What changed in this filing

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Item 1. Financial Statements

2026-05-15 compared with 2025-11-14 · 128 added, 162 removed, 257 unchanged (53% of the section changed)

3 unchanged sentences

(in thousands, except share amounts)

September 30,

Current assets:

7 unchanged sentences

Property and equipment, net

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

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Commitments and contingencies (Note 4)

Stockholders’ equity:

Shareholders’ equity:

Preferred stock, par value $ 0.0001 per share Authorized:

10,000,000 shares at September 30, 2025, and December 31, 2024;

10,000,000 shares at March 31, 2026, and December 31, 2025;

Issued and outstanding:

0 shares at September 30, 2025, and December 31, 2024

0 shares at March 31, 2026, and December 31, 2025

Common stock, par value $ 0.0001 per share Authorized:

100,000,000 shares at September 30, 2025 and December 31, 2024;

100,000,000 shares at March 31, 2026 and December 31, 2025;

Issued and outstanding:

4,270,840 shares at September 30, 2025 and 4,238,581 at December 31, 2024

4,185,852 shares at March 31, 2026 and 4,201,948 at December 31, 2025

Additional paid-in capital

1 unchanged sentence

Accumulated other comprehensive loss

Total stockholders’ equity

Total liabilities and stockholders’ equity

Total shareholders’ equity

Total liabilities and shareholders’ equity

See accompanying notes to condensed consolidated financial statements.

3 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Operating expense:

1 unchanged sentence

Selling, general and administrative

Impairment loss on investment

Total operating expense

12 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Other comprehensive income (loss):

8 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Total shareholders’ equity, beginning balances

17 unchanged sentences

(in thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities:

1 unchanged sentence

Stock-based compensation

Impairment loss on investment

Changes in assets and liabilities:

6 unchanged sentences

Cash flows from investing activities:

Purchase of property and equipment

Purchase of investments

13 unchanged sentences

(in thousands, except per share amounts)

Note 1 — Business Description and Basis of Presentation

VirnetX Holding Corporation (Company, we, us, or our) is an Internet security software and technology company.

We develop patented cybersecurity solutions that ensure resilient, secure communications

across any network or device.

Built on Zero Trust Network Access (ZTNA) principles, our flagship platform, VirnetX One™, virtualizes on-demand private networks using patented Secure Domain Names and automatically establishes secure links regardless

of location or endpoint.

Our products, including War Room™ and VirnetX Matrix™, are designed to support the U.S.

Department of War (DoW) with real-time, encrypted collaboration.

War Room TM offers advanced visualization for situational awareness, while Matrix secures communications through robust encryption, even in contested environments.

Our Digital Engineering (DE) services are designed to strengthen our current and evolving Model-Based Systems Engineering (MBSE) processes while also providing comprehensive Cyber Threat Assessment

services seamlessly integrating into the US DoW’s Digital Engineering strategy.

Additionally, our DE professional services include integration of our subject matter expertise in kinetic and non-kinetic secure, automated, command and control, battle

management, and all-domain collection sensor orchestration.

With embedded secure communication from research and development (R&D) to operational deployment, our Dynamic Trust Evaluation (DTE) methods continuously enforce real-time trust

policies, ensuring resilient and adaptive network security.

Our Cyber Threat Intelligence (CTE) and assessment services deliver context-aware insights, empowering defense leaders to anticipate and mitigate emerging cyber threats.

Our product portfolio includes sophisticated technologies, products and services that are available for sale worldwide.

Our next-generation VirnetX One™ platform builds upon our patented Secure Domain

Name Registry and Technology to further enhance the security and efficiency of our patented secure communication links.

VirnetX One™ is a security-as-a-service platform that protects enterprise applications, services, and infrastructure from

cyber-attacks.

Our platform allows government organizations, businesses, and other enterprises of all sizes to add a “security umbrella” as an added layer on top of their existing infrastructure to further reduce risk and bolster security against

evolving cyberthreat landscape to data, operating systems, other infrastructure products and gateway security controllers.

Note 1 — Business Description and Going Concern

VirnetX Holding Corporation (“Company”, “we”, “us”, or “our”) is an Internet security software and technology company with patented cybersecurity solutions that are designed to ensure resilient,

secure communications across any network or device.

Our products, including VirnetX One™, VirnetX Matrix™, and VirnetX War Room™, are designed to support the U.S.

Department of Defense (DoD), federal government, and commercial customers requiring

real-time encrypted communications and network security.

Our solutions are designed to also be applicable across a range of public and private sector markets, including critical infrastructure, law enforcement, healthcare, financial services, legal

services, energy, and related industries.

We pursue sales opportunities nationwide and engage with universities and academic institutions to support research collaboration, workforce development, and technology transition initiatives.

To support system design and evaluation, we employ Model-Based Systems Engineering (MBSE) and agent-based modeling methodologies.

These approaches enable simulation and analysis of complex systems,

including cyber-physical environments and adaptive networks, and support assessment of system behavior under evolving threat conditions.

Going Concern

For the three months ended March 31, 2026, we had a net loss of $ 4,354 and an accumulated deficit of $ 227,249 .

Management believes that its cash and cash equivalents will be insufficient to satisfy the Company’s current operations for the twelve months following the issuance of these financial statements.

As such, there is substantial doubt about the Company’s ability to continue as a going concern.

Management’s plans to address this condition include pursuit of (1) additional revenue, although there can be no assurance that additional revenue will be timely-secured in sufficient quantity, and (2) additional capital, likely through one or more equity offerings, or otherwise, although there can be no assurance such financing will be available on acceptable terms.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Note 2 — Summary of Significant Accounting Policies

Unaudited Interim Financial Information

The accompanying Condensed Consolidated Balance Sheet as of September 30, 2025, the Condensed Consolidated Statements of Operations, Condensed Consolidated Statements of Comprehensive Loss, Condensed

Consolidated Statements of Shareholders’ Equity, and Condensed Consolidated Statements of Cash Flows for the three and nine months ended September 30, 2025 and 2024 are unaudited.

These unaudited interim consolidated financial statements have been

prepared in accordance with generally accepted accounting principles in the United States (U.S.

In our opinion, the unaudited interim consolidated financial statements include all adjustments of a normal recurring nature necessary for the

fair presentation of our financial position as of September 30, 2025, our results of operations and our cash flows for the three and nine months ended September 30, 2025 and 2024.

The results of operations for interim periods are not necessarily

indicative of the results to be expected for a full year.

These unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the

fiscal year ended December 31, 2024, filed with the SEC on March 17, 2025.

The accompanying Condensed Consolidated Balance Sheet as of March 31, 2026, the Condensed Consolidated Statements of Operations, Condensed Consolidated Statements of Comprehensive Loss, Condensed Consolidated

Statements of Shareholders’ Equity, and Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2026, and 2025 are unaudited.

These unaudited interim condensed consolidated financial statements have been prepared in

accordance with generally accepted accounting principles in the United States (U.S.

In our opinion, the unaudited interim condensed consolidated financial statements include all adjustments of a normal recurring nature necessary for the fair

presentation of our financial position as of March 31, 2026, our results of operations and our cash flows for the three months ended March 31, 2026, and 2025.

The results of operations for interim periods are not necessarily indicative of the

results to be expected for a full year.

These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal

year ended December 31, 2025, filed with the SEC on March 24, 2026.

Use of Estimates

We prepare our consolidated financial statements in accordance with U.S.

In doing so, we have to make estimates and assumptions that affect our reported amounts of assets, liabilities, revenues,

and expenses, as well as related disclosure of contingent assets and liabilities.

We prepare our condensed consolidated financial statements in accordance with U.S.

In doing so, we have to make estimates and assumptions that affect our reported amounts of assets, liabilities, revenues, and

expenses, as well as related disclosure of contingent assets and liabilities.

In some cases, we could reasonably have used different accounting policies and estimates.

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We have elected the investment measurement alternative for other investments without readily determinable fair values.

During 2023, we invested $ 2,000 in L2 Holdings LLC and $ 500 in OP Media Inc.

During 2023, we invested $ 2,000 in L2 Holdings LLC (dba OmniTeq) and $ 500 in OP Media Inc.

These investments are carried at our initial cost less any impairment because we do not have the ability to exercise significant influence over operating and financial matters.

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If we identify an impairment, we reduce the carrying value for the impairment loss with a charge to operating expenses.

Effective September 30, 2025 we identified an impairment in our investment in OP Media Inc., and as a result, we recognized an impairment loss totaling $ 500 .

In September 2025, we identified an impairment in our investment in OP Media Inc., and as a result, we recognized an impairment loss totalling $ 500 .

Basis of Consolidation

The consolidated financial statements include the accounts of VirnetX Holding Corporation and our wholly-owned subsidiaries.

The condensed consolidated financial statements include the accounts of VirnetX Holding Corporation and our wholly-owned subsidiaries.

All intercompany balances and transactions have been eliminated.

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We recognize revenue pursuant to Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers.

A performance obligation is a promise in a contract to transfer a distinct

good or service to the customer.

A performance obligation is a promise in a contract to transfer a distinct good or service to

the customer.

A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.

Our revenue arrangements may consist of

multiple-element arrangements, with revenue for each unit of accounting recognized as the product or service is delivered to the customer.

Our revenue arrangements may consist of multiple-element arrangements,

with revenue for each unit of accounting recognized as the product or service is delivered to the customer.

With our service contracts, performance obligations are generally satisfied as the service is delivered.

the licensing of our patents, performance obligations are generally satisfied at a point in time as work is complete when our patent rights are transferred to our customers.

We generally have no further obligation to our customers regarding our

Certain contracts may require our customers to enter into a hosting arrangement with us and for these arrangements, revenue is recognized over time, generally over the life of the service contract.

Payment for services and licensing is

collected within a short period following commencement of delivery of services or transfer of patent rights.

With the licensing of our patents,

performance obligations are generally satisfied at a point in time as work is complete when our patent rights are transferred to our customers.

We generally have no further obligation to our customers regarding our technology.

Certain contracts may

require our customers to enter into a hosting arrangement with us and for these arrangements, revenue is recognized over time, generally over the life of the service contract.

Payment for services and licensing is collected within a short period

following commencement of delivery of services or transfer of patent rights.

Cash and Cash Equivalents

We consider all highly liquid investments purchased with maturities of three months or less at the date of purchase to be cash equivalents.

Our cash and cash equivalents are not subject to significant

interest rate risk due to the short maturities of these investments.

Our cash and cash equivalents are not subject to significant interest rate

risk due to the short maturities of these investments.

Property and Equipment

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Repair and maintenance costs are charged to expense as incurred.

We determine if an arrangement is a lease at inception in accordance ASC Topic 842.

Operating lease right-of-use (ROU) assets are included in prepaid expenses and other assets and lease liabilities are included in other liabilities on the Condensed Consolidated Balance Sheets.

We determine if an arrangement is a lease at inception in accordance with ASC Topic 842.

Operating lease right-of-use (ROU) assets are included in prepaid expenses and other assets, and lease

liabilities are included in other liabilities.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term, using the incremental borrowing rate, U.S.

prime rate of 7.5 % in 2025 and 8.5 % in 2024.

ROU assets and lease

liabilities are recognized at the commencement date based on the present value of lease payments over the lease term, using the incremental borrowing rate.

Concentration of Credit Risk and Other Risks and Uncertainties

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We have not experienced any losses on our deposits of cash and cash equivalents.

Our financial instruments are stated at amounts that equal, or approximate, fair value.

When we estimate fair value, we utilize market data or assumptions that we believe market participants would use

in pricing the financial instrument, including assumptions about risk and inputs to the valuation technique.

We use valuation techniques, primarily the income and market approach, which maximizes the use of observable inputs and minimize the use of

unobservable inputs for recurring fair value measurements.

The carrying amounts of our financial instruments, including cash equivalents, accounts payable, and accrued liabilities, approximate fair value because of their generally short maturities.

Intangible Assets

2 unchanged sentences

Impairment of Long-Lived Assets

We identify and record impairment losses on long-lived assets used in operations when events and changes in circumstances indicate that the carrying amount of an asset might not be recoverable, but

not less than annually.

We identify and record impairment losses on long-lived assets used in operations when events and changes in circumstances indicate that the carrying amount of an asset might not be recoverable, but not less than

Recoverability is measured by comparison of the anticipated future net undiscounted cash flows to the related assets’ carrying value.

If such assets are deemed impaired, the impairment to be recognized is measured by the

amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows arising from the asset.

If such assets are deemed impaired, the impairment to be recognized is measured by the amount by which

the carrying amount of the assets exceeds the projected discounted future net cash flows arising from the asset.

Research and Development

Research and development costs include expenses paid to outside development consultants and compensation related expenses for our engineering staff.

Research and development costs are expensed as

Research and development costs are expensed as incurred.

We account for income taxes using the asset and liability method.

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In assessing our deferred tax assets, we consider whether it is more likely than not that all or some portion of the deferred tax assets will not be realized.

On July 4, 2025, the United States enacted tax legislation, often referred to as the “One Big Beautiful Bill” Act (OB3).

Management is evaluating the impact of OB3 to the Company and cannot yet

estimate what elections it will make related to accelerating pre-2025 IRC Section 174 domestic capitalized R&D costs or federal bonus depreciation elections for fixed assets placed in service on or after January 19, 2025.

We will continue to

monitor and assess options.

A valuation allowance is provided for deferred income tax assets when, in our judgment, based upon currently available information and other factors, it is more likely than not that all or a portion

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Basic earnings per share are computed by dividing earnings available to common stockholders by the weighted average number of common shares outstanding during the period.

Diluted earnings per share is

computed by dividing net income by the weighted average number of shares outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had

Diluted earnings per share are computed by

dividing net income by the weighted average number of shares outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued.

Additionally, weighted average shares outstanding for both basic and diluted earnings per share include all vested restricted shares issued and outstanding.

New Accounting Pronouncements

In December 2023, the FASB issued Accounting Standards Updated (ASU) 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which requires disaggregated information about an

entity’s effective tax rate reconciliation as well as information on income tax paid.

The guidance in this ASU is effective for public companies with annual periods beginning after December 15, 2024.

We plan to adopt the guidance for the fiscal

year ending December 31, 2025.

We do not expect the adoption of this accounting standard to have an impact on our consolidated financial statements but will require certain additional disclosures.

In March 2024, the FASB issued ASU 2024-01, Compensation—Stock Compensation (Topic 718):

Scope Application of Profits Interest and Similar Awards.

The guidance in this ASU is effective for public

companies with annual periods beginning after December 15, 2024.

We plan to adopt the guidance for the fiscal year ending December 31, 2025.

We are currently evaluating the effect adoption of this ASU will have on our consolidated financial

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation (Subtopic 220-40):

Disaggregation of Income Statement Expenses, that requires

disclosure of the amounts of purchases of inventory, employee compensation, depreciation, and intangible asset amortization included in each relevant expense line item on the income statement.

The standard also requires a qualitative description

of other amounts included in each relevant expense line item on the income statement that are not separately disclosed.

In addition, entities are required to disclose the nature and amount of selling expenses.

The new standard is effective for

annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

In November 2024, the FASB issued Accounting Standards Update (ASU) 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation (Subtopic 220-40):

Disaggregation

of Income Statement Expenses , that requires disclosure of the amounts of purchases of inventory, employee compensation, depreciation, and intangible asset amortization included in each relevant expense line item on the income statement.

The standard also requires a qualitative description of other amounts included in each relevant expense line item on the income statement that are not separately disclosed.

In addition, entities are required to disclose the nature and amount of

selling expenses.

The new standard is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Early adoption is permitted.

We do not expect the adoption of this accounting standard to have an impact on our

consolidated financial statements but will require certain additional disclosures.

We do not expect the adoption of this

accounting standard to have an impact on our consolidated financial statements but will require certain additional disclosures.

In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832):

Accounting for Government Grants Received by Business Entities , which establishes authoritative

guidance on the recognition, measurement, presentation, and disclosure of government grants.

Under ASU 2025-10, government grants are recognized when it is probable that the entity will both comply with the conditions of the grant and the grant

will be received.

The ASU provides specific accounting models for grants related to assets and grants related to income, including options to recognize government grants as deferred income or as a reduction of the asset’s cost basis.

requires enhanced disclosures regarding the nature of government grants, significant terms and conditions, accounting policies applied, and amounts recognized in the financial statements.

ASU 2025-10 is effective for fiscal years beginning after

December 15, 2028, including interim periods within those fiscal years, with early adoption permitted.

The Company is currently evaluating the impact of adopting this standard.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270):

Narrow-Scope Improvements , which clarifies the guidance in Topic 270 to improve the consistency

of interim financial reporting.

The ASU provides a comprehensive list of required interim disclosures and introduces a disclosure principle requiring entities to disclose events since the end of the last annual reporting period that have a material

impact on the entity.

ASU 2025-11 is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years, with early adoption permitted.

The Company is currently evaluating the impact of adopting this

Fair Value of Financial Instruments

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A fair value hierarchy prioritizes the inputs used to measure fair value.

hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

Level 2 measurements utilize either

directly or indirectly observable inputs in markets other than quoted prices in active markets.

The hierarchy gives

the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

Level 2 measurements utilize either directly or

indirectly observable inputs in markets other than quoted prices in active markets.

Mutual funds:

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Valued at the closing price reported on the active market on which the individual securities are traded.

The following tables show the adjusted cost, gross unrealized gains, gross unrealized losses, and fair value of our securities by significant investment category as of September 30, 2025 and December 31, 2024.

September 30, 2025

The following tables show the adjusted cost, gross unrealized gains, gross unrealized losses, and fair value of our securities by significant investment category as of March 31, 2026 and December 31, 2025.

March 31, 2026

agency and treasury securities

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Note 3 — Income Taxes

For the three months ended September 30, 2025 and 2024, we recognized no income tax expense.

For the nine months ended September 30, 2025 and 2024, we recognized income tax expense of $ 2 and $ 3 , on pretax losses of $ 11,646 , and $ 11,957 .

For the three months ended March 31, 2026 and 2025, we recognized income tax expense of $ 0 and $ 2 , on pretax losses of $ 4,354 , and $ 3,677 .

Our effective tax rate is approximately 0 % for all periods.

Our effective tax rate differed from the federal statutory rate of 21 %, primarily due to the valuation allowance placed against our net deferred tax assets.

We have a full valuation allowance on all federal and state deferred tax assets as of September 30, 2025.

We have a full valuation allowance on all federal and state deferred tax assets as of March 31, 2026.

Our tax years for 2007 and forward are subject to examination by the U.S.

tax authority and our tax years for 2021 and forward are open for various state tax authorities because we utilized the net operating loss and tax credits generated in those years in 2020.

As of September 30, 2025, we have no t identified or accrued amounts for uncertain tax positions or interest and penalties related to uncertain tax positions and do not expect significant changes to the estimate in the coming twelve months.

As of March 31, 2026, we have accrued $ 484 for uncertain tax positions and no interest and penalties related to these positions and do not expect significant changes to the estimate in the coming twelve months.

Note 4 — Commitments and Related Party Transactions

We have a non-exclusive service agreement for the use of an aircraft from K2 Investment Fund LLC (LLC) for business travel for our employees.

We incurred approximately $ 458 and $ 1,214 compared to $ 446 and $ 1,132 during the three and nine months ended September 30, 2025 and 2024, respectively.

We incurred approximately $ 560 compared to $ 377 during the three months ended March 31, 2026 and 2025, respectively.

We pay for our use of the aircraft and have no rights to purchase.

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Note 5 — Stock-Based Compensation

At September 30, 2025, there were 562,529 shares available for grant under the Amended and Restated 2013 Equity Incentive Plan.

Stock-based compensation expense included in general and administrative expense was $ 314 and $ 309 , and in research and development expense was $ 166 and $ 149 , for the three months ended September 30, 2025 and 2024, respectively.

Stock-based compensation expense included in general and administrative expense was $ 741 and $ 803 , and in research and development expense was $ 611 and $ 603 , for the nine months ended September 30, 2025 and 2024, respectively.

No awards were granted during the three months ended September 30, 2025 and 2024.

During the nine months ended September 30, 2025, we granted 30,000 shares of restricted stock with a weighted average grant date fair value of $ 8.90 per share.

During nine months ended September 30, 2024, we granted 119,000 shares of restricted stock, with a weighted average grant date fair value $ 5.58 per share.

During the nine months ended September 30, 2025 and 2024, we paid $ 19 and $ 9 , respectively for withholding taxes due on awards;

these withholding taxes are reflected as financing costs in the accompanying statement of cash flows because the grantees surrendered shares equal to the value of withholding taxes due, and those surrendered shares were cancelled.

As of September 30, 2025 and 2024, the unrecognized stock-based compensation expense related to unvested awards (including stock options, RSUs, and restricted stock) was $ 3,346 and $ 1,778 , respectively, which will be amortized over an estimated weighted average period of approximately 2.9 years and 2.2 years, respectively.

During 2025, we returned 17,474 awards to the plan due to cancellation of unexercised options.

At March 31, 2026, there were 153,090 shares available for grant under our equity incentive plan.

Stock-based compensation expense included in general and administrative expense was $ 392 and $ 190 , and in research and development expense was $ 347 and $ 242 , for the three months ended March 31, 2026 and 2025, respectively.

No awards were granted during the three months ended March 31, 2026 or 2025.

As of March 31, 2026 and 2025, the unrecognized stock-based compensation expense related to unvested awards (including stock options, RSUs, and restricted stock) was $ 8,688 and $ 3,999 , respectively, which will be amortized over an estimated weighted average period of approximately 3.1 years and 3.3 years, respectively.

During 2026, we cancelled 46,176 awards and added them back to the plan.

Note 6 — Equity

During the nine months ended September 30, 2025, we issued 30,000 shares of restricted stock as well as 3,341 shares of common stock as a result of vesting RSUs;

we also cancelled 1,082 shares used to cover withholding taxes on awards.

During the nine months ended September 30, 2024, we issued 119,000 shares of restricted stock, as well as 7,166 shares of common stock as a result of vesting RSUs;

we also cancelled 2,981 shares to cover withholding taxes on awards.

During the three months ended March 31, 2026, and 2025, no shares of common stock were issued.

In 2020, we issued warrants for the purchase of 1,250 shares of common stock at an exercise price of $ 115 per share, exercisable on the date of grant;

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We record any potential gains related to legal proceedings only after cash is collected.

We record a liability when it is probable that a loss has been incurred and the amount is reasonably estimable, the determination of which requires significant judgment.

As additional information becomes available, we reassess our potential

liability and may revise our estimates.

liability when it is probable that a loss has been incurred and the amount is reasonably estimable, the determination of which requires significant judgment.

As additional information becomes available, we reassess our potential liability and may

revise our estimates.

Such resolutions could have a material impact on future quarterly or annual results of operations.

One or more potential intellectual property infringement claims may also be available to us against certain other companies who have the resources to defend against any such claims.

believe these potential claims are likely valid, commencing a lawsuit can be expensive and time-consuming, and there is no assurance that we could prevail on such potential claims if we made them.

Although we believe these

potential claims are likely valid, commencing a lawsuit can be expensive and time-consuming, and there is no assurance that we could prevail on such potential claims if we made them.

Note 8 — Leases

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The operating lease requires monthly payments of $ 5 and expires in October 2027.

At September 30, 2025, our ROU asset and lease liability totaled $ 4 .

Lease expense totaled $ 14 and $ 42 for the three and nine months ended September 30, 2025 and 2024.

At March 31, 2026, our ROU asset and lease liability totaled $ 82 .

Lease expense totaled $ 16 and $ 14 for the three months ended March 31, 2026 and 2025.

We lease a facility in Utah used for technical integration and training.

This operating lease requires monthly payments of $ 75 , includes periodic increases, and expires in April 2029.

At September 30, 2025, our ROU asset totaled $ 2,535 and lease liability totaled $ 2,959 .

Lease expense totaled $ 210 for the three months ended September 30, 2025, and 2024, and totaled $ 629 for the nine months ended September 30, 2025 and 2024.

At March 31, 2026, our ROU asset totaled $ 2,233 and lease liability totaled $ 2,617 .

Lease expense totaled $ 207 and $ 210 for the three months ended March 31, 2026 and 2025, respectively.

We also lease a facility in California for corporate promotional and marketing through 2035.

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on January 13, 2025, we changed to the annual payment option, adjusting our ROU asset and lease liability approximately $ 600 for the modification.

At September 30, 2025, our ROU asset totaled $ 4,848 and our lease liability totaled $ 4,964 .

Lease expense totaled $ 181 and $ 538 for the three and nine months ended September 30, 2025, respectively.

Lease expense totaled $ 143 and $ 384 for the three months and nine months ended September 30, 2024, respectively.

Payments due under the above leases as of September 30, 2025, are as follows:

At March 31, 2026, our ROU asset totaled $ 4,670 and our lease liability totaled $ 4,518 .

Lease expense totaled $ 181 and $ 176 for the three months ended March 31, 2026 and 2025, respectively.

Payments due under the above leases as of March 31, 2026, are as follows:

Less imputed interest

We have a service agreement for the use of an aircraft from a related party discussed in more detail in Note 4.

We incurred approximately $ 458 and $ 1,214 compared to $ 446 and $ 1,132 during the three and nine months ended September 30, 2025 and 2024, respectively.

We incurred approximately $ 560 compared to $ 377 during the three months ended March 31, 2026 and 2025, respectively.

Note 9 — Earnings Per Share

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Diluted earnings per share are based on the weighted average number of common shares and potentially dilutive common shares outstanding.

Unvested restricted shares ( 597,874 as of September 30, 2025 and 127,865 as of September 30, 2024) are excluded from weighted average shares outstanding.

Unvested restricted shares ( 424,212 as of March 31, 2026, and 611,259 as of March 31, 2025) are excluded from weighted average shares outstanding.

Potential common shares outstanding principally include stock options, RSUs and warrants, excluding any potentially dilutive shares convertible at a price higher than the closing price of our stock at the end of each reporting period.

The following table shows the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2025, and 2024 (in thousands, except per share amounts):

The following table shows the computation of basic and diluted earnings per share for the three months ended March 31, 2026 and 2025 (in thousands, except per share amounts):

Three Months Ended

Nine Months Ended

September 30 ,

Weighted-average basic shares outstanding

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Diluted (loss) per share

We incurred a net loss for the three and nine months ended September 30, 2025 and 2024;

therefore, all potentially dilutive securities representing shares of common stock ( 228,615 at September 30, 2025 and 287,908 at September 30, 2024) were excluded from the computation of diluted earnings per share, because their effect would have been antidilutive.

We incurred a net loss for the three months ended March 31, 2026 and 2025;

therefore, all potentially dilutive securities representing shares of common stock ( 227,490 at March 31, 2026 and 263,790 at March 31, 2025) were excluded from the computation of diluted earnings per share, because their effect would have been antidilutive.

Note 10 — Segment Reporting

We view our operations and make decisions regarding how to allocate resources and manage our business as one reportable segment and one reporting unit.

Our Chief Executive Officer, who is the chief operating decision maker (CODM), is regularly provided with expense information at a level consistent with that disclosed in our consolidated financial statements, regularly assesses performance of the aggregated single operating and reporting segment and decides how to allocate resources based on net income calculated on the same basis as net income reported in our consolidated financial statements.

Our Chief Executive Officer, who is the chief operating decision maker (CODM), is regularly provided with expense information at a level consistent with that disclosed in our condensed consolidated financial statements, regularly assesses performance of the aggregated single operating and reporting segment and decides how to allocate resources based on net income calculated on the same basis as net income reported in our condensed consolidated financial statements.

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 1. Financial Statements