TENAX THERAPEUTICS, INC. 10-Q

ITEM 1. FINANCIAL STATEMENTS TENAX THERAPEUTICS, INC. CONDENSED C ONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share and per share data) June 30, 2026 December 31, 2025 (unaudited) ASSETS Current assets Cash and cash equivalents $ 117,976 $ 97,565 Prepaid expenses 3,415 5,643 Other current assets 272 1,019 Total current assets 121,663 104,227 Total assets $ 121,663 $ 104,227 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable $ 6,795 $ 6,041 Accrued liabilities 1,278 1,115 Total current liabilities 8,073 7,156 Total liabilities 8,073 7,156 Commitments and contingencies ; see Note 4 Stockholders' equity Preferred stock, undesignated, authorized 4,818,654 shares Series A Preferred stock, par value $ 0.0001 , authorized 5,181,346 shares; issued and outstanding 210 , as of June 30, 2026 and December 31, 2025 - - Common stock, par value $ 0.0001 per share; authorized 400,000,000 shares; issued and outstanding 31,949,785 as of June 30, 2026 and 9,314,130 as of December 31, 2025, respectively 3 1 Additional paid-in capital 514,560 464,524 Accumulated deficit ( 400,973 ) ( 367,454 ) Total stockholders’ equity 113,590 97,071 Total liabilities and stockholders' equity $ 121,663 $ 104,227 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 Table of Contents TENAX THERAPEUTICS, INC. CONDENSED CONSOLIDAT ED STATEMENTS OF OPERATIONS (unaudited) (Amounts in thousands, except share and per share data) For the three months ended June 30, For the six months ended June 30, 2026 2025 2026 2025 Operating expenses Research and development $ 12,850 $ 6,121 $ 24,389 $ 11,804 Selling, general and administrative 5,934 5,671 10,968 11,326 Total operating expenses 18,784 11,792 35,357 23,130 Net operating loss ( 18,784 ) ( 11,792 ) ( 35,357 ) ( 23,130 ) Interest income 981 954 1,842 1,884 Other expense, net - ( 9 ) ( 4 ) ( 9 ) Net loss $ ( 17,803 ) $ ( 10,847 ) $ ( 33,519 ) $ ( 21,255 ) Net loss per share, basic and diluted $ ( 0.35 ) $ ( 0.27 ) $ ( 0.70 ) $ ( 0.56 ) Weighted average number of common shares and prefunded warrants outstanding, basic and diluted 50,869,259 39,572,177 48,064,151 38,086,800 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 Table of Contents TENAX THERAPEUTICS, INC. CONDENSED CONSOLIDATED STA TEMENTS OF STOCKHOLDERS’ EQUITY (unaudited) (Amounts in thousands, except share data) Preferred Stock Common Stock Number of Shares Amount Number of Shares Amount Additional paid-in capital Accumulated deficit Total stockholders' equity Balance at December 31, 2024 210 $ - 3,420,906 $ - $ 406,848 $ ( 314,855 ) $ 91,993 Public offering sale of common stock and prefunded warrants, net of offering costs of $ 1,746 - - 378,346 - 23,216 - 23,216 Exercise of pre-funded warrants - - 99,189 - 1 - 1 Exercise of warrants - - 71,944 - 347 - 347 Stock-based compensation expense - - - - 4,142 - 4,142 Net loss - - - - - ( 10,408 ) ( 10,408 ) Balance at March 31, 2025 210 $ - 3,970,385 $ - $ 434,554 $ ( 325,263 ) $ 109,291 Exercise of pre-funded warrants - - 116,693 - 1 - 1 Exercise of warrants - - 61,417 - 276 - 276 Stock-based compensation expense - - - - 4,609 - 4,609 Net loss - - - - - ( 10,847 ) ( 10,847 ) Balance at June 30, 2025 210 $ - 4,148,495 $ - $ 439,440 $ ( 336,110 ) $ 103,330 Preferred Stock Common Stock Number of Shares Amount Number of Shares Amount Additional paid-in capital Accumulated deficit Total stockholders' equity Balance at December 31, 2025 210 $ - 9,314,130 $ 1 $ 464,524 $ ( 367,454 ) $ 97,071 Exercise of pre-funded warrants - - 8,533,958 1 52 - 53 Exercise of warrants - - 6,422,412 - 30,416 - 30,416 Exercise of options 5,000 - 30 - 30 Stock-based compensation expense - - - - 2,838 - 2,838 Net loss - - - - - ( 15,716 ) ( 15,716 ) Balance at March 31, 2026 210 $ - 24,275,500 $ 2 $ 497,860 $ ( 383,170 ) $ 114,692 Exercise of pre-funded warrants 4,707,239 1 30 31 Exercise of warrants - - 2,964,546 - 13,340 - 13,340 Vesting of restricted stock units - - 2,500 - - - - Stock-based compensation expense - - - - 3,330 - 3,330 Net loss - - - - - ( 17,803 ) ( 17,803 ) Balance at June 30, 2026 210 $ - 31,949,785 $ 3 $ 514,560 $ ( 400,973 ) $ 113,590 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 Table of Contents TENAX THERAPEUTICS, INC. CONDENSED CONSOLIDATED STA TEMENTS OF CASH FLOWS (unaudited) (Amounts in thousands) Six months ended June 30, 2026 2025 CASH FLOWS FROM OPERATING ACTIVITIES Net Loss $ ( 33,519 ) $ ( 21,255 ) Adjustments to reconcile net loss to net cash used in operating activities Stock-based compensation 6,168 8,751 Changes in operating assets and liabilities Prepaid expenses and other current assets 2,975 1,440 Accounts payable 754 ( 2,595 ) Accrued liabilities 163 429 Net cash used in operating activities ( 23,459 ) ( 13,230 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of warrants and pre-funded warrants, net of issuance costs - 23,216 Proceeds from the exercise of options 30 - Proceeds from the exercise of warrants and pre-funded warrants 43,840 625 Net cash provided by financing activities 43,870 23,841 Net change in cash and cash equivalents 20,411 10,611 Cash and cash equivalents, beginning of period 97,565 94,851 Cash and cash equivalents, end of period $ 117,976 $ 105,462 The accompanying notes are an integral part of these condensed consolidated financial statements. 6 Table of Contents TENAX THERAPEUTICS, INC. NOTES TO CONDENSED C ONSOLIDATED FINANCIAL STATEMENTS (unaudited) NOTE 1. DESCRIPTION OF BUSINESS Tenax Therapeutics, Inc., together with its subsidiaries (collectively “Tenax” or the “Company”), is a Phase 3, development-stage pharmaceutical company using clinical insights to develop novel cardiopulmonary therapies. The Company is incorporated in Delaware and is headquartered in Chapel Hill, North Carolina. Liquidity and Capital Resources The Company has financed its operations since September 1990 primarily through the sale of equity and debt securities and loans from stockholders. The Company had an accumulated deficit of $ 401.0 million at June 30, 2026 and incurred losses of $ 33.5 million and $ 21.3 million during the six months ended June 30, 2026 and 2025, respectively. The Company expects to continue to incur expenses related to the development of levosimendan for pulmonary hypertension and other potential indications and, over the long term, imatinib for pulmonary arterial hypertension (“PAH”), as well as identifying and developing other potential product candidates. At June 30, 2026, the Company had cash and cash equivalents of $ 118.0 million . Based on its resources on June 30, 2026, Company management believes that it has sufficient funds for the Company to continue its operations over at least the next 12 months from the date these condensed consolidated financial statements were available to be issued. To the extent that the Company raises additional funds by issuing shares of its common stock or other securities convertible or exchangeable for shares of common stock, stockholders will experience dilution, which may be significant. In the event the Company raises additional capital through debt financings, the Company may incur significant interest expense and become subject to restrictive covenants in the related transaction documents that may affect the manner in which the Company conducts its business. To the extent that the Company raises additional funds through collaboration and licensing arrangements, it may be necessary to relinquish some rights to its technologies or product candidates or grant licenses on terms that may not be favorable to the Company. Any or all of the foregoing may have a material adverse effect on the Company’s business and financial performance. NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Form 10‑Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. Certain information and footnote disclosures normally included in the Company’s annual financial statements prepared in accordance with GAAP have been condensed or omitted. These condensed consolidated financial statement results are not necessarily indicative of results to be expected for the full fiscal year or any future period. The accompanying unaudited condensed consolidated financial statements and related disclosures have been prepared with the presumption that users of the unaudited condensed consolidated financial statements have read or have access to the audited financial statements for the preceding fiscal year. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Form 10-K, which was filed with the United States Securities and Exchange Commission (“SEC”) on March 10, 2026, from which the Company derived the balance sheet data on December 31, 2025. The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany balances and transactions have been eliminated upon consolidati on. Use of Estimates The preparation of the accompanying unaudited condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and reported amounts of expenses during the reporting period. Actual results could differ from those estimates. 7 Table of Contents On an ongoing basis, management reviews its estimates to ensure that these estimates appropriately reflect changes in the Company’s business and new information as it becomes available. If historical experience and other factors used by management to make these estimates do not reasonably reflect future activity, the Company’s results of operations and financial position could be materially impacted. Significant Accounting Policies There have been no material changes in the Company’s significant accounting policies to those previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2025, other than the following: Cash Concentration Risk The Federal Deposit Insurance Corporation (the “FDIC”) insurance limits are $ 250,000 per depositor per insured bank. The Company had cash balances of $ 117.7 million and $ 97.0 million un insured by the FDIC as of June 30, 2026 and December 31, 2025 , respectively. Loss Per Share Basic loss per share, which excludes antidilutive securities, is computed by dividing net loss by the weighted-average number of common shares outstanding for that particular period. In contrast, diluted loss per share considers the potential dilution that could occur from other equity instruments that would increase the total number of outstanding shares of common stock. Such amounts include shares potentially issuable under outstanding options, restricted stock, and warrants. The following outstanding options, restricted stock grants, convertible preferred shares and warrants were excluded from the computation of basic and diluted net loss per share for the periods presented because including them would have had an anti-dilutive effect. Six months ended June 30, 2026 2025 Warrants to purchase common stock 7,508,153 19,740,901 Options to purchase common stock, restricted stock grants (stock incentive plans and inducement grants) 9,262,744 6,306,747 Convertible preferred shares outstanding 210 210 NOTE 3. BALANCE SHEET COMPONENTS Prepaid expenses and other current assets consist of the following (in thousands): June 30, 2026 December 31, 2025 Prepaid assets: Prepaid CRO expenses $ 3,009 $ 4,841 Other prepaid expenses 406 802 Total prepaid expenses $ 3,415 $ 5,643 Other current assets: Cash from warrant exercise held at transfer agent $ - $ 949 Miscellaneous other current assets 272 70 Total other current assets $ 272 $ 1,019 Accrued liabilities consist of the following (in thousands): June 30, 2026 December 31, 2025 Accrued liabilities: Operating costs $ 304 $ 217 Employee related 974 898 Total accrued liabilities $ 1,278 $ 1,115 8 Table of Contents NOTE 4. COMMITMENTS AND CONTINGENCIES Orion License and Supply Agreements On November 13, 2013, the Company acquired certain assets of Phyxius Pharma, Inc. (“Phyxius”) pursuant to an asset purchase agreement by and among the Company, Phyxius and the stockholders of Phyxius, dated October 21, 2013. Among these assets was a license with Orion Corporation (“Orion”) for the exclusive, sublicensable right to develop and commercialize pharmaceutical products containing levosimendan, 2.5 mg/ml concentrate for solution for infusion / 5ml vial in the United States and Canada (as amended from time to time, the “License”). On October 9, 2020 and January 25, 2022, the Company entered into amendments to the License to include in the scope of the License two new product formulations containing levosimendan, in capsule and solid dosage form (TNX-103) and a subcutaneously administered dosage form (TNX-102), subject to specified limitations (together, the “Product”). On February 19, 2024, the Company entered into an amendment to the License providing global rights to oral and subcutaneous formulations of levosimendan used in the treatment of pulmonary hypertension in heart failure with preserved ejection fraction (“PH-HFpEF”). The amendment also reduced the tiered royalties based on worldwide net sales of the product by the Company and its sublicensees, increased the License’s existing milestone payment due to Orion upon the grant of United States Food and Drug Administration (the “FDA”) approval of a levosimendan-based product to $ 10.0 million and added a milestone payment to Orion of $ 5.0 million due upon the grant of regulatory approval for a levosimendan-based product in Japan. The amendment also (i) increased the Company’s obligations to make certain non-refundable commercialization milestone payments to Orion, aggregating to up to $ 45.0 million, contingent upon achievement of certain cumulative worldwide sales of the product by the Company, and (ii) reduced the maximum price per capsule payable by the Company to Orion, under a supply agreement finalized in June 2026, for the commercial supply of oral levosimendan-based product. Pursuant to the License, the Company and Orion will agree to a new trademark when commercializing levosimendan in either of the dosage forms. On September 3, 2025, the Company entered into an amendment to the License providing exclusive worldwide rights to develop, commercialize, manufacture, and have manufactured any orally-administered pharmaceutical product containing levosimendan and, in addition to the Company’s existing rights to develop and commercialize subcutaneously administered products containing levosimendan, to manufacture or have manufactured such products. The License also grants the Company a right of first refusal to commercialize new developments of the Product, including developments as to the formulation, presentation, means of delivery, route of administration, dosage or indication but, pursuant to the February 2024 amendment, excluding new applications of levosimendan for neurological diseases and disorders developed by Orion. On June 29, 2026, the Company further amended the License and extended to December 31, 2035, the date by which regulatory approval for the Product must be obtained in the United States, in order to avoid the effectiveness of a termination right for either party based on the failure to achieve such milestone. Pursuant to the amendment, the Company also is required to comply with certain information and cybersecurity requirements of Orion. The term of the License extends until 10 years after the launch of the Product in the territory, provided that the License will continue after the end of the term in each country in the territory until the expiration of Orion’s patent rights in the Product in such country. As of June 30, 2026, the Company has not met any of the developmental milestones under the License and, accordingly, has not recorded any liability for the contingent payments due to Orion. On June 29, 2026, the Company and Orion also entered into a supply agreement to govern Orion's manufacture and supply of oral levosimendan for development and, if approved, commercial purposes (“Supply Agreement”). The Supply Agreement has an initial term of five years from the first delivery of supplied oral levosimendan with automatic three-year renewals unless either party provides 24 months' prior written notice of non-renewal. Either party may terminate the Supply Agreement for the other party's material breach, subject to a 60-day cure period, insolvency or in connection with a termination of the License. The Supply Agreement establishes forecasting, ordering, delivery, quality, pricing, and non-conforming product provisions and certain alternative manufacturing rights between Orion and the Company. The Supply Agreement also includes cost-sharing provisions with respect to scaling up Orion's manufacturing capabilities. Litigation The Company is subject to litigation in the normal course of business, none of which management believes will have a material adverse effect on the Company’s consolidated financial statements. 9 Table of Contents NOTE 5. STOCKHOLDERS’ EQUITY Common Stock, Preferred Stock, and Warrants Common Stock The Company’s Certificate of Incorporation, as amended, authorizes the issuance of 400,000,000 shares of $ 0.0001 par value common stock. As of June 30, 2026 and December 31, 2025, there were 31,949,785 and 9,314,130 shares of common stock issued and outstanding, respectively. Preferred Stock Under the Company’s Certificate of Incorporation, as amended, the Board is authorized, without further stockholder action, to provide for the issuance of up to 10,000,000 shares of preferred stock, par value $ 0.0001 per share, in one or more series, to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations and restrictions thereof. Of the potential 10,000,000 shares of preferred stock, 5,181,346 are designated as Series A Stock and 4,818,654 remain undesignated. As of June 30, 2026 and December 31, 2025 , there were 210 shares of Series A Stock outstanding, convertible in the aggregate into one share of common stock. Common Stock and Warrants March 2025 Private Placement Financing (the “March 2025 Offering”) On March 4, 2025, the Company entered into a securities purchase agreement with certain accredited investors for the purchase and sale, in a private placement financing by the Company, of (i) an aggregate of 378,346 shares of its common stock, and pre-funded warrants to purchase an aggregate of 3,760,726 shares of common stock at an offering price of $ 6.04 per share of common stock and $ 6.03 per pre-funded warrant, resulting in gross proceeds of $ 25.0 million. The pre-funded warrants do not expire and have an exercise price of $ 0.01 . The net proceeds of the March 2025 Offering, after deducting placement agent fees and direct offering expenses were $ 23.2 million. The relative fair value allocated to the common stock and pre-funded warrants was $ 2.3 million and $ 22.7 million, respectively. Also, on March 5, 2025 and in connection with the March 2025 Offering, the Company entered into a registration rights agreement (the “March 2025 Registration Rights Agreement”) with the purchasers, pursuant to which the Company agreed to register for resale the shares of common stock issued in the March 2025 Offering and the shares of common stock issuable upon exercise of the pre-funded warrants issued in the March 2025 Offering within 45 days of the closing date. Pursuant to the March 2025 Registration Rights Agreement, on April 15, 2025, the Company filed a resale registration statement on Form S-3 with the SEC, which went effective on April 23, 2025. The March 2025 Registration Rights Agreement includes liquidated damages provisions that meet the definition of a registration payment arrangement that is within the scope of ASC 825-20. The Company determined at the initial issuance of the pre-funded warrants that it is not probable that a payment would be required as it has both the intent and ability to satisfy the March 2025 Registration Rights Agreement. Therefore, the Company did not record a liability at inception but will evaluate the contingency at each reporting period. As of June 30, 2026, no events had occurred that would change our initial assessment of this provision. 10 Table of Contents Pre-Funded Warrant Activity The following table summarizes the Company’s pre-funded warrant activity for the six months ended June 30, 2026: Prefunded Warrants Weighted Average Exercise Price Outstanding at December 31, 2025 33,102,778 $ 0.01 Exercised (Shares Issued) ( 13,241,197 ) 0.01 Forfeited* ( 3,538 ) 0.01 Outstanding at June 30, 2026 19,858,043 $ 0.01 *Represents shares forfeited as a result of the cashless exercise of pre-funded warrants during the period. Warrant Activity The following table summarizes the Company’s warrant activity for the six months ended June 30, 2026, not including pre-funded warrants: Warrants Weighted Average Exercise Price Outstanding at December 31, 2025 16,895,111 $ 5.66 Exercised (Shares Issued) ( 9,386,958 ) 4.66 Outstanding at June 30, 2026 7,508,153 $ 6.91 August 2024 Warrants As part of the Company’s private placement in August 2024 (the “2024 Offering”) , the Company issued unregistered common warrants to purchase 16,666,666 shares of its common stock at an exercise price of $ 4.50 per share (the “August 2024 Warrants”) and pre-funded warrants to purchase an aggregate of 31,882,671 shares of common stock . The August 2024 Warrants expire at the earlier of (i) 30 trading days following the date of the Company’s initial public announcement of topline data from its Phase 3 LEVEL trial (the “Topline Data Announcement”), (ii) immediately upon the exercise of the pre-funded warrants if such exercise is prior to the Topline Data Announcement, provided that if the pre-funded warrant is not exercised in full, the warrant expires proportionally to the extent the pre-funded warrant is exercised, and (iii) August 8, 2029. At June 30, 2026, 7,267,749 of the August 2024 Warrants remained outstanding. February 2024 Warrants As part of the Company’ s registered public offering in February 2024, the Company issued registered warrants to purchase 3,200,000 shares of its common stock at an exercise price of $ 5.65 per share and contractual term of five years. At June 30, 2026, 223,880 of the February 2024 Warrants remained outstanding. Stock-Based Compensation Summary of Stock Option and Restricted Stock Unit (RSU) Activity Stock Incentive Plans In June 2022, the Company adopted the 2022 Stock Incentive Plan, as amended on June 7, 2024 and October 25, 2024, (the “2022 Plan”), with the outstanding shares available for future grants under prior plans, as well as outstanding awards under prior plans that subsequently expire, terminate or are surrendered or forfeited, generally being assumed by the 2022 Plan. Unexpired awards granted under certain prior plans may be subject to the terms of such prior plans. Under the 2022 Plan, with the approval of the Board’s Compensation Committee, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”) , performance shares, performance units, cash-based awards or other stock-based awards. Stock options granted under the 2022 Plan may be either incentive stock options (“ISOs”) or nonqualified stock options (“NSOs”). ISOs may be granted only to employees. NSOs may be granted to employees, consultants and directors. Stock options under the 2022 Plan may be granted with a term of up to ten years and at prices no less than fair market value at the time of grant. Stock options granted generally vest over one to four years . 11 Table of Contents A total of 435,121 shares remained available for issuance under the 2022 Plan as of June 30, 2026. Transactions during the six months ended June 30, 2026 related to stock options granted to employees and directors under Company option plans were as follows: Shares Weighted average exercise price per Share Weighted average remaining contractual life (years) Aggregate intrinsic value (in thousands) Options outstanding as of December 31, 2025 6,616,432 $ 6.21 9.19 $ 41,382 Granted 1,286,000 13.27 Exercised ( 5,000 ) 5.94 Forfeited/Expired ( 2 ) 87,040.00 Options outstanding as of June 30, 2026 7,897,430 $ 7.34 8.79 $ 58,597 Options exercisable at June 30, 2026 3,903,535 $ 5.17 8.46 $ 33,312 The Company estimated the fair value of stock options granted during the six months ended June 30, 2026 using the Black-Scholes option pricing model and the following range of assumptions: For the six months ended June 30, 2026 Risk-free interest rate 3.5 % - 4.1 % Expected volatility 61.0 % - 122.2 % Expected term (in years) 1.7 - 7.0 Expected dividend yield - The Company recorded compensation expense for stock options granted under Company stock incentive plans of $ 2.8 million and $ 5.6 million for the three and six months ended June 30, 2026, respectively, and $ 4.5 million and $ 8.5 million for the three and six months ended June 30, 2025, respectively. As of June 30, 2026 , there were unrecognized compensation costs of $ 23.9 million related to non-vested stock option awards that will be recognized on a straight-line basis over the weighted average remaining vesting period of 2.89 years. Inducement Awards Transactions during the six months ended June 30, 2026 related to inducement stock options and an inducement RSU award granted to new employees. The inducement awards were granted in accordance with the employment inducement award exemption provided by Nasdaq Listing Rule 5635(c)(4) and were therefore not granted pursuant to the 2022 Plan. Inducement Stock Options Inducement stock option activity during the six months ended June 30, 2026 was as follows: Shares Weighted average exercise price per Share Weighted average remaining contractual life (years) Aggregate intrinsic value (in thousands) Options outstanding as of December 31, 2025 250,314 $ 10.20 9.10 $ 1,435 Granted 1,107,500 12.22 Options outstanding as of June 30, 2026 1,357,814 $ 11.85 9.65 $ 4,602 Options exercisable at June 30, 2026 62,686 $ 16.09 8.60 $ 503 The Company estimated the fair value of inducement stock options granted during the six months ended June 30, 2026 using the Black-Scholes option pricing model and the following range of assumptions: 12 Table of Contents For the six months ended June 30, 2026 Risk-free interest rate 4.2 % - 4.3 % Expected volatility 115.3 % - 115.4 % Expected term (in years) 7.0 Expected dividend yield - Inducement stock option compensation expense totaled $ 0.5 million for each of the three and six months ended June 30, 2026, and $ 0.1 million and $ 0.2 million for the three and six months ended June 30, 2025, respectively. As of June 30, 2026 , there was $ 12.6 million of remaining unrecognized compensation expense related to inducement stock options that will be recognized on a straight-line basis over the weighted average remaining vesting period of 3.77 years. Inducement Restricted Stock Units The Company granted an inducement RSU award to a new employee for 10,000 shares of common stock on May 11, 2026. One quarter of the RSU award vested 10 days after issuance and the remainder will vest in three equal installments on the four-month, eight-month, and twelve-month anniversaries of issuance . Inducement RSU compensation expense totaled $ 40,000 for the three and six months ended June 30, 2026. No RSU compensation expense was recorded in the corresponding periods of 2025. As of June 30, 2026, there was $ 0.1 million of remaining unrecognized compensation expense related to inducement RSUs that will be recognized on a straight-line basis through May 2027 . NOTE 6. SEGMENTS Operating segments are identified as components of an entity about which separate discrete financial information is available for evaluation by the Chief Operating Decision Maker ("CODM"), or decision-making group, in making decisions on how to allocate resources and assess performance. The Company's CODM, the President and Chief Executive Officer , views the Company's operations as one operating segment, which is focused on identifying and developing therapeutics that address cardiovascular and pulmonary diseases with high unmet medical need, with an initial therapeutic focus on pulmonary hypertension. The Company does no t have revenue in the current comparative period, incurs expenses primarily in the United States and manages the business activities on a consolidated basis. The accounting policies of the cardiovascular and pulmonary therapeutics segment are the same as those described in the summary of significant accounting policies. The CODM assesses performance for the cardiovascular and pulmonary therapeutics segment and decides how to allocate resources based on net loss that also is reported on the income statement as consolidated net loss. The measure of segment assets is reported on the balance sheet as cash and cash equivalents. The Company has no t generated any product revenue in the current period and expects to continue to incur significant expenses and operating losses for the foreseeable future as the Company advances its product candidates through all stages of development and clinical trials. As such, the CODM uses cash forecast models in deciding how to invest into the cardiovascular and pulmonary therapeutics segment. Such cash forecast models are reviewed to assess the entity-wide operating results and performance. Net loss is used to monitor budget versus actual results. Monitoring budgeted versus actual results, net cash used in operating activities for the period and cash on hand are used in assessing performance of the segment. The table below summarizes the significant expense categories regularly reviewed by the CODM for the three and six months ended June 30, 2026 and 2025 (in thousands). 13 Table of Contents For the three months ended June 30, For the six months ended June 30, 2026 2025 2026 2025 Operating expenses: Research and development $ 12,850 $ 6,121 $ 24,389 $ 11,804 Selling, general and administrative 5,934 5,671 10,968 11,326 Total operating expenses $ 18,784 $ 11,792 $ 35,357 $ 23,130 Net operating loss ( 18,784 ) ( 11,792 ) ( 35,357 ) ( 23,130 ) Other segment items (a) Interest income 981 954 1,842 1,884 Other expense, net - ( 9 ) ( 4 ) ( 9 ) Net loss (b) $ ( 17,803 ) $ ( 10,847 ) $ ( 33,519 ) $ ( 21,255 ) (a) Other segment items included in segment loss includes interest income. (b) The Company is a single operating segment and therefore the measure of segment net loss is the same as consolidated net loss and does not require reconciliation. For the six months ended June 30, 2026 and 2025, the net cash used in operating activities was $ 23.5 million and $ 13.2 million , respectively. The table below summarizes the significant asset categories regularly reviewed by the CODM at June 30, 2026 and June 30, 2025 (in thousands). As of June 30, 2026 2025 Assets: Cash and cash equivalents $ 117,976 $ 105,462 NOTE 7. SUBSEQUENT EVENTS Subsequent to June 30, 2026, the Company received a total of $ 8.1 million from the exercise of 3,667,440 pre-funded warrants and 1,797,973 warrants for the issuance of shares of common stock. 14 Table of Contents