What NeuroPace, Inc. told the SEC could break it.

NeuroPace's RNS System depends on qualified/approved suppliers that are mostly single-source: Micro Systems Technologies Management AG and Greatbatch Ltd are single-source suppliers of key components including printed circuit assemblies and batteries (other single-source suppliers provide silicone adhesive, integrated circuits and other components), so a supplier interruption, discontinuation, quality issue or regulatory change at these single sources could halt manufacturing of its only product and harm its business.

“Micro Systems Technologies Management AG and Greatbatch Ltd are single source suppliers of key components of our products, including printed circuit assemblies and batteries.”

NeuroPace's MidCap Term Loan is secured by substantially all of its properties, rights and assets, including intellectual property, and its financial covenants require maintaining an Applicable Liquidity Threshold of at least $60.0 million until June 30, 2027 (then $40.0M, or $35.0M if it earns ≥$90.0M of RNS revenue in 2026), with minimum trailing RNS-System-revenue tests triggered if liquidity falls below the threshold; a covenant breach or declaration of default could let the lender foreclose and materially harm the company, making it reliant on continued RNS revenue and capital raises (e.g., its $69.7M February 2025 follow-on).

“financial covenants require the Company to maintain an Applicable Liquidity Threshold no less than (a) $ 60.0 million until June 30, 2027, and (b) $ 40.0 million thereafter; or (c) provided the Company earns at least $ 90.0 million net revenue from the RNS System in 2026, liquidity shall be no less than $ 35.0 million thereafter.”

NeuroPace relies on its RNS System — which can only be marketed in the United States for adults with drug-resistant focal epilepsy — as its primary source of revenue, so its results depend on continued market acceptance and adoption of that single product; additionally, its exclusive distribution relationship with DIXI Medical (whose products were ~16% of total revenue) expired in April 2025, which may materially affect revenue growth and results, leaving NeuroPace more concentrated on RNS sales.

“We currently rely on our RNS System, which can only be marketed in the United States for use in adults with drug-resistant focal epilepsy, as our primary source of revenue.”

NeuroPace must manufacture in conformity with FDA and QMSR requirements (and foreign regulators for any expansion), and its revenue depends on hospital facilities obtaining per-procedure reimbursement from Medicare, Medicaid and private payors for RNS implant and follow-up; it is also subject to new U.S. restrictions on data transactions involving countries of concern (China, Russia, Iran) and to data-privacy regimes such as the EU/UK GDPR and Canada's PIPEDA, where violations could bring significant civil and criminal penalties.

“our ability to manufacture our products in conformity with the U.S. Food and Drug Administration, or FDA, requirements and with regulatory requirements of any foreign countries in which we may seek to do business”