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Item 7. Management’s Discussion and Analysis

2026-07-27 compared with 2025-07-23 · 44 added, 52 removed, 123 unchanged (44% of the section changed)

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It is the combination of the Datacenter and the analytics that create a foundation for Lumin.

Insights developed using Lumin can provide the basis for

biomarker hypotheses, reveal potential mechanisms of therapeutic resistance, and guide the direction of additional preclinical evaluations.

Insights developed using Lumin can provide the basis for biomarker hypotheses, reveal potential mechanisms of therapeutic resistance, and guide the direction of additional preclinical evaluations.

Our drug discovery and development business leverages the computational and experimental capabilities within our platforms.

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Any expenses associated with this part of our business are research and development and are expensed as incurred.

We regularly evaluate strategic options to create additional value from our drug discovery business, which may include, but are not limited to, potential spin-out transactions or capital raises.

We regularly evaluate strategic options to create additional value from our drug discovery business, which may include, but are not limited to, potential spin-out transactions, licensing opportunities, or capital raises.

Results of Operations

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Other TOS revenue 1,528 3,683

Personalized oncology services — 18

Total oncology revenue $ 59,425 $ 56,944

Pharmacology Services

• The increase for the year ending April 30, 2025 was the result of a stronger bookings to revenue conversion rate.

Bookings, which represent the total value of signed statements of work, convert to revenue over time as the Company fulfills its contractual performance obligations.

Operational improvements implemented throughout the year have enhanced execution efficiency, contributing to the improvement in the conversion percentage.

• Pharmacology services revenue increased for the year ended April 30, 2026 compared to the prior year.

The increase was primarily driven by improved conversion of previously booked studies into revenue, including studies that had been expected to convert in the prior fiscal year but were delayed into fiscal 2026.

The timing and progress of study activity can impact the period in which bookings convert to revenue.

TOS Data License Revenue

• Revenue for the year ending April 30, 2025 resulted from the sale of data licenses.

No such revenues occurred for the year ending April 30, 2024.

• TOS data license revenue decreased for the year ended April 30, 2026 compared to the prior year.

Fiscal 2025 revenue primarily reflected a significant data license transaction with a single customer, while fiscal 2026 revenue was generated from multiple, smaller customer contracts.

Although fiscal 2026 did not include a comparable large transaction, the Company expanded its data licensing customer base during the year.

Other TOS Revenue

• Other TOS Revenue includes additional clinical services provided to the Company's pharmaceutical and biotechnology customers, specifically flow cytometry and SaaS provided via Lumin.

• Our flow cytometry services revenue increased approximately $787,000 for the year ending April 30, 2025 due to stronger bookings to revenue conversion rates.

• This increase in Other TOS Revenue was offset by a decrease in our SaaS revenues for the year ending April 30, 2025 as compared with 2024 of $205,000.

This decrease resulted from both a decline in new and renewal subscriptions.

• Other TOS revenue includes additional clinical services provided to the Company's pharmaceutical and biotechnology customers specifically for flow cytometry and SaaS provided via Lumin.

Other TOS revenue decreased for the year ended April 30, 2026 compared to the prior year, primarily due to lower flow cytometry revenue as the Company strategically shifted its focus and investment away from this area of the business.

Cost of Oncology Revenue

Cost of oncology revenue was $28.4 million and $29.4 million for the years ended April 30, 2025 and 2024, respectively, a decrease of $1.0 million or 3.4%.

Cost of oncology revenue is comprised primarily of expenses for mice, laboratory supplies, compensation, and outsourced lab services.

The reduction from prior year was primarily driven by lower compensation, such as overtime, and lab supply costs due to operational improvements, along with a decrease in outsourced lab services.

Cost of oncology revenue was $30.9 million and $28.4 million for the years ended April 30, 2026 and 2025, respectively, an increase of $2.5 million or 8.8%.

The increase was primarily driven by higher outsourced laboratory costs associated with the expansion of our radiopharmacology services.

During fiscal 2026, we transitioned these capabilities in-house, which we expect will reduce our reliance on outsourced laboratory services and associated costs for fiscal 2027.

Research and Development

Research and development expense was $6.8 million and $9.5 million for the years ended April 30, 2025 and 2024, respectively, a decrease of $2.7 million or 28.5%.

Research and development expense was $9.1 million and $6.8 million for the years ended April 30, 2026 and 2025, respectively, an increase of $2.3 million or 33.1%.

The significant components of research and development expense were comprised of the following:

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Outside Services 2,270 590

The overall decreases in research and development expense from the prior year period were primarily the result of a reduction in investment in our developmental programs including Corellia, our wholly owned subsidiary focused on target discovery.

Research and development expense increased $2.3 million, or 33.1% for the year ended April 30, 2026 compared to the prior year.

The increase was primarily driven by increased investment in the Company's data platform, including higher sequencing and laboratory costs, as well as higher compensation expenses associated with these initiatives.

Sales and Marketing

Sales and marketing expense was $7.5 million and $7.1 million for the years ended April 30, 2025 and 2024, respectively, an increase of $481,000 or 6.8%.

The increase was mainly due to an increase in compensation costs including the expansion of the Data License deals team.

Sales and marketing expense increased $1.8 million or 23.5% for the year ended April 30, 2026 compared to the prior year.

The increase was primarily driven by higher compensation costs associated with the expansion of the Company's commercial organization, including personnel supporting both its pharmacology services and data licensing businesses.

General and Administrative

General and administrative expense was $9.3 million and $11.1 million for the years ended April 30, 2025 and 2024, respectively, a decrease of $1.7 million, or 15.6%.

General and administrative expense was primarily comprised of compensation, insurance, professional fees, IT, and depreciation and amortization expenses.

The general and administrative expense decrease was primarily due to a reduction in compensation expenses and professional fees.

Additional non-cash

declines resulted from stock compensation and allowances for estimated credit losses and bad debt reserves.

The overall reduction was partially offset by an increase in IT expenses.

General and administrative expense increased $1.8 million, or 19.4% for the year ended April 30, 2026 compared to the prior year.

The increase was primarily driven by higher information technology costs, stock-based compensation and compensation-related expenses, including costs associated with changes in executive leadership.

Loss on Disposal of Equipment

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Other Income, net

Other income, net, was $73,000 and $48,000 for the years ended April 30, 2025 and April 30, 2024, respectively.

For the year ended April 30, 2025, other income resulted primarily from interest income of $87,000 and foreign currency transaction net gains of approximately $11,000 partially offset by interest expense of $27,000.

For the year ended April 30, 2024, other income resulted primarily from interest income of $92,000 partially offset by foreign currency transaction net losses of approximately $16,000 and interest expense of $28,000.

Other income, net, was $211,000 and $73,000 for the years ended April 30, 2026 and 2025, respectively.

The increase was primarily attributable to higher interest income.

Income Taxes, net

For the years ended April 30, 2026 and 2025, the Company recognized income tax expense of $246,000 and an income tax benefit of $75,000, respectively.

For the year ended April 30, 2026, income tax expense of $246,000 is mainly attributable to U.S.

state income taxes due to net operating loss limitations and taxable income earned in Israel and Italy relating to transfer pricing.

For the year ended April 30, 2025, the income tax benefit of $75,000 is related to the same items as indicated for the year ending 2026, net of a $181,000 reversal of an uncertain tax liability in Israel.

Liquidity and Capital Resources

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In the past, we have met these cash requirements through our cash on hand, working capital management, proceeds from certain private placements and public offerings of our securities and sales of products and services.

For the years ended April 30, 2025 and 2024, the Company had net income of approximately $4.7 million and a net loss of approximately $7.3 million, respectively.

As of April 30, 2025, the Company had an accumulated deficit of approximately $79.9 million, negative working capital of $1.5 million and cash of $9.8 million.

For the twelve months ended April 30, 2025, the Company realized cash flow from operations of approximately $7.4 million.

Despite our negative working capital at this date, we believe that our cash on hand, together with expected cash flows from operations, are adequate to fund operations through at least August 2026.

For the years ended April 30, 2026 and 2025, the Company had a net loss of approximately $1.2 million and net income of approximately $4.7 million, respectively.

As of April 30, 2026, the Company had an accumulated deficit of approximately $81.1 million, negative working capital of $703,000 and cash of $4.9 million.

For the twelve months ended April 30, 2026, the Company used cash flow from operations of approximately $4.5 million.

Despite our negative working capital at this date and use of cash from operations, we believe that our cash on hand, together with expected cash flows from operations, are adequate to fund operations through at least August 2027.

Should the Company be required to raise additional capital, there can be no assurance that management would be successful in raising such capital on terms acceptable to us, if at all.

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Cash Flows from Operating Activities

Net cash provided by operating activities was $7.4 million for the year ended April 30, 2025.

Net cash used in operating activities was $6.1 million for the year ended April 30, 2024.

The increase in cash from operations was primarily due to the net income realized in fiscal 2025 and an increase in deferred revenue partially offset by changes in our working capital accounts in the ordinary course of business.

Net cash used in operating activities was $4.5 million for the year ended April 30, 2026 compared to net cash provided by operating activities of $7.4 million for the year ended April 30, 2025.

The decrease was primarily driven by a $6.6 million decrease in deferred revenue, compared to a $3.3 million increase in the prior year.

The decrease in deferred revenue was primarily attributable to lower bookings and the timing of customer billings and study activity.

Cash flow from operations was also impacted by the net loss in fiscal 2026 and an increase in accounts receivable, partially offset by an increase in accounts payable.

Cash Flows from Investing Activities

Net cash used in investing activities was $540,000 and $389,000 for the years ended April 30, 2026 and 2025, respectively.

The cash used was for the investment in lab and computer equipment.

The cash used was for the investment in lab and computer equipment which, in fiscal 2026, was partially offset by proceeds from the sale of certain equipment.

Cash Flows from Financing Activities

Net cash provided by financing activities was $99,000 for the year ended April 30, 2026.

Net cash used in financing activities was $527,000 for the year ended April 30, 2024.

Cash flows provided by financing activities in 2025 was primarily from proceeds from stock option exercises offset by financing lease payments.

Net cash used in financing activities for 2024 was for the repurchase of common stock per our stock buyback program and financing lease payments and was partially offset by stock option exercise proceeds.

Net cash provided by financing activities was $170,000 for the year ended April 30, 2025.

Cash flows provided by financing activities in both 2026 and 2025 was generated from the proceeds of stock option exercises offset by financing lease payments.

Critical Accounting Policies

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Generally Accepted Accounting Principles (“GAAP”).

Our significant accounting policies are described in Note 2 - Summary of Significant Accounting Policies to our

Consolidated Financial Statements attached hereto.

Our significant accounting policies are described in Note 2 - Summary of Significant Accounting Policies to our Consolidated Financial Statements attached hereto.

We believe the following critical accounting policies involve the most significant judgments and estimates used in the preparation of our Consolidated Financial Statements.

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The Company accounts for revenue under the Financial Accounting Standards Board's ("FASB") Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers.

In accordance with ("ASC 606"), revenue is now recognized when, or as, a customer obtains control of promised services.

In accordance with ("ASC 606"), revenue is recognized when, or as, a customer obtains control of promised services.

The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these services.

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A contract's transaction price is allocated to each separate performance obligation based upon the standalone selling price and is recognized as revenue, when, or as, the performance obligation is satisfied.

The majority of the Company's contracts have a single performance obligation because the promise to transfer individual services is not separately identifiable from other promises in the contracts, and therefore, is not distinct.

The majority of the Company's contracts have a single performance

obligation because the promise to transfer individual services is not separately identifiable from other promises in the contracts, and therefore, is not distinct.

The majority of the Company's revenue arrangements are service contracts that are completed within a year or less.

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In the event of forfeitures, compensation expense is adjusted.

We report cash flows resulting from tax deductions in excess of the compensation cost recognized from those options (excess tax benefits) as financing cash flows when the cash tax benefit is received.

Recent Accounting Pronouncements

In November 2023, the FASB issued Accounting Standards Update ("ASU") 2023-07, “Segment Reporting” (Topic 280):

Improvements to Reportable Segment Disclosures, which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses.

The amendments require entities to disclose significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within segment profit and loss, as well as the title and position of the CODM.

The Company has adopted this standard effective May 1, 2024, noting that it did not have a material impact on its consolidated financial statements or related disclosures.

In December 2023, the FASB issued ASU 2023-09, “Improvements to Tax Disclosures” (Topic 740).

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The ASU is effective retrospectively for fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is in the process of completing the assessment of the impact that the adoption of this ASU will have on its financial statements, which is not expected to be material.

The Company adopted this ASU as of May 1, 2025, and it has been included in the required disclosures in our financial statements since.

In November 2024 and January 2025, the FASB issued ASU 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures" (Subtopic 220-40) "Disaggregation of Income Statement Expenses" and ASU 2025-01 "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures" (Subtopic 220-40):

Clarifying the Effective Date".

The new guidance is intended to enhance transparency and disclosures by requiring public

business entities to disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods.

The new guidance is intended to enhance transparency and disclosures by requiring public business entities to disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods.

The ASU is effective for the first annual reporting periods after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted.

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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-K

Item 7. Management’s Discussion and Analysis