The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the related notes and other financial information included under the heading “Financial Statements,” in this Quarterly Report and our audited consolidated financial statements and related notes included under the heading “Financial Statements and Supplementary Data,” in our Annual Report. Certain statements included in this discussion and analysis constitute “forward-looking statements” that are subject to considerable risks and uncertainties. Please see the information under the heading “Special Note Regarding Forward-Looking Statements” in this Quarterly Report. EXECUTIVE OVERVIEW Our Strategy Sight Sciences’ mission is to develop transformative, interventional technologies that allow eyecare providers to procedurally elevate the standards of care – empowering people to keep seeing. We are passionate about improving patients’ lives by helping them preserve their sight. Our objective is to develop and market products for use in new treatment paradigms and to create an interventional mindset in eyecare whereby our products may be used in procedures which supplant conventional outdated approaches. Our business philosophy is grounded in the following principles: •comprehensively understanding disease physiology; •developing transformative technologies that are intended to preserve, protect and restore natural physiological functionality to diseased eyes; •developing and marketing products with proven clinical evidence that achieve superior effectiveness versus current treatment paradigms while minimizing complications or side effects; •providing intuitive, patient-friendly, interventional solutions to ophthalmologists and optometrists (together, "ECPs"); and •delivering compelling economic value to all stakeholders, including patients, providers and third-party payors such as Medicare and commercial insurers. Our initial product development has focused on the treatment of two of the world’s most prevalent and underserved eye diseases, glaucoma and dry eye disease ("DED"). We have commercialized products in each of our two reportable operating segments, Interventional Glaucoma and Interventional Dry Eye. Our Interventional Glaucoma revenue consists of sales of our OMNI® Surgical System family of products ("OMNI"), currently comprised of our Ergo Series OMNI Surgical System and OMNI Edge Surgical System, and the SION® Surgical Instrument ("SION"), while our Interventional Dry Eye revenue consists of sales of the TearCare® System ("TearCare"), and related components and accessories. Each product is primarily sold through a highly involved direct sales model that offers intensive education, training and customer service. We believe this model not only enables us to differentiate our products and our company from competitors, but also expands our addressable market by educating ECPs, patients and other stakeholders on our products and evolving treatment paradigms. Outside of the U.S., we have established direct commercial operations in the United Kingdom and Germany. We sell OMNI directly in the United Kingdom and Germany, and indirectly in several other countries in Europe through distributors. We sell OMNI and SION to facilities where ophthalmic surgeons perform outpatient procedures, such as ambulatory surgery centers ("ASCs") and hospital outpatient departments ("HOPDs"), which are typically reimbursed by Medicare (or similar foreign governmental reimbursement entity) or private payors for procedures using our products. We are focused on educating surgeons on the clinical benefits of earlier interventions with the comprehensive OMNI and TearCare procedures, driving TearCare revenue growth in the jurisdictions where appropriate payment values have been established for the TearCare procedure, expanding equitable reimbursed access to the TearCare procedure in other jurisdictions, engagement efforts with accounts, enhanced competitive counter selling, investments in targeted commercial resources including growth of our TearCare commercial infrastructure, and development of the OMNI pseudophakic standalone market. 23 We sell TearCare to ECPs, where eyecare providers perform evacuation of meibomian glands, using heat-delivered through wearable, open-eye eyelid treatment devices and manual expression, which TearCare is specifically designed for. We are continuing our TearCare commercial launch while focusing on our comprehensive, clinical data-driven, long-term market development plan that aims to improve awareness and patient access to TearCare. In addition, in the areas where appropriate fee schedules have been established for the TearCare procedure, we are focusing our commercial resources on supporting providers in these specific geographies to drive utilization. Our strategy is focused on driving adoption and utilization through our experienced sales, marketing, and customer support teams who are already dedicated to the dry eye market, and the ECP customers who have previously purchased TearCare SmartHubs in these states. Furthermore, we are targeting new ECP customers in these states based on their current treatment approaches to DED, while also focusing on our current Interventional Glaucoma customers, who may benefit from adding TearCare to their current treatment offerings. We do not have, and do not currently intend to develop, any internal manufacturing capabilities or infrastructure, and rely on a limited number of third-party manufacturers, many of which are single source suppliers, for the components, accessories and materials that are utilized in the assembly of our products. We believe the manufacturing capacity provided by our current suppliers will be adequate to meet our current and anticipated manufacturing needs across all of our product lines. However, as part of our long-term manufacturing strategy, we are actively expanding third party manufacturing capacity and options for our products, which we expect will be available to us in the current year for certain products. We plan to continue to utilize third party contract manufacturers for our products and any related components. We believe in the importance of continued strategic investment in initiatives that: •further demonstrate our products’ clinical effectiveness and safety to potential customers, patients, payors and regulators, including (i) establishing OMNI and SION as standards of care of Interventional Glaucoma treatment among MIGS-trained surgeons, (ii) developing a standalone Interventional Glaucoma market segment with a focus on pseudophakic patients whose IOP is not well-controlled on two or more medications and who are at risk of disease progression, and (iii) increasing customer advocacy and utilization of TearCare while also pursuing expanded coverage and/or payment for TearCare; •enhance our commercial capabilities and expertise, including resources dedicated to sales, marketing and education; •ensure the broadest possible patient access to the treatment alternatives that our products are cleared to offer; •enhance and improve upon our existing product technologies; and •allow us to create innovative, transformational and interventional technology with new products, devices or drugs, in glaucoma and ocular surface disease or in new eye disease areas. As a result, we intend to continue to invest in product development, market access, sales and marketing, clinical studies, and education initiatives. Because of these and other factors, we expect to continue to incur net losses for at least the next several years, and we may seek additional debt and/or equity financing to fund our operations and planned growth. Results of Operations We believe there are several important factors that have impacted and will continue to impact our business, financial condition, and results of operations. There have been no material changes to such factors from those described in our Annual Report under the heading "Factors Affecting Our Business and Results of Operations." 24 Comparison of the Three and Six Months Ended June 30, 2026 and 2025 (dollars in thousands) Three Months Ended June 30, Change Six Months Ended June 30, Change 2026 2025 % 2026 2025 % (unaudited) (unaudited) Revenue Interventional Glaucoma $ 20,713 $ 19,231 7.7 % $ 39,058 $ 36,345 7.5 % Percentage of total 88.6 % 98.3 % 90.7 % 98.0 % Interventional Dry Eye 2,675 333 703.3 4,028 727 454.1 Percentage of total 11.4 % 1.7 % 9.3 % 2.0 % Total 23,388 19,564 19.5 43,086 37,072 16.2 Cost of goods sold Interventional Glaucoma 1,604 2,772 (42.1 ) 3,947 5,070 (22.1 ) Interventional Dry Eye 410 205 100.0 787 321 145.2 Total 2,014 2,977 (32.3 ) 4,734 5,391 (12.2 ) Gross profit Interventional Glaucoma 19,109 16,459 16.1 35,111 31,275 12.3 Interventional Dry Eye 2,265 128 1,669.5 3,241 406 698.3 Total 21,374 16,587 28.9 38,352 31,681 21.1 Gross margin Interventional Glaucoma 92.3 % 85.6 % 89.9 % 86.1 % Interventional Dry Eye 84.7 % 38.4 % 80.5 % 55.8 % Total 91.4 % 84.8 % 89.0 % 85.5 % Operating expenses R&D 2,512 4,387 (42.7 ) 5,058 8,817 (42.6 ) SG&A 22,750 23,867 (4.7 ) 49,595 48,390 2.5 Total operating expenses 25,262 28,254 (10.6 ) 54,653 57,207 (4.5 ) Loss from operations (3,888 ) (11,667 ) 66.7 (16,301 ) (25,526 ) 36.1 Investment income 678 1,026 (33.9 ) 1,419 2,174 (34.7 ) Interest expense (1,290 ) (1,284 ) (0.5 ) (2,557 ) (2,547 ) (0.4 ) Other income (expense), net 82 24 241.7 53 (115 ) 146.1 Loss before income taxes (4,418 ) (11,901 ) 62.9 (17,386 ) (26,014 ) 33.2 Provision for income taxes 28 40 (30.0 ) 40 81 (50.6 ) Net loss and comprehensive loss $ (4,446 ) $ (11,941 ) 62.8 % $ (17,426 ) $ (26,095 ) 33.2 % Revenue. We currently derive the majority of our revenue from the sale of our OMNI and SION products to ASCs and HOPDs and from the sale of our TearCare products to ECPs. To date, the revenue from our Interventional Glaucoma segment has accounted for the vast majority of our total revenue, substantially all of which was generated from sales within the U.S. Our Interventional Glaucoma customers place orders based on their expected procedure volumes. Our TearCare customers typically purchase a TearCare System which consists of one or more TearCare SmartHubs® ("SmartHubs"), multiple single-use TearCare SmartLids® ("SmartLids") and other accessories. After utilizing their initial inventory, customers can reorder SmartLids as needed. No single customer accounted for 10% or more of our revenue for the three and six months ended June 30, 2026 and 2025. The growth of our revenue is primarily driven by the demand for elective surgery and treatment utilizing our products in the United States and Europe, product reimbursement rates and coverage criteria, and competition. Such demand is often lower during summer months because of ECP vacations and in winter months because of fewer business or surgery days due to holidays and adverse weather conditions. For the three and six months ended June 30, 2026, we generated more than 90% of our revenue from customers in the U.S. 25 Revenue was $23.4 million during the three months ended June 30, 2026, an increase of $3.8 million, or 19.6% compared to $19.6 million in the prior year comparable period. For the six months ended June 30, 2026, revenue was $43.1 million, an increase of $6.0 million, or 16.2% compared to $37.1 million in the prior year comparable period. The increase in revenue for the three- and six-month periods was primarily as a result of the following: •Interventional Glaucoma segment revenue for the three months ended June 30, 2026 increased by $1.5 million, or 7.7%, to $20.7 million, compared to $19.2 million for the three months ended June 30, 2025. Interventional Glaucoma revenue for the six months ended June 30, 2026 increased by $2.7 million, or 7.5%, to $39.1 million, compared to $36.3 million for the six months ended June 30, 2025. For both the three and six months ended June 30, 2026, the overall increase in Interventional Glaucoma revenue was primarily attributable to an increase in the number of OMNI units sold in the comparable periods, as well as an increase in average selling prices. •Interventional Dry Eye segment revenue for the three months ended June 30, 2026 increased by $2.3 million, or 703.3%, to $2.7 million, compared to $0.3 million for the three months ended June 30, 2025. Interventional Dry Eye revenue for the six months ended June 30, 2026 increased by $3.3 million, or 454.1%, to $4.0 million, compared to $0.7 million for the six months ended June 30, 2025. For both the three- and six-month periods ended June 30, 2026, the overall increase in Interventional Dry Eye revenue compared to the prior year comparable periods was primarily due to an increased volume of SmartLids sold as well as increased average selling prices. The Company made reimbursement progress in the fourth quarter of 2025 with the establishment of fee schedules for CPT code 0563T, the code specifically associated with the TearCare procedure, by two Medicare Administrative Contractors, which has led to the increased volume. Cost of Goods Sold. Our components and products are produced by third-party suppliers and manufacturers. Our cost of goods sold consists primarily of amounts paid for our products to third-party manufacturers, and our manufacturing overhead costs, which consist primarily of personnel expenses, including salaries, benefits and stock-based compensation, and reserves for excess, obsolete and non-sellable inventory. Cost of goods sold also includes depreciation expenses for production equipment which we provide to our third-party manufacturers and certain direct costs, such as shipping and handling costs and tariffs on imported products and components. Cost of goods sold was $2.0 million during the three months ended June 30, 2026, a decrease of $1.0 million, or 32.3%, from $3.0 million in the prior year comparable period. Cost of goods sold for the six months ended June 30, 2026, was $4.7 million, a decrease of $0.7 million or 12.2% from $5.4 million in the prior year comparable period. The decrease in cost of goods sold was primarily as a result of the following: •Interventional Glaucoma segment cost of goods sold decreased $1.2 million and $1.1 million in the three and six months ended June 30, 2026, respectively, compared to the prior year comparable periods, primarily due to $1.2 million of tariff refunds received in the second quarter of 2026. For the six months ended June 30, 2026, this decrease was partially offset by the increased volume. •Interventional Dry Eye segment cost of goods sold increased $0.2 million and $0.5 million in the three and six months ended June 30, 2026, respectively, compared to the prior year comparable periods. These increases were primarily driven by higher volumes of SmartLids sold in the current year, partially offset by $0.1 million of tariff refunds received in the second quarter of 2026. Gross Profit and Gross Margin. We calculate gross profit as revenue minus cost of goods sold. We calculate gross margin as gross profit divided by revenue. Our gross profit and gross margin have been, and we believe they will continue to be, affected by a variety of factors, including differences in segment gross profit and gross margins, changes in average selling prices, changes in product reimbursement rates, product sales mix, production and ordering volumes, manufacturing, tariff and freight costs, product yields, and headcount. In general, we expect our gross profit to increase over time as our revenue increases, and we expect our gross margins to increase over the long term to the extent our production and ordering volumes increase and as we spread the fixed portion of our overhead costs over a larger number of units produced and sold. We intend to use our design, engineering and manufacturing know-how and capabilities to further advance and improve the efficiency of our suppliers’ manufacturing processes, which we believe will reduce costs and increase our gross margins. 26 Our gross margins could fluctuate from quarter to quarter due to a number of factors, including variations in product mix, changes in product reimbursement rates or average selling prices, transitions to new suppliers, introduction of new products by us or our competitors, adoption of new manufacturing processes and technologies, and responses to evolving macroeconomic and geopolitical conditions, including the adoption of new or increased tariffs by the United States, China, and other countries. Our total gross profit was $21.4 million in the three months ended June 30, 2026, an increase of $4.8 million from the prior year comparable period. Our gross profit was $38.4 million in the six months ended June 30, 2026, an increase of $6.7 million from the prior year comparable period. Our gross margin for the three and six months ended June 30, 2026 increased to 91.4% and 89.0%, respectively, up from 84.8% and 85.5% in the prior year comparable periods. These increases were primarily the result of the following: •Interventional Glaucoma segment gross margin was 92.3% and 89.9% for the three and six months ended June 30, 2026, respectively, an increase from 85.6% and 86.1% for the prior year comparable periods. This increase in margin was primarily driven by $1.2 million of tariff refunds received in the second quarter of 2026, as well as higher average selling prices and changes in product sales mix. •Interventional Dry Eye segment gross margin was 84.7% and 80.5% for the three and six months ended June 30, 2026, respectively, an increase from 38.3% and 55.8%, respectively, for the prior year comparable periods. The increase in both periods was due to increased average selling price, higher volumes, and $0.1 million of tariff refunds received. Interventional Dry Eye margins are expected to continue to improve over time as market access and volume expands. Research and Development Expenses. Research and development ("R&D") expenses consist primarily of costs associated with engineering, product development, clinical studies to develop and support our products, including clinical trial design, clinical trial site initiation and study costs, internal and external costs associated with our regulatory compliance and quality assurance functions, medical affairs, cost of products used for clinical trials and other costs associated with products and technologies that are in development. These expenses also include personnel expenses, including salaries, benefits and stock-based compensation related to R&D functions, supplies, consulting, prototyping, testing, materials, travel expenses, depreciation expenses for equipment and an allocation of information technology ("IT") and facility overhead expenses. Our R&D expenses as a percentage of revenue may vary over time depending on the level and timing of new product development efforts, as well as clinical development, clinical trial and other related activities. While we expect to continue to make key investments in our R&D initiatives including active clinical trials, we implemented a targeted plan during the third quarter of 2025 intended to reduce operating expenses, improve cost efficiencies, and better align our operating structure for long-term profitability growth. This targeted plan has and is expected to continue to reduce R&D costs in the near term. R&D expenses were $2.5 million for the three months ended June 30, 2026, a decrease of $1.9 million from the prior year comparable period. The decrease in R&D expenses was driven by a $1.4 million decrease in payroll expenses, due to a reduced headcount, and a $0.2 million decrease in clinical studies expenses. R&D expenses were $5.1 million for the six months ended June 30, 2026, a decrease of $3.8 million from the prior year comparable period. The decrease in R&D expenses was driven by a $3.2 million decrease in payroll expenses, due to a reduced headcount, and a $0.6 million decrease in clinical studies expenses. Selling, General, and Administrative Expenses. Selling, general and administrative ("SG&A") expenses consist primarily of personnel expenses, including salaries, benefits and stock-based compensation related to selling, marketing and corporate functions, allocation of IT and facility overhead expenses, bad debt expense, finance, legal and human resource costs. Other SG&A expenses include training activities, travel expenses, promotional activities, marketing initiatives, market research and analysis, conferences and trade shows, professional services fees (including external legal, audit, consulting and tax fees), insurance costs, and general corporate expenses. Our SG&A expenses as a percentage of revenue may vary over time depending on the level and timing of commercial expansion efforts. While we expect to continue to make strategic investments in SG&A expenses, we implemented a targeted plan during the third quarter of 2025 intended to reduce operating expenses, improve cost efficiencies, and better align our operating structure for long-term profitability growth. SG&A expenses were $22.8 million for the three months ended June 30, 2026, a decrease of $1.1 million from the prior year comparable period. The decrease was primarily driven by a $0.6 million decrease in payroll-related 27 expenses, including stock-based compensation expenses, driven by reduced headcount following the Company’s restructuring in the third quarter of 2025, as well as a $0.6 million decrease in marketing and sales training and events. Partially offsetting these decreases was a $0.5 million increase in legal expenses. SG&A expenses were $49.6 million for the six months ended June 30, 2026, an increase of $1.2 million from the prior year comparable period. The increase was primarily driven by a $5.7 million increase in legal expenses, which includes a $5.4 million litigation success fee charge associated with the final judgment in the Alcon litigation. Partially offsetting the increase was a $1.8 million decrease in payroll-related expenses, including stock-based compensation expenses, driven by reduced headcount following the Company’s restructuring in the third quarter of 2025. Additionally, there was a $1.7 million decrease in marketing and sales training and event expenses. Investment Income. Investment income primarily consists of interest and amortization on held-to-maturity investments in U.S. treasury debt securities and money market funds. Investment income was $0.7 million for the three months ended June 30, 2026, a decrease of $0.3 million from the prior year comparable period. Investment income was $1.4 million for the six months ended June 30, 2026, a decrease of $0.8 million from the prior year comparable period. The decrease in the three and six month periods ended June 30, 2026 was due to lower investment balances on held-to-maturity investments during the current period. Interest Expense. Interest expense consists of interest incurred on our outstanding indebtedness and non-cash interest related to the accretion of debt discount and amortization of debt issuance costs associated with the Term Loans. Interest expense was flat during the three and six months ended June 30, 2026, compared to the prior year comparable periods. Other Income (Expense), Net. Other income (expense), net primarily consists of income and expenses that do not originate from our primary business. Other income (expense), net was income of $0.1 million for the three and six months ended June 30, 2026. Other income (expense) was income of less than $0.1 million and expense of $0.1 million for the three and six months ended June 30, 2025, respectively. Cash Flows The following table summarizes our cash flows for the periods indicated (in thousands): Six Months Ended June 30, 2026 2025 Net cash used in operating activities $ (12,692 ) $ (19,148 ) Net cash used in investing activities (79 ) (210 ) Net cash provided by financing activities 562 501 Net change in cash, cash equivalents, and restricted cash $ (12,209 ) $ (18,857 ) Net Cash Used in Operating Activities. Net cash used in operating activities for the six months ended June 30, 2026 was $12.7 million, consisting primarily of a net loss of $17.4 million, as well as a net change in our operating assets and liabilities of $1.9 million. Partially offsetting these were non-cash charges of $6.6 million. The net change in our operating assets and liabilities was primarily due to a $1.6 million increase in accounts receivable, a $1.4 million decrease in accrued compensation, and a $1.3 million increase in prepaid expenses and other current assets. These changes were partially offset by a $2.1 million decrease in inventory and a $0.6 million increase in accounts payable. The non-cash charges primarily consisted of $5.8 million related to stock-based compensation expense. Net cash used in operating activities for the six months ended June 30, 2025 was $19.1 million, consisting primarily of a net loss of $26.1 million, as well as a net change in our operating assets and liabilities of $2.2 million, partially offset by non-cash charges of $9.1 million. The net change in our operating assets and liabilities was primarily due to a $4.5 million decrease in accrued compensation. This change was partially offset by a $1.1 million decrease in accounts receivable, a $0.4 million increase in accounts payable, and a $0.1 million decrease in our inventory balance. The non-cash charges primarily consisted of $8.1 million related to stock-based compensation 28 expense, $0.5 million of accretion of debt discount and debt issuance costs, $0.3 million of depreciation and amortization, and $0.2 million of noncash operating lease expense. Net Cash Used in Investing Activities. Net cash used in investing activities for both the six months ended June 30, 2026 and 2025 was $0.1 million and $0.2 million, respectively. The cash used in both periods was for purchases of property and equipment. Net Cash Provided by Financing Activities. Net cash provided by financing activities for the six months ended June 30, 2026 and 2025 was $0.6 million and $0.5 million, respectively, consisting primarily of proceeds from employee stock purchase plan purchases and stock option exercises. Liquidity and Capital Resources Sources of Liquidity To date, our primary sources of capital have been private placements of redeemable convertible preferred stock, the sale of common stock in our IPO, debt financing arrangements, and revenue from the sale of our products. In January 2024, we entered into a Loan and Security Agreement (the "Hercules Loan Agreement") with Hercules Capital, Inc ("Hercules") and certain of its affiliates (collectively with Hercules, the "Lenders"), which provides for a senior secured term loan facility in the aggregate principal amount of up to $65.0 million. We used the proceeds from an initial $35.0 million funded under the Hercules Loan Agreement (the "Initial Loan") to discharge our indebtedness under our previous credit facility (the "Prior Loan Agreement") with MidCap Financial Trust and certain of its affiliates. In December 2024, we consummated the drawdown of the $5.0 million Tranche I(b) term loan advance (the "Tranche I(b) Loan") contemplated by the Hercules Loan Agreement. As of June 30, 2026, we had cash and cash equivalents of $79.8 million, an accumulated deficit of $402.1 million, and an outstanding term loan balance of $40.0 million plus a $2.4 million fee final payment due at maturity under the Hercules Loan Agreement (excluding unamortized debt discount and issuance costs). Based on our current planned operations, we expect our cash and cash equivalents balance, as well as other sources of liquidity, will enable us to fund our operations for at least the next 12 months and the foreseeable future. Our historical cash outflows have primarily been associated with cash used for operating activities such as sales, marketing and commercialization of our products, research and development activities, regulatory and market access activities, intellectual property enforcement and portfolio expansion, capital expenditures and debt service costs. Our cash requirements will be significantly impacted by our ability to manage and grow our business by maintaining and expanding our sales to existing customers or introducing our products to new customers; our ability to obtain and maintain sufficient reimbursement for our products, including successfully protecting reimbursement for our Interventional Glaucoma products and expanding and maintaining sufficient reimbursement for our Interventional Dry Eye products; the level of our investment in commercialization and research and development activities, including clinical trials; whether we enter into any strategic acquisitions or investments, and the timing and amount of the associated capital expenditures; the outcome of our litigation against Alcon, including receipt of any final, non-appealable award thereunder; and competitive dynamics within our industry. There are numerous factors that may impact our long-term cash requirements, and we are unable to accurately predict them at this time. An extended period of global supply chain disruption, geopolitical or trade tensions, or economic uncertainty could materially affect our business, results of operations, financial condition, and access to sources of liquidity. We may in the future need to seek additional sources of liquidity and capital resources through equity or debt financings, such as additional securities offerings or through borrowings under a new or existing credit facility. There can be no assurance that such transactions will be available to us on favorable terms, if at all. Hercules Capital Loan Agreement In January 2024, we entered into the Hercules Loan Agreement with the Lenders, which provides for a maximum $65.0 million credit facility. An Initial Loan of $35.0 million was funded under the Hercules Loan Agreement on January 22, 2024, which was used to discharge our indebtedness under the Prior Loan Agreement. On December 10, 2024, we consummated the drawdown of the $5.0 million Tranche I(b) Loan under the Hercules Loan Agreement. Upon consummation of the Tranche I(b) Loan, the aggregate principal amount of borrowings under the Hercules Loan Agreement was $40.0 million. 29 In addition to the Initial Loan and the Tranche I(b) Loan, the Hercules Loan Agreement provides additional tranches available to us (the "Tranche Loans," and together with the Initial Loan and the Tranche I(b) Loan, the "Term Loans"). Tranche 2 originally consisted of $10.0 million available to draw through September 15, 2025, contingent upon the achievement of certain performance milestones prior to June 30, 2025, which milestones were not met. Tranche 3 consisted of $15.0 million available to draw through the interest-only period in increments of $5.0 million, subject to the sole approval of Hercules' investment committee. The Hercules Loan Agreement originally provided for a maturity date of July 1, 2028, with an interest-only period running for the first 30 months of the agreement term. This interest-only period was extendable for an additional six months for a total of 36 months upon the achievement of certain performance milestones prior to June 30, 2025; which milestones were not met. In September 2025, the Company and Hercules entered into a third amendment (the "Amendment") to the Hercules Loan Agreement. The Amendment provided for an additional six-month extension of the interest-only period through February 1, 2027. The Amendment also reallocated the undrawn $10.0 million tranche by increasing the amount available to draw through the interest-only period from $15.0 million to $25.0 million, thereby maintaining the maximum $65.0 million credit facility. The additional $25.0 million may be drawn in minimum increments of $5.0 million, subject in each case to the sole approval of Hercules’ investment committee. The Term Loans accrue interest at a floating annual rate equal to the greater of 10.35%, or the Wall Street Journal prime rate (the "Prime Rate") plus 2.35%, with the interest rate equal to 10.35% at June 30, 2026. The final payment fee is set at 5.95% of the funded balance, which is recognized as a debt discount and is being accreted into the amortization of debt issuance costs using the effective interest rate method over the term of the loan. In conjunction with the funding of the Initial Loan, we issued warrants to the Lenders to purchase up to an aggregate of 135,686 shares of our common stock at an exercise price of $5.159 per share, which were recorded and classified as equity. On December 10, 2024, upon the funding of the Tranche I(b) Loan, we issued additional warrants to the Lenders to purchase 26,095 shares of our common stock at an exercise price of $3.83 per share. Each warrant is exercisable for a period of seven years from the date of issuance. If the additional Term Loans are funded, we will be obligated to issue to the Lenders additional warrants to purchase common stock in an amount equal to 2.0% of the funded balance of each tranche loan under the Hercules Loan Agreement, divided by the exercise price on the date we draw funds under such tranche loan. The exercise price will be calculated using the five-day volume-weighted average stock price as of such date. See Note 7, Stockholders' Equity, for additional information regarding these common stock warrants. The obligations under the Hercules Loan Agreement are guaranteed by us and our future subsidiaries, subject to exceptions for certain foreign subsidiaries. The obligations under the agreement are secured by substantially all of our assets, including its material intellectual property. Additionally, we are subject to customary affirmative and negative covenants, including covenants that limit or restrict our ability to, among other things, incur indebtedness, grant liens, merge or consolidate, make investments, dispose of assets, make acquisitions, pay dividends or make distributions, repurchase stock and enter into certain transactions with affiliates, in each case subject to certain exceptions. We are also subject to certain minimum cash and revenue covenants under the Hercules Loan Agreement. We were in compliance with all covenants as of June 30, 2026. While any Term Loans remain outstanding under the Hercules Loan Agreement, we are required to use commercially reasonable efforts to grant to the Lenders the option to invest up to $3.0 million in our next round of equity financing, if any, that is broadly marketed to multiple investors on the same terms, conditions and pricing offered to investors in such subsequent equity financing. Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements. Critical Accounting Estimates Our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities, and the reported amounts of revenue and expense during the reporting period. We evaluate our estimates and assumptions on an ongoing basis using 30 historical experience, existing and known circumstances, authoritative accounting guidance, and various other factors we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions and any such differences may be material. There have been no material changes to our critical accounting estimates as compared to the critical accounting estimates described under the heading "Critical Accounting Estimates" in our Annual Report. Recently Issued Accounting Pronouncements See Note 2, Summary of Significant Accounting Policies, in the notes to our unaudited condensed consolidated financial statements in this Quarterly Report for recent accounting pronouncements not yet adopted as of the date hereof.