STAA

STAAR SURGICAL COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except par value amounts) (Unaudited) July 3, 2026 January 2, 2026 ASSETS Current assets: Cash and cash equivalents $ 148,579 $ 153,150 Investments available for sale (amortized cost basis of $32,922 and $34,385 at July 3, 2026 and January 2, 2026, respectively) 32,910 34,386 Accounts receivable trade, net of allowance for credit losses of $768 and $83 at July 3, 2026 and January 2, 2026, respectively 98,475 50,064 Inventories, net 46,837 55,496 Prepayments, deposits and other current assets 15,552 18,449 Total current assets 342,353 311,545 Property, plant and equipment, net 69,930 73,323 Operating lease right-of-use assets, net 27,505 29,609 Cloud-based software 31,318 30,700 Goodwill 1,786 1,786 Deferred income taxes 1,087 3,365 Other assets 1,226 1,350 Total assets $ 475,205 $ 451,678 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 13,476 $ 11,574 Obligations under operating leases 6,176 5,872 Allowance for sales returns 16,200 10,199 Other current liabilities 37,542 40,859 Total current liabilities 73,394 68,504 Obligations under operating leases 29,765 32,481 Asset retirement obligations 44 45 Deferred rent 89 89 Pension liability 6,515 6,375 Total liabilities 109,807 107,494 Commitments and contingencies (Note 12) Stockholders’ equity: Common stock, $0.01 par value; 60,000 shares authorized: 50,499 shares issued and 50,123 shares outstanding at July 3, 2026 and 49,779 shares issued and 49,403 shares outstanding at January 2, 2026 505 498 Additional paid-in capital 513,081 504,682 Treasury stock, 376 and 376 shares at July 3, 2026 and January 2, 2026, respectively (6,461 ) (6,461 ) Accumulated other comprehensive loss (6,967 ) (6,511 ) Accumulated deficit (134,760 ) (148,024 ) Total stockholders’ equity 365,398 344,184 Total liabilities and stockholders’ equity $ 475,205 $ 451,678 See accompanying notes to the condensed consolidated financial statements. 1 STAAR SURGICAL COMPANY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) Three Months Ended Six Months Ended July 3, 2026 June 27, 2025 July 3, 2026 June 27, 2025 Net sales $ 93,535 $ 44,320 $ 187,057 $ 86,909 Cost of sales 23,808 11,521 48,471 26,105 Gross profit 69,727 32,799 138,586 60,804 Selling, general and administrative expenses: General and administrative 22,739 20,969 39,761 45,427 Selling and marketing 26,944 26,283 51,453 53,228 Research and development 9,943 10,263 19,868 21,602 Merger transaction and related costs — — 6,743 — Restructuring, impairment and related charges — 5,248 2,681 27,912 Total selling, general and administrative expenses 59,626 62,763 120,506 148,169 Operating income (loss) 10,101 (29,964 ) 18,080 (87,365 ) Other income (expense), net: Interest income, net 939 1,366 1,846 2,732 Gain (loss) on foreign currency transactions (410 ) 2,563 (1,521 ) 3,981 Other income, net 394 120 837 251 Total other income, net 923 4,049 1,162 6,964 Income (loss) before income taxes 11,024 (25,915 ) 19,242 (80,401 ) Provision (benefit) for income taxes 2,966 (9,103 ) 5,978 (9,378 ) Net income (loss) $ 8,058 $ (16,812 ) $ 13,264 $ (71,023 ) Net income (loss) per share: Basic $ 0.16 $ (0.34 ) $ 0.26 $ (1.44 ) Diluted $ 0.16 $ (0.34 ) $ 0.26 $ (1.44 ) Weighted average shares outstanding: Basic 50,321 49,520 50,114 49,432 Diluted 51,501 49,520 51,293 49,432 See accompanying notes to the condensed consolidated financial statements. 2 STAAR SURGICAL COMPANY CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In thousands) (Unaudited) Three Months Ended Six Months Ended July 3, 2026 June 27, 2025 July 3, 2026 June 27, 2025 Net income (loss) $ 8,058 $ (16,812 ) $ 13,264 $ (71,023 ) Other comprehensive income (loss): Defined benefit plans: Net change in plan assets (69 ) (620 ) (112 ) 330 Reclassification into other income (expense), net (6 ) 16 (12 ) 32 Investments available for sale: Change in unrealized gain (loss) (11 ) 9 (16 ) 8 Reclassification into other income (expense), net — 1 — 1 Foreign currency translation gain (loss) (161 ) 704 (482 ) 1,505 Tax effect 58 (151 ) 166 (490 ) Other comprehensive income (loss), net of tax (189 ) (41 ) (456 ) 1,386 Comprehensive income (loss) $ 7,869 $ (16,853 ) $ 12,808 $ (69,637 ) See accompanying notes to the condensed consolidated financial statements. 3 STAAR SURGICAL COMPANY CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands) (Unaudited) Three Months Ended Common Stock Shares Common Stock Par Value Additional Paid-In Capital Treasury Stock Shares Treasury Stock Accumulated Other Comprehen- sive Income (Loss) Accumulated Deficit Total Balance, at April 3, 2026 50,156 $ 502 $ 507,921 (376 ) $ (6,461 ) $ (6,778 ) $ (142,818 ) $ 352,366 Net income — — — — — — 8,058 8,058 Other comprehensive loss — — — — — (189 ) — (189 ) Common stock issued upon exercise of options 68 1 1,234 — — — — 1,235 Stock-based compensation — — 6,665 — — — — 6,665 Repurchase of employee common stock for taxes withheld (86 ) (2 ) (2,739 ) — — — — (2,741 ) Vested restricted and performance stock units 361 4 — — — — — 4 Balance, at July 3, 2026 50,499 $ 505 $ 513,081 (376 ) $ (6,461 ) $ (6,967 ) $ (134,760 ) $ 365,398 Balance, at March 28, 2025 49,523 $ 495 $ 476,868 — $ — $ (5,604 ) $ (121,787 ) $ 349,972 Net loss — — — — — — (16,812 ) (16,812 ) Other comprehensive loss — — — — — (41 ) — (41 ) Common stock issued upon exercise of options 1 — 11 — — — — 11 Stock-based compensation — — 7,994 — — — — 7,994 Repurchase of common stock — — — (261 ) (4,479 ) (4,479 ) Repurchase of employee common stock for taxes withheld (3 ) (1 ) (72 ) — — — (73 ) Vested restricted and performance stock units 25 1 — — — — — 1 Balance, at June 27, 2025 49,546 $ 495 $ 484,801 (261 ) $ (4,479 ) $ (5,645 ) $ (138,599 ) $ 336,573 See accompanying notes to the condensed consolidated financial statements. 4 STAAR SURGICAL COMPANY CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands) (Unaudited) Six Months Ended Common Stock Shares Common Stock Par Value Additional Paid-In Capital Treasury Stock Shares Treasury Stock Accumulated Other Comprehen- sive Income (Loss) Accumulated Deficit Total Balance, at January 2, 2026 49,779 $ 498 $ 504,682 (376 ) $ (6,461 ) $ (6,511 ) $ (148,024 ) $ 344,184 Net income — — — — — — 13,264 13,264 Other comprehensive loss — — — — — (456 ) — (456 ) Common stock issued upon exercise of options 88 1 1,404 — — — — 1,405 Stock-based compensation — — 11,601 — — — — 11,601 Repurchase of employee common stock for taxes withheld (182 ) (2 ) (4,606 ) — — — — (4,608 ) Vested restricted and performance stock units 814 8 — — — — — 8 Balance, at July 3, 2026 50,499 $ 505 $ 513,081 (376 ) $ (6,461 ) $ (6,967 ) $ (134,760 ) $ 365,398 Balance, at December 27, 2024 49,294 $ 493 $ 471,449 — $ — $ (7,031 ) $ (67,576 ) $ 397,335 Net loss — — — — — — (71,023 ) (71,023 ) Other comprehensive income — — — — — 1,386 — 1,386 Common stock issued upon exercise of options 53 1 386 — — — — 387 Stock-based compensation — — 14,321 — — — — 14,321 Repurchase of common stock — — — (261 ) (4,479 ) (4,479 ) Repurchase of employee common stock for taxes withheld (69 ) (1 ) (1,355 ) — — — — (1,356 ) Vested restricted and performance stock units 268 2 — — — — — 2 Balance, at June 27, 2025 49,546 $ 495 $ 484,801 (261 ) $ (4,479 ) $ (5,645 ) $ (138,599 ) $ 336,573 See accompanying notes to the condensed consolidated financial statements. 5 STAAR SURGICAL COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Six Months Ended July 3, 2026 June 27, 2025 Cash flows from operating activities: Net income (loss) $ 13,264 $ (71,023 ) Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation of property, plant, and equipment 4,497 4,312 Amortization of cloud-based software 1,053 200 Non-cash operating lease expense 1,773 1,866 Impairment of fixed assets and operating lease right-of-use assets — 14,593 Accretion/Amortization of investments available for sale (255 ) (139 ) Deferred income taxes 3,134 (10,624 ) Change in net pension liability 47 (2 ) Loss on disposal of property and equipment 1 — Stock-based compensation expense 11,383 13,817 Provision for sales returns and credit losses 6,694 (1,818 ) Inventory provision 1,776 2,499 Changes in working capital: Accounts receivable (49,230 ) 43,859 Inventories 6,840 (11,205 ) Prepayments, deposits, and other assets 5,443 637 Cloud-based software (5,046 ) (7,101 ) Accounts payable 1,737 (5,424 ) Other current and non-current liabilities (5,116 ) (7,430 ) Net cash used in operating activities (2,005 ) (32,983 ) Cash flows from investing activities: Acquisition of property and equipment (937 ) (3,260 ) Purchase of investments available for sale (32,747 ) (14,691 ) Proceeds from maturity of investments available for sale 32,515 77,560 Proceeds from sale of investments available for sale 1,950 862 Net cash provided by investing activities 781 60,471 Cash flows from financing activities: Repayment of finance lease obligations — (42 ) Repurchase of common stock — (4,479 ) Repurchase of employee common stock for taxes withheld (4,608 ) (1,356 ) Proceeds from the exercise of stock options 1,405 387 Proceeds from vested restricted and performance stock units 8 2 Net cash used in financing activities (3,195 ) (5,488 ) Effect of exchange rate changes on cash and cash equivalents (152 ) 972 Increase (decrease) in cash and cash equivalents (4,571 ) 22,972 Cash and cash equivalents, at beginning of the year 153,150 144,159 Cash and cash equivalents, at end of the period $ 148,579 $ 167,131 See accompanying notes to the condensed consolidated financial statements. 6 STAAR SURGICAL COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 1 — Basis of Presentation and Significant Accounting Policies STAAR Surgical Company, a Delaware corporation, was first incorporated in 1982, and together with its subsidiaries designs, develops, manufactures, and sells implantable lenses for the eye and accessory delivery systems used to deliver the lenses into the eye. The accompanying Condensed Consolidated Financial Statements present the financial position, results of operations, and cash flows of STAAR Surgical Company and its wholly owned subsidiaries (the “Company”). All significant intercompany accounts and transactions have been eliminated. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Commission. In accordance with those rules and regulations, certain information and footnote disclosures normally included in the Comprehensive Financial Statements have been condensed or omitted pursuant to such rules and regulations. The Consolidated Balance Sheet as of January 2, 2026 was derived from the audited financial statements at that date, but does not include all the information and footnotes required by GAAP. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended January 2, 2026. The Condensed Consolidated Financial Statements for the three and six months ended July 3, 2026 and June 27, 2025, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s financial condition and results of operations. The results of operations for the three and six months ended July 3, 2026 and June 27, 2025, are not necessarily indicative of the results to be expected for any other interim period or for the entire year. Each of the Company’s fiscal reporting periods ends on the Friday nearest to the quarter ending date and generally consists of 13 weeks. Unless the context indicates otherwise “we,” “us,” the “Company,” and “STAAR” refer to STAAR Surgical Company and its consolidated subsidiaries. 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. In addition, as a result of the termination of the Agreement and Plan of Merger (the “Merger Agreement” with Alcon Research, LLC, a Delaware limited liability company (“Alcon”) in January 2026 and the entry into a letter agreement (the “Cooperation Agreement”) with Broadwood Partners, L.P. and its affiliates (“Broadwood”), the Company incurred additional restructuring related charges due to leadership realignment. Restructuring, impairment and related charges were as follows (in thousands): Three Months Ended Six Months Ended July 3, 2026 June 27, 2025 July 3, 2026 June 27, 2025 Severance and reduction in workforce(1) $ — $ 3,645 $ 1,614 $ 12,453 Consulting expenses — 227 1,067 866 Impairment on leasehold improvements and machinery and equipment(2) — 700 — 7,759 Impairment on real property right-of-use assets(3) — 676 — 4,083 Impairment on internally developed software(2) — — — 2,751 $ — $ 5,248 $ 2,681 $ 27,912 (1)See also Note 7 – Other Current Liabilities (2)The Company will no longer be using these assets, see Note 5 – Property, Plant and Equipment. (3)The Company is actively pursuing subleasing opportunities, see Note 8 – Operating Leases. STAAR SURGICAL COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) Note 1 — Basis of Presentation and Significant Accounting Policies (Continued) Merger Transactions and Related Costs In connection with the proposed merger with Alcon and the Cooperation Agreement, the Company incurred professional service expenses of $6,743,000 for the six months ended July 3, 2026. The Cooperation Agreement provided for the reimbursement of certain reasonable out-of-pocket fees and expenses to Broadwood, Yunqi Capital and Defender Capital related to the merger with Alcon. See Note 16 – Related Party Transactions. Vendor Concentration There were two vendors that accounted for over 28% and 30%, respectively, of the Company’s consolidated accounts payable as of July 3, 2026 and January 2, 2026, respectively. Segment Reporting 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 by 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 Condensed 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 Condensed Statement of Cash Flows. See Note 14 – Disaggregation of Sales, Geographic Sales and Product Sales and Note 15 – Geographic Assets for specific information regarding the Company’s sales and long-lived assets. Recent Accounting Pronouncements 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 also would 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 adopted the annual disclosure requirements of ASU 2024-03 at the beginning of fiscal year 2026 and will adopt the interim disclosure requirement beginning in fiscal year 2027. The Company is currently evaluating the annual disclosure requirements and its effect on its annual report for fiscal year 2026. 8 STAAR SURGICAL COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) Note 2 — Investments Available for Sale Investments available for sale (“AFS”) and the related fair value measurement consisted of the following (dollars in thousands): July 3, 2026 Fair Value Measurements Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value Level 1 Level 2 Commercial paper $ 8,195 $ — $ (5 ) $ 8,190 $ — $ 8,190 Certificates of deposit 2,394 — (1 ) 2,393 — 2,393 U.S. Treasury securities 19,791 1 (6 ) 19,786 19,786 — Corporate debt securities 2,542 — (1 ) 2,541 — 2,541 Total investments AFS $ 32,922 $ 1 $ (13 ) $ 32,910 $ 19,786 $ 13,124 January 2, 2026 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 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. The Company assessed each debt security 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 three months ended July 3, 2026 and June 27, 2025. The following table shows the fair value of investments AFS by contractual maturity (in thousands): As of July 3, 2026 Within one year After one year through five years Total Commercial paper $ 8,190 $ — $ 8,190 Certificates of deposit 2,393 — 2,393 U.S. Treasury securities 19,786 — 19,786 Corporate debt securities 2,541 — 2,541 Total investments AFS $ 32,910 $ — $ 32,910 9 STAAR SURGICAL COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) Note 2 — Investments Available for Sale (Continued) During the six months ended July 3, 2026 several of the Company’s investments AFS with an aggregate fair value of $1,950,000 were subject to early redemption. The Company recognized a gain upon redemption of less than $1,000 for the six months ended July 3, 2026. During the six months ended June 27, 2025, two of the Company’s investments AFS with an aggregate fair value of $862,000 were subject to early redemption. The Company recognized a gain upon redemption of $1,000 for the six months ended June 27, 2025. Note 3 — Inventories Inventories, net are stated at the lower of cost and net realizable value, determined on a first-in, first-out basis and consisted of the following (in thousands): July 3, 2026 January 2, 2026 Raw materials and purchased parts $ 11,030 $ 10,238 Work in process 7,310 8,514 Finished goods(1) 31,192 39,673 Total inventories, gross 49,532 58,425 Less inventory reserves (2,695 ) (2,929 ) Total inventories, net $ 46,837 $ 55,496 (1)Finished goods inventory includes consigned inventory of $4,437,000 and $9,619,000 for July 3, 2026 and January 2, 2026, respectively. See also Note 14 – Disaggregation of Sales, Geographic Sales and Product Sales to the Condensed Consolidated Financial Statements for further details. Note 4 — Prepayments, Deposits, and Other Current Assets Prepayments, deposits, and other current assets consisted of the following (in thousands): July 3, 2026 January 2, 2026 Prepayments and deposits $ 4,732 $ 8,229 Prepaid insurance 1,696 3,269 Prepaid income taxes 253 1,917 Cloud-based software 3,793 418 Value added tax (VAT) receivable 3,583 4,249 BVG (Swiss Pension) prepayment 1,289 — Other(1) 206 367 Total prepayments, deposits and other current assets $ 15,552 $ 18,449 (1)No individual category in “Other” exceeds 5% of the total prepayments, deposits and other current assets. 10 STAAR SURGICAL COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) Note 5 — Property, Plant and Equipment Property, plant and equipment, net consisted of the following (in thousands): July 3, 2026 January 2, 2026 Machinery and equipment $ 49,411 $ 45,137 Computer equipment and software 12,538 10,525 Furniture and fixtures 7,461 7,483 Leasehold improvements 24,527 19,403 Construction in process 19,765 30,340 Total property, plant and equipment, gross 113,702 112,888 Less accumulated depreciation (43,772 ) (39,565 ) Total property, plant and equipment, net $ 69,930 $ 73,323 As discussed in Note 1 – Basis of Presentation and Significant Accounting Policies, during the three and six months ended June 27, 2025, the Company recognized fixed asset impairment expense of $700,000 and $7,759,000, respectively, primarily on leasehold improvements and machinery and equipment as the Company will no longer be using these assets. The Company also recognized impairment during the six months ended June 27, 2025 of $2,751,000 for internally developed software that the Company will no longer be using as it transitions to a cloud-based software solution. These amounts are recorded in Restructuring, impairment and related charges on the Condensed Consolidated Statements 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): Three Months Ended Six Months Ended July 3, 2026 June 27, 2025 July 3, 2026 June 27, 2025 Cost of sales $ 936 $ 772 $ 1,811 $ 1,640 General and administrative 1,090 841 1,931 1,916 Selling and marketing 190 174 372 349 Research and development 174 188 383 370 Total depreciation expense $ 2,390 $ 1,975 $ 4,497 $ 4,275 Note 6 — Cloud-Based Software The Company capitalized cloud-based software implementation costs related to several systems, including enterprise resource planning and customer relationship management systems, which were placed into service at the beginning of the second quarter of 2026. The Company expects to continue to invest and add functionality to its systems. Capitalized cloud-based software costs, net consisted of the following (in thousands): July 3, 2026 January 2, 2026 Capitalized cloud-based software $ 36,573 $ 31,527 Less accumulated amortization (1,462 ) (409 ) Total capitalized cloud-based software, net $ 35,111 $ 31,118 Capitalized cloud-based software included in prepayments, deposits and other current assets $ 3,793 $ 418 Capitalized cloud-based software $ 31,318 $ 30,700 11 STAAR SURGICAL COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) Note 6 — Cloud-Based Software (Continued) Activity related to cloud-based software was as follows (in thousands): Three Months Ended Six Months Ended July 3, 2026 June 27, 2025 July 3, 2026 June 27, 2025 Additions to cloud-based software $ 1,378 $ 4,934 $ 5,046 $ 7,101 Amortization of cloud-based software 949 147 1,053 200 Capitalized software placed into service 33,699 — 33,699 1,256 Note 7 — Other Current Liabilities Other current liabilities consisted of the following (in thousands): July 3, 2026 January 2, 2026 Accrued salaries and wages $ 12,891 $ 12,981 Accrued bonuses 3,866 9,424 Severance payable(1) 1,264 894 Income taxes payable 2,143 1,304 Accrued sales commissions 1,988 1,487 Marketing obligations 3,433 3,397 Other(2) 11,957 11,372 Total other current liabilities $ 37,542 $ 40,859 (1)As discussed in Note 1, during the six months ended July 3, 2026, the Company recognized costs in connection with its leadership realignment and related efforts. Of these costs, a total of $1,614,000 was recognized for severance costs related to leadership realignment. This amount is recorded in Restructuring, impairment and related charges on the Condensed Consolidated Statements of Operations. A majority of these severance payments will be paid monthly through mid-2027. (2)No individual category in “Other” exceeds 5% of the other current liabilities. Note 8 — 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): July 3, 2026 January 2, 2026 Machinery and equipment $ 856 $ 773 Computer equipment and software 68 413 Real property 38,974 39,824 Operating lease right-of-use assets, gross 39,898 41,010 Less accumulated depreciation (12,393 ) (11,401 ) Operating lease right-of-use assets, net $ 27,505 $ 29,609 Current operating lease obligations $ 6,176 $ 5,872 Long-term operating lease obligations 29,765 32,481 Total operating lease liability $ 35,941 $ 38,353 Weighted-average remaining lease term (in years) 6.3 6.7 Weighted-average discount rate 6.45 % 6.33 % 12 STAAR SURGICAL COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) Note 8 — Operating Leases (Continued) As discussed in Note 1, during the three and six months ended June 27, 2025, the Company recognized impairment on real property right-of-use assets of $676,000 and $4,083,000, respectively. The impairment relates to the Company’s decision to exit several of its leased properties, for which the Company has obtained a subtenant for one of its properties and is actively pursuing subleasing the remaining 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 Condensed Consolidated Statements of Operations. Supplemental cash flow information related to operating leases was as follows (in thousands): Three Months Ended Six Months Ended July 3, 2026 June 27, 2025 July 3, 2026 June 27, 2025 Operating lease cost $ 2,029 $ 1,798 $ 4,153 $ 3,947 Cash paid for amounts included in the measurement of operating lease liabilities: Operating cash flows 2,043 1,661 4,025 3,313 Right-of-use assets obtained in exchange for new operating lease liabilities 324 1,629 773 1,933 Future Maturities of Lease Liabilities Estimated future maturities of lease liabilities under operating leases having initial or remaining non-cancelable lease terms more than one year as of July 3, 2026 is as follows (in thousands): As of July 3, 2026 12 Months Ended Operating Leases June 2027 $ 8,316 June 2028 7,193 June 2029 7,200 June 2030 6,727 June 2031 5,606 Thereafter 9,791 Total future minimum lease payments 44,833 Less amounts representing interest (8,892 ) Total lease liability $ 35,941 Note 9 — Income Taxes The Company recorded an income tax provision (benefit) as follows (in thousands): Three Months Ended Six Months Ended July 3, 2026 June 27, 2025 July 3, 2026 June 27, 2025 Provision (benefit) for income taxes $ 2,966 $ (9,103 ) $ 5,978 $ (9,378 ) The effective tax rates for the three months ended July 3, 2026 and June 27, 2025 were 26.9% and 35.1%, respectively, and were 31.1% and 11.7% for the six months ended July 3, 2026 and June 27, 2025, respectively. The Company’s effective tax rates differ from the U.S. federal statutory rate of 21% for the three and six months ended July 3, 2026 and June 27, 2025, respectively, primarily due to the income tax expense generated in foreign jurisdictions. 13 STAAR SURGICAL COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) Note 10 — Defined Benefit Pension Plans The Company has defined benefit plans covering employees of its Switzerland and Japan operations. The following table summarizes the components of net periodic pension cost recorded for the Company’s defined benefit pension plans (in thousands): Three Months Ended Six Months Ended July 3, 2026 June 27, 2025 July 3, 2026 June 27, 2025 Service cost(1) $ 451 $ 436 $ 907 $ 840 Interest cost(2) 94 63 186 125 Expected return on plan assets(2) (169 ) (139 ) (332 ) (274 ) Prior service credit(2),(3) (55 ) (53 ) (110 ) (106 ) Settlement gain(2),(3) — (4 ) — (8 ) Actuarial loss recognized in current period(2),(3) 49 73 98 146 Net periodic pension cost $ 370 $ 376 $ 749 $ 723 (1)Recognized in selling general and administrative expenses on the Condensed Consolidated Statements of Operations. (2)Recognized in other income, net on the Condensed Consolidated Statements of Operations. (3)Amounts reclassified from accumulated other comprehensive income (loss). The Company currently is not required to and does not make contributions to its Japan pension plan. The Company’s contributions to its Swiss pension plan are as follows (in thousands): Three Months Ended Six Months Ended July 3, 2026 June 27, 2025 July 3, 2026 June 27, 2025 Employer contribution $ 363 $ 357 $ 716 $ 622 Note 11 — 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, restricted stock units (“RSUs”) and performance stock units (“PSUs”) and other stock- and cash-based awards, including awards that are subject to service-based and performance-based vesting conditions. As of July 3, 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 of Directors (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 18, 2026, stockholders approved a proposal to increase the number of shares under the Equity Plan by 3,900,000 shares, for a total of 26,705,000 shares. As of July 3, 2026, there were 4,139,002 shares available for grant under the Equity Plan. 14 STAAR SURGICAL COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) Note 11 — Stockholders’ Equity (Continued) Stock-Based Compensation The cost that has been charged against income for stock-based compensation is set forth below (in thousands): Three Months Ended Six Months Ended July 3, 2026 June 27, 2025 July 3, 2026 June 27, 2025 Employee stock options $ 867 $ 1,683 $ 2,001 $ 4,045 Restricted stock — 145 — 302 RSUs 3,107 3,345 5,385 6,308 PSUs 2,196 2,211 3,389 2,607 Nonemployee stock options 273 165 376 302 Nonemployee RSUs 117 253 232 253 Total stock-based compensation expense $ 6,560 $ 7,802 $ 11,383 $ 13,817 The Company recorded stock-based compensation costs in the following categories (in thousands): Three Months Ended Six Months Ended July 3, 2026 June 27, 2025 July 3, 2026 June 27, 2025 Cost of sales $ 286 $ 90 $ 510 $ 380 General and administrative 3,292 4,643 4,945 7,326 Selling and marketing 1,254 1,309 2,490 2,586 Research and development 1,728 1,760 3,438 3,525 Total stock-based compensation expense, net 6,560 7,802 11,383 13,817 Amounts capitalized as part of inventory 105 192 218 504 Total stock-based compensation expense, gross $ 6,665 $ 7,994 $ 11,601 $ 14,321 As of July 3, 2026, total unrecognized compensation cost related to non-vested stock-based compensation arrangements were as follows (in thousands): July 3, 2026 Stock options $ 2,914 RSUs and PSUs 28,401 Total unrecognized stock-based compensation cost $ 31,315 The 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 15% 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. Three Months Ended Six Months Ended July 3, 2026 June 27, 2025 July 3, 2026 June 27, 2025 Expected dividend yield 0 % 0 % 0 % 0 % Expected volatility 62 % 60 % 62 % 60 % Risk-free interest rate 4.23 % 4.03 % 4.06 % 4.09 % Expected term (in years) 4.86 5.05 4.86 5.05 15 STAAR SURGICAL COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) Note 11 — Stockholders’ Equity (Continued) Stock Options A summary of stock option activity under the Equity Plan for six months ended July 3, 2026 is presented below: Stock Options (in 000’s) Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (years) Aggregate Intrinsic Value (in 000’s) Outstanding at January 2, 2026 1,716 $ 44.85 Granted 66 25.48 Exercised (88 ) 15.93 Forfeited or expired (123 ) 40.03 Outstanding at July 3, 2026 1,571 $ 46.04 5.64 $ 2,282 Exercisable at July 3, 2026 1,374 $ 48.18 5.29 $ 1,873 Restricted Stock, Restricted Stock Units and Performance Stock Units A summary of RSU and PSU activity under the Equity Plan for the six months ended July 3, 2026 is presented below (shares in thousands): RSUs PSUs Unvested at January 2, 2026 1,459 802 Granted 510 460 Vested (533 ) (281 ) Forfeited or expired (256 ) (178 ) Unvested at July 3, 2026 1,180 803 Note 12 - Commitments and Contingencies 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, claims, regulatory actions and other matters arising in the normal course of business. These legal proceedings, claims, regulatory actions and other matters may relate to, among other things, contractual rights and obligations, vendor and distributor relations, employment matters, and claims of product liability or medical device quality compliance. The Company 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. 16 STAAR SURGICAL COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) Note 13 — 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): Three Months Ended Six Months Ended July 3, 2026 June 27, 2025 July 3, 2026 June 27, 2025 Numerator: Net income (loss) $ 8,058 $ (16,812 ) $ 13,264 $ (71,023 ) Denominator: Weighted average common shares: Common shares outstanding 50,321 49,520 50,114 49,432 Denominator for basic calculation 50,321 49,520 50,114 49,432 Weighted average effects of potentially diluted common stock: Stock options 77 — 62 — RSUs 494 — 515 — PSUs 609 — 602 — Denominator for diluted calculation 51,501 49,520 51,293 49,432 Net income (loss) per share: Basic $ 0.16 $ (0.34 ) $ 0.26 $ (1.44 ) Diluted $ 0.16 $ (0.34 ) $ 0.26 $ (1.44 ) Because the Company had a net loss for the three and six months ended June 27, 2025, the number of diluted shares is equal to the number of basic shares. The following table sets forth potentially dilutive securities excluded from the computation of diluted net income (loss) per share for the periods presented because their effect would have been anti-dilutive (shares in thousands): Three Months Ended Six Months Ended July 3, 2026 June 27, 2025 July 3, 2026 June 27, 2025 Stock options 1,280 2,372 1,443 2,487 Restricted stock, RSUs and PSUs 77 651 38 700 Total 1,357 3,023 1,481 3,187 17 STAAR SURGICAL COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) Note 14 — Disaggregation of Sales, Geographic Sales and Product Sales 100% of the Company’s sales are generated from the ophthalmic surgical product segment and the CODM 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. 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. 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): Three Months Ended Six Months Ended July 3, 2026 June 27, 2025 July 3, 2026 June 27, 2025 Non-consignment sales $ 80,924 $ 37,525 $ 156,412 $ 75,376 Consignment sales 12,611 6,795 30,645 11,533 Total net sales $ 93,535 $ 44,320 $ 187,057 $ 86,909 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 this 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 the three and six months ended July 3, 2026 were $9,520,000 and $22,154,000, respectively. China consignment sales were $2,785,000 for the three and six months ended June 27, 2025. 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 locations of customers. The composition of the Company’s net sales to unaffiliated customers was as follows (in thousands): Three Months Ended Six Months Ended July 3, 2026 June 27, 2025 July 3, 2026 June 27, 2025 Domestic $ 6,055 $ 5,635 $ 12,722 $ 11,094 Foreign: China(1) 52,341 5,299 99,783 4,422 Japan 11,140 10,915 23,406 22,310 Korea 4,297 4,293 12,272 11,815 Other(2) 19,702 18,178 38,874 37,268 Total foreign sales 87,480 38,685 174,335 75,815 Total net sales $ 93,535 $ 44,320 $ 187,057 $ 86,909 (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’s China distributors accounted for 56% and 53% of net sales for the three and six months ended July 3, 2026, respectively. The Company’s China distributors accounted for 12% of net sales for the three months ended June 27, 2025, and the Company’s Korea distributor accounted for 14% of net sales for the six months ended June 27, 2025. As of July 3, 2026, the Company’s China distributors accounted for 65% of consolidated trade receivables, and as of January 2, 2026, the Company’s China distributors accounted for 33% of consolidated trade receivables. 18 STAAR SURGICAL COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) Note 15 — 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. The composition of the Company’s long-lived assets was as follows (in thousands): July 3, 2026 U.S. Switzerland Other(1) Total Property, plant and equipment, net $ 52,408 $ 17,154 $ 368 $ 69,930 Operating lease ROU assets, net 20,209 4,770 2,526 27,505 Cloud-based software 35,111 — — 35,111 Total $ 107,728 $ 21,924 $ 2,894 $ 132,546 January 2, 2026 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 31,118 — — 31,118 Total $ 108,193 $ 22,657 $ 3,200 $ 134,050 (1)No other location individually exceeds 10% of each category of long-lived assets. Note 16 — Related Party Transactions On January 14, 2026, following the termination of the Merger Agreement, STAAR entered into the Cooperation Agreement with Broadwood, and agreed, among other things, to increase the size of the Board from six to seven directors, accept the resignations of Mr. Farrell and Dr. Yeu from the Board, and appoint each of Messrs. Bradsher, LeBuhn and Wang (each a “New Director”) to the Board. Additionally, the Company agreed that the Board would nominate each New Director as a candidate for election as a director at the 2026 annual meeting of shareholders and that the size of the Board, until the conclusion of the 2027 annual meeting of shareholders, will not exceed seven directors. The Company also agreed to reimburse Broadwood, Yunqi Capital and Defender Capital for certain reasonable and documented out-of-pocket fees and expenses they have incurred. Each of Broadwood and Yunqi Capital were holders of more than 5% of the Company’s outstanding stock at the time the Company entered into the Cooperation Agreement. The Cooperation Agreement was reviewed and approved by the Company’s Board, and it reviewed and approved the payment of the fees and expenses incurred by Broadwood and Yunqi Capital. The Company paid $5,036,000 to Broadwood and $962,000 to Yunqi Capital, in accordance with the Cooperation Agreement. Note 17 - Subsequent Event Effective August 4, 2026, following an extensive global search, the Board appointed Warren Foust as President and Chief Executive Officer and a new member of the Board. Also effective August 4, 2026, Deborah Andrews, who served since February 2026 as Interim co-Chief Executive Officer alongside Mr. Foust, began serving as Executive Vice President. She also continues to serve as Chief Financial Officer. 19