Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited Condensed Consolidated Financial Statements and the related notes thereto appearing in Part I, Item 1 of this Quarterly Report. This discussion and analysis contains forward-looking statements that are based upon current expectations and involve risks, assumptions and uncertainties. You should review the section titled "Risk Factors" appearing in our 2024 Form 10-K and in Part II, Item 1.A of this Quarterly Report for a discussion of important risk factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements described in the following discussion and analysis. In addition, historical results and trends that might appear in this Quarterly Report should not be interpreted as being indicative of future operations.

Overview

We are a commercial-stage medical device company that develops and commercializes innovative platforms for performing minimally invasive surgical procedures in the brain. We have deployed significant resources to fund our efforts to develop the capabilities for enabling neurosurgery interventions, building an intellectual property portfolio, and identifying and building out commercial applications for the technologies developed by our company.

The foundational part of our business is providing medical devices for neurosurgery applications. Our primary medical device product, the ClearPoint Navigation System (the "ClearPoint system"), is an integrated system comprised of hardware components, disposable components, and intuitive, menu-driven software, which is in commercial use globally. The primary applications for the ClearPoint system are to target and guide the insertion of deep brain stimulation electrodes, biopsy needles, and laser catheters, as well as the infusion of pharmaceuticals into the brain. The ClearPoint system was originally designed for use in an MRI setting. In 2021, we launched the SmartFrame Array Neuro Navigation System and Software, which allow for operating room placement of the ClearPoint system, and in 2024, we commenced limited market release of the SmartFrame OR Stereotactic System, which allows for complete procedures to be performed in the operating room. In 2022, we commercialized the ClearPoint Prism Neuro Laser Therapy System as our first therapy product offering. We have exclusive global commercialization rights to the ClearPoint Prism Neuro Laser Therapy System through our Swedish partner, CLS.

The second part of our business is focused on partnerships in the biologics and drug delivery space. Our services include protocol consultation and solutions for preclinical study design and execution for studies relating to the delivery of pharmaceutical agents to the brain. Currently, we have more than 60 biologics and drug delivery customers who are evaluating using our products and services in trials to inject gene and cell therapies directly into the brain. These partnerships involve drug development programs that are at various stages of development ranging from preclinical research to late-stage regulatory trials for multiple distinct disease states. This part of our business potentially represents the largest opportunity for growth; however, our ability to grow in this market is dependent on our ability to maintain and establish new relationships with customers, such customers' continuation of research and development plans, and such customers' achievement of success in completion of clinical trials and subsequent regulatory approvals of their biologics and drugs.

Substantially all our revenue for the three and nine months ended September 30, 2025 and 2024 relates to: (i) sales of our ClearPoint system products and related services; and (ii) consulting services from our customers in the biologics and drug delivery space. We have financed our operations and internal growth primarily through the sale of equity securities and the issuance of notes payable. We have incurred significant losses since our inception in 1998 as we have devoted substantial efforts to research and development. As of September 30, 2025, we had accumulated losses of $209.1 million. We may continue to incur operating losses as we expand our ClearPoint system platform, consulting services to our pharmaceutical and other medical technology customers, and our business generally.

Factors Which May Influence Future Results of Operations

The following is a description of factors that may influence our future results of operations, and that we believe are important to an understanding of our business and results of operations.

Macroeconomic Trends

We continue to monitor the impacts of various macroeconomic trends, such as inflationary pressure, changes in monetary policy, decreasing consumer confidence and spending, the introduction of or changes in tariffs or trade barriers, and global or local recession. Such changes in domestic and global macroeconomic conditions may lead to increased costs for our business. Additionally, these macroeconomic trends could adversely affect our customers, which could impact their willingness to spend on our products and services, or their ability to make payments, which could harm our collection of accounts receivable and financial results. The world's financial markets remain susceptible to significant stresses, resulting in reductions in available credit and government spending, economic downturn or stagnation, foreign currency fluctuations and volatility in the valuations of securities generally. As a result, funding through capital markets and other funding sources may not be available in the future on commercially reasonable terms, if at all. The rapid development and fluidity of these situations precludes any prediction as to the ultimate impact they will have on our business, financial condition, results of operation and cash flows, which will depend largely on future developments.

Revenue

In 2010, we received 510(k) clearance from the United States Food and Drug Administration ("FDA") to market our ClearPoint system in the U.S. for general neurosurgical procedures; in February 2011 and May 2018, we also obtained CE marking for our ClearPoint system and SmartFlow cannula, respectively; and in June 2020, we obtained CE marking for version 2.0 of our ClearPoint software and our Inflexion head fixation frame. In January 2021, we received 510(k) clearance for the SmartFrame Array Neuro Navigation System. In September 2022, the ClearPoint Prism Neuro Laser Therapy System, for which we have exclusive global rights to commercialize, received 510(k) clearance through our Swedish partner, CLS. The Prism laser represents the first therapy product we have commercialized. In January 2024, we received 510(k) clearance from the FDA for the SmartFrame OR Stereotactic System.

In 2021, we started providing consulting services to our pharmaceutical and other medical technology customers for improving outcome predictability and optimizing preclinical and clinical workflows. Our expertise is concentrated in benchtop testing, preclinical studies, clinical trial support, regulatory consultation, and over-arching translation from the preclinical to the clinical setting to enhance accuracy and precision of drug delivery.

Future revenue from sales of our ClearPoint platform products and services is difficult to predict and may not be sufficient to offset our continuing research and development expenses and our increasing selling, general and administrative expenses.

Generating recurring revenue from the sale of products is an important part of our business model for our ClearPoint system. Our product revenue was $5.4 million and $16.6 million for the three and nine months ended September 30, 2025, respectively, and was almost entirely related to our ClearPoint system. Our service revenue was $3.5 million and $9.9 million for the three and nine months ended September 30, 2025, respectively, of which 89% and 90%, respectively, is related to the biologics and drug delivery service line.

Our revenue recognition policies are more fully described in Note 2 to the Condensed Consolidated Financial Statements included above in Part I, Item 1 in this Quarterly Report.

Our revenue from sales of products and services to our biologics and drug delivery customers comes from pharmaceutical and biotech companies, academic institutions, or customer-sponsored contract research organizations that are developing methods to deliver a wide variety of molecules, genes or proteins to targeted brain tissue or structures that would need to

bypass the blood-brain barrier for the treatment of a variety of disorders (our "Partners"). This is a novel area in which commercialization must be preceded by FDA-mandated clinical trials, which are expensive and time consuming to conduct, and for which the commercial success is uncertain, pending, in part, on the outcome of those trials. While our revenue from sales of products and services to our biologics and drug delivery customers is indicative of growth, the number of Partner relationships is also of importance as we recognize the possibility that some Partners' research will reach commercial success, and others may not. To the extent our Partners achieve commercial success, our expectation is that we will share in such success through our Partners' use of our products and services in their delivery of therapies. At September 30, 2025, we had more than 60 Partners, as compared to more than 50 Partners as of the same date in 2024.

Cost of Revenue

Cost of revenue includes the direct costs associated with the assembly and purchase of components for functional neurosurgery navigation products, biologics and drug delivery products, non-neurosurgery therapy products, and ClearPoint capital equipment and software that we have sold, and for which we have recognized the revenue in accordance with our revenue recognition policy, as well as labor hours and materials for the cost of providing preclinical, consulting, and service revenue. Cost of revenue also includes the allocation of manufacturing overhead costs and depreciation of loaned systems installed under our ClearPoint placement program, as well as provisions for obsolete, impaired, or excess inventory.

Research and Development Costs

Our research and development costs consist primarily of costs associated with the conceptualization, design, testing, and prototyping of our ClearPoint system products and enhancements. Such costs include salaries, travel, and benefits for research and development personnel; materials and laboratory supplies in research and development activities; outside consultant costs; and licensing costs related to technology not yet commercialized. We anticipate that, over time, our research and development costs may increase as we: (i) develop devices and services intended for delivery of therapeutics into the central nervous system; (ii) expand products into the operating room and therapeutics space; and (iii) expand the application of our technological platforms internationally.

Product development timelines, likelihood of success, and total costs can vary widely by product candidate. There are also risks inherent in the regulatory clearance and approval process. At this time, we are unable to estimate with any certainty the costs that we will incur in our efforts to expand the application of our technological platforms.

Sales and Marketing, and General and Administrative Expenses

Our sales and marketing, and general and administrative expenses consist primarily of salaries, incentive-based compensation, travel and benefits, including share-based compensation; marketing costs; professional fees, including fees for outside attorneys and accountants; occupancy costs; insurance; and other general and administrative expenses, which include, but are not limited to, corporate licenses, director fees, hiring costs, taxes, postage, office supplies, information technology and meeting costs. Our sales and marketing expenses are expected to continue to increase due to costs associated with the continued commercialization of our products and services and the increased headcount necessary to support growth in operations.

Critical Accounting Policies and Estimates

There have been no significant changes in our critical accounting policies and estimates during the nine months ended September 30, 2025, as compared to the critical accounting policies and estimates described in our 2024 Form 10-K.

Results of Operations

Three Months Ended September 30, 2025, Compared to the Three Months Ended September 30, 2024

NM - The percentage change is not meaningful.

Revenue. Total revenue was $8.9 million for the three months ended September 30, 2025, and $8.1 million for the three months ended September 30, 2024, which represents an increase of $0.7 million, or 9%.

Biologics and drug delivery revenue, which includes sales of disposable products and services related to customer-sponsored preclinical and clinical trials, stayed relatively consistent at $4.4 million for each of the three months ended September 30, 2025 and 2024. Service and other revenue increased $0.7 million due to new studies performed for our partners in the three months ended September 30, 2025, offset by a decrease in product revenue due to timing of the pharmaceutical partners' clinical and preclinical trials.

Neurosurgery navigation and therapy revenue, which primarily consists of disposable product commercial sales related to cases utilizing the ClearPoint system, increased 20% to $3.4 million for the three months ended September 30, 2025, from $2.9 million for the same period in 2024. The increase is driven by higher sales of Prism Laser Therapy, and the introduction

of our 3.0 operating room navigation software, which has positively impacted procedural volumes in the operating room during the three months ended September 30, 2025, compared to the same period in 2024.

Capital equipment and software revenue, consisting of sales of ClearPoint reusable hardware and software and related services, increased 25% to $1.0 million for the three months ended September 30, 2025, from $0.8 million for the same period in 2024 due to an increase in the sale of hardware and rental revenue.

Cost of Revenue and Gross Profit. Cost of revenue was $3.3 million, resulting in gross profit of $5.6 million for the three months ended September 30, 2025, and was $3.3 million, resulting in gross profit of $4.8 million for the three months ended September 30, 2024. Gross margin was 63% for the three months ended September 30, 2025, as compared to 60% in the same period in 2024. The increase in gross margin is primarily due to higher margins on biologics and drug delivery service revenue and mix of product sold for the three months ended September 30, 2025, as compared to the same period in 2024.

Research and Development Costs. Research and development costs were $3.5 million for the three months ended September 30, 2025, compared to $3.3 million for the same period in 2024, an increase of $0.1 million, or 4%. The increase was due primarily to higher product and software development costs.

Sales and Marketing Expenses.Sales and marketing expenses were $3.8 million for the three months ended September 30, 2025, compared to $3.5 million for the same period in 2024, an increase of $0.3 million, or 8%. This increase was due primarily to additional personnel costs, including share-based compensation, resulting from increases in headcount.

General and Administrative Expenses. General and administrative expenses were $3.6 million for the three months ended September 30, 2025, compared to $3.1 million for the same period in 2024, an increase of $0.4 million, or 14%. This increase was due primarily to higher personnel costs, including share-based compensation, of $0.2 million, as well as higher professional fees and information technology costs, each in the amount of $0.1 million.

Interest Income (Expense), net. Net interest expense was $0.5 million for the three months ended September 30, 2025, compared to net interest income of $0.2 million for the three months ended September 30, 2024. Interest expense increased from $0.2 million in the three months ended September 30, 2024 to $0.9 million in the three months ended September 30, 2025 as a result of the note payable entered into in May 2025. This was partially offset by interest income of $0.4 million in the three months ended September 30, 2025, which increased slightly from $0.3 million in the three months ended September 30, 2024, due to higher investment in U.S. Government debt securities. See Note 6 to the Condensed Consolidated Financial Statements included in Part 1, Item 1 in this Quarterly Report for additional information with respect to the note payable.

Nine Months Ended September 30, 2025, Compared to the Nine Months Ended September 30, 2024

NM - The percentage change is not meaningful.

Revenue. Total revenue was $26.6 million for the nine months ended September 30, 2025, and $23.6 million for the nine months ended September 30, 2024, which represents an increase of $2.9 million, or 12%.

Biologics and drug delivery revenue, which includes sales of disposable products and services related to customer-sponsored preclinical and clinical trials, increased 6% to $13.8 million for the nine months ended September 30, 2025, from $13.1 million for the same period in 2024. This increase is primarily attributable to $0.7 million of higher product revenue resulting from greater demand for disposables as multiple partners progress in their trials.

Neurosurgery navigation and therapy revenue, which primarily consists of disposable product commercial sales related to cases utilizing the ClearPoint system, increased 37% to $10.1 million for the nine months ended September 30, 2025, from $7.4 million for the same period in 2024. The increase is driven by an increased customer base, and higher sales for new offerings of SmartFrame OR, Prism Laser Therapy, and introduction of our 3.0 operating room software, during the nine months ended September 30, 2025, compared to the same period in 2024.

Capital equipment and software revenue, consisting of sales of ClearPoint reusable hardware and software and related services, decreased 18% to $2.6 million for the nine months ended September 30, 2025, from $3.2 million for the same period in 2024 due to a decrease in the placements of ClearPoint navigation capital and software and Prism laser units.

Cost of Revenue and Gross Profit. Cost of revenue was $10.3 million, resulting in gross profit of $16.3 million for the nine months ended September 30, 2025, as compared to $9.3 million, resulting in gross profit of $14.4 million for the nine months ended September 30, 2024. Gross margin was 61% for the nine months ended September 30, 2025, and broadly in line with gross margin of 61% in the same period in 2024.

Research and Development Costs. Research and development costs were $10.7 million for the nine months ended September 30, 2025, compared to $9.1 million for the same period in 2024, an increase of $1.6 million, or 18%. The increase was due primarily to higher product and software development costs.

Sales and Marketing Expenses.Sales and marketing expenses were $11.7 million for the nine months ended September 30, 2025, compared to $10.7 million for the same period in 2024, an increase of $1.0 million, or 10%. This increase was due primarily to additional personnel costs, including share-based compensation, resulting from increases in headcount, of $1.1 million, partially offset by lower travel costs of $0.1 million.

General and Administrative Expenses. General and administrative expenses were $11.1 million for the nine months ended September 30, 2025, compared to $8.7 million for the same period in 2024, an increase of $2.3 million, or 27%. This increase was due primarily to higher personnel costs, including share-based compensation, of $0.8 million, higher bad debt expense of $0.7 million, higher professional service fees of $0.4 million, and higher IT costs of $0.3 million.

Interest Income (Expense), net. Net interest expense was $0.5 million for the nine months ended September 30, 2025, compared to net interest income of $0.6 million for the nine months ended September 30, 2024. Interest expense increased from $0.5 million in the nine months ended September 30, 2024 to $1.3 million in the nine months ended September 30, 2025 due to the note payable entered into in May 2025. This was partially offset by interest income of $0.8 million in the nine months ended September 30, 2025, which decreased from $1.2 million in the nine months ended September 30, 2024. The decrease in interest income is mainly as a result of decreased investment in U.S. Government securities due to lower cash balances in the first half of 2025. See Note 6 to the Condensed Consolidated Financial Statements included in Part 1, Item 1 in this Quarterly Report for additional information with respect to the note payable.

Liquidity and Capital Resources

We have incurred net losses since our inception, which has resulted in a cumulative deficit at September 30, 2025 of $209.1 million. In addition, our use of cash from operations amounted to $11.8 million for the nine months ended September 30, 2025, and $9.0 million for the year ended December 31, 2024. Since inception, we have financed our operations principally from the sale of equity securities and the issuance of notes payable.

In May 2025, the Company entered into the 2025 SPA with the 2025 Investor relating to the purchase and sale in a registered direct offering of an aggregate of 275,808 shares of Company's common stock, par value $0.01 per share at a price of $12.69 per share, based on the trailing 30-trading day volume-weighted average price of the Company's common stock. The aggregate net proceeds to the Company from the offering totaled approximately $3.3 million after deducting offering expenses payable by the Company.

Contemporaneously with the 2025 SPA, the Company entered into the 2025 NPA under which the Company may sell to the 2025 Investor, and the 2025 Investor may buy from the Company, tranches of notes in an aggregate principal amount of up to $105.0 million. The net proceeds in connection with the issuance of the First Purchase Note, after deducting the debt discount and debt issuance costs of $0.6 million and $0.7 million, respectively, was approximately $28.7 million.

In March 2024, we completed a public offering of 2,653,848 shares of our common stock from which the net proceeds totaled approximately $16.2 million after deducting our payment of underwriting discounts and commissions and other offering expenses. In November 2024, we entered into an ATM Agreement pursuant to which we may offer and sell, from time to time, shares of our common stock, having aggregate sales proceeds of up to $50 million, subject to the terms and conditions of the ATM Agreement. We have not issued any shares of common stock under the ATM Agreement.

Additional information with respect to the stock offerings and the 2025 NPA is in Notes 8 and 6, respectively, to the condensed consolidated financial statements included in Part 1, Item 1 in this Quarterly Report.

As a result of these transactions and our business operations, our cash and cash equivalents totaled $38.2 million at September 30, 2025. In management's opinion, based on our current forecasts for revenue, expense and cash flows, our existing cash and cash equivalent balances at September 30, 2025, are sufficient to support our operations and meet our obligations for at least the next twelve months.

Cash Flows

Cash activity for the nine months ended September 30, 2025 and 2024 is summarized as follows:

Net Cash Flows from Operating Activities. Net cash flows used in operating activities for the nine months ended September 30, 2025 were $11.8 million, an increase of $4.1 million from the nine months ended September 30, 2024. This increase was primarily due to a higher net loss of $4.2 million and increased working capital requirements, mainly due to higher payments made as a result of bonus payouts. This was partially offset by an increase in non-cash expenses, including share-based compensation and the allowance for credit losses.

Net Cash Flows from Investing Activities.Net cash flows used in investing activities for the nine months ended September 30, 2025 were $0.5 million and related to equipment acquisitions.

Net cash flows used in investing activities for the nine months ended September 30, 2024 were nominal and related to equipment acquisitions.

Net Cash Flows from Financing Activities.Net cash flows provided by financing activities for the nine months ended September 30, 2025 consisted primarily of proceeds, net of financing costs and discount, of $28.7 million from the issuance of the note payable; proceeds, net of offering costs, of $3.3 million from the registered direct offering of common stock; partially offset by $1.7 million in payments for taxes related to shares withheld in connection with the vesting of restricted stock awards.

Net cash flows provided by financing activities for the nine months ended September 30, 2024 consisted of proceeds, net of offering costs, of $16.2 million received from the public offering of our common stock and $0.3 million in proceeds from the issuance of common stock under the employee stock purchase plan. This was partially offset by the repayment of the $10.0 million 2020 secured convertible note and payments of $0.3 million for taxes related to shares withheld in connection with the vesting of restricted stock awards.

Operating Capital and Capital Expenditure Requirements

To date, we have not achieved profitability. We may continue to incur net losses as we continue our efforts to expand the commercialization of our products and services and pursue additional applications for our technology platforms. Our cash balances are primarily held in a variety of demand accounts with a view to liquidity and capital preservation.

Because of the numerous risks and uncertainties associated with the development and commercialization of medical devices, we are unable to estimate the exact amounts of capital outlays and operating expenditures necessary to successfully commercialize our products and pursue additional applications for our technology platforms. Our future capital requirements will depend on many factors, including, but not limited to, the following: