What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-25 compared with 2025-03-11 · 88 added, 53 removed, 338 unchanged (29% of the section changed)

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Our ExPERT platform, which is based on our Flow Electroporation technology, has been designed to address this rapidly expanding cell therapy market and can be utilized across the continuum of the high-growth cell therapy sector, from discovery and development through commercialization of next-generation, cell-based therapies.

The ExPERT family of products includes four instruments, which we call the ATx, STx, GTx and VLx, and related software protocols, as well as a portfolio of proprietary related PAs and consumables.

We launched the VLx instrument in September 2022.

The ExPERT family of products includes five instruments, which we call the DTx, the ATx, the STx, the GTx, and the VLx, and related software protocols, as well as a portfolio of proprietary related PAs and consumables.

We have garnered meaningful expertise in cell engineering via our internal research and development efforts as well as our customer-focused commercial approach, which includes a growing application scientist team.

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We received aggregate net proceeds of $184.3 million after deducting aggregate underwriting commissions and offering costs of $17.6 million.

We believe that our current cash, cash equivalents and short-term investments will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months from the date of the filing of this Annual

We have based this estimate on assumptions that may prove to be wrong, however, and we could exhaust our available capital resources sooner than we expect.

We have based this estimate on assumptions that may prove to be wrong, however, and we could exhaust our

available capital resources sooner than we expect.

See “Liquidity and Capital Resources” below for more information about our current capital resources.

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Our financial performance has largely been driven by, and in the future will continue to be impacted by, the rate of sales and licenses of our ExPERT family of proprietary Flow Electroporation instruments to existing and new customers.

We currently market four versions of our instruments, the ATx, the STx, the GTx and the VLx.

We currently market five versions of our instruments, the DTx, the ATx, the STx, the GTx, and the VLx..

The ATx is primarily to academic institutions and investigative research users.

The STx is primarily sold to end users for research and drug discovery purposes, and the GTx is licensed to customers for research, clinical or commercial use or sold for research use in certain circumstances or sold to academic centers for research or clinical use.

We launched the VLx in September 2022 to provide our customers with an easier to use system that incorporates the benefits of the ExPERT platform.

We launched the VLx to provide our customers with an easier to use system that incorporates the benefits of the ExPERT platform.

We announced the launch the DTx in February 2026.

We view the demand for our instruments, whether in the form of sales or license, as an indicator of the health of our current business and as a predictor of future instrument sale and license revenue.

As described below, we separately sell proprietary single-use PAs, which we call PAs, that are necessary for our customers to use our electroporation instruments.

As described below, we separately sell proprietary single-use processing assemblies, which we call PAs, that are necessary for our customers to use our electroporation instruments.

Therefore, depending on the number of instruments that have been sold or are under active license, we have insight into the demand for PAs that will also translate to future revenue for us.

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If our customer intends to use our platform for research or discovery only, we typically sell the instrument outright.

Each of the ATx, STx, GTx and VLx instruments have different prices based on the instrument’s features, with the VLx being the most expensive.

Each of the ExPERT instruments have different prices based on the instrument’s features.

When we sell an instrument, we also provide a non-exclusive license to our intellectual property for the customer to use the instrument broadly for research or discovery, as applicable.

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To achieve this goal, we intend to further expand our commercial infrastructure, including through the expansion of our sales force and field application scientists.

We have expanded our sales force and field application scientist count over the past several years and now have over 33 dedicated field sales and application scientist professionals globally.

Our candidate identification and hiring process is stringent, and there can be no assurance that we will be able to continue to recruit the high level of candidates that make up our current team.

We have over 23 dedicated field sales and application scientist professionals globally.

In addition, we have numerous collaborations in place with academic and commercial institutions to further expand our capabilities and supporting data in new cell engineering applications.

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We expect license revenue to continue to grow as those customers move their existing drug or biologic development programs into later-stage clinical trials and advance their preclinical pipeline programs into clinical development.

In addition, we expect new customers to emerge and contribute to these revenues, particularly given the underlying growth in the cell therapy pipeline among companies in this industry, availability of capital to support such companies, and in particular the switch by some of these cell therapy companies away from viral approaches to non-viral approaches.

In addition, we expect new customers to emerge and contribute to these revenues.

Sales of Processing Assemblies and Consumables

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The amount of each milestone payment is typically correlated in size with value-creating, precommercial clinical progress events or commercial sales levels.

Under our current SPLs, one program is in commercial stage, and 18 programs are currently in clinical development, meaning they have at least an FDA-cleared IND application or foreign equivalent.

Under our current SPLs, one program is in commercial stage, and 13 programs are currently in clinical development as of December 31, 2025, meaning they have at least an FDA-cleared IND application or foreign equivalent.

Our 31 SPLs have the potential to generate greater than $2 billion.

This figure includes both existing active SPL programs currently in clinical development and future SPL programs that are encompassed in our SPL agreements.

From the 18 active clinical programs under our SPL agreements, the total pre-commercial milestone opportunity can exceed $220 million if all of

the active programs were to achieve regulatory approvals.

We have already received about $10 million of milestone revenue from active programs.

From the 13 clinical programs under our SPL agreements, the total pre-commercial milestone opportunity can exceed $130 million if all of the active programs were to achieve regulatory approvals.

We have received over $30 million in milestone revenue to date.

However, our actual milestone revenue from these agreements will likely be lower, as not all programs covered by each agreement will become and remain active programs in a customer’s development pipeline or successfully complete the clinical development process.

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Our strategy is to capitalize on the growth in the number of cell therapy developers by entering into new SPL agreements.

We entered into six agreements in 2024.

For the year ended December 31, 2024, two cell therapy companies with which we have entered into an SPL agreement accounted for 32% of our total revenue, and our five largest SPL customers accounted for an aggregate of approximately 46% of our total revenue for the year through a combination of instrument license fees, milestones realized and processing assembly revenue.

We entered into four agreements in 2025.

For the year ended December 31, 2025, one cell therapy company with which we have entered into an SPL agreement accounted for 26% of our total revenue, and our five largest SPL customers accounted for an aggregate of

approximately 42% of our total revenue for the year through a combination of instrument license fees, milestones realized and processing assembly revenue.

Our future milestone revenue under our SPL agreements will depend in large part on the clinical and regulatory achievements of our customers.

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However, realization of these potential revenues is uncertain.

Margins may also experience downward pressure during the investment phase of our internal PA production ramp up, increases in labor and materials costs, expansion of our PA portfolio, future design changes or the mix of PAs sold, or other factors, but may benefit in the mid-to-long term as PA production becomes more automated.

Margins may also experience downward pressure due to increases in labor and materials costs, expansion of our PA portfolio, future design changes or the mix of PAs sold, or other factors, but may benefit in the mid-to-long term as PA production becomes more automated.

Key Business Metrics

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Revenue from SPLs, including payments that we may receive from our customers based on their achievement of specified clinical development or commercialization milestones, are classified as leased elements in our consolidated financial statements.

Our business and revenue growth strategy currently consists of the sale or instruments, the sale of PAs and consumables, and SPL license fees.

Our business and revenue growth strategy currently consists of the sale of instruments, the sale of PAs and consumables, and SPL license fees.

We record revenue from the sale of instruments, PAs or consumables upon shipment to a customer.

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In addition, as customers use instruments they have either purchased or included with their license, they typically replenish their supplies of PAs and consumables through recurring purchases.

Although customers are not contractually obligated to renew their licenses or to purchase additional PAs or consumables and may decide not to do so solely in their own discretion, license fees and PAs and consumable revenue streams have historically formed an important component of our revenues, and we believe they provide insight into our future performance.

Although customers are not

contractually obligated to renew their licenses or to purchase additional PAs or consumables and may decide not to do so solely in their own discretion, license fees and PAs and consumable revenue streams have historically formed an important component of our revenues, and we believe they provide insight into our future performance.

We consider these sales and license revenue streams to be recurring revenues.

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Core revenue includes sales instruments, PAs and consumables, and research and clinical licenses, while non-core revenue relates to SPL program-related revenue.

We recognize both core and non-core revenue in accordance with generally accepted accounting principles in the United States.

We recognize both core and non-core revenue in accordance with generally accepted accounting principles in the United States (“U.S.

Program-related revenue includes precommercial milestones earned and recognized as revenue during the period.

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Revenue from contracts with customers includes revenue from the sale of instruments, PAs and consumables.

Customers purchase an ATx, STx, GTx or VLx depending upon their intended use and all customers purchase PAs and consumables for use with our instruments.

Customers purchase a specific ExPERT instrument depending upon their intended use and all customers purchase PAs and consumables for use with our instruments.

Commercial customers may not use a purchased instrument for clinical or commercial processes.

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We expect to continue to incur substantial research and development expenses as we invest in research and development to support our customers, develop new uses for our existing technology and develop improved and/or new offerings to our customers and partners.

As a result, we expect that our research and development expenses will continue to increase in absolute dollars in future periods and vary from period to period as a percentage of revenue.

While we expect an initial decrease in 2026 in research and development compared to 2025 as a result of our restructuring, we expect these expenses will increase in absolute dollars in future periods beyond 2026 and vary from period to period as a percentage of revenue.

Sales and Marketing

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These expenses are exclusive of depreciation and amortization.

We expect our sales and marketing expenses to increase in future periods as we expand our commercial sales, marketing and business development teams, increase our presence globally, and increase marketing activities to drive awareness and adoption of our products.

While we expect an initial decrease in 2026 in sales and marketing compared to 2025 as a result of our restructuring, we expect these expenses will increase in absolute dollars in future periods beyond 2026 as we expand our commercial sales, marketing and business development teams, increase our presence globally, and increase marketing activities to drive awareness and adoption of our products.

General and Administrative

General and administrative expenses primarily consist of salaries, benefits, stock-based compensation and travel costs for employees in our executive, accounting and finance, legal, corporate development, human resources, and office administration functions as well as professional services fees, such as consulting, audit, tax and legal fees, general corporate costs, facilities and allocated overhead expenses and costs associated with being a Nasdaq and AIM listed public company such as director fees, U.K.

corporate costs, facilities and allocated overhead expenses and costs associated with being a Nasdaq-listed and previously an AIM-listed public company such as director fees, U.K.

Nominated Advisor and broker fees, investor relations consultants and insurance costs.

These expenses are exclusive of depreciation and amortization.

We expect that our general and administrative expenses will continue to increase in absolute dollars in future periods, primarily due to increased headcount to support anticipated growth in the business and due to incremental costs associated with operating as a public company listed on a U.S.

While we expect an initial decrease in 2026 in general and administrative expenses compared to 2025 as a result of our restructuring, we expect these expenses will increase in absolute dollars in future periods beyond 2026 primarily due to increased headcount to support anticipated growth in the business and due to incremental costs associated with operating as a public company listed on a U.S.

exchange, including insurance (particularly directors and officers insurance), costs to comply with the rules and regulations applicable to companies listed on a U.S.

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We expect these expenses to vary from period to period as a percentage of revenue.

Restructuring expense

On September 22, 2025, we began to implement a workforce reduction plan (the “Plan”) as part of our ongoing efforts to streamline operations, improve our cost structure, and align resources with strategic priorities.

As of December 31, 2025, the Plan has resulted in a reduction of approximately 34% of the Company’s workforce globally, which includes both directly employed personnel and individuals engaged through third-party employer-of-record arrangements.

Expenses incurred with the execution of the plan, including one-time severance and associated costs, are recorded as restructuring expense.

Goodwill impairment

We test for impairment on our recorded goodwill at least annually, and any impairment would be recorded as goodwill impairment in our statement of operations.

Depreciation and Amortization

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General and administrative

Restructuring expense

Goodwill impairment

Depreciation and amortization

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Instrument revenue

PA and consumable revenue

License revenue

Other revenue

Assay service revenue

Other service revenue

Total core revenue

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Total revenue for the year ended December 31, 2025 was $33.0 million, a decrease of $5.6 million, or 15%, compared to revenue of $38.6 million during the year ended December 31, 2024.

The decrease was primarily driven by the decreases in program-related revenue.

Total core revenue for the year ended December 31, 2024 was $32.5 million, an increase of $2.7 million, or 9%, compared to core revenue of $29.8 million for the year ended December 31, 2023.

Our overall increase in core revenue was primarily driven by revenue increases in PA and consumable sales, which increased by $3.7 million, or 36% for the year ended December 31, 2024 compared to the year ended December 31, 2023.

The increase was also partially

attributable to an increase in other revenue of $0.2 million, offset by decreases in instrument sales of $1.2 million, for the year ended December 31, 2024 compared to the year ended December 31, 2023.

The decrease was primarily driven by decreases in core and program-related revenue.

Total core revenue for the year ended December 31, 2025 was $29.6 million, a decrease of $2.9 million, or 9%, compared to core revenue of $32.5 million for the year ended December 31, 2025.

Our overall decrease in core revenue was primarily driven by revenue decreases in PA and consumable sales, which decreased by $2.1 million, or 15% for the year ended December 31, 2025 compared to the year ended December 31, 2024.

The decrease was also attributable to a decrease in license revenue of $1.4 million, or 13% compared to the year ended December 31, 2024, and a decrease in instrument revenue of $0.3 million, or 4%.

These decreases were offset by increases in assay service revenue from the acquisition of SeQure of $0.8 million and other service revenue of $0.1 million for the year ended December 31, 2025 compared to the year ended December 31, 2024.

The $2.7 million decrease in SPL program-related revenues resulted from achievement of fewer contractually specified clinical and regulatory milestones during the year ended December 31, 2025 compared to the year ended December 31, 2024.

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Cost of goods sold

Cost of goods sold increased by $2.4 million, or 50%, for the year ended December 31, 2024, compared to the year ended December 31, 2023.

The increase was primarily driven by increases in PA and consumable sales, an increase in the allowance for obsolete inventory of $1.1 million, and lower absorption of manufacturing overhead costs.

Cost of goods sold decreased by $0.9 million, or 12%, for the year ended December 31, 2025, compared to the year ended December 31, 2024.

The decrease was primarily driven by decreases in PA and consumable sales, and a decrease in the allowance for obsolete inventory of $1.1 million due to enhancements in supply chain management.

Gross profit decreased by $4.7 million, or 15%, for the year ended December 31, 2025, compared to the year ended December 31, 2024.

The decrease was primarily driven by a decrease in program-related revenue for the year ended December 31, 2024 and by increases to cost of goods sold described above.

The decrease was primarily driven by a decrease in program-related revenue for the year ended December 31, 2025 and a decrease in license revenue.

During the year ended December 31, 2025, gross margin was 81%, compared to 82% in the same period of 2024.

The decrease was primarily driven by a decrease in SPL program-related revenue, and by an increase in the inventory allowance.

Operating Expenses

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Research and development expenses decreased by $1.4 million, or 6%, for the year ended December 31, 2025 compared to the year ended December 31, 2024.

The decrease was primarily driven by a $1.6 million decrease in stock-based compensation, a $0.7 million decrease in engineering and lab expenses, and a $0.5 million decrease in office, travel, and general operating expenses, offset by a $0.6 million increase in occupancy expenses and a $0.6 million increase in compensation expenses.

The decrease was primarily driven by a $1.1 million decrease in stock-based compensation, a $0.6 million decrease in lab and production expenses, a $0.4 million decrease in compensation expenses, and a net decrease of $0.1 million in travel, occupancy and other overhead expenses, offset by a $0.5 million increase in professional fees, and a $0.3 million increase in engineering expenses.

Sales and Marketing

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Sales and marketing expenses decreased by $7.7 million, or 29%, for the year ended December 31, 2025 compared to the year ended December 31, 2024.

The decrease was primarily driven by a $1.0 million decrease in occupancy expenses, a $0.4 million decrease in travel expenses, a $0.3 million decrease in stock-based compensation, and a $0.2 million decrease in professional services and marketing expenses, offset by a $1.4 million increase in compensation expense and a $0.2 million increase in software subscriptions.

The decrease was primarily driven by a $4.5 million decrease in compensation expenses due to a reduction in headcount, a $1.2 million decrease in stock-based compensation, a $0.8 million decrease in marketing expenses, a $0.7 million decrease in travel expense commensurate with the reduction in headcount, and a $0.5 million decrease in professional fees.

General and Administrative

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General and administrative expenses decreased by $1.6 million, or 5%, for the year ended December 31, 2025, compared to the year ended December 31, 2024.

The decrease was primarily driven by a $1.4 million decrease in compensation expenses, a $0.8 million decrease in professional services, a $0.3 million credit loss recovery, net of expense, and a $0.2 million decrease in office, travel, and general operating expenses, offset by a $1.1 million increase in stock-based compensation, a $0.8 million increase in fixed asset disposal loss, and a $0.4 million increase in legal and public company expenses.

The decrease was primarily driven by a $1.5 million decrease in stock-based compensation, a decrease in compensation expenses of $0.3 million, a smaller fixed asset disposal loss of $0.6 million compared to year ended December 31, 2024, offset by a $0.8 million increase in professional services.

Restructuring expense

We incurred $3.1 million in restructuring expense during the year ended December 31, 2025 due to the implementation of the Plan.

We did not incur restructuring expense during the year ended December 31, 2024.

Goodwill impairment

During the year ended December 31, 2025, we performed our annual quantitative impairment analysis during out fourth fiscal quarter, and based on the evaluation performed, we determined that our goodwill was fully impaired and recognized a non-cash impairment charge of $3.6 million.

We did not have goodwill impairment during the year ended December 31, 2024.

Depreciation and Amortization

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Depreciation and amortization expense increased by $0.1 million, or 2%, for the year ended December 31, 2025, compared to the year ended December 31, 2024.

The increase was primarily driven by investments in laboratory equipment and consignment instruments.

Interest Income

Year Ended December 31,

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Interest income decreased $2.9 million, or 28%, for the year ended December 31, 2025 compared to the year ended December 31, 2024.

The decrease is primarily due to a decrease in balances of cash and investments.

The decrease is primarily due to decreases in interest rates and in balances of cash and investments.

Liquidity and Capital Resources

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As of December 31, 2025, we had cash and cash equivalents and short-term investments of $103.0 million.

In 2025, we implemented a workforce reduction plan as part of our ongoing efforts to streamline operations, improve our cost structure, and align resources with strategic priorities.

As a result of this workforce reduction plan, we expect operating expenses to decrease in 2026 compared to 2025.

We expect to incur near-term operating losses as we continue to invest in expanding our business through growing our sales and marketing efforts, continued research and development, product development and expanding our product offerings.

Based on our current business plan, we believe that our existing cash, cash equivalents, short-term investments and internally generated cash flows will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months.

We expect to end 2025 with approximately $160 million in total cash, cash equivalents and investments.

We expect to end 2026 with at least $136 million in total cash, cash equivalents and investments.

We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect.

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If additional financings are required from outside sources, we may not be able to raise such capital on terms acceptable to us or at all.

To the extent that we raise additional capital through the sale of equity or debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders.

affect the rights of our common stockholders.

Debt financing, if available, may involve agreements that include covenants restricting our ability to take specific actions, such as incurring additional debt, selling or licensing our assets, making product acquisitions, making capital expenditures or declaring dividends.

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Financing activities

Net (decrease) increase in cash and cash equivalents

Net decrease in cash and cash equivalents

Operating Activities

Net cash used in operating activities for the year ended December 31, 2025 was $34.4 million, and consisted primarily of our net loss of $44.6 million, offset in part by net non-cash expenses of $16.3 million, including stock-based compensation of $9.2 million, depreciation and amortization expenses of $4.3 million, goodwill impairment of $3.6 million, lease right-of use asset amortization of $0.8 million, an increase in our inventory reserve of $0.7 million, and a loss on disposal of assets of $0.3 million, offset by the amortization of $2.6 million of discounts on investments.

We also had net cash outflows of $6.1 million due to net changes in our operating assets and liabilities.

Net changes in our operating assets and liabilities consisted primarily of a $3.7 million decrease in accounts payable, accrued expenses and other liabilities, a $1.7 million decrease in deferred revenue, a $1.2 million decrease in operating lease liabilities, and a $1.2 million increase in prepaid expenses and other assets, offset by a $1.1 million decrease in accounts receivable and a $0.6 million decrease in inventory.

Net cash used in operating activities for the year ended December 31, 2024 was $27.6 million, and consisted primarily of our net loss of $41.1 million, offset in part by net non-cash expenses of $14.2 million, including stock-based compensation of $13.1 million, depreciation and amortization expenses of $4.3 million, an increase in our inventory reserve of $1.8 million, a loss on disposal of assets of $0.9 million, and other net non-cash expenses totaling $0.3 million, offset by the amortization of $6.2 million of discounts on investments.

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Net changes in our operating assets and liabilities consisted primarily of a $1.9 million decrease in accounts payable, accrued expenses and other liabilities, a $1.2 million increase in other assets, and a $0.7 million decrease in operating lease liabilities, offset by a $1.4 million decrease in inventory, a $1.2 million decrease in accounts receivable, $0.3 million decrease in prepaid expenses and other current assets, and a $0.2 million increase in deferred revenue.

Net cash used in operating activities for the year ended December 31, 2023 was $21.7 million, and consisted primarily of our net loss of $37.9 million, offset in part by net non-cash expenses of $12.4 million, including stock-based compensation of $14.0 million, depreciation and amortization expenses of $4.2 million, an increase in our inventory reserve of $0.7 million, and other non-cash expenses totaling $0.6 million, offset by the amortization of $7.1 million of discounts on investments.

We also had net cash inflows of $3.8 million due to net changes in our operating assets and liabilities.

Net changes in our operating assets and liabilities consisted primarily of a $5.2 million decrease in accounts receivable, a $1.9 million decrease in tenant improvement allowances receivable, a $3.3 million increase in accounts payable, accrued expenses and other, and a $0.4 million decrease in other assets, offset by a $4.5 million increase in inventory, a $1.6 million decrease in deferred revenue, a $0.6 million decrease in prepaid expenses and other current assets, and a $0.2 million decrease in operating lease and other liabilities.

Investing Activities

Cash provided by investing activities during the year ended December 31, 2024 was $6.9 million, which was primarily attributable to maturities of investments of $159.4 million, partially offset by purchases investments of $150.9 million, and purchases of property and equipment of $1.7 million.

Net cash provided by investing activities during the year ended December 31, 2025 was $25.9 million, which was primarily attributable to maturities of investments of $155.8 million, offset by purchases of investments of $126.3 million, $1.8 million for the acquisition of SeQure, net of cash acquired, and purchases of property and equipment of $1.8 million.

million, and purchases of property and equipment of $1.7 million.

Purchases of investments are made as part of ordinary course investing activities in compliance with our investment policy which has as its primary objective preservation of principal.

Cash provided by investing activities during the year ended December 31, 2023 was $55.0 million, which was primarily attributable to maturities of investments of $313.8 million, partially offset by purchases investments of $255.1 million, and purchases of property and equipment of $3.7 million.

Financing Activities

Net cash provided by financing activities during the years ended December 31, 2024 and 2023 was $2.1 million, which consisted of proceeds from the exercise of stock options and employee purchases from our employee stock purchase plan.

Net cash provided by financing activities during the years ended December 31, 2025 and 2024 was $0.7 million and $2.1 million, respectively, which consisted of proceeds from the exercise of stock options and employee purchases from our employee stock purchase plan.

Contractual Obligations and Commitments

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The total incremental remaining non-cancellable lease payments under the lease agreement are $24.0 million through the lease term.

We expect to be able to fund our obligations under this lease, both in the short-term and in the long-term, from cash on hand, investments and operating cash flows.

See Part I, Item 2, “Facilities” in this Annual Report for additional information regarding the new office lease.

Upon acquisition of SeQure, we assumed the SeQure headquarters lease, (the “SeQure Lease”) which term expires on December 31, 2027.

The total incremental remaining non-cancellable lease payments under the SeQure Lease are $0.8 million throughout the lease term.

We expect to be able to fund our obligations under these leases, both in the short-term and in the long-term, from cash on hand, investments and operating cash flows.

See Part I, Item 2, “Facilities” in this Annual Report for additional information regarding our leases.

We had no debt obligations as of December 31, 2025 or 2024.

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The assumptions include expected volatility based on the historical volatility of our common stock, expected dividend yield, risk-free rate of interest and the expected term using the simplified method and are disclosed in Note 4 to our consolidated financial statements.

Business Combination Accounting-Developed Technology

Assets acquired and liabilities assumed as part of a business acquisition are generally recorded at their fair value at the date of acquisition.

The excess of purchase price over the fair value of assets acquired and liabilities assumed is recorded as goodwill.

Determining fair value of intangible assets requires management to make estimates, which are based on all available information and in some cases assumptions with respect to the timing and amount of future revenues and expenses associated with an asset.

These estimates affect the amount of consideration that is allocable to assets and liabilities acquired in the business acquisition.

We recorded $471,000 in developed technology upon the acquisition of SeQure.

The Company tests goodwill for impairment at least annually, or more frequently if events or changes in circumstances indicate that goodwill may be impaired.

The impairment analysis requires significant judgment and is based on estimates and assumptions, including projected future cash flows, long - term growth rates, and the weighted - average cost of capital.

The Company operates as a single reporting unit and estimates fair value primarily using an income approach based on a discounted cash flow (“DCF”) model.

The DCF model incorporates assumptions related to projected revenues, expenses, capital expenditures, working capital requirements, income tax rates, and a discount rate derived from a weighted - average cost of capital.

The Company also considers a market approach based on comparable companies and transactions.

Fair value estimates are assessed for reasonableness through comparison to the Company’s market capitalization.

As of December 31, 2025, the quantitative impairment test indicated that the carrying amount of the reporting unit exceeded its estimated fair value.

Accordingly, the Company recorded a goodwill impairment charge of $3.6 million for the year ended December 31, 2025.

Recent Accounting Pronouncements

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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