature on April 2, 2027 and April 20, 2027, respectively, and each bear interest at 12% per annum and is convertible into shares of our common stock, subject to the terms of the notes. The warrant contains customary terms and provisions for instruments of this nature. In connection with the Warrant issuance, the Company entered into a side letter agreement with Ascent pursuant to which Ascent waived certain defaults under the Purchase Agreement, the number of shares issuable upon exercise of the Warrant was increased to 3,333,333 shares, and the Company agreed to provide Ascent with demand and piggyback registration rights with respect to the underlying shares. In connection with the Warrant issuance, Ascent also entered into a lock-up agreement with the Company, dated as of April 20, 2026, pursuant to which Ascent agreed not to transfer shares underlying the Warrant for 120 days (expiring August 22, 2026), subject to customary exceptions. Any permitted transferee is required to execute a lock-up agreement on substantially similar terms. On April 29, 2026, the Company and Ascent Partners Fund LLC entered into an amendment to an existing Warrant to Purchase Shares of common stock, which eliminated the provisions relating to the automatic conversion or assumption of the warrant in connection with Fundamental Transactions. Subsequent to March 31, 2026 and through the date of filing, we issued 360,000 shares of our common stock in exchange for $0.4 million under the ELOC Purchase Agreement and issued 1,870,245 shares of our common stock for the settlement of $0.8 million of principal and interest on the Ascent PIPE Notes. 31 Asset Acquisition On April 1, 2026, we entered into a Letter of Intent (“LOI”) with Bio Insights LLC for the proposed acquisition of Bio Insight LLC’s PanOmics Assay. On April 21, 2026, we entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Bio Insights LLC (“Seller”), pursuant to which we agreed to acquire substantially all of the know-how assets related to Seller’s PanOmics Assay, an integrated NGS multi-omics analysis platform used in drug discovery and precision medicine (the “Purchased Assets”). The Purchased Assets include proprietary methodologies, data, processes, algorithms, software, databases, and related goodwill, but exclude patent rights and biological samples (which remain with Seller, subject to an exclusive sample access license granted to the Company). The aggregate purchase price is $30.0 million payable through the issuance of Series A Convertible Preferred Stock (the “Preferred Stock”), convertible into common stock one year following issuance based on the closing trading price of the Company’s common stock on the date preceding closing. Issuance of the Preferred Stock and underlying conversion shares (collectively, the “Securities”) is subject to stockholder approval as required by Nasdaq Listing Rules 5635(a) and 5635(d). The Securities are subject to a five-year lock-up, with one-fourth released annually beginning on the first anniversary of issuance. Seller is also entitled to receive a royalty equal to 3% of net revenue from commercialization of the PanOmics Assay. The Asset Purchase Agreement contains customary representations, warranties, covenants, and indemnification provisions, including a five-year non-compete, 24-month transition assistance, and a voting agreement. The closing is subject to customary conditions, and either party may terminate if the closing has not occurred on or before September 30, 2026. Principles of Accounting and Consolidation The accompanying condensed consolidated financial statements have been prepared in conformity with GAAP and pursuant to applicable rules and regulations of the SEC and include all adjustments necessary for the fair presentation of our financial position as of March 31, 2026 and 2025 and the results of operations and cash flows for the periods then ended. The accompanying condensed consolidated financial statements include the accounts of Profusa Inc. and its wholly owned subsidiary, Profusa Asia Pacific Pte. Ltd (“APAC”). All intercompany balances and transactions have been eliminated in consolidation. Components of Results of Operations Research and Development Expenses Research and development expenses consist primarily of personnel expenses, including salaries, benefits, and stock-based compensation, costs of consulting, supplies, depreciation and amortization and allocations of facility-related expenses. We expect our research and development expenses to increase as we increase staffing to support product development, continue our clinical trials, build prototypes, and continue to explore and develop next generation technologies. 32 General and Administrative Expenses General and administrative expenses consist of personnel expenses, including salaries, benefits, and stock-based compensation, related to executive management, finance, legal, human resource functions, and business development, contractor and professional services fees, audit and compliance expenses, insurance costs and general corporate expenses, including merger transaction costs incurred, allocated facility-related expenses and information technology costs. Loss on Change in the Fair Value of Convertible Notes We elected to apply the fair value option to account for (i) the convertible notes issued between June 2023 and March 2024 (the “Tasly Convertible Note”), (ii) the Ascent PIPE Notes issued during the year ended December 31, 2025 and (iii) the Northview Sponsor working capital promissory note. Loss on change in the fair value of convertible notes comprise of the change in fair value of the Company’s convertible notes and its related accrued interest on the convertible notes. These abovementioned notes were recorded at fair value at inception and are subject to remeasurement to fair value at each balance sheet date, with the change in fair value reflected in our condensed consolidated statements of operations. Gain on Change in Fair Value of Warrant Liabilities The change in fair value of our private and representatives warrant liabilities that we acquired as a result of our Business Combination is reflected in this financial statement line item. Loss on Disposal of Digital Assets The change in fair value of Bitcoins that we held during the respective periods is reflected in this financial statement line item. Interest Expense Interest expense consists primarily of the interest on our senior notes, promissory notes, and PPP Loans. Gain on Extinguishment of PPP Loan The gain on the extinguishment of our PPP loan is reflected in this financial statement line item. Financing Costs Financing costs consists of costs in relation to the issuance of shares under the ELOC Purchase Agreement. Other Income (Expense) Other income (expense) consists primarily of interest income earned from our operating cash account and a short-term sublease of a portion of our facilities. 33 Results of Operations Comparison of the three months ended March 31, 2026 and 2025 The following table sets forth our condensed consolidated statements of operations for the periods indicated (in thousands): Three Months Ended March 31, Change 2026 2025 $ % Operating expenses: Research and development $ 1,146 $ 434 $ 712 164 % General and administrative 2,860 990 1,870 189 % Total operating expenses 4,006 1,424 2,582 181 % Loss from operations (4,006 ) (1,424 ) (2,582 ) 181 % Other income (expenses) Loss on change in the fair value of convertible notes (797 ) (156 ) (641 ) 411 % Gain on change in fair value of warrant liabilities 258 — 258 100 % Loss on disposal of digital assets (295 ) — (295 ) 100 % Interest expense (including related parties amounts of $5 and $609 for the three months ended March 31, 2026 and 2025, respectively) (18 ) (1,135 ) 1,117 (98 )% Gain on extinguishment of PPP loan 1,391 — 1,391 100 % Financing costs (60 ) — (60 ) 100 % Other income (expense) 71 (1 ) 72 (7200 )% Total other income (expense), net 550 (1,292 ) 1,842 (143 )% Net loss $ (3,456 ) $ (2,716 ) $ (740 ) 27 % Research and Development – Research and development expenses increased by $0.7 million, or 164%, to $1.1 million during the three months ended March 31, 2026 from $0.4 million during the three months ended March 31, 2025. The increase was driven primarily by the increase in regulatory and contract research organization (“CRO”) costs of $0.6 million and third-party consultant services of $0.1 million , respectively, which is in line with our focus on research and development to complete device functionality and reach the point of commercialization in the near future. General and Administrative – General and administrative expenses increased by $1.9 million, or 189%, to $2.9 million during the three months ended March 31, 2026 from $1.0 million during the three months ended March 31, 2025. The increase was driven primarily by an increase in legal, accounting and other third party professional services of $1.1 million, personnel costs of $0.4 million, and an increase to insurance fees of $0.3 million. Loss on Change in the Fair Value of Convertible Notes – Loss on change in the fair value of convertible notes increased by $0.6 million, or 411%, to $0.8 million during the three months ended March 31, 2026 from a loss of $0.2 million during the three months ended March 31, 2025. The loss recognized during the three months ended March 31, 2026 was driven by the losses on the remeasurement of the Ascent PIPE Notes of approximately $0.6 million. During the three months ended March 31, 2025, the entirety of the loss on change in the fair value of convertible notes was due to the remeasurement of the Tasly Convertible Note. 34 Gain on Change in Fair Value of Warrant Liabilities – Gain on change in the fair value of warrant liabilities was $0.3 million during the three months ended March 31, 2026 due to the decline in our stock price during the same period. We acquired the warrant liabilities as a result of the Business Combination and therefore the change in fair value of warrant liabilities is only reflected in the three months ended March 31, 2026. Loss on Disposal of Digital Assets – Loss on disposal of digital assets was $0.3 million during the three months ended March 31, 2026. We did not have any Bitcoin during the three months ended March 31, 2025. Interest Expense – Interest expense decreased by $1.1 million, or 98%, to $18 thousand during the three months ended March 31, 2026, from $1.1 million during the three months ended March 31, 2025. The decrease was primarily due to the conversion of the entirety of our junior convertible debt and a significant portion of our senior notes at the closing of our Business Combination. Gain on extinguishment of PPP loan – Gain on extinguishment of PPP loan increased by $1.4 million, or 100%, due to the forgiveness of our PPP loan of $1.4 million in the three months ended March 31, 2026. Financing Costs – Increased by $0.1 million in relation to the issuance of shares under the ELOC Purchase Agreement during the three months ended March 31, 2026. Other Income (Expense) – Other income (expense) increased by $72 thousand during the three months ended March 31, 2026 primarily due to sublease income recognized in the period. Liquidity and Capital Resources Sources of Liquidity Since inception, we have incurred recurring annual losses from operations, and we expect to continue to incur losses and negative operating cash flows for the foreseeable future until we successfully commence sustainable commercial operations. For the three months ended March 31, 2026 and 2025, we incurred a net loss of $3.5 million and $2.7 million, respectively. During the three months ended March 31, 2026 and 2025, we have used $2.6 million and $0.5 million, respectively, of cash in our operating activities. We have $12.5 million of notes, loans payable and interest due within twelve months from March 31, 2026. We have been able to finance our operations primarily with the proceeds from the issuance of equity and debt instruments. For the three months ended March 31, 2026, we obtained net cash from financing activities of $28.0 thousand, compared to $0.4 million for the same period during 2025. We held cash of $0.4 million and $1.8 million as of March 31, 2026 and December 31, 2025, respectively. Additional funds may be necessary to maintain current operations and will be required for successful product commercialization efforts. Conditions exist that raise substantial doubt about our ability to continue as a going concern within one year from the date the condensed consolidated financial statements as of and for the three months ended March 31, 2026 are issued. 35 Our condensed consolidated financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We have reviewed the relevant conditions and events surrounding its ability to continue as a going concern including among others: historical losses, projected future results, cash requirements for the upcoming year, funding capacity, net working capital, total stockholders’ deficit and future access to capital. It is our expectation to continue to make substantial investments in building our European and United States commercial infrastructure and enhancing existing products and developing new ones. Furthermore, we aim to continue discussions with potential partners in Asia. We expect that we will require additional financing to fund our operations and planned growth. We may seek to raise any additional capital through equity offerings or debt financings, additional credit or loan facilities or a combination of one or more of these funding sources. In the scenario that we are unable to acquire sufficient financing or financing on terms satisfactory to our management or Board of Directors, our ability to continue to pursue our business objectives and to respond to business opportunities, challenges or unforeseen circumstances could be significantly limited, and our business, financial condition and results of operations could be materially adversely affected. For the current period and for twelve months following the issuance of these financial statements, our risk of going concern has been mitigated but not fully alleviated by the issuance of additional Ascent PIPE Notes with an aggregate principal amount of $1.7 million subsequent to the balance sheet date, remaining borrowing capacity on the PIPE Subscription Agreement and remaining funds available under the ELOC. As of and for the three months ended March 31, 2026, there continue to be factors which raise substantial doubt about our ability to continue as a going concern. Long-Term Liquidity Requirements We expect our cash on hand, remaining borrowing capacity from the PIPE Investment, proceeds from the ELOC and Ascent PIPE Notes will provide sufficient funding to support initial commercial operations. Until we generate sufficient operating cash flow to cover our operating expenses, working capital needs and planned capital expenditures, or if circumstances evolve differently than anticipated, we expect to utilize a combination of equity and debt financing to fund any future capital needs. If we raise funds by issuing equity securities, dilution to stockholders may result. Any equity securities issued may also provide for rights, preferences, or privileges senior to those of holders of common stock. If we raise funds by issuing debt securities, these debt securities may have rights, preferences, and privileges senior to those of common stockholders. The terms of debt securities or borrowings could impose significant restrictions on our operations. The capital markets are currently experiencing, and may continue to experience in the future, periods of upheaval that could impact the availability and cost of equity and debt financing. Our principal uses of cash in recent periods have been funding our research and development activities, legal and bank transaction fees, and other personnel cost. Near-term capital requirements through March 31, 2027 leading to and supporting initial commercialization are estimated to total approximately $15.9 million and include further research and development to enable us to obtain the required regulatory approvals, manufacturing, commercialization and wide-scale marketing for our Lumee Oxygen and Lumee Glucose devices. Our future capital requirements will depend on many factors, including our revenue growth rate, the timing and the amount of cash received from our customers, the expansion of sales and marketing activities, the timing and extent of spending to support development efforts. In the future, we may enter into arrangements to acquire or invest in complementary businesses, products, and technologies. For any periods after the twelve months subsequent to the filing of these financial statements as of March 31, 2026, we may be required to seek additional equity or debt financing. In the event that we require additional financing, we may not be able to raise such financing on acceptable terms or at all. If we are unable to raise additional capital or generate cash flows necessary to continue our research and development and invest in continued innovation, we may not be able to compete successfully, which would harm our business, results of operations, and financial condition. If adequate funds are not available, we may need to reconsider our production investments, the pace of our production ramp-up, expansion plans or limit our research and development activities, which could have a material adverse impact on our business prospects and results of operations. 36 Cash Flow Summary The following table summarizes our cash flows for the periods presented (in thousands): Three months ended March 31, 2026 2025 Change Net cash provided by (used in): Operating activities $ (2,576 ) $ (537 ) $ (2,039 ) Investing activities 1,145 — 1,145 Financing activities 28 365 (337 ) Net decrease in cash $ (1,403 ) $ (172 ) $ (1,231 ) Operating Activities Cash used in operating activities for the three months ended March 31, 2026 of $2.6 million was primarily driven by our net loss of $3.5 million, adjusted for non-cash charges of $0.4 million and net cash inflows of $1.2 million provided by changes in our operating assets and liabilities. Non-cash charges primarily consisted of non-cash gain on extinguishment of our PPP loan of $(1.4) million, loss on fair value of convertible notes of $0.8 million, stock-based compensation of $0.2 million, the loss on the disposal of digital assets of $0.3 million, offset by the gain on fair value of warrant liabilities of $(0.3) million. The main driver of the cash inflows from the changes in operating assets and liabilities was primarily related to an increase in accounts payable of $1.0 million and a decrease in prepaid expenses and other current assets of $0.3 million. Investing Activities Cash provided by investing activities was $1.1 million for the three months ended March 31, 2026 due to the sale of our Bitcoins. We did not have any investing activities in the three months ended March 31, 2025. Financing Activities Cash provided by financing activities was not material for the three months ended March 31, 2026, which consisted primarily of proceeds from the issuance of ELOC of $0.5 million, offset by the repayment of borrowings of $(0.4) million. Cash provided by financing activities was $0.4 million for the three months ended March 31, 2025, which consisted primarily of proceeds from the issuance of senior notes of $0.8 million, offset by payment of deferred offering costs of $(0.4) million. 37 Contractual Obligations The following table summarizes our contractual obligations as of March 31, 2026, and the years in which these obligations are due (in thousands): Remaining nine months of 2026 2027 Total Tasly convertible note - related party $ 2,532 $ — $ 2,532 Convertible promissory note - related party 1,870 — 1,870 Loans payable — 6,977 6,977 Senior notes 43 — 43 Promissory notes 1,040 — 1,040 D&O financing 75 — 75 Total contractual obligations $ 5,560 $ 6,977 $ 12,537 Critical Accounting Estimates The accounting policies that we consider to be our most critical, that require our most subjective or complex judgments, are summarized in “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Estimates” in our Annual Report on the Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on April 15, 2026. There have been no material changes to our critical accounting policies and significant estimates in the three months ended March 31, 2026. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.