# ASTROTECH Corp: Form 10-Q/A for the period ended Mar 31, 2026

- Company: [ASTROTECH Corp](/companies/astc.md) (CIK 1001907)
- Form: 10-Q/A
- Filed: 2026-08-06
- Accepted by EDGAR: Aug 6, 2026, 21:26 ET
- Period: 2026-03-31
- Accession: 0001437749-26-026366
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1001907/000143774926026366/astc20260331_10qa.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1001907/000143774926026366/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2026-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2026-01-01 to 2026-03-31 | $343.0k | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Revenue | 9 months, 2025-07-01 to 2026-03-31 | $787.0k | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Cost of revenue | 3 months, 2026-01-01 to 2026-03-31 | $276.0k | us-gaap:CostOfRevenue |
| Cost of revenue | 9 months, 2025-07-01 to 2026-03-31 | $525.0k | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2026-01-01 to 2026-03-31 | $67.0k | us-gaap:GrossProfit |
| Gross profit | 9 months, 2025-07-01 to 2026-03-31 | $262.0k | us-gaap:GrossProfit |
| Research and development | 3 months, 2026-01-01 to 2026-03-31 | $1.4m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months, 2025-07-01 to 2026-03-31 | $5.2m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2026-01-01 to 2026-03-31 | $2.1m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2025-07-01 to 2026-03-31 | $5.9m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2026-01-01 to 2026-03-31 | −$3.5m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2025-07-01 to 2026-03-31 | −$10.9m | us-gaap:OperatingIncomeLoss |
| Net income | 3 months, 2026-01-01 to 2026-03-31 | −$3.8m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2025-07-01 to 2026-03-31 | −$11.2m | us-gaap:NetIncomeLoss |
| Basic EPS | 3 months, 2026-01-01 to 2026-03-31 | −$2.25 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2025-07-01 to 2026-03-31 | −$6.66 | us-gaap:EarningsPerShareBasic |
| Operating cash flow | 9 months, 2025-07-01 to 2026-03-31 | −$11.2m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2025-07-01 to 2026-03-31 | $857.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2026-03-31 | $2.7m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2026-03-31 | $11.3m | us-gaap:AssetsCurrent |
| Total assets | at 2026-03-31 | $16.2m | us-gaap:Assets |
| Current liabilities | at 2026-03-31 | $1.8m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2026-03-31 | $4.0m | us-gaap:Liabilities |
| Shareholders' equity | at 2026-03-31 | $12.2m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 32,409 characters.

*The following information should be read in conjunction with the unaudited condensed consolidated financial statements and the accompanying notes included in Part I, Item 1 of this Report.*

### Business Overview

The terms “Astrotech”, “the Company”, “we”, “us”, or “our” refer to Astrotech Corporation (Nasdaq: ASTC), a Delaware corporation organized in 1984. Our use of “products” and “devices” refer to the TRACER 1000™, BreathTest-1000™, AGLAB 1000™, TRACER 1000™ NTD, and Pro-Control 1000™ along with related accessories and consumables.

Our mission encompasses the advancement of both mass spectrometry and gas chromatography, two powerful analytical techniques that together enable precise detection and identification of chemical compounds across a wide range of high-demand environments. We aim to expand access to mass spectrometry and its use through the deployment of devices designed specifically for the appropriate levels of precision required in high-volume, real-time testing environments such as airports, border checkpoints, cargo hubs, infrastructure security, correctional facilities, military bases, law enforcement centers, and industrial locations. We are introducing our new line of products that are ultra-portable, on-site, rugged environmental testing instruments, featuring our proprietary ATi Gas Chromatography Column ("GC") and ATi Mass Spectrometer Technology ("MS") to achieve our mission through simplifying the user interface, ruggedizing the critical components to endure MS/GC field work, and enabling multiple configurations for sample intake options.The Astrotech Mass Spectrometer Technology™ ("AMS Technology") and ATi GC platforms achieve our mission through simplifying the user interface, automating the complicated calibration process, ruggedizing the critical components to endure MS/GC field work, and enabling multiple configurations for sample intake options.

We are commercializing the AMS Technology platform through application specific, wholly owned subsidiaries.

### Astrotech Technologies, Inc.

Astrotech Technologies, Inc. ("ATI") owns and licenses the AMS Technology, the platform MS technology originally developed by 1st Detect. The AMS Technology has been designed to be inexpensive, smaller, and easier to use when compared to traditional mass spectrometers. Unlike other technologies, the AMS Technology works under ultra-high vacuum, which eliminates competing molecules, yielding higher resolution and fewer false alarms. The intellectual property includes 16 patents granted along with extensive trade secrets. With a number of diverse market opportunities for our core technology, ATI is structured to license our intellectual property for different fields of use. ATI currently licenses the AMS Technology to our four wholly owned subsidiaries on an exclusive basis.

### 1st Detect Corporation

1st Detect Corporation (“1st Detect”), a licensee of ATI for security and detection applications, has developed the TRACER 1000™, the world’s first MS based explosives trace detector (“ETD”) certified by the European Civil Aviation Conference (“ECAC”) and approved by the U.S. Transportation Security Administration (“TSA”) for air cargo. The TRACER 1000 was designed to outperform the ETDs currently used at airports, cargo and other secured facilities, and borders worldwide. We believe that ETD customers are unsatisfied with the currently deployed ETD technology, which is driven by ion mobility spectrometry (“IMS”). We further believe that some IMS-based ETDs have issues with false positives, as they often misidentify personal care products and other common household chemicals as explosives, causing facility shutdowns, unnecessary delays, frustration, and significant wasted security resources. In addition, there are hundreds of different types of explosives, but IMS-based ETDs have a very limited threat detection library reserved only for those few explosives of largest concern. Adding additional compounds to the detection library of an IMS-based ETD fundamentally reduces the instrument’s performance, further increasing the likelihood of false alarms. In contrast, adding additional compounds to the TRACER 1000’s detection library does not degrade its detection capabilities, as it has an extensive and easily expandable threat library.

We obtained ECAC certification in 2019 which allows us to sell the TRACER 1000 to airport and cargo security customers in the European Union and certain other countries. We currently sell the TRACER 1000 to customers who accept ECAC certification. As of March 31, 2026, we have the TRACER 1000 in approximately 37 locations in 16 countries throughout the United States of America, Europe and Asia.

In June 2024, the TSA approved 1st Detect’s TRACER 1000 for the Air Cargo Security Technology List, which advanced the TRACER 1000 to Stage II testing, and permits air cargo companies in the United States to use our equipment in their operations. During Stage II testing, we are conducting field trials with the TSA. If field trials are successful, the TRACER 1000 will be added to the “qualified” list.

We have also started the process to pass TSA checkpoint testing. This process involves Developmental Test and Evaluation in which the Transportation Security Laboratory (“TSL”) will test the TRACER 1000 and work with 1st Detect to ensure its readiness to enter certification testing. The certification test is then completed by the Independent Test & Evaluation department of TSL. For the fiscal year 2023, the U.S. federal government had a budget of over 6,000 ETD units at checkpoint and baggage screening points for which we believe that the TSA would benefit from utilizing our AMS Technology.

We are currently accepting orders for the TRACER 1000 ETD and NTD which are listed in the United States General Services Administration ("GSA") IT Schedule 70 under Contract No. GS-35F-250GA with SRI Group LLC, Special Item Number 334290. The TRACER 1000 ETD and NTD are high-performance laboratory instruments capable of rapid detection of trace levels of explosive and narcotic compounds in seconds. The TRACER 1000 ETD and NTD both provide a ruggedized platform that can be applied across various markets including airports, border security, checkpoint, cargo and infrastructure security, correctional facilities, military, and law enforcement. IT Schedule 70 is a long-term contract issued by the GSA to commercial technology vendors that allows sales to the United States federal government, one of the largest buyers of goods and services in the world.

On January 14, 2025, our wholly owned subsidiary, 1st Detect Corporation, announced that it has been awarded research and development contract 70RSAT24CB0000015 with the United States Department of Homeland Security ("DHS") to research, develop and mature the TRACER 1000 for DHS next generation explosives trace detection.

On March 10, 2025, we announced the launch of the enhanced TRACER 1000 Narcotic Trace Detector ("TRACER 1000 NTD"). This innovative mobilized mass spectrometer is specifically configured to screen for the full range of synthetic opiates and novel psychoactive substances ("NPS") delivering accuracy and speed to counter the global drug crisis.

In April 2025, we received a $429,000 purchase order for TRACER 1000™ explosive trace detectors ("ETDs") from Intuitive Research and Technology, a TSA approved contractor. In April 2025, we fulfilled the purchase order and sold six TRACER 1000 explosive detectors to Intuitive Research and Technology Corporation. This is the first TSA-approved sale of our TRACER 1000 ETD, which utilizes mass spectrometry technology, known for its accuracy and low false alarm rate.

On June 12, 2025, we sold the first sale and deployment of the TRACER 1000 Narcotic Trace Detector in Vietnam, by way of its subsidiary 1st Detect. This milestone marked a significant step in expanding the 1st Detect footprint across Southeast Asia and reinforces its commitment to enhancing narcotics trace detection inspection capabilities.

On May 11, 2026, we announced the TRACER 1000 system has achieved ECAC/EU G1 approval, meeting the highest European standards for aviation security. This approval reflects compliance with the European Civil Aviation Conference and European Commission requirements for trace detection systems, supporting enhanced security for airline passengers.

We continue to showcase the TRACER 1000 NTD and ETD at trade events in the U.S.

### AgLAB Inc.

AgLAB Inc. (“AgLAB”), an exclusive licensee of ATI for the use in the agriculture industry to analyze complex chemical compounds found in organic plant material and extracts, has developed the AgLAB 1000™ series of mass spectrometers for use in the hemp and cannabis markets with the initial focus on optimizing yields in the distillation process. The AgLAB product line is a derivative of our core AMS Technology. AgLAB continues to conduct field trials demonstrating that the AgLAB 1000-D2™ can be used in the distillation process to significantly improve the yields of tetrahydrocannabinol (“THC”) and cannabidiol (“CBD”) oil during distillation. The AgLAB 1000-D2™ uses the Maximum Value Process solution (“MVP”) to analyze samples in real-time and assist the equipment operator determining the ideal settings required to maximize yields.

Production and processing of hemp and cannabis is a large, worldwide industry. We believe growth in the U.S. and in the worldwide market is likely fed in part by the growing acceptance of medicinal cannabis products and anticipated legislative changes in various jurisdictions worldwide. We also believe this growth is due in part to the passage of the 2018 Farm Bill, which legalized hemp production in the U.S.

As the CBD and hemp market continues to grow, there has been an influx of new companies entering the CBD and THC supply chains, ranging from large corporations to small startups. These companies comprise AgLAB’s target market. The competition within the supply chain is fierce, with companies investing heavily in research and development to create innovative products and differentiate themselves from their competitors. However, the market remains highly fragmented, with many products of varying quality and efficacy, making it challenging for consumers to navigate. Overall, the CBD and hemp market in the U.S. is a rapidly growing industry with significant potential for continued expansion. As more research is conducted and regulations are established, we believe it is likely that the market will become more standardized and regulated, leading to increased consumer confidence and demand. Stakeholders in the industry are likely to face challenges as it matures, including increased competition and potential regulatory hurdles.

Management believes the AgLAB 1000-D2™ will deliver a compelling combination of cost and time savings while enhancing product quality and quantity for distillation processors of hemp and cannabis. The use of the AgLAB 1000-D2™ should reduce waste from current distillation practices and result in a significantly improved product. Due in large part to the Company’s proprietary technology, we believe it is the only provider of a mass spectrometry system that gives it a distinct advantage in the industry. Sales efforts for the AgLAB 1000-D2 are currently underway.

AgLAB announced the presentation of the AgLAB Maximum Value Processing at MJBizCon. The AgLAB MVP is an innovative process control system proven to increase the potency of ending-weight yields and increase revenue. The AgLAB MVP process provides real-time data, allowing distillers to adjust parameters to optimize the quality and quantity of each batch of oil. During our field trials of the AgLAB MVP, we were able to improve ending-weights yields by approximately 15% to 30% depending on application. We believe these ongoing field trials demonstrate the solution can be a valuable tool for cannabis and hemp oil processors worldwide.

On June 13, 2024, AgLAB and SC Laboratories (“SC Labs”) entered into a master lease agreement providing for the joint marketing of the AgLAB 1000-D2™ mass spectrometer and the AgLAB Maximum Value Process™ testing method to SC Labs’ clients.

### BreathTech Corporation

BreathTech, an exclusive licensee of ATI for use in breath analysis applications, has developed the BreathTest-1000™, a breath analysis tool to screen for VOC metabolites found in a person’s breath that could indicate they may have compromised condition. We believe that new tools to quickly identify the presence of a VOC metabolite could play an important role in detecting and containing airborne diseases.

In conjunction with the CCF JDA, BreathTech entered into an Investigator-Initiated Study Agreement ("CCF IISA") with The Cleveland Clinic Foundation (“Cleveland Clinic”), effective March 31, 2021, to expand the application of breath analysis by collecting and studying the gaseous portion of exhaled breath for markers of lung and systemic diseases. The pilot study concluded and the CCF IISA terminated in accordance with its terms on February 7, 2025. We currently have no active or anticipated studies with Cleveland Clinic under the CCF JDA. In addition, we have satisfied all payment obligations under the CCF JDA. We believe additional studies would be required to continue exploration of technologies which may provide non-invasive methods of monitoring and studying lung and systematic diseases.

We believe commercialization of this application with the AMS Technology would require many years and significant investment due to regulatory requirements. As such, we have determined to deploy capital instead to our other subsidiaries. We are also exploring how the advancements and knowledge derived from our research on the BreathTech use case can be applied in our other existing and potential new business units.

### Pro-Control, Inc.

On December 12, 2023, we announced the formation of our new wholly owned subsidiary, Pro-Control, and ATI’s entry into an exclusive license with Pro-Control to utilize our AMS Technology for industrial process control applications involving chemical distillation outside of the agriculture industry. Pro-Control uses advanced mass spectrometer instrumentation to monitor and control the production and operations of manufacturing processes using real-time, in-process samples. Pro-Control provides the vital spectral qualitative and quantitative data needed to control the production parameters (temperatures, flow, speed, and pressure) while significantly improving efficiency.

Pro-Control has introduced its proprietary Pro-Control Maximum Value Processing and the Pro-Control 1000-D2™ mass spectrometer, which in combination are designed to test, measure and increase reaction intermediates, purity and percent yields in industrial processes.

### EN-SCAN, Inc.

On February 28, 2025, we announced the formation of our new wholly owned subsidiary, EN-SCAN, to manufacture and sell a new line of instruments built for environmental testing using its proprietary ATi Gas Chromatograph ("GC") and AMS Technology for outdoor field work for on-site, real-time air, water, and soil analysis providing instant feedback for accurate contamination source location and migration. With a focus on real-time monitoring, EN-SCAN is expected to enable organizations to make data-driven decisions while reducing testing costs and time delays. The EN-SCAN lineup includes EN-SCAN Rugged Lab GC-MS, EN-SCAN Fenceline Monitor, and EN-SCAN Handheld GC. Each of these three testing solutions are designed for specific applications.

### Critical Accounting Estimates

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with United States Generally Accepted Accounting Principles ("U.S. GAAP"). The preparation of these financial statements requires us to make estimates and judgments that directly affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosure of contingent assets and liabilities in our Company’s consolidated financial statements and accompanying notes. A critical accounting estimate is one that involves a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Management continuously evaluates its critical accounting policies and estimates, including those used in evaluating the recoverability of long-lived assets, recognition of revenue, valuation of inventory, and the recognition and measurement of loss contingencies, if any. Actual results may differ from these estimates under different assumptions or conditions. We believe that the following accounting policies require us to make significant judgments and estimates in the preparation of our consolidated financial statements.

### Results of Operations

**Three months ended March 31, 2026, compared to three months ended March 31, 2025:**

Selected consolidated financial data for the three months ended March 31, 2026, and 2025 is as follows:

*(In thousands)*

|  | Three Months Ended March 31, 2026 | 2025 |
| --- | ---: | ---: |
| Revenue | $343 | $534 |
| Cost of revenue | 276 | 297 |
| **Gross profit** | **67** | **237** |
| **Gross margin** | **20%** | **44%** |
| Operating expenses: |  |  |
| Selling, general and administrative | 2,085 | 2,115 |
| Research and development | 1,435 | 1,989 |
| **Total operating expenses** | **3,520** | **4,104** |
| **Loss from operations** | **(3,453)** | **(3,867)** |
| Other income and expense, net | (315) | 234 |
| **Net loss** | $(3,768) | $(3,633) |

***Revenue –*** Total revenue was $343 thousand for the three months ended March 31, 2026, compared to $534 thousand for the three months ended March 31, 2025. During the three months ended March 31, 2026, revenue was primarily derived from consumables, with additional product sales of the TRACER 1000. The decrease in revenue was primarily due to lower product revenue and negative grant revenue, reflecting additional hours incurred as a result of re-testing phase, partially offset by increased consumables revenue.

***Cost of Revenue –*** Gross profit is comprised of revenue less cost of revenue. Cost of revenue includes materials, overhead, warranty expenses, shipping, and labor. Our cost of revenue decreased by $21 thousand during the three months ended March 31, 2026, compared to the same period in 2025, primarily due to lower device sales, partially offset by higher consumables and grant related costs. The decrease was primarily attributable to consumables sold at costs exceeding revenue during the current quarter. These consumables were purchased at elevated costs during the COVID period and subsequently sold below cost to recover value rather than write off the inventory, which resulted in revenue that was lower than the related cost of revenue. As a result, gross margin decreased by 25% during the three months ended March 31, 2026, compared to the same period in 2025.

***Operating Expenses –*** Operating expenses decreased by $584 thousand, or 14.2%, during the three months ended March 31, 2026, compared to the same period in 2025. Significant changes to operating expenses include the following:

- Selling, general and administrative expenses decreased $30 thousand, or 1.4% during the three months ended March 31, 2026, compared to the same period in 2025. The decrease was primarily driven by lower consulting fees of approximately $177 thousand, partially offset by higher travel related expenses and increased depreciation associated with leasehold improvements placed in service in October 2025 for the lease of our primary office space in Austin, Texas.
- Research and development expenses decreased $554 thousand, or 27.9%, during the three months ended March 31, 2026, compared to the same period in 2025. The decrease was primarily driven by lower consulting costs of approximately $318 thousand, reflecting a shift in focus from research and development activities toward sales initiatives, as well as reductions in compensation costs, recruiting expenses, and depreciation, primarily related to the disposal of equipment no longer in use and reduced spending on materials and equipment. These reductions were partially offset by higher facilities costs, as well as increased travel and subcontractor costs.

***Other Income and Expense, net –*** Other income and expense, net decreased by $549 thousand during the three months ended March 31, 2026, compared to the same period in 2025, primarily due to a loss on the disposal of assets ($210 thousand), a realized loss on securities during the current quarter ($184 thousand) compared to a realized gain in the prior- year period, and lower dividend income ($140 thousand).

**Nine months ended March 31, 2026, compared to nine months ended March 31, 2025:**

Selected consolidated financial data for the nine months ended March 31, 2026, and 2025 is as follows:

*(In thousands)*

|  | Nine Months Ended March 31, 2026 | 2025 |
| --- | ---: | ---: |
| Revenue | $787 | $829 |
| Cost of revenue | 525 | 428 |
| **Gross profit** | **262** | **401** |
| **Gross margin** | **33%** | **48%** |
| Operating expenses: |  |  |
| Selling, general and administrative | 5,941 | 5,842 |
| Research and development | 5,211 | 6,375 |
| **Total operating expenses** | **11,152** | **12,217** |
| **Loss from operations** | **(10,890)** | **(11,816)** |
| Other income and expense, net | (271) | 896 |
| **Net loss** | **$(11,161)** | **$(10,920)** |

***Revenue –*** Total revenue decreased by approximately $42 thousand, or 5.0%, during the nine months ended March 31, 2026, compared to the nine months ended March 31, 2025. Revenue in both periods was generated from product sales, consumables, warranty services, training, and grant revenue. The decrease was primarily attributable to a $323 thousand decline in product revenue and a $60 thousand decline in warranty revenue. These decreases were partially offset by higher grant revenue of $111 thousand, increased consumables revenue of $209 thousand, and $20 thousand of training revenue recognized in the current period.

***Cost of Revenue –*** Gross profit is comprised of revenue less cost of revenue. Our costs of revenue include materials, overhead, warranty expenses, shipping, and labor. For the nine months ended March 31, 2026, cost of revenue increased by approximately $97 thousand compared to the prior year period, primarily due to higher labor and warranty costs, including the sale of obsolete consumable parts at standard cost under contractual agreements rather than recording an inventory write‑off. These increases were partially offset by lower material costs, resulting in a decrease in gross margin compared to the prior year period.

***Operating Expenses –*** Operating expenses decreased $1,064 thousand, or 8.7% during the nine months ended March 31, 2026, compared to the same period in 2025.

- Selling, general and administrative expenses increased by $99 thousand, or 1.7%, primarily driven by higher investor relations costs, facilities‑related expenses, travel and conference spending, legal costs, depreciation, moving expenses, and other tax and license costs, partially offset by lower consulting costs and the absence of bonus payment
- Research and development expenses decreased by $1.16 million (18%) for the nine‑month period, primarily due to a $1.08 million reduction in consulting services as the Company shifted focus from research and development activities toward sales initiatives, as well as lower recruiting, materials, equipment, and depreciation costs, partially offset by higher payroll‑related and facilities expenses.

***Other Income and Expense, net –*** Other income and expense, net decreased by $1.17 million for the nine months ended March 31, 2026, compared to the same prior year period, primarily due to lower dividend income and higher realized losses on the sale of securities.

### Liquidity and Capital Resources

### Cash Flows

The following is a summary of the change in our cash and cash equivalents:

*(In thousands)*

| Change in cash and cash equivalents: | Nine Months Ended March 31, 2026 | 2025 | Change |
| --- | ---: | ---: | ---: |
| Net cash used in operating activities | $(11,165) | $(10,591) | $(574) |
| Net cash provided by investing activities | 10,824 | 3,118 | 7,706 |
| Net cash used in financing activities | (80) | (157) | 77 |
| **Net change in cash and cash equivalents** | $(421) | $(7,630) | $7,209 |

### Cash and Cash Equivalents

As of March 31, 2026, we held cash and cash equivalents of $2.7 million, and our working capital was approximately $9.5 million. As of June 30, 2025, we held cash and cash equivalents of $3.1 million, and our working capital was approximately $19.5 million. The decrease in working capital was primarily driven by the sale of short-term investments of approximately $11.2 million, along with a decrease in cash balances, partially offset by increases in inventory. Cash and cash equivalent decreased by $421 thousand as of March 31, 2026, compared to June 30, 2025, due to funding our operating losses. During the nine-month period, we continued to direct resources toward sales and marketing activities to support revenue generation efforts.

### Operating Activities

Cash used in operating activities increased $574 thousand for the nine months ended March 31, 2026, compared to the nine months ended March 31, 2025, primarily due to higher operating expenses, an increase in inventory, and a decrease in accounts payable.

### Investing Activities

Cash provided by investing activities increased by approximately $7.7 million for the nine months ended March 31, 2026, compared to the nine months ended March 31, 2025, primarily due to $11.7 million of proceeds from short-term investments, partially offset by $0.9 million of capital expenditures, including leasehold improvements.

### Financing Activities

Cash used in financing activities was $80 thousand for the nine months ended March 31, 2026, compared to $157 thousand for the nine months ended March 31, 2025, primarily due to lower finance lease payments.

We did not have any material off-balance sheet arrangements as of March 31, 2026.

### Liquidity

The Company’s unaudited consolidated financial statements have been prepared in accordance with US GAAP, which assumes that the Company’s management will evaluate whether it will be able to meet its obligations and continue its operations in the normal course of business. As of March 31, 2026, the Company had cash of approximately $2.7 million, short-term investments of approximately $3.9 million, and had positive working capital of $9.5 million. We have incurred recurring losses and negative cash flows from operations since inception and had an accumulated deficit of approximately $262 million at March 31, 2026, and reported a net loss of $11.2 million. We regularly monitor potential financings and capital sources, including equity and debt markets, in an effort to meet our planned capital expenditures and liquidity requirements. Our future success may depend on our ability to access outside sources of capital including through public or private equity offerings, additional debt financing, or via strategic collaborations, partnerships, or other arrangements with third parties. The availability and terms of future financing will depend on a variety of factors, including general economic and market conditions, our operating performance, and investor interest. Additional funding may not be available on acceptable terms, if at all. If we are unable to obtain adequate financing when needed, we may be forced to delay, reduce the scope of, or eliminate certain operations, commercialization efforts, or other aspects of our business. In addition, raising additional funds through equity offerings may result in dilution to our stockholders, while debt or other financing could involve covenants or obligations that restrict our business operations. Until we can generate sufficient revenue from product sales, if at all, we expect to finance our operations primarily through existing cash reserves and additional capital-raising activities.

While management believes that our cash and cash equivalents at March 31, 2026, together with operational cash flows will fund our current operating plans and meet our anticipated obligations for at least the next 12 months, substantial additional capital may be required to support longer-term growth and operational objectives. Future cash flows are subject to a number of variables, including the ability to generate sales under existing and future business opportunities, and significant additional capital expenditures may be required to conduct our operations. There can be no assurance that operations and other capital sources will provide sufficient cash to maintain planned or future levels of capital expenditures.

Management continues to monitor liquidity needs closely and will adapt strategy as appropriate to align with both near- and long-term business objectives. Management anticipates that significant additional expenditures will be necessary to develop and expand our business, before significant positive operating cash flows can be achieved, as current available funds are insufficient to complete our business plan and strategic objectives. Until we can generate sufficient revenue from sales, if at all, we expect to finance our operations primarily through existing cash reserves and additional capital-raising activities.

### Income Taxes

### Provision for Income Tax

The Company’s effective tax rate is 0% for income tax for the three and nine months ended March 31, 2026, and the Company expects that its effective tax rate for the full fiscal year 2026 year will be 0%. Based on the weight of available evidence, including net cumulative losses and expected future losses, the Company has determined that it is more likely than not that its U.S. federal and state deferred tax assets will not be realized and therefore a full valuation allowance has been provided on the U.S. federal and state net deferred tax assets.

In general, if the Company experiences a greater than 50 percentage point aggregate change in ownership over a three-year period (a Section 382 ownership change), utilization of its pre-change net operating loss (NOL) carryforwards are subject to an annual limitation under Section 382 of the Internal Revenue Code. Generally, U.S. state laws have laws similar to Internal Revenue Code Section 382. The annual limitation generally is determined by multiplying the value of the Company’s stock at the time of such ownership change (subject to certain adjustments) by the applicable long-term tax-exempt rate. Such limitations may result in expiration of a portion of the NOL carryforward before utilization.

The Company files U.S. federal and state income tax returns. The Company is not currently subject to any income tax examinations. The Company has net operating loss carryovers dating back to the June 2002 year, which generally allows all tax years to remain open to income tax examinations for all years for which there are loss carryforwards.

### Uncertain Tax Positions

The Company recognizes the financial statement effects of a tax position when it becomes more likely than not, based upon the technical merits, that the position will be sustained upon examination. The Company currently has approximately $763 thousand of uncertain tax positions as of March 31, 2026, all of which are accounted as contra-deferred tax assets. The Company does not expect any significant changes to its uncertain tax positions in the coming 12 months.

### Income Taxes

There is no income tax expense for the three and nine months ended March 31, 2026. There was $1 thousand provision for income taxes during both the three and nine months ended March 31, 2025.

## Controls and procedures

As filed, 1,775 characters.

### Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed by us in the reports we file or submit under the Exchange Act, 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 the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management was required to apply its judgment in evaluating and implementing possible controls and procedures. Management, including our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2026, at the reasonable assurance level.

### Changes in Internal Controls over Financial Reporting

There have been no changes in our internal controls over financial reporting that occurred during our last fiscal quarter ended March 31, 2026, that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

## Risk factors

As filed, 7,857 characters.

Our business, financial condition, results of operations, and cash flows may be impacted by several factors, many of which are beyond our control, including those set forth in Item 1A. "Risk Factors" of our 2025 Form 10-K and our subsequently filed Form 10-Qs, the occurrence of any one of which could have a material adverse effect on our actual results. Other than below, there have been no material changes to the risk factors and other cautionary statements disclosed in our 2025 Form 10-K.

***We have incurred significant losses since inception and anticipate that we will incur continued losses for the foreseeable future, as a result we will need to raise additional capital.***

As of March 31, 2026, the Company had cash of approximately $2.7 million and short-term investments of approximately $3.9 million. If our available cash resources and anticipated cash flows from operations are insufficient to satisfy our liquidity requirements, we will need to raise additional capital to continue to fund our operations in the future. In addition, as of March 31, 2026, we had an accumulated deficit of approximately $262 million and reported a net loss of $11.2 million. We are unable to predict the extent of any future losses or when we will become profitable, if at all. If we are unable to achieve and then maintain profitability or raise capital, the market value of our common stock will likely experience significant decline.

We will require additional financing as we continue to execute our business strategy, including the need for additional funds for the development of our products. We may seek to raise additional capital through issuances of equity or debt securities, entrance into a credit facility or another form of third-party funding or seek other debt financing. Such funding may not be available to us on acceptable terms, or at all, and such funding may become even more difficult to obtain due to macroeconomic conditions, including rising interest rates, tariffs and trade restrictions, global conflicts and other conditions that could result in volatility in the U.S. capital markets. We may be unable to raise capital through public offerings of our common stock and may need to turn to alternative financing arrangements. Such arrangements could involve issuances of one or more types of securities, including common stock, preferred stock, convertible debt, warrants to acquire common stock or other securities. Even if successful in raising new capital, we could be limited in the amount of capital we raise due to investor demand. There can be no assurance that funding will be available on acceptable terms, on a timely basis, or at all. The various ways that we could raise capital carry potential risks. Any additional financing will likely involve the issuance of our equity securities, which will have a dilutive effect on our stockholders. Any debt financing, if available, may involve restrictive covenants that may impact our ability to conduct our business. If we raise funds through partnering, such as collaborations and licensing arrangements, we might be required to relinquish significant rights to our technologies or grant licenses on terms that are not favorable to us. If we do not succeed in raising additional funds on acceptable terms or at all, we may be unable to develop our products.

If we are unable to raise additional capital when required or on acceptable terms, we may be required to:

- significantly scale back, or discontinue the development or commercialization of our products;
- dispose of technology assets, or relinquish or license on unfavorable terms, our rights to technologies or any of our products that we otherwise would seek develop or commercialize ourselves;
- pursue the sale of our company to a third party at a price that may result in a loss on investment for our stockholders; or
- file for bankruptcy or cease operations altogether. Any of these events could have a material adverse effect on our business, operating results and prospects.

***Our failure to maintain compliance with Nasdaq’s continued listing requirements could result in the delisting of our Common Stock.***

Our common stock is currently listed for trading on the Nasdaq Capital Market. We must satisfy the Nasdaq Capital Market’s continued listing requirements or risk delisting, which would have a material adverse effect on our business. A delisting of our common stock from the Nasdaq Capital Market could materially reduce the liquidity of our common stock and result in a corresponding material reduction in the price of our common stock. In addition, delisting could harm our ability to raise capital through alternative financing sources on terms acceptable to us, or at all, and may result in the potential loss of confidence by investors, suppliers, customers and employees and fewer business development opportunities. In addition, Nasdaq has filed a rule proposal with the SEC to adopt a new continued listing requirement that would require all companies listed on the Nasdaq Global Market or Nasdaq Capital Market to maintain a minimum market value of listed securities of $5 million. Under the proposed rule, if a company’s market value of listed securities falls below this threshold for 30 consecutive trading days, Nasdaq may immediately suspend trading and initiate delisting proceedings without affording the company a compliance cure period. This proposed rule, if adopted, would be in addition to Nasdaq’s existing continued listing requirements, which include minimum bid price, publicly held shares, and shareholders’ equity, among others. As of the date hereof, the market value of our listed securities falls below $5 million. The SEC has instituted formal proceedings to extend the period to determine whether to approve or disapprove the proposed rule change, which remains pending as of the date of this filing. If adopted in its current form, and our market value of securities continues to fall below the proposed $5 million threshold, or we otherwise fail to satisfy Nasdaq’s continued listing standards, we could face delisting proceedings on an accelerated basis. Moreover, even if we remain in compliance with quantitative criteria, Nasdaq retains discretionary authority under Rule IM-5101-1 to suspend or terminate a company’s listing if necessary to protect investors or ensure the orderly operation of the market. We may not be able to maintain compliance with Nasdaq’s continued listing standards, particularly in light of our trading volume, market capitalization, public float and other qualitative factors.

If our common stock were delisted from Nasdaq, trading of our common stock would most likely take place on an over-the-counter market established for unlisted securities, such as one maintained by OTC Markets Group Inc. An investor would likely find it less convenient to sell, or to obtain accurate quotations in seeking to buy, our common stock on an over-the-counter market, and many investors would likely not buy or sell our common stock due to difficulty in accessing over-the-counter markets, policies preventing them from trading in securities not listed on a national exchange or other reasons. A delisting of our common stock from Nasdaq could negatively impact us by (i) reducing the liquidity and market price of our common stock; (ii) reducing the number of investors willing to hold or acquire our common stock, which could negatively impact our ability to raise equity financing; (iii) impacting our ability to use a registration statement to offer and sell freely tradable securities, thereby preventing or limiting us from accessing the public capital markets; and (iv) impairing our ability to provide equity incentives to our employees. For these reasons and others, a delisting could have a material adverse effect on us.

Filed Aug 6, 2026.
Source: SEC EDGAR, the filing index for accession 0001437749-26-026366. Last ingested by Listed: Oct 24, 2026, 15:01 ET. No prices; not investment advice.