ASTROTECH Corp

Previous wording

The terms “Astrotech”, “the Company”, “we”, “us”, or “our” refer to Astrotech Corporation (Nasdaq: ASTC), a Delaware corporation organized in 1984. Our use of “products” and “devices” refer to the TRACER 1000™, BreathTest-1000™, AGLAB 1000™, and Pro-Control 1000™ along with related accessories and consumables.

Current wording

The terms “Astrotech”, “the Company”, “we”, “us”, or “our” refer to Astrotech Corporation (Nasdaq: ASTC), a Delaware corporation organized in 1984. Our use of “products” and “devices” refer to the TRACER 1000™, BreathTest-1000™, AGLAB 1000™, TRACER 1000™ NTD, and Pro-Control 1000™ along with related accessories and consumables.

Previous wording

ATI owns and licenses the AMS Technology, the platform MS technology originally developed by 1st Detect. The AMS Technology has been designed to be inexpensive, smaller, and easier to use when compared to traditional mass spectrometers. Unlike other technologies, the AMS Technology works under ultra-high vacuum, which eliminates competing molecules, yielding higher resolution and fewer false alarms. The intellectual property includes 16 patents granted along with extensive trade secrets. With several diverse market opportunities for the core technology, ATI is structured to license the intellectual property for different fields of use. ATI currently licenses the AMS Technology to four wholly owned subsidiaries of Astrotech on an exclusive basis, including to 1st Detect for use in security and detection applications, to AgLAB for use in the agriculture application, to BreathTech for use in breath analysis applications, and to Pro-Control for use in production applications.

Current wording

ATI owns and licenses the AMS Technology, the platform MS technology originally developed by 1st Detect. The AMS Technology has been designed to be less expensive, smaller, and easier to use when compared to traditional mass spectrometers. Unlike other technologies, the AMS Technology works under ultra-high vacuum, which eliminates competing molecules, yielding higher resolution and fewer false alarms. The intellectual property includes 16 patents granted along with extensive trade secrets. With several diverse market opportunities for our core technology, ATI is structured to license our intellectual property for different fields of use. ATI currently licenses the AMS Technology to our wholly-owned subsidiaries on an exclusive basis, including to 1st Detect for use in security and detection applications, to AgLAB for use in the agriculture application, to BreathTech for use in breath analysis applications to Pro-Control for use in production applications and EN-SCAN, Inc. for use for on-site, real-time air, water and soil analysis.

Previous wording

1st Detect, a licensee of ATI for security and detection applications, has developed the TRACER 1000™, the world’s first MS based ETD certified by the ECAC and approved by TSA for air cargo. The TRACER 1000 was designed to outperform the ETDs currently used at airports, cargo and other secured facilities, and borders worldwide. The Company believes that ETD customers are unsatisfied with the currently deployed ETD technology, which is driven by ion mobility spectrometry (“IMS”). The Company further believes that some IMS-based ETDs have issues with false positives, as they often misidentify personal care products and other common household chemicals as explosives, causing facility shutdowns, unnecessary delays, frustration, and significant wasted security resources. In addition, there are hundreds of different types of explosives, but IMS-based ETDs have a very limited threat detection library reserved only for those few explosives of largest concern. Adding additional compounds to the detection library of an IMS-based ETD fundamentally reduces the instrument’s performance, further increasing the likelihood of false alarms. In contrast, adding additional compounds to the TRACER 1000’s detection library does not degrade its detection capabilities, as it has a virtually unlimited and easily expandable threat library.

Current wording

1st Detect Corporation (“1 st Detect”), a licensee of ATI for security and detection applications, has developed the TRACER 1000™, the world’s first MS based explosives trace detector (“ETD”) certified by the European Civil Aviation Conference (“ECAC”) and approved by the Transportation Security Administration (“TSA”) for air cargo. The TRACER 1000 was designed to outperform the ETDs currently used at airports, cargo, other secured facilities, and borders worldwide. We believe that ETD customers are unsatisfied with currently deployed ETD technology, which is driven by ion mobility spectrometry (“IMS”). We further believes that some IMS-based ETDs have issues with false positives, as they often misidentify personal care products and other common household chemicals as explosives, causing facility shutdowns, unnecessary delays, frustration, and significant wasted security resources. In addition, there are hundreds of different types of explosives, but IMS-based ETDs have a very limited threat detection library reserved only for those few explosives of largest concern. Adding additional compounds to the detection library of an IMS-based ETD fundamentally reduces the instrument’s performance, further increasing the likelihood of false alarms. In contrast, adding additional compounds to the TRACER 1000’s detection library does not degrade its detection capabilities, as it has an extensive and easily expandable threat library.

Previous wording

We obtained European Civil Aviation Conference (“ECAC”) certification in 2019 which allows us to sell the TRACER 1000 to airport and cargo security customers in the European Union and certain other countries. The Company is currently selling the TRACER 1000 to customers who accept ECAC certification. As of December 31, 2024, the Company has deployed the TRACER 1000 in approximately 30 locations in 14 countries throughout Europe and Asia.

Current wording

We obtained ECAC certification in 2019 which allows us to sell the TRACER 1000 to airport and cargo security customers in the European Union and certain other countries. We currently sell the TRACER 1000 to customers who accept ECAC certification. As of March 31, 2025, we have the TRACER 1000 in approximately 32 locations in 15 countries throughout the United States of America, Europe and Asia.

Previous wording

In June of 2024, the TSA approved 1st Detect’s TRACER 1000 for the Air Cargo Security Technology List, which advanced the TRACER 1000 to Stage II testing and permits air cargo companies in the United States to use our equipment in their operations. During Stage II testing, the Company is conducting field trials with the TSA. If field trials are successful, the TRACER 1000 will be added to the "qualified" list.

Current wording

In June of 2024, the TSA approved 1st Detect’s TRACER 1000 for the Air Cargo Security Technology List, which advanced the TRACER 1000 to Stage II testing, and permits air cargo companies in the United States to use our equipment in their operations. During Stage II testing, we are conducting field trials with the TSA. If field trials are successful, the TRACER 1000 will be added to the “qualified” list.

Previous wording

The Company has also started the process to pass TSA checkpoint testing. This process involves Developmental Test and Evaluation in which the Transportation Security Laboratory ("TSL") will test the TRACER 1000 and work with 1st Detect to ensure its readiness to enter certification testing. The certification test is then completed by the Independent Test & Evaluation department of TSL. As of the fiscal year 2023 budget the government had over 6,000 ETD units at checkpoint and baggage screening points for which we believe that the TSA would benefit from utilizing our AMS Technology.

Current wording

We have also started the process to pass TSA checkpoint testing. This process involves Developmental Test and Evaluation in which the Transportation Security Laboratory (“TSL”) will test the TRACER 1000 and work with 1st Detect to ensure its readiness to enter certification testing. The certification test is then completed by the Independent Test & Evaluation department of TSL. For the fiscal year 2023, the U.S. federal government had a budget of over 6,000 ETD units at checkpoint and baggage screening points for which we believe that the TSA would benefit from utilizing our AMS Technology.

Previous wording

We are currently accepting orders for the TRACER 1000 ETD and NTD which are listed in the U.S. General Services Administration ("GSA") IT Schedule 70 under Contract No. GS-35F-250GA with SRI Group LLC, Special Item Number 334290 in April 2024. The TRACER 1000 ETD and NTD are high-performance laboratory instruments capable of rapid detection of trace levels of explosive and narcotic compounds in seconds. The TRACER 1000 ETD and NTD both provide a ruggedized platform that can be applied across various markets including airports, border security, checkpoint, cargo, and infrastructure security, correctional facilities, military, and law enforcement.

Current wording

We are currently accepting orders for the TRACER 1000 ETD and narcotics trace detector (“NTD”) which are listed in the U.S. General Services Administration (“GSA”) IT Schedule 70 under Contract No. GS-35F-250GA with SRI Group LLC, Special Item Number 334290. The TRACER 1000 ETD and NTD are high-performance laboratory instruments capable of rapid detection of trace levels of explosive and narcotic compounds in seconds. The TRACER 1000 ETD and NTD both provide a ruggedized platform that can be applied across various markets including airports, border security, checkpoint, cargo, and infrastructure security, correctional facilities, military, and law enforcement.

Previous wording

On January 14, 2025, our wholly owned subsidiary, 1st Detect Corporation, issued a press release announcing that it has been awarded research and development contract 70RSAT24CB0000015 with the U.S. Department of Homeland Security (“DHS”) to research, develop and mature the TRACER 1000 for DHS next generation explosives trace detection.

Current wording

On January 14, 2025, our wholly owned subsidiary, 1st Detect Corporation, announced that it has been awarded research and development contract 70RSAT24CB0000015 with the U.S. Department of Homeland Security (“DHS”) to research, develop and mature the TRACER 1000 for DHS next generation explosives trace detection.

Previous wording

On January 23, 2025, we announced that 1 st Detect received a purchase order for its TRACER 1000™ explosive trace detectors (ETDs) from Intuitive Research and Technology Corporation a TSA contractor. The purchase order is valued at $429 thousand and should be recognized as revenue during fiscal year 2025.

Current wording

On January 23, 2025, we announced that 1 st Detect received a purchase order for its TRACER 1000™ ETDs from Intuitive Research and Technology Corporation a TSA contractor. The purchase order was valued at $429 thousand and was recognized as revenue during the three months ended March 31, 2025.

Previous wording

We continue to showcase the TRACER 1000 NTD and ETD at the trade events in the U.S.

Current wording

We continue to showcase the TRACER 1000 NTD and ETD at trade events in the U.S.

Previous wording

AgLAB, an exclusive licensee of ATI for the use in the agriculture industry to analyze complex chemical compounds found in organic plant material and extracts, has developed the AgLAB 1000™ series of mass spectrometers for use in the hemp and cannabis markets with the initial focus on optimizing yields in the distillation process. The AgLAB product line is a derivative of the Company’s core AMS Technology. AgLAB continues to conduct field trials demonstrating that the AgLAB 1000-D2™ can be used in the distillation process to significantly improve the yields of tetrahydrocannabinol (“THC”) and cannabidiol (“CBD”) oil during distillation. The AgLAB 1000-D2™ uses the Maximum Value Process solution (“MVP”) to analyze samples in real-time and assist the equipment operator determining the ideal settings required to maximize yields.

Current wording

AgLAB Inc. (“AgLAB”), an exclusive licensee of ATI for the use in the agriculture industry to analyze complex chemical compounds found in organic plant material and extracts, has developed the AgLAB 1000™ series of mass spectrometers for use in the hemp and cannabis markets with the initial focus on optimizing yields in the distillation process. The AgLAB product line is a derivative of our core AMS Technology. AgLAB continues to conduct field trials demonstrating that the AgLAB 1000-D2™ can be used in the distillation process to significantly improve the yields of tetrahydrocannabinol (“THC”) and cannabidiol (“CBD”) oil during distillation. The AgLAB 1000-D2™ uses the Maximum Value Process solution (“MVP”) to analyze samples in real-time and assist the equipment operator determining the ideal settings required to maximize yields.

Previous wording

Production and processing of hemp and cannabis is a huge, worldwide industry. In the U.S., for example, the wholesale value of the cannabis crop from just the U.S. states permitting adult-use and medical cannabis exceeds $6 billion annually. We believe growth in the U.S. and in the worldwide market is likely fed in part by the growing acceptance of medicinal cannabis products and anticipated legislative changes in various jurisdictions worldwide. We also believe this growth is due in part to the passage of the 2018 Farm Bill, which legalized hemp production in the U.S.

Current wording

Production and processing of hemp and cannabis is a large, worldwide industry. We believe growth in the U.S. and in the worldwide market is likely fed in part by the growing acceptance of medicinal cannabis products and anticipated legislative changes in various jurisdictions worldwide. We also believe this growth is due in part to the passage of the 2018 Farm Bill, which legalized hemp production in the U.S.

Previous wording

Management believes the AgLAB 1000-D2™ will deliver a compelling combination of cost and time savings while enhancing product quality and quantity for distillation processors of hemp and cannabis. The use of the AgLAB 1000-D2™ should reduce waste from current distillation practices and result in a significantly improved product. Due in large part to the Company’s proprietary technology, the Company believes it is the only provider of a mass spectrometry system that gives it a distinct advantage in the industry. Sales efforts for the AgLAB 1000-D2 are currently underway.

Current wording

Management believes the AgLAB 1000-D2™ will deliver a compelling combination of cost and time savings while enhancing product quality and quantity for distillation processors of hemp and cannabis. The use of the AgLAB 1000-D2™ should reduce waste from current distillation practices and result in a significantly improved product. Due in large part to the Company’s proprietary technology, we believe it is the only provider of a mass spectrometry system that gives it a distinct advantage in the industry. Sales efforts for the AgLAB 1000-D2 are currently underway.

Previous wording

AgLAB announced the presentation of the AgLAB Maximum Value Processing at MJBizCon. The AgLAB MVP is an innovative process control system proven to increase the potency of ending-weight yields and increase revenue. The AgLAB MVP process provides real-time data, allowing distillers to adjust parameters to optimize the quality and quantity of each batch of oil. During our field trials of the AgLAB MVP, we were able to improve ending-weights yields by 20% or more. We believe these ongoing field trials demonstrate the solution can be a valuable tool for cannabis and hemp oil processors worldwide.

Current wording

AgLAB announced the presentation of the AgLAB Maximum Value Processing at MJBizCon. The AgLAB MVP is an innovative process control system proven to increase the potency of ending-weight yields and increase revenue. The AgLAB MVP process provides real-time data, allowing distillers to adjust parameters to optimize the quality and quantity of each batch of oil. During our field trials of the AgLAB MVP, we were able to improve ending-weights yields by approximately 15% to 30% depending on application. We believe these ongoing field trials demonstrate the solution can be a valuable tool for cannabis and hemp oil processors worldwide.

Previous wording

In October 2020, we entered into a Joint Development Agreement with The Cleveland Clinic Foundation (“CCF JDA”) to develop a rapid breath test for coronavirus infection or related indicators using BreathTech’s license for the AMS Technology and collection of data through a clinical study. Amendments to the CCF JDA extended the expiration date to April 30, 2025.

Current wording

BreathTech Corporation (“BreathTech”) is an exclusive licensee of ATI for use in breath analysis applications. In October 2020, we entered into a Joint Development Agreement with The Cleveland Clinic Foundation (“CCF JDA”) to develop a rapid breath test for coronavirus infection or related indicators using BreathTech’s license for the AMS Technology and collection of data through a clinical study. The CCF JDA expired on April 30, 2025.

Previous wording

While the CCF JDA remains active, we believe the work to commercialize this application of the AMS Technology will require many years and significant investment due to regulatory requirements and have determined to deploy capital instead to our other subsidiaries. We are also exploring how the advancements and knowledge derived from our research on the BreathTech use case can be applied in our other existing and potential new business units.

Current wording

We believe commercialization of this application with the AMS Technology will require many years and significant investment due to regulatory requirements and have determined to deploy capital instead to our other subsidiaries. We are also exploring how the advancements and knowledge derived from our research on the BreathTech use case can be applied in our other existing and potential new business units.

Previous wording

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of these financial statements requires us to make estimates and judgments that directly affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosure of contingent assets and liabilities in the Company’s consolidated financial statements and accompanying notes. A critical accounting estimate is one that involves a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Management continuously evaluates its critical accounting policies and estimates, including those used in evaluating the recoverability of long-lived assets, recognition of revenue, valuation of inventory, and the recognition and measurement of loss contingencies, if any. Actual results may differ from these estimates under different assumptions or conditions. We believe that the following accounting policies require us to make significant judgments and estimates in the preparation of our consolidated financial statements.

Current wording

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with United States Generally Accepted Accounting Principles. The preparation of these financial statements requires us to make estimates and judgments that directly affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosure of contingent assets and liabilities in the Company’s consolidated financial statements and accompanying notes. A critical accounting estimate is one that involves a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Management continuously evaluates its critical accounting policies and estimates, including those used in evaluating the recoverability of long-lived assets, recognition of revenue, valuation of inventory, and the recognition and measurement of loss contingencies, if any. Actual results may differ from these estimates under different assumptions or conditions. We believe that the following accounting policies require us to make significant judgments and estimates in the preparation of our consolidated financial statements.

Previous wording

Selected consolidated financial data for the six months ended December 31, 2024, and 2023 is as follows:

Current wording

Selected consolidated financial data for the three months ended March 31, 2025, and 2024 is as follows:

Previous wording

Revenue – Total revenue decreased by $854 thousand during the second quarter of fiscal year 2025, compared to the second quarter of fiscal year 2024. In the second quarter of fiscal year 2025 revenue was related to sales of our TRACER 1000, a government grant and ongoing consumable and recurring maintenance services of the TRACER 1000. In the second quarter of fiscal year 2024, revenue was related to the sales of our TRACER 1000 along with ongoing consumable and recurring maintenance services of the TRACER 1000. The decrease in revenue is the result of selling fewer devices during the second quarter of fiscal year 2025 than sold in the second quarter of fiscal year 2024.

Current wording

Revenue – Total revenue increased by $484 thousand during the third quarter of fiscal year 2025, compared to the third quarter of fiscal year 2024. In the third quarter of fiscal year 2025, revenue was primarily derived from sales of our TRACER 1000, a government grant and ongoing consumable and recurring maintenance services of the TRACER 1000. In the third quarter of fiscal year 2024, revenue was primarily derived from ongoing consumables and recurring maintenance services of the TRACER 1000. The increase in revenue is the result of selling more devices during the third quarter of fiscal year 2025 than were sold in the third quarter of fiscal year 2024.

Previous wording

Cost of Revenue– Gross profit is comprised of revenue less cost of revenue. Our costs of revenue include materials, overhead, warranty expenses, shipping, and labor. Cost of revenue decreased by $477 thousand during the second quarter of fiscal year 2025, compared to the second quarter of fiscal year 2024, because of the decrease in device sales. Gross margin increased by 11% in the second quarter of fiscal year 2025, compared to the second quarter of fiscal year 2024. The device sales in fiscal year 2025 had a higher margin compared to the device sales in fiscal year 2024 which resulted in an increase in gross margin. In addition, grant revenue had a minimal cost of revenue and lower costs of revenue due to a sales mix. These factors resulted in an increase in gross margin.

Current wording

Cost of Revenue– Gross profit is comprised of revenue less cost of revenue. Our costs of revenue include materials, overhead, warranty expenses, shipping, and labor. Cost of revenue increased by $255 thousand during the third quarter of fiscal year 2025, compared to the third quarter of fiscal year 2024, primarily due to the increase in device sales. Gross margin increased by 28% in the third quarter of fiscal year 2025, compared to the third quarter of fiscal year 2024. The device sales in fiscal year 2025 had a higher margin compared to the device sales in fiscal year 2024 which resulted in an increase in gross margin.

Previous wording

Operating Expenses – Operating expenses increased $876 thousand, or 24.3%, during the second quarter of fiscal year 2025, compared to the second quarter of fiscal year 2024. Significant changes to operating expenses include the following:

Current wording

Operating Expenses – Operating expenses increased $563 thousand, or 15.9%, during the third quarter of fiscal year 2025, compared to the third quarter of fiscal year 2024. Significant changes to operating expenses include the following:

Previous wording

Other Income and Expense, net– Other income and expense, net decreased $115 thousand during the second quarter of fiscal year 2025, compared to the second quarter of fiscal year 2024, due to less investments earning interest income.

Current wording

Other Income and Expense, net– Other income and expense, net decreased $145 thousand during the third quarter of fiscal year 2025, compared to the third quarter of fiscal year 2024, due to less investments earning interest income.

Previous wording

Selected consolidated financial data for the quarters ended December 31, 2024, and 2023 is as follows:

Current wording

Selected consolidated financial data for the nine months ended March 31, 2025, and 2024 is as follows:

Previous wording

Revenue – Total revenue decreased by $1.2 million during the six months ended December 31, 2024, compared to the six months ended December 31, 2023. In the six months ended December 31, 2024, revenue was related to sales of our TRACER 1000, a government grant and ongoing consumable and recurring maintenance services of the TRACER 1000. In the six months ended December 31, 2023, revenue was related to the sales of our TRACER 1000 along with ongoing consumable and recurring maintenance services of the TRACER 1000. The decrease in revenue is the result of selling fewer devices during fiscal year 2025 compared to fiscal year 2024.

Current wording

Revenue – Total revenue decreased by $761 thousand during the nine months ended March 31, 2025, compared to the nine months ended March 31, 2024. In the nine months ended March 31, 2025, revenue was primarily derived from sales of our TRACER 1000, a government grant and ongoing consumable and recurring maintenance services of the TRACER 1000. In the nine months ended March 31, 2024, revenue was primarily derived from sales of our TRACER 1000 along with ongoing consumable and recurring maintenance services of the TRACER 1000. The decrease in revenue is the result of selling fewer devices during fiscal year 2025 compared to fiscal year 2024.

Previous wording

Cost of Revenue– Gross profit is comprised of revenue less cost of revenue. Our costs of revenue include materials, overhead, warranty expenses, shipping, and labor. Cost of revenue decreased by $694 thousand during six months ended December 31, 2024, compared to the six months ended December 31, 2023, because of the decrease in device sales. Gross margin increased by 10% in the during six months ended December 31, 2024, compared to the six months ended December 31, 2023. The device sales in fiscal year 2025 had a higher margin compared to the device sales in fiscal year 2024. In addition, grant revenue had a minimal cost of revenue and lower costs of revenue due to a sales mix. These factors resulted in an increase in gross margin.

Current wording

Cost of Revenue– Gross profit is comprised of revenue less cost of revenue. Our costs of revenue include materials, overhead, warranty expenses, shipping, and labor. Cost of revenue decreased by $439 thousand during the nine months ended March 31, 2025, compared to the nine months ended March 31, 2024, primarily due to a decrease in device sales. Gross margin increased by 3% during the nine months ended March 31, 2025, compared to the nine months ended March 31, 2024. This increase was primarily due to the device sales in fiscal year 2025 having a higher margin compared to the device sales in fiscal year 2024. In addition, grant revenue had a minimal cost of revenue and lower costs of revenue due to a sales mix. These factors resulted in an increase in gross margin.

Previous wording

Operating Expenses – Operating expenses increased $1 million, or 14.0%, during the six months ended December 31, 2024, compared to the six months ended December 31, 2023. Significant changes to operating expenses include the following:

Current wording

Operating Expenses – Operating expenses increased $1.6 million, or 14.6%, during the nine months ended March 31, 2025, compared to the nine months ended March 31, 2024. Significant changes to operating expenses include the following:

Previous wording

Other Income and Expense, net– Other income and expense, net decreased $188 thousand during the six months ended December 31, 2024, compared to the six months ended December 31, 2023, due to less investments earning interest income.

Current wording

Other Income and Expense, net– Other income and expense, net decreased $333 thousand during the nine months ended March 31, 2025, compared to the nine months ended March 31, 2024, due to less investments earning interest income.

Previous wording

As of December 31, 2024, we held cash and cash equivalents of $3.2 million, and our working capital was approximately $25.5 million. As of June 30, 2024, we had cash and cash equivalents of $10.4 million, and our working capital was approximately $32.2 million. Cash and cash equivalents decreased $7.2 million as of December 31, 2024, compared to June 30, 2024, due to funding our continuing operating expenses.

Current wording

As of March 31, 2025, we held cash and cash equivalents of $2.8 million, and our working capital was approximately $22.1 million. As of June 30, 2024, we had cash and cash equivalents of $10.4 million, and our working capital was approximately $32.2 million. Cash and cash equivalents decreased $7.6 million as of March 31, 2025, compared to June 30, 2024, due to funding our operating losses.

Previous wording

Cash used in operating activities increased $1.9 million for the six months ended December 31, 2024, compared to the** **six months ended December 31, 2023, due to increased use of cash to fund operating losses and working capital.

Current wording

Cash used in operating activities increased $3.4 million for the nine months ended March 31, 2025, compared to the** **nine months ended March 31, 2024, due to increased use of cash to fund operating losses and working capital.

Previous wording

Cash used in investing activities increased $2.3 million for the six months ended December 31, 2024, compared to the** **six months ended December 31, 2023, due primarily to not selling short-term time deposit investments.

Current wording

Cash provided by investing activities increased $1.5 million for the nine months ended March 31, 2025, compared to the** **nine months ended March 31, 2024, due primarily to selling short-term time deposit investments.

Previous wording

Cash used in financing activities was slightly lower for the six months ended December 31, 2024, compared to the six months ended December 31, 2023.

Current wording

Cash used in financing activities was slightly lower for the nine months ended March 31, 2025, compared to the nine months ended March 31, 2024.

Previous wording

There have been no material updates to our expectations for our short- and long-term liquidity and operating capital requirements since our Annual Report on Form 10-K for the year ended June 30, 2024.

Current wording

There have been no material updates to our expectations for our short- and long-term liquidity and operating capital requirements since our 2024 Form 10-K.

Previous wording

The Company’s effective tax rate is 0% for income tax for the six months ended December 31, 2024, and the Company expects that its effective tax rate for the full fiscal year 2025 will be 0%. Based on the weight of available evidence, including net cumulative losses and expected future losses, the Company has determined that it is more likely than not that its U.S. federal and state deferred tax assets will not be realized and therefore a full valuation allowance has been provided on the U.S. federal and state net deferred tax assets.

Current wording

The Company’s effective tax rate is 0% for income tax for the nine months ended March 31, 2025, and the Company expects that its effective tax rate for the full fiscal year 2025 will be 0%. Based on the weight of available evidence, including net cumulative losses and expected future losses, the Company has determined that it is more likely than not that its U.S. federal and state deferred tax assets will not be realized and therefore a full valuation allowance has been provided on the U.S. federal and state net deferred tax assets.

Previous wording

There is a $1 thousand provision for state minimum tax expense during the six months ended December 31, 2024. There was $2 thousand provision for state minimum tax expense during the six months ended December 31, 2023.

Current wording

There is a $1 thousand provision for state minimum tax expense during the nine months ended March 31, 2025. There was $2 thousand provision for income taxes during the nine months ended March 31, 2025.