What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-07 compared with 2024-11-06 · 59 added, 133 removed, 55 unchanged (78% of the section changed)

5 unchanged sentences

The Company's business consists of the development, manufacture, marketing and sale of simple, easy to use diagnostic products and specimen collection devices using the Company's proprietary technologies, as well as other diagnostic products including immunoassays and other in vitro diagnostic tests that are used on other specimen types.

These products include tests for diseases including COVID-19, HIV, Hepatitis C, and Syphilis that are performed on a rapid basis at the point of care, and tests for drugs of abuse that are processed in a laboratory.

These products include tests for diseases including HIV, Hepatitis C, Syphilis, and COVID-19 that are performed on a rapid basis at the point of care.

These products are sold in the United States and internationally to various clinical laboratories, hospitals, clinics, community-based organizations, and other public health organizations, distributors, government agencies, physicians’ offices, and commercial and industrial entities.

The Company's COVID-19 and HIV products are also sold in a consumer-friendly format in the over-the-counter (“OTC”) market in the U.S.

The Company's HIV and COVID-19 products are also sold in a consumer-friendly format in the over-the-counter (“OTC”) market in the U.S.

and, in the case of the HIV product, as a self-test to individuals in a number of other countries, including as an oral swab in-home test for HIV-1 and HIV-2 in Europe.

The Company's business also includes molecular sample management solutions and services that are used by clinical laboratories, direct-to-consumer laboratories, researchers, pharmaceutical companies, and animal health service and product providers.

The Company's business also includes sample management solutions and services that are used by clinical laboratories, direct-to-consumer laboratories, researchers, pharmaceutical companies, and animal health service and product providers.

The revenues from sample management solutions are derived from product sales to commercial customers and sales into the academic and research markets.

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This product is in its early stages, and initial sales are occurring primarily through distributors and collaborations in the liquid biopsy and sexually transmitted disease markets.

Additionally, through its Diversigen subsidiary, the Company offered laboratory and bioinformatics services for both genomics and microbiome customers.

These services were primarily provided to pharmaceutical, biotech companies, and research institutions.

During the first quarter of 2024, the Company initiated steps to wind down and exit this line of business.

Diversigen contributed $1.7 million to revenues during the nine months ended September 30, 2024 and contributed $4.5 million to revenues for the full year of 2023.

In October 2024, the Company announced the discontinuance of the sales of its risk assessment product line which is expected to be completed by end of year.

Sales of its risk assessment products contributed $6.3 million to revenues during the nine months ended September 30, 2024 and contributed $9.7 million to revenues for the full year of 2023.

Results of Operations

For the three months ended September 30, 2024 compared to September 30, 2023.

CONSOLIDATED NET REVENUES

The table below shows an outline of total consolidated net revenues (dollars in thousands) for the three months ended September 30, 2024 and 2023:

For the Three Months Ended September 30,

Dollars % Change Percentage of Total Net Revenues

2024 2023 2024 2023

Diagnostics (1)

22,023 19,551 13 % 55 % 22 %

Molecular Sample Management Solutions (2)

12,806 15,238 (16) 32 17

COVID-19 Diagnostics 2,155 50,145 (96) 5 56

Recent Developments

Risk Assessment Testing

1,911 2,554 (25) 5 3

Other products and services 748 638 17 2 1

Molecular Services 9 834 (99) — 1

COVID-19 Molecular Products — 54 (100) — —

Net product and services revenues 39,652 89,014 (55) 99 100

Non-product and services revenues (4)

263 173 52 1 —

Net revenues $ 39,915 $ 89,187 (55) % 100 % 100 %

(1) Includes HIV, HCV and Syphilis product revenues.

(2) Includes Genomics, Microbiome and Novosanis product revenues.

(3) Includes substance abuse testing product revenues.

(4) Includes funded research and development contracts, royalty income and grant revenues.

Product and Services Revenues

Consolidated net revenues decreased 55% to $39.9 million for the three months ended September 30, 2024 from $89.2 million for the three months ended September 30, 2023.

Sales of the Company's Diagnostics products increased 13% to $22.0 million for the three months ended September 30, 2024 from $19.6 million for the three months ended September 30, 2023.

This increase in revenues is largely due to higher international HIV revenues of approximately $2.4 million primarily driven by customer ordering patterns of sales in Africa.

Molecular Sample Management Solutions revenues decreased 16% to $12.8 million for the three months ended September 30, 2024 from $15.2 million for the three months ended September 30, 2023.

Sales of the Company's Molecular Products are being impacted by reduced consumer demand for products in which our genomics collection devices are used, economic pressures, and the overall decline in the microbiome market.

COVID-19 Diagnostics revenues decreased by 96% to $2.2 million for the three months ended September 30, 2024 compared to $50.1 million for the three months ended September 30, 2023 due to decreased sales of the Company's InteliSwab ® tests through its U.S.

government procurement contracts.

We expect this decline in revenue to continue throughout the remainder of 2024 and for the foreseeable future due to the fulfillment of these contracts and lower overall demand for COVID-19 testing.

Risk assessment revenue decreased 25% due to the loss of customers to competing products.

The Company has announced that it will discontinue this line of business by the end of 2024.

Molecular Services revenues, which are derived from the Company's microbiome molecular sequencing services, decreased 99% to $9 thousand for the three months ended September 30, 2024 from $0.8 million for the three months ended September 30, 2023.

The decrease in services revenues was due to the decision to exit this line of business.

We expect minimal molecular services revenues in the remainder of 2024.

Non-Product and Services Revenues

Non-product and services revenues increased 52% to $0.3 million for the three months ended September 30, 2024 from $0.2 million for the three months ended September 30, 2023 due to recognizing royalty income in the third quarter of 2024 and none in the third quarter of 2023.

CONSOLIDATED OPERATING RESULTS

Consolidated gross profit margin decreased to 42.8% for the three months ended September 30, 2024 from 49.7% for the three months ended September 30, 2023.

The largest driver of the margin decline was due to the lower volume in InteliSwab® sales driven by less units produced and sold and a lower average selling price based on contractual pricing.

Furthermore, the lower units produced resulted in lower overhead absorption of fixed costs as compared to the prior year period.

Gross margin was also negatively impacted by the increased sales of international product which generate lower margins coupled with the lower margins contributed by genomics products.

The decline in gross margins was partially offset by the impact of the exit of the Molecular Services business which historically caused a drag on consolidated gross margin.

Consolidated operating loss for the three months ended September 30, 2024 was $6.0 million, a decline from the $10.9 million operating income reported for the three months ended September 30, 2023.

The operating income reported in the third quarter of 2023 was largely a result of higher revenues and gross margins generated by the Company's InteliSwab® product and was partially offset by the inclusion of $6.2 million in impairment loss.

In 2023, the Company began implementing cost cutting measures and has benefited from this in the three months ended September 30, 2024 with a $4.2 million reduction in operating expense compared to the three months ended September 30, 2023.

Research and development expenses decreased 34% to $5.6 million for the three months ended September 30, 2024 from $8.5 million for the three months ended September 30, 2023 largely due to a decrease in employee costs associated with a reduction in headcount, decrease in spend on COVID-19 product development, and no related project management fees for our $109 million manufacturing expansion contract which ended during the fourth quarter of 2023.

Sales and marketing expenses decreased 13% to $7.6 million for the three months ended September 30, 2024 from $8.7 million for the three months ended September 30, 2023 due to lower employee costs associated with a decrease in headcount, decreased bad debt expense and consulting fees and lower amortization expense partially offset by an increase in severance expense due to the third quarter 2024 reduction in workforce.

General and administrative expenses decreased 2% to $9.8 million for the three months ended September 30, 2024 from $10.1 million for the three months ended September 30, 2023 largely due lower employee costs due to a reduction in headcount, partially offset by an increase in legal fees and in non-cash stock compensation expense.

All of the above contributed to the Company's operating loss of $6.0 million for the three months ended September 30, 2024, which included non-cash charges of $3.0 million for depreciation and amortization, and non-cash charges of $2.9 million for stock-based compensation.

The Company's operating income of $10.9 million for the three months ended September 30, 2023 included a non-cash impairment charge of $6.2 million, non-cash charges of $3.4 million for depreciation and amortization, and $2.6 million for stock-based compensation.

Other income for the three months ended September 30, 2024 was $2.8 million compared to $2.6 million for the three months ended September 30, 2023.

This increase is due to higher interest income partially offset by the absence of profit earned under our manufacturing expansion contract with the U.S.

government which ended at the end of 2023.

CONSOLIDATED INCOME TAXES

The Company continues to believe the full valuation allowance established against its total U.S.

deferred tax asset is appropriate as the facts and circumstances necessitating the allowance have not changed.

For the three months ended September 30, 2024 and 2023, the Company recorded U.S.

state income tax expense of $18.0 thousand and $1.1 million, respectively and foreign tax expense of $0.7 million and $1.2 million, respectively.

In the third quarter of 2024, the Company announced the discontinuance of sales of its risk assessment product line which was expected to be completed in the second quarter of 2025.

Sales of its risk assessment products contributed $1.4 million and $2.1 million to revenues during the three months ended March 31, 2025 and 2024, respectively.

During the first quarter of 2025, the Company sold certain assets that made up the risk assessment product line including certain intellectual property, contracts, permits, and equipment.

Results of Operations

For the nine months ended September 30, 2024 compared to September 30, 2023.

For the three months ended March 31, 2025 compared to March 31, 2024.

CONSOLIDATED NET REVENUES

The table below shows an outline of total consolidated net revenues (dollars in thousands) for the nine months ended September 30, 2024 and 2023:

For the Nine Months Ended September 30,

The table below shows total consolidated net revenues (dollars in thousands) for the three months ended March 31, 2025 and 2024:

For the Three Months Ended March 31,

Dollars % Change Percentage of Total Net Revenues

2 unchanged sentences

$ 17,689 $ 16,380 8 % 59 % 30 %

COVID-19 Diagnostics 44,186 215,876 (80) 30 65

Molecular Sample Management Solutions (2)

Sample Management Solutions (2)

9,110 10,822 (16) 30 20

1 unchanged sentence

1,420 2,080 (32) 5 3

COVID-19 Diagnostics 457 23,097 (98) 2 43

Other products and services (4)

321 527 (39) 1 1

Molecular Services — 873 (100) — 2

COVID-19 Molecular Products 36 239 (85) — —

Net product and services revenues 28,997 53,779 (46) 97 99

3 unchanged sentences

(1) Includes HIV, HCV and Syphilis product revenues.

(2) Includes Genomics, Microbiome and Novosanis product revenues.

(2) Includes Genomics, Microbiome and Colli-Pee product revenues.

(3) Includes substance abuse testing product revenues.

(4) Includes COVID-19 Sample Management Solutions product revenues.

(5) Includes funded research and development contracts, royalty income and grant revenues.

Product and Services Revenues

Consolidated net product and services revenues decreased 55% to $148.4 million for the nine months ended September 30, 2024 from $329.6 million for the nine months ended September 30, 2023.

Sales of the Company's Diagnostics products increased 1% to $57.2 million for the nine months ended September 30, 2024 from $56.5 million for the nine months ended September 30, 2023.

This increase in revenue was primarily driven by higher HIV and HCV revenues in international markets of $1.4 million as a result of customer ordering patterns.

Also contributing to the diagnostic revenue increase is a combined increase in HCV domestic and Syphilis revenues of $1.4 million.

A decline in our HIV domestic revenue resulting from funding delays or reductions in funding for HIV products and customer order patterns partially offset the increased revenues from the other product lines.

COVID-19 Diagnostics revenues decreased 80% to $44.2 million for the nine months ended September 30, 2024 compared to $215.9 million for the nine months ended September 30, 2023 due to decreased sales of the Company's InteliSwab® tests through its U.S.

Consolidated net revenues decreased 45% to $29.9 million for the three months ended March 31, 2025 from $54.1 million for the three months ended March 31, 2024.

Sales of the Company's Diagnostics products increased 8% to $17.7 million for the three months ended March 31, 2025 from $16.4 million for the three months ended March 31, 2024.

This increase in revenues is largely due to higher international HIV and HCV revenues of approximately $1.2 million primarily driven by customer ordering patterns.

Sales of a syphilis product, which were first sold in the second quarter of 2024 are also partially responsible for the increase.

This increase in revenues was offset by decrease in revenues under the CDC "Together Take me Home," HIV self-test program.

Sample Management Solutions revenues decreased 16% to $9.1 million for the three months ended March 31, 2025 from $10.8 million for the three months ended March 31, 2024.

Sales of the Company's genomics products are being impacted by customer bankruptcy and economic pressures.

Risk assessment revenue decreased 32% to $1.4 million for the three months ended March 31, 2025 from $2.1 million for the three months ended March 31, 2024.

The Company discontinued this line of business at the end of 2024 and business is winding down in early 2025.

COVID-19 Diagnostics revenues decreased 98% to $0.5 million for the three months ended March 31, 2025 compared to $23.1 million for the three months ended March 31, 2024 due to decreased sales of the Company's InteliSwab ® tests through its U.S.

government procurement contracts.

We expect this decline in revenue to continue for the remainder of 2024 and for the foreseeable future due to the fulfillment of these contracts and lower overall demand for COVID-19 testing.

Molecular Sample Management Solutions revenues decreased 12% to $36.2 million for the nine months ended September 30, 2024 from $41.2 million for the nine months ended September 30, 2023.

Sales of the Company's Molecular Sample Management Solutions Products are being impacted by reduced consumer demand for products in which our genomics collection devices are used, economic pressures and reduction on funding for programs in which our collection devices are used, and the overall decline in the microbiome market.

Risk assessment revenue decreased 17%, due to the loss of customers to competing products.

The Company has announced that it will discontinue this line of business by the end of 2024.

Molecular Services revenues, which are largely derived from the Company's laboratory services, decreased 53% to $1.7 million for the nine months ended September 30, 2024 from $3.6 million for the nine months ended September 30, 2023.

The decrease in services revenues was due to the decision to exit this line of business.

We expect minimal molecular services revenues in the remainder of 2024.

We expect this decline in revenue to continue throughout the remainder of 2025 and for the foreseeable future due to the fulfillment of these contracts and lower overall demand for COVID-19 testing.

Molecular Services revenues, which are derived from the Company's microbiome molecular sequencing services, were zero during the three months ended March 31, 2025 compared to $0.9 million during the three months ended March 31, 2024.

The decrease in services revenues was due to the Company's decision to exit this line of business in 2024.

Non-Product and Services Revenues

Non-product and services revenues decreased 66% to $1.0 million for the nine months ended September 30, 2024 from $2.9 million for the nine months ended September 30, 2023 as a result of lower funding for research and development activities largely as a result of the end of our agreement with Biomedical Advanced Research Authority ("BARDA") which provided funding to obtain clearance of a premarket notification ("510(k)") and Clinical Laboratory Improvement Amendments of 1988 waiver of our InteliSwab® tests.

The Company has communicated to BARDA that it does not intend to pursue further development of this clearance.

Further contributing to the decline in non-product revenues is lower royalty income in 2024 as one of the Company's royalty agreements for sample collection kits expired in June 2023.

Non-product and services revenues increased 165% to $0.9 million for the three months ended March 31, 2025 from $0.4 million for the three months ended March 31, 2024 primarily due to the recognition of revenue under funded R&D contracts that were assumed by the Company as a result of the Sherlock acquisition at the end of 2024.

CONSOLIDATED OPERATING RESULTS

Consolidated gross profit margin increased to 44.4% for the nine months ended September 30, 2024 from 41.4% for the nine months ended September 30, 2023.

Gross margins in 2023 included $7.0 million of accelerated depreciation associated with the wind-down of InteliSwab® manual assembly in Thailand as the Company began to on-shore and automate manufacturing of this product at its Pennsylvania facilities.

In addition, reduced salary and benefits due to the reduction in workforce experienced in 2023 and 2024 contributed to improved overhead absorption.

Lastly, lower product scrap expense helped to increase margins for the nine months ended September 30, 2024.

These improvement in margins were partially offset by the decline in InteliSwab® revenues and a shift in product mix of increased revenues from lower margin product.

Other non-product revenues which contribute 100% to gross margins also declined for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

Consolidated operating loss for the nine months ended September 30, 2024 was $15.8 million, compared to $28.8 million operating income reported for the nine months ended September 30, 2023.

Results for the nine months ended September 30, 2024 were negatively impacted by the decrease in revenues and were positively impacted by reduced operating expense.

Results for the nine months ended September 30, 2024 included $4.4 million of impairment losses compared to $7.5 million for the nine months ended September 30, 2023.

Operating expenses for the nine months ended September 30, 2024, excluding the impairment charge, decreased 22.9% to $77.3 million from $100.2 million for the nine months ended September 30, 2023 reflecting the impact of the Company's cost saving measures and headcount reductions.

Research and development expenses decreased 25% to $20.0 million for the nine months ended September 30, 2024 from $26.7 million for the nine months ended September 30, 2023, largely due to lower staffing costs due to a decrease in headcount and no related project management fees for our $109 million manufacturing expansion contract which ended during the fourth quarter of 2023, and a decrease in spend on COVID-19 product development.

This overall decrease in spend is partially offset by an increase in severance costs for those employees impacted by the Company's decisions to exit the molecular services business offered by its Diversigen subsidiary and wind-down of operations located in Belgium.

Sales and marketing expenses decreased 18% to $24.0 million for the nine months ended September 30, 2024 from $29.4 million for the nine months ended September 30, 2023 primarily due to decreased employee costs associated with the reduction in headcount and lower advertising, consulting, and amortization expense.

General and administrative expenses decreased 25% to $33.3 million for the nine months ended September 30, 2024 from $44.2 million for the nine months ended September 30, 2023 largely due to lower legal fees relating to the Spectrum litigation (discussed further in Part II.

Other Information, Item 1.

Legal Proceedings, below) and lower employee costs associated with reduced headcount partially offset by an increase in non-cash stock compensation expense.

All of the above contributed to the Company's operating loss of $15.8 million for the nine months ended September 30, 2024, which included non-cash impairment charges of $4.4 million, non-cash charges of $8.4 million for depreciation and amortization, and $9.2 million for stock-based compensation.

The Company's operating income of $28.8 million for the nine months ended September 30, 2023 included a non-cash impairment charge of $7.5 million, non-cash charges of $17.4 million for depreciation and amortization, and $7.6 million for stock-based compensation.

Other income for the nine months ended September 30, 2024 was $9.3 million compared to $6.8 million for the nine months ended September 30, 2023.

This increase is largely due to higher interest income offset by absence of profit earned under our manufacturing expansion contract with the U.S.

government which ended at the end of 2023.

Consolidated gross profit margin decreased to 41.1% for the three months ended March 31, 2025 from 44.5% for the three months ended March 31, 2024.

The largest driver of the margin decline was driven by product mix of lower volume InteliSwab® sales that generate higher gross margins.

Gross margin was also negatively impacted by the decrease in genomics sales that also generate higher gross margin coupled with increased international product sales which generate lower margins.

This negative impact to gross margin was offset by improved overhead absorption and the termination of the microbiome molecular sequencing services business which historically dragged down the gross margin rate.

Consolidated operating loss for the three months ended March 31, 2025 was $17.8 million, a $10.7 million decline from the operating loss reported for the three months ended March 31, 2024.

The increase in the operating loss reported in the first quarter of 2025 was largely a result of the lower revenues and lower gross margins generated on sales of the Company's products during the three months ended March 31, 2025.

Research and development expenses increased 24% to $9.6 million for the three months ended March 31, 2025 from $7.7 million for the three months ended March 31, 2024 largely due the additional R&D spend incurred by the newly acquired Sherlock companies.

Sales and marketing expenses decreased 19% to $6.9 million for the three months ended March 31, 2025 from $8.4 million for the three months ended March 31, 2024 due to lower spend on consulting fees and lower employee costs associated with a decrease in headcount.

General and administrative expenses increased 21% to $14.1 million for the three months ended March 31, 2025 from $11.6 million for the three months ended March 31, 2024 largely due an increase in legal fees and the additional general and administrative costs associated with the newly acquired Sherlock companies.

As discussed above in Recent Developments, the Company sold certain assets, including certain intellectual property, contracts, permits and equipment during the first quarter of 2025 related to it risk assessment product line.

The Company recorded a $0.75 million gain on the sales of those assets in addition to the sale of other assets for an approximately $0.2 million gain.

During the first quarter of 2025, the Company recorded a non-cash adjustment of $0.5 million, reflecting the change in the estimated fair value of the Sherlock acquisition-related contingent consideration.

The Sherlock acquisition was completed in December 2024 and there is no comparable amount in the first quarter of 2024.

All of the above contributed to the Company's operating loss of $17.8 million for the three months ended March 31, 2025, which included non-cash charges of $2.8 million for depreciation and amortization, and non-cash charges of $2.7 million for stock-based compensation.

The Company's operating loss of $7.1 million for the three months ended March 31, 2024 included a non-cash impairment charge of $3.3 million, non-cash charges of $2.7 million for depreciation and amortization, and $3.0 million for stock-based compensation.

Other income for the three months ended March 31, 2025 was $1.8 million compared to $3.5 million for the three months ended March 31, 2024 due to lower interest income and foreign currency gains.

CONSOLIDATED INCOME TAXES

1 unchanged sentence

deferred tax asset is appropriate as the facts and circumstances necessitating the allowance have not changed.

For the nine months ended September 30, 2024 and 2023, the Company recorded U.S.

state tax benefit and expense of $0.2 million and $2.4 million, respectively.

For the nine months ended September 30, 2024 and 2023, the Company recorded foreign tax expense and benefit of $1.3 million and $0.4 million, respectively.

For the three months ended March 31, 2025 and 2024, the Company recorded an income tax benefit of $0.5 million and $0.02 million, respectively.

The increase in the income tax benefit is largely due to a higher foreign income tax benefit as a result of higher projected foreign losses.

Liquidity and Capital Resources

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

(in thousands)

1 unchanged sentence

Working capital 288,359 299,737

The Company's cash and cash equivalents decreased to $278.6 million at September 30, 2024 from $290.4 million at December 31, 2023.

$93.7 million or 34% of the $278.6 million in cash and cash equivalents is held by DNAG, the Company's Canadian subsidiary.

The Company's working capital decreased to $322.4 million at September 30, 2024 from $346.9 million at December 31, 2023.

The decrease in cash and cash equivalents and working capital was primarily due to the investment in Sapphiros of $30.0 million during the nine months ended September 30, 2024.

The Company's cash and cash equivalents decreased to $247.6 million at March 31, 2025 from $267.8 million at December 31, 2024.

The Company's Canadian subsidiary, DNAG, held $82.5 million or 33% of the $247.6 million in cash and cash equivalents.

The Company's working capital decreased to $288.4 million at March 31, 2025 from $299.7 million at December 31, 2024.

Analysis of the Company's Cash Flows

Operating Activities

During the nine months ended September 30, 2024, net cash provided by operating activities was $27.3 million.

During the three months ended March 31, 2025, net cash used in operating activities was $19.7 million.

Cash flows from operations can be significantly impacted by factors such as timing of receipt from customers, inventory purchases, and payments to vendors.

The Company's net loss of $8.7 million included non-cash charges of depreciation and amortization expense of $8.4 million, stock-based compensation expense of $9.2 million, impairment losses of $4.4 million, and loss on equity investment of $1.2 million.

Cash provided by the working capital accounts included a decrease in accounts receivable of $12.7 million largely associated with lower overall sales and collections of balances due, a decrease in inventory of $8.7 million as the Company fulfilled demand for its InteliSwab® product, and a decrease in prepaid expense and other current assets of $2.6 million.

Uses of cash included a decrease in accounts payable of $3.4 million due to lower inventory purchases and timing of vendor invoice payments and a decrease in accrued expenses of $7.6 million as the Company paid out year-end bonuses in March 2024.

The Company's net loss of $16.0 million included non-cash charges of depreciation and amortization expense of $2.8 million, stock-based compensation expense of $2.7 million, and other non-cash income of $0.3 million mostly consisting of a gain on the sale of assets offset by the non-cash adjustment to the contingent consideration liabilities.

Cash used by the working capital accounts included an increase in inventory of $1.5 million due to the lower revenues and reduced shipments, an increase in prepaid expense and other current assets of $2.1 million due to foreign tax installment payments, and a decrease in accrued expenses of $6.6 million as the Company paid out year-end bonuses in March 2025.

Cash provided by the working capital accounts included an decrease in accounts receivable of $2.4 million largely associated with lower overall sales and collections of balances due.

Investing Activities

Net cash used in investing activities was $33.5 million for the nine months ended September 30, 2024, which reflects proceeds from the maturities of investments of $53.1 million, offset by $53.2 million in purchases of investments.

Investing activities also include a $30.0 million investment in Sapphiros, and $3.3 million to acquire property and equipment to support the normal operations of the business.

Net cash provided by investing activities was $0.4 million for the three months ended March 31, 2025, which was due to proceeds from sale of property and equipment offset by the acquisition of new property and equipment.

Financing Activities

Net cash used in financing activities was $4.1 million for the nine months ended September 30, 2024, which is largely comprised of $3.5 million used for the repurchase of common stock to satisfy withholding taxes related to the vesting of restricted shares awarded to the Company's employees.

Net cash used in financing activities was $1.0 million for the three months ended March 31, 2025, which was largely comprised of $0.9 million used for the repurchase of common stock to satisfy withholding taxes related to the vesting of restricted shares awarded to the Company's employees.

The Company expects existing cash and cash equivalents will be sufficient to fund its operating expenses and capital expenditure requirements over the next twelve months.

1 unchanged sentence

A summary of the Company's obligations to make future payments under contracts existing at December 31, 2024 is included in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of its Annual Report on Form 10-K for the year ended December 31, 2024.

As of September 30, 2024, there were no significant changes to this information.

As of March 31, 2025, there were no significant changes to this information.

Critical Accounting Policies and Estimates

A more detailed review of the Company's critical accounting policies is contained in its Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC.

No material changes have been made to such critical accounting policies during the nine months ended September 30, 2024.

No material changes have been made to such critical accounting policies during the three months ended March 31, 2025.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

1 unchanged sentence

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