Hyperfine(HYPR) - 2025 Q2 - Quarterly Report

FORM 10-Q Filing Information Registrant Information Provides the basic identification details for Hyperfine, Inc, including its legal name, jurisdiction of incorporation, address, telephone number, and SEC filing status - Hyperfine, Inc. is incorporated in Delaware with its principal executive offices in Guilford, Connecticut[2] Registrant Information | Indicator | Value | | :---------- | :---- | | Commission File Number | 001-39949 | | Filer Status | Non-accelerated filer, Smaller reporting company, Emerging growth company | | Class A Common Stock Outstanding (as of Aug 1, 2025) | 63,525,713 shares | | Class B Common Stock Outstanding (as of Aug 1, 2025) | 15,055,288 shares | Cautionary Statement Regarding Forward-Looking Statements Nature of Forward-Looking Statements The report contains forward-looking statements based on management's beliefs and assumptions, which are inherently subject to risks and are not guarantees of future performance - Forward-looking statements relate to future events or financial performance, including plans, strategies, and prospects[8] - Statements are based on management's beliefs and assumptions, but actual results may differ due to inherent risks and uncertainties[8] Key Areas of Forward-Looking Statements Forward-looking statements cover critical aspects of the Company's operations, including product development, commercialization, regulatory approvals, and financial performance - Success, cost, and timing of product development activities[8] - Commercialization and adoption of existing and future product offerings[8] - Ability to obtain and maintain regulatory approval for products[8] - Size and growth potential of markets for products and services[9] - History of losses and ability to continue as a going concern[9] - Estimates regarding expenses, revenue, capital requirements, and needs for additional financing[9] - Impact of market conditions, global and economic factors (inflation, geopolitical conflicts, export controls, tariffs)[10] - Intense competition and competitive pressures[10] - Ability to retain or recruit key employees and directors[10] PART I — FINANCIAL INFORMATION Item 1. Financial Statements Presents the unaudited condensed consolidated financial statements for Hyperfine, Inc, including balance sheets, statements of operations, and cash flows, with detailed notes Condensed Consolidated Balance Sheets (unaudited) Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | ASSETS | | | | Cash and cash equivalents | $25,420 | $37,645 | | Total current assets | $40,096 | $53,710 | | Total assets | $45,234 | $58,901 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Total current liabilities | $7,988 | $8,729 | | Warrant liabilities | $1,194 | — | | Total liabilities | $10,108 | $9,861 | | Total stockholders' equity | $35,126 | $49,040 | - Total assets decreased by $13,667 thousand (23.2%) from December 31, 2024, to June 30, 2025, primarily due to a decrease in cash and cash equivalents[13] - Total stockholders' equity decreased by $13,914 thousand (28.4%) from December 31, 2024, to June 30, 2025, mainly due to accumulated deficit[13] Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited) Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total sales | $2,696 | $3,631 | $4,833 | $6,926 | | Total cost of sales | $1,368 | $1,828 | $2,622 | $3,769 | | Gross margin | $1,328 | $1,803 | $2,211 | $3,157 | | Total operating expenses | $10,923 | $12,649 | $22,708 | $24,653 | | Loss from operations | $(9,595) | $(10,846) | $(20,497) | $(21,496) | | Net loss and comprehensive loss | $(9,225) | $(10,156) | $(18,643) | $(20,004) | | Net loss per common share, basic and diluted | $(0.12) | $(0.14) | $(0.24) | $(0.28) | - Total sales decreased by 25.8% for the three months ended June 30, 2025, and by 30.2% for the six months ended June 30, 2025, compared to the respective prior periods[16] - Net loss improved by 9.2% for the three months ended June 30, 2025, and by 6.8% for the six months ended June 30, 2025, compared to the respective prior periods[16] - Operating expenses decreased by 13.6% for the three months ended June 30, 2025, and by 7.9% for the six months ended June 30, 2025, primarily due to reduced R&D and G&A expenses[16] Condensed Consolidated Statements of Changes in Stockholders' Equity (unaudited) Changes in Stockholders' Equity (in thousands, except share amounts) | Metric | Balance, Dec 31, 2024 | Net Loss (Q1 2025) | Issuance of common stock and warrants, net | Stock-based compensation expense (Q1 2025) | Balance, Mar 31, 2025 | Net Loss (Q2 2025) | Stock-based compensation expense (Q2 2025) | Balance, June 30, 2025 | | :--------------------------------------- | :-------------------- | :------------------- | :----------------------------------------- | :--------------------------------------- | :-------------------- | :------------------- | :--------------------------------------- | :--------------------- | | Total Stockholders' Equity | $49,040 | $(9,418) | $2,385 | $945 | $43,114 | $(9,225) | $547 | $35,126 | - Total stockholders' equity decreased from $49,040 thousand at December 31, 2024, to $35,126 thousand at June 30, 2025, primarily due to net losses[19] - The company issued 4,511,278 shares of Class A common stock and warrants, generating $2,385 thousand in additional paid-in capital during the first quarter of 2025[19] Condensed Consolidated Statements of Cash Flows (unaudited) Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(17,159) | $(21,893) | | Net cash used in investing activities | $(992) | $(216) | | Net cash provided by financing activities | $6,056 | $114 | | Net decrease in cash and cash equivalents and restricted cash | $(12,095) | $(21,995) | | Cash, cash equivalents and restricted cash, end of period | $25,578 | $53,809 | - Net cash used in operating activities decreased by $4,734 thousand (21.6%) for the six months ended June 30, 2025, compared to the same period in 2024[23] - Net cash provided by financing activities significantly increased to $6,056 thousand in 2025, primarily due to proceeds from common stock and warrant issuance[23] - Overall net decrease in cash and cash equivalents and restricted cash improved by $9,900 thousand (45.0%) in 2025 compared to 2024[23] Notes to Condensed Consolidated Financial Statements (unaudited) 1. Organization and Description of Business Hyperfine, Inc develops and commercializes the AI-powered portable ultra-low-field (ULF) MR brain imaging Swoop® system, which has multiple FDA clearances and international marketing authorizations - Hyperfine, Inc develops AI-powered portable ultra-low-field (ULF) MR brain imaging systems, specifically the Swoop® system[25] - Received initial FDA 510(k) clearance for brain imaging in 2020[26] - Received 510(k) clearance for ninth-generation AI-powered software in July 2024, reducing scan times[26] - Received 510(k) clearance for tenth-generation Optive AI™ software in May 2025, enhancing image clarity and detail[27] - Next-generation Swoop® system with Optive AI™ software features new hardware for highest signal-to-noise ratio and exceptional image quality[27] - Swoop® system has marketing authorization in EU (CE Mark), UK (UKCA Mark), Canada, Australia, and New Zealand[28] 2. Summary of Significant Accounting Policies Outlines the company's accounting policies, going concern assumption, risks, and use of significant estimates in financial reporting - The financial statements are prepared on a going concern basis, but the company has limited revenues and a history of negative working capital, requiring future financing[29][30] - Subject to risks from geopolitical and macroeconomic impacts (conflicts, inflation, tariffs)[35] - Relies on single-source manufacturers and suppliers, posing supply chain disruption risks[36] - Cash and cash equivalents are deposited with major financial institutions, exceeding insured amounts at times[43] - Significant estimates include revenue recognition, allowance for credit losses, inventory valuation, deferred tax assets, stock-based compensation, and warrant liabilities valuation[43] Customer Concentration (Revenue > 10%) | Period | Number of Customers | Revenue Contribution (in thousands) | | :-------------------------------- | :------------------ | :-------------------------------- | | Three Months Ended June 30, 2025 | 4 | $402, $362, $321, $310 | | Six Months Ended June 30, 2025 | None | N/A | | Three Months Ended June 30, 2024 | 4 | $721, $434, $394, $378 | | Six Months Ended June 30, 2024 | 2 | $1,146, $721 | - A new accounting pronouncement, ASU 2024-03, on expense disaggregation disclosures, is effective for fiscal years beginning after December 15, 2026, and is currently being evaluated for impact[42] 3. Revenue Recognition Details revenue disaggregation by product type, recognition timing, and remaining performance obligations Disaggregated Revenue (in thousands) | Revenue Type | Recognition Pattern | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------- | :------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Device | Point in time | $2,128 | $2,970 | $3,650 | $5,674 | | Service | Over time | $568 | $661 | $1,183 | $1,252 | | Total revenue | | $2,696 | $3,631 | $4,833 | $6,926 | Contract Balances (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Accounts receivable, net | $5,057 | $5,956 | | Unbilled receivables - current | $1,892 | $2,349 | | Unbilled receivables - non-current | $937 | $825 | | Deferred revenue | $1,370 | $1,460 | | Long term deferred revenue | $914 | $1,054 | - Revenue recognized from beginning deferred revenue balance: $430 thousand (Q2 2025), $829 thousand (H1 2025), $489 thousand (Q2 2024), $879 thousand (H1 2024)[49] - Remaining performance obligations: $5,939 thousand (June 30, 2025) vs $5,644 thousand (Dec 31, 2024)[50] - Expects to recognize ~17% of remaining performance obligations in FY2025 and ~83% in FY2026 and thereafter[55] 4. Fair Value of Financial Instruments Financial instruments are measured at fair value using a three-tier hierarchy, with warrant liabilities classified as Level 3 - Cash and cash equivalents are measured at fair value using Level 1 inputs (quoted prices in active markets)[61] Warrant Liabilities Fair Value (in thousands) | Date | Fair Value | | :---------------- | :--------- | | June 30, 2025 | $1,194 | | February 12, 2025 | $2,858 | - Warrant liabilities are measured at fair value using Level 3 inputs, with a decrease in fair value from February 12, 2025, to June 30, 2025, primarily due to changes in Class A common stock price[61][135] 5. Inventories Details the composition of inventory, which consists of raw materials and finished goods, and shows a decrease in total value Inventories (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :----------- | :------------ | :---------------- | | Raw materials | $2,463 | $3,070 | | Finished goods | $2,419 | $2,762 | | Total inventories | $4,882 | $5,832 | - Total inventories decreased by $950 thousand (16.3%) from December 31, 2024, to June 30, 2025[63] 6. Property and Equipment, Net Property and equipment, net, remained stable, with depreciation expense detailed for the reporting periods Property and Equipment, Net (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Total historical cost | $7,163 | $6,679 | | Less: Accumulated depreciation | $(4,041) | $(3,557) | | Property and equipment, net | $3,122 | $3,122 | Depreciation Expense (in thousands) | Period | 2025 | 2024 | | :-------------------------------- | :--- | :--- | | Three Months Ended June 30, | $283 | $253 | | Six Months Ended June 30, | $512 | $516 | 7. Right-of-Use (ROU) Assets and Leases Liabilities Details operating lease ROU assets and liabilities for corporate offices and a warehouse Operating Lease Balances (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Operating lease ROU assets | $254 | $341 | | Current lease liabilities | $238 | $269 | | Non-current lease liabilities | $12 | $78 | - Weighted-average remaining lease term: 14 months[67] - Annual weighted-average discount rate: 9.78%[67] - Future minimum commitments: $136 thousand for 2025 and $114 thousand thereafter[68] 8. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities decreased, driven primarily by lower bonuses and contracted services Accrued Expenses and Other Current Liabilities (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Bonuses | $1,277 | $2,144 | | Contracted services | $657 | $1,755 | | Legal fees | $474 | $176 | | Payroll and related benefits | $559 | $756 | | Operating lease liabilities | $238 | $269 | | Other | $225 | $473 | | Total | $3,430 | $5,573 | - The decrease of $2,143 thousand (38.4%) was mainly driven by lower bonuses and contracted services[69] 9. Stockholders' Equity Details changes in stockholders' equity, including capital raised from stock offerings and equity plan activity - Under the ATM program, 1,579,912 Class A common shares were issued as of June 30, 2025, for net proceeds of $1,633 thousand[71] - In February 2025, the company issued 4,511,278 Class A common shares and warrants in a registered direct offering, generating $6,000 thousand in gross proceeds[72] - Outstanding stock options decreased from 18,396,536 at January 1, 2025, to 17,016,565 at June 30, 2025, due to exercises and forfeitures/cancellations[74] - Outstanding RSUs increased significantly from 138,902 at January 1, 2025, to 2,567,691 at June 30, 2025, primarily due to new hire and annual employee grants[79] Stock-Based Compensation Expense (in thousands) | Functional Line Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of sales | $48 | $24 | $66 | $48 | | Research and development | $367 | $387 | $712 | $724 | | Sales and marketing | $71 | $47 | $134 | $86 | | General and administrative | $61 | $716 | $580 | $1,348 | | Total | $547 | $1,174 | $1,492 | $2,206 | 10. Net Loss Per Share Reports basic and diluted net loss per share, noting that all common equivalent shares were anti-dilutive Net Loss Per Share (Basic and Diluted) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Loss (in thousands) | $(9,225) | $(10,156) | $(18,643) | $(20,004) | | Weighted-average shares used to compute net loss per share (basic and diluted) | 78,077,118 | 72,041,332 | 76,893,733 | 71,987,688 | | Basic and dilutive net loss per share | $(0.12) | $(0.14) | $(0.24) | $(0.28) | - The inclusion of outstanding stock options, RSUs, and warrants would have been anti-dilutive for all periods presented due to the net loss position[81][83] 11. Income Taxes The effective income tax rate was 0.0% due to a full valuation allowance against net deferred tax assets - The effective tax rate was 0.0% for the three and six months ended June 30, 2025, due to a full valuation allowance against deferred tax assets[85][86] - The primary reconciling items to the federal statutory rate of 21.0% were deferred state income taxes, R&D credits, stock-based compensation, and the valuation allowance[85] - The One Big Beautiful Bill Act (OBBBA), enacted on July 4, 2025, will be evaluated for its impact on future tax rates[87] 12. Related Party Transactions Details related party transactions with 4Catalyzer Corporation (4C) for office space and administrative services Related Party Payments to 4C (in thousands) | Service | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | | :---------------- | :------------------------------- | :----------------------------- | :------------------------------- | :----------------------------- | | Rent | $115 | $203 | $120 | $248 | | Master Services Agreement | $33 | $58 | $31 | $65 | - As of June 30, 2025, $59 thousand was due to 4C for expenses paid on Hyperfine's behalf[89] 13. Commitments and Contingencies Outlines commitments related to a 401(k) plan, BMGF grants, and purchase orders, with no material legal contingencies - No matching contributions were made to the 401(k) plan for the reported periods[90] - Awarded $4.9 million in grants from BMGF (2020-2021) for deploying 25 Swoop® systems for a multi-site study, completed by February 2024[91] - Awarded an additional $3.354 million BMGF grant in May 2023 to develop scalable neurodevelopment measurement via ULF MRI in neonates/infants in low-to-middle income countries through February 2026[91] - During H1 2025, completed $492 thousand in grant deliverables and received $616 thousand in cash funding[92] - As of June 30, 2025, restricted cash of $158 thousand was offset by deferred grant funding[92] - Purchase commitments are primarily short-term and generally allow for cancellation or rescheduling[92] - The company is not a party to any material litigation and has not recorded any liability for indemnification obligations[93][94] 14. Reportable Segments and Geographic Information The company operates as a single business segment with all long-lived assets located in the United States - The company operates in one business segment, managed by the CEO as the chief operating decision maker[95] - All long-lived assets are located in the United States[96] Non-U.S. Revenue (in thousands) | Period | 2025 | 2024 | | :-------------------------------- | :--- | :--- | | Three Months Ended June 30, | $492 | $1,901 | | Six Months Ended June 30, | $1,566 | $4,335 | 15. Subsequent Events No subsequent events requiring disclosure were identified through the financial statement issuance date - No subsequent events requiring disclosure were identified through the financial statement issuance date[97] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Provides management's perspective on financial condition, results of operations, key performance metrics, and critical accounting policies Overview Hyperfine is a health technology company commercializing its AI-powered portable ULF MR brain imaging Swoop® system to increase access to MRI in various care settings - Hyperfine's mission is to revolutionize patient care globally through accessible, affordable, AI-powered portable ULF MR brain imaging with the Swoop® system[100] - Swoop® system is the first FDA-cleared, portable, ULF, MR brain imaging system[101] - Estimated U.S. total addressable market for Swoop® system device placements is over $16 billion[102] - The system integrates deep learning (AI) to enhance image quality and reduce scan artifacts[103] - Received FDA 510(k) clearance for ninth-generation software (July 2024) and tenth-generation Optive AI™ software (May 2025), improving scan times and image clarity[105] - Next-generation Swoop® system with Optive AI™ software features new hardware for exceptional low-field MRI image quality[106] Key Performance Metrics Management monitors total revenues and Swoop® system units sold, both of which decreased year-over-year Key Performance Metrics | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenues (in millions) | $2.7 | $3.6 | $4.8 | $6.9 | | Total Swoop® system units sold | 8 | 13 | 14 | 26 | - Total revenues decreased by 25.8% (Q2) and 30.2% (H1) YoY, primarily due to fewer units sold[109] - Total Swoop® system units sold decreased by 38.5% (Q2) and 46.2% (H1) YoY[109] Factors Affecting Results of Operations Key factors influencing results include technical innovation, U.S. commercialization, and global expansion - Continuous investment in technical innovation, including AI and cloud technology, to improve image quality and develop new applications[110] - U.S. commercialization efforts expanding beyond critical care to emergency departments and neurology clinics, supported by the next-generation Swoop® system with Optive AI™ software[111] - International expansion in Canada, Europe, Australia, and New Zealand, bolstered by CE Mark and UKCA Mark approval for ninth-generation software[112][113] - Grant funding from the Bill and Melinda Gates Foundation (BMGF) supports global expansion and deployment of Swoop® systems in low-to-middle income countries for neurodevelopment research[114] Results of Operations Compares results of operations year-over-year, showing decreased sales but an improved net loss due to reduced operating expenses and a gain from warrant liabilities Sales Performance (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (%) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (%) | | :---------- | :------------------------------- | :------------------------------- | :--------- | :----------------------------- | :----------------------------- | :--------- | | Device sales | $2,128 | $2,970 | (28.4)% | $3,650 | $5,674 | (35.7)% | | Service sales | $568 | $661 | (14.1)% | $1,183 | $1,252 | (5.5)% | | Total sales | $2,696 | $3,631 | (25.8)% | $4,833 | $6,926 | (30.2)% | - Device sales decreased primarily due to lower units sold, partially offset by an increase in average selling price[118][119] - Service sales decreased due to one-time revenue in 2024 and a subscription business model in prior years[120][121] Cost of Sales Performance (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (%) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (%) | | :---------------- | :------------------------------- | :------------------------------- | :--------- | :----------------------------- | :----------------------------- | :--------- | | Device cost of sales | $1,097 | $1,422 | (22.9)% | $2,082 | $2,921 | (28.7)% | | Service cost of sales | $271 | $406 | (33.3)% | $540 | $848 | (36.3)% | | Total cost of sales | $1,368 | $1,828 | (25.2)% | $2,622 | $3,769 | (30.4)% | | Percentage of revenue | 50.7% | 50.3% | | 54.3% | 54.4% | | - Cost of device sales decreased due to lower units sold[122][123] - Cost of service sales decreased due to lower headcount and infrastructure costs[124] Operating Expenses (in thousands) | Expense Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (%) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (%) | | :----------------------- | :------------------------------- | :------------------------------- | :--------- | :----------------------------- | :----------------------------- | :--------- | | Research and development | $4,541 | $5,959 | (23.8)% | $9,578 | $11,529 | (16.9)% | | General and administrative | $3,859 | $4,421 | (12.7)% | $8,067 | $8,851 | (8.9)% | | Sales and marketing | $2,523 | $2,269 | 11.2% | $5,063 | $4,273 | 18.5% | | Total operating expenses | $10,923 | $12,649 | (13.6)% | $22,708 | $24,653 | (7.9)% | - R&D expenses decreased due to lower headcount and consulting expenses[125][126] - G&A expenses decreased primarily due to lower stock-based compensation[128][129] - Sales and marketing expenses increased due to higher salary and benefits and marketing expenses[130][131] Other Income/Expense (in thousands) | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (%) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (%) | | :-------------------------------- | :------------------------------- | :------------------------------- | :--------- | :----------------------------- | :----------------------------- | :--------- | | Interest income | $239 | $675 | (64.6)% | $556 | $1,471 | (62.2)% | | Change in fair value of warrant liabilities | $46 | — | NM | $1,664 | — | NM | | Other income (expense), net | $85 | $15 | NM | $(366) | $21 | NM | - Interest income decreased due to lower cash balances[132][133] - Gain from change in fair value of warrant liabilities (H1 2025) was $1.7 million, primarily due to changes in Class A common stock price[134][135] - Other income (expense), net, decreased for H1 2025 due to financing costs allocated to warrant liabilities, partially offset by favorable foreign exchange[136][137] Liquidity and Capital Resources The company has a history of net losses and expects existing cash to fund operations for at least 12 months, but may require additional financing - Funded operations primarily through common stock, preferred stock, and warrants[138] - Incurred a net loss of $18.6 million for H1 2025 and an accumulated deficit of $313.1 million as of June 30, 2025[139] - Cash and cash equivalents: $25.4 million as of June 30, 2025[139] - Expects existing cash and sales to fund operations for at least 12 months, but future cash needs may accelerate[140] - Filed a $150 million shelf registration statement in November 2023, including a $50 million 'at-the-market' (ATM) equity program[141] - Under ATM, 1,579,912 shares of Class A common stock sold for $1,633 thousand net proceeds as of June 30, 2025[141] - Closed a $6.0 million gross proceeds registered direct offering of 4,511,278 Class A common shares and warrants in February 2025[141] - Future cash requirements depend on market adoption, sales/marketing expansion, R&D costs, regulatory approvals, and competitive developments; inability to obtain additional funds could lead to delays or cessation of operations[143][144] Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(17,159) | $(21,893) | | Net cash used in investing activities | $(992) | $(216) | | Net cash provided by financing activities | $6,056 | $114 | | Net decrease in cash, cash equivalents, and restricted cash | $(12,095) | $(21,995) | - Net cash used in operating activities decreased due to lower net loss and favorable changes in working capital[146][147] - Net cash used in investing activities increased due to higher purchases of property and equipment[149][150] - Net cash provided by financing activities significantly increased due to proceeds from the issuance of common stock and warrants[151][152] Critical Accounting Policies and Significant Judgments and Estimates No material changes were made to critical accounting policies, which rely on significant estimates and assumptions - Financial statements require significant estimates and assumptions, which are evaluated on an ongoing basis[157] - No material changes to critical accounting policies were reported, except for the evaluation of ASU 2024-03[158][159] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks from interest rates, inflation, and foreign exchange fluctuations - Interest Rate Risk: Primarily affects cash, cash equivalents, and restricted cash; a 0.5 percentage point decrease in interest rates would decrease earnings before income taxes by $0.1 million annually[161][162] - Inflation Risk: Not deemed to have a material effect on the business, but inability to offset higher costs through price increases could be harmful[163] - Foreign Exchange Risk: Limited exposure as most transactions are in U.S. dollars; no hedging strategies are currently utilized[164] Item 4. Controls and Procedures Disclosure controls and procedures were deemed effective, with no material changes to internal controls - Disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025[165] - No material changes in internal control over financial reporting occurred during the three months ended June 30, 2025[166] PART II — OTHER INFORMATION Item 1. Legal Proceedings The company is not currently a party to any material legal proceedings - The company is not currently involved in any material legal proceedings[169] Item 1A. Risk Factors No material changes to risk factors were reported, except for an update on international trade disputes - No material changes to risk factors from the 2024 Annual Report on Form 10-K, except for an update on international trade disputes[170] - Changes in U.S. trade policy, including new or increased tariffs, could raise material or component costs, reducing margins or impacting product affordability[171] - Retaliatory tariffs could delay supplies and adversely affect international market operations or growth[171] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This item is not applicable for the reporting period - Not applicable[172] Item 3. Defaults Upon Senior Securities This item is not applicable for the reporting period - Not applicable[174] Item 4. Mine Safety Disclosures This item is not applicable for the reporting period - Not applicable[175] Item 5. Other Information No Rule 10b5-1 trading arrangements were adopted, modified, or terminated by officers or directors - No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted, modified, or terminated by officers or directors during the three and six months ended June 30, 2025[176] Item 6. Exhibits Lists the exhibits filed with the report, including officer certifications and XBRL documents - Includes Certifications of the Principal Executive Officer and Principal Financial Officer pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002[178] - Contains Inline XBRL Instance Document, Taxonomy Extension Schema Document, and Cover Page Interactive Data File[178] Signatures Authorized Signatories The report was duly signed by the President and CEO, and the CAO and CFO on August 13, 2025 - The report was signed by Maria Sainz (President and CEO) and Brett Hale (CAO, CFO, Treasurer, and Corporate Secretary) on August 13, 2025[182]