Vivos Therapeutics, Inc.: Form 10-Q for the period ended Jun 30, 2026

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes to those statements included elsewhere in this Quarterly Report on Form 10-Q. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Some of the numbers included herein have been rounded for the convenience of presentation. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors. See “Cautionary Note Regarding Forward-Looking Statements.”

Overview

We are a revenue stage medical technology and healthcare services company focused on the development and commercialization of innovative treatment alternatives for patients with dentofacial abnormalities and/or patients diagnosed with mild to severe obstructive sleep apnea (“OSA”) and snoring in adults. We believe our technologies and conventions represent a significant improvement in the treatment of mild to severe OSA versus other treatments such as CPAP or palliative oral appliance therapies. Our alternative treatments are part of The Vivos Method.

The Vivos Method is an advanced therapeutic protocol, which often combines the use of customized oral appliance specifications and proprietary clinical treatments developed by our company and prescribed by specially trained dentists in cooperation with their medical colleagues. Published studies have shown that using our customized appliances and clinical treatments led to significantly lower Apnea Hypopnea Index scores and have improved other conditions associated with OSA. Nearly 75,000 patients have been treated to date worldwide with our entire current suite of products by more than 2,000 trained dentists.

In June 2025, we acquired all assets, including operating assets such as sleep testing, diagnostics, and treatment centers of SCN. The Acquisition marked a milestone in the pivot to our medical provider-focused sales, marketing distribution model for our innovative OSA appliances. Under the new model, SCN will provide sleep disorder patients with the opportunity to be candidates for our advanced, proprietary and FDA-cleared CARE oral medical devices, oral appliances and additional adjunctive therapies and methods. Under customary agreements designed to comply with applicable corporate practice of medicine law, our operation of SCN allows us to manage and capture both diagnostic and diagnostic consulting revenues, representing new higher margin revenue streams for us, as well as potential Vivos appliance and related product and service revenue.

See Note 1 to the accompanying financial statements for additional background information on our Company and current product and service offerings.

Material Items, Trends and Risks Impacting Our Business

We believe that the following items and trends may be useful in better understanding our results of operations.

VIP Enrollments (Service Revenue). Enrolling dental practices as VIPs has historically been the first step in our ability to generate new revenue. As part of the VIP enrollment fee, we enter into a service contract with VIPs under which they receive training on the use of the Vivos treatment modalities. VIPs have the ability to start generating revenue for us and themselves after this training.

In addition to enrollment service revenue, we offer additional services, such as our Billing Intelligence Services offering, and MyoSync (formally MyoCorrect) orofacial myofunctional therapy services, which was introduced in April 2021. Revenue for these services is recognized as our performance obligations are satisfied in accordance with ASC 606.

Because of our 2024 marketing and distribution business model pivot, which was accelerated by our June 2025 acquisition of SCN, we have become primarily focused on engaging in strategic collaborations or acquisitions to market the benefits of the Vivos treatment modalities to dentists and other medical providers, including our cooperative relationships with various medical providers to deliver diagnostic and medical consultation services to people across North America who suffer from OSA. As such, while we will continue to recognize some VIP enrollment revenue through 2026, we believe such revenue will become immaterial.

We recognize revenue on VIP enrollments once the contract is executed, payment is received, and as our performance obligations are satisfied in accordance with ASC 606.

Product Sales Revenue. Vivos treatment “case starts” are paramount to our business, as case starts lead to appliance orders and related revenue. Once a provider is fully trained, we encourage them to start cases. However, our historic experience had been that VIPs typically start slowly as they introduce The Vivos Method into their practices. The slow acceptance rate Vivos appliances with providers led us to consider other business models, most notably the medical provider-focused alliance marketing and distribution model announced in 2024 and the 2025 acquisition of SCN, to provide services and sell appliance product. In our new model, our biggest challenge to date has been hiring, equipping and training personnel at SCN locations in the Vivos Method, as well as insurance reimbursement. Navigating these challenges has led to increases in service revenue (including sleep testing) and our goal is to increase case starts and appliance sales as well. Since our SCN acquisition, we have been unable to generate sufficient revenues to pay for all of our expenses, including debt service, so our business primary goal is to increase revenues through SCN and also consider other acquisitions or alliances as a means of increasing revenue from services and appliance sales.

In addition, an important aspect of our strategy to increase product revenues relates to the products and related intellectual property we acquired in March 2023 from Advanced Facialdontics, LLC (“AFD”), including a custom single arch device with an FDA 510(k) clearance for treating TMD and/or Bruxism (teeth grinding or clenching). We have rebranded the AFD products as Vivos Versa, Vivos Vida and Vivos Vida Sleep.

Clinical Trial Work. Our efforts to engage in research to demonstrate the clinical efficacy of our products and obtain additional regulatory clearances for the use of our products is an important aspect of our overall strategy. In this regard, on May 29, 2023, we and Stanford University executed an agreement to commence a sponsored clinical research study to evaluate the efficacy of our FDA-cleared DNA appliance compared to the standard of care, CPAP for treatment of sleep apnea. Our DNA device is currently indicated for the treatment of mild to severe sleep apnea and jaw repositioning in adults (and in the case of severe OSA, along with positive airway pressure and/or myofunctional therapy, as needed) and has an FDA clearance intended to reduce nighttime snoring and to treat moderate and severe obstructive sleep apnea in children, 6 - 17 years of age who are diagnosed with snoring and/or moderate or severe obstructive sleep apnea and need orthodontic treatment. Enrollment of 150 patients with moderate to severe sleep apnea (apnea-hypopnea index score of 15 or greater) will be randomly assigned to either treatment with our FDA-cleared DNA appliance or CPAP. The protocol has been finalized, and enrollment began in 2024. Late 2024, our clinical study conducted in collaboration with Stanford University and evaluating the DNA and CPAP for the treatment of OSA, was placed on hold by Stanford University. The decision to pause the study was made due to low recruitment into the study. The study is still on hold as of 2026.

We are working with Stanford University to address the concerns that led to the hold and has continued engaged discussions with the university. While we believe these efforts will facilitate the resumption of the study, there can be no assurance that the hold will be lifted in a timely manner, or at all. Any delay or failure to resolve the issues could impact the development timeline and future prospects for the study. We remain committed to the highest standards of patient safety, scientific integrity, and regulatory compliance and will provide updates as material developments occur. This trial may not meet its designated endpoints, and therefore additional FDA clearances for the DNA device may not be obtained.

Distribution Agreements. During 2023, we entered into distribution collaborations with third parties to expand access of our products to potential patients. We hope that these strategic initiatives will lead to revenue growth opportunities for us in 2024 and beyond, and our ability to capitalize on these initiatives is expected to be a material aspect of our medical provider-focused sales and marketing program going forward.

Also, in October 2023, we announced an exclusive distribution agreement with NOUM DMCC, a Dubai-based company focused on diagnostic testing and treatment product distribution for healthcare providers and hospital networks treating obstructive sleep apnea patients throughout the Middle East-North Africa region. With regulatory approvals pending, there was no revenue from this collaboration in 2025 or year to date, 2026.

Inflation. The U.S. has been experiencing a period of inflation which has increased (and may continue to increase) our and our suppliers’ costs as well as the end cost of our products to consumers. To date, we have been able to manage inflation risk without a material adverse impact on our business or results of operations. However, inflationary pressures (including increases in the price of raw material components of our appliances) made it necessary for us to adjust our standard pricing for our appliance products in 2022 and will be revisited in 2026. The full impact of such price adjustments on sales or demand for our products is not fully known at this time and may require us to adjust other aspects of our business as we seek to grow revenue and, ultimately, achieve profitability and positive cash flow from operations.

An additional inflation-related risk is the Federal Reserve’s response, which up to this point has been to slightly decrease interest rates, however, the perceived decrease was lower than what was expected. Such actions have, in times past, created unintended consequences in terms of the impact on housing starts, overall manufacturing, capital markets, and banking. If such disruptions become systemic, as occurred in the recession of 2008, then the impact on our revenue, earnings and access to capital of both inflation and inflation-fighting responses would be impossible to know or calculate.

Supply Chain. From time to time, we may experience supply chain challenges due to forces beyond our control. For example, the Suez Canal blockage earlier in 2021 caused some delay in shipments of SleepImage® rings from China. Changes in U.S. or foreign trade policy, including the imposition of new tariffs, increases in existing tariffs or changes in customs classifications, could increase our costs. Overall, however, as our appliances are made in the U.S., we have not experienced significant supply chain issues as a result of COVID-19 or otherwise, although this may change in future periods.

Middle East Hostilities. In addition, geopolitical instability in the Middle East continues to create uncertainty in global economic conditions and commercial activity. Hostilities in the region, including the attacks by Hamas on Israel in October 2023, Israel’s subsequent military responses, and more recent U.S. and Israeli military actions involving Iran, have contributed to heightened regional and global tensions. These developments, combined with the ongoing effects of Russia’s invasion of Ukraine that began in February 2022, have intensified supply chain constraints, increased commodity price volatility, disrupted international trade flows, creating. If an economic recession or depression commences and is sustained, it could have a material adverse effect on our business as demand for our products could decrease. Capital markets uncertainty, with public stock price decreases and volatility, could make it more difficult for us to raise capital when needed.

Potential Nasdaq Delisting. Given that our stockholders’ equity at December 31, 2025 and June 30, 2026 was less than $2.5 million, we are presently not in compliance with the Nasdaq Stock Market’s (“Nasdaq”) minimum stockholders’ equity requirement (the “Equity Requirement”). We are seeking to regain compliance by raising new funding in the form of equity and reducing costs. However, we will be faced with delisting proceedings which will distract management and cost resources to remedy.

We have a history of challenges of maintaining compliance with the Nasdaq’s continuing listing requirements. We have been subject to two Nasdaq listing deficiencies, one related to Nasdaq’s $1.00 minimum bid price requirement (the “Minimum Bid Requirement”) and a second related to the Equity Requirement.

On September 21, 2023, we received a written notice from the Nasdaq staff confirming that since, as of that date, we failed to meet the Minimum Bid Requirement, and because as of the period ended June 30, 2023 we also failed the Equity Requirement, Nasdaq would commence delisting proceedings against us. As permitted under Nasdaq rules, we appealed the Nasdaq staff’s determination and requested a hearing (the “Hearing”) before a Nasdaq Hearing Panel (the “Hearing Panel”). The Hearing request stayed any delisting or suspension action by the Nasdaq staff pending the issuance of the Hearing’s Panel decision. The Hearing took place on November 9, 2023.

Prior to the date of the Hearing, we effectuated a reverse stock split of our issued and outstanding shares of common stock at a ratio of 1-for-25 (the “Reverse Stock Split”). The Reverse Stock Split became effective on October 25, 2023, and our common stock began trading on a post-Reverse Stock Split basis on the Nasdaq on October 27, 2023. To satisfy the Minimum Bid Requirement, our common stock was required to trade at above $1.00 per share for at least 10 trading days, and this was achieved on November 9, 2023. We therefore have regained compliance with the Minimum Bid Requirement.

At the Hearing on November 9, 2023, we presented our plan to regain compliance with the Equity Requirement, which included raising additional equity capital. On November 30, 2023, we received a letter from the Hearings Panel that, subject to certain conditions, the Hearings Panel granted our request to continue to be listed on Nasdaq. On February 23, 2024 we presented our plan of compliance to the Hearings Committee. On May 6, 2024, we received written notice from the Nasdaq staff indicating that we had regained compliance with the Equity Requirement.

On May 16, 2024, we received a further written notice from Nasdaq indicating that, as of March 31, 2024, we failed to comply with the Equity Requirement. On June 25, 2024, we reported in a Current Report on Form 8-K that we believed we had stockholders’ equity of at least $2.5 million as of the date of the filing of such report as a result of our closing of a $7.5 million equity private placement on June 10, 2024.

On June 27, 2024, we met with the Panel to discuss our past, current, and anticipated future compliance with the Equity Requirement, and requested the continued listing of its securities on Nasdaq.

On July 5, 2024, we were notified that the Panel granted our request for continued listing on Nasdaq, subject to our filing of the Form 10-Q for the quarter ended June 30, 2024, with the Securities and Exchange Commission, evidencing our compliance with the Equity Requirement. We made such filing in a timely manner.

On April 17, 2026, we received a letter (“Letter”) from the Listing Qualifications Staff (the “Staff”) of Nasdaq indicating that the Company’s stockholders’ equity as reported in its Annual Report on Form 10-K for the year ended December 31, 2025 (the “Form 10-K”), did not satisfy the continued listing requirement under the Equity Requirement. As reported in its Form 10-K, as of December 31, 2025 we had a negative stockholders’ equity of approximately $1.55 million. The Staff’s notice has no immediate impact on the listing of the Company’s common stock on Nasdaq.

On June 5, 2026, the Company received a notice from the Listing Qualifications Staff of Nasdaq indicating that, based on the closing bid price of the Company’s common stock from April 23, 2026 through June 4, 2026, the Company was no longer in compliance with the Minimum Bid Requirement.

We have taken affirmative steps since December 31, 2025 to remedy the Minimum Stockholders’ Equity Requirement. Specifically, as previously reported, the Company engaged in two equity financing transactions during the first quarter ended March 31, 2026 for aggregate gross proceeds of $6.8 million: a $4.6 million warrant exercise inducement transaction and $2.25 million private placement with an existing investor. The Company also engaged in a $2 million private placement in the second quarter ended June 30, 2026 with one new and one existing investor. While these equity financings do not in and of themselves cure the Minimum Stockholders’ Equity Requirement deficiency, they demonstrate our ability to raise funding to bolster its stockholders’ equity.

In accordance with the Nasdaq Listing Rules, we timely submitted a plan to regain compliance with the Stockholders’ Equity Requirement for the Staff’s consideration. If the plan is accepted, the Staff may grant us an extension period of up to 180 calendar days from the date of the deficiency notice (or through October 14, 2026) to regain compliance with the Minimum Stockholders’ Equity Requirement.

We anticipate that our new medical provider-focused strategic marketing and distribution alliance model will also positively impact our revenue growth and stockholders’ equity in upcoming fiscal quarters. However, there is a risk that we will be unable to raise sufficient capital, reduce costs sufficiently or generate sufficient revenue or operating results to maintain compliance with the Equity Requirement. If we fail to achieve ongoing compliance and our common stock is delisted by Nasdaq, such delisting would likely have a material adverse effect on our stock price, the ability of our stockholders to buy or sell their common stock, our ability to raise capital and on our reputation, all of which could make it significantly more difficult to operate.

CFO Transition. Effective July 31, 2026, Bradford Amman voluntarily resigned as Chief Financial Officer and Secretary of the Company. Mr. Amman’s resignation was not the result of any disagreement with the Company on any matter relating to its operations, accounting policies or practices, financial reporting, internal controls, or disclosures. Concurrently, the Board of Directors appointed Roman Franklin as Chief Financial Officer and principal financial officer pursuant to a managed services agreement with The CFO Portal, LLC, a related-party arrangement. Mr. Amman agreed to provide transitional and advisory services for a period following his resignation under specified compensation terms.

Key Components of Consolidated Statements of Operations

Net revenue. We recognize revenue when we satisfy our performance obligations over time as our customers receive the benefit of the promised goods and services, which generally occurs over a short period of time. Performance obligations with respect to appliance sales are typically satisfied at a point in time by shipping or delivering products to our VIPs or to the sleep clinic, through our new strategic alliance model. In the case of enrollment or service revenue, upon our satisfaction of performance obligations associated with VIP enrollments. Revenue consists of the gross sales price, net of estimated allowances, discounts, and personal rebates that are accounted for as a reduction from the gross sale price.

In the case of product purchased by clinics managed by our subsidiary for inclusion in a treatment protocol, the sales price of the Vivos device is recognized by us and becomes a component of cost of sales of the treatment center service provided to the patient. For the treatment centers, the intercompany account is used to fulfil the account payable obligation and recognize the expense of the goods and services in cost of sales.

Cost of sales. Cost of goods sold primarily consists of direct costs attributable to the purchase from third party suppliers and related products. It also includes freight costs, fulfillment, distribution, and warehousing costs related to products sold.

Sales and marketing. Sales and marketing costs primarily consist of personnel costs for employees engaged in sales and marketing activities, commissions, advertising and marketing costs, website enhancements, and conferences for our sales and marketing staff.

General and administrative expenses. General and administrative (“G&A”) expenses consist primarily of personnel costs for our administrative, human resources, finance and accounting employees, and executives. General and administrative expenses also include contract labor and consulting costs, travel-related expenses, legal, auditing and other professional fees, rent and facilities costs, repairs and maintenance, and general corporate expenses.

Depreciation and amortization expense. Depreciation and amortization expense is comprised of depreciation expense related to property and equipment, amortization expense related to leasehold improvements, and amortization expense related to identifiable intangible assets.

Other income. Other income relates to the excess warrant fair value and change in fair value of warrant liability and contingent consideration for the purchase of SCN.

Results of Operations

Comparison of the three and six months ended June 30, 2026 and 2025

Our consolidated statements of operations for the three and six months ended June 30, 2026 and 2025 (which includes incremental revenue recognized from the operations of SCN since June 10, 2025) are presented below (dollars in thousands):

Comparison of the three months ended June 30, 2026 and 2025

Revenue

Revenue increased by approximately $1.3 million, or 35%, to approximately $5.2 million for the three months ended June 30, 2026 compared to $3.8 million for the three months ended June 30, 2025. The increase in total revenue during the second quarter of 2026 was impacted by an increase of approximately $1.9 million in service revenue and a decrease of approximately $0.5 million in product revenue. The decrease in product revenue is attributable to a decrease in appliance sales to VIPs of approximately $1.1 million. offset by a decrease of approximately $0.5 million in discounts offered and an increase in diagnostic reports of $0.1 million. The increase in service revenue is attributable to approximately $1.5 million in sleep testing services primarily generated from SCN and an increase of approximately $0.6 million of revenue generated from Vivos treatment to patients launched at two SCN locations, offset by a decrease of approximately $0.1 million in VIP enrollment revenue and approximately $0.1 million from sponsorship, seminar and other service revenue.

For the three months ended June 30, 2026, we sold 5,180 oral appliance arches for a total of approximately $1.4 million, a 28% decrease in revenue from the three months ended June 30, 2025, when we sold 4,116 oral appliance arches for a total of approximately $1.9 million. The decrease is directly attributable a higher volume mix of preformed appliance sales, which are lower revenue generating products when compared to Vivos C.A.R.E. appliances.

Cost of Sales and Gross Profit

Cost of sales increased $0.5 million or 29% to approximately $2.2 million for the three months ended June 30, 2026, compared to $1.7 million for the three months ended June 30, 2025. This was primarily attributable to higher costs associated with diagnostic services and patient therapy, including the addition of staff at the Vivos treatment centers.

For the three months ended June 30, 2026, gross profit increased by approximately $0.8 million to $3.0 million. This increase was attributable to the increase in revenue of approximately $1.3 million and increase in cost of sales of $0.5 million. Gross margin increased to 57% for the three months ended June 30, 2026, compared to 55% for the three months ended June 30, 2025 due to the increase in higher margins on Service Revenue.

General and Administrative Expenses

General and administrative expenses increased $0.7 million or 11% to approximately $7.1 million for the three months ended June 30, 2026, as compared to $6.4 million for the three months ended June 30, 2025. The primary cause of this increase was approximately $0.6 million in salaries and wages related to acquiring SCN and opening Vivos treatment centers, and approximately $0.3 million in higher rent expense, offset by a reduction of approximately $0.2 million in bad debt and allowances.

Sales and Marketing

Sales and marketing expenses decreased $0.1 million to approximately $0.2 million for the three months ended June 30, 2026, as compared to $0.3 million for the three months ended June 30, 2025, which is attributable in significant part to our focus on reducing costs.

Depreciation and Amortization

Depreciation and amortization expense increased $0.2 million for the three months ended June 30, 2026 due to assets being placed into service.

Other Income/(Expense)

Other (Expense) increased $0.9 million due to additional interest expense on a note during the three months ended June 30, 2026, offset by an increase in Other Income of $0.3 million related to the valuation change in the contingent earnout related to the acquisition of SCN.

Comparison of the six months ended June 30, 2026 and 2025

Revenue

Revenue increased by approximately $3.5 million, or 51%, to approximately $10.3 million for the six months ended June 30, 2026 compared to $6.8 million for the six months ended June 30, 2025. The increase in total revenue during the period was impacted by an increase of approximately $4.4 million in service revenue and a decrease of approximately $0.9 million in product revenue. The decrease in product revenue is attributable to a decrease in appliance sales of approximately $2.0 million, offset by a decrease of approximately $0.2 million in discounts offered, an increase of $0.4 million in sales of tooth positioners, and an increase in diagnostic reports and other clinical sales of $0.5 million. The increase in service revenue is attributable to approximately $3.5 million in sleep testing services primarily generated from SCN and an increase of approximately $1.4 million of revenue generated from Vivos treatment to patients launched at two SCN locations, offset by a decrease of approximately $0.3 million in VIP enrollment revenue and approximately $0.2 million from sponsorship, seminar and other service revenue.

For the six months ended June 30, 2026, we sold 10,484 oral appliance arches for a total of approximately $2.8 million, a 24% decrease in revenue from the six months ended June 30, 2025, when we sold 7,852 oral appliance arches for a total of approximately $3.7 million. The decrease is directly attributable a higher volume mix of preformed appliance sales, which are lower revenue generating products when compared to Vivos C.A.R.E. appliances.

Cost of Sales and Gross Profit

Cost of sales increased $1.1 million or 33% to approximately $4.3 million for the six months ended June 30, 2026, compared to $3.2 million for the six months ended June 30, 2025. This was primarily related to higher costs associated with diagnostic services and patient therapy, including the addition of staff at the Vivos treatment centers.

For the six months ended June 30, 2026, gross profit increased by approximately $2.4 million to $6.0 million. This increase was attributable to the increase in revenue of approximately $3.5 million and increase in cost of sales of $1.1 million. Gross margin increased to 58% for the six months ended June 30, 2026, compared to 53% for the six months ended June 30, 2025 due to the increase in revenue and smaller increase in cost of sales.

General and Administrative Expenses

General and administrative expenses increased by approximately $4.8 million, or approximately 42%, to approximately $16.1 million for the six months ended June 30, 2026, as compared to $11.3 million for the six months ended June 30, 2025. The primary driver of this increase related to the costs associated with acquiring and integrating SCN and establishing the Vivos treatment centers, including an increase in salaries and related compensation of approximately $3.0 million, an increase of approximately $0.9 million for professional fees, and an increase in rent of $0.6 million and other costs of $0.3 million.

Sales and Marketing

Sales and marketing expenses decreased by $0.2 million to $0.4 million for the six months ended June 30, 2026, compared to $0.6 million for the six months ended June 30, 2025. This decrease was primarily driven by our decrease in sales and marketing campaigns, lower commissions paid to our employees for digital media services and reduction in use of marketing supplies.

Depreciation and Amortization

Depreciation and amortization expense increased $0.5 million to approximately $1.0 million for the six months ended June 30, 2026 from $0.5 million for the six months ended June 30, 2025. Depreciation and amortization increased during the period due to assets being placed into service during the period.

Other Income/(Expense)

Other (Expense) increased $2.0 million due primarily to interest expense on a note during the six months ended June 30, 2026, offset by an increase in Other Income of $0.3 million related to the valuation change in the contingent earnout related to the acquisition of SCN.

Liquidity and Capital Resources

The financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. We have incurred losses since inception, including $5.5 and $5.0 million for the three months ended June 30, 2026 and 2025, respectively, and $13.3 and $8.9 million for the six months ended June 30, 2026 and 2025, respectively, resulting in an accumulated deficit of approximately $138.5 million as of June 30, 2026.

Net cash used in operating activities amounted to approximately $9.2 and $7.3 million for the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, we had total liabilities of approximately $28.1 million.

On June 5, 2026, the Company entered into an Exchange Agreement with Streeterville Capital, LLC pursuant to which Streeterville agreed to exchange up to approximately $4.5 million of outstanding senior secured debt for a combination of perpetual non-convertible preferred stock and shares of common stock, contingent upon the Company completing certain qualifying equity financings. On June 18, 2026, the parties entered into a letter agreement extending the outside date for completion of the initial qualifying financing of at least $2.6 million from June 15, 2026 to August 31, 2026. See Note 18 to the accompanying financial statements for additional information.

On June 30, 2026, the Company closed a private placement with V-Co Investors 4 LLC and Bigger Capital Fund, LP for aggregate proceeds of approximately $2.1 million through the sale of units consisting of Series A Convertible Preferred Stock and warrants at a purchase price of $0.582 per unit. In connection with the transaction, the Company filed a Certificate of Designation creating the Series A Convertible Preferred Stock and entered into a registration rights agreement. A portion of the proceeds reflected the conversion of previously outstanding bridge financing.

As of June 30, 2026, we had approximately $1.8 million in cash and cash equivalents, which will not be sufficient to fund operations and strategic objectives over the next twelve months from the date of the issuance of these financial statements. Without additional financing, these factors raise substantial doubt regarding the Company’s ability to continue as a going concern.

We have implemented cost savings measures in our legacy business that have reduced cash used in operations. During the first six months of 2025, many one-time costs related to the acquisition of SCN were recognized and were not recurring in 2026.

As such, we have funded our operations through equity raises in the period ended June 30, 2026 and fiscal year ended December 31, 2025. We were required to obtain additional financing to satisfy our cash needs, including funding the SCN acquisition, and increasing our stockholders’ equity for Nasdaq compliance purposes as we seek to increase revenue with a view towards ultimately achieving positive cash flow operations. For a discussion of the financings to fund the SCN acquisition, please refer to the section “Material Items, Trends and Risks Impacting Our Business - Enrollments (Service Revenue) and Pivot to the Marketing and Distribution Model.”

Until we have attained positive cash flow, our management is reviewing all options to obtain additional financing to fund our operations. We financed the SCN acquisition from the issuance of senior secured debt and equity securities. We expect the SCN acquisition will ultimately allow our company to achieve positive cash flows; however, there is a risk this may not occur. We originally expected the Strategic Alliance Agreement (“SAA”) with Rebis Health entered into in June 2024 to increase patient volume, drive top line revenue and lower customer acquisition costs and overhead. However, due to ongoing delays at Rebis Health that are beyond our control, we are currently re-evaluating and lowering our revenue expectations under the SAA. As such, we seek to acquire other sleep centers in transactions similar to the SCN acquisition or enter into other strategic alliances. There can be no assurances that adequate additional funding will be available on favorable terms, or at all. If such funds are not available in the future, or the SAA or similar alliances or acquisitions do not result in the patient volume, appliance sales and financial results within the timeframes we expect, we may be required to delay, significantly modify or terminate some or all of our operations, all of which could have a material adverse effect on us and our stockholders.

We do not have any off-balance sheet arrangements, as defined by applicable regulations of the SEC, that are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

Cash Flows

The following table presents a summary of our cash flow for the six months ended June 30, 2026 and 2025 (in thousands):

Net cash used in operating activities of approximately $9.2 million for the six months ended June 30, 2026 an increase of approximately $1.9 million compared to net cash used in operating activities of approximately $7.3 million for the six months ended June 30, 2025. This increase is due primarily to a $4.4 million increase in net loss for the six months ended June 30, 2026, a decrease in other liabilities of $0.6 million, a decrease in stock-based compensation expense of approximately $0.4 million, offset by an increase of approximately $0.7 million in accounts payable, an increase of approximately $1.2 million in accrued expenses, an increase in depreciation and amortization of $0.5 million, an increase of $0.4 million in accounts receivable and an increase of approximately $0.6 million related to the fair value of common stock issued for services.

For the six months ended June 30, 2026, net cash used in investing activities consisted of approximately $0.4 million related to the acquisition of property, plant and equipment. This compares to net cash used in investing activities for the six months ended June 30, 2025 of approximately $5.1 million for payment of a business acquisition and capital expenditures of $0.9 million related to internally developed software.

Net cash provided by financing activities of $9.3 million for the six months ended June 30, 2026, is attributable to proceeds of approximately $4.6 million from the exercise of warrants, approximately $3.0 million from the issuance of debt and $1.0 million for the issuance of preferred stock, offset by a decrease of approximately $6.6 million of proceeds from debt and a decrease of approximately $0.6 million from the issuance of warrants.

Critical Accounting Policies Involving Management Estimates and Assumptions

Our critical accounting policies and estimates are described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. We have reviewed and determined that those critical accounting policies and estimates remain our critical accounting policies and estimates as of and for the three and six months ended June 30, 2026.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that are adopted by us as of the specified effective date. Unless otherwise discussed in Note 1 to the accompanying condensed consolidated financial statements included in this Report, we believe that the impact of recently issued standards that are not yet effective could have a material impact on our financial position or results of operations upon adoption. For additional information on recently issued accounting standards and our plans for adoption of those standards, please refer to the section titled Recent Accounting Pronouncements under Note 1 to the accompanying condensed consolidated financial statements included in this Report.

Evaluation of Disclosure Controls and Procedures

Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) are designed to ensure that information required to be disclosed by us in reports we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the appropriate time periods, and that such information is accumulated and communicated to our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely discussions regarding required disclosure. We, under the supervision of and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the design and operation of our disclosure controls and procedures were effective, at the reasonable assurance level, as of the end of the period covered by this Report.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We are voluntarily providing in this Item 1A. updated risk factors associated with SCN, the Acquisition and related matters.

In 2025 and 2026, we worked to pivot our sales, marketing distribution model, including via the acquisition of the Sleep Center of Nevada (the “Acquisition”). However, this new model is unproven and may not produce the benefits we anticipate. This makes it difficult to evaluate our future prospects and may increase the risk of your investment.

In June 2025, we acquired all assets, including operating assets such as sleep testing, diagnostics, and treatment centers, of SCN. The Acquisition marked the completion in a pivot to our sales, marketing distribution model for our innovative OSA appliances. Under the new model, SCN will provide sleep disorder patients with the opportunity to be candidates for our advanced, proprietary and FDA-cleared CARE oral medical devices, oral appliances and additional adjunctive therapies and methods. Under customary agreements designed to comply with applicable corporate practice of medicine law, our operation of SCN allows us to manage and capture both diagnostic and consulting revenues, representing new higher margin revenue streams for us, as well as potential Vivos appliance sales revenue from SCN. We are exploring and seeking to implement additional acquisitions of, or collaborations with, medical sleep and similar healthcare practices to expand our business model in an effort to grow our revenues.

We are placing significant emphasis on establishing and growing this new model as means of increasing our revenue. However, this new model is unproven, and we have limited operating history associated with this new model. Our prior collaboration with Rebis Health in Colorado entered into in 2024 has not met our expectations and differed materially from the SCN acquisition in that we did not have adequate control over patient processing, systems and protocols, dentist hiring and management, staff hiring and management, patient education, hours of operation, or medical provider training and education. As a result, the Rebis Health collaboration has not benefited us as we had anticipated. There is therefore a lack of information for you to evaluate our future prospects utilizing this new model. Moreover, there is a material risk that this new model will not increase our revenues or gross margins in the manner we anticipate. In addition, we may be unable to find additional sleep medical providers to incorporate into our business, and even if we do, the is a risk we may not derive the benefits from additional acquisition that we intend to. Our inability to implement and scale this marketing and distribution model would materially harm our business and operating results and likely cause our stock price to suffer.

Additionally, if the benefits of the Acquisition or similar acquisitions or collaborations we may undertake do not meet the expectations of our shareholders, the market price of our securities may decline. Fluctuations, including declines, in the price of our common stock could contribute to the loss of all or part of your investment. Certain factors, including, but not limited to, the factors listed below could have a material adverse effect on the price of our common stock:

• actual or anticipated fluctuations in financial results post-Acquisition or following the execution of similar transactions;
• changes in the market’s expectations about our operating results post-Acquisition or following the execution of similar transactions;
• announcements of technological innovation, or new products, by our competition; and
• the success of our competitors.

As such, no assurances can be given that the Acquisition or similar transactions will benefit our operating results or stock price.

We have incurred substantial indebtedness in connection with financing the SCN acquisition, the cost of servicing that debt could adversely affect our business, financial condition, and results of operation, and we may not be able in the future to service that debt.

Concurrently with the SCN Acquisition, we entered into a Note Purchase Agreement with Streeterville Capital, LLC, a Utah limited liability company (“Lender”), pursuant to which we issued and sold to Lender a Secured Promissory Note in the original principal amount of $8,250,000 (the “Note”). The Note is secured by our wholly-owned subsidiary AIM, which manages SCN in accordance with the corporate practice of medicine. The Company has also pledged the entirety of AIM’s membership interests to the Lender as collateral for the Loan pursuant and caused AIM to provide a guarantee of our obligations to the Lender under the Note and the other transaction documents.

In June 2026, we entered into an Exchange Agreement with Streeterville under which Streeterville agreed to exchange a portion of the outstanding indebtedness under the Note for shares of our preferred stock and common stock, contingent on our completion of a qualifying financing of at least $2.6 million. In August 2026, the financing condition was satisfied and subsequently the exchange was completed. See Note 18 to the accompanying financial statements for additional information. Notwithstanding the exchange, a portion of the original Note remains outstanding and continues to be secured by the collateral and guarantees described above. In addition, Series B Non-Convertible Preferred Stock issued in the exchange carries preferential rights (including with respect to dividends, liquidation, and other terms) that rank senior to our common stock, resulted in dilution to existing common stockholders, and makes us subject to certain affirmative and negative covenants in favor of Streeterville, including a requirement that we obtain Streeterville’s consent for future debt and equity financings over $2.5 million in the aggregate, which may restrict our ability to access capital or require us to access capital on terms that are not as favorable as would otherwise have been available.

Our ability to make scheduled payments under the Note or any alternative debt financing arrangements we may enter into in connection with our growth strategy to acquire additional medical sleep practices will depend on our financial and operating performance, which will be affected by economic, financial, competitive, business, and other factors, some or all of which are beyond our control. The indebtedness we incurred in connection with the Acquisition will require us to dedicate a portion of our cash flow to servicing this debt, thereby reducing the availability of cash to fund other business initiatives. There can be no assurance that our business, inclusive of SCN, will generate sufficient cash flow from operations to service our indebtedness or to fund our other liquidity needs. If we are unable to meet our debt obligations or fund our other liquidity needs, we may need to restructure or refinance all or a portion of our indebtedness on or before maturity or sell certain of our assets. There can be no assurance that we will be able to restructure or refinance any of our indebtedness on commercially reasonable terms, if at all, which could cause us to default on our debt obligations and impair our liquidity. Any refinancing of our indebtedness could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. If we are unable to generate or borrow sufficient cash to make payments on our indebtedness, our business, financial condition, and results of operations could be adversely affected.

Integrating SCN’s operations may be more difficult, costly, or time-consuming than expected.

The ongoing integration of Vivos and SCN could result in the disruption of our ongoing business, and inconsistencies in standards, controls, procedures and policies that adversely affect our ability to maintain relationships with patients and employees or achieve the anticipated benefits of the Acquisition. As with any acquisition, there also may be disruptions that cause us to lose patients or cause patients to elect alternative form of sleep treatment. We may also face other unintended consequences from the Acquisition (including adverse effects on our business reputation, supply chain issues, and similar matters) that that could have a material adverse effect on our results of operations, financial condition and stock price.

If our contractual arrangements between AIM and our physicians at SCN are found to constitute the improper rendering of medical services or fee splitting under applicable state laws, our business, financial condition and our ability to operate in those states could be adversely impacted.

Our contractual relationships between AIM and our physicians at SCN (and similar arrangements we may enter into in the future in connection with other sleep provider acquisitions) may implicate certain state laws that generally prohibit non-professional entities from providing licensed medical services or exercising control over medical practitioners or other healthcare professionals (such activities generally referred to as the “corporate practice of medicine”, and laws, rules and regulations relating to the corporate practice of medicine, the “CPM Laws”) or engaging in certain practices such as fee-splitting with such licensed professionals. The interpretation and enforcement of CPM Laws vary significantly from state to state. There can be no assurance that CPM Laws will be interpreted in a manner consistent with our practices or that other laws or regulations will not be enacted in the future that could have a material and adverse effect on our business, financial condition and results of operations. Regulatory authorities, state boards of medicine, state attorneys general and other parties may assert that, despite the agreements through which we operate, we are engaged in the provision of medical services and/or that our arrangements with our medical practitioners constitute unlawful fee-splitting. If a jurisdiction’s prohibition on the corporate practice of medicine or fee-splitting is interpreted in a manner that is inconsistent with our practices, we would be required to restructure or terminate our arrangements with our medical practitioner at SCN to bring our activities into compliance with such CPM Laws. A determination of non-compliance, or the termination of or failure to successfully restructure these relationships could result in disciplinary action, penalties, damages, fines, and/or a loss of revenue, any of which could have a material and adverse effect on our business, financial condition and results of operations. State corporate practice and fee-splitting prohibitions also often impose penalties our medical practitioners for aiding in the improper rendering of professional services, which could discourage medical practitioners and other healthcare professionals from providing clinical services at SCN or other sleep centers we may operate in the future.

As a result of our business model pivot which includes the acquisition of sleep centers like SCN, we may become a party to lawsuits, demands, claims, qui tam suits, governmental investigations and audits and other legal matters, any of which could result in, among other things, substantial financial and other penalties, damage to our reputation or adverse effects on our ability to conduct business.

As a result of our 2025 business model pivot, which includes acquisitions of sleep medical providers like SCN as a means of driving sales of our OSA treatments, our business has (subject to compliance with CPM laws as described above) become more associated with diagnosing and treating OSA patients. Given the nature of this business, we may in the future be subject to investigations and audits by governmental agencies, private civil qui tam complaints and other lawsuits, demands, claims, legal proceedings and/or other actions alleging our, or the medical practices we manage, failure to comply with applicable rules, regulations, laws or the practice of medicine.

For example, we and sleep medical providers we manage (like SCN) could become subject to audits from the government concerning the billing of patients. If, following the conclusion of any audit, the government were to require refunds and/or modifications to our business practices, and such amounts or changes are significant, it could have a material adverse effect on our business, results of operations, financial condition and cash flows. In addition, any allegation against us, our medical providers we manage or related personnel, representatives, third party vendors, or operations in such matters or matters that involve patients suffering adverse health outcomes, may, among other things harm our reputation, stock price, and adversely affect our relationships and/or contracts related to our business, among other things.

Responding to subpoenas, investigations and other lawsuits, claims and legal proceedings, as well as defending ourselves in such matters, would require management’s attention and cause us to incur significant legal expense. Negative developments, findings or terms and conditions that we might agree to accept as part of a negotiated resolution of pending or future legal or regulatory matters, or have been forced upon us, could result in, among other things, harm to our or our medical providers’ reputation, substantial financial penalties or awards against us, substantial payments made by us, required changes to our business practices, impacts on our various relationships and/or contracts related to our business, exclusion from future participation in Medicare, Medicaid and other healthcare programs and, in certain cases, criminal penalties, any of which could have a material adverse effect on us.

Changes in the structure of and payment rates under private insurance, Medicare, Medicaid or other non-Medicare government-based programs or payment rates related to our business could have a material adverse effect on our business, results of operations, financial condition and cash flows.

Sleep center providers like SCN or other medical sleep providers we may acquire and manage or do business with rely on various forms of insurance held by patients for payment for products and services. These include private insurance, Medicare, Medicaid and other government programs. As such, the business of the medical sleep providers we manage and our business and results of operations could be adversely impacted by matters related to insurance coverage including, without limitation:

• The risk that reimbursement rates are reduced by private insurance carriers or government insurance providers;
• The risk that changes in insurance policies or regulatory mandates could limit the ability to either be paid for covered services or bill for treatments or services or otherwise impact reimbursement;
• The risk that interpretations of existing regulations, manual provisions and/or guidance, or the implementation or enforcement of new interpretations, will be inconsistent with how we and the medical sleep providers we manage have interpreted regulations, manual provisions and/or guidance;
• The risk that data and related reporting requirements are implemented that result in decreased reimbursement, increased technology and operational costs, or reputational harm;
• The risk that increases in our operating costs will outpace any Medicare or other rate increases we receive;
• The risk of federal budget sequestration cuts or other disruptions in federal government operations and funding; and
• The risk of ensuring that the sleep medical providers we manage remain compliant with applicable requirements, including marketing and education requirements and restrictions, as well as contractual terms with associated insurance plans.

If we are faced with these or similar risks, we could face material adverse consequences on our business, results of operations, financial condition and cash flows.

Our business and the medical practices we manage are labor intensive. Our inability to recruit qualified talent and manage labor costs or shortages result could result significant increases in our operating costs, decreases in productivity, and disruptions in our business operations.

Our business and the business of the medical practices we manage is labor intensive. This is particularly true with respect to the Sleep Optimization (SO) teams we are putting in place at SCN, each consisting of one nurse practitioner (or physician’s assistant), two specially trained dentists, six dental assistants, six administrative support personnel, and one treatment navigator. Labor requirements also exist, albeit to a lesser extent, for contractual alliances with medical sleep providers we may enter into. We face increased labor costs and the risk of difficulties in hiring skilled clinical personnel. The healthcare labor market for the talent we require is challenging and experiences volatility, uncertainty and labor supply shortages. We may be unable to achieve the financial results we desire from the SCN acquisition, the acquisition of other medical sleep providers or our contractual alliances due to variations in labor-related costs and the productivity our personnel.

We have incurred and, as we seek to scale our business, expect to continue to incur increased labor costs, including through elevated compensation levels to our personnel, the ultimate extent of which will depend on the needs at SCN or other medical sleep providers we acquire as well as macroeconomic conditions and ancillary impacts on the labor market, among other things.

We compete for qualified talent with hospitals and other healthcare providers. Furthermore, changes in certification requirements could adversely impact our ability to maintain sufficient staff levels, including to the extent our personnel are not able to meet new requirements. In addition, if we experience a higher than normal turnover rate for our skilled clinical personnel, our operations and ability to meet patient demand may be negatively impacted, which could adversely affect our business, results of operations, financial condition and cash flows.

Also, political or other efforts at the national or local level could result in actions or proposals that increase the likelihood of success of union organizing activities at the facilities we manage. If a significant portion of our personnel were to become unionized, we could experience, among other things, potential additional work stoppages or other business disruptions; adverse impacts to our financial results due to the costs of bargaining or implementing a grievance procedure and processing grievances, decreases in our operational flexibility and efficiency, or negative impacts on our employee culture. Any of these events or circumstances, including our responses to such events or circumstances, could have a material adverse effect on our employee relations, treatment growth, productivity, business, results of operations, financial condition, cash flows and reputation.