What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-14 compared with 2025-08-05 · 90 added, 72 removed, 186 unchanged (47% of the section changed)

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Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere in this report, particularly in the sections titled “Risk Factors” and “Special Note Regarding Forward-Looking Statements.”

Recent Developments

Backlog and Pipeline

Backlog as of October 6, 2025 was approximately $11 million, representing firm fixed price contracts awarded in the third quarter of 2025 that will be shipped and invoiced through the remainder of calendar year 2025 and early 2026.

Our total validated pipeline as of September 30, 2025 was $166 million, consisting of single and multi-year opportunities for AI- driven edge, video, and sensor and data management platform across our customer verticals.

Our pipeline includes opportunities at varying stages of progression with expected award timeframes over the next 18-24 months.

Warrant Exercise

On October 8, 2025, we entered into warrant exercise inducement offer letter with the holder of its existing common stock warrants exercisable for an aggregate of 2,162,162 shares of its common stock to exercise its existing warrants at the existing exercise price of $4.50 per share, in exchange for our agreement to issue new common stock warrants to purchase 2,702,702 shares of common stock at an exercise price per share of $6.20.

The aggregate gross proceeds from the exercise of the existing warrants were approximately $9,729,729, before deducting financial advisory fees.

We intend to use the net proceeds from the exercise of the existing warrants for working capital and general corporate purposes.

The shares of common stock issuable upon exercise of the existing warrants are registered for issuance pursuant to a registration statement on Form S-3 (File No.

333-284462), which was declared effective by the SEC on January 31, 2025.

In consideration for the immediate exercise of the existing warrants for cash, the holder received the inducement warrants in a private placement pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”).

The inducement warrants have an exercise price of $6.20 per share, are immediately exercisable and will be exercisable for five and one-half years from the date of issuance.

The inducement warrants and the shares of common stock underlying the inducement warrants offered in the private placement have not been registered under the Securities Act or applicable state securities laws.

Accordingly, the securities may not be offered or sold in the United States except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act and such applicable state securities laws.

As part of the transaction, we have filed a resale registration statement on Form S-3 with the SEC to register the resale of the shares of common stock underlying the inducement warrants.

We are a robust AI-driven data management platform that solves complex data challenges for large institutions operating in dynamic and mission-critical environments with rapidly increasing volumes of data being ingested from a similarly rapidly growing number of data sources.

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Our offerings allow customers to manage their data across the full data lifecycle, when and where they need it, using a highly secure permissioned based architecture.

Recent Developments

Fair Value Transactions in Connection with Merger

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Liability as of

June 30, 2025

September 30, 2025

December 31, 2024

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On June 3, 2024, we permanently reduced the exercise price of such warrants from $11.50 per share to an exercise price of $7.80 per share.

On November 20, 2024, the Company further reduced the exercise price of the outstanding public warrants and private warrants to an exercise price of $4.50 per share.

On November 20, 2024, we further reduced the exercise price of the outstanding public warrants and private warrants to an exercise price of $4.50 per share.

The purpose of this reduced exercise price was to potentially raise proceeds received from the exercise of such warrants, if any, for working capital and general corporate purposes.

As of June 30, 2025, there were 515,000 private placement warrants and 16,145,110 public warrants outstanding.

As of September 30, 2025, there were 515,000 private placement warrants and 16,145,108 public warrants outstanding.

Key Performance Indicators

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Results of Operations

The following table sets forth key components of our results of operations during the three months ended June 30, 2025 and 2024.

The following table sets forth key components of our results of operations during the three months ended September 30, 2025 and 2024.

(dollars in thousands)

Three Months Ended June 30,

Three Months Ended September 30,

Cost of net revenues

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Other income (expense):

(Loss) gain from change in fair value of earnout liability

(Loss) gain change in fair value of warrant liability

Gain from change in fair value of earnout liability

Gain change in fair value of warrant liability

Gain from change in fair value of convertible debt

Loss on note conversion

Interest income (expense), net

Other expense

Total (other expense) income, net

(Loss) income before income taxes

Total other income, net

Income before income taxes

Provision for income taxes

Net (loss) income

Net Revenues — Net revenues for the three months ended June 30, 2025 decreased $4,254,000 to $2,147,000 as compared to $6,401,000 for the three months ended June 30, 2024, as a result of purchase orders from various federal government agency customers totaling over $13 million which we primarily shipped in the three months ended June 30, 2024.

Net Revenues — Net revenues for the three months ended September 30, 2025 decreased $1,691,000 to $1,177,000 as compared to $2,868,000 for the three months ended September 30, 2024.

On January 20, 2025, President Trump signed an executive order creating an advisory commission, the Department of Government Efficiency to reform federal government processes and reduce expenditures.

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Cost of Net Revenues — Cost of net revenues primarily consists of product costs and post customer support.

For the three months ended June 30, 2025, cost of sales decreased $1,281,000 to $614,000 as compared to $1,895,000 for the three months ended June 30, 2024.

The decrease was due to lower sales, offset by product mix with decreased equipment purchases during the three months ended June 30, 2025.

Research and Development Expenses — Research and development expenses for the three months ended June 30, 2025 increased $38,000 to $741,000 as compared to $703,000 for the three months ended June 30, 2024.

The increase was due to increased expenses for product development in the United States and Taiwan.

Selling, General and Administrative Expenses — Selling, general and administrative expenses for the three months ended June 30, 2025 decreased $13,000 to $2,814,000.

Other (Expense) Income — Other expense for the three months ended June 30, 2025 was $21,735,000 as compared to other income of $17,486,000 for the three months ended June 30, 2024.

Other expense for the three months ended June 30, 2025 consisted of (i) loss from change in fair value of earnout liability of $7,302,000;

(ii) loss from change in fair value of warrant liability of $14,494,000;

For the three months ended September 30, 2025, cost of sales decreased $140,000 to $574,000 as compared to $714,000 for the three months ended September 30, 2024.

The decrease was due to lower sales, offset by product mix with decreased equipment purchases during the three months ended September 30, 2025.

Research and Development Expenses — Research and development expenses for the three months ended September 30, 2025 decreased $321,000 to $753,000 as compared to $1,074,000 for the three months ended September 30, 2024.

The decrease was due to decreased expenses for product development in the United States and Taiwan.

Selling, General and Administrative Expenses — Selling, general and administrative expenses for the three months ended September 30, 2025 increased $50,000 to $2,667,000.

Other Income (Expense) — Other income for the three months ended September 30, 2025 was $9,277,000 as compared to $7,801,000 for the three months ended September 30, 2024.

Other income for the three months ended September 30, 2025 consisted of (i) gain from change in fair value of earnout liability of $3,893,000;

(ii) gain from change in fair value of warrant liability of $5,331,000;

and (iii) other income of $53,000.

The loss from change in fair value of various financial instruments was primarily the result of an increase in our stock price.

Other income for the three months ended June 30, 2024 consisted of (i) gain from change in fair value of warrant liability of $1,542,000;

(ii) gain from change in fair value of earnout liability of $14,877,000;

The income from change in fair value of various financial instruments was primarily the result of a decrease in our stock price.

Other income for the three months ended September 30, 2024 consisted of (i) gain from change in fair value of earnout liability of $5,512,000;

(ii) gain from change in fair value of warrant liability of $2,471,000;

(iii) gain from change in fair value of convertible debt of $371,000;

and offset by (iv) interest expense $421,000;

and (v) other expense of $39,000.

Net (Loss) Income — Net loss for the three months ended June 30, 2025 was $23,757,000 as compared to a net income of $18,462,000 for the three months ended June 30, 2024.

The net loss primarily related to noncash expenses of $22,264,000.

Noncash items included (i) loss from change in warrant liability of $14,494,000;

(ii) loss from change in earnout liability of $7,301,000;

(iv) other income of $16,000;

offset by (v) loss on note conversion of $435,000;

and (vi) interest expense of $134,000.

The gain from change in fair value of various financial instruments was primarily the result of a lower stock price.

Net Income — Net income for the three months ended September 30, 2025 was $6,410,000 as compared to net income of $6,214,000 for the three months ended September 30, 2024.

The net income primarily related to noncash income of $8,770,000.

Noncash items included (i) gain from change in warrant liability of $5,331,000;

(ii) gain from change in earnout liability of $3,893,000;

(iii) stock based compensation of $356,000;

and (iv) net amortization of operating lease right of use asset of $98,000.

The net income for the three months ended June 30, 2024 primarily related to noncash items of $16,894,000.

Net income for the three months ended September 30, 2024 was $6,214,000.

The net income is reduced by noncash items of $7,338,000, primarily the gain from the change in fair value of various financial instruments.

Noncash items included (i) stock based compensation of $557,000;

(ii) net amortization of operating lease right of use asset of $24,000;

(iii) issuance of common stock for services of $198,000;

(iv) noncash interest expense of $521,000;

(v) gain from change in warrant liability of $1,542,000;

(vi) gain from change in earnout liability of $14,877,000;

and (vii) gain from change in fair value of convertible note of $1,527,000.

The following table sets forth key components of our results of operations during the six months ended June 30, 2025 and 2024.

(iii) loss on note conversions of $434,000;

offset by (iv) gain from change in fair value of warrant liability of $2,471,000;

(v) gain from change in fair value of earnout liability of $5,571,000;

and (vi) gain from change in fair value of convertible note of $370,000.

The following table sets forth key components of our results of operations during the nine months ended September 30, 2025 and 2024.

(dollars in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cost of net revenues

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Total income (other expense), net

(Loss) income before income taxes

Income (loss) before income taxes

Provision for income taxes

Net Revenues — Net revenues for the six months ended June 30, 2025 decreased $9,326,000 to $7,650,000 as compared to $16,976,000 for the six months ended June 30, 2024, as a result of purchase orders from various federal government agency customers totaling over $13 million which we primarily shipped in the six months ended June 30, 2024.

Net income (loss)

Net Revenues — Net revenues for the nine months ended September 30, 2025 decreased $11,017,000 to $8,827,000 as compared to $19,844,000 for the nine months ended September 30, 2024, as a result of purchase orders from various federal government agency customers totaling over $13 million which we primarily shipped in the nine months ended September 30, 2024.

On January 20, 2025, President Trump signed an executive order creating an advisory commission, the Department of Government Efficiency to reform federal government processes and reduce expenditures.

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Cost of Net Revenues — Cost of net revenues primarily consists of product costs and post customer support.

For the six months ended June 30, 2025, cost of sales decreased $5,960,000 to $3,882,000 as compared to $9,842,000 for the six months ended June 30, 2024.

The decrease was due to lower sales, offset by product mix with decreased equipment purchases during the six months ended June 30, 2025.

Research and Development Expenses — Research and development expenses for the six months ended June 30, 2025 increased $62,000 to $1,460,000 as compared to $1,398,000 for the six months ended June 30, 2024.

The increase was due to increased expenses for product development in the United States and Taiwan.

Selling, General and Administrative Expenses — Selling, general and administrative expenses for the six months ended June 30, 2025 decreased $118,000 to $6,044,000 as compared to $6,162,000 for the six months ended June 30, 2024.

Other Income (Expense) — Other income for the six months ended June 30, 2025 was $3,687,000 as compared to other expense of $13,076,000 for the six months ended June 30, 2024.

Other income for the six months ended June 30, 2025 consisted of (i) gain from change in fair value of earnout liability of $2,522,000;

For the nine months ended September 30, 2025, cost of sales decreased $6,100,000 to $4,456,000 as compared to $10,556,000 for the nine months ended September 30, 2024.

The decrease was due to lower sales, offset by product mix with decreased equipment purchases during the nine months ended September 30, 2025.

Research and Development Expenses — Research and development expenses for the nine months ended September 30, 2025 decreased $259,000 to $2,213,000 as compared to $2,472,000 for the nine months ended September 30, 2024.

The decrease was due to decreased expenses for product development in the United States and Taiwan.

Selling, General and Administrative Expenses — Selling, general and administrative expenses for the nine months ended September 30, 2025 increased $69,000 to $8,761,000 as compared to $8,830,000 for the nine months ended September 30, 2024.

Other Income (Expense) — Other income for the nine months ended September 30, 2025 was $12,964,000 as compared to other expense of $5,275,000 for the nine months ended September 30, 2024.

Other income for the nine months ended September 30, 2025 consisted of (i) gain from change in fair value of earnout liability of $6,415,000;

(ii) gain from change in fair value of warrant liability of $6,358,000;

and (iii) other income of $191,000.

The gain from change in fair value of various financial instruments was primarily the result of an increase in our stock price.

Other expense for the six months ended June 30, 2024 consisted of (i) loss from change in fair value of warrant liability of $5,305,000;

(ii) loss from change in fair value of earnout liability of $6,608,000;

The income from change in fair value of various financial instruments was primarily the result of a decrease in our stock price.

Other expense for the nine months ended September 30, 2024 was $5,275,000 as compared to other expense of $466,000 for the nine months ended September 30, 2023.

Other expense for the nine months ended September 30, 2024 consisted of (i) loss from change in fair value of earnout liability of $1,096,000;

(ii) loss from change in fair value of warrant liability of $2,834,000;

(iii) loss from change in fair value of convertible debt of $142,000;

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(v) interest expense of $587,000:

and (vi) other interest of $39,000.

Net (Loss) Income — Net loss for the six months ended June 30, 2025 was $49,000 as compared to a net loss of $13,502,000 for the six months ended June 30, 2024.

and (vi) other expense of $23,000.

The loss from change in fair value of various financial instruments was primarily the result of an increase in the stock price.

Net Income (Loss) — Net income (loss) for the nine months ended September 30, 2025 was 6,361,000 as compared to a net loss of $7,289,000 for the nine months ended September 30, 2024.

The net income primarily related to noncash items of $11,339,000.

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(ii) gain from change in earnout liability of $6,415,000;

and offset by (iii) stock based compensation of $800,000;

and (ix) net amortization of operating lease right of use asset of $180,000.

The net loss for the six months ended June 30, 2024 primarily related to noncash items of $13,987,000.

and offset by (iii) stock based compensation of $1,156,000 and (iv) net amortization of operating lease right of use asset of $278,000.

Net loss for the nine months ended September 30, 2024 was $7,289,000 The net loss primarily related to noncash items of $6,649,000.

Noncash items included (i) depreciation of $2,000;

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(v) noncash interest expense of $521,000;

(vi) loss from change in warrant liability of $5,305,000;

(vii) loss from change in earnout liability of $6,608,000;

(vi) loss from change in fair value of warrant liability of $2,834,000;

(vii) loss from change in fair value of earnout liability of $1,096,000;

(viii) loss from change in fair value of convertible note of $142,000;

and (ix) loss on note conversions of $593,000.

Liquidity and Capital Resources as of June 30, 2025 and 2024

Liquidity and Capital Resources as of September 30, 2025 and 2024

Liquidity is our ability to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis.

Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures.

We have incurred losses from operations in the past few years and had an accumulated deficit of $75.0 million as of June 30, 2025.

We have incurred losses from operations in the past few years and had an accumulated deficit of $68.6 million as of September 30, 2025.

In September 2024, we closed an $8.0 million public offering with approximately $7.3 million in net proceeds.

In December 2024, we received net proceeds of approximately $7.4 million from the exercise of warrants related to an inducement offer agreement.

We formally evaluated our liquidity and cash position in August 2025 when preparing the June 30, 2025 Form 10-Q consolidated financial statements.

During this process, we analyzed our cash requirements and operations at least through August 2026 and determined that, based upon our current available cash and operations, we have no substantial doubt about our ability to continue as a going concern.

In October 2025, we received net proceeds of approximately $9.7 million from the exercise of warrants related to an inducement offer agreement.

We formally evaluated our liquidity and cash position in November 2025 when preparing the September 30, 2025 Form 10-Q consolidated financial statements.

During this process, we analyzed our cash requirements and operations at least through November 2026 and determined that, based upon our current available cash and operations, we have no substantial doubt about our ability to continue as a going concern.

Our assessment of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement and involves risks and uncertainties.

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Operating Activities

Net cash used in operating activities for the six months ended June 30, 2025 was $3,919,000.

This amount was primarily related to (i) net loss of $49,000;

(ii) net working capital reductions of $1,301,000 (including a $606,000 reduction in deferred revenues);

Net cash used in operating activities for the nine months ended September 30, 2025 was $4,502,000.

This amount was primarily related to (i) net income of $6,361,000;

(ii) net working capital changes of $476,000 (including a $1,211,000 reduction in deferred revenues);

and offset by (iii) noncash items of $11,339,000.

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(v) gain from change in earnout liability of $6,415,000;

and offset by (vi) stock based compensation of $800,000;

and (vii) net amortization of operating lease right of use asset of $180,000.

Net cash used in operating activities for the six months ended June 30, 2024 was $4,147,000.

and offset by (vi) stock based compensation of $1,156,000 and (vii) net amortization of operating lease right of use asset of $278,000.

Net cash used in operating activities for the nine months ended September 30, 2024 was $4,398,000.

This amount was primarily related to (i) net loss of $7,289,000;

and (ii) net working capital reductions of $4,632,000;

and (ii) net working capital reductions of $3,758,000 (including a $2,059,000 reduction in deferred revenues);

offset by (iii) noncash items of $6,649,000.

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Financing Activities

Net cash used in financing activities for the six months ended June 30, 2025 was $1,182,000 and consisted of (i) repayment of advances by founders of $1,300,000;

Net cash used in financing activities for the nine months ended September 30, 2025 was $1,149,000 and consisted of (i) repayment of advances by founders of $1,300,000;

and offset by (ii) net proceeds from exercise of warrants of $60,000;

and (iii) proceeds from stock option exercises of $91,000.

Net cash provided by financing activities for the six months ended June 30, 2024 was $1,240,000 and consisted of (i) proceeds from warrant exercise of $293,000;

(ii) advances from founders of $800,000;

Net cash provided by financing activities for the nine months ended September 30, 2024 was $7,780,000 and consisted of (i) proceeds from offering of $7,290,000;

(ii) proceeds from exercise of warrants of $294,000;

and (iii) proceeds from stock option exercises of $196,000.

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We believe that the significant accounting policies described in “ Note 2, Summary of Significant Accounting Policies ” to our audited consolidated financial statements are accurate and complete.

The critical accounting estimates and policies during the six months ended June 30, 2025 have not materially changed to those discussed in our Annual Report on Form 10-K for the year ended December 31, 2024.

The critical accounting estimates and policies during the nine months ended September 30, 2025 have not materially changed to those discussed in our Annual Report on Form 10-K for the year ended December 31, 2024.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis