What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-13 compared with 2026-02-11 · 82 added, 90 removed, 181 unchanged (49% of the section changed)

81 unchanged sentences

Recent Government Contracts

During the quarter ended December 31, 2025, we

did not enter into any new material government contracts.

We continue to perform under existing contracts, including contracts with NASA,

Navy, the U.S.

During the three and nine months ended March 31,

2026, we entered into four and five new material government contracts, respectively, that include NASA, the State University of New York,

and the Office of the Secretary of Defense.

We also continue to perform under existing contracts, including contracts with the U.S.

Department of Energy, and U.S.

Defense Advanced Research Projects Agency, which remain significant sources of

Defense Advanced Research Projects Agency, which remain significant sources of revenue.

Public Offerings of Common Stock

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of our common stock, raising net proceeds of $12.6 million in March 2025 and $23.4 million in September 2025.

As of December 31, 2025,

the proceeds from these offerings continue to support our working capital, operations, and planned business development activities.

additional equity offerings are planned at this time, but management continues to monitor capital market conditions and may consider future

financing if needed.

Other Recent Events

On August 4, 2025, we appointed Christopher Stewart

as our Chief Financial Officer.

Pursuant to Mr.

Stewart’s employment agreement, he was granted 110,000 stock options and 55,000 restricted

stock units (“RSUs”).

The stock options have an exercise price of $21.04, with 25% of the stock options vesting on the

twelve (12) month anniversary of Mr.

Stewart’s employment with the Company.

The balance of the stock options will vest in equal

monthly increments on each monthly anniversary of Mr.

Stewart’s employment start date with the Company, over the next thirty-six

The stock options expire on the 10-year anniversary of their vesting date.

25% of the shares underlying the RSUs will

vest at the end of the fiscal quarter following the twelve (12) month anniversary of Mr.

Stewart’s employment start date with the

Company, with a pro-rated amount for any partial quarter preceding the twelve (12) month anniversary.

The remaining RSUs will vest in

equal quarterly increments, with a pro-rated amount for any partial final quarter.

Each restricted stock unit represents the contingent

right to receive, at settlement, one share of common stock.

As of March 31, 2026, the

proceeds from these offerings continue to support our working capital, operations, and planned business development activities.

On March 20, 2026, we entered into a sales agreement,

pursuant to which we may sell shares of our common stock having an aggregate offering price of up to $50 million, through an “at-the-market”

offering program.

As of March 31, 2026, no sales of our common stock were transacted under this agreement.

We are not obligated to sell,

and the agents are not obligated to buy or sell, any shares under the agreement.

Any shares will be offered and sold under the agreement

will be pursuant to the Company’s effective shelf registration statement on Form S-3.

Management continues to monitor capital market

conditions and may consider other future financing if needed.

Plan of Operations

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Limited Operating History

We have a limited operating history, and our future

success is subject to numerous uncertainties and risks inherent in the development of a new business.

Although we raised substantial funds

through underwritten completed public offerings in March 2025 and September 2025, raising gross proceeds of $13.8 million and $25.4 million,

respectively, there can be no assurance that these funds will be sufficient to carry out all aspects of our business plan.

Following the offerings, management has assessed

our financial position and operating plan and determined that the previously reported substantial doubt about our ability to continue

as a going concern has been alleviated.

The proceeds from the offerings have provided near-term capital to support our operations and

ongoing development efforts.

However, we continue to face risks typical of early-stage companies, including limited capital resources,

operational and financial challenges, uncertainty in product development and product-market fit.

We have a limited operating history and our operations

remain in the development stage.

To date, our activities have been primarily concentrated on product design, engineering validation, prototyping,

and establishing manufacturing and supply chain relationships.

We have not yet generated significant revenues from commercial product

sales and continue to devote substantial resources to research and development, product qualification, and market readiness.

To support these activities, we completed public

offerings in March 2025 and September 2025, raising gross proceeds of $13.8 million and $25.4 million, respectively.

The proceeds have

been used primarily to fund research and development efforts, expand engineering capabilities, and support general corporate operations.

The proceeds from the completed offerings have provided near-term capital to support our operations and ongoing development efforts.

we continue to face risks typical of development stage companies including, but not limited to, operational and financial challenges,

uncertainty in product development, and product-market fit.

On March 20, 2026, we entered into a sales agreement,

pursuant to which we may, from time to time, offer and sell shares of our common stock, par value $0.0001 per share.

The Sales Agreement

provides for an aggregate offering amount of up to $50.0 million of our common stock, through an “at-the-market” offering

Proceeds from the sales will be used for general corporate purposes, including working capital and other liquidity needs.

Components of Results of Operations

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Interest income consists primarily of interest

earned in interest-bearing savings accounts and certificates of deposit held at a bank.

earned in interest-bearing savings accounts, certificates of deposit held at a bank, and money market funds that invest 100% of their

assets in short-term U.S.

Treasury obligations.

Amortization of discount on convertible notes

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Results of Operations

Our results of operations for the six months ended

December 31, 2025, as compared to the same period of 2024, were as follows ($ in thousands):

Six Months Ended December 31,

Our results of operations for the nine months

ended March 31, 2026, as compared to the same period of 2025, were as follows ($ in thousands):

Nine Months Ended March 31,

Operating expenses

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to $3.9 million, of which $3.8 million was derived from government contracts and $41 thousand from other products and services for the

six months ended December 31, 2025.

nine months ended March 31, 2026.

Revenue was $3.3 million, of which $3.1 million was derived from government contracts and $201 thousand

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Operating expenses

increased $3.9 million, or 160.7%, to $6.3 million for the six months ended December 31, 2025, compared to $2.4 million for the same period

increased $5.2 million, or 114%, to $9.7 million for the nine months ended March 31, 2026, compared to $4.5 million for the same period

The increase was primarily driven by an increase in material purchases to support the delivery of our products and services associated

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Other income (expense):

Other income (expense)

consists of interest income of $343 thousand for the six months ended December 31, 2025, compared to ($3.3) million comprised of amortization

of discount on convertible notes of ($428) thousand and changes in fair value of derivative liabilities of ($2.9) million for the same

period of 2024.

Other income of

$668 thousand for the nine months ended March 31, 2026 consisted of interest income, compared to other (expense) of $990 thousand for

the same period of 2025, comprised of amortization of discount on convertible notes of ($715) thousand and changes in fair value of derivative

liabilities of $(279) thousand, and interest income of $3 thousand.

Income tax expense :

No income tax expense

was recorded for the six months ended December 31, 2025 and 2024.

was recorded for the nine months ended March 31, 2026 and 2025.

Liquidity and Capital Resources

As of December 31, 2025, we had cash, cash equivalents,

As of March 31, 2026, we had cash, cash equivalents,

and a certificate of deposit totaling $37.8 million, compared to $15.7 million as of June 30, 2025.

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Treasury obligations.

Prior to the offerings, our operations were primarily

financed through the issuance of convertible notes and sales of common stock in private placement transactions.

As previously disclosed,

we had expressed substantial doubt about our ability to continue as a going concern due to recurring losses and negative operating cash

With the successful completion of the offerings, we believe that substantial doubt about our ability to continue as a going concern

has been alleviated for at least the next twelve months.

We intend to continue to use the net proceeds

from the offerings to support operational growth, invest in product development, and fund working capital and general corporate purposes.

Based on our current operating plan, we believe that our existing cash, cash equivalents, and certificate of deposit, combined with projected

revenues and cost management strategies, will be sufficient to meet our working capital and capital expenditure requirements for at least

the next twelve months.

We will continue to assess our capital requirements

Prior to the public offerings, our operations

were primarily financed through the issuance of convertible notes and sales of common stock in private placement transactions.

to continue to use the net proceeds from the offerings to support operational growth, invest in product development, and fund working

capital and general corporate purposes.

On March 20, 2026, we entered into a Sales Agreement

under which we may, from time to time, offer and sell shares of our common stock, par value $0.0001 per share, for aggregate gross proceeds

of up to $50.0 million, through an “at-the-market” offering program.

Any proceeds, if and when received, are expected to be

used for general corporate purposes, including working capital and other liquidity needs.

We continue to assess our capital requirements

and may pursue additional financing opportunities to support long-term growth initiatives or respond to changes in market conditions.

As of December 31, 2025, we had net working capital,

As of March 31, 2026, we had net working capital,

defined as total current assets less total current liabilities, of $38.6 million, compared to $16.6 million at June 30, 2025.

was primarily driven by a $22.8 million increase in current assets, which rose to $40.2 million from $17.3 million over the same period,

largely due to a $22.8 million increase in cash and cash equivalents.

Current liabilities totaled $825 thousand and $705 thousand as of

December 31, 2025 and June 30, 2025, respectively, and the balances primarily consisted of accounts payable, along with accrued expenses

and other short-term obligations expected to be settled within one year.

largely due to a $22.0 million increase in cash and cash equivalents, including the certificate of deposit balance at June 30, 2025.

Current liabilities totaled $1.5 million and $705 thousand as of March 31, 2026 and June 30, 2025, respectively, and the balances primarily

consisted of accounts payable, along with accrued expenses and other short-term obligations expected to be settled within one year.

The following table shows a summary of our cash

flows for the periods presented ($ in thousands):

Six Months Ended December 31,

Nine Months Ended March 31,

Net cash provided by (used in)

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Net cash used in our operating activities was

$1.1 million and $1.3 million for the six months ended December 31, 2025 and 2024, respectively.

For the six months ended December 31,

2025, the net cash used in operating activities primarily resulted from a net loss of $3.3 million and decreases in accounts payable of

$177 thousand, primarily offset by non-cash stock-based compensation expense of $2.1 million and depreciation and amortization expense

$1.6 million and $1.1 million for the nine months ended March 31, 2026 and 2025, respectively.

For the nine months ended March 31, 2026,

the net cash used in operating activities primarily resulted from a net loss of $5.1 million and a decrease in prepaids and other current

assets of $699 thousand, primarily offset by non-cash stock-based compensation expense of $3.2 million and an increase in accounts payable

of $612 thousand.

For the six months ended December 31, 2024, the net cash used in operating activities was primarily attributable to

a net loss of $3.6 million, increases in accounts receivable of $1.3 million and prepaid and other current assets of $115 thousand, and

a decrease in accounts payable of $134 thousand.

These amounts were partially offset by non-cash expenses including changes in fair value

of derivative liabilities of $2.9 million, amortization of discount on convertible notes of $428 thousand, stock-based compensation expense

of $316 thousand, and depreciation and amortization expense of $202 thousand.

For the nine months ended March 31, 2025, the net cash used in operating activities was primarily attributable to a

net loss of $2.2 million and a decrease in accounts receivable of $1.1 million.

These amounts were partially offset by non-cash expenses,

including stock-based compensation expense of $1.1 million, amortization of discount on convertible notes of $715 thousand, depreciation

and amortization expense of $307 thousand, and changes in fair value of derivative liabilities of $278 thousand.

Net cash used in our investing activities totaled

$241 thousand and $41 thousand for the six months ended December 31, 2025 and 2024, respectively.

These investing activities primarily

consisted of purchases of equipment.

$439 thousand and $85 thousand for the nine months ended March 31, 2026 and 2025, respectively.

These investing activities primarily consisted

of purchases of equipment.

Net cash provided by our financing activities

was $24.1 million for the six months ended December 31, 2025, compared to net cash provided by our financing activities of $3.1 million

for the same period in 2024.

We received $23.4 million, net of offering costs, from the public offering, $690 thousand from the exercise

of stock warrants and $64 thousand from the exercise of stock options for the six months ended December 31, 2025, compared to $3.1 million

from the issuance of convertible notes during the same period in 2024.

was $24.1 million for the nine months ended March 31, 2026, compared to $15.7 million for the same period in 2025.

For the nine months

ended March 31, 2026, we received $23.4 million, net of offering costs, from the public offering, $690 thousand from the exercise of stock

warrants, and $103 thousand from the exercise of stock options.

For the nine months ended March 1, 2025, we received $12.6 million, net

of offering costs, from the public offering and $3.1 million from the issuance of convertible notes.

Critical Accounting Estimates

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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