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Item 2. Management’s Discussion and Analysis

2026-05-13 compared with 2025-11-10 · 76 added, 143 removed, 93 unchanged (70% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our condensed financial statements and related notes.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our condensed financial statements, related notes and other information included in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 13, 2026.

Forward-Looking Statements

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In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “suggests,” “targets,” “contemplates,” “projects,” “predicts,” “may,” “might,” “plan,” “would,” “should,” “could,” “can,” “potential,” “continue,” “objective,” or the negative of those terms, or similar expressions intended to identify forward-looking statements.

However, not all forward-looking statements contain these identifying words.

Specific forward-looking statements in this Quarterly Report on Form 10-Q include statements regarding:

• our expectation that we will continue to incur significant expenses and operating losses for the foreseeable future;

• our belief that if we encounter continued issues or delays in the commercialization of fertility control products, our expected future losses could have an adverse effect on our financial condition and negatively impact our ability to fund continued operations, obtain additional financing in the future and continue as a growing concern;

• our expectation that if we are unable to generate additional funds in the future through additional financings, sales of our products, licensing fees, royalty payments or from other sources or transactions, we will exhaust our resources and will be unable to continue operations;

• our expectation that significant operating losses will continue for the near future;

• our ability to successfully commercialize our fertility control products and obtain and maintain regulatory approval for our products and product candidates;

• our ability to gain market acceptance, commercial viability and profitability of fertility control products and other products;

• our ability to market our products and establish an effective sales force and marketing infrastructure to generate sufficient revenue;

Forward-looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, statements regarding:

• the size of the market for our products, and our ability to serve that market;

• our belief that ContraPest ® or Evolve ® are novel in the pest control industry;

• the success of competing products that are or become available;

• existing regulations and regulatory developments towards first and second generation anti-coagulant rodenticides in the United States and other jurisdictions;

• our belief that Evolve qualifies for exemption from registration as a minimum risk pesticide under Section 25(b) of the United States Environmental Protection Agency’s (the “EPA’s”) Federal Insecticide, Fungicide, and Rodenticide Act (“FIFRA”);

• our ability to meet current and anticipated demand by our internal production capabilities;

• the success of non-registered, online product sales advertising rodent reproduction control;

• our plan to continue to utilize various forms of stock-based awards to hire, retain and motivate talented employees, consultants and directors;

• our expectation that our expenses may continue to increase in connection with our ongoing activities, particularly as we advance our commercialization activities;

• our ability to gain market acceptance, commercial viability and profitability of ContraPest, Evolve and any other approved products;

• our ability to market our products and establish an effective sales force and marketing infrastructure to generate significant revenue;

• the success of our research and development;

• the development of our products for multiple indications including application to non-Rodentia mammalian species;

• our ability to retain and attract key personnel to develop, operate and grow our business;

• our ability to meet our working capital needs;

• our expectation that cash and cash equivalents will be sufficient to fund our current operations for the next 12 months and the foreseeable future;

• our belief that the use of our products can lead to sustained reductions of the rat or mice populations;

• our belief that additional financing may still be needed before achieving our anticipated revenue and margin targets;

• our belief that if we are unable to raise necessary capital through the sale of our securities, we may be required to take other measures that could impair our ability to be successful and operate as a going concern;

• our belief that we may never achieve profitability or generate positive cash flows, and unless and until we do, we will continue to need to raise capital through equity or debt financing;

• our belief that if equity or debt financing is not available at adequate levels or on acceptable terms we may need to delay, limit or terminate commercialization and development efforts or discontinue operations;

• our belief that we will not pay dividends;

• our estimates of the fair value of warrants based on a Black-Scholes model;

• our belief that we have strong defenses against the claims by Liphatech;

• our belief that we may be subject to other legal proceedings and claims arising from contracts or other matters from time to time in the ordinary course of business;

• our belief that Evolve qualifies for exemption from registration as a minimum risk pesticide under the EPA’s FIFRA, Section 25(b);

• our belief that the market opportunity for non-poison rodent control remains significant and growing, driven by regulatory restrictions on traditional rodenticides and increasing demand for safer, sustainable pest management alternatives;

• our ability to raise necessary capital through the sale of our securities;

• our ability to achieve profitability or generate positive cash flows;

• our expectations regarding our ability to obtain and maintain intellectual property protection for our products and our ability to operate our business without infringing on the intellectual property rights of others;

• our belief that product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that we may develop;

• the effect that a reverse stock split or other capital restructuring may have on the liquidity of the shares of our common stock;

• the volatility of our stock price, which could subject us to securities class action litigation;

• our estimates or expectations related to our revenue, cash flow, expenses, capital requirements and need for additional financing;

• our expectation that Evolve product sales will continue to increase as the market adoption of Evolve grows;

• our expectation that for the foreseeable future tariffs on foreign countries will not increase our costs, as the majority of our components are sourced domestically;

• our expectation that our expenses will continue or increase in connection with our ongoing activities, particularly as we focus on marketing and sales of fertility control products;

• our expectation that we will continue to incur costs associated with operating as a public company;

• our expectation that we will incur substantial and increased expenses;

• our belief that we will need additional financing to fund our continuing and additional expenses.

• our financial performance, including our ability to fund operations.

These forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and situations that are difficult to predict and that may cause our own, or our industry’s, actual results to be materially different from the future results that are expressed or implied by these statements.

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The SEC’s website contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

SenesTech, Inc.

(subsequently referred to in this report as “we,” “us,” “our,” or “our company”) was incorporated in Nevada in July 2004 and reincorporated in Delaware in November 2015.

Our corporate headquarters and manufacturing facility are located in Surprise, Arizona.

We develop and commercialize products that manage animal pest populations through fertility control.

Our current products focus on rat and mouse populations and are marketed under the brands ContraPest®, Evolve® Rat, and Evolve® Mouse.

Our products target the reproductive systems of both male and female rodents, are formulated for high palatability, and do not cause illness or behavioral change, resulting in significant and sustained population reductions.

To date, ContraPest is registered in all 50 states, the District of Columbia, Puerto Rico, and the U.S.

Virgin Islands.

We are authorized to sell Evolve Rat in 48 states, Puerto Rico, and the U.S.

Virgin Islands, and Evolve Mouse in 36 states and the U.S.

Virgin Islands.

We have also begun to market Evolve products internationally through distributors.

During the third quarter of 2025, we continued to experience strong growth in our Evolve® product line, which now represents the majority of our total revenue.

We have developed and are commercializing products for managing animal pest populations through fertility control and population management strategies.

Our current products focus on rat and mouse populations, and are known as:

ContraPest, Evolve Rat, and Evolve Mouse.

During 2025, we experienced strong growth in our Evolve product line, which now represents the majority of our total revenue, which has continued into the first quarter of 2026.

Sales of Evolve Rat and Evolve Mouse increased across all major distribution channels, led by e-commerce, pest management professionals, and retail expansion.

We also announced that our products are now available on retailer e-commerce sites, which we view as an important step toward broader brick-and-mortar retail availability.

Our focus remains on achieving sustainable, high-margin revenue growth while progressing toward profitability.

To that end, we continue to emphasize operational efficiency, manufacturing cost reductions, and sales channel optimization.

Gross margins remain strong, reflecting the favorable economics of our Evolve products and improved manufacturing throughput at our Surprise, Arizona facility.

We also expanded our regulatory footprint and distribution reach.

Evolve Mouse received additional state registrations during the quarter, and we continued to support our international distribution partners as they introduce our fertility control technology to new markets.

Our products are

now available on retailer e-commerce sites, which we view as an important step toward broader brick-and-mortar retail availability.

Our focus remains on achieving sustainable revenue growth while progressing toward profitability.

To that end, we continue to emphasize operational efficiency, manufacturing cost efficiencies, and sales channel optimization.

Gross margins remain strong, reflecting the favorable economics of our Evolve products and improved manufacturing throughput.

We have also expanded our distribution reach and continued to support our international distribution partners as they introduce our fertility control technology to new markets.

We believe the market opportunity for non-poison rodent control remains significant and growing, driven by regulatory restrictions on traditional rodenticides and increasing demand for safer, sustainable pest-management alternatives.

Our near-term priorities are to further scale our Evolve product family, expand retail and professional distribution channels, and strengthen our path to profitability.

Our near-term priorities are to further scale our Evolve product family, expand e-commerce and retail and professional distribution channels, and strengthen our path to profitability.

Results of Operations

The following table summarizes our results of operations for the periods presented (in thousands):

Three Months Ended September 30, % Increase (Decrease) Nine Months Ended September 30, % Increase (Decrease)

2025 2024 2025 2024

Three Months Ended March 31, % Increase (Decrease)

Revenues, net $ 493 $ 485 2 %

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Loss from operations (2,119) (1,663) 27 %

Other income, net 49 34 44 % 45 63 (29) %

Interest income (expense), net 56 (2) (2900) %

Net loss $ (2,063) $ (1,665) 24 %

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

$ 535 78 % $ 252 52 % $ 1,328 74 % $ 744 55 %

51 7 % 79 17 % 161 9 % 107 8 %

Three Months Ended March 31,

Evolve $ 418 85 % $ 384 79 %

75 15 % 101 21 %

Revenues, net $ 493 100 % $ 485 100 %

Sales, net of sales discounts and promotions, were $690,000 for the third quarter of 2025, compared to $482,000 for the third quarter of 2024.

Sales, net of sales discounts and promotions, were $493,000 for the first quarter of 2026, compared to $485,000 for the first quarter of 2025.

The $8,000 increase was driven by sales of our Evolve product offerings — Evolve Rat and Evolve Mouse (collectively, “Evolve”) — partially offset by a decline in units sold of our existing ContraPest product line.

Evolve, which launched in January 2024 and expanded with variations later that year, is a soft bait containing the active ingredient, cottonseed oil.

It represented approximately 85% of third quarter 2025 revenues, compared to 69% in the third quarter of 2024.

The increase in Evolve revenues was partially offset by a continued decline in ContraPest sales.

Sales, net of sales discounts and promotions, were $1.8 million for the nine months ended September 30, 2025, compared to $1.4 million for the comparable period of 2024.

The $444,000 increase was driven by sales of Evolve , partially offset by a decline in units sold of our ContraPest product line.

Evolve product sales represented approximately 83% of revenues for the nine months ended September 30, 2025, compared with 63% in the comparable period of 2024.

The increase in Evolve revenues was partially offset by a continued decline in ContraPest sales.

We expect this trend to continue as the market adoption of Evolve grows.

It represented approximately 85% of first quarter 2026 revenues, compared to 79% in the first quarter of 2025.

The increase in Evolve revenues was partially offset by an expected decline in ContraPest sales.

Cost of Sales

Cost of sales consists of costs related to products sold, including scrap and reserves for obsolescence, as well as shipping costs when charged to the customer.

Cost of sales was $257,000, or 37.2% of net sales, for the third quarter of 2025, compared to $167,000, or 34.6%, for the third quarter of 2024.

Cost of sales was $645,000, or 35.8% of net sales, for the nine months ended September 30, 2025, compared to $657,000, or 48.5%, for the same period of 2024.

The decrease as a percentage of sales was driven by a shift in product mix toward Evolve, which carries a lower cost relative to ContraPest.

Additionally, 2024 reflected higher input costs for a key Evolve ingredient, as we transitioned from development-stage pricing to production-scale sourcing.

Cost of sales was $155,000, or 31.4% of net sales, for the first quarter of 2026, compared to $172,000, or 35.5%, for the first quarter of 2025.

For the foreseeable future, tariffs on foreign countries are not expected to increase our costs, as the majority of our components are sourced domestically.

Gross profit for the third quarter of 2025 was $433,000, representing a margin of 62.8%, compared to $315,000, or 65.4%, in the third quarter of 2024.

Gross profit for the nine months ended September 30, 2025 was $1.2 million, representing a margin of 64.2%, compared to $699,000, or 51.5%, for the comparable period of 2024.

The improvement in gross margin was primarily driven by a greater proportion of sales coming from Evolve combined with lower input costs for a key Evolve ingredient as transitioned from development-stage pricing in 2024 to production-scale sourcing into 2025.

Gross profit for the first quarter of 2026 was $338,000, representing a margin of 68.6%, compared to $313,000, or 64.5%, in the first quarter of 2025.

The improvement reflects a combination of improved production efficiency and average selling prices.

Research and Development Expenses

Research and development expenses consisted of the following (in thousands):

Three Months Ended September 30, Increase

(Decrease) Nine Months Ended September 30, Increase

2025 2024 2025 2024

Three Months Ended March 31, Increase

Personnel related (including stock-based compensation) $ 256 $ 253 1 %

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Supplies and maintenance 18 20 (10) %

Professional fees 9 32 (23) 39 66 (27)

Stability studies, materials and testing 11 33 (22) 19 67 (48)

Other 17 38 (55) %

Total $ 422 $ 418 1 %

Research and development expenses were $400,000 for the third quarter of 2025, compared to $451,000 for the third quarter of 2024.

The $51,000 decrease was primarily due to cost containment efforts, including lower personnel costs resulting from changes in headcount.

These savings were partially offset by increased facility expenses associated with our move to a new manufacturing site in April 2025, with expanded production capacity and corporate offices, and included $44,000 in non-cash operating lease costs.

Additionally, maintenance costs were higher and related to the expanded production capacity.

Research and development expenses were $1.2 million for the nine months ended September 30, 2025, compared to $1.3 million during the same period of 2024.

The $43,000 decrease was primarily driven by overall reductions in spending as a result of our ongoing cost containment efforts.

This decrease was partially offset by higher facility-related costs related to our April 2025 move to a new facility, which included $87,000 in non-cash operating lease expense.

Research and development expenses were $422,000 for the first quarter of 2026, compared to $418,000 for the first quarter of 2025, representing an increase of $4,000.

The slight increase was due to higher facility-related expenses following our move to a new manufacturing site in April 2025, which provides expanded production capacity and corporate office space.

This increase was largely offset by savings from ongoing cost-containment efforts.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consisted of the following (in thousands):

Three Months Ended September 30, Increase

(Decrease) Nine Months Ended September 30, Increase

2025 2024 2025 2024

Three Months Ended March 31, Increase

Personnel related (including stock-based compensation) $ 907 $ 712 27 %

Professional fees 793 430 84 %

Franchise fees 28 13 15 174 85 89

Marketing 56 64 (13) %

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Travel and entertainment 47 62 (24) %

Facilities 32 39 (7) 32 119 (87)

Other 126 189 (33) %

Total $ 2,035 $ 1,558 31 %

Selling, general and administrative expenses were $1.4 million for the third quarter of 2025, compared to $1.4 million for the third quarter of 2024.

The decreases resulting from our continued cost containment efforts in 2025 were largely offset by higher legal fees related to an ongoing legal matter as well as higher franchise fees.

Selling, general and administrative expenses were $4.5 million for the nine months ended September 30, 2025, compared to $4.4 million for the same period of 2024.

The increase in selling, general and administrative expenses was primarily due to higher legal fees related to an ongoing legal matter, as well as increased franchise fees and corporate governance costs.

Other operating expenses decreased as a result of our continued cost containment efforts.

Other Income, Net

For the third quarter of 2025, other income, net was $49,000, consisting of $55,000 in interest income and $6,000 in interest expense.

This compares to other income, net of $34,000 in the third quarter of 2024, which included a $28,000 gain from the sale of equipment, consisting of $11,000 in interest income and $6,000 in interest expense.

Selling, general and administrative expenses were $2.0 million for the first quarter of 2026, compared to $1.6 million for the first quarter of 2025, representing an increase of $477,000.

The increase was primarily driven by higher professional fees, including $213,000 in legal expenses associated with the settlement of a specific litigation matter and increased general corporate activity.

Consulting costs related to marketing efforts also rose due to changes in product packaging and strategy, including a shift toward direct sales on Amazon.

Also included in professional fees, board compensation increased as a result of changes in director responsibilities and committee assignments.

Personnel-related costs included $230,000 of severance expense incurred during the first quarter of 2026, as well as executive search fees related to succession planning, partially offset by changes in headcount.

Interest Income (Expense), Net

For the first quarter of 2026, interest income, net was $56,000, consisting of $60,000 in interest income and $4,000 in interest expense.

This compares to interest expense, net of $2,000 in the first quarter of 2025, consisting of $3,000 in interest income and $5,000 in interest expense.

The increase in interest income in 2026 reflects a higher average balance of cash, cash equivalents and investments compared to the same period in 2025.

For the nine months ended September 30, 2025, other income, net was $45,000, consisting of $62,000 in interest income and $17,000 in interest expense.

This compares to other income, net of $63,000, which included a $28,000 gain from the sale of equipment, consisting of $48,000 in interest income and $15,000 in interest expense.

The increase in interest income and in interest expense in 2025 were driven by a higher average balance of cash, cash equivalents and investments and a higher average balance of notes payable, respectively.

The higher average balance of cash, cash equivalents and investments was driven by warrant exercise and ATM transactions in June and August 2025, while the higher average balance of notes payable relates to the financing of new equipment in late 2024 to expand production capacity and streamline operations.

Liquidity and Capital Resources

Since our inception, we have incurred significant operating losses related to our research and development activities and commercialization efforts, with a net loss of $1.3 million for the three months ended September 30, 2025, and we expect these losses to continue in the near term.

Since our inception, we have incurred operating losses related to our research and development activities and commercialization efforts, with a net loss of $2.1 million for the three months ended March 31, 2026, and we expect these losses to continue for the near future.

Although sales of our product have increased over the last three years —20 % in 2025, 56% in 2024, and 17% in 2023 — we are not yet able to fund operations by product sales alone.

We have primarily funded our operations to date through the sale of equity securities, including common stock and warrants to purchase common stock.

As of September 30, 2025, we had received net proceeds of $117.0 million from the issuance of common and preferred stock, warrant exercises, and convertible and other promissory notes.

We have also generated an aggregate of $7.3 million in net product sales and $1.7 million in licensing fees.

At the end of the period, we reported an accumulated deficit of $140.7 million and cash and cash equivalents and short-term investments totaling $10.2 million.

Our long-term success depends on several key factors, including:

(i) successful commercialization and regulatory approval of our fertility control products and pipeline candidates;

(ii) market acceptance, commercial viability, and profitability of our products;

(iii) the ability to market our products and establish an effective sales force and marketing infrastructure to generate revenue;

(iv) the success of our ongoing research and development efforts;

(v) our ability to attract and retain key personnel to develop, operate and grow our business;

(vi) our ability to meet our ongoing working capital requirements.

Based on our current operating plan, we expect that our cash and cash equivalents and short-term investments as of September 30, 2025, combined with anticipated revenue and potential proceeds from future equity sales, will be sufficient to fund operations for the next 12 months and the foreseeable future.

While we have evaluated and continue to evaluate our operating expenses and remain focused on the successful commercialization of our fertility control products both in the United States and abroad.

However, if our revenue or margin targets are not met, or if our expenses exceed projections, we may need to secure additional financing sooner than expected.

If additional capital is required and we are unable to raise it through equity or debt offerings, we may need to take alternative actions that could negatively impact our business and our ability to continue as a going concern.

Regardless, we anticipate needing additional capital to fund ongoing operating losses and research and development efforts before reaching profitability and may seek funding opportunistically.

There is no guarantee that we will ever achieve profitability or positive cash flow.

Without adequate financing on acceptable terms, we may be forced to delay, scale back, or discontinue commercialization and development activities—or cease operations entirely.

Potential Additional Funding Requirements

We expect our expenses to continue or increase in connection with our ongoing activities, particularly as we focus on marketing and sales of fertility control products.

We have primarily funded our operations through the sale of equity securities, including common stock and warrants to purchase common stock.

Through March 31, 2026, we received net proceeds of $117.2 million primarily from the sales of our equity securities, including warrant exercises, an aggregate of $8.3 million in product sales and an aggregate of $1.7 million from licensing fees.

As of March 31, 2026, cash and cash equivalents and short-term investments were $6.8 million, compared to $8.6 million as of December 31, 2025.

Based on our current operating plan, we expect that our cash and cash equivalents as of March 31, 2026, in combination with anticipated revenue, will be sufficient to fund our current operations into the third quarter of 2027.

This estimate assumes continued execution of our current commercialization strategy, planned levels of operating expenses, and no significant changes in working capital requirements.

Our projected cash runway does not assume the receipt of additional capital from equity issuances, debt financings, strategic partnerships, or other external sources.

If revenue growth does not occur at anticipated levels, or if expenses exceed current expectations, we may be required to seek additional financing sooner than currently anticipated.

We continue to evaluate various financing alternatives, including equity offerings under our existing ATM program, strategic partnerships, and other capital-raising transactions.

There can be no assurance that additional capital will be available on acceptable terms, if at all.

Additional Funding Requirements

Our expenses may continue to increase in connection with our ongoing activities, particularly as we focus on marketing and sales of fertility control products.

In addition, we will continue to incur costs associated with operating as a public company.

In particular, we expect to incur substantial and increased expenses as we:

In particular, we expect to incur increased expenses as we:

• work to maximize market acceptance for, and generate sales of, our products, including by conducting field demonstrations for potential lead customers;

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The following table summarizes our sources and uses of cash for each of the periods presented (in thousands):

Nine Months Ended September 30,

Three Months Ended March 31,

Cash and cash equivalents, beginning of period $ 7,575 $ 1,307

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Cash Flows from Operating Activities— Cash flows from operating activities are generally determined by the amount and timing of cash received from customers and payments made to vendors, as well as the nature and amount of non-cash items, including depreciation and amortization and stock-based compensation included in operating results during a given period.

During the nine months ended September 30, 2025, operating activities used $4.1 million of cash, resulting from our net loss of $4.6 million and net changes in our operating assets and liabilities of $75,000, partially offset by net non-cash charges of $418,000, consisting primarily of stock-based compensation, depreciation and amortization and operating lease expenses.

During the three months ended March 31, 2026, operating activities used $1.9 million of cash, resulting from our net loss of $2.1 million and net changes in our operating assets and liabilities of $73,000, partially offset by net non-cash charges of $61,000, consisting primarily of stock-based compensation, depreciation and amortization and operating lease expenses.

Our net loss was driven by costs related to our selling, general and administrative activities resulting from our continued efforts to commercialize our products, combined with research and development costs related to our continued efforts on formulations of new products and improvements to existing products.

Net cash provided by changes in our operating assets and liabilities consisted of a net increase in accounts payable and accrued expenses of $77,000 combined by decreases in prepaid expenses of $64,000, inventory of $27,000 and other assets related to the return of facility deposits of $22,000, partially offset by increase in accounts receivable of $125,000.

During the nine months ended September 30, 2024, operating activities used $4.8 million of cash, resulting from our net loss of $4.9 million and net changes in our operating assets and liabilities of $216,000, partially offset by non-cash charges of $330,000, consisting primarily of stock-based compensation and depreciation and amortization expense.

Net cash provided by changes in our operating assets and liabilities consisted of a net increase in accounts payable and accrued expenses of $142,000 and a decrease in accounts receivable of $32,000, partially offset by increases in prepaid expenses of $40,000 and inventory of $54,000.

During the three months ended March 31, 2025, operating activities used $1.6 million of cash, resulting from our net loss of $1.7 million and net changes in our operating assets and liabilities of $22,000, partially offset by non-cash charges of $130,000, consisting primarily of stock-based compensation and depreciation and amortization expense.

Our net loss was driven by costs related to our selling, general and administrative activities resulting from our efforts to commercialize our products, combined with costs related to our research and development efforts.

Net cash used by changes in our operating assets and liabilities consisted primarily of increases in accounts receivable of $121,000, inventory of $85,000, and other assets related to the deposit on our new facility of $36,000, partially offset by a decrease in prepaid expenses of $28,000 and an increase in accounts payable and accrued expenses of $4,000.

Cash Flows from Investing Activities— Cash flows used in investing activities consist of held-to-maturity investment transactions, the purchase of property and equipment, and any proceeds received in connection with sales of property and equipment.

For the nine months ended September 30, 2025, cash used in investing activities consisted of purchases of held-to-maturity investments totaling $3.0 million and property and equipment purchases of $125,000 compared to property and equipment purchases of $69,000, partially offset by proceeds received in connection with the sale of property and equipment of $28,000 in the same period of 2024.

The higher 2025 property and equipment purchases were related to our move into a new manufacturing facility with increased production capacity and corporate offices.

Net cash used by changes in our operating assets and liabilities consisted primarily of an increase in accounts receivable of $163,000 and a decrease in accounts payable accrued expenses of $19,000, partially offset by decreases in prepaid expenses of $119,000 and inventory of $41,000.

Cash Flows from Investing Activities— Cash flows used in investing activities consist of held-to-maturity investment transactions and purchases of property and equipment.

For the three months ended March 31, 2026, cash provided by investing activities consisted of the maturity of a held-to-maturity investment totaling $1.0 million compared to cash used in investing activities related to property and equipment purchases of $36,000 in the same period of 2025.

Cash Flows from Financing Activities— Financing activities provide cash for both day-to-day operations and capital requirements as needed.

During the nine months ended September 30, 2025, net cash provided by financing activities consisted of net proceeds received from the exercise of warrants of $10.5 million and from the issuance of common stock under our ATM Facility of $2.7 million, partially offset by repayments on notes payable of $42,000.

During the nine months ended September 30, 2024, net cash provided by financing activities consisted of net proceeds received from the exercise of warrants of $2.0 million and proceeds received from notes payable of $25,000, partially offset by the repayment of notes payable of $29,000.

Warrant Inducement Transaction

On August 5, 2025, we completed a warrant inducement transaction resulting in the issuance of 1,458,872 shares of our common stock upon the exercise of certain existing warrants (the “Warrant Inducement Transaction”).

The holders of such warrants agreed to exercise their existing warrants at the exercise price of $4.15 per share and pay a purchase price of $0.125 per share—totaling $274,000—in consideration of our issuance, in a private placement, of new warrants.

These new warrants relate to 2,188,308 shares of common stock, have an exercise price of $5.25 per share, are immediately exercisable, and will expire 15 months after the effective date of the resale registration statement covering the underlying shares.

This Warrant Inducement Transaction generated gross proceeds of $6.3 million, before deducting placement agent fees and other offering expenses payable by us.

In connection with this transaction, we issued placement agent warrants to purchase up to 72,944 shares of common stock.

These placement agent warrants have an exercise price of $5.4219 per share and have terms substantially similar to those of the new warrants issued to the investors.

As a result of this latest Warrant Inducement Transaction, we had $10.2 million in cash and cash equivalents and short-term investments as of September 30, 2025, and we believe that our existing cash and cash equivalents and short-term investments will be sufficient to fund our operations and any capital expenditures for the next 12 months and the foreseeable future.

If we have not yet achieved break-even or profitability by that point, our ability to continue as a going concern will depend on our ability to generate sufficient revenues, reduce operating costs, or obtain additional funding through equity or debt financings, strategic collaborations, or other arrangements.

During the three months ended March 31, 2026, net cash provided by financing activities consisted of net proceeds received from the issuance of common stock under our ATM Facility of $173,000, partially offset by repayments on notes payable of $15,000.

During the three months ended March 31, 2025, net cash provided by financing activities consisted of net proceeds received from the issuance of common stock under our ATM Facility of $1.1 million and from the exercise of warrants of $889,000, partially offset by the repayment of notes payable of $14,000.

Critical Accounting Policies and 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