908 Devices Inc.

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on March 8, 2024 (“2023 Form 10-K”). Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in “Item 1.A. Risk Factors” section of our 2023 Form 10-K, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Current wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on March7, 2025, or the2024* Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in “Item 1.A. Risk Factors” section of our 2024 Form 10-K, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.*

Previous wording

We have developed an innovative suite of purpose-built handheld and desktop devices for point-of-need chemical analysis. Leveraging complementary analytical technologies including our proprietary mass spectrometry, or Mass Spec, microfluidics, and analytics and machine learning technologies, we make devices that are significantly smaller and more accessible than conventional laboratory instruments. Our devices are used at the point-of-need to interrogate unknown and invisible materials and provide quick, actionable answers to directly address some of the most critical problems in forensics, bioprocessing, pharma/biopharma, life science research and adjacent markets.

Current wording

We have developed an innovative suite of purpose-built handheld devices for point-of-need chemical analysis. Leveraging complementary analytical technologies including our proprietary mass spectrometry, or Mass Spec, and FTIR, an optical spectroscopy technology and analytics and machine learning technologies, we make devices that are significantly smaller and more accessible than conventional laboratory instruments. Our devices are used at the point-of-need to interrogate unknown and invisible materials and provide quick, actionable answers to directly address vital health and safety applications, including the fentanyl and illicit drug crisis, toxic carcinogen exposure, and global security threats.

Previous wording

Front-line workers rely upon our handheld devices to combat the opioid crisis and detect counterfeit pharmaceuticals and illicit materials in the air or on surfaces at levels 1,000 times below their lethal dose. First responders also utilize our handheld devices to detect and identify thousands of hazardous bulk materials. Our desktop devices are accelerating development and production of biotherapeutics by identifying and quantifying extracellular species in bioprocessing critical to cell health and productivity. They sit alongside or are directly connected to bioreactors and fermenters producing drug candidates, functional proteins, cell and gene therapies, and synthetic biology derived products. We believe the insights and answers our devices provide accelerate workflows, reduce costs, and offer transformational opportunities for our end users. The term “products” as used in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” refers to the MX908, ThreatID, ProtectIR, XplorIR, Rebel, ZipChip Interface, Maverick, Maven and related sampling devices.

Current wording

Front-line workers rely upon our handheld devices to combat the opioid crisis and detect counterfeit pharmaceuticals and illicit materials in the air or on surfaces at levels 1,000 times below their lethal dose. First responders also utilize our handheld devices to detect and identify thousands of hazardous bulk materials. The term “products” as used in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” refers to the MX908, ThreatID, ProtectIR, XplorIR and related devices.

Previous wording

Since our inception, we have incurred significant operating losses. Our ability to generate revenue sufficient to achieve profitability will depend on the successful further development and commercialization of our products. We generated revenue of $40.8 million and $35.9 million for the nine months ended September 30, 2024 and 2023, respectively, and incurred net losses of $52.8 million and $29.0 million for those same periods. As of September 30, 2024, we had an accumulated deficit of $223.4 million. We expect to continue to incur net losses as we focus on growing sales of our products in both the United States and international markets, including expanding our sales teams as we grow, scaling our manufacturing operations,

Current wording

Since our inception, we have incurred significant operating losses. Our ability to generate revenue sufficient to achieve profitability will depend on the successful further development and commercialization of our products. We generated revenue from continuing operations of $11.8 million and $7.4 million for the three months ended March 31, 2025 and 2024, respectively, and incurred net losses of $9.8 million and $5.9 million for those same periods. As of March 31, 2025, we had an accumulated deficit of $199.2 million. We expect to continue to incur net losses as we focus on growing sales of our products in both the United States and international markets, scaling our manufacturing operations, continuing research and development efforts to develop new products and further enhance our existing products. As a result, we may need additional funding for expenses related to our operating activities, including selling, general and administrative expenses and research and development expenses.

Previous wording

Because of the numerous risks and uncertainties associated with product development and commercialization, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve or maintain profitability. Until such time, if ever, as we can generate substantial revenue sufficient to achieve profitability, we expect to finance our operations through a combination of equity offerings, debt financings and strategic alliances. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we are unable to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back or discontinue the further development and commercialization efforts of one or more of our products, or may be forced to reduce or terminate our operations.

Current wording

Because of the numerous risks and uncertainties associated with product development and commercialization, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve or maintain profitability. Until such time, if ever, as we can generate substantial revenue sufficient to achieve profitability, we expect to finance our operations through a combination of available cash, equity offerings, debt financings and strategic alliances. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we are unable to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back or discontinue the further development and commercialization efforts of one or more of our products, or may be forced to reduce or terminate our operations.

Previous wording

We are continuing to closely monitor macroeconomic factors, including, but not limited to, continued inflationary and interest rate pressures, challenging capital market conditions and the limited availability of financing alternatives, which may have an impact on our business, results of operations and financial results.

Current wording

We are continuing to closely monitor macroeconomic factors, including, but not limited to, continued inflationary and interest rate pressures, changes in countries’ trade policies and tariffs, challenging capital market conditions and the limited availability of financing alternatives, which may have an impact on our business, results of operations and financial results.

Previous wording

We are closely monitoring continued economic uncertainty in the United States and abroad, including volatility in the global markets and the rise and fluctuations in inflation and interest rates. These developments and the potential worsening of other macro-economic conditions present risks for us, and our suppliers and customers. For example, general inflation in the United States, EMEA and other geographies has recently been at levels not experienced in recent decades, which has led to higher prices for our raw materials and other inputs, as well as higher salaries and travel expenses, which could continue to negatively impact our business by increasing our cost of sales and operating expenses. General inflation could also negatively impact our business if it leads to spending pressure and decreased available capital for our customers to deploy to purchase our products and services.

Current wording

We are closely monitoring continued economic uncertainty in the United States and abroad, including volatility in the global markets and the rise and fluctuations in inflation and interest rates. These developments and the potential worsening of other macroeconomic conditions present risks for us, our suppliers and customers. For example, general inflation in the United States, Europe, the Middle East and other geographies has recently been at levels not experienced in recent decades, which has led to higher prices for our raw materials and other inputs, as well as higher salaries and travel expenses, which could continue to negatively impact our business by increasing our cost of sales and operating expenses. General inflation could also negatively impact our business if it leads to spending pressure and decreased available capital for our customers to deploy to purchase our products and services.

Previous wording

Challenging capital market conditions and the limited availability of financing alternatives, together with inflationary and interest rates pressures, may contribute to more cautious spending by our customers. Certain of our pharmaceutical and biotechnology customers, including bioprocessing customers, may evaluate their inventory levels, cash on hand and path to profitability, and institute cost controls and take other actions to reduce or delay purchases of our products and services. We cannot accurately predict the full impact of current macroeconomic factors on the budgets and capital expenditures of our customers, or the timing of the normalization of customer purchasing patterns.

Current wording

Challenging capital market conditions and the limited availability of financing alternatives, together with inflationary and interest rates pressures, and other economic uncertainty, including as a result of changes in countries’ trade policies and tariffs, may contribute to more cautious spending by our customers. Certain of our customers may evaluate their inventory levels, cash on hand and path to profitability, and institute cost controls and take other actions to reduce or delay purchases of our products and services. We cannot accurately predict the full impact of current macroeconomic factors on the budgets and capital expenditures of our customers, or the timing of the normalization of customer purchasing patterns.

Previous wording

While it is difficult to predict all of the impacts these global economic events and continued inflationary and interest rate pressures will have on our business and to predict the effects of these factors on our customers’ spending in the near term, we believe the long-term opportunity that we see for our products and services remain unchanged.

Current wording

While it is difficult to predict all of the impacts these global economic events and continued inflationary, tariff and interest rate pressures will have on our business and to predict the effects of these factors on our customers’ spending in the near term, we believe the long-term opportunity that we see for our products and services remain unchanged.

Previous wording

Our financial performance has largely been driven by, and in the future will continue to be impacted by, the rate of sales of our handheld and desktop devices. Management focuses on device sales as an indicator of current business success and a leading indicator of likely future recurring revenue from consumables and services. We expect our device sales to continue to grow as we increase penetration in our existing markets and expand into, or offer new features and solutions that appeal to, new markets.

Current wording

Our financial performance has largely been driven by, and in the future will continue to be impacted by, the rate of sales of our handheld devices. Management focuses on device sales as an indicator of current business success and a leading indicator of likely future recurring revenue from consumables and services. We expect our device sales to continue to grow as we increase penetration in our existing markets and expand into, or offer new features and solutions that appeal to, new markets.

Previous wording

We plan to grow our device sales in the coming years through multiple strategies including expanding our sales efforts domestically and globally and continuing to enhance the underlying technology and applications for bioprocessing and life sciences research related to our Maverick, Rebel, ZipChip Interface, and Maven and related sampling devices. We regularly solicit feedback from our customers and focus our research and development efforts on enhancing our devices and enabling our customers to use additional applications that address their needs, which we believe in turn helps to drive additional sales of our devices and consumables.

Current wording

We plan to grow our device sales in the coming years through multiple strategies including expanding our sales efforts domestically and globally and continuing to enhance the underlying technology and applications for our handheld devices. We regularly solicit feedback from our customers and focus our research and development efforts on enhancing our devices and enabling our customers to use additional applications that address their needs, which we believe in turn helps to drive additional sales of our devices and consumables.

Previous wording

Our sales process varies considerably depending upon the type of customer to whom we are selling. Our handheld device orders relate to our MX908, ThreatID, ProtectIR, and XplorIR, as well as components for the Aerosol and Vapor Chemical Agent Detectors (“AVCAD”) sold to our channel partner. Historically, our handheld devices have been used by municipal, state, federal and foreign governments and governmental agencies. Our sales process with government customers is often long and involves multiple levels of approvals, testing and, in some cases, trials. Device orders from a government customer are typically large orders and can be impacted by the timing of their capital budgets. As a result, the revenue for our handheld devices can vary significantly from period-to-period and has been and may continue to be concentrated in a small number of customers in any given period.

Current wording

Our handheld device orders relate to our MX908, ThreatID, ProtectIR, and XplorIR, as well as components for the Aerosol and Vapor Chemical Agent Detectors, or AVCAD, sold to our channel partner. Historically, our handheld devices have been used by municipal, state, federal and foreign governments and governmental agencies. Our sales process with government customers is often long and involves multiple levels of approvals, testing and, in some cases, trials. Device orders

Previous wording

We regularly assess trends relating to recurring revenue which includes consumables, accessories and services based on our product offerings, our customer base and our understanding of how our customers use our products. Recurring revenue was 39% and 33% of total product and service revenue for the nine months ended September 30, 2024 and 2023, respectively. Our recurring revenue as a percentage of total product and service revenue will vary based upon new device placements in the period. As our device installed base expands, recurring revenue on an absolute basis is expected to increase and over time should be an increasingly important contributor to our revenue.

Current wording

We regularly assess trends relating to recurring revenue which includes consumables, accessories and services based on our product offerings, our customer base and our understanding of how our customers use our products. Recurring revenue was 37% and 38% of total revenue for the three months ended March 31, 2025 and 2024, respectively. Our recurring revenue as a percentage of total revenue will vary based upon new device placements in the period. As our device installed base expands, recurring revenue on an absolute basis is expected to increase and over time should be an increasingly important contributor to our revenue.

Previous wording

Revenue from the sales of consumables will vary by type of device. We expect that recurring revenue as a percentage of the original device price to be higher for our desktop devices (Rebel, ZipChip Interface, Maverick, Maven and related sampling devices) than for our handheld devices (MX908, ThreatID, ProtectIR, and XplorIR). While we sell single-use swab samplers for MX908 to be used in liquid and solid materials analysis, there are a number of other applications that the MX908 can be used for that do not require consumables. ThreatID, ProtectIR, and XplorIR do not have consumables. Rebel and ZipChip

Current wording

Recurring revenue is primarily from service revenue and accessories. Consumable revenue is mainly related to single-use swab samplers for MX908 to be used in liquid and solid materials analysis, but there are a number of other applications that the MX908 can be used for that do not require consumables. ThreatID, ProtectIR, and XplorIR do not have consumables.

Previous wording

Our revenue is derived from sales of our devices, consumables, accessories and services. There will be fluctuations in mix between devices and recurring from period-to-period. Over time, as our device installed base grows and we see adoption of Rebel, we expect consumables revenue to constitute a larger percentage of product and service revenue. However, the percentage will be subject to fluctuation based upon our handheld sales in a period. In addition, our selling price and, consequently, our margins, are higher for those devices and recurring revenue that we sell directly to customers as compared to those that we sell through channel partners. While we expect the mix of direct sales as compared to sales through channel partners to remain relatively constant in the near term, we are currently evaluating increasing our direct sales capabilities in certain geographies.

Current wording

Our revenue is derived from sales of our devices, consumables, accessories and services. There will be fluctuations in the mix between devices and recurring from period-to-period. Over time, as our device installed base grows, we expect service revenue to constitute a larger percentage of total revenue. However, the percentage will be subject to fluctuation based upon our handheld sales in a period. In addition, our selling price and, consequently, our margins, are higher for those devices and recurring revenue that we sell directly to customers as compared to those that we sell through channel partners. While we expect the mix of direct sales as compared to sales through channel partners to remain relatively constant in the near term, we may consider increasing our direct sales capabilities in certain geographies based upon identified opportunities.

Previous wording

We regularly review the number of product placements and cumulative product placement as key metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections, and make strategic decisions. We believe that these metrics are representative of our current business; however, we anticipate these will change or may be substituted for additional or different metrics as our business grows.

Current wording

We regularly review the number of product placements and cumulative product placement as key metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections, and make strategic

Previous wording

During the nine months ended September 30, 2024 and 2023, our product placements (units recognized as revenue) were as follows:

Current wording

During the three months ended March 31, 2025 and 2024, our product placements (units recognized as revenue) were as follows:

Previous wording

We generate product and service revenue from the sale of our devices and recurring revenue from the sale of consumables, accessories and services. Device sales accounted for 61% and 67% of our product and service revenue for the nine months ended September 30, 2024 and 2023, respectively. Recurring revenue accounted for 39% and 33% of our product and service revenue for the nine months ended September 30, 2024 and 2023, respectively.

Current wording

We generate product and service revenue from the sale of our devices and recurring revenue from the sale of consumables, accessories and services. Device sales accounted for 63% and 62% of our total revenue for the three months ended March 31, 2025 and 2024, respectively. Recurring revenue accounted for 37% and 38% of our total revenue for the three months ended March 31, 2025 and 2024, respectively.

Previous wording

We sell our devices directly to customers and through channel partners. Each of our device sales drives various streams of recurring revenue comprised of consumable and accessory product sales and service revenue.

Current wording

We sell our devices directly to customers and through channel partners. Each of our device sales drives various streams of recurring revenue comprised of consumable and accessory product sales and service revenue. Our consumables consist primarily of accessories and swabs for MX908.

Previous wording

generally have fixed fees and terms ranging from one additional year to four additional years. We recognize revenue from the sale of extended warranty and service plans over the respective coverage period, which approximates the service effort provided by us.

Current wording

We also offer our customers extended warranty and service plans. Our extended warranty and service plans are offered for periods beyond the standard one-year warranty that all of our customers receive. These extended warranty and service plans generally have fixed fees and terms ranging from one additional year to four additional years. We recognize revenue from the sale of extended warranty and service plans over the respective coverage period, which approximates the service effort provided by us.

Previous wording

Contract agreements are arrangements whereby we provide engineering services for the development of our technology platform for specific programs or new and expanding applications of our technologies for future commercial endeavors. Our contract agreements are with the U.S. government and commercial entities (who may be contracting with the government). Contracts typically include compensation for labor effort and materials incurred related to the deliverables under the contract. Our contract revenue was related to one customer during the nine months ended September 30, 2024 and 2023, respectively.

Current wording

contract agreements are with the U.S. government and commercial entities (who may be contracting with the government). Contracts typically include compensation for labor effort and materials incurred related to the deliverables under the contract. Our contract revenue was related to one customer during the three months ended March 31, 2025.

Previous wording

During the three and nine months ended September 30, 2024 and 2023, our revenue was comprised of revenue from the following sources:

Current wording

During the three months ended March 31, 2025 and 2024, our revenue was comprised of revenue from the following sources:

Previous wording

Our product and service revenue is comprised of sales of our handheld and desktop devices and related consumables, accessories and service contracts to end-users in the government, pharmaceuticals/biotechnology and academia markets as follows:

Current wording

Our product and service revenue is comprised of sales of our devices and related consumables, accessories and service contracts to end-users in the government, pharmaceutical and industrial markets as follows:

Previous wording

We sell our products primarily in the United States; however, we continue to expand our global sales efforts as we see traction in our products and assess global market needs. The majority of our international sales are through a distribution channel.

Current wording

We sell our products primarily in the United States; however, we will continue to expand our global sales efforts as we see traction in our products and assess global market needs. The majority of our international sales are through a distribution channel.

Previous wording

We expect that our gross profit margin for product and service will increase over the long term as our sales and production volumes increase and our cost per unit decreases due to efficiencies of scale. We intend to use our design, engineering and manufacturing capabilities to further advance and improve the efficiency of our manufacturing, which we believe will reduce costs and increase our gross margin. We expect that our gross profit margin for contract will remain consistent for our contracts that are cost reimbursement contracts.

Current wording

We expect that our gross profit margin for product and service will increase over the long term as our sales and production volumes increase and our cost per unit decreases due to efficiencies of scale. We intend to use our design, engineering and

Previous wording

We believe that our continued investment in research and development is essential to our long-term competitive position and expect these expenses to increase in future periods.

Current wording

We believe that our continued investment in research and development is essential to our long-term competitive position.

Previous wording

Selling, general and administrative expenses consist primarily of salaries and other personnel costs, and stock-based compensation for our sales and marketing, finance, legal, human resources and general management, as well as professional services, such as legal, audit and accounting services. We expect selling, general and administrative expenses, amortization of customer relationship and tradename intangibles to increase in future periods as the number of sales, sales application specialists and marketing and administrative personnel grows and we continue to introduce new products, invest in demonstration equipment, broaden our customer base and grow our business. We also anticipate that we will incur increased accounting, audit, legal, regulatory, compliance and director and officer insurance costs as well as investor and public relations expenses associated with operating as a public company.

Current wording

Selling, general and administrative expenses consist primarily of salaries and other personnel costs, and stock-based compensation for our sales and marketing, finance, legal, human resources and general management, as well as professional services, such as legal, audit and accounting services, and director and officer insurance costs as well as investor and public relations expenses associated with operating as a public company.

Previous wording

Interest income consists of interest earned on our invested cash balances.

Current wording

Interest income consists of interest earned on our invested cash, cash equivalents and marketable securities balances.

Previous wording

Interest expense consists of interest expense associated with outstanding borrowings under our loan and security agreements and the amortization of deferred financing costs and debt discounts associated with such arrangements.

Current wording

Other income (expense), net consists of miscellaneous other income and expense unrelated to our core operations, interest expense associated with the amortization of deferred financing costs and debt discounts associated with our loan and security agreements and the expenses incurred for certain labor and other passthrough costs of the TSA that are not related to continuing operations and exclusivity related to the support of the TSA.

Previous wording

As of December 31, 2023, we had gross federal and state operating loss carryforwards of $108.2 million and $77.4 million, respectively, which may be available to offset future taxable income and begin to expire in 2032 and 2025, respectively, of which $73.8 million of federal gross operating losses do not expire. As of December 31, 2023, we also had U.S. federal and state research and development tax credit carryforwards of $7.2 million and $3.4 million, respectively, which may be available to offset future tax liabilities and begin to expire in 2032 and 2030, respectively.

Current wording

As of December 31, 2024, the Company had gross federal and state operating loss carryforwards of $127.9 million and $92.5 million, respectively, which may be available to offset future taxable income and begin to expire in 2032 and 2025, respectively, of which $93.5 million of federal gross operating losses do not expire. As of December 31, 2024, the Company also had U.S. federal and state research and development tax credit carryforwards of $8.6 million and $4.8 million, respectively, which may be available to offset future tax liabilities and begin to expire in 2032 and 2030, respectively.

Previous wording

Product revenue increased by $0.7 million, or 6%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The increase was primarily related to $2.8 million in product revenue from our recently acquired FTIR products and an increase in MX908 device placements, offset in part by a $2.3 million decrease from initial component shipments under our subcontract agreement with a commercial entity that holds a U.S. government prime contract,

Current wording

Product revenue increased by $3.3 million, or 63%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The increase was primarily related to $4.1 million in product revenue from our recently acquired Fourier Transform Infrared, or FTIR, products. This increase was offset in part by a $1.4 million decrease in program product revenue related to our AVCAD program, pursuant to which we had component shipments under our subcontract agreement with a commercial entity in the three months ended March 31, 2024.

Previous wording

Product cost of revenue increased by $1.6 million, or 34%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The increase in product cost of revenue was primarily related to an increase in production costs related to the higher product revenues, $0.6 million in higher intangible amortization, $0.6 million in higher manufacturing costs due to favorable manufacturing variances in the comparable prior period, and $0.4 million in higher personnel related costs, partly related to our RedWave acquisition, offset in part by $0.2 million in lower warranty costs.

Current wording

Product cost of revenue increased by $2.3 million, or 95%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The increase in product cost of revenue was primarily related to an increase in production costs related to the higher product revenues, $0.6 in higher intangible amortization, and $0.5 million in higher personnel related costs, partly related to our RedWave acquisition of CAM2 Technologies, LLC (d/b/a RedWave Technology), or RedWave.

Previous wording

Product gross profit increased by $0.6 million, or 4%, and gross profit margin was relatively unchanged for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023. The increase in product gross profit was primarily due to the higher product revenue volume, net of favorable timing of production and lower material costs, offset in part by increases in intangible amortization and other production related costs for the nine months ended September 30, 2024.

Current wording

Product gross profit increased by $1.0 million, or 35%, and gross profit margin decreased by nine percentage points for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. The increase in product gross profit was primarily due to the higher product revenue volume, offset in part by the impact of lower margin international sales, an increase in intangible amortization and higher personnel related costs for the three months ended March 31, 2025, which drove the decrease in gross profit margin.

Previous wording

Service revenue increased by $1.8 million, or 82%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The increase was primarily related to an increase in handheld service revenues related to extended service contracts for MX908 devices and our recently acquired FTIR products, and to a lesser extent, an increase in handheld training revenue.

Current wording

Service and contract revenue increased by $1.1 million, or 48%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The increase was primarily related to an increase in handheld service revenues related to extended service contracts for MX908 devices and $0.5 million in service revenue related to our recently acquired FTIR products. Contract revenue for the three months ended March 31, 2025 was $0.1 million compared to zero in the three months ended March 31, 2024.

Previous wording

Service cost of revenue increased by $0.4 million, or 24%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The increase in service cost of revenue was primarily related to a $0.2 million increase in personnel and other operating costs primarily related to our RedWave acquisition as well as other increases across materials, depreciation and stock compensation.

Current wording

Service and contract cost of revenue increased by $0.4 million, or 35%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The increase in service cost of revenue was primarily related to a $0.3 million increase in personnel related costs and $0.1 million in higher cost of contract.

Previous wording

Service gross profit increased by 369% and gross profit margin increased by 26% for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, primarily due to an increase in service volume related to training and extended service contracts, leveraging our investments in personnel and service infrastructure.

Current wording

Service gross profit increased by $0.7 million, or 62%, and gross profit margin increased by four percentage points for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, primarily due to an increase in service volume related to training and extended service contracts, leveraging our investments in personnel and service infrastructure.

Previous wording

Our research and development expenses were $6.8 million for the three months ended September 30, 2024, an increase of $1.3 million from research and development expenses of $5.5 million for the three months ended September 30, 2023. The increase was partly due to the increased expenses from the RedWave acquisition and increased spending due primarily to a $0.6 million increase in personnel and related costs, a $0.2 million increase in stock-based compensation, and a $0.4 million increase in project spend related to materials and consulting.

Current wording

Our research and development expenses were $3.8 million for the three months ended March 31, 2025, an increase of $0.5 million from research and development expenses of $3.3 million for the three months ended March 31, 2024. The increase was partly due to the increased expenses from the RedWave acquisition and was due primarily to a $0.1 million increase in personnel and related costs, a $0.3 million increase in project expenditure related to materials and consulting, and a $0.1 million increase in facility related costs.

Previous wording

Our selling, general and administrative expenses were $13.4 million for the three months ended September 30, 2024, an increase of $2.1 million from selling, general and administrative expenses of $11.3 million for the three months ended September 30, 2023. The increase was partly due to the increased expenses from the RedWave acquisition and was due primarily to a $1.1 million increase in salaries and related costs, a $0.3 million increase in stock-based compensation, a $0.3 million increase in consulting expenses costs and a $0.2 million increase in audit and related costs.

Current wording

Our selling, general and administrative expenses were $10.2 million for the three months ended March 31, 2025, an increase of $2.0 million from selling, general and administrative expenses of $8.2 million for the three months ended March 31, 2024. The increase was partly due to the increased expenses from the RedWave acquisition and was due primarily to a $0.7 million increase in payroll and related costs, mainly related to our acquisition of RedWave, a $0.6 million charge for transaction bonuses earned with the Desktop Portfolio divestiture, a $0.3 million increase in commissions, a $0.2 million increase in non-cash stock based compensation and a $0.3 million increase in other expenses including intangible amortization, depreciation and operating expenses, offset in part by $0.4 million in lower legal and accounting related costs incurred with the RedWave acquisition during the three months ended March 31, 2024.

Previous wording

Interest income decreased by $0.6 million to $0.8 million for the three months ended September 30, 2024 from $1.4 million for the three months ended September 30, 2023. The decrease was due to the lower cash, cash equivalent and marketable securities balance during the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to the lower average balance due to the use of cash for the RedWave acquisition in April 2024.

Current wording

Interest income decreased by $0.8 million for the three months ended March 31, 2025 from $1.7 million for the three months ended March 31, 2024. The decrease was due to the lower cash, cash equivalent and marketable securities balance, primarily due to the average balance during the three months ended March 31, 2025, compared to the three months ended March 31, 2024.

Previous wording

Since our inception, we have incurred significant operating losses. To date, we have funded our operations primarily with proceeds from sales of redeemable preferred stock, borrowings under loan agreements and revenue from sales of our products and services and contract revenue, proceeds from our initial public offering in December 2020, and with proceeds from an underwritten public offering in November 2021. As of September 30, 2024, we had cash, cash equivalents and marketable securities of $71.7 million. We believe that our existing cash, cash equivalents and marketable securities will enable us to fund our operating expenses, capital expenditure requirements and debt service payments for at least the next twelve months.

Current wording

Since our inception, we have incurred significant operating losses. To date, we have funded our operations primarily with proceeds from the Desktop Portfolio divesture, proceeds from sales of redeemable preferred stock, borrowings under loan agreements and revenue from sales of our products and services and contract revenue, proceeds from our initial public offering in December 2020, and proceeds from an underwritten public offering in November 2021. As of March 31, 2025, we had cash, cash equivalents and marketable securities of $124.3 million, inclusive of the proceeds from the recent Desktop Portfolio divesture. We believe that our existing cash, cash equivalents and marketable securities will enable us to fund our operating expenses, capital expenditure requirements and debt service payments for at least the next twelve months.