Airship AI Holdings, Inc.
For the period ended Mar 31, 2026. Filed May 8, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 8, 2026
AISP$1.79+2.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-14.
0001654954-25-013084
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-08.
0001654954-26-004630
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 70 previous paragraphs and 60 current paragraphs.
30 unchanged; 18 reworded; 12 added; 17 removed; 5 previous and 0 current paragraphs rearranged.
Tables are not compared: 6 previous and 3 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (12)
Current report
Outpost AI is our edge hardware and software offering that is purpose built to structure and analyze data efficiently and effectively at the source using Airship AI trained models. Once structured, Outpost AI securely encodes the data and streams it to Acropolis for further processing. In the automobile example, Outpost AI will process the unstructured and unlabeled video data into structured data including images of vehicles, images of plates, make, model, color, locations and plate numbers, as well as confidence levels on the structured results.
Current report
Acropolis is our enterprise management software suite which serves as the backbone of our software ecosystem. Acropolis allows customers with a handful of devices or hundreds of thousands of devices to manage their user and install base efficiently and securely from a single graphical user interface. Acropolis can be installed and managed locally (on-premises) as well as in cloud/multi-cloud-based system architectures. Acropolis can work with structured and unstructured data. In the scenario where Outpost AI processes the unstructured video of vehicles into images, plate numbers and other structured data, Acropolis will compare the structured data against customer repositories of structured data in order to add labels to results for user attention. Here, Acropolis leaves the initial processing of unstructured data to the edge device (Outpost AI) and handles additional labeling which requires bigger centralized datasets. Where Acropolis is receiving unstructured data as input from devices, it will do the initial processing of unstructured to structured data similar to what Outpost AI does at the edge before any additional labelling. This holistic approach allows customers to leverage the benefits of both edge and back-end data structuring and analysis in a “single-pane-of-glass” approach.
Current report
Airship Command then allows the customer to view the final labelled data which can be presented in real-time or as search results, as alerts, in automatically updating lists or on maps. In the vehicle example, Airship Command can present alarms on specific filters such as specific plates, intelligent partial matches, make, model, color and any combination thereof, as well as searches using the same filters against character recognition and vehicle characteristics results.
Current report
Airship Command is our suite of visualization tools that allow customers to interact with their data and devices securely and efficiently. Customer data interaction may include receiving and viewing an alarm triggered by an AI detected event at the edge on a mobile phone, or receiving and viewing events from thousands of edge devices spread across multiple different locations on a large video wall in a Security Operations Center (“SOC”). Our visualization tools span applications for workstations, web-based browsers, and applications for mobile handheld devices ensuring our customers data is never out of their immediate reach.
Current report
We apply AI across the entire offering suite, ensuring that we are extracting as much value from our customers’ existing and emerging data as possible. Whether it is using machine learning to train new models for deployment at the edge, or using a rules-based approach to detect anomalies based on data generated by machine learning models, we are constantly expanding and evolving our AI capabilities.
Current report
Our offerings are used by some of the largest government agencies and commercial organizations in the world. While we are heavily focused on continuing to grow market share in the United States, our offerings are currently deployed around the world, with significant room to grow in both the governmental and commercial markets.
Current report
Our typical customer engagement is a multi-year contractual agreement, an agreement which includes our core offerings as well as professional services, technical support, and software maintenance, which we expect will result in predictable, long-term recurring revenue. Our history shows that organizations that have chosen to partner with Airship AI stick with Airship AI.
Current report
Since our inception and until the Merger in December 2023, we have operated as a 100% employee-owned bootstrapped company with no outside investment, operating in a fiscally conservative model. As a U.S. based company, we operate in high growth areas, namely the intersection of public safety and AI, with a combined $7 billion edge AI hardware and software addressable market.
Current report
Our customers trust us to collect and analyze vast amounts of data in real-time as well as make it available to their users when they need it, where they need it, as securely as possible. We believe our offerings are purpose-built from the ground up to help ensure we continue to meet or exceed these expectations.
Current report
Net Revenues — Net revenues for the three months ended March 31, 2026 increased $850,000 to $6,353,000 as compared to $5,503,000 for the three months ended March 31, 2025. The increase was due increased commercial orders.
Current report
*Net (Loss)*Income — Net (loss) for the three months ended March 31, 2026 was $721,000 as compared to a net income of $23,708,000 for the three months ended March 31, 2025. The net loss primarily related to increases in selling, general and administrative and research and development expenses.
Current report
Net cash generated by operating activities for the three months ended March 31, 2026 was $814,000. This amount was primarily related to (i) net loss of $721,000; and (ii) noncash items of $5,000; offset by (iii) operating assets and liabilities changes of $1,540,000 (including a $493,000 increase in deferred revenues). Noncash items included (iv) gain from change in warrant liability of $1,499,000; and offset by (v) loss from change in earnout liability of $726,000; (vi) stock based compensation of $666,000; and (vii) net amortization of operating lease right of use asset of $102,000.
Removed paragraphs (17)
Previous report
Warrant Exercise
Previous report
The shares of common stock issuable upon exercise of the existing warrants are registered for issuance pursuant to a registration statement on Form S-3 (File No. 333-284462), which was declared effective by the SEC on January 31, 2025.
Previous report
In consideration for the immediate exercise of the existing warrants for cash, the holder received the inducement warrants in a private placement pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The inducement warrants have an exercise price of $6.20 per share, are immediately exercisable and will be exercisable for five and one-half years from the date of issuance.
Previous report
The inducement warrants and the shares of common stock underlying the inducement warrants offered in the private placement have not been registered under the Securities Act or applicable state securities laws. Accordingly, the securities may not be offered or sold in the United States except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act and such applicable state securities laws. As part of the transaction, we have filed a resale registration statement on Form S-3 with the SEC to register the resale of the shares of common stock underlying the inducement warrants.
Previous report
Key Performance Indicators
Previous report
Historically, a majority of our product revenue has consisted primarily of a bundled hardware and software product and to date we have sold or licensed a minimal amount of standalone software. In the future, we expect to see more delivery of our products using a cloud-based software solution which will allow us to create additional subscription revenue.
Previous report
We have historically evaluated our business solely based on revenue generated from customers and we have not tracked any other customer-related metrics. As we grow and increase our product offerings and customer base, we intend to modify and develop more advanced performance indicators. We believe the following key performance indicators apply to us in the future:
Previous report
Principal Factors Affecting Our Financial Performance
Previous report
We believe the following factors and trends may cause previously reported financial information not to be necessarily indicative of future operating results or future financial conditions:
Previous report
Other income for the three months ended September 30, 2024 consisted of (i) gain from change in fair value of earnout liability of $5,512,000; (ii) gain from change in fair value of warrant liability of $2,471,000; (iii) gain from change in fair value of convertible debt of $371,000; (iv) other income of $16,000; offset by (v) loss on note conversion of $435,000; and (vi) interest expense of $134,000. The gain from change in fair value of various financial instruments was primarily the result of a lower stock price.
Previous report
*Net Income *— Net income for the three months ended September 30, 2025 was $6,410,000 as compared to net income of $6,214,000 for the three months ended September 30, 2024. The net income primarily related to noncash income of $8,770,000. Noncash items included (i) gain from change in warrant liability of $5,331,000; (ii) gain from change in earnout liability of $3,893,000; (iii) stock based compensation of $356,000; and (iv) net amortization of operating lease right of use asset of $98,000.
Previous report
Net income for the three months ended September 30, 2024 was $6,214,000. The net income is reduced by noncash items of $7,338,000, primarily the gain from the change in fair value of various financial instruments. Noncash items included (i) stock based compensation of $557,000; (ii) net amortization of operating lease right of use asset of $24,000; (iii) loss on note conversions of $434,000; offset by (iv) gain from change in fair value of warrant liability of $2,471,000; (v) gain from change in fair value of earnout liability of $5,571,000; and (vi) gain from change in fair value of convertible note of $370,000.
Previous report
(dollars in thousands)
Previous report
*Net Revenues *— Net revenues for the nine months ended September 30, 2025 decreased $11,017,000 to $8,827,000 as compared to $19,844,000 for the nine months ended September 30, 2024, as a result of purchase orders from various federal government agency customers totaling over $13 million which we primarily shipped in the nine months ended September 30, 2024.
Previous report
Other expense for the nine months ended September 30, 2024 was $5,275,000 as compared to other expense of $466,000 for the nine months ended September 30, 2023. Other expense for the nine months ended September 30, 2024 consisted of (i) loss from change in fair value of earnout liability of $1,096,000; (ii) loss from change in fair value of warrant liability of $2,834,000; (iii) loss from change in fair value of convertible debt of $142,000; (iv) loss on note conversion of $593,000; (v) interest expense of $587,000: and (vi) other expense of $23,000. The loss from change in fair value of various financial instruments was primarily the result of an increase in the stock price.
Previous report
Net loss for the nine months ended September 30, 2024 was $7,289,000 The net loss primarily related to noncash items of $6,649,000. Noncash items included (i) depreciation of $2,000; (ii) stock based compensation of $1,088,000; (iii) net amortization of operating lease right of use asset of $175,000; (iv) issuance of common stock for services of $198,000; (v) noncash interest expense of $521,000; (vi) loss from change in fair value of warrant liability of $2,834,000; (vii) loss from change in fair value of earnout liability of $1,096,000; (viii) loss from change in fair value of convertible note of $142,000; and (ix) loss on note conversions of $593,000.
Previous report
Net cash used in operating activities for the nine months ended September 30, 2024 was $4,398,000. This amount was primarily related to (i) net loss of $7,289,000; and (ii) net working capital reductions of $3,758,000 (including a $2,059,000 reduction in deferred revenues); offset by (iii) noncash items of $6,649,000. Noncash items included (iv) depreciation of $2,000; (v) stock based compensation of $1,088,000; (vi) net amortization of operating lease right of use asset of $175,000; (vii) issuance of common stock for services of $198,000; (viii) noncash interest expense of $521,000; (ix) loss from change in warrant liability of $2,834,000; (x) loss from change in earnout liability of $1,096,000; (xi) loss from change in fair value of convertible note of $142,000; and (xii) loss on note conversions of $593,000.
Reworded paragraphs (18)
Previous wording
Backlog as of October 6, 2025 was approximately $11 million, representing firm fixed price contracts awarded in the third quarter of 2025 that will be shipped and invoiced through the remainder of calendar year 2025 and early 2026.
Current wording
Backlog as of May 6, 2026 was approximately $4.6 million, representing firm fixed price contracts awarded in the first quarter of 2026 that will be shipped and invoiced through the remainder of 2026.
Previous wording
Our total validated pipeline as of September 30, 2025 was $166 million, consisting of single and multi-year opportunities for AI- driven edge, video, and sensor and data management platform across our customer verticals. Our pipeline includes opportunities at varying stages of progression with expected award timeframes over the next 18-24 months.
Current wording
Our total validated pipeline as of March 31, 2026 was $165.3 million, consisting of single and multi-year opportunities for AI-driven edge, video, and sensor and data management platform across our customer verticals. Our pipeline includes opportunities at varying stages of progression with expected award timeframes over the next 18-24 months.
Previous wording
At the merger closing, we assumed 515,000 private placement warrants and 16,184,612 public warrants. On June 3, 2024, we permanently reduced the exercise price of such warrants from $11.50 per share to an exercise price of $7.80 per share. On November 20, 2024, we further reduced the exercise price of the outstanding public warrants and private warrants to an exercise price of $4.50 per share. The purpose of this reduced exercise price was to potentially raise proceeds received from the exercise of such warrants, if any, for working capital and general corporate purposes. As of September 30, 2025, there were 515,000 private placement warrants and 16,145,108 public warrants outstanding.
Current wording
At the Merger closing, we assumed 515,000 private placement warrants and 16,184,612 public warrants. On June 3, 2024, we reduced the exercise price of such warrants from $11.50 per share to an exercise price of $7.80 per share. On November 20, 2024, we further reduced the exercise price of the outstanding public warrants and private warrants to an exercise price of $4.50 per share. The purpose of this reduced exercise price was to potentially raise proceeds received from the exercise of such warrants, if any, for working capital and general corporate purposes. As of March 31, 2026, there were 515,000 private placement warrants and 16,145,006 public warrants outstanding.
Previous wording
On January 20, 2025, President Trump signed an executive order creating an advisory commission, the Department of Government Efficiency to reform federal government processes and reduce expenditures. Pressures on and uncertainty surrounding the U.S. federal government’s budget, and potential changes in budgetary priorities and spending levels, could adversely affect staffing levels and the funding for government projects. Disruptions in how the government agencies operate due to these policies are materially affecting our business.
Current wording
On January 20, 2025, President Trump signed an executive order creating an advisory commission, the Department of Government Efficiency, to reform federal government processes and reduce expenditures. Pressures on and uncertainty surrounding the U.S. federal government’s budget, and potential changes in budgetary priorities and spending levels, could adversely affect staffing levels and the funding for government projects. Disruptions in how the government agencies operate due to these policies is materially affecting our government business.
Previous wording
Cost of Net Revenues — Cost of net revenues primarily consists of product costs and post customer support. For the three months ended September 30, 2025, cost of sales decreased $140,000 to $574,000 as compared to $714,000 for the three months ended September 30, 2024. The decrease was due to lower sales, offset by product mix with decreased equipment purchases during the three months ended September 30, 2025.
Current wording
Cost of Net Revenues — Cost of net revenues primarily consists of product costs and post customer support. For the three months ended March 31, 2026, cost of sales decreased $81,000 to $3,187,000 as compared to $3,268,000 for the three months ended March 31, 2025. The decrease was due product mix with increased higher margin commercial sales during the three months ended March 31, 2026, offset by raw material cost increases.
Previous wording
Research and Development Expenses — Research and development expenses for the three months ended September 30, 2025 decreased $321,000 to $753,000 as compared to $1,074,000 for the three months ended September 30, 2024. The decrease was due to decreased expenses for product development in the United States and Taiwan.
Current wording
Research and Development Expenses — Research and development expenses for the three months ended March 31, 2026 increased $125,000 to $844,000 as compared to $719,000 for the three months ended March 31, 2025. The increase was due to increased expenses for product development in the United States and Taiwan.
Previous wording
Selling, General and Administrative Expenses — Selling, general and administrative expenses for the nine months ended September 30, 2025 increased $69,000 to $8,761,000 as compared to $8,830,000 for the nine months ended September 30, 2024.
Current wording
Selling, General and Administrative Expenses — Selling, general and administrative expenses for the three months ended March 31, 2026 increased $674,000 to $3,904,000 as compared to $3,230,000 for the three months ended March 31, 2025. The increase is primarily due to an increase in stock-based compensation expense of $238,000 and other personnel costs.
Previous wording
Other Income (Expense) — Other income for the nine months ended September 30, 2025 was $12,964,000 as compared to other expense of $5,275,000 for the nine months ended September 30, 2024. Other income for the nine months ended September 30, 2025 consisted of (i) gain from change in fair value of earnout liability of $6,415,000; (ii) gain from change in fair value of warrant liability of $6,358,000; and (iii) other income of $191,000. The income from change in fair value of various financial instruments was primarily the result of a decrease in our stock price.
Current wording
Other Income (Expense) — Other income for the three months ended March 31, 2026 was $861,000 as compared to other income for the three months ended March 31, 2025 was $25,422,000. Other income for the three months ended March 31, 2026 consisted of (i) loss from change in fair value of earnout liability of $726,000; (ii) gain from change in fair value of warrant liability of $1,499,000; and (iii) interest income of $88,000. The loss from change in fair value of earnout liability resulted from the increase in the volatility factor to 78.4%, offset by a decrease in the our share price. The income from change in fair value of warrant liability was primarily the result of a decrease in our stock price.
Previous wording
Other Income *(Expense) *— Other income for the three months ended September 30, 2025 was $9,277,000 as compared to $7,801,000 for the three months ended September 30, 2024. Other income for the three months ended September 30, 2025 consisted of (i) gain from change in fair value of earnout liability of $3,893,000; (ii) gain from change in fair value of warrant liability of $5,331,000; and (iii) other income of $53,000. The income from change in fair value of various financial instruments was primarily the result of a decrease in our stock price.
Current wording
Other income for the three months ended March 31, 2025 consisted of (i) gain from change in fair value of earnout liability of $9,824,000; (ii) gain from change in fair value of warrant liability of $15,521,000; (iii) other income of $77,000. The gain from change in fair value of various financial instruments was primarily the result of a decrease in our stock price.
Previous wording
Net Income (Loss) — Net income (loss) for the nine months ended September 30, 2025 was 6,361,000 as compared to a net loss of $7,289,000 for the nine months ended September 30, 2024. The net income primarily related to noncash items of $11,339,000. Noncash items included (i) gain from change in warrant liability of $6,359,000; (ii) gain from change in earnout liability of $6,415,000; and offset by (iii) stock based compensation of $1,156,000 and (iv) net amortization of operating lease right of use asset of $278,000.
Current wording
Net income for the three months ended March 31, 2025 primarily related to noncash items of $24,833,000. Noncash items included (i) gain from change in warrant liability of $15,521,000; and (ii) gain from change in earnout liability of $9,823,000; and offset by (iii) stock based compensation of $428,000; and (iv) net amortization of operating lease right of use assets of $83,000.
Previous wording
Liquidity is our ability to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures. We have incurred losses from operations in the past few years and had an accumulated deficit of $68.6 million as of September 30, 2025. In September 2024, we closed an $8.0 million public offering with approximately $7.3 million in net proceeds. In December 2024, we received net proceeds of approximately $7.4 million from the exercise of warrants related to an inducement offer agreement. In October 2025, we received net proceeds of approximately $9.7 million from the exercise of warrants related to an inducement offer agreement. We formally evaluated our liquidity and cash position in November 2025 when preparing the September 30, 2025 Form 10-Q consolidated financial statements. During this process, we analyzed our cash requirements and operations at least through November 2026 and determined that, based upon our current available cash and operations, we have no substantial doubt about our ability to continue as a going concern. Our assessment of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement and involves risks and uncertainties. Our actual results could vary as a result of our near and long-term future capital requirements that will depend on many factors.
Current wording
Liquidity is our ability to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures. We have incurred losses from operations in the past few years and had an accumulated deficit of $46 million as of March 31, 2026.
Previous wording
On October 8, 2025, we entered into warrant exercise inducement offer letter with the holder of its existing common stock warrants exercisable for an aggregate of 2,162,162 shares of its common stock to exercise its existing warrants at the existing exercise price of $4.50 per share, in exchange for our agreement to issue new common stock warrants to purchase 2,702,702 shares of common stock at an exercise price per share of $6.20. The aggregate gross proceeds from the exercise of the existing warrants were approximately $9,729,729, before deducting financial advisory fees. We intend to use the net proceeds from the exercise of the existing warrants for working capital and general corporate purposes.
Current wording
On October 8, 2025, we entered into warrant exercise inducement offer letter with the holder of existing common stock warrants exercisable for an aggregate of 2,162,162 shares of common stock to exercise such warrants at the existing exercise price of $4.50 per share, in exchange for our agreement to issue new common stock warrants to purchase 2,702,702 shares of common stock at an exercise price per share of $6.20. The aggregate gross proceeds received from the exercise of the existing warrants were approximately $9,729,729, before deducting financial advisory fees. We intend to use the net proceeds from the exercise of the existing warrants for working capital and general corporate purposes.
Previous wording
Net cash used in operating activities for the nine months ended September 30, 2025 was $4,502,000. This amount was primarily related to (i) net income of $6,361,000; (ii) net working capital changes of $476,000 (including a $1,211,000 reduction in deferred revenues); and offset by (iii) noncash items of $11,339,000. Noncash items included (iv) gain from change in warrant liability of $6,359,000; (v) gain from change in earnout liability of $6,415,000; and offset by (vi) stock based compensation of $1,156,000 and (vii) net amortization of operating lease right of use asset of $278,000.
Current wording
Net cash used in operating activities for the three months ended March 31, 2025 was $2,098,000. This amount was primarily related to (i) net income of $23,708,000; and offset by (ii) operating assets and liabilities reductions of $973,000 (including a $713,000 reduction in deferred revenues); and (iii) noncash items of $24,833,000. Noncash items included (iv) gain from change in warrant liability of $15,521,000; and (v) gain from change in earnout liability of $9,823,000; and offset by (vi) stock based compensation of $428,000; and (vii) net amortization of operating lease right of use assets of $83,000.
Previous wording
Net cash provided by financing activities for the nine months ended September 30, 2024 was $7,780,000 and consisted of (i) proceeds from offering of $7,290,000; (ii) proceeds from exercise of warrants of $294,000; and (iii) proceeds from stock option exercises of $196,000.
Current wording
Net cash provided by financing activities for the three months ended March 31, 2026 was $11,000 and consisted of proceeds from stock option exercises.
Previous wording
Net cash used in financing activities for the nine months ended September 30, 2025 was $1,149,000 and consisted of (i) repayment of advances by founders of $1,300,000; and offset by (ii) net proceeds from exercise of warrants of $60,000; and (iii) proceeds from stock option exercises of $91,000.
Current wording
Net cash used in financing activities for the three months ended March 31, 2025 was $497,000 and consisted of (i) repayment of advances by founders of $600,000; and offset by (ii) net proceeds from exercise of warrants of $60,000; and (iii) proceeds from stock option exercises of $43,000.
Previous wording
On July 13, 2023, we entered into a lease in Redmond, WA for 15,567 square feet of office and warehouse space which started October 1, 2023. The monthly payment is $25,000 per month. The lease expires October 31, 2027 and the monthly payment increases 3% on July 31, 2024 and each year thereafter. There is a one three year option to extend the lease based on the fair market rate on October 31, 2027, which we expect to exercise.
Current wording
On September 7, 2023, we entered into a lease in Redmond, WA for 15,567 square feet of office and warehouse space which started August 1, 2024. The monthly payment is approximately $29,600 per month. The lease expires October 31, 2027 and the monthly payment increases 3% on August 1, 2025 and each year thereafter. There is a one three year option to extend the lease based on the fair market rate on October 31, 2027. We do not believe that is reasonably certain that the lease will be extended.
Previous wording
On February 1, 2025, we entered into an office lease in Mooresville, North Carolina. We lease 5,240 square feet and the net monthly payment is $9,105. The lease expires January 31, 2028 and the monthly payment increases 3% on February 1, 2026 and each year thereafter. There is no option to extend the lease.
Current wording
On December 6, 2024, we entered into two separate office leases in Mooresville, North Carolina, the terms of which commenced on February 1, 2025. We lease an aggregate of 5,240 square feet and the net monthly payment is approximately $9,105. The leases expire January 31, 2028 and the monthly payment increases 3% on February 1, 2026 and each year thereafter. There is no option to extend the lease.
Previous wording
We believe that the significant accounting policies described in “Note 2, Summary of Significant Accounting Policies” to our audited consolidated financial statements are accurate and complete. The critical accounting estimates and policies during the nine months ended September 30, 2025 have not materially changed to those discussed in our Annual Report on Form 10-K for the year ended December 31, 2024.
Current wording
We believe that the significant accounting policies described in “Note 2, Summary of Significant Accounting Policies” to our audited consolidated financial statements are accurate and complete. The critical accounting estimates and policies during the three months ended March 31, 2026 have not materially changed to those discussed in our Annual Report on Form 10-K for the year ended December 31, 2025.
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
Net Revenues — Net revenues for the three months ended September 30, 2025 decreased $1,691,000 to $1,177,000 as compared to $2,868,000 for the three months ended September 30, 2024. On January 20, 2025, President Trump signed an executive order creating an advisory commission, the Department of Government Efficiency to reform federal government processes and reduce expenditures. Pressures on and uncertainty surrounding the U.S. federal government’s budget, and potential changes in budgetary priorities and spending levels, could adversely affect staffing levels and the funding for government projects. Disruptions in how the government agencies operate due to these policies are materially affecting our business.
Previous report — wording carried elsewhere
Selling, General and Administrative Expenses — Selling, general and administrative expenses for the three months ended September 30, 2025 increased $50,000 to $2,667,000.
Previous report — wording carried elsewhere
The following table sets forth key components of our results of operations during the nine months ended September 30, 2025 and 2024.
Previous report — wording carried elsewhere
Cost of Net Revenues — Cost of net revenues primarily consists of product costs and post customer support. For the nine months ended September 30, 2025, cost of sales decreased $6,100,000 to $4,456,000 as compared to $10,556,000 for the nine months ended September 30, 2024. The decrease was due to lower sales, offset by product mix with decreased equipment purchases during the nine months ended September 30, 2025.
Previous report — wording carried elsewhere
Research and Development Expenses — Research and development expenses for the nine months ended September 30, 2025 decreased $259,000 to $2,213,000 as compared to $2,472,000 for the nine months ended September 30, 2024. The decrease was due to decreased expenses for product development in the United States and Taiwan.