What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-08-06 compared with 2026-05-12 · 77 added, 58 removed, 86 unchanged (61% of the section changed)

2 unchanged sentences

Executive Summary

We realized modest revenue growth during the three months ended March 31, 2026, as compared to the same period in 2025 .

Revenue for the three months ended March 31, 2026, totaled $9.6 million , an increase of 3% , as compared to $9.3 million for the same period of 2025 .

Net loss for the three months ended March 31, 2026, was $1.4 million compared to a net loss of $6.1 million for the same period in 2025 .

The decrease in our net loss for the three months ended March 31, 2026, was primarily attributable to the $4.9 million non-cash loss on the change in fair value of derivative liabilities recognized in the prior year period that did not recur during the three months ended March 31, 2026.

For the three months ended March 31, 2026, our operating loss totaled $1.1 million , which is a change of $1.7 million compared to operating income of $0.6 million for the same period of 2025 .

Revenue for the three months ended June 30, 2026 totaled $9.7 million , a decrease of approximately 3% compared to $10.1 million for the same period in 2025 .

Revenue for the six months ended June 30, 2026 totaled $19.4 million , approximately flat compared to $19.4 million for the same period in 2025 .

Net loss for the three months ended June 30, 2026 was $0.7 million , compared to net income of $0.6 million for the same period in 2025 .

The change from net income to a net loss was primarily attributable to an operating loss of $0.3 million in the current-year period, compared to operating income of $1.4 million in the prior-year period, reflecting higher operating expenses during the current-year period, including increased headcount costs, stock-based compensation, and research and development that outpaced a modestly lower gross margin on reduced revenue.

Total other expense, net improved to $0.4 million from $0.9 million , as significantly lower interest expense more than offset the non-recurrence of a $1.0 million gain from the change in fair value of derivative liabilities recognized in the prior-year period.

Net loss for the six months ended June 30, 2026 was $2.1 million , compared to a net loss of $5.6 million for the same period in 2025 .

The reduction in net loss was driven principally by items below operating income, including the non-recurrence of a $3.9 million loss from the change in fair value of derivative liabilities recognized in the prior-year period and a $2.8 million decrease in interest expense following our September 2025 debt refinancing.

These improvements were partially offset by a decline in operating results:

our operating loss for the six months ended June 30, 2026 was $1.4 million , compared to operating income of $2.0 million for the same period in 2025 .

The decline in operating results for the six months ended June 30, 2026 was primarily driven by higher operating expenses, including increased research and development, selling and marketing, and general and administrative spending, together with a slight decline in gross margin.

Non-GAAP Financial Measures

19 unchanged sentences

As presented in the U.S.

GAAP to Non-GAAP Reconciliations section below, our non-GAAP financial measure excludes the impact of certain charges that contribute to our net loss.

Three Months Ended March 31,

GAAP to Non-GAAP Reconciliations section below, our non-GAAP financial measure excludes the impact of certain charges that contribute to our net (loss) income.

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2026 2025 2026 2025

(As Restated)

Net Loss $ (1,439) $ (6,118)

Net (Loss) Income $ (682) $ 551 $ (2,121) $ (5,567)

Non-GAAP Adjustments:

1 unchanged sentence

Depreciation and amortization 1

313 226 607 493

EBITDA 149 2,716 (450) (1,226)

4 unchanged sentences

State & local sales tax 2

(532) 329 (194) 705

Sale of excess inventory - - (220) -

Shares issued for services 97 -

Adjusted EBITDA $ 1,189 $ 3,188 $ 2,279 $ 5,506

4 unchanged sentences

Results of Operations

Three Months Ended March 31, Change

Three Months Ended June 30, Change Six Months Ended June 30, Change

(in thousands) 2026 2025 $ % 2026 2025 $ %

(As Restated) $ %

Revenue $ 9,739 $ 10,054 $ (315) (3 %) $ 19,358 $19,387 $ (29) - %

Cost of revenue 2,188 1,958 230 12 %

Cost of revenues 2,315 2,206 109 5 % 4,502 4,164 338 8 %

Gross margin 7,424 7,848 (424) (5 %) 14,856 15,223 (367) (2 %)

6 unchanged sentences

Operating (loss) income (280) 1,438 (1,718) -119 % (1,404) 2,039 (3,443) -169 %

Other expense, net (315) (6,719) 6,404 95 %

Net loss $ (1,439) $ (6,118) $ 4,679 76 %

Revenues for the t hree months ended March 31, 2026, were $9.6 million , compared to $9.3 million for the same period of 2025 , an increase of $0.3 million or 3% .

The increase in net sales was primarily driven by the growth in quantity of

UltraMIST ® disposables, which increased by 22% in the t hree months ended March 31, 2026, as compared to the same period of 2025 .

The quantity of UltraMIST ® systems sold decreased by 1% in the t hree months ended March 31, 2026, as compared to the same period of 2025.

Pricing of the UltraMIST ® system and disposables declined in the t hree months ended March 31, 2026, as compared to the same period of 2025;

the average selling price of disposables decreased 6% in the t hree months ended March 31, 2026, and the average selling price of systems decreased 11% in the t hree months ended March 31, 2026.

Revenue from UltraMIST ® totaled 100% of total revenue in the t hree months ended March 31, 2026, and 99% in the same period of 2025 .

Other (expense) income (396) (887) 491 55 % (711) (7,606) 6,895 91 %

Net (Loss) Income Before Income Taxes (676) 551 (1,227) -223 % (2,115) (5,567) 3,452 -62 %

Income tax expense 6 - 6 100 % 6 - 6 100 %

Net (loss) income $ (682) $ 551 $ (1,233) -224 % $ (2,121) $ (5,567) $ 3,446 62 %

Revenues for the three months ended June 30, 2026 were $9.7 million, compared to $10.1 million for the same period of 2025, a decrease of $0.3 million, or 3%.

The decrease was primarily driven by a decline in UltraMIST® system revenue, which decreased to $2.3 million from $3.4 million, or approximately 34%, partially offset by growth in consumables revenue, which increased to $7.3 million from $6.5 million, or approximately 12%.

The decrease in UltraMIST® system revenue for the three months ended June 30, 2026 compared to the same period in 2025, was primarily driven by a 29% decline in unit volume, reflecting weaker capital sales due to financial pressures in the industry as well as increased availability of used UltraMIST® systems in the market.

UltraMIST® system revenue was also impacted by a 9% decrease in average selling price, primarily due to a higher reseller mix.

The increase in consumables revenue for the three months ended June 30, 2026 compared to the same period in 2025, was primarily driven by a 27% increase in unit volume, reflecting strong consumable utilization across our active installed base.

This consumable growth was partially offset by a 11% decrease in average selling price due to a higher mix of reseller sales.

Revenues for the six months ended June 30, 2026 were $19.4 million, approximately flat compared to $19.4 million for the same period of 2025.

Consumables revenue increased to $14.0 million from $12.5 million, or approximately 11%, substantially offset by a decline in UltraMIST® system revenue to $5.2 million from $6.6 million, or approximately 22%.

The decrease in UltraMIST® system revenue for the six months ended June 30, 2026 compared to the same period in 2025, was primarily driven by a 16% decline in unit volume, reflecting weaker capital sales due to financial pressures in the industry as well as increased availability of used UltraMIST® systems in the market.

UltraMIST® system revenue was also impacted by an 8% decrease in average selling price, primarily due to a higher reseller mix.

The increase in consumables revenue for the six months ended June 30, 2026, compared to the same period in 2025, was primarily driven by a 24% increase in unit volume, reflecting strong consumable utilization across our active installed base.

This consumable growth was partially offset by an 8% decrease in average selling price due to a higher mix of reseller sales.

Cost of Revenues

Cost of revenues for the t hree months ended March 31, 2026, was $2.2 million , compared to $2.0 million for the same period of 2025 .

Gross profit as a percentage of revenues was 77% for the t hree months ended March 31, 2026, compared to 79% for the same period in 2025 .

This decrease in gross margin was largely driven by a decrease in pricing on our UltraMIST ® systems and applicators due to a higher reseller mix.

Cost of revenues for the three months ended June 30, 2026 was $2.3 million, compared to $2.2 million for the same period of 2025.

Gross margin as a percentage of revenues was 76% for the three months ended June 30, 2026, compared to 78% for the same period in 2025.

The decline in gross margin percentage was primarily driven by a shift in revenue mix toward consumables sales and away from higher-margin system sales, lower average sales prices due to a higher reseller mix, and

an increase in personnel costs within cost of revenues for the three months ended June 30, 2026, compared to the same period in 2025.

Cost of revenues for the six months ended June 30, 2026 was $4.5 million, compared to $4.2 million for the same period of 2025.

Gross margin as a percentage of revenues was 77% for the six months ended June 30, 2026, compared to 79% for the same period in 2025.

The decline in gross margin percentage was primarily driven by a shift in revenue mix toward consumables sales and away from higher-margin system sales and lower average sales prices due to a higher reseller mix, combined with increased personnel costs within cost of revenues.

General and Administrative

General and administrative expenses for the three months ended March 31, 2026, were $5.3 million as compared to $4.8 million for the same period of 2025, an increase of $0.4 million, or 8%.

The increase in the three months ended March 31, 2026, as compared to the same period of 2025, was primarily due to an increase in payroll and related expenses of $0.4 million, software expenses of $0.2 million, and audit and tax fees of $0.2 million, partially offset by a decrease in Nasdaq listing costs of $0.3 million and regulatory costs of $0.1 million.

General and administrative expenses for the three months ended June 30, 2026 were $4.9 million, compared to $4.4 million for the same period of 2025, an increase of $0.5 million, or 12%.

The increase was primarily due to higher personnel costs of $0.5 million (including stock-based compensation), higher legal and professional fees of $0.6 million, and increased bad debt expense of $0.2 million, partially offset by a $0.9 million reduction in state and local sales tax accruals.

General and administrative expenses for the six months ended June 30, 2026 were $10.2 million, compared to $9.2 million for the same period of 2025, an increase of $0.9 million, or 10%.

The increase was primarily due to higher personnel costs of $1.0 million (including stock-based compensation), higher legal and professional fees of $0.7 million, increased bad debt expense of $0.2 million, and increased software costs of $0.2 million, partially offset by a $0.9 million reduction in state and local sales tax accruals and lower public company costs of $0.3 million from initial Nasdaq listing fees in the six months ended June 30, 2025 that did not recur.

Selling and Marketing

Selling and marketing expenses for the t hree months ended March 31, 2026, were $2.4 million as compared to $1.5 million for the same period of 2025 , an increase of $0.9 million , or 57% .

The year-over-year increase in sales and marketing expenses in the t hree months ended March 31, 2026, was largely driven by increased consulting expenses of $0.5 million and payroll and related expenses of $0.4 million.

Selling and marketing expenses for the three months ended June 30, 2026 were $1.9 million, compared to $1.7 million for the same period of 2025, an increase of $0.2 million, or 15%.

The increase was primarily due to higher consulting costs of $0.2 million and increased travel costs of $0.1 million.

Selling and marketing expenses for the six months ended June 30, 2026 were $4.3 million, compared to $3.2 million for the same period of 2025, an increase of $1.1 million, or 35%.

The increase was primarily due to higher consulting costs of $0.6 million, increased personnel costs of $0.5 million (primarily higher salary expense and stock-based compensation), and increased travel costs of $0.2 million, partially offset by lower sales commissions of $0.3 million.

Research and Development

Research and development expenses for the t hree months ended March 31, 2026, were $0.7 million as compared to $0.2 million for the same period of 2025, an increase of $0.5 million.

The year-over-year increase in research and development expenses in the t hree months ended March 31, 2026, was largely driven by consulting expenses of $0.2 million , non-cash charges for stock-based compensation totaling $0.1 million, and software and patents expenses of $0.1 million.

Other Expense, net

Other expense, net consists of the following:

Three Months Ended March 31, Change

(As Restated) $ %

Research and development expenses for the three months ended June 30, 2026 were $0.6 million, compared to $0.2 million for the same period of 2025, an increase of $0.4 million.

The increase was primarily due to higher personnel costs of $0.3 million, including increased stock-based compensation of $0.1 million, and higher consulting costs of $0.1 million.

Research and development expenses for the six months ended June 30, 2026 were $1.3 million, compared to $0.4 million for the same period of 2025, an increase of $0.9 million.

The increase was primarily due to higher personnel costs of $0.4 million, including increased stock-based compensation of $0.2 million, higher consulting costs of $0.4 million, and increased development project and software costs of $0.1 million.

Other (Expense) Income, net

Other (expense) income, net consists of the following:

Three Months Ended June 30, Change Six Months Ended June 30, Change

2026 2025 $ % 2026 2025 $ %

Interest expense $ (518) $ (1,939) $ 1,421 73 % $ (1,064) $ (3,848) $ 2,784 72 %

2 unchanged sentences

Other income 199 89 110 124 % 490 181 309 171 %

Other expense, net $ (315) $ (6,719) $ 6,404 95 %

Other expense, net totaled $0.3 million for the t hree months ended March 31, 2026, as compared to $6.7 million for the same period of 2025 , a decrease of $6.4 million .

The decrease was primarily driven by the change in the fair value of derivative liabilities of $4.9 million and decreased interest expense of $1.4 million .

The change in fair value of derivative liabilities relates to valuation of warrants previously issued by the Company;

these warrants expired during 2025.

The reduction in interest expense reflects the September 2025 repayment of our Prior Debt and the closing of our Term Loan

under the JPM Credit Agreement, which carries a lower interest rate, as described in Note 8 to the condensed consolidated financial statements.

Total Other Expense, net $ (396) $ (887) $ 491 55 % $ (711) $ (7,606) $ 6,895 91 %

Total Other Expense, net was $0.4 million for the three months ended June 30, 2026, compared to $0.9 million for the same period of 2025, a decrease in net expense of $0.5 million.

The decrease was primarily driven by a $1.4 million reduction in interest expense, partially offset by the non-recurrence of a $1.0 million gain from the change in fair value of derivative liabilities recognized in the prior-year period.

The change in fair value of derivative liabilities relates to the valuation of warrants previously issued by the Company.

Total Other Expense, net was $0.7 million for the six months ended June 30, 2026, compared to $7.6 million for the same period of 2025, a decrease in net expense of $6.9 million.

The decrease was primarily driven by the non-recurrence of a $3.9 million loss from the change in fair value of derivative liabilities recognized in the prior-year period, and a $2.8 million reduction in interest expense, reflecting the September 2025 refinancing of our senior secured debt.

The change in fair value of derivative liabilities relates to the valuation of warrants previously issued by the Company.

Liquidity and Capital Resources

From inception through the year ended December 31, 2024, we incurred losses from operations each year, before achieving net income for the year ended December 31, 2025.

As of March 31, 2026, we had an accumulated deficit of $244.1 million .

As of June 30, 2026, we had an accumulated deficit of $244.8 million.

Historically, our operations have primarily been funded from the sale of capital stock, issuances of notes payable, and convertible debt securities.

2 unchanged sentences

Together with the positive cash flow from operations generated in 2025 and the $5.0 million received in connection with the patent purchase agreement described in Note 14 of the condensed consolidated financial statements, these actions strengthened our liquidity position and capital structure.

As of March 31, 2026, we had cash and cash equivalents of $10.8 million , $20.1 million outstanding under our Term Loan, and $0.7 million drawn under our Revolver.

We were in compliance with all financial and other covenants under the JPM Credit Agreement as of March 31, 2026.

As of June 30, 2026, we had cash and cash equivalents of $9.4 million, $18.7 million outstanding under our Term Loan, and $0.7 million drawn under our Revolver.

We were in compliance with all financial and other covenants under the JPM Credit Agreement as of June 30, 2026.

Based on our current cash position, anticipated cash flows from operations, and availability under our Revolver, we believe we will have sufficient resources to meet our working capital needs, capital expenditures, and debt service obligations for at least the next twelve months from the date of issuance of these condensed consolidated financial statements.

2 unchanged sentences

The following table presents summarized cash flow information:

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands) 2026 2025

(As Restated)

Cash flows provided by (used in) operating activities $ 822 $ (524)

Cash flows (used in) investing activities $ (606) $ (1,321)

Cash flows used in financing activities $ (1,419) $ (57)

Cash flows (used in) provided by financing activities $ (2,798) $ 104

Cash Flows from Operating Activities

Cash provided by operating activities for the three months ended March 31, 2026 totaled $0.4 million, an improvement of $1.9 million compared to cash used in operating activities of $1.5 million for the three months ended March 31, 2025 .

The improvement was primarily driven by a $4.7 million reduction in net loss, from $6.1 million in the prior year period to $1.4 million in the current year period, reflecting continued revenue growth and operational improvements.

Significant non-cash adjustments in the current year period included stock-based compensation of $1.6 million and depreciation and amortization of $0.3 million.

The prior year period included a $4.9 million non-cash loss on the change in fair value of derivative liabilities, which did not recur in the current year period as the related warrants expired during 2025.

Working capital changes in the current year period reflected a $0.6 million increase in accounts receivable from higher revenue activity, while inventory remained relatively flat compared to a $1.3 million build in the prior year period.

Cash provided by operating activities for the six months ended June 30, 2026 totaled $0.8 million.

This primarily reflected non-cash charges, including $3.1 million of stock-based compensation expense, $0.6 million of depreciation and amortization, $0.4 million of provision for credit losses, and $0.1 million of amortization of debt issuance costs and debt discounts, partially offset by a net loss of $2.1 million and a $1.4 million use of cash from changes in operating assets and liabilities.

The change in operating assets and liabilities was driven primarily by increases in inventory and accounts receivable to support our operations.

Cash used in operating activities for the six months ended June 30, 2025 totaled $0.5 million.

This primarily reflected a net loss of $5.6 million, partially offset by non-cash charges of $3.9 million related to the change in fair value of derivative liabilities, $2.1 million of stock-based compensation expense, and $1.1 million related to amortization of debt issuance costs and debt discounts.

Cash Flows from Investing Activities

Cash used in investing activities for the three months ended March 31, 2026 totaled $0.2 million, consisting of $23 thousand in purchases of property and equipment, $66 thousand in deposits on property and equipment, and $69 thousand in investment in software development.

Cash used in investing activities for the three months ended March 31, 2025 totaled $0.2 million, consisting entirely of purchases of property and equipment.

Cash used in investing activities for the six months ended June 30, 2026 totaled $0.6 million, consisting primarily of $0.4 million of purchases of property and equipment, including leasehold improvements at our headquarters, and $0.2 million of investment in capitalized software development.

Cash used in investing activities for the six months ended June 30, 2025 totaled $1.3 million, and consisted entirely of purchases of property and equipment of $1.3 million, of which $0.9 million was related to leasehold improvements at our new headquarters.

Cash Flows from Financing Activities

Cash used in financing activities for the three months ended March 31, 2026 totaled $1.4 million, consisting primarily of $1.4 million in scheduled quarterly principal payments on the Term Loan under the JPM Credit Agreement, partially offset by $19 thousand in proceeds from stock option exercises.

Cash used in financing activities for the three months ended

March 31, 2025 totaled $57 thousand, consisting entirely of principal payments on finance leases.

Cash used in financing activities for the six months ended June 30, 2026 totaled $2.8 million, consisting primarily of $2.9 million in scheduled quarterly principal payments on the Term Loan under the JPM Credit Agreement, partially offset by $0.1 million in proceeds from stock option exercises.

The increase in financing cash outflows reflects the transition from our prior non-amortizing Senior Secured Debt to the Term Loan, which requires quarterly principal payments that commenced on December 31, 2025.

Cash provided by financing activities for the six months ended June 30, 2025 totaled $0.1 million, consisting of proceeds from stock option exercises, partially offset by payments on principal of finance leases.

Segment and Geographic Information

9 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis