Envoy Medical reports net loss of $3.93 million for Q3 2026

Cover page 11 changes

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For the quarterly period ended June September 30, 2026

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(Registrant's telephone number, including area code)

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Redeemable Warrants, each exercisable for one share of Class A Common Stock at an exercise price of $11.50 $115.00 per share COCHW The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

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Indicate by check mark whether the registrant

See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company,"

and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

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As of August 10, November 5, 2026, the registrant had 77,194,595 7,744,488 shares of Class A Common Stock, par value $0.0001 per share, issued and outstanding .

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For the Quarterly Period ended June September 30, 2026

PART I FINANCIAL INFORMATION

Financial statements 5 changes

Condensed Consolidated Balance Sheets as of June September 30, 2026 (Unaudited) and December 31, 2025 1

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six nine months ended June September 30, 2026 and 2025 2

Unaudited Condensed Consolidated Statements of Changes in Mezzanine Equity and Stockholders' Equity (Deficit) for the three and six nine months ended June September 30, 2026 and 2025 3

Unaudited Condensed Consolidated Statements of Cash Flows for the six nine months ended June September 30, 2026 and 2025 5

Notes to Unaudited Condensed Consolidated Financial Statements 6

Legal proceedings 30 changes

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On November 14, 2023, the Company, Whitney Haring-Smith (the former chief executive officer and a former director of the Company), Daniel Hirsch (the former chief financial officer of the Company), and Anzu SPAC GP I LLC were named as defendants in a complaint filed by Atlas Merchant Capital SPAC Fund I LP ("Atlas") in the Delaware Court of Chancery. Atlas alleges alleged that it was not allowed to redeem its shares of the Anzu Special Acquisition Corp I class A common stock and that the defendants acted to prevent Atlas's attempt to redeem its shares. The defendants assert that Atlas did not comply with the requirements for redeeming shares set forth in the Company's organizational documents. Atlas asserts asserted damages in the amount of approximately $ 9,400 , pre- and post-judgment interest, costs, and reasonable attorneys' fees. The Company has standard indemnification obligations to Dr. Haring-Smith and Mr. Hirsch. The Company believes that the lawsuit is meritless and has been defending this matter vigorously. On March 3, 2025, the court partially granted a motion to dismiss which dismissed and reduced some of the Counts and allegations in the amended complaint, which narrowed the theories and facts at issue in this litigation. On October 6, 2026, this matter was settled with no payment by the Company is unable to predict Atlas under the outcome of Dismissal Agreement. See Note 16 for additional information regarding this legal proceeding. matter.

The Company has business liability insurance to cover litigation costs exceeding $ 5,000 . As of June September 30, 2026 and December 31, 2025, the Company has not recorded accruals for potential losses related to any existing or pending litigation claims as the Company's management determined that there are no matters where a potential loss is probable and reasonably estimable.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except share and per share data)

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

(Dollars in thousands, except share and per

The Company timely remitted a tax payment to the IRS, the IRS later refunded those amounts to the Company and has asserted that interest is due retroactive to the original payment date. The Company believes that, because the IRS had possession and use of the funds for a portion of the relevant period and was not the result of a substantive tax underpayment by the Company, any interest computation should be limited to the period, if any, during which the Company had use of the refunded amounts. While the Company does not believe it is probable that interest will ultimately be owed, it is reasonably possible that the IRS could prevail. If so, the Company could be required to pay up to approximately $ 150 of interest related to this matter. As of June September 30, 2026, the Company has not accrued for interest related to the uncertain tax position .

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Net loss $ ( 5,982 ) $ ( 5,690 ) $ ( 10,333 ) $ ( 10,688 )

Less: Cumulative preferred dividends ( 1,290 ) ( 1,252 ) ( 2,640 ) ( 2,490 )

Stock-based compensation 7,039,538 2,164,238

Publicly Traded Warrants 14,166,666 14,166,666

Shortfall Warrants 1,135,499 3,209,511

Term Loan Warrants 3,500,000 3,500,000

Three Months Ended Six Nine Months Ended

September 30, September 30,

Net loss $ ( 3,932 ) $ ( 6,482 ) $ ( 14,265 ) $ ( 17,170 )

Less: Cumulative preferred dividends ( 1,308 ) ( 1,265 ) ( 3,948 ) ( 3,755 )

Net loss attributable to common stockholders, basic and diluted $ ( 7,272 5,240 ) $ ( 6,942 7,747 ) $ ( 12,973 18,213 ) $ ( 13,178 20,925 )

Weighted-average Class A Common Stock and pre-funded warrants outstanding, basic and diluted 104,039,109 21,383,852 86,584,007 21,355,388 10,434,466 2,185,161 9,256,928 2,152,262

Net loss per share attributable to common stockholders, basic and diluted $ ( 0.07 0.50 ) $ ( 0.32 3.55 ) $ ( 0.15 1.97 ) $ ( 0.62 9.72 )

Included within the weighted average shares of common stock outstanding for the three and six nine months ended June September 30, 2026 27,053,850 are 2,705,385 shares of Class A Common Stock issuable upon the exercise of the pre-funded warrants. respectively. The pre-funded warrants are exercisable at any time for nominal consideration, and as such, the shares are considered outstanding for the purpose of calculating basic and diluted net loss per share (See Note 9).

The Company's potentially dilutive securities below, presented based on amounts outstanding at each period end and representing the number of shares of Class A Common Stock issuable upon exercise, conversion, or vesting, as applicable, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted-average number of shares of Class A Common Stock outstanding noted above used to calculate both basic and diluted net loss per share attributable to stockholders of Class A Common Stock for these periods is the same.

Stock-based compensation 742,879 216,424

Series A Preferred Stock (as converted to Class A Common Stock) 3,588,406 3,588,406 358,841 358,841

Publicly Traded Warrants 1,416,667 1,416,667

Shortfall Warrants 113,550 320,951

Term Loan Warrants 350,000 350,000

September 2025 Offering Warrants 5,868,336 586,834 -

October 2025 Offering Warrants 9,248,136 924,814 -

Series A Warrants & February 2026 Placement Agent Warrants 123,750,000 12,355,000 -

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The Company has evaluated all events occurring through the date on which these unaudited condensed consolidated financial statements were issued, and during which time, nothing has occurred outside the normal course of business operations that would require disclosure, except for the following:

MD&A 5 changes

of Financial Condition and Results of Operations

The following analysis

on March 23, 2026 (the "Form 10-K"), which is accessible on the SEC's website at www.sec.gov. Unless otherwise indicated or the context otherwise requires, references in this section to the "Company," "Envoy Medical," "we,"

"us," "our" and other similar terms refer to Envoy Medical, Inc.

The following analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes included elsewhere in this Quarterly Report on Form 10-Q (this "Report"), as well as the information contained in the Company's Annual Report on Form 10-K, dated and filed with the Securities and Exchange Commission (the "SEC") on March 23, 2026 (the "Form 10-K"), which is accessible on the SEC's website at www.sec.gov. Unless otherwise indicated or the context otherwise requires, references in this section to the "Company," "Envoy Medical," "we," "us," "our" and other similar terms refer to Envoy Medical, Inc.

Forward-looking statements 291 changes

This Report contains certain

"forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section

"estimate," "expect," "intends," "may," "might," "plan," "possible,"

"potential," "predict," "project," "should," "will," "would" and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.

All forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to:

Stock, par value $0.0001 per share (the "Class A Common Stock");

This Report contains certain "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements other than statements of historical fact contained in this Report, including statements as to future results of operations and financial position, revenue and other metrics, products, business strategy and plans, objectives of management for future operations of the Company, market size and growth, competitive position and technological and market trends, are forward-looking statements. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "intends," "may," "might," "plan," "possible," "potential," "predict," "project," "should," "will," "would" and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. All forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to:

● changes in the market price of shares of our Class A Common Stock, par value $0.0001 per share (the "Class A Common Stock");

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● the outcome of litigation to which the Company is a party;

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Should one or more of these

You should read the following

of United States dollars ("$"), unless otherwise indicated.

We are a hearing health company

focused on development of fully implanted hearing solutions and providing innovative medical technologies across the hearing loss spectrum.

We believe that the Acclaim

Our first product, the Esteem

market. Unfortunately, the Esteem FI-AMEI failed to gain commercial traction, primarily due to a lack of reimbursement or insurance coverage from third-party payors.

Despite the commercial challenges,

approximately 1,000 Esteem FI-AMEI devices were implanted. Some devices were implanted in the early 2000s during clinical trials, providing

In late 2015, we made the

The Investigational Device

The IDE was approved as a "staged"

Each implanted study participant

The FDA will have at least

Our PMA submission will occur

We had net losses of $5,982 and

Should one or more of these risks or uncertainties materialize, or should any of the underlying assumptions prove incorrect, actual results may vary in material respects from those expressed or implied by these forward-looking statements. Nothing in this Report should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on these forward-looking statements. The Company does not give any assurance that it will achieve its expected results and does not undertake any duty to update these forward-looking statements, except as required by law.

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements as of June September 30, 2026 and December 31, 2025, and the three and six nine months ended June September 30, 2026 and 2025, together with the notes thereto included elsewhere in this Report. It should also be read in conjunction with the audited consolidated financial statements as of and for the years ended December 31, 2025 and 2024, together with related notes thereto included in the Form 10-K, which is accessible on the SEC's website at www.sec.gov.

All dollar amounts are expressed in thousands of United States dollars ("$"), unless otherwise indicated.

We are a hearing health and neuroprosthetics company focused on development of fully implanted hearing solutions and providing innovative technologies across the hearing loss spectrum. Our technologies are designed to shift the paradigm within the hearing industry and bring both providers and patients the hearing devices they desire. We are dedicated to pushing beyond the status quo to provide patients with improved access, usability, independence, and quality of life. We believe leveraging the ear's natural anatomy, rather than an external or sub-dermal artificial microphone, is the ideal way for people to hear. In recent years, we have focused almost exclusively on developing the fully implanted Acclaim® cochlear implant (the "Acclaim CI"), our lead product candidate.

We believe that the Acclaim CI is a first-of-its-kind cochlear implant. Our fully implanted technology includes a sensor designed to leverage the natural anatomy of the ear instead of a microphone to capture sound. The Acclaim CI is designed to address sensorineural hearing loss that is not adequately addressed by hearing aids. As part of the clinical trial, the Acclaim CI is intended for adults with severe-to-profound sensorineural hearing loss who have been deemed adequate candidates by a qualified physician. The Acclaim CI received the Breakthrough Device Designation from the United States Food and Drug Administration (the "FDA") in 2019.

Our first product, the Esteem ® Fully Implanted Active Middle Ear Implant ("Esteem FI-AMEI"), received FDA approval in 2010. The Esteem FI-AMEI is a fully implanted active middle ear hearing device and remains the only FDA approved fully implanted active hearing implant in the U.S. market. Unfortunately, the Esteem FI-AMEI failed to gain commercial traction, primarily due to a lack of reimbursement or insurance coverage from third-party payors.

Despite the commercial challenges, approximately 1,000 Esteem FI-AMEI devices were implanted. Some devices were implanted in the early 2000s during clinical trials, providing Envoy Medical with over two decades of experience with our implantable sensor technology. Throughout our experience, our sensor technology proved a viable alternative and robust option to external or implanted microphones.

In late 2015, we made the decision to shift our focus from the Esteem FI-AMEI to a new product that would leverage our sensor technology and incorporate it into a cochlear implant. As a result, we now have the Acclaim CI, a fully implanted cochlear implant. We believe that Acclaim CI gives us the opportunity to disrupt the existing cochlear implant market. The cochlear implant market is one that already has established market acceptance and reimbursement pathways. In the United States, before we can market a new Class III medical device, like the Acclaim CI, we must first receive FDA approval via the premarket application approval process.

The Investigational Device Exemption ("IDE") to begin a pivotal clinical study on the Acclaim CI was granted by the FDA in October of 2024. Seven investigational sites were selected prior to the end of 2024.

The IDE was approved as a "staged" clinical trial. The first stage allowed for enrollment of 10 study participants ("First Stage") prior to us having to formally request FDA approval to expand enrollment to the full subject cohort of 56 patients ("Second Stage"). Once the First Stage completed their 3-month follow-up visits, we submitted this preliminary clinical data to justify study expansion into the second and final stage. The FDA agreed that this data adequately characterized device effectiveness and our expansion request to the FDA was formally approved by the FDA on October 3, 2025. We completed enrollment of all 56 patients on March 10, 2025 2026 and all 56 patients completed their activation visits, when a patient's device is initially turned on for the first time, by April 16, 2026. On July 21, 2026, we announced that all 56 patients enrolled in the clinical trial have surpassed the 3-month milestone and on October 20, 2026 we announced that we have surpassed the six-month follow-up visit milestone for the clinical trial.

Each implanted study participant will be followed through their 12-month visit. After all 56 patients have been through their 12-month visits, the data will be collected and analyzed in accordance with the clinical study protocol and statistical analysis plan. Upon finalization of the results, we intend to submit a Premarket Approval ("PMA") application to the FDA. As of June 30, 2026, The first 10 pivotal trial patients implanted at the start of 2025 have reached the 12-month follow-up evaluation point during the second quarter of 2026. We expect all Stage 2 participants to complete their 12-month data collection by early Q2 2027, with a PMA submission to the FDA planned to follow a few months thereafter.

The FDA will have at least 180 days to review the PMA application. unless The FDA may take longer than 180 actual calendar days for the review if it "pauses the clock" during the 180 day review period (pausing the days counted) or requests a panel review. is requested. If a panel review is requested, it may add several months of additional review time to the PMA application. As a result, the earliest we currently anticipate obtaining the FDA's decision on our PMA application at some point within the second half is late Q4 of 2027; assuming that no panel review is requested. however, if the FDA pauses the clock or requests a panel review, is requested, the FDA's decision could extend to the first half of 2028.

Our PMA application will occur as four modular submissions so that completed sections modules can be provided to the FDA for review over time, rather than waiting to compile and submit the entire submission at once after the clinical trial is completed. We expect plan to submit a total of four modules, with the final module containing final clinical trial data. By utilizing the modular PMA pathway, we expect to engage with the FDA throughout the review process, allowing for earlier regulatory feedback while establishing a series of defined development milestones. On June 30, 2026, we announced the submission of the first module of our is uncertain and there can be no guarantees of whether the Acclaim CI will ever successfully receive FDA approval. In addition, PMA application. On October 12, 2026, we cannot predict announced the effects that changes to federal regulatory staffing, funding, and policies and procedures will have on submission of the timeline and ultimate second module of our PMA application.

The FDA approval process is uncertain and there can be no guarantees of whether the Acclaim CI will ever successfully receive FDA approval. In addition, we cannot predict the effects that changes to federal regulatory staffing, funding, and policies and procedures will have on the timeline and ultimate FDA approval decision. As a result, we cannot guarantee that we will receive FDA approval on a specific timeline, or at all.

$5,690 We had net losses of $3,932 and $6,482 for the three months ended June September 30, 2026 and 2025, respectively, $10,333 $14,265 and $10,688 $17,170 for the six nine months ended June September 30, 2026 and 2025, respectively, and had an accumulated deficit of $326,369 $331,609 and $313,396 as of June September 30, 2026 and December 31, 2025, respectively. We have funded our operations to date primarily through the issuance of equity securities and debt. We expect to continue to incur net losses for the foreseeable future, and expect our research and development expenses, sales and marketing expenses, general and administrative expenses, and capital expenditures will continue to increase. In particular, we expect our expenses to increase as we continue the clinical trial forthe for the Acclaim CI and seek the necessary regulatory approvals for our product candidate. In addition, if and when we seek and obtain regulatory approval to commercialize the Acclaim CI in the United States, we will also incur increased expenses in connection with commercialization and marketing of such product. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials, if any, and our expenditures on other research and development activities. We anticipate that our expenses will increase significantly in connection with our ongoing activities, if and as we:

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We expect that our financial

The Acclaim CI has not yet

We expect that our financial performance may fluctuate significantly from quarter-to-quarter and year-to-year due to the development status of our Acclaim CI product and our efforts to obtain regulatory approval and commercialize the Acclaim CI product.

The Acclaim CI has not yet been approved for sale. We do not expect to generate any product sales from the Acclaim CI unless and until we successfully complete development and obtain regulatory approval for our product candidate. If we obtain regulatory approval for the Acclaim CI, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution. As a result, until such time, if ever, that we can generate substantial product revenue, we expect to finance our cash needs through equity offerings, debt financings or other capital sources, including collaborations, licenses or similar arrangements. However, we may be unable to raise additional funds or enter into such other arrangements when needed or on favorable terms, if at all. Any failure to raise capital as and when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies, including our research and development activities. If we are unable to raise capital, we will need to delay, reduce, or terminate planned activities to reduce costs.

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Our business and financial

performance are impacted by macroeconomic conditions. Global macroeconomic challenges, such as the effects of the ongoing war between

Furthermore, a recession

or market correction resulting from macroeconomic factors could materially affect our business and the value of our Class A Common Stock.

Adverse macroeconomic conditions,

Our business and financial performance are impacted by macroeconomic conditions. Global macroeconomic challenges, such as the effects of the ongoing war between Russia and Ukraine, wars and armed conflicts in the Middle East, supply chain constraints, tariffs and trade wars, market uncertainty, volatility in exchange rates, inflationary trends, interest rates, and evolving dynamics in the global trade environment have impacted our business, financial performance, and our ability to raise capital.

Furthermore, a recession or market correction resulting from macroeconomic factors could materially affect our business and the value of our Class A Common Stock. The occurrence of any such events may lead to reduced disposable income which could adversely affect the number of Esteem FI-AMEI implants and replacement components sold as a result of customer and patient reluctance to seek treatment due to financial considerations.

Adverse macroeconomic conditions, including pandemics or international tensions, could also result in significant disruption of global economic conditions and consumer trends, as well as a significant disruption in financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity.

On October 26, 2026, we completed a one-for-ten reverse stock split ("Reverse Stock Split"), which reduced the number of shares of our Class A Common Stock that were issued and outstanding immediately prior to the effectiveness of the Reverse Stock Split. The number of shares of our authorized Class A Common Stock was not affected by the Reverse Stock Split and the par value of our Class A Common Stock remained unchanged at $0.0001 per share. No fractional shares were issued in connection with the Reverse Stock Split.

Proportional adjustments were made to the number of shares of Class A Common Stock awarded and available for issuance under our equity incentive plans, as well as the exercise price and the number of shares issuable upon the exercise or conversion of our outstanding stock options and other equity securities under our equity incentive plans. All outstanding warrants were also adjusted in accordance with their terms.

All share and per share amounts of Class A Common Stock in this Report have been adjusted to reflect the Reverse Stock Split.

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Currently, we derive substantially

all our revenue from the sale of the Esteem FI-AMEI implants and replacement components to Esteem FI-AMEI implants. We enter arrangements with patients to provide them with the Esteem FI-AMEI device, personal programmer devices, sound processor / battery assembly ("Battery")

Upon commercialization of

Cost of goods sold includes

We expect cost of goods sold

Currently, we derive substantially all our revenue from the sale of the Esteem FI-AMEI implants and replacement components to Esteem FI-AMEI implants. We enter arrangements with patients to provide them with the Esteem FI-AMEI device, personal programmer devices, sound processor / battery assembly ("Battery") replacements, and/or an optional Care Plan, each of which are outputs of our ordinary activities in exchange for consideration. Revenue from product sales is recognized upon transfer of control of the product to a customer, which occurs at a point in time, when we are notified the product has been implanted or used by the customer in a surgical procedure. New implantations of the Esteem FI-AMEI are not expected to be more than a few per year and may be as low as zero. Although we believe it to be unlikely, Esteem FI-AMEI implantations could potentially increase with favorable reimbursement policy and coverage changes. We will continue our efforts to pursue positive reimbursement changes for fully implanted active middle ear implants. There will be continued nominal revenue from replacement of sound processors for patients who need a new Battery.

Upon commercialization of our Acclaim CI product, we expect that Acclaim CI revenues will more than exceed our Esteem FI-AMEI revenue. We are targeting FDA approval on our PMA application for the Acclaim CI late in the second half of 2027 or first half of 2028, depending on the FDA's review process and timeline.

Cost of goods sold includes direct and indirect costs related to the manufacturing and distribution of the Esteem FI-AMEI, including materials, labor costs for personnel involved in the manufacturing process, distribution-related services, indirect overhead costs, and charges for excess and obsolete inventory reserves and inventory write-offs.

We expect cost of goods sold to increase or decrease in absolute dollars primarily as, and to the extent, our revenue grows or declines, respectively.

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Research and development

FI-AMEI product. We expense R&D costs as incurred, which include:

Research and development ("R&D") expenses consist of costs incurred for our research activities, primarily our discovery efforts and the development of the Acclaim CI product. We also incur R&D costs related to continuing to support, and improving upon where possible, our Esteem FI-AMEI product. We expense R&D costs as incurred, which include:

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● costs of laboratory testing including supplies and acquiring, developing, and manufacturing study materials; and

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Costs for certain development

Our R&D expenses are

The duration, costs and timing

Costs for certain development activities are recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors, service providers and our clinical sites.

Our R&D expenses are currently tracked on a project basis. The majority of our R&D expenses incurred during the three and six nine months ended June September 30, 2026 and 2025 were for the development of the Acclaim CI, including expenses for clinical trial activities and patient enrollment for the Acclaim clinical trials to obtain regulatory approval for commercial sales. We cannot determine with certainty the size, duration, or completion costs of future clinical trials, or if or when they may be completed. Furthermore, we do not know if the CI pivotal clinical trials will show positive or negative results, or what those results will mean for regulatory approval or commercialization efforts. trial.

Our products require human clinical trials to obtain regulatory approval for commercial sales. We cannot determine with certainty the size, duration, or completion costs of future clinical trials, or if or when they may be completed. Furthermore, we do not know if the clinical trials will show positive or negative results, or what those results will mean for regulatory approval or commercialization efforts.

The duration, costs and timing of future clinical trials and development of our products will depend on a variety of factors, including:

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A change in the outcome of

R&D activities are central

to our business model. We expect that our R&D expenses will continue to increase for the foreseeable future as we continue the clinical trials for the Acclaim CI product and prepare the product for possible commercialization, should it gain regulatory approval(s). If the

Additionally, future commercial and regulatory factors beyond our control will impact our clinical development program and plans.

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and 211 more changes in the filing

Market risk 10 changes

We are exposed to a variety

Foreign currency risk is

We are exposed to a variety of market risks, including currency risk, credit and counterparty risk, and inflation risk, as set out below. We manage and monitor these exposures to ensure appropriate measures are implemented in a timely and effective manner.

Foreign currency risk is the risk that the value of a financial instrument fluctuates because of the change in foreign exchange rates. We primarily operate in the United States and Germany with most of the transactions settled in the United States dollar. Our presentation and functional currency is the United States dollar. Certain bank balances, deposits and other payables are denominated in the Euro, which exposes us to foreign currency risk. However, any transactions that may be conducted in foreign currencies are not expected to have a material effect on our results of operations, financial position or cash flows.

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Financial instruments that

With respect to accounts

Inflationary factors, such

Financial instruments that potentially expose us to concentrations of credit risk consist primarily of cash and accounts receivable, net. Periodically, we maintain deposits in accredited financial institutions in excess of federally insured limits. We maintain cash with financial institutions that management believes to be of high credit quality. We have not experienced any losses on such accounts and do not believe we are exposed to any unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

With respect to accounts receivable, we perform credit evaluations of our customers and do not require collateral. There have been no material losses on accounts receivable. There were no customers that accounted for 10% or more of sales for the three or six nine months ended June September 30, 2026 and 2025.

Inflationary factors, such as increases in our cost of goods sold and selling and operating expenses, may adversely affect our operating results. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, a high rate of inflation in the future may have an adverse effect on our ability to maintain and increase our gross margin and decrease our selling and marketing and operating expenses as a percentage of our revenue if the selling prices of our products do not increase as much as or more than these increased costs.

Controls and procedures 25 changes

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Disclosure controls and procedures

Under the supervision and

with the participation of our management, including our Chief Executive Officer and Interim Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2026, as such term is defined in Rules 13a-15(e) and 15d-15(e)

Notwithstanding the conclusion

Management concluded the

Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Accounting Officer and Vice President of Finance, we evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2026, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on the evaluation of our disclosure controls and procedures as of June September 30, 2026, our Chief Executive Officer and Interim Chief Financial Accounting Officer and Vice President of Finance concluded that, as of such date, our disclosure controls and procedures were not effective due to the existence of the material weaknesses in the Company's internal control over financial reporting described below.

Notwithstanding the conclusion by our Chief Executive Officer and Interim Chief Financial Accounting Officer and Vice President of Finance that our disclosure controls and procedures as of June September 30, 2026 were not effective, and notwithstanding the material weaknesses in our internal control over financial reporting described below, management believes that the unaudited condensed consolidated financial statements and related financial information included in this Report fairly present in all material respects our financial condition, results of operations and cash flows as of the dates presented, and for the periods ended on such dates, in conformity with accounting principles generally accepted in the United States ("U.S. GAAP").

Material Weaknesses in Internal Control Over Financial Reporting

Management concluded the following material weaknesses existed as of June September 30, 2026:

● The Company's management has not yet to fully implement implemented a formal risk assessment process that addresses risks relevant to financial reporting objectives, including cybersecurity and fraud risks.

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Considering this, the Company

Considering this, the Company performed additional procedures and analyses as deemed necessary to ensure that its financial statements were prepared in accordance with third-party service provider and is in the process of conducting a formal risk assessment and implementation of a plan to remediate these material weaknesses. These remediation measures are ongoing and include the following steps: U.S. GAAP.

The Company is working with an outsourced internal audit provider and has conducted a formal risk assessment and implementation of a plan to remediate these material weaknesses. The outsourced internal audit provider is performing testing of control effectiveness as controls are designed, implemented and maintained. A third-party information technology service provider has also been engaged to assist in executing on the implemented information technology controls. These remediation measures are ongoing and include the following steps:

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Framework" issued by the Committee of Sponsoring Organizations of the Treadway Commission.

The Company intends to implement

these remediation measures during the year ending December 31, 2026.

There was no change in the Company's internal control over

financial reporting that occurred during the fiscal quarter ended June 30, 2026 that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

● designing, documenting, and implementing security management and change management policies and controls over information technology systems, including but not limited to adjusting user access levels and implementing external logging on activity and periodic review of such logs; and

● engaging an accounting advisory firm to assist with the, documentation, evaluation, remediation and testing of the Company's internal control over financial reporting based on the criteria established in "Internal Control - Integrated Framework" issued by the Committee of Sponsoring Organizations of the Treadway Commission.

The Company has continued to advance its remediation efforts related to internal control over financial reporting. During the period, the Company substantially completed its assessment of the design of controls related to its financial reporting and business processes and began testing the operating effectiveness of those controls. The Company, with the assistance of third-party service providers, is also conducting walkthroughs and evaluating the design of controls within its information technology environment. The Company expects to continue implementing and evaluating these remediation measures during the remainder of the year ending December 31, 2026.

Changes in Internal Control Over Financial Reporting

The Company is in the process of remediating its material weaknesses in internal control over financial reporting. During the fiscal quarter ended September 30, 2026, the Company engaged a third-party information technology service provider to assist with the implementation of information technology controls designed to enhance the Company's internal control over financial reporting.

In addition, the Company has undertaken a number of remediation initiatives to strengthen its control environment, including the appointment of a Chief Accounting Officer and Vice President of Finance, the engagement of a third-party service provider to assist with remediation of the identified material weaknesses and the development of an effective internal control over financial reporting environment, and the redesign of business processes supporting significant classes of transactions to accommodate enhanced internal controls over financial reporting.

Risk factors 2 changes

As a smaller reporting company,

As a smaller reporting company, we are not required to provide the information called for by this Item. However, for a discussion of the material risks, uncertainties and other factors that could have a material effect on us, please refer to the risk factors disclosed in the section of the Form 10-K titled "Risk Factors," as filed with the SEC on March 23, 2026.

Unregistered sales of stock 5 changes

Use of Proceeds, and Issuer Purchase of Equity Securities

During the fiscal quarter

On May 29, 2026, we issued 140,000

shares of Common Stock to a public relations firm in exchange for services to be provided by the firm. The shares of Common Stock were issued in reliance on the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933.

During the fiscal quarter ended June September 30, 2026, there were no unregistered sales of our securities that were not reported in a Current Report on Form 8-K. except as follow:

Other information 1 change

During the fiscal quarter ended June September 30, 2026, no director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K .

Exhibits 414 changes

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

Cash $ 19,679 $ 3,739

Accounts receivable, net 49 34

Other receivable 17 19

Inventories 1,579 1,546

Prepaid expenses and other current assets 593 941

Total current assets 21,917 6,279

Property and equipment, net 921 1,035

Operating lease right-of-use asset (related party) 818 886

Prepaid expenses and other assets 293 358

Total assets $ 23,949 $ 8,558

Liabilities, mezzanine equity, and stockholders' equity (deficit)

Current liabilities:

Accounts payable $ 2,035 $ 2,920

Accrued expenses 10,032 7,639

Forward purchase agreement warrant liability 14 24

Product warranty liability, current portion 255 287

Operating lease liability, current portion (related party) 132 174

Other current liabilities 166 518

Total current liabilities 12,634 11,562

Product warranty liability, net of current portion 1,543 1,605

Operating lease liability, net of current portion (related party) 678 745

Private warrant liability 4,668 5,835

Publicly traded warrant liability 705 551

Other liability 27 27

Total liabilities 20,255 20,325

Commitments and contingencies (see Note 14)

Warrants issued to placement agent as part of the 2025 Offerings (see Note 9) 391 391

Stockholders' equity (deficit)

Series A Preferred Stock, $ 0.0001 par value; 100,000,000 shares authorized and 10,000,000 shares designated as of June 30, 2026 and December 31, 2025; 4,126,667 shares issued and outstanding as of June 30, 2026 and December 31, 2025 - -

Class A Common Stock, $ 0.0001 par value; 400,000,000 shares authorized as of June 30, 2026 and December 31, 2025; 77,194,595 shares issued and outstanding as of June 30, 2026 and 28,934,960 shares issued and outstanding as of December 31, 2025 8 3

Additional paid-in capital 329,786 301,355

Accumulated deficit ( 326,369 ) ( 313,396 )

Accumulated other comprehensive loss ( 122 ) ( 120 )

Total stockholders' equity (deficit) 3,303 ( 12,158 )

Total liabilities, mezzanine equity, and stockholders' equity (deficit) $ 23,949 $ 8,558

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS

(In thousands, except share and per share amounts)

Net revenues $ 51 $ 78 $ 90 $ 124

Costs and operating expenses:

Cost of goods sold 278 234 591 460

Research and development 3,132 2,485 6,774 5,233

Sales and marketing 181 361 345 719

General and administrative 2,029 2,068 3,908 3,889

Total costs and operating expenses 5,620 5,148 11,618 10,301

Operating loss ( 5,569 ) ( 5,070 ) ( 11,528 ) ( 10,177 )

Other income (expense):

Change in fair value of forward purchase agreement warrant liability 23 37 10 458

Loss on offering and change in fair value of private warrant liability ( 838 ) - 1,167 -

Change in fair value of publicly traded warrant liability 236 ( 32 ) ( 154 ) 162

Interest expense (related party) - ( 624 ) - ( 1,119 )

Other income (expense), net 166 ( 1 ) 172 ( 12 )

Total other income (expense), net ( 413 ) ( 620 ) 1,195 ( 511 )

Net loss ( 5,982 ) ( 5,690 ) ( 10,333 ) ( 10,688 )

Cumulative preferred dividends ( 1,290 ) ( 1,252 ) ( 2,640 ) ( 2,490 )

Net loss attributable to common stockholders, basic and diluted $ ( 7,272 ) $ ( 6,942 ) $ ( 12,973 ) $ ( 13,178 )

Net loss per share attributable to common stockholders, basic and diluted $ ( 0.07 ) $ ( 0.32 ) $ ( 0.15 ) $ ( 0.62 )

Weighted-average Class A Common Stock and pre-funded warrants outstanding, basic and diluted 104,039,109 21,383,852 86,584,007 21,355,388

Other comprehensive (loss) income:

Foreign currency translation adjustment ( 1 ) ( 2 ) ( 2 ) 4

Other comprehensive (loss) income ( 1 ) ( 2 ) ( 2 ) 4

Comprehensive loss $ ( 5,983 ) $ ( 5,692 ) $ ( 10,335 ) $ ( 10,684 )

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES

IN MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY (DEFICIT)

(In thousands, except share amounts)

the Three and Six Months Ended June 30, 2026

Balance at December 31, 2025 368,694 $ 391 4,126,667 $ - 28,934,960 $ 3 $ 301,355 $ ( 313,396 ) $ ( 120 ) $ ( 12,158 )

Dividends on the Series A Preferred Stock - - - - - - - ( 1,350 ) - ( 1,350 )

Stock-based compensation - - - - - - 239 - - 239

Net proceeds from issuance of Class A Common Stock, Issued Pre-Funded Warrants, and Series A Warrants in February 2026 Offering - - - - 47,946,150 5 27,777 - - 27,782

Foreign currency translation adjustment - - - - - - - ( 1 ) ( 1 )

Net loss - - - - - - - ( 4,351 ) - ( 4,351 )

Balance at March 31, 2026 368,694 $ 391 4,126,667 $ - 76,881,110 $ 8 $ 329,371 $ ( 319,097 ) $ ( 121 ) $ 10,161

Dividends on the Series A Preferred Stock - - - - - - - ( 1,290 ) - ( 1,290 )

and 334 more changes in the filing