STAAR SURGICAL CO 10-K

ITEM 9A. Controls and Procedures Attached as exhibits to this Annual Report on Form 10-K are certifications of STAAR’s Interim Co-Chief Executive Officers, our principal executive officers (PEOs), and Chief Financial Officer, our principal financial officer 47 (PFO), which are required to be made by Rule 13a-14 or Rule 15d-14 of the Securities Exchange Act of 1934, as amended (the Exchange Act). This item includes information concerning the controls and controls evaluation referred to in the certifications. This item should be read in conjunction with the certifications for a more complete understanding of the certifications. Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our PEOs and PFO, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of assurance, management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. As of the end of the period covered by this Annual Report, our management carried out an evaluation, with the participation of our PEOs and PFO, of the effectiveness of the disclosure controls and procedures of the Company. Based on that evaluation, our PEOs and PFO concluded, as of January 2, 2026, that our disclosure controls and procedures were effective at the reasonable assurance level. Changes in Internal Control over Financial Reporting There was no change during the fiscal quarter ended January 2, 2026 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Management’s Annual Report on Internal Control over Financial Reporting The Company’s management, including our PEOs and PFO, is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the Company. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements in accordance with generally accepted accounting principles in the United States of America. Because of its inherent limitations, a system of internal control over financial reporting may not prevent or detect misstatements and can provide only reasonable, not absolute assurance, that its objectives will be achieved. Further, because of changing conditions, effectiveness of internal control over financial reporting may vary over time. The Company’s processes contain self-monitoring mechanisms, and actions are taken to correct deficiencies as they are identified. Management has assessed the effectiveness of the Company’s internal control over financial reporting as of January 2, 2026, based on the criteria for effective internal control described in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on its assessment, management concluded that the Company’s internal control over financial reporting was effective as of January 2, 2026. The report of BDO USA, P.C., our independent registered public accounting firm, regarding its audit of the Company’s internal control over financial reporting follows below. 48 Report of Independent Registered Public Accounting Firm Shareholders and Board of Directors STAAR Surgical Company Lake Forest, California Opinion on Internal Control over Financial Reporting We have audited STAAR Surgical Company’s (the “Company’s”) internal control over financial reporting as of January 2, 2026, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 2, 2026, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of January 2, 2026 and December 27, 2024, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the three fiscal years in the period ended January 2, 2026, and the related notes and financial statement schedule listed in the accompanying index and our report dated March 3, 2026 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Item 9A, Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ BDO USA, P.C. Los Angeles, California March 3, 2026 49 ITEM 9B. Othe r Information (c) Trading Plans During the quarter ended January 2, 2026 , no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated : (i) Any contract, instruction or written plan for the purchase or sale of securities of the Company intended to satisfy the affirmative defense conditions of Rule 10b5-1(c); and (ii) Any “non-Rule 10b5-1 trading arrangement” as defined in paragraph (c) of item 408(a) of Regulation S-K. ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections None. PART III Certain information required by Part III is omitted from this Annual Report because the Company will file a definitive proxy statement within 120 days after the close of its fiscal year ended January 2, 2026, pursuant to Regulation 14A (the “Proxy Statement”) for its 2026 annual meeting of stockholders, and certain information included in the Proxy Statement is incorporated herein by reference. ITEM 10. Directors, Executive Of ficers and Corporate Governance Information regarding our executive officers will be set forth in the Proxy Statement under the caption “Information Regarding Executive Officers,” which is incorporated herein by reference and made a part hereof in response to the information required by Item 10. Information regarding our directors and certain corporate governance and other matters will be set forth in the Proxy Statement under the captions “Proposal No. 1: Election of Directors,” “Information Regarding Director Nominees,” and “Corporate Governance,” which is incorporated herein by reference and made a part hereof in response to the information required by Item 10. The Corporate Governance Guidelines adopted by our Board of Directors, as well as the charters of the Audit Committee, the Nominating and Governance Committee and the Compensation Committee of the Board are each posted in the Investors section of our website, www.staar.com, under the Investor Resources & FAQs tab, as a Corporate Governance Document. We have adopted a Code of Business Conduct and Ethics that applies to all our directors, officers, and employees, including our Principal Executive Officers, Principal Financial Officer, Principal Accounting Officer, or Controller, or persons performing similar functions. The Code of Business Conduct and Ethics is posted in the Investors section of our website, www.staar.com, under the Investor Resources & FAQs tab, as a Corporate Governance Document. We intend to disclose any future amendments to certain provisions of the Code of Business Conduct and Ethics, or waivers thereunder granted to executive officers and directors, on our website within four business days of such amendment or waiver. We have adopted an Insider Trading Policy that governs the purchase, sale, and other dispositions of our securities by directors, officers and employees, as well as by the Company itself. We believe our policies and procedures are reasonably designed to promote compliance with insider trading laws, rules and regulations and applicable listing standards applicable to us. The Insider Trading Policy is posted in the Investors section of our website, www.staar.com, under the Investor Resources & FAQs tab, as a Corporate Governance Document, and a copy is filed with the Company’s 2025 Annual Report on Form 10-K as Exhibit 19.1. ITEM 11. Executi ve Compensation Information regarding compensation of our executives and directors will be set forth in the Proxy Statement under the captions “Compensation Discussion and Analysis,” “Compensation Tables,” and “Compensation of Directors,” which is incorporated herein by reference and made a part hereof in response to the information required by Item 11. 50 ITEM 12. Security Ownership of Certain Beneficial Ow ners and Management and Related Stockholder Matters Information regarding security ownership of certain beneficial owners and management will be set forth in the Proxy Statement under the caption “Security Ownership of Principal Shareholders and Management,” which is incorporated herein by reference and made a part hereof in response to the information required by Item 12. Information regarding securities authorized for issuance under equity compensation plans will be set forth in the Proxy Statement under the caption “Equity Compensation Plan Information,” which is incorporated herein by reference and made a part hereof in response to the information required by Item 12. ITEM 13. Certain Relationships and Relate d Transactions, and Director Independence Information regarding certain relationships and related transactions and director independence will be set forth in the Proxy Statement under the captions “Review of Related Person Transactions,” and “Corporate Governance,” which is incorporated herein by reference and made a part hereof in response to the information required by Item 13. ITEM 14. Principal Accou nting Fees and Services Information regarding principal accounting fees and services will be set forth in the Proxy Statement under the caption “Proposal No. 2: Ratification of Independent Registered Public Accounting Firm - Principal Accountant Fees and Services,” which is incorporated herein by reference and made a part hereof in response to the information required by Item 14. PAR T IV ITEM 15. Exhibits and Financ ial Statement Schedules We have filed the following documents as part of this Annual Report on Form 10-K: Page (1) Consolidated Financial Statements Report of Independent Registered Public Accounting Firm F- 2 Consolidated Balance Sheets F- 4 Consolidated Statements of Operations F- 5 Consolidated Statements of Comprehensive Income (Loss) F- 6 Consolidated Statements of Stockholders’ Equity F- 7 Consolidated Statements of Cash Flows F- 8 Notes to Consolidated Financial Statements F- 9 (2) Schedules required by Regulation S-X are filed as an exhibit to this report II. Schedule II — Valuation and Qualifying Accounts and Reserves F- 43 All other schedules have been omitted because they are not required, not applicable, or the required information is otherwise included. (3) Index to Exhibits Exhibit Number Description 2.1 Agreement and Plan of Merger, dated as of August 4, 2025, by and among STAAR Surgical Company, Alcon Research, LLC and Rascasse Merger Sub, Inc . (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K as filed with the Commission on August 5, 2025). 3.1 Amended and Restated Certificate of Incorporation (incorporated by reference to Appendix 2 of the Company’s Proxy Statement on Form DEF 14A as filed with the Commission on April 26, 2018). 3.2 Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K as filed with the Commission on February 1, 2023). 51 4.1 Form of Certificate for Common Stock, par value $0.01 per share (incorporated by reference to Exhibit 4.1 to Amendment No. 1 to the Company’s Registration Statement on Form 8 A/A as filed with the Commission on April 18, 2003). 4.2 Description of the Registrant’s Securities (incorporated by reference to Exhibit 4.3 to the Company’s Annual Report on Form 10-K, for the year ended January 3, 2020, as filed with the Commission on February 26, 2020). 10.1 # Form of Indemnity Agreement between the Company and certain officers and directors (incorporated by reference to Exhibit 10.38 to the Company’s Quarterly Report on Form 10-Q, for the period ended June 29, 2018, as filed with the Commission on August 1, 2018). 10.2 # Form of Severance Agreement between the Company and certain executives (incorporated by reference to Exhibit 10.31 to the Company’s Quarterly Report on Form 10-Q, for the period ended March 31, 2023, as filed with the Commission on May 3, 2023). 10.3 # Form of Executive Change in Control Agreement between the Company and certain officers (incorporated by Reference to Exhibit 10.3 to the Company’s Annual Report on Form 10-K, for the year ended December 29, 2023, as filed with the Commission on February 27, 2024). 10.4 # Letter of the Company dated September 11, 2017 to Scott Barnes, Chief Medical Officer, regarding compensation (incorporated by reference to Exhibit 10.36 to the Company’s Annual Report on Form 10-K, for the year ended January 3, 2020, as filed with the Commission on February 26, 2020). 10.5 # Letter of the Company dated March 24, 2023 to Magda Michna, Chief Clinical, Regulatory and Medical Affairs Officer, regarding compensation (incorporated by reference to Exhibit 10.30 to the Company’s Quarterly Report on Form 10-Q, for the period ended March 31, 2023, as filed with the Commission on May 3, 2023). 10.6 # Letter of the Company dated March 24, 2023 to Warren Foust, Chief Operating Officer, regarding compensation (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K as filed with the Commission on March 29, 2023). 10.7 # Letter of the Company, dated October 24, 2023 to Nathaniel Sisitsky, General Counsel, regarding compensation (incorporated by Reference to Exhibit 10.13 to the Company’s Annual Report on Form 10-K, for the year ended December 29, 2023, as filed with the Commission on February 27, 2024). 10.8 # Employment Agreement, effective February 26, 2025, by and between the Company and Stephen C. Farrell (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K as filed with the Commission on February 26, 2025). 10.9 # Consulting Agreement, effective February 26, 2025, by and between the Company and Thomas G. Frinzi (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K as filed with the Commission on February 26, 2025). 10.10 # Letter of the Company dated June 25, 2025 to Deborah Andrews, Chief Financial Officer, regarding employment and compensation (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, for the period ended June 27, 2025, as filed with the Commission on August 6, 2025). 10.11 # Consulting Agreement dated April 24, 2025 between the Company and Wei Jiang (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, for the period ended June 27, 2025, as filed with the Commission on August 6, 2025). 10.12 Form of Distributorship Agreement (incorporated by reference to Exhibit 10.37 to the Company’s Quarterly Report on Form 10-Q, for the period ended June 29, 2018, as filed with the Commission on August 1, 2018). 10.13 Standard Industrial/Commercial Multi-Tenant Lease-Gross dated April 5, 2000 entered into between the Company and Kilroy Realty, L.P. (incorporated by reference to Exhibit 10.46 to the Company’s Annual Report on Form 10-K, for the year ended December 29, 2000, as filed with the Commission on March 29, 2001). 52 10.14 Tenth Amendment of Lease dated May 13, 2022, by and between the Company and Oxford Spectrum Wilson LLC (incorporated by Reference to Exhibit 10.20 to the Company’s Annual Report on Form 10-K, for the year ended December 29, 2023, as filed with the Commission on February 27, 2024). 10.15 Tenancy Agreement dated June 13, 2019 between Einfache Gesellschaft Calderari & Schwab. and STAAR Surgical AG (incorporated by reference to Exhibit 10.37 to the Company’s Quarterly Report on Form 10-Q, for the period ended June 28, 2019, as filed with the Commission on July 31, 2019). 10.16 Lease Agreement entered into on September 14, 2020 between Calderari & Schwab and STAAR Surgical AG (incorporated by reference to Exhibit 10.39 to the Company’s Current Report on Form 8-K as filed with the Commission on September 14, 2020). 10.17 Lease Agreement dated August 10, 2017 by and between the Company and 2000 Gold L.P. (incorporated by reference to Exhibit 10.46 to the Company’s Quarterly Report on Form 10-Q, for the period ended September 29, 2017, as filed with the Commission on November 8, 2017). 10.18 First Amendment to Lease Agreement dated March 23, 2023 between the Company and 2000 Gold L.P. (incorporated by Reference to Exhibit 10.24 to the Company’s Annual Report on Form 10-K, for the year ended December 29, 2023, as filed with the Commission on February 27, 2024). 10.19 Lease Agreement commencing dated March 19, 2018 between the Company and Bukewihge Properties, LLC (incorporated by reference to Exhibit 10.36 to the Company’s Quarterly Report on Form 10-Q, for the period ended March 30, 2018, as filed with the Commission on May 2, 2018). 10.20 First Amendment to Lease Agreement dated August 11, 2022 between the Company and Bukewihge Properties, LLC (incorporated by reference to Exhibit 10.27 to the Company’s Annual Report on Form 10-K, for the year ended December 30, 2022, as filed with the Commission on February 23, 2023). 10.21 Second Amendment to Lease Agreement dated November 15, 2023 between the Company and Bukewihge Properties, LLC (incorporated by Reference to Exhibit 10.27 to the Company’s Annual Report on Form 10-K, for the year ended December 29, 2023, as filed with the Commission on February 27, 2024). 10.22 # STAAR Surgical Company Amended and Restated Omnibus Equity Incentive Plan ( incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K as filed with the Commission on June 21, 2024). 10.23 # Amendment No. 1 to the STAAR Surgical Company Amended and Restated Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K as filed with the Commission on June 21, 2024). 10.24 # Form of Option Grant and Stock Option Agreement for employees (incorporated by reference to Exhibit 10.35 to the Company’s Annual Report on Form 10-K, for the year ended December 30, 2016, as filed with the Commission on March 2, 2017). 10.25 # Form of Option Grant and Stock Option Agreement for Non-Employee Directors (incorporated by reference to Exhibit 10.36 to the Company’s Annual Report on Form 10-K, for the year ended December 30, 2016, as filed with the Commission on March 2, 2017). 10.26 # Form of Restricted Stock Unit Grant and Agreement (incorporated by reference to Exhibit 10.37 to the Company’s Annual Report on Form 10-K, for the year ended December 30, 2016, as filed with the Commission on March 2, 2017). 10.27 # Form of Restricted Stock Award Grant and Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.38 to the Company’s Annual Report on Form 10-K, for the year ended December 30, 2016, as filed with the Commission on March 2, 2017). 10.28 # Form of Performance Stock Unit Grant and Agreement (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q, for the period ended March 28, 2025, as filed with the Commission on May 7, 2025). 10.29 Cooperation Agreement dated January 14, 2026 between the Company and Broadwood Partners, L.P. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K as filed with the Commission on January 15, 2026). 53 10.30 *# Separation and Consulting Agreement dated January 14, 2026 between the Company and Stephen C. Farrell . 10.31 *# Interim Co-CEO Letter Agreement dated February 1, 2026 between the Company and Warren Foust. 10.32 *# Separation Agreement dated February 4, 2026 between the Company and Nathaniel Sisitsky . 10.33 *# Consulting Agreement dated February 4, 2026 between the Company and Nathaniel Sisitsky. 19.1 Insider Trading Policy (incorporated by reference to Exhibit 19.1 to the Company’s Annual Report on Form 10-K, for the year ended December 27, 2024, as filed with the Commission on February 21, 2025). 21.1 * List of Subsidiaries. 23.1 * Consent of BDO USA, P.C . 31.1 * Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 * Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 ** Certification Pursuant to 18 U.S.C. Section 1350, Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 97.1 Compensation Recoupment (Clawback) Policy (incorporated by Reference to Exhibit 97.1 to the Company’s Annual Report on Form 10-K, for the year ended December 29, 2023, as filed with the Commission on February 27, 2024). 101.INS * Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. 101.SCH * Inline XBRL Taxonomy Extension Schema With Embedded Linked Documents. 104 The cover page from the Company’s Annual Report on Form 10-K for the fiscal year ended January 2, 2026, has been formatted in Inline XBRL with applicable taxonomy extension information contained in Exhibit 101. # Management contract or compensatory plan, contract or arrangement. * Filed herewith. ** Certification furnished herewith solely to accompany this annual report pursuant to 18 U.S.C. Section 1350. Certification is not deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. Such certification is not deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act except to the extent that the registrant specifically incorporates it by reference. ITEM 16. Form 10-K Summary None. 54 SIGNA TURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. STAAR SURGICAL COMPANY Date: March 3, 2026 By: /s/ WARREN FOUST Warren Foust Interim Co-Chief Executive Officer, President and Chief Operating Officer (principal executive officer) Date: March 3, 2026 /s/ DEBORAH ANDREWS Deborah Andrews Interim Co-Chief Executive Officer and Chief Financial Officer (principal executive officer and principal financial officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Name Title Date /s/ WARREN FOUST Interim Co-Chief Executive Officer, President and Chief Operating Officer March 3, 2026 Warren Foust (principal executive officer) /s/ DEBORAH ANDREWS Interim Co-Chief Executive Officer and Chief Financial Officer March 3, 2026 Deborah Andrews (principal executive officer, principal accounting officer and principal financial officer) /s/ NEAL C. BRADSHER Director March 3, 2026 Neal C. Bradsher /s/ ARTHER C. BUTCHER Director March 3, 2026 Arthur C. Butcher /s/ WEI JIANG Director March 3, 2026 Wei Jiang /s/ RICHARD T. LEBUHN Director March 3, 2026 Richard T. LeBuhn /s/ LOUIS E. SILVERMAN Director March 3, 2026 Louis E. Silverman /s/ CHRISTOPHER MIN FANG WANG Director March 3, 2026 Christopher Min Fang Wang /s/ LILIAN ZHOU Director March 3, 2026 Lilian Zhou 55 STAAR SURGICAL COMPANY AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS Years Ended January 2, 2026, December 27, 2024 and December 29, 2023 TABLE OF CONTENTS Report of Independent Registered Public Accounting Firm (BDO USA, P.C.; Los Angeles, California; PCAOB ID# 243 ) F- 2 Consolidated Balance Sheets at January 2, 2026 and December 27, 2024 F- 4 Consolidated Statements of Operations for the years ended January 2, 2026, December 27, 2024 and December 29, 2023 F- 5 Consolidated Statements of Comprehensive Income (Loss) for the years ended January 2, 2026, December 27, 2024 and December 29, 2023 F- 6 Consolidated Statements of Stockholders’ Equity for the years ended January 2, 2026, December 27, 2024 and December 29, 2023 F- 7 Consolidated Statements of Cash Flows for the years ended January 2, 2026, December 27, 2024 and December 29, 2023 F- 8 Notes to Consolidated Financial Statements F- 9 Schedule II Valuation and Qualifying Accounts and Reserves F- 43 F- 1 REPORT OF INDEPENDENT REGIST ERED PUBLIC ACCOUNTING FIRM Shareholders and Board of Directors STAAR Surgical Company Lake Forest, California Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of STAAR Surgical Company (the “Company”) as of January 2, 2026 and December 27, 2024, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the three fiscal years in the period ended January 2, 2026, and the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at January 2, 2026 and December 27, 2024, and the results of its operations and its cash flows for each of the three fiscal years in the period ended January 2, 2026, in conformity with accounting principles generally accepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of January 2, 2026, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated March 3, 2026 expressed an unqualified opinion thereon. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Income Tax Provision As described in Notes 1 and 10 to the consolidated financial statements, the Company operates in multiple international markets and is subject to income taxes in the U.S. and numerous foreign jurisdictions. The tax provision is based on management’s understanding of current enacted tax laws and tax rates of each tax jurisdiction with consideration of intercompany transactions across multiple tax jurisdictions. F- 2 We identified the accounting for the Company’s income tax provision as a critical audit matter due to the complexity involved in: (i) the application of relevant tax laws and regulations in calculating domestic taxable income and domestic deferred tax balances and (ii) the application of transfer pricing guidelines to various intercompany transactions. Auditing these elements required challenging auditor judgment and an increased extent of audit effort, including the use of income tax professionals and professionals with knowledge and skills in transfer pricing. The primary procedures we performed to address this critical audit matter included: • Testing the completeness and accuracy of the underlying data used to determine domestic taxable income, domestic deferred tax balances and transfer pricing adjustments. • Utilizing income tax professionals to assist in evaluating management’s application of relevant domestic tax laws, enacted tax rates and regulations in calculating domestic taxable income and domestic deferred tax balances. • Utilizing professionals with knowledge and skills in transfer pricing to assist in evaluating management’s application of the transfer pricing guidelines to various intercompany transactions. /s/ BDO USA, P.C. We have served as the Company's auditor since 1993. Los Angeles, California March 3, 2026 F- 3 STAAR SURGICAL COMPANY AND SUBSIDIARIES CONSOLIDATED B ALANCE SHEETS January 2, 2026 and December 27, 2024 (In thousands, except par value amounts) 2025 2024 ASSETS Current assets: Cash and cash equivalents $ 153,150 $ 144,159 Investments available for sale (amortized cost basis of $ 34,385 and $ 86,346 at January 2, 2026 and December 27, 2024, respectively) 34,386 86,335 Accounts receivable trade, net of allowance for credit losses of $ 83 and $ 32 at January 2, 2026 and December 27, 2024, respectively 50,064 77,897 Inventories, net 55,496 43,305 Prepayments, deposits and other current assets 18,449 16,244 Total current assets 311,545 367,940 Property, plant and equipment, net 73,323 84,889 Finance lease right-of-use assets, net — 37 Operating lease right-of-use assets, net 29,609 36,850 Cloud-based software 30,700 15,763 Goodwill 1,786 1,786 Deferred income taxes 3,365 788 Other assets 1,350 1,471 Total assets $ 451,678 $ 509,524 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 11,574 $ 16,704 Obligations under finance leases — 42 Obligations under operating leases 5,872 3,894 Allowance for sales returns 10,199 6,579 Other current liabilities 40,859 43,087 Total current liabilities 68,504 70,306 Obligations under operating leases 32,481 34,807 Deferred income taxes — 297 Asset retirement obligations 45 42 Deferred rent 89 — Pension liability 6,375 6,737 Total liabilities 107,494 112,189 Commitments and contingencies (Note 13) Stockholders’ equity: Common stock, $ 0.01 par value; 60,000 shares authorized: 49,779 shares issued and 49,403 shares outstanding at January 2, 2026 and 49,294 shares issued and outstanding at December 27, 2024, respectively 498 493 Additional paid-in capital 504,682 471,449 Treasury stock, 376 and 0 shares at January 2, 2026 and December 27, 2024, respectively ( 6,461 ) — Accumulated other comprehensive loss ( 6,511 ) ( 7,031 ) Accumulated deficit ( 148,024 ) ( 67,576 ) Total stockholders’ equity 344,184 397,335 Total liabilities and stockholders’ equity $ 451,678 $ 509,524 The accompanying notes are an integral part of these consolidated financial statements. F- 4 STAAR SURGICAL COMPANY AND SUBSIDIARIES CONSOLIDATED STATEM ENTS OF OPERATIONS Years Ended January 2, 2026, December 27, 2024 and December 29, 2023 (In thousands, except per share amounts) 2025 2024 2023 Net sales $ 239,442 $ 313,901 $ 322,415 Cost of sales 57,022 74,319 69,764 Gross profit 182,420 239,582 252,651 Selling, general and administrative expenses: General and administrative 85,783 89,898 72,319 Selling and marketing 102,528 116,978 111,757 Research and development 40,055 45,317 40,478 Merger transaction and related costs 17,135 — — Restructuring, impairment and related charges 28,632 — — Total selling, general and administrative expenses 274,133 252,193 224,554 Operating income (loss) ( 91,713 ) ( 12,611 ) 28,097 Other income, net: Interest income, net 4,594 5,911 6,986 Gain (loss) on foreign currency transactions 2,603 ( 3,675 ) ( 1,909 ) Royalty income — 508 74 Other income, net 2,253 815 448 Total other income, net 9,450 3,559 5,599 Income (loss) before income taxes ( 82,263 ) ( 9,052 ) 33,696 Provision (benefit) for income taxes ( 1,815 ) 11,156 12,349 Net income (loss) $ ( 80,448 ) $ ( 20,208 ) $ 21,347 Net income (loss) per share: Basic $ ( 1.62 ) $ ( 0.41 ) $ 0.44 Diluted $ ( 1.62 ) $ ( 0.41 ) $ 0.43 Weighted average shares outstanding: Basic 49,568 49,125 48,523 Diluted 49,568 49,125 49,427 The accompanying notes are an integral part of these consolidated financial statements. F- 5 STAAR SURGICAL COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Years Ended January 2, 2026, December 27, 2024 and December 29, 2023 (In thousands) 2025 2024 2023 Net income (loss) $ ( 80,448 ) $ ( 20,208 ) $ 21,347 Other comprehensive income (loss): Defined benefit plans: Net change in plan assets 460 ( 1,830 ) ( 3,946 ) Reclassification into other income (expense), net 78 ( 77 ) ( 357 ) Investments available for sale: Change in unrealized gain 11 28 363 Reclassification into other income (expense), net 2 3 — Foreign currency translation gain (loss) 22 ( 1,775 ) ( 1,095 ) Tax effect ( 53 ) 733 766 Other comprehensive income (loss), net of tax 520 ( 2,918 ) ( 4,269 ) Comprehensive income (loss) $ ( 79,928 ) $ ( 23,126 ) $ 17,078 The accompanying notes are an integral part of these consolidated financial statements. F- 6 STAAR SURGICAL COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Years Ended January 2, 2026, December 27, 2024 and December 29, 2023 (In thousands) Common Stock Shares Common Stock Par Value Additional Paid-In Capital Treasury Stock Shares Treasury Stock Accumulated Other Compre-hensive Income (Loss) Accumulated Deficit Total Balance, at December 30, 2022 48,212 $ 482 $ 404,189 — $ — $ 156 $ ( 68,715 ) $ 336,112 Net income — — — — — — 21,347 21,347 Other comprehensive loss — — — — — ( 4,269 ) — ( 4,269 ) Common stock issued upon exercise of options 518 5 9,667 — — — — 9,672 Stock-based compensation — — 25,188 — — — — 25,188 Repurchase of employee common stock for taxes withheld ( 35 ) — ( 2,097 ) — — — — ( 2,097 ) Unvested restricted stock 14 — — — — — — — Vested restricted and performance stock units 130 1 — — — — — 1 Balance, at December 29, 2023 48,839 488 436,947 — — ( 4,113 ) ( 47,368 ) 385,954 Net loss — — — — — — ( 20,208 ) ( 20,208 ) Other comprehensive loss — — — — — ( 2,918 ) — ( 2,918 ) Common stock issued upon exercise of options 315 3 7,389 — — — — 7,392 Stock-based compensation — — 28,618 — — — — 28,618 Repurchase of employee common stock for taxes withheld ( 44 ) — ( 1,505 ) — — — — ( 1,505 ) Unvested restricted stock 16 — — — — — — — Forfeited restricted stock ( 5 ) — — — — — — — Vested restricted and performance stock units 173 2 — — — — — 2 Balance, at December 27, 2024 49,294 493 471,449 — — ( 7,031 ) ( 67,576 ) 397,335 Net loss — — — — — — ( 80,448 ) ( 80,448 ) Other comprehensive income — — — — — 520 — 520 Common stock issued upon exercise of options 221 2 3,463 — — — — 3,465 Stock-based compensation — — 31,290 — — — — 31,290 Repurchase of common stock — — — ( 376 ) ( 6,461 ) — — ( 6,461 ) Repurchase of employee common stock for taxes withheld ( 77 ) — ( 1,520 ) — — — — ( 1,520 ) Vested restricted and performance stock units 341 3 — — — — — 3 Balance, at January 2, 2026 49,779 $ 498 $ 504,682 ( 376 ) $ ( 6,461 ) $ ( 6,511 ) $ ( 148,024 ) $ 344,184 The accompanying notes are an integral part of these consolidated financial statements. F- 7 STAAR SURGICAL COMPANY AND SUBSIDIARIES CONSOLIDATED STATEM ENTS OF CASH FLOWS Years Ended January 2, 2026, December 27, 2024 and December 29, 2023 (In thousands) 2025 2024 2023 Cash flows from operating activities: Net income (loss) $ ( 80,448 ) $ ( 20,208 ) $ 21,347 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation of property, plant, and equipment 8,319 6,891 5,111 Amortization of cloud-based software 409 — — Non-cash operating lease expense 3,570 3,562 3,256 Impairment of fixed assets and operating lease right-of-use assets 15,404 — — Gain on fixed asset recovery ( 1,458 ) — — Amortization of intangibles — — 13 Impairment of intangibles — — 154 Accretion/amortization of investments available for sale ( 198 ) ( 1,091 ) ( 2,501 ) Deferred income taxes ( 2,916 ) 3,590 3,264 Change in net pension liability ( 249 ) 26 ( 956 ) Loss on disposal of property and equipment 74 1,694 73 Stock-based compensation expense 30,588 27,210 23,516 Change in asset retirement obligation 4 ( 53 ) ( 102 ) Provision for sales returns and credit losses 3,664 286 663 Inventory provision 5,334 2,782 4,851 Changes in working capital: Accounts receivable 27,834 16,493 ( 32,760 ) Inventories ( 16,981 ) ( 10,000 ) ( 14,361 ) Prepayments, deposits, and other assets ( 1,352 ) ( 2,006 ) ( 1,007 ) Cloud-based software ( 15,764 ) ( 13,357 ) ( 2,406 ) Accounts payable ( 5,507 ) 75 ( 701 ) Other current liabilities and non-current liabilities ( 4,557 ) ( 169 ) 7,140 Net cash provided by (used in) operating activities ( 34,230 ) 15,725 14,594 Cash flows from investing activities: Acquisition of property and equipment ( 5,820 ) ( 23,394 ) ( 18,188 ) Purchase of investments available for sale ( 75,363 ) ( 80,240 ) ( 52,313 ) Proceeds from maturity of investments available for sale 124,145 43,103 143,548 Proceeds from sale of investments available for sale 3,377 1,314 1,300 Net cash provided by (used in) investing activities 46,339 ( 59,217 ) 74,347 Cash flows from financing activities: Repayment of finance lease obligations ( 42 ) ( 165 ) ( 161 ) Repurchase of common stock ( 6,461 ) — — Repurchase of employee common stock for taxes withheld ( 1,520 ) ( 1,505 ) ( 2,097 ) Proceeds from the exercise of stock options 3,465 7,392 9,672 Proceeds from vested restricted and performance stock units 3 2 1 Net cash provided by (used in) financing activities ( 4,555 ) 5,724 7,415 Effect of exchange rate changes on cash and cash equivalents 1,437 ( 1,111 ) 202 Increase (decrease) in cash and cash equivalents 8,991 ( 38,879 ) 96,558 Cash and cash equivalents, at beginning of year 144,159 183,038 86,480 Cash and cash equivalents, at end of year $ 153,150 $ 144,159 $ 183,038 The accompanying notes are an integral part of these consolidated financial statements. F- 8 STAAR SURGICAL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 — Organization and Description of Business and Accounting Policies Organization and Description of Business STAAR Surgical Company, a Delaware corporation, was first incorporated in 1982, and together with its subsidiaries (the “Company”) designs, develops, manufactures, and sells implantable lenses for the eye and accessory delivery systems used to deliver the lenses into the eye. The Company generates worldwide revenue almost exclusively from sales of its Implantable Collamer Lenses (“ICLs”), which are used in corrective or “refractive” surgery. Historically, the Company also manufactured and sold intraocular lenses (“IOLs”), for use in surgery to treat cataracts. As the Company has focused its business and strategy on its ICL product offerings, it has phased out its cataract IOL product line. The Company markets and sells ICLs for refractive surgery to treat myopia (nearsightedness) as its “EVO” family of lenses. The Company’s EVO family of lenses includes its EVO ICL, EVO+ ICL, and EVO Visian ICL. The Company’s newest offering, EVO Viva, has an extended depth of focus (EDoF) optic, which is designed to treat myopia with presbyopia (age-related loss of ability to focus). The Company also markets and sells an ICL lens to treat hyperopia (farsightedness), which is called Visian ICL. The Company makes its ICL product offerings available in multiple models, powers and lengths, including some with toric ICL (TICL) versions to correct for astigmatism (blurred vision). Not all of the Company’s products are currently available in all markets where it sells ICLs today. As of January 2, 2026, the Company’s significant subsidiaries consisted of: • STAAR Surgical AG, a wholly owned subsidiary organized under the laws of Switzerland (“STAAR AG”) • STAAR Japan, Inc., a wholly owned subsidiary organized under the laws of Japan (“STAAR Japan”) Principles of Consolidation The accompanying consolidated financial statements include the accounts of STAAR Surgical Company and its wholly-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All significant intercompany balances and transactions have been eliminated. Fiscal Year and Interim Reporting Periods The Company’s fiscal year ends on the Friday nearest December 31 and each of the Company’s quarterly reporting periods generally consists of 13 weeks. Fiscal year 2025 is based on a 53-week period and fiscal years 2024 and 2023 are based on a 52-week period. Termination of Alcon Merger Agreement As previously disclosed, on August 4, 2025, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Alcon Research, LLC, a Delaware limited liability company (“Alcon”), and Rascasse Merger Sub, Inc., a Delaware corporation and a wholly owned direct subsidiary of Alcon (“Merger Sub”). The Merger Agreement provided, among other things, that subject to the satisfaction or waiver of the conditions set forth therein, Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly owned subsidiary of Alcon. The Company and Alcon entered into two amendments to the Merger Agreement, on November 7, 2025 and December 9, 2025, and the Company held a special meeting of stockholders (the “Special Meeting”) to vote on the Merger on January 6, 2026. At the Special Meeting, the Company’s stockholders voted against the Merger, and the Merger Agreement was terminated in accordance with its terms effective January 6, 2026. None of the Company, Alcon or Merger Sub was required to pay any termination fee as a result of the termination of the Merger Agreement, and the parties are responsible for their respective costs and expenses related to the Merger Agreement and the transactions contemplated thereby. During fiscal 2025, the Company incurred $ 17,135,000 in professional fees and expenses related to the Merger, which are recorded as Merger transaction and related costs on the Consolidated Statement of Operations. Following the termination of the Merger Agreement, on January 14, 2026, the Company entered into a letter agreement (the “Cooperation Agreement”) with Broadwood Partners, L.P. and its affiliates (“Broadwood”), the Company’s largest stockholder. The Cooperation Agreement provided for certain governance and leadership changes, as well as reimbursement by the Company of expenses incurred by Broadwood and other stockholders in connection with their engagement with the Company, including the Special Meeting. See Note 19 – Subsequent Events to the Consolidated Financial Statements for information about the Merger Agreement and the Cooperation Agreement. F- 9 STAAR SURGICAL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 1 — Organization and Description of Business and Accounting Policies (Continued) Reclassifications The Company reclassified certain personnel costs including salary-related and payroll tax expenses, bonus and stock-based compensation related expenses and travel related expenses previously included in research and development to sales and marketing. These costs support internal and external training and education with respect to the Company’s existing products, and as such, the Company determined that classification of these costs in sales and marketing better reflects the nature of the costs and financial performance of the Company as it operates. The Company has made certain reclassification adjustments to conform prior period amounts to current presentation, which include reclassification adjustments between Research and development expenses and Sales and marketing expenses on its Consolidated Statements of Operations as follows (in thousands): 2024 2023 Prior Presentation Reclassification New Presentation Prior Presentation Reclassification New Presentation Sales and marketing $ 108,322 $ 8,656 $ 116,978 $ 107,834 $ 3,923 $ 111,757 Research and development 53,973 ( 8,656 ) 45,317 44,401 ( 3,923 ) 40,478 The reclassification adjustments did not have a material impact on previously recorded amounts and had no impact on the Company’s Total selling, general and administrative expenses, Operating income (loss), Net income (loss) or Net earnings (loss) per share. The Consolidated Balance Sheets, Consolidated Statements of Operations, Comprehensive Income (Loss), Stockholders’ Equity and Cash Flows were not affected by changes in the presentation of these costs. Additionally, non-cash lease expense is now presented on its own line in the Company’s Consolidated Statements of Cash Flows instead of combined with the changes in other current and non-current liabilities as follows (in thousands): 2024 2023 Prior Presentation Reclassification New Presentation Prior Presentation Reclassification New Presentation Non-cash operating lease expense $ — $ 3,562 $ 3,562 $ — $ 3,256 $ 3,256 Other current and non-current liabilities 3,393 ( 3,562 ) ( 169 ) 10,396 ( 3,256 ) 7,140 Net cash provided by (used in) operating activities presented in the Consolidated Statements of Cash Flows was not affected by this change in presentation. Segment Reporting The Company operates in one reportable segment, ophthalmic surgical product segment, as all of the Company’s sales are generated from ophthalmic surgical products. The accounting policies for the ophthalmic surgical product segment are the same as those described in Note 1 – Organization and Description of Business and Accounting Policies of the Consolidated Financial Statements. The Company’s chief operating decision maker (“CODM”) has been identified as the Chief Executive Officer . The Company’s CODM manages and allocates resources to the operations of the Company on a consolidated basis. The CODM assesses performance comparing actual results to forecasts and decides how to allocate resources, i.e., headcount and compensation, based on net income or on operating results, if a net loss. Significant segment expenses are consistent with those presented on the Consolidated Statements of Operations. The measure of segment assets is reported on the balance sheet as total consolidated assets and the expenditures for additions to long-lived assets, and depreciation and amortization expense is consistent with those presented on the Consolidated Statement of Cash Flows. See Note 1 – Organization and Description of Business and Accounting Policies – Concentration of Credit Risk and Sales, Note 17 – Disaggregation of Revenues, Geographic Sales and Product Sales and Note 18 – Geographic Assets for specific information regarding the Company’s sales and long-lived assets. F- 10 STAAR SURGICAL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 1 — Organization and Description of Business and Accounting Policies (Continued) Foreign Currency The functional currency of STAAR Japan is the Japanese yen. The functional currency of STAAR AG is the U.S. dollar. Assets and liabilities of STAAR Japan are translated at rates of exchange in effect at the close of the period. Sales and expenses are translated at the weighted average of exchange rates in effect during the period. Net foreign translation gain (loss) was as follows (in thousands): Years Ended 2025 2024 2023 Foreign currency translation gain (loss) (1) $ 22 $ ( 1,775 ) $ ( 1,095 ) Gain (loss) on foreign currency transactions (2) 2,603 ( 3,675 ) ( 1,909 ) (1) Shown as a separate line item on the Consolidated Statements of Comprehensive Income (Loss). (2) Shown as a separate line item on the Consolidated Statements of Operations. Cash and Cash Equivalents Cash and cash equivalents include cash and balances in deposits and money market accounts held at banks and financial institutions with original maturities of three months or less. Such balances generally exceed the federal insurance limits; however, the Company periodically assesses the financial condition of the institutions and believes that the risk of any loss is minimal. The book value of money market accounts approximates fair value and are classified as Level 1. Use of Estimates The consolidated financial statements have been prepared in conformity with GAAP and, as such, include amounts based on significant estimates and judgments of management with consideration given to materiality. Estimates used include determining valuation allowances for uncollectible trade receivables, sales returns reserves, obsolete and excess inventory reserves, deferred income taxes, and tax reserves, including valuation allowances for deferred tax assets, pension liabilities, evaluation of asset impairment, in determining the useful life of depreciable and definite-lived intangible assets, and in the variables and assumptions used to calculate and record stock-based compensation. Actual results could differ materially from those estimates. Significant estimates used include determining valuation allowances for sales returns reserves, obsolete and excess inventory reserves, deferred income taxes, and tax reserves, including valuation allowances for deferred tax assets, pension liabilities, and in the variables and assumptions used to calculate and record stock-based compensation. Other estimates made by management not considered to be significant include determining valuation allowances for uncollectible trade receivables, evaluation of asset impairment, and in determining the useful life of depreciable and definite-lived intangible assets. Revenue Recognition The Company recognizes revenue when its contractual performance obligations with customers are satisfied and collectability is reasonably assured. The Company’s performance obligations are generally limited to single sales orders with product shipping to the customer within a month of receipt of the sales order. Substantially all of the Company’s revenues are recognized at a point-in-time when control of its products transfers to the customer, which is typically upon shipment (as discussed below). Payment for product sales is typically collected within a short period following transfer of control of product. The Company presents sales tax and similar taxes it collects from its customers on a net basis (excluded from revenues). From time to time, the Company consigns or ships inventory to third parties outside the United States in advance of anticipated demand. While the Company does not recognize revenue on shipment of consigned inventory, the Company believes it can help address challenges and delays associated with importation and logistics. Further, the Company believes that increasing the amount of product in-country can mitigate potential impacts from geopolitical risk and tariff changes. F- 11 STAAR SURGICAL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 1 — Organization and Description of Business and Accounting Policies (Continued) Revenue Recognition (Continued) Historically, the Company marketed and sold cataract IOLs and related injectors and injector parts. The Company phased out sales of such products in fiscal 2023, and it did not sell any such products in fiscal 2024 or 2025. Sales of such products involved sales by the Company of injector parts to an unrelated customer and supplier (collectively referred to as “supplier”) whereby these injector part sales were either made as a final sale to the supplier or, were sold to be combined with an acrylic cataract IOL by the supplier into finished goods inventory (a preloaded acrylic cataract IOL). These finished goods were then sold back to the Company at an agreed upon, contractual price. The Company made a profit margin on either type of sale with the supplier and each type of sale was made under separate purchase and sales orders between the two parties resulting in cash settlement for the orders sold or repurchased. For parts that were sold as a final sale, the Company recognized a sale, and those sales were classified as other product sales in total net sales. For the injector parts that were sold to be combined with an acrylic cataract IOL into finished goods, the Company recorded the transaction at its carrying value deferring any profit margin as contra-inventory, until the finished goods inventory was sold to an end-customer (not the supplier) at which point the Company recognized revenues. For all sales, the Company is considered the principal in the transaction as the Company is the party providing specified goods it has control over prior to when control is transferred to the customer. Cost of sales includes cost of production, freight and distribution, and inventory provisions, net of any purchase discounts. Shipping and handling activities that occur after the customer obtains control of the goods are recognized as fulfillment costs. The Company disaggregates its revenue into the following categories: non-consignment sales and consignment sales. • Non-consignment Sales – The Company recognizes revenue from non-consignment product sales at a point-in-time when control has been transferred, which is typically at shipping point, except for certain customers and for STAAR Japan, which is typically recognized when the customer receives the product. The Company does no t have significant deferred revenues as of January 2, 2026, December 27, 2024 and December 29, 2023, as delivery to the customer is generally made within the same or the next day of shipment. In December 2024, the Company shipped a $ 27.5 million order of ICLs to one of its distributors in China. The distributor requested extended payment terms, and the Company agreed. As these payment terms were significantly longer than the terms included in the Company’s distributor agreement, management determined that collectability was not probable, and the Company did no t recognize the revenue associated with the shipment in the quarter ended December 27, 2024. However, as the shipment was received by the distributor, and control of the product passed to the distributor, the cost of the inventory was charged to cost of sales in the quarter ended December 27, 2024. Revenue for this order was recognized in 2025 when payments were received from the distributor, at which point the collectability concern is alleviated. • Consignment Sales – The Company’s products are marketed to ophthalmic surgeons, hospitals, ambulatory surgery centers or vision centers, and distributors. ICLs may be offered to surgeons and hospitals on a consignment basis, and historically, cataract IOLs were also offered on a consignment basis. The Company maintains title and risk of loss on consigned inventory and recognizes revenue for consignment inventory at a point-in-time when the Company is notified that the lenses have been implanted, thus completing the performance obligation. See Note 17 – Disaggregation of Revenues, Geographic Sales and Product Sales to the Consolidated Financial Statements for additional information. F- 12 STAAR SURGICAL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 1 — Organization and Description of Business and Accounting Policies (Continued) Revenue Recognition (Continued) The Company also enters into certain strategic cooperation agreements with customers in which, as consideration for certain commitments made by the customer, including minimum purchase commitments, the Company agrees, among other things, to share the expense for marketing, educational training and general support of the Company’s products. The provisions in these arrangements allow for these payments to be made directly to the customer or payments can be made directly to a third party for distinct marketing, educational training and general support services provided to or on behalf of the customer by the third party. For payments the Company makes to another party or reimburses the customer for distinct marketing and support services, the Company recognizes these payments as sales and marketing expense as incurred. These strategic cooperation agreements are generally for periods of 12 months or more with quarterly minimum purchase commitments. The Company recognizes sales and marketing expenses in the period in which it expects the customer will achieve its minimum purchase commitment, generally quarterly, and any unpaid amounts are recorded in other current liabilities on the Consolidated Balance Sheets, see Note 8 – Other Current Liabilities to the Consolidated Financial Statements. Reimbursements made directly to the customer for general marketing incentives are treated as a reduction in revenues. The Company’s performance obligations generally occur in the same quarter as the shipment of product. Sales and marketing expenses for distinct services were as follows (in thousands): Years Ended 2025 2024 2023 Marketing and support services related to strategic cooperation agreements $ 3,428 $ 3,342 $ 1,891 Since the payments for distinct or non-distinct services occur within the quarter corresponding with the purchases made by the customer and the shipments made by the Company to that customer, there is no remaining performance obligation by the Company to the customer. Accordingly, there are no deferred revenues associated with these types of arrangements as of January 2, 2026, December 27, 2024 and December 29, 2023 . Allowance for Credit Losses The Company performs ongoing credit evaluations of its customers and adjusts credit limits based on customer payment history and credit worthiness, as determined by the Company’s review of its customers’ current credit information. The Company continuously monitors collections and payments from customers and maintains a provision for estimated credit losses and uncollectible accounts based upon an expected loss model which considers its historical experience, any specific customer collection issues that have been identified and other relevant observable data, including current economic conditions. Amounts determined to be uncollectible are written off against the allowance for credit losses. Concentration of Credit Risk and Sales Financial instruments that potentially subject the Company to credit risk principally consist of trade receivables. This risk is limited due to the large number of customers comprising the Company’s customer base, and their geographic dispersion. As of January 2, 2026 and December 27, 2024, the Company’s China distributors accounted for 33 % and 58 %, respectively, of the Company’s consolidated trade receivables. Ongoing credit evaluations of customers’ financial condition are performed and, generally, no collateral is required. The Company maintains reserves for potential credit losses and such losses, taken together, have not exceeded management’s expectations. The Company’s China distributors accounted for 32 % , 51 % and 58 % of the Company’s consolidated net sales for the years ended 2025, 2024 and 2023 , respectively. F- 13 STAAR SURGICAL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 1 — Organization and Description of Business and Accounting Policies (Continued) Sales Return Reserve The Company generally may permit returns of product if the product, upon issuance of a Return Goods Authorization, is returned within the time allowed by its return policies and records an allowance for estimated returns at the time revenue is recognized. The Company’s allowance for estimated returns is based on an expected loss model which considers historical and current/anticipated trends and experience, the impact of new product launches, the entry of a competitor, availability of timely and pertinent information and the various terms and arrangements offered, including sales with extended credit terms. For estimated returns, sales are reported net of estimated returns and cost of sales are reported net of estimated returns that can be resold. On the Consolidated Balance Sheets, the balances associated for estimated sales returns were as follows (in thousands): 2025 2024 Estimated returns - inventory (1) $ 1,860 $ 853 Allowance for sales returns 10,199 6,579 (1) Recognized in inventories, net on the Consolidated Balance Sheets Investments Available for Sale Investments available for sale (“AFS”) are investments in debt securities for which the Company does not have the positive intent and ability to hold to maturity. The Company’s investment policy primary objective is capital preservation while maximizing its return on investment. Investments may include U.S. government and corporate debt securities, commercial paper, certain certificates of deposit and related security types, that are rated by two nationally recognized statistical rating organizations with minimum investment grade ratings of AAA to A-/A-1+ to A-2, or the equivalent. The maturity of individual investments may not extend 24 months from the date of purchase. There are also limits to the amount of credit exposure in any given security type. Investments AFS with maturities of twelve months or less, are classified as short-term, otherwise, they are classified as long-term. Accrued interest receivable is recognized in current investments AFS on the Consolidated Balance Sheets. Investments AFS are measured at fair value and its unrealized gains and losses reported net of the allowance for credit losses and applicable income taxes, are recognized in accumulated other comprehensive income (loss) on the Consolidated Balance Sheets. The cost of investments AFS is adjusted for amortization of premiums and accretion of discounts to maturity. Interest earned, including amortization of premiums and accretion of discounts recognized, is included in interest income (expense) on the Consolidated Statements of Operations. The cost of investments for purposes of computing realized and unrealized gains and losses is based on the specific identification method. The Company recognizes impairment of a debt security for which there has been a decline in fair value below amortized cost if management intends to sell the security, or it is more-likely-than-not that the Company will be required to sell the security before recovery of its amortized cost basis. Impairment related to credit losses is recognized in other income (expense) on the Consolidated Statements of Operations. Any portion of impairment not related to credit losses is recognized in accumulated other comprehensive income (loss) on the Consolidated Balance Sheets. The measurement of the credit loss component is equal to the difference between the debt security’s amortized cost basis and the present value of its expected future cash flows discounted at the security’s effective yield. F- 14 STAAR SURGICAL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 1 — Organization and Description of Business and Accounting Policies (Continued) Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value: • Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. • Level 2 – Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. • Level 3 – Inputs to the valuation methodology are unobservable; that reflect management’s own assumptions about the assumptions market participants would make and significant to the fair value. The carrying values reflected on the Consolidated Balance Sheets for cash and cash equivalents, trade accounts receivable, net, prepayments, deposits and other current assets, accounts payable and other current liabilities approximate their fair values because of the short maturity of these instruments. Inventories, Net Inventories, net are valued at the lower of cost, determined on a first-in, first-out basis, or net realizable value. Inventories include the costs of raw material, labor, and manufacturing overhead, work in process and finished goods. Inventories also include as a contra item, deferred margins for certain injector parts described under the revenue recognition policy. The Company provides estimated inventory allowances for excess, expiring, slow moving and obsolete inventory as well as inventory whose carrying value is in excess of net realizable value to properly reflect inventory at the lower of cost or market. Property, Plant, and Equipment Property, plant, and equipment are recorded at cost. Depreciation on property, plant, and equipment is computed using the straight-line method over the estimated useful lives of the assets as noted below. Leasehold improvements are amortized over the lesser of the estimated useful lives of the assets or the related expected lease term. Major improvements are capitalized, and minor replacements, maintenance and repairs are charged to expense as incurred. Also included in property, plant and equipment is construction in process. Construction in process includes the cost of design plans and build out of facilities and the cost of equipment, as well as the direct costs incurred in the testing and validation of machinery and equipment and facilities before they are ready for productive use. Upon placement in service, costs are reclassified into the appropriate asset category and depreciation commences. The estimated useful lives of assets are as follows: Machinery and equipment 5 - 10 years Computer equipment and software 2 - 5 years Furniture and equipment 3 - 7 years Leasehold improvements The shorter of the useful life of the asset or the expected term of the associated lease Goodwill Goodwill, which has an indefinite life, is not amortized but instead is tested for impairment on an annual basis or between annual tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired. Impairment testing for goodwill is done at the reporting unit level. Reporting units can be one level below the operating segment level and can be combined when reporting units within the same operating segment have similar economic characteristics. The Company has determined that its reporting units have similar economic characteristics, and therefore, can be combined into one reporting unit for the purposes of goodwill impairment testing. The Company performed its annual impairment test and determined that its goodwill was not impaired. As of January 2, 2026 and December 27, 2024 , the carrying value of goodwill was $ 1,786,000 . F- 15 STAAR SURGICAL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 1 — Organization and Description of Business and Accounting Policies (Continued) Long-Lived Assets The Company reviews property, plant, and equipment and intangible assets, excluding goodwill, for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. The Company measures recoverability of these assets by comparing the carrying value of such assets to the estimated undiscounted future cash flows the assets are expected to generate. When the estimated undiscounted future cash flows are less than their carrying amount, an impairment loss is recognized equal to the difference between the assets’ fair value and their carrying value. A review of long-lived assets was conducted as of December 27, 2024 and no impairment was identified (see also Note 1 – Organization and Description of Business and Accounting Policies – Restructuring, Impairment and Related Charges.) Amortization is computed on the straight-line basis, which is the Company’s best estimate of the economic benefits realized over the estimated useful lives of the assets which range from 3 to 20 years for patents, certain acquired rights and licenses, 10 years for customer relationships, and 3 to 10 years for developed technology. During 2023, the Company recognized impairment of $ 154,000 for the remaining unamortized Japan patent and licenses related to cataract IOLs. Amortization expense for intangible assets were as follows (in thousands): Years Ended 2025 2024 2023 Amortization expense $ — $ — $ 13 Cloud-Based Software The Company has entered into cloud-based software hosting arrangements for which it incurs implementation costs. Certain costs incurred during the application development stage are capitalized and included within Prepayments, deposits and other current assets or Cloud-based software on the Consolidated Balance Sheet, depending on the short- or long-term nature of such costs, in line with the Company’s policy on the accounting for prepaid software hosting arrangements. Costs incurred during the preliminary project stage and post-implementation stage are expensed as incurred. Capitalized cloud-based software implementation costs are amortized, beginning on the date the related software or module is ready for its intended use, on a straight-line basis over the remaining term of the hosting arrangement, which is approximately 5 to 10 years. Amortization is recognized as a component of selling, general, and administrative expenses, in the same line item as the expense for the associated hosting arrangement. Lease Accounting The Company recognizes right-of-use (“ROU”) assets and lease liabilities for leases with terms greater than twelve months on the Consolidated Balance Sheets. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the Consolidated Statements of Operations. A contract contains a lease if the contract conveys the right to control an identified asset for a period of time in exchange for consideration. An asset is either explicitly identified or implicitly identified and must be physically distinct. In addition, the Company must have both the right to obtain substantially all of the economic benefits from use of the identified asset and has the right to direct the use of the identified asset. Certain leases may have non-lease components such as common area maintenance expense for building leases and maintenance expenses for automobile leases. In general, the Company separates common area maintenance expense component from the value of the ROU asset and lease liability when evaluating rental properties, whereas the Company includes the maintenance and service components in the value of the ROU asset and lease liability while evaluating automobile leases. When determining whether a lease is a finance lease or operating lease, the Company uses (i) greater than or equal to 75% to determine whether the lease term is a major part of the remaining economic life of the underlying asset and (ii) greater than or equal to 90% to determine whether the present value of the sum of lease payments is substantially all of the fair value of the underlying asset. F- 16 STAAR SURGICAL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 1 — Organization and Description of Business and Accounting Policies (Continued) Lease Accounting (Continued) The Company uses either the rate implicit in the lease or its incremental borrowing rate as the discount rate in lease accounting. The Company also elected not to capitalize leases that have terms of twelve months or less. The Company reviews ROU assets, for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. The Company measures recoverability of these assets by comparing the carrying value of such assets to the estimated undiscounted future cash flows the assets are expected to generate. When the estimated undiscounted future cash flows are less than their carrying amount, an impairment loss is recognized equal to the difference between the assets’ fair value and their carrying value. Vendor Concentration There were two vendors that accounted for over 30 % of the Company’s consolidated accounts payable as of January 2, 2026. There was one vendor that accounted for over 10 % of the Company’s consolidated accounts payable as of December 27, 2024 . Research and Development Costs Expenditures for research activities relating to product development and improvement are charged to expense as incurred. Advertising Costs Advertising costs, which are included in selling and marketing expenses, are expensed as incurred, and were as follows (in thousands): Years Ended 2025 2024 2023 Advertising costs $ 19,631 $ 34,084 $ 46,680 Merger Transaction and Related Costs In connection with the proposed merger with Alcon, the Company incurred professional service expenses of $ 17,135,000 dur ing fiscal year 2025, which are included in Merger transaction and related costs on the Consolidated Statements of Operations. In accordance with the Cooperation Agreement with Broadwood Partners L.P., the Company expects to incur approximately $ 7,000,000 in additional expenses in the quarter ended April 3, 2026. See Note 19 – Subsequent Events to the Consolidated Financial Statements for further information. Restructuring, Impairment and Related Charges In the first half of 2025, the Company took a number of steps to change its leadership team, realign its leadership structure to better address market needs, reduce costs and discretionary spending, and better position the Company to return to sustainable growth. As part of this leadership realignment and related efforts, during the fiscal year 2025, the Company recognized costs related to severance and reduction in workforce of $ 12,354,000 ; consulting expenses of $ 874,000 ; impairment expenses on leasehold improvements and machinery and equipment of $ 7,759,000 , as the Company will no longer be using these assets; and impairment on real property right-of-use assets of $ 4,894,000 , as the Company is actively pursuing subleasing opportunities. In addition, the Company also recognized impairment of $ 2,751,000 during fiscal year 2025 for internally developed software that it will no longer be using as it will transition to a cloud-based software solution. An aggregate of $ 28,632,000 for such costs, expenses and charges is included in Restructuring, impairment and related charges on the Consolidated Statements of Operations for fiscal year 2025. The restructuring effort was substantially completed as of June 27, 2025. For more detail, see Notes 6 – Property, Plant and Equipment, Net, 8 – Other Current Liabilities and 9 – Operating Leases to the Consolidated Financial Statements . F- 17 STAAR SURGICAL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 1 — Organization and Description of Business and Accounting Policies (Continued) Income Taxes The Company adopted the annual disclosure requirements of the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, “Income Taxes (Topic 740)” in fiscal 2025. ASU 2023-09 improves the transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. It also includes certain other amendments to improve the effectiveness of income tax disclosures regarding (a) income or loss from continuing operations disaggregated between domestic and foreign and (b) income tax expense or benefit from continuing operations disaggregated by federal, state and foreign. The Company’s income tax disclosure requirements have been enhanced on a prospective basis in these Consolidated Financial Statements as a result of the ASU 2023-09 adoption. On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted into law. The OBBBA introduces changes in U.S. tax law, with certain provisions applicable to the Company beginning in 2025. These changes include the immediate expensing of domestic research and experimental expenditures, accelerated tax deductions for qualified property, and modifications to certain international tax frameworks. The Company has incorporated OBBBA into the income tax provision during fiscal year 2025 resulting in an immaterial impact to the effective tax rate. The Company continues to evaluate the impact the new legislation will have on its Consolidated Financial Statements. The Company recognizes deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities, net operating loss and credit carryforwards, and uncertainty in income taxes, on a jurisdiction-by-jurisdiction basis. For each tax entity and tax jurisdiction, the Company presents deferred tax liabilities and assets, as well as any related valuation allowance, as a single non-current amount. The Company does not offset deferred tax liabilities and assets attributable to different tax entities or to different tax jurisdictions. In evaluating the Company’s ability to recover the deferred tax assets within a jurisdiction from which they arise, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies, and results of recent operations. In projecting future taxable income, the Company begins with historical results and incorporates assumptions including overall current and projected business and industry conditions, projected sales growth, margins, costs and income by jurisdiction, the amount of future federal, state, and foreign pretax operating income, the reversal of temporary differences and the successful implementation of feasible and prudent tax-planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates the Company uses to manage the underlying businesses. In evaluating the objective evidence that historical results provide, the Company also considers three years of cumulative operating results. It is the Company’s policy to not rely on future taxable profit as source of income to evaluate deferred tax asset realizability, if the Company is under three years of cumulative losses. Valuation allowances, or reductions to deferred tax assets, are recognized if, based on the weight of all the available evidence, it is more likely than not that some portion or all the deferred tax asset may not be realized. The impact on deferred taxes of changes in tax rates and laws, if any, are applied to the years during which temporary differences are expected to be settled and reflected in the financial statements in the period of enactment. The Company has made a policy election to apply the incremental cash tax savings approach when analyzing the impact Global Intangible Low Tax Income (“GILTI”) could have on its U.S. valuation allowance. As a result of future expected GILTI inclusions, and because of the 2017 Tax Cuts and Jobs Act’s ordering rules, U.S. companies may now expect to utilize tax attribute carryforwards (e.g., net operating losses and deferred tax assets) for which a valuation allowance has historically been recorded (this is referred to as the “tax law ordering approach”). However, due to the mechanics of the GILTI rules, companies that have a GILTI inclusion may realize a reduced (or no) cash tax savings from utilizing such tax attribute carryforwards (this view is referred to as the “incremental cash tax savings approach”). F- 18 STAAR SURGICAL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 1 — Organization and Description of Business and Accounting Policies (Continued) Income Taxes (Continued) The Company and its foreign subsidiaries operate in multiple tax jurisdictions, and have entered into certain intercompany service arrangements that are priced under transfer pricing policies intended to reflect arm’s-length terms under applicable tax laws and regulations. Transfer pricing requires management judgment and is supported by economic analyses, including benchmarking to comparable companies and/or transactions. The Company monitors the nature of its intercompany service arrangements for changes in its operations as well as economic conditions, and periodically refreshes its transfer pricing analyses, including updates to the comparable set and related results, as appropriate. Although these intercompany transactions reflect arm’s-length terms and the proper transfer pricing documentation is in place, transfer pricing terms and conditions may be scrutinized by local tax authorities during an audit and any resulting changes may impact the Company’s effective tax rate and taxes due. The Company recognizes the income tax benefit from an uncertain tax position when it is more likely than not that, based on technical merits, the position will be sustained upon examination, including resolutions of any related appeals or litigation processes. The amount of tax benefit recorded, if any, is limited to the extent it is not greater than 50 percent likely to be realized upon settlement with the taxing authority (that has full knowledge of all relevant information). Accrued interest, if any, related to uncertain tax positions is included as a component of income tax expense, and penalties, if incurred, are recognized as a component of operating income or loss. Basic and Diluted Net Income (Loss) Per Share The Company has only one class of common stock and no participating securities which would require the two-class method of calculating basic earnings per share. Basic per share information is calculated by dividing net income (loss) by the weighted average number of shares outstanding during the period. Diluted per share information is calculated by dividing net income (loss) by the weighted average number of shares outstanding during the period, adjusted for the effects of potentially dilutive securities using the treasury stock method. When the Company incurs a net loss, the number of diluted shares is equal to the number of basic shares. Potentially dilutive securities include the Company’s outstanding stock-based awards. As of January 2, 2026 , the Company had outstanding grants of stock options, restricted stock units (“RSUs”), and performance stock units (“PSUs”). Stock options that are anti-dilutive, where their exercise price exceeds the average market price of the common stock, are not included in the treasury stock method calculation for diluted net income (loss) per share. Employee Defined Benefit Plans The Company maintains a passive pension plan (the “Swiss Plan”) covering employees of STAAR AG. The Swiss Plan conforms to the features of a defined benefit plan. The Company also maintains a noncontributory defined benefit pension plan which covers substantially all the employees of STAAR Japan. The Company recognizes the funded status, or difference between the fair value of plan assets and the projected benefit obligations of the pension plan on the Consolidated Balance Sheets, with a corresponding adjustment to accumulated other comprehensive income (loss). If the projected benefit obligation exceeds the fair value of plan assets, then that difference or unfunded status represents the pension liability. The Company records a net periodic pension cost in the Consolidated Statements of Operations. The liabilities and annual income or expense of both plans are determined using methodologies that involve several actuarial assumptions, the most significant of which are the discount rate and the expected long-term rate of asset return (asset returns and fair-value of plan assets are applicable for the Swiss Plan only). The fair values of plan assets are determined based on prevailing market prices. Stock-Based Compensation The Company maintains an Amended and Restated Omnibus Equity Incentive Plan, as amended (the “Equity Plan”). The Equity Plan provides the Company with the ability to grant various types of stock-based awards to executive officers, employees, consultants and members of its Board of Directors (the “Board”). The Equity Plan allows for awards of stock options, stock appreciation rights, restricted stock, RSUs, and other stock- and cash-based awards, including awards that are subject to service-based and performance-based vesting conditions. As of January 2, 2026, the Company had outstanding grants of stock options, RSUs and PSUs. F- 19 STAAR SURGICAL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 1 — Organization and Description of Business and Accounting Policies (Continued) Stock-Based Compensation (Continued) Stock-based compensation expense for all stock-based awards granted is based on the grant-date fair value of the award. The Company recognizes this compensation expense on a straight-line basis over the requisite service period of the award, which is generally the vesting term of three to four years for executive officers, employees and consultants, and one year for Board members. For performance-based awards, vesting is contingent upon the Company meeting certain internally established performance conditions and is subject to the grantee’s continued service with the Company. The Company recognizes compensation expense for performance-based awards when the Company concludes that it is probable that the performance condition will be achieved, net of an estimate of pre-vesting forfeitures, over the requisite service period based on the grant-date fair value of the award. The Company reassesses the probability of vesting at each reporting period and adjusts compensation cost based on its probability assessment. While the majority of the Company’s outstanding stock-based awards are stock options, RSUs and PSUs, the Company also, at times, grants awards in the form of restricted stock. Restricted stock awards provide for the issuance of common stock upon grant, subject to restrictions that lapse over the requisite service period of the award. For restricted stock awards granted to the Board, the restrictions lapse over a one-year service period and for executive officers and employees, it is typically a three-year service period. In each case the awards are subject to forfeiture (or acceleration, depending upon the circumstances) until the service period is completed. Restricted stock compensation expense is recognized on a straight-line basis over the requisite service period of one to three years, based on the grant-date fair value of the award. Restricted stock awards are included in the Company’s shares of common stock issued and outstanding on the grant date. Shares subject to RSU and PSU awards are not issuable until the requisite service and applicable performance conditions are satisfied, so they are not included in the Company’s shares of common stock issued and outstanding until the vesting of such awards. Share Repurchases Repurchased shares are held in treasury stock. Treasury stock purchases are accounted for under the cost method whereby the cost of the acquired stock is recorded as treasury stock. Comprehensive Income (Loss) The Company presents comprehensive income (loss) on the Consolidated Balance Sheets and the Consolidated Statements of Comprehensive Income (Loss). Total comprehensive income (loss) includes, in addition to the net income (loss), changes in equity that are excluded from the Consolidated Statements of Operations and are recorded directly into a separate section of stockholders’ equity on the Consolidated Balance Sheets. The following table summarizes the changes in the accumulated balances for each component of accumulated other comprehensive income (loss) attributable to the Company for the years ended January 2, 2026, December 27, 2024 and December 29, 2023 (in thousands): Foreign Currency Translation Investments Available for Sale Defined Benefit Pension Plan – Japan Defined Benefit Pension Plan – Switzerland Accumulated Other Com-prehensive Income (Loss) Balance, at December 30, 2022 $ ( 1,547 ) $ ( 336 ) $ 184 $ 1,855 $ 156 Other comprehensive income (loss) ( 1,095 ) 363 ( 182 ) ( 4,121 ) ( 5,035 ) Tax effect 345 ( 64 ) 54 431 766 Balance, at December 29, 2023 ( 2,297 ) ( 37 ) 56 ( 1,835 ) ( 4,113 ) Other comprehensive income (loss) ( 1,775 ) 31 16 ( 1,923 ) ( 3,651 ) Tax effect 542 ( 5 ) ( 5 ) 201 733 Balance, at December 27, 2024 ( 3,530 ) ( 11 ) 67 ( 3,557 ) ( 7,031 ) Other comprehensive income (loss) 22 13 ( 20 ) 558 573 Tax effect ( 6 ) ( 1 ) 6 ( 52 ) ( 53 ) Balance, at January 2, 2026 $ ( 3,514 ) $ 1 $ 53 $ ( 3,051 ) $ ( 6,511 ) F- 20 STAAR SURGICAL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 1 — Organization and Description of Business and Accounting Policies (Continued) 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).” ASU 2024-03 does not change the expense captions an entity presents on the face of the income statement; rather it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. ASU 2024-03 requires footnote disclosure about specific expenses to disaggregate, in a tabular presentation, each relevant expense caption on the face of the income statement that includes any of the following natural expenses: (1) purchases of inventory, (2) employee compensation, (3) depreciation, (4) intangible asset amortization and (5) depreciation, depletion and amortization recognized as part of oil- and gas-production activities or other types of depletion expenses. The tabular disclosure would also include certain other expenses, when applicable. ASU 2024-03 does not change or remove existing expense disclosure requirements; however, it may affect where that information appears in the footnotes to the financial statements. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The requirements will be applied prospectively with the option for retrospective application. Early adoption is permitted. The Company will adopt ASU 2024-03 at the beginning of fiscal year 2026. The Company is currently evaluating the annual disclosure requirements and its effect on the Consolidated Financial Statements. Note 2 — Investments Available for Sale Investments AFS and the related fair value measurement consisted of the following (in thousands): 2025 Fair Value Measurements Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value Level 1 Level 2 Commercial paper $ 14,682 $ 1 $ ( 1 ) $ 14,682 $ — $ 14,682 Certificates of deposit 816 — — 816 — 816 U.S. Treasury securities 990 — — 990 990 — Corporate debt securities 17,897 3 ( 2 ) 17,898 — 17,898 Total investments AFS $ 34,385 $ 4 $ ( 3 ) $ 34,386 $ 990 $ 33,396 2024 Fair Value Measurements Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value Level 1 Level 2 Commercial paper $ 21,466 $ 4 $ ( 2 ) $ 21,468 $ — $ 21,468 Certificates of deposit 1,997 — — 1,997 — 1,997 U.S. Treasury securities 11,356 3 ( 4 ) 11,355 11,355 — Corporate debt securities 51,527 14 ( 26 ) 51,515 — 51,515 Total investments AFS $ 86,346 $ 21 $ ( 32 ) $ 86,335 $ 11,355 $ 74,980 The Company obtains the fair value from third-party pricing services. The pricing services utilize industry standard valuation models, including both income and market-based approaches and observable market inputs to determine value. These observable market inputs include reportable trades, benchmark yields, credit spreads, broker/dealer quotes, bids, offers and other industry and economic events. F- 21 STAAR SURGICAL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 2 — Investments Available for Sale (Continued) The Company assessed each debt security (see Note 1 – Organization and Description of Business and Accounting Policies – Investments Available for Sale – for information on composition of the portfolio) in a gross unrealized loss position to determine whether the decline in fair value below amortized cost was a result of credit losses or other factors, whether the Company expects to recover the amortized cost of the debt security, the Company’s intent to sell and whether it is more-likely-than-not that the Company will not be required to sell the debt security before the recovery of the amortized cost basis. There has been no allowance for expected credit losses recorded for the fiscal years ended 2025, 2024 and 2023. The following table shows the fair value of investments AFS by contractual maturity (in thousands): 2025 Within one year After one year through five years Total Commercial paper $ 14,682 $ — $ 14,682 Certificates of deposit 816 — 816 U.S. Treasury securities 990 — 990 Corporate debt securities 17,898 — 17,898 Total investments AFS $ 34,386 $ — $ 34,386 During 2025, several of the Company’s investments AFS with an aggregate fair value of $ 3,377,000 were subject to early redemption. The Company recognized a gain upon redemption of $ 2,000 for the fiscal year ended 2025. During 2024, several of the Company’s investments AFS with an aggregate fair value of $ 1,314,000 were subject to early redemption. The Company recognized a gain upon redemption of $ 3,000 for the fiscal year ended 2024. During 2023, two of the Company’s investments AFS were the subject of a downgraded credit rating. The Company sold its investments of $ 1,300,000 during 2023 following the downgrade. The Company recognized a realized loss upon sale of less than $ 1,000 for the fiscal year ended 2023. Note 3 — Accounts Receivable Trade, Net Accounts receivable trade, net consisted of the following (in thousands): 2025 2024 Domestic $ 2,846 $ 2,661 Foreign 47,301 75,268 Total accounts receivable trade, gross 50,147 77,929 Less allowance for credit losses ( 83 ) ( 32 ) Total accounts receivable trade, net $ 50,064 $ 77,897 Note 4 — Inventories, Net Inventories, net consisted of the following (in thousands): 2025 2024 Raw materials and purchased parts $ 10,238 $ 9,705 Work in process 8,514 8,168 Finished goods (1) 39,673 26,710 Total inventories, gross 58,425 44,583 Less inventory reserves ( 2,929 ) ( 1,278 ) Total inventories, net $ 55,496 $ 43,305 (1) Finished goods inventory includes consigned inventory of $ 9,619,000 and $ 1,484,000 for 2025 and 2024, respectively. See also Note 17 – Disaggregation of Revenues, Geographic Sales and Product Sales to the Consolidated Financial Statements for further deta ils. F- 22 STAAR SURGICAL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 5 — Prepayments, Deposits and Other Current Assets Prepayments, deposits and other current assets consisted of the following (in thousands): 2025 2024 Prepayments and deposits $ 7,965 $ 7,887 Prepaid rent 682 2,910 Prepaid insurance 3,269 2,432 Prepaid income taxes 1,917 658 Value added tax (VAT) receivable 4,242 1,359 Other (1) 374 998 Total prepayments, deposits and other current assets $ 18,449 $ 16,244 (1) No individual category in “other” exceeds 5 % of the total prepayments, deposits and other current assets. Note 6 — Property, Plant and Equipment, Net Property, plant and equipment, net consisted of the following (in thousands): 2025 2024 Machinery and equipment $ 45,137 $ 46,113 Computer equipment and software 10,525 12,976 Furniture and fixtures 7,483 7,627 Leasehold improvements 19,403 19,766 Construction in process 30,340 32,014 Total property, plant and equipment, gross 112,888 118,496 Less accumulated depreciation ( 39,565 ) ( 33,607 ) Total property, plant and equipment, net $ 73,323 $ 84,889 As discussed in Note 1 – Organization and Description of Business and Accounting Policies – Restructuring, Impairment and Related Charges, during fiscal 2025, the Company recognized fixed asset impairment expense of $ 7,759,000 primarily on leasehold improvements and machinery and equipment as the Company will no longer be using these assets. The Company also recognized impairment of $ 2,751,000 for internally developed software that the Company will no longer be using as it will transition to a cloud-based software solution. These amounts are recorded in Restructuring, impairment and related charges on the Consolidated Statement of Operations. Construction in process primarily consists of the build out and validation of machinery and equipment. The Company recorded depreciation expense in the following categories as follows (in thousands): Years Ended 2025 2024 2023 Cost of sales $ 3,168 $ 2,518 $ 1,405 General and administrative 3,633 2,917 1,912 Selling and marketing 709 626 1,095 Research and development 772 683 548 Total depreciation expense $ 8,282 $ 6,744 $ 4,960 Loss on disposal of property, plant and equipment was as follows (in thousands): Years Ended 2025 2024 2023 Loss on disposal of property, plant and equipment $ 74 $ 1,694 $ 73 The loss recognized for the fiscal year ended 2024 consisted primarily of an asset that is no longer in use and was recorded in selling and marketing expense on the Consolidated Statements of Operations. F- 23 STAAR SURGICAL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 7 — Cloud-Based Software The Company capitalized cloud-based software implementation costs related to several systems, including enterprise resource planning and customer relationship management systems. Assets are expected to be placed into service throughout 2026. Capitalized cloud-based software costs, net consisted of the following (in thousands): 2025 2024 Cloud-based software $ 31,527 $ 15,763 Less accumulated amortization ( 409 ) — Total cloud-based software, net $ 31,118 $ 15,763 Cloud-based software included in prepayments, deposits and other current assets $ 418 $ — Cloud-based software $ 30,700 $ 15,763 Activity related to cloud-based software was as follows (in thousands): Years Ended 2025 2024 2023 Additions to cloud-based software $ 15,764 $ 13,357 $ 2,406 Amortization of cloud-based software 409 — — Note 8 — Other Current Liabilities Other current liabilities consisted of the following (in thousands): 2025 2024 Accrued salaries and wages $ 12,891 $ 16,140 Accrued bonuses 9,424 1,300 Severance payable (1) 894 356 Accrued insurance 1,773 2,701 Income taxes payable 1,304 6,547 Marketing obligations 3,397 2,699 Other (2) 11,176 13,344 Total other current liabilities $ 40,859 $ 43,087 (1) As discussed in Note 1 – Organization and Description of Business and Accounting Policies – Restructuring, Impairment and Related Charges, during fiscal year 2025, the Company recognized costs in connection with its leadership realignment and related efforts. Of these costs, a total of $ 12,354,000 was recognized for severance costs related to leadership realignment and reduction in workforce. This amount is recorded in Restructuring, impairment and related charges on the Consolidated Statement of Operations. A majority of these severance payments were paid during the second quarter of 2025. (2) No individual category in “Other” exceeds 5 % of the other current liabilities. Note 9 — Operating Leases The Company entered into operating leases primarily related to real property (office, manufacturing and warehouse facilities), automobiles and copiers. These operating leases are two to ten years in length with options to extend. The Company does not include any lease extensions in the initial valuation unless the Company was reasonably certain to extend the lease. Depending on the lease, there are those with fixed payment amounts for the entire length of the contract or payments which increase periodically as noted in the contract or increased at an inflation rate indicator. For operating leases that increase using an inflation rate indicator, the Company used the inflation rate at the time the lease was entered into for the length of the lease term. Supplemental balance sheet information related to operating leases consisted of the following (dollars in thousands): F- 24 STAAR SURGICAL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 9 — Operating Leases (Continued) 2025 2024 Machinery and equipment $ 773 $ 758 Computer equipment and software 413 446 Real property 39,824 47,648 Operating lease ROU assets, gross 41,010 48,852 Less accumulated depreciation ( 11,401 ) ( 12,002 ) Operating lease ROU assets, net $ 29,609 $ 36,850 Current operating lease obligations $ 5,872 $ 3,894 Long-term operation lease obligations 32,481 34,807 Total operating lease liability $ 38,353 $ 38,701 Weighted-average remaining lease term (in years) 6.7 7.1 Weighted-average discount rate 6.33 % 5.98 % As discussed in Note 1 – Organization and Description of Business and Accounting Policies – Restructuring, Impairment and Related Charges, during the fiscal year 2025, the Company recognized impairment on real property right-of-use assets of $ 4,894,000 . The impairment relates to the Company’s decision to exit three of its leased properties, for which the Company has obtained a subtenant for one of its properties and is actively pursuing subleasing for the other two properties. The impairment was determined based on market comparables of similar subleased properties. The impairment is recorded in Restructuring, impairment and related charges on the Consolidated Statements of Operations. Supplemental cash flow information related to operating leases was as follows (in thousands): Years Ended 2025 2024 2023 Operating lease cost $ 7,805 $ 8,574 $ 5,239 Cash paid for amounts included in the measurement of operating lease liabilities: Operating cash flows 6,891 6,016 4,875 ROU assets obtained in exchange for new and amended operating lease liabilities 3,873 8,385 8,498 Future Maturities of Lease Liabilities Estimated future maturities of lease liabilities for operating leases having initial or remaining non-cancelable lease terms more than one year are as follows (in thousands): Year Ended Operating Leases 2026 $ 8,194 2027 7,603 2028 6,954 2029 7,150 2030 6,173 Thereafter 12,633 Total minimum lease payments, including interest $ 48,707 Less amounts representing interest ( 10,354 ) Total lease liability $ 38,353 F- 25 STAAR SURGICAL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 10 — Income Taxes Provision (benefit) for Income Taxes Income (loss) from continuing operations before provision (benefit) for income taxes was as follows (in thousands): Years Ended 2025 2024 2023 Domestic $ ( 63,737 ) $ ( 52,859 ) $ ( 46,388 ) Foreign ( 18,526 ) 43,807 80,084 Income (loss) before income taxes $ ( 82,263 ) $ ( 9,052 ) $ 33,696 The provision (benefit) for income taxes consisted of the following (in thousands): Years Ended 2025 2024 2023 Current tax provision: U.S. federal $ — $ — $ — State 22 27 21 Foreign 1,079 7,539 9,064 Total current provision 1,101 7,566 9,085 Deferred tax provision (benefit): U.S. federal — 3,738 3,306 State — 137 12 Foreign ( 2,916 ) ( 285 ) ( 54 ) Total deferred provision (benefit) ( 2,916 ) 3,590 3,264 Provision (benefit) for income taxes $ ( 1,815 ) $ 11,156 $ 12,349 A reconciliation of the statutory U.S. federal tax rate to the Company’s effective tax rate after the adoption of ASU 2023-09 was as follows (dollars in thousands): Year Ended 2025 Amount Percent US federal statutory tax rate $ ( 17,275 ) 21.0 % State and local income taxes, net of federal income tax effect (1) 22 0.0 % Foreign tax effects Switzerland Statutory tax rate difference between Switzerland and United States 1,898 ( 2.3 )% Other 331 ( 0.4 )% Other foreign jurisdictions 460 ( 0.6 )% Effect of changes in tax laws or rates enacted in the current period — 0.0 % Effect of cross-border tax laws 587 ( 0.7 )% Tax credits 62 ( 0.1 )% Changes in valuation allowances 7,334 ( 8.9 )% Nontaxable or nondeductible items Equity compensation 5,259 ( 6.4 )% Other 153 ( 0.2 )% Changes in unrecognized tax benefits ( 633 ) 0.8 % Other adjustments ( 13 ) 0.0 % Effective tax rate $ ( 1,815 ) 2.2 % (1) State taxes in California and Illinois made up the majority (greater than 50 percent) of the tax effect in this category. F- 26 STAAR SURGICAL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 10 — Income Taxes (Continued) Provision for Income Taxes (Continued) A reconciliation of the statutory U.S. federal tax rate to the Company’s effective tax rate before the adoption of ASU 2023-09 was as follows (dollars in thousands): Years Ended 2024 2023 Amount Percent Amount Percent US federal statutory tax rate $ ( 1,901 ) 21.0 % $ 7,076 21.0 % State and local income taxes, net of federal income tax effect ( 330 ) 3.6 % 440 1.3 % Equity compensation 2,237 ( 24.7 )% 1,035 3.1 % Foreign rate differential ( 3,902 ) 43.1 % ( 7,611 ) ( 22.6 )% Foreign income inclusion 9,659 ( 106.7 )% 16,922 50.2 % Changes in valuation allowance 4,060 ( 44.9 )% ( 4,233 ) ( 12.6 )% Tax credits ( 277 ) 3.1 % ( 930 ) ( 2.8 )% Return to provision adjustment 100 ( 1.1 )% ( 284 ) ( 0.8 )% Changes in unrecognized tax benefits 1,450 ( 16.0 )% — 0.0 % Non-deductible expenses 163 ( 1.8 )% 134 0.4 % Other ( 103 ) 1.2 % ( 200 ) ( 0.6 )% Total income tax expense $ 11,156 ( 123.2 )% $ 12,349 36.6 % The Company has elected to recognize U.S. taxes on GILTI as a period expense in the year the tax is incurred. Deferred Tax Assets and Liabilities Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets (liabilities) were as follows (in thousands): 2025 2024 Deferred tax assets: Accrued expenses $ 3,185 $ 1,230 Stock-based compensation 5,271 6,103 Operating lease liability 6,439 6,466 Net operating loss and other credit carryforwards 50,662 44,083 Other deferred tax assets 2,305 2,776 Gross deferred tax assets 67,862 60,658 Valuation allowance ( 54,556 ) ( 46,804 ) Total deferred tax assets $ 13,306 $ 13,854 Deferred tax liabilities: Property, plant, equipment and intangibles $ ( 4,666 ) $ ( 5,976 ) Operating lease ROU assets ( 4,706 ) ( 6,066 ) Foreign taxes ( 569 ) ( 1,321 ) Total deferred tax liabilities ( 9,941 ) ( 13,363 ) Total net deferred tax assets $ 3,365 $ 491 F- 27 STAAR SURGICAL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 10 — Income Taxes (Continued) Deferred Tax Assets and Liabilities (Continued) The ultimate realization of deferred tax assets is dependent upon future generation of income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers projected future income and tax planning strategies in making this assessment. In addition, management considers all other available positive and negative evidence in its analysis, including existing profits in foreign jurisdictions as well as projected future foreign profits. As of January 2, 2026, the Company determined that it is more likely than not that the deferred tax assets of its foreign subsidiaries will be realized based on projected future taxable income and cumulative income over the most recent three-year period. As of January 2, 2026, the Company has incurred cumulative losses in its U.S. operation over the most recent three-year period. Based on the weight of available positive and negative evidence, management concluded that it is more likely than not that the deferred tax assets related to its U.S. operation will not be realized. Accordingly, the Company has maintained a full valuation allowance against its U.S. deferred tax assets. The deferred tax asset valuation allowance activity was as follows (in thousands): Years Ended 2025 2024 2023 Balance at beginning of period $ ( 46,804 ) $ ( 42,744 ) $ ( 46,977 ) Release (recapture) due to incremental cash tax savings — ( 4,456 ) ( 3,318 ) Current year change due to deferred tax asset realization ( 7,752 ) 396 7,551 Balance at end of period $ ( 54,556 ) $ ( 46,804 ) $ ( 42,744 ) As of January 2, 2026, the Company had U.S. net operating loss (“NOL”) carryforwards consisting of the following (in thousands): 2025 Expiration Date Pre-2018 federal NOL carryforwards $ 41,996 will begin to expire in 2027 Post-2018 federal NOL carryforwards 124,895 indefinite State NOL carryforwards 56,265 will begin to expire in 2026 A s of January 2, 2026, the Company had U.S. tax credit carryforwards consisting of the following (in thousands): 2025 Expiration Date Federal credit carryforwards $ 1,994 will begin to expire in 2030 State research tax credit carryforwards 1,012 indefinite Federal foreign tax credit carryforwards 2,013 will begin to expire in 2028 The Company files income tax returns in the U.S. federal, various states and foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities throughout the world. The following tax years remain subject to examination: Significant jurisdictions Open Years U.S. Federal 2022 – 2024 U.S. States 2021 – 2024 Foreign 2021 – 2024 In various jurisdictions, years prior to 2021 remain open solely for the purposes of examination of the Company’s NOL and credit carryforwards. F- 28 STAAR SURGICAL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 10 — Income Taxes (Continued) Income Taxes Paid The income taxes paid, net of refunds received, was as follows (in thousands): Year Ended 2025 U.S. federal $ — State and local 25 Foreign Switzerland 5,104 Japan 1,036 China 1,344 Other 321 Net income taxes paid $ 7,830 The amount of income taxes paid, net of refunds received, for fiscal years ended 2024 and 2023 were $ 10,945,000 and $ 2,759,000 , respectively. Tax Holiday The Company operates under a tax holiday in Switzerland from 2020 through 2029, which consists of two consecutive five year periods: 2020 – 2024 and 2025 – 2029. The tax holiday is conditional upon the Company meeting specific activity and investment requirements as outlined by the Swiss Tax Authorities. The impact of this tax holiday is as follows (in thousands, except per share amounts): Years Ended 2025 2024 2023 Tax impact related to tax holidays $ ( 1,894 ) $ 4,466 $ 8,683 Impact of tax holidays on diluted earnings (loss) per share $ ( 0.04 ) $ 0.09 $ 0.17 Uncertain Tax Benefits A reconciliation of the beginning and ending amount of unrecognized tax benefits, exclusive of interest, are included in other current liabilities as income taxes payable, is as follows (in thousands): Years Ended 2025 2024 Balance at beginning of period $ 910 $ — Increases (decreases) - tax positions in prior period ( 220 ) 910 Increases (decreases) - tax positions in current period — — Cash settlement ( 690 ) — Balance at end of period $ — $ 910 Interest expense, included in other current liabilities on the Consolidated Balance Sheet, was $ 0 and $ 540,000 for January 2, 2026 and December 27, 2024 , respectively. There were no uncertain tax positions in 2023. F- 29 STAAR SURGICAL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 11 — Employee Benefit Plans Defined Benefit Plan – Switzerland The Company maintains a passive pension plan (the “Swiss Plan”) covering employees of STAAR AG, which is accounted for as a defined benefit plan. In Switzerland employers are required to provide a minimum pension plan for their staff. Contributions of both the employees and employer finance the Swiss Plan. The amount of the contributions is defined by the plan regulations and cannot be decreased without amending the plan regulations. It is required that the employer contribute an amount equal to or greater than the employee contribution. The following table shows the changes in the benefit obligation and plan assets and the Swiss Plan’s funded status (in thousands): 2025 2024 Change in Projected Benefit Obligation: Projected benefit obligation, beginning of period $ 24,045 $ 21,965 Service cost 1,689 1,233 Interest cost 247 340 Participant contributions 1,155 979 Benefits deposited (paid) ( 1,474 ) ( 851 ) Actuarial (gain) loss 1,866 692 Prior service credit ( 118 ) ( 313 ) Projected benefit obligation, end of period $ 27,410 $ 24,045 Change in Plan Assets: Plan assets at fair value, beginning of period $ 17,690 $ 17,381 Actual return on plan assets (including foreign currency impact) 2,762 ( 942 ) Employer contributions 1,320 1,123 Participant contributions 1,155 979 Benefits deposited (paid) ( 1,474 ) ( 851 ) Plan assets at fair value, end of period $ 21,453 $ 17,690 Funded status (pension liability), end of year (1) $ ( 5,957 ) $ ( 6,355 ) Amount Recognized in Accumulated Other Comprehensive Income (Loss), net of tax: Actuarial loss on plan assets $ 618 $ ( 1,364 ) Actuarial loss on benefit obligation ( 7,650 ) ( 5,997 ) Actuarial gain recognized in current year 2,217 1,952 Prior service credit 1,155 1,242 Effect of curtailments 609 610 Accumulated other comprehensive loss $ ( 3,051 ) $ ( 3,557 ) Accumulated benefit obligation at year end $ ( 25,771 ) $ ( 22,540 ) (1) The underfunded balance was included in pension liability on the Consolidated Balance Sheets. F- 30 STAAR SURGICAL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 11 — Employee Benefit Plans (Continued) Defined Benefit Plan – Switzerland (Continued) Net periodic pension cost associated with the Swiss Plan included the following components (in thousands): Years Ended 2025 2024 2023 Service cost (1) $ 1,689 $ 1,233 $ 916 Interest cost (2) 247 340 413 Expected return on plan assets (2) ( 546 ) ( 540 ) ( 452 ) Prior service credit (2),(3) ( 211 ) ( 179 ) ( 179 ) Actuarial loss recognized in current period (2),(3) 302 117 — Net periodic pension cost $ 1,481 $ 971 $ 698 (1) Recognized in selling general and administrative expenses on the Consolidated Statements of Operations. (2) Recognized in other income, net, on the Consolidated Statements of Operations. (3) Amounts reclassified from accumulated other comprehensive income (loss). Changes in other comprehensive income (loss), net of tax, associated with the Swiss Plan included the following components (in thousands): Years Ended 2025 2024 2023 Current year actuarial gain (loss) on plan assets $ 1,982 $ ( 1,326 ) $ 1,316 Current year actuarial gain (loss) on benefit obligation ( 1,653 ) ( 619 ) ( 4,847 ) Actuarial gain recorded in current year 265 103 2 Prior service credit ( 87 ) 120 ( 161 ) Effect of curtailments ( 1 ) — — Change in other comprehensive gain (loss) $ 506 $ ( 1,722 ) $ ( 3,690 ) Net periodic pension cost and projected and accumulated pension obligation for the Company’s Swiss Plan were calculated using the following assumptions: 2025 2024 Discount rate 1.3 % 1.0 % Salary increases 2.5 % 2.5 % Expected return on plan assets 3.0 % 3.0 % Expected average remaining working lives in years 9.7 9.8 The discount rates are based on an assumed duration of the pension obligations and estimated using the rates of returns for AAA and AA-rated Swiss and foreign CHF-denominated corporate bonds listed on the SIX Swiss Exchange. The salary increase rate was based on the Company’s best estimate of future increases over time. The expected long-term rate of return on plan assets is based on the expected asset allocation and assumptions concerning long-term interest rates, inflation rates, and risk premiums for equities above the risk-free rates of return. These assumptions take into consideration historical long-term rates of return for relevant asset categories. Under Swiss law, pension funds are legally independent from the employer and all the contributions are invested with regulated entities. The Company has a contract with Allianz Suisse Life Insurance Company’s BVG Collective Foundation (the “Foundation”) to manage its Swiss pension fund. Multiple employers contract with the Foundation to manage the employers’ respective pension plans. The Foundation manages the pension plans of its contracted employers as a collective entity. The investment strategy is determined by the Foundation and applies to all members of the collective Foundation. There are no separate financial statements for each employer contract. The pension plan assets of all the employers that contract with the Foundation are comingled. They are considered multiple-employer plans and therefore accounted for as single-employer plans. F- 31 STAAR SURGICAL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 11 — Employee Benefit Plans (Continued) Defined Benefit Plan – Switzerland (Continued) As there are no separate financial statements for each employer contract, there are no individual investments that can be directly attributed to the Company’s pension plan assets. However, the funds contributed by an employer are specifically earmarked for its employees and the total assets of the plan allocable to Company’s employees are separately tracked by the Foundation. The lack of visibility into the specific investments of the plan assets and how they are valued is a significant unobservable input, therefore, the Company considers the plan assets collectively to be Level 3 assets under the fair value hierarchy. The table below sets forth the fair value of Plan assets at January 2, 2026 and December 27, 2024, and the related activity in years ended 2025 and 2024 (in thousands): Insurance Contracts (Level 3) Ending balance at December 29, 2023 $ 17,381 Actual return on plan assets ( 942 ) Purchases, sales, and settlement 1,251 Ending balance at December 27, 2024 $ 17,690 Actual return on plan assets 2,762 Purchases, sales, and settlement 1,001 Ending balance at January 2, 2026 $ 21,453 During fiscal year 2026, the Company expects to make cash contributions totaling approximately $ 1,387,000 to the Swiss Plan. The estimated future benefit payments for the Swiss Plan are as follows (in thousands): Year Ended Amount 2026 $ 93 2027 122 2028 3,976 2029 641 2030 316 Thereafter 809 Total $ 5,957 Defined Benefit Plan – Japan STAAR Japan maintains a noncontributory defined benefit pension plan (“Japan Plan”) substantially covering all the employees of STAAR Japan. Benefits under the Japan Plan are earned, vested, and accumulated based on a point-system, primarily based on the combination of years of service, actual and expected future grades (management or non-management) and actual and future zone (performance) levels of the employees. Each point earned is worth a fixed monetary value, 1,000 Yen per point, regardless of the level grade or zone of the employee. Gross benefits are calculated based on the cumulative number of points earned over the service period multiplied by 1,000 Yen. The mandatory retirement age limit is 60 years old. STAAR Japan administers the pension plan and funds the obligations of the Japan Plan from STAAR Japan’s operating cash flows. STAAR Japan is not required, and does not intend, to provide contributions to the Plan to meet benefit obligations and therefore does not have any plan assets. Benefit payments are made to beneficiaries as they become due. F- 32 STAAR SURGICAL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 11 — Employee Benefit Plans (Continued) Defined Benefit Plan – Japan (Continued) The funded status of the benefit plan was as follows (in thousands): 2025 2024 Change in Projected Benefit Obligation: Projected benefit obligation, beginning of period $ 382 $ 471 Service cost 56 56 Interest cost 4 3 Actuarial (gain) loss 8 ( 40 ) Benefits paid ( 33 ) ( 60 ) Foreign exchange adjustment 1 ( 48 ) Projected benefit obligation, end of period $ 418 $ 382 Change in Plan Assets: Plan assets at fair value, beginning of period $ — $ — Actual return on plan assets — — Employer contributions — — Benefits paid — — Distribution of plan assets — — Foreign exchange adjustment — — Plan assets at fair value, end of period $ — $ — Funded status (pension liability), end of year (1) $ ( 418 ) $ ( 382 ) Amount Recognized in Accumulated Other Comprehensive Income (Loss), net of tax: Actuarial loss $ ( 25 ) $ ( 25 ) Prior service cost 3 3 Settlement ( 103 ) ( 102 ) Curtailment ( 2 ) ( 2 ) Net gain 180 193 Accumulated other comprehensive income $ 53 $ 67 Accumulated benefit obligation at year end $ ( 403 ) $ ( 368 ) (1) The underfunded balance was included in pension liability on the Consolidated Balance Sheets. Net periodic pension cost associated with the Japan Plan included the following components (in thousands): Years Ended 2025 2024 2023 Service cost (1) $ 56 $ 56 $ 60 Interest cost (2) 4 3 3 Prior service credit (2),(3) ( 13 ) ( 5 ) ( 14 ) Settlement gain (2),(3) — ( 10 ) ( 160 ) Curtailment gain (2),(3) — — ( 4 ) Net periodic pension cost $ 47 $ 44 $ ( 115 ) (1) Recognized in selling general and administrative expenses on the Consolidated Statements of Operations. (2) Recognized in other income, net, on the Consolidated Statements of Operations. (3) Amounts reclassified from accumulated other comprehensive income (loss). F- 33 STAAR SURGICAL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 11 — Employee Benefit Plans (Continued) Defined Benefit Plan – Japan (Continued) Changes in other comprehensive income (loss), net of tax, associated with the Japan Plan include the following components (in thousands): Years Ended 2025 2024 2023 Amortization of actuarial loss $ — $ 3 $ 2 Prior service cost — — ( 1 ) Actuarial income (loss) recorded in current year ( 13 ) 4 ( 21 ) Settlement ( 1 ) 4 ( 106 ) Curtailment loss — — ( 2 ) Change in other comprehensive income (loss) $ ( 14 ) $ 11 $ ( 128 ) Net periodic pension cost and projected and accumulated pension obligation for the Company’s Japan Plan were calculated using the following assumptions: 2025 2024 Discount rate 1.6 % 0.9 % Salary increases 5.0 % 5.0 % Expected return on plan assets N/A N/A Expected average remaining working lives in years 4.4 4.9 The discount rates are based on the yield curve of corporate bonds rated AA or higher. The salary increase average rate was based on the Company’s best estimate of future increases over time. The estimated future benefit payments for the Japan Plan are as follows (in thousands): Year Ended Amount 2026 $ 55 2027 52 2028 63 2029 113 2030 48 Thereafter 87 Total $ 418 Defined Contribution Plan The Company has a 401(k) profit sharing plan (“401(k) Plan”) for the benefit of qualified employees in the U.S. During the year ended January 2, 2026, employees who participate may elect to make salary deferral contributions to the 401(k) Plan up t o $ 23,500 of the employees’ eligible payroll subject to annual Internal Revenue Code maximum limitations (with a $ 7,500 annual catch-up contribution permitted for those over 50 years old). The Company’s contribution percentage is 80 % of the employee’s contribution up to the first 6 % of the employee’s compensation. In addition, STAAR may make a discretionary contribution to qualified employees, in accordance with the 401(k) Plan. The Company’s contributions, net of forfeitures, to the 401(k) Plan were as follows (in thousands): Years Ended 2025 2024 2023 Employer contributions, net of forfeitures $ 2,770 $ 3,379 $ 2,720 F- 34 STAAR SURGICAL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 12 — Stockholders’ Equity Incentive Plan The Company maintains an Amended and Restated Omnibus Equity Incentive Plan, as amended (the “Equity Plan”). The Equity Plan allows for awards of stock options, stock appreciation rights, restricted stock, RSUs, PSUs and other stock- and cash-based awards, including awards that are subject to service-based and performance-based vesting conditions. As of January 2, 2026, the Company had outstanding grants of stock options, RSUs and PSUs. Stock options granted under the Equity Plan are granted at fair market value on the date of grant, become exercisable generally over a three-year period, or as determined by the Board, and expire over periods not exceeding 10 years from the date of grant. Certain stock options and stock-based awards provide for accelerated vesting if there is a change in control and pre-established financial metrics are met (as defined in the Equity Plan). Grants of restricted stock outstanding under the Equity Plan generally vest over periods of one to three years . Grants of RSUs and PSUs outstanding under the Equity Plan generally vest based on service, performance, or a combination of both. On June 15, 2023, the Company’s stockholders approved a proposal to increase the number of shares that may be issued pursuant to stock-based awards granted under the Equity Plan, which increased the share pool by 2,170,000 shares. On June 19, 2024, the Company’s stockholders approved a proposal to increase the number of shares that may be issued pursuant to stock-based awards granted under the Equity Plan, which increased the share pool by 2,600,000 shares. As a result of such increases, a total of 22,805,000 shares may be issued pursuant to stock-based awards granted under the Equity Plan. As of January 2, 2026, there were 1,310,727 shares available for grants of stock-based awards under the Equity Plan. Stock-Based Compensation The following table represents the fair value of stock-based compensation granted during the year ended 2025 (in thousands): Fair Value Stock options $ 1,214 RSUs 22,560 PSUs 14,463 Total stock-based compensation expense $ 38,237 The Company recorded stock-based compensation expense by award as follows (in thousands): Years Ended 2025 2024 2023 Employee stock options $ 7,190 $ 13,824 $ 12,842 Restricted stock 302 512 548 RSUs 13,382 11,623 7,213 PSUs 7,645 568 1,270 Nonemployee stock options 553 567 869 Nonemployee RSUs 1,516 116 774 Total stock-based compensation expense $ 30,588 $ 27,210 $ 23,516 The Company recorded stock-based compensation expense in the following categories (in thousands): Years Ended 2025 2024 2023 Cost of sales $ 665 $ 1,192 $ 716 General and administrative 17,615 14,122 12,125 Selling and marketing 5,306 4,583 4,083 Research and development 7,002 7,313 6,592 Total stock-based compensation expense, net 30,588 27,210 23,516 Amounts capitalized as part of inventory 702 1,408 1,672 Total stock-based compensation expense, gross $ 31,290 $ 28,618 $ 25,188 F- 35 STAAR SURGICAL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 12 — Stockholders’ Equity (Continued) Stock-Based Compensation (Continued) As of January 2, 2026, total unrecognized compensation cost related to non-vested stock-based compensation arrangements granted under the Equity Plan were as follows (in thousands): 2025 Stock options $ 5,068 Restricted stock, RSUs and PSUs 26,848 Total unrecognized stock-based compensation cost $ 31,916 This cost is expected to be recognized over a weighted-average period of approximately two years . Assumptions The fair value of each stock option award is estimated on the date of grant using a Black-Scholes option valuation model applying the weighted-average assumptions noted in the following table. Expected volatilities are based on historical volatility of the Company’s stock. The expected term of stock options granted is derived from the historical exercises and post-vesting cancellations, and represents the period of time that stock options granted are expected to be outstanding. The Company has calculated a 8 % estimated forfeiture rate based on historical forfeiture experience. The risk-free rate is based on the U.S. Treasury yield curve corresponding to the expected term at the time of the grant. Years Ended 2025 2024 2023 Expected dividend yield 0 % 0 % 0 % Expected volatility 60 % 59 % 60 % Risk-free interest rate 4.07 % 4.17 % 3.98 % Expected term (in years) 5.05 5.29 5.05 Stock Options A summary of stock option activity under the Equity Plan for the year ended January 2, 2026 was as follows: Shares (in 000’s) Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (years) Aggregate Intrinsic Value (in 000’s) Outstanding at December 27, 2024 2,808 $ 45.72 Granted 121 18.22 Exercised ( 221 ) 15.66 Forfeited or expired ( 992 ) 50.48 Outstanding at January 2, 2026 1,716 $ 44.85 6.13 $ 2,263 Exercisable at January 2, 2026 1,370 $ 48.02 5.53 $ 1,604 A summary of unvested stock options activity under the Equity Plan for the year ended January 2, 2026 was as follows: F- 36 STAAR SURGICAL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 12 — Stockholders’ Equity (Continued) Stock Options (Continued) Shares (in 000’s) Weighted-Average Grant-Date Fair Value Unvested at December 27, 2024 982 $ 23.62 Granted 121 10.04 Forfeited or expired ( 370 ) 24.42 Vested ( 387 ) 24.13 Unvested at January 2, 2026 346 $ 17.90 The weighted average grant date fair value of stock options granted under the Equity Plan and the total intrinsic value of stock options exercised were as follows: Years Ended 2025 2024 2023 Weighted-average grant-date fair value $ 10.04 $ 21.12 $ 28.36 Intrinsic value of options exercised (in thousands) $ 2,027 $ 4,150 $ 17,041 Restricted Stock, Restricted Stock Units and Performance Stock Units A summary of restricted stock, RSU and PSU activity under the Equity Plan for the year ended January 2, 2026 was as follows: Restricted Stock Restricted Stock Units Performance Stock Units Units (in 000’s) Weighted-Average Grant-Date Fair Value Units (in 000’s) Weighted-Average Grant-Date Fair Value Units (in 000’s) Weighted-Average Grant-Date Fair Value Outstanding at December 27, 2024 16 $ 40.11 695 $ 43.33 406 $ 39.99 Granted — — 1,281 17.61 849 17.04 Vested ( 16 ) 40.11 ( 321 ) 42.41 ( 20 ) 74.80 Forfeited — — ( 196 ) 33.48 ( 433 ) 35.93 Outstanding at January 2, 2026 — $ — 1,459 $ 22.29 802 $ 17.04 The weighted average grant date fair value of restricted stock, RSU and PSU awards granted under the Equity Plan and the total fair value of awards vested were as follows: Years Ended 2025 2024 2023 Weighted-average grant-date fair value $ 17.38 $ 37.73 $ 52.98 Fair value of awards vested (in thousands) $ 7,280 $ 6,283 $ 7,715 Share Repurchase Program In May 2025, the Company’s Board of Directors authorized a share repurchase program under which the Company may repurchase up to $ 30 million of its outstanding common stock. Under the program, the Company may repurchase shares in the open market, through privately negotiated transactions, by entering into structured repurchase agreements with third parties, by making block purchases, and/or pursuant to Rule 10b5-1 trading plans. The timing, manner, price, and amount of any repurchases under the program will be determined by the Company in its discretion, subject to market conditions, legal requirements, and other considerations. The Company is not obligated to repurchase any specific number of shares, and the program may be modified, suspended, or discontinued at any time, without prior notice. During fiscal 2025 the Company purchased 375,630 shares, for an aggregate of $ 6,461,000 , pursuant to its share repurchase program. As of January 2, 2026 , $ 23,539,000 remained available for repurchases pursuant to the program. F- 37 STAAR SURGICAL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 13 — Commitments and Contingencies Asset Retirement Obligation The Company recorded certain Asset Retirement Obligations (“ARO”), in connection with the Company’s obligation to return its Japan facility to its “original condition,” as defined in the lease agreements. The Company has recorded approximately $ 45,000 and $ 42,000 , representing the fair value of the ARO liability obligations in noncurrent liabilities at January 2, 2026 and December 27, 2024, respectively. These leases expire in 2027 and 2029. Open Purchase Orders As of January 2, 2026, there were open purchase orders of $ 18,069,000 . Severance Paid For fiscal year 2025, see Notes 1 – Organization and Description of Business and Accounting Policies – Restructuring, Impairment and Related Charges and 8 – Other Current Liabilities to the Consolidated Financial Statements. For fiscal year 2023, the Company recognized expense of $ 1,392,000 for one-time employee benefits paid to certain employees in STAAR Japan who worked primarily in cataract IOL sales. These one-time employee benefits were recognized in general and administrative expense on the Consolidated Statements of Operations. Indemnification Agreements The Company has entered into indemnification agreements with its directors and officers that may require the Company: (a) to indemnify them against liabilities that may arise by reason of their status or service as directors or officers, except as prohibited by applicable law; (b) to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified; and (c) to make a good faith determination whether or not it is practicable for the Company to obtain directors’ and officers’ insurance. The Company currently has directors’ and officers’ liability insurance through a third-party carrier. Also, in connection with the sale of products and entering into business relationships in the ordinary course of business, the Company may make representations affirming, among other things, that its products do not infringe on the intellectual property rights of others and agrees to indemnify customers against third-party claims for such infringement as well as its negligence. The Company has not been required to make material payments under such provisions. Tax Filings The Company’s tax filings are subject to audit by taxing authorities in jurisdictions where it conducts business. These audits may result in assessments of additional taxes that are subsequently resolved with the authorities or potentially through the courts. Management believes the Company has adequately provided for taxes; however, final assessments, if any, could be significantly different than the amounts recorded in the Consolidated Financial Statements. Executive Agreements The Company has entered into agreements with certain of its executives that provide for severance payments and benefits upon termination of employment by the Company without “cause” or by the executive for “good reason” as defined in the applicable agreements. Certain executives are also party to agreements that provide for enhanced payments and benefits in connection with a termination of employment upon a “change in control.” Litigation and Claims From time to time, the Company is involved in various legal proceedings and other matters arising in the normal course of business. These legal proceedings and other matters may relate to, among other things, contractual rights and obligations, employment matters, or claims of product liability. STAAR maintains insurance coverage for various matters, including product liability and certain securities claims. While the Company does not believe that any of the claims known is likely to have a material adverse effect on the Company’s financial condition or results of operations, new claims or unexpected results of existing claims could lead to significant financial harm. F- 38 STAAR SURGICAL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 14 — Related Party Transactions The Company has made various advances to certain non-executive employees. Amounts due from employees are included in prepayments, deposits, and other current assets were as follows (in thousands): 2025 2024 Due from employees $ 301 $ 3 Note 15 — Supplemental Disclosure of Cash Flow Information The Company’s non-cash investing and financing activities, and cash paid were as follows (in thousands): Years Ended 2025 2024 2023 Non-cash investing and financing activities: Purchase of property and equipment included in accounts payable $ 369 $ 3,118 $ 2,768 Cash paid: Interest $ 122 $ 87 $ 75 See Note 10 – Income Taxes, for cash paid for income taxes. Note 16 — Basic and Diluted Net Income (Loss) Per Share The following table sets forth the computation of basic and diluted net income (loss) per share (in thousands except per share amounts): Years Ended 2025 2024 2023 Numerator: Net income (loss) $ ( 80,448 ) $ ( 20,208 ) $ 21,347 Denominator: Weighted average common shares outstanding 49,568 49,125 48,523 Weighted average common shares outstanding for basic 49,568 49,125 48,523 Dilutive potential common stock outstanding: Stock options — — 813 Unvested restricted stock — — 3 RSUs — — 56 PSUs — — 32 Weighted average common shares outstanding for diluted 49,568 49,125 49,427 Net income (loss) per share: Basic $ ( 1.62 ) $ ( 0.41 ) $ 0.44 Diluted $ ( 1.62 ) $ ( 0.41 ) $ 0.43 Because the Company had a net loss for 2025 and 2024, the number of diluted shares is equal to the number of basic shares. The following table sets forth (in thousands) the weighted average number of options to purchase shares of common stock, restricted stock, RSUs and PSUs with either exercise prices or unrecognized compensation cost per share greater than the average market price per share of the Company’s common stock, which were not included in the calculation of diluted per share amounts because the effects would be anti-dilutive. Years Ended 2025 2024 2023 Stock options 5,253 4,166 2,073 Restricted stock, RSUs and PSUs 778 212 32 Total 6,031 4,378 2,105 F- 39 STAAR SURGICAL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 17 — Disaggregation of Revenues, Geographic Sales and Product Sales 100 % of the Company’s sales are generated from the ophthalmic surgical product segment and the chief operating decision maker makes operating decisions and allocates resources based upon the consolidated operating results, and therefore the Company operates as one operating segment for financial reporting purposes. The Company’s principal products are Implantable Collamer Lenses (“ICLs”) used in refractive surgery. Historically the Company marketed and sold cataract intraocular lenses (“IOLs”) and related injectors and injector parts. The Company phased out sales of such products in fiscal 2023, and no longer intends to sell any such products. The composition of the Company’s net sales is primarily related to ICL sales. Net sales include sales of delivery systems and normal recurring sales adjustments such as sales return allowances, and for fiscal year 2023, IOL sales. In the following tables, sales are disaggregated by category and sales by geographic market data. The Company maintains finished goods inventory at different sites in the United States, Switzerland and Japan, and from time to time, consigns or ships finished goods inventory to surgeons, hospitals, and distributors in advance of anticipated demand. The Company maintains title and risk of loss on consigned inventory and generally does not recognize revenue for consignment inventory until the Company is notified that the lenses have been implanted. The following table disaggregates the Company’s consignment sales (in thousands): Years Ended 2025 2024 2023 Non-consignment sales $ 178,992 $ 293,573 $ 301,163 Consignment sales 60,450 20,328 21,252 Total net sales $ 239,442 $ 313,901 $ 322,415 In April 2025, in order to mitigate potential financial exposure from tariffs imposed by China, the Company negotiated and implemented consignment agreements with its two distributors in China and delivered consigned inventory to its distributors in advance of the implementation of tariffs and delivered additional consignment inventory throughout fiscal 2025. As consigned inventory in China is purchased by the Company’s distributors, revenue associated with such consigned inventory will be recorded as consignment sales. China consignment sales for fiscal 2025 were $ 43,534,000 . The Company’s product is marketed and sold in more than 85 countries and its product is manufactured in the United States and Switzerland. Sales are attributed to countries based on location of customers. During 2025, the presentation of immaterial amounts related to normal recurring sales adjustments previously presented in foreign other sales are presented in the countries these normal recurring sales adjustments are attributable to. Prior period amounts have been conformed to current presentation in the following table. The composition of the Company’s net sales to unaffiliated customers was as follows (in thousands): Years Ended 2025 2024 2023 Domestic $ 22,558 $ 19,896 $ 17,221 Foreign: China (1) 77,781 162,287 184,569 Japan 45,265 41,814 38,468 Other (2) 93,838 89,904 82,157 Total foreign sales 216,884 294,005 305,194 Total net sales $ 239,442 $ 313,901 $ 322,415 (1) The China region includes sales into China and Hong Kong. (2) No other location individually exceeds 10 % of the total net sales. The Company sells its products internationally, which subjects the Company to several potential risks, including fluctuating exchange rates (to the extent the Company’s transactions are not in U.S. dollars), regulation of fund transfers by foreign governments, U.S. and foreign export and import duties and tariffs, and political instability. F- 40 STAAR SURGICAL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 18 — Geographic Assets The Company’s long-lived assets are located in the following geographical locations in which the Company operates. Other than the U.S. and Switzerland, no other geographic location exceeds 10 % of each category of long-lived assets. The composition of the Company’s long-lived assets was as follows (in thousands): 2025 U.S. Switzerland Other (1) Total Property, plant and equipment, net $ 55,621 $ 17,311 $ 391 $ 73,323 Operating lease ROU assets, net 21,454 5,346 2,809 29,609 Cloud-based software 30,700 — — 30,700 Total $ 107,775 $ 22,657 $ 3,200 $ 133,632 2024 U.S. Switzerland Other (1) Total Property, plant and equipment, net $ 68,318 $ 16,084 $ 487 $ 84,889 Finance lease ROU assets, net 37 — — 37 Operating lease ROU assets, net 27,754 6,414 2,682 36,850 Cloud-based software 15,763 — — 15,763 Total $ 111,872 $ 22,498 $ 3,169 $ 137,539 (1) No other location individually exceeds 10 % of each category of long-lived assets. Note 19 — Subsequent Events On January 6, 2026, the Company held a special meeting of stockholders (the “Special Meeting”) to vote on the Merger with Alcon. At the Special Meeting, the Company’s stockholders voted against the Merger, and the Merger Agreement was terminated in accordance with its terms effective January 6, 2026. None of the Company, Alcon or Merger Sub was required to pay any termination fee as a result of the termination of the Merger Agreement, and the parties are responsible for their respective costs and expenses related to the Merger Agreement and the transactions contemplated thereby. Following the termination of the Merger Agreement, on January 14, 2026, the Company entered into a letter agreement (the “Cooperation Agreement”) with Broadwood Partners, L.P. and its affiliates (“Broadwood”), the Company’s largest stockholder. Pursuant to the Cooperation Agreement, the Company increased the size of the Board of Directors of the Company (the “Board”) from six to seven directors, accepted the resignations of Stephen C. Farrell and Elizabeth Yeu, M.D. from the Board, and appointed each of Neal C. Bradsher, Richard T. LeBuhn and Christopher Min Fang Wang (each a “New Director”) to the Board. Additionally, the Company agreed that the Board will nominate each of the New Directors as a candidate for election as a director at the 2026 annual meeting of stockholders of the Company and that the size of the Board until the conclusion of the 2027 annual meeting of stockholders of the Company will not exceed seven directors. In connection with the Company’s entry into the Cooperation Agreement, Mr. Farrell entered into a letter agreement with the Company, dated as of January 14, 2026 (the “Letter Agreement”), that provided for Mr. Farrell’s resignation from the Board and the termination of Mr. Farrell’s employment as Chief Executive Officer. Mr. Farrell’s termination of employment was effective as of January 31, 2026, and was treated as a termination by the Company without cause for all purposes. Mr. Farrell has agreed to provide consulting services to the Company for a period of one year, for which Mr. Farrell will receive consulting fees of $ 45,000 per month. The Letter Agreement provides that, in accordance with Mr. Farrell’s Employment Agreement with the Company, dated as of February 26, 2025 (the “Employment Agreement”), Mr. Farrell will be eligible to receive certain Accrued Benefits and Severance Benefits (as each such term is defined in the Employment Agreement), and that Mr. Farrell’s unvested RSUs and PSUs will continue to be earned, vest and be settled during the one-year consulting period. F- 41 STAAR SURGICAL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 19 — Subsequent Events (Continued) The Cooperation Agreement also provided for the reimbursement to Broadwood, Yunqi Capital and Defender Capital of certain reasonable and documented out-of-pocket fees and expenses they have incurred of approximately $ 7,000,000 . The Company expects to pay such amounts in the first quarter of fiscal 2026. On January 15, 2026, Mr. Bradsher was elected as Board Chair, to serve in accordance with the Company’s amended and restated bylaws. On February 1, 2026, the Company appointed Warren Foust and Deborah Andrews as interim Co-Chief Executive Officers, effective February 1, 2026. The Company has established a Search Committee of the Board, which has initiated a global search for the Company’s next Chief Executive Officer, including both internal and external candidates. F- 42 STAAR SURGICAL COMPANY AND SUBSIDIARIES SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS AND RESERVES Column A Column B Column C - Additions Column D Column E Description Balance at Beginning of Year Charged to costs and expenses Charged to other accounts Deductions Balance at End of Year (in thousands) 2025 Allowance for credit losses $ 32 $ 71 $ — $ 20 $ 83 Sales return reserve 6,579 24,644 — 21,024 10,199 Deferred tax asset valuation allowance 46,804 — — ( 7,752 ) 54,556 $ 53,415 $ 24,715 $ — $ 13,292 $ 64,838 2024 Allowance for credit losses $ 191 $ 9 $ — $ 168 $ 32 Sales return reserve 6,174 17,754 — 17,349 6,579 Deferred tax asset valuation allowance 42,744 4,456 — 396 46,804 $ 49,109 $ 22,219 $ — $ 17,913 $ 53,415 2023 Allowance for credit losses $ 20 $ 171 $ — $ — $ 191 Sales return reserve 5,706 15,967 — 15,499 6,174 Deferred tax asset valuation allowance 46,977 3,318 — 7,551 42,744 $ 52,703 $ 19,456 $ — $ 23,050 $ 49,109 F- 43