Airship AI Holdings, Inc.
For the period ended Sep 30, 2026. Filed Nov 5, 2026.
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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.
Sep 30, 2026 · Filed Nov 5, 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 2026-06-30; filed 2026-08-06.
0001654954-26-007328
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-05.
0001654954-26-009546
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 63 previous paragraphs and 68 current paragraphs.
30 unchanged; 25 reworded; 13 added; 8 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 4 previous and 4 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 (13)
Current report
Backlog as of October 1, 2026 was approximately $28.3 million, representing firm validated contract backlog. This backlog represents firm commitments scheduled for systematic execution and delivery during the quarters ending December 31, 2026 and March 31, 2027.
Current report
Ask Airship is intended to differentiate our platform from traditional video management system (“VMS”) providers. Rather than competing with VMS, access control and other established physical security systems, Ask Airship is designed to operate as a layer above them, ingesting and structuring the video, sensor and event data those systems generate and consolidating it into a single decision-support environment. We believe most organizations have made substantial investments in security infrastructure that produces large volumes of camera-derived data but offers limited ability to reason across that data or act on it. Our objective is to become the data and decision platform for camera-derived and related sensor data, independent of the underlying VMS or hardware vendor, so that a customer can retain its existing systems and add analytical and agentic capability on top of them rather than replacing infrastructure it has already deployed. We also believe that the data these systems generate has value beyond physical security. By structuring camera and sensor data and making it accessible to operational users, Ask Airship is intended to help customers extract operational intelligence from existing infrastructure in areas such as facility utilization, process compliance, safety and logistics, which we believe broadens both the set of users within a customer organization and the budgets available to fund our solutions. A significant element of our integration roadmap is the large installed base of commercial camera and recording systems manufactured by large installed base of commercial camera systems, including manufacturers restricted in federal procurement, with which our platform already integrates. We believe this installed base, which is typically treated as commodity video capture and storage equipment, is under-served by analytics and represents an opportunity for Ask Airship and Airship Light to add intelligence to equipment customers already own. Our integrations with these systems are directed at commercial customers; we do not supply or resell such equipment, and our federal and other government engagements remain subject to applicable restrictions on covered telecommunications and video surveillance equipment. Consistent with this positioning, we are seeking to shift a greater portion of our commercial revenue from the capital-expenditure purchasing model that has traditionally characterized security technology toward operating-expenditure, subscription and consumption-based arrangements. Over time, we believe this shift could increase the proportion of our revenue that is recurring; however, it may also reduce the size of initial orders relative to our historical hardware-inclusive engagements and affect the timing of revenue recognition, and there can be no assurance that customers will adopt these purchasing models at the rate we anticipate.
Current report
A core design principle of Ask Airship is that the customer retains control of its data. Structured data remains within the customer's own environment, whether on-premises or in a customer-controlled cloud, and Ask Airship is architected to be model-agnostic, allowing the customer to apply the vision-language model (“VLM”) or large language model (“LLM”) best suited to its particular use case, security requirements and cost constraints rather than being limited to a single vendor's model. We believe this approach is attractive both to federal and other security-sensitive customers, for whom data sovereignty and model provenance are procurement requirements, and to commercial customers seeking to benefit from rapid improvements in foundation models without re-platforming. For deployments in federal and other security-sensitive environments, we expect on-premises inference to rely on Western open-weight models to satisfy applicable procurement and model-origin requirements. Our ability to execute on this strategy depends on, among other things, maintaining integrations with third-party VMS and security systems, continued availability of suitable third-party models on acceptable terms, and market acceptance of a vendor-independent architecture, and we can give no assurance that we will be successful.
Current report
Agentic AI is now the primary focus of our product development efforts. During the third quarter of 2026 we significantly increased our engineering investment in Ask Airship, including expanding our dedicated development team, and we expect research and development expenses to continue to increase in the coming quarters as a result. Building on the Ask Airship core, we are developing Airship Light, a standardized, lower-cost appliance that packages our edge AI structuring and agentic capabilities in a pre-configured form intended for commercial customers that operate large numbers of sites and existing camera installations, and that is designed to be deployed through our partner and channel relationships rather than through the customized, professional-services intensive engagements that characterize our federal business. We currently expect to make Airship Light commercially available in the first half of 2027. The timing of any product release, as well as market acceptance, pricing and the ultimate financial contribution of these initiatives, is subject to development, integration and competitive risks, and we can give no assurance that these initiatives will be completed on the timeline we currently anticipate or that they will generate meaningful revenue.
Current report
Commercial Expansion and Partner Channels
Current report
In 2026, we added dedicated commercial sales leadership and began building a partner and channel program to reach commercial customers through systems integrators, distributors and technology partners rather than solely through direct sales. These efforts are at an early stage, but during the third quarter of 2026 we began to see increased engagement from our partner channels, which contributed to the growth in our validated pipeline described above. Commercial opportunities generally carry shorter sales cycles and smaller initial deployment sizes than our federal engagements, and we can give no assurance as to whether or when these opportunities will convert into revenue.
Current report
Separately, one of our largest commercial customers has informed us that it intends to migrate its video management operations to a different platform. Purchases by this customer had already been declining over the past several years, and we expect the transition to occur gradually over approximately the next 12 to 18 months, during which we anticipate continuing to provide support and maintenance under our existing arrangements while revenue from this customer declines. Revenue from this customer represented approximately 18.5% of our total revenue for the nine months ended September 30, 2026. A separate company that was formerly affiliated with this customer, and is no longer part of the same corporate group, continues to be a customer and is not affected by this transition. We do not currently expect this transition to have a material impact on our overall results of operations, but the timing and extent of the decline are outside our control, and we can give no assurance that our commercial expansion efforts will offset the associated revenue in any particular period.
Current report
We address a problem common to these organizations: they have invested heavily in sensors and security infrastructure that generate large volumes of unstructured, or “dark,” data, principally video, but have limited ability to reason across that data or act on it. Our software structures this data at the edge, the location at which it is generated and collected, by detecting objects within a video frame and extracting their identifying characteristics (for example, a vehicle’s license plate characters and its make, model and color), a process we refer to as “structuring” the data. Structuring at the edge, rather than transmitting raw data to a central location for processing, enables real-time decision-making and reduces transmission and storage requirements.
Current report
Our software platform consists of Outpost AI (edge software for structuring and analyzing sensor data at the point of collection), Acropolis (our enterprise management software backbone, deployable on-premises or in cloud and multi-cloud architectures), Airship Command (visualization and operator tools across workstation, web and mobile) and Ask Airship (our agentic AI layer, currently under development, described under “Strategic Initiatives” above). The platform is designed to operate as an open software layer above a customer’s existing VMS and physical security systems, independent of the underlying camera or hardware vendor, and uses a secure, permission-based, single-pane-of-glass architecture under which the customer retains control of its data within its own on premises or customer-controlled cloud environment.
Current report
Where a customer’s environment requires it, we deliver our software on pre-configured appliances and servers, including Outpost AI edge appliances and Fortress Server, our on-premises data center server and storage platform. We view this hardware as a delivery vehicle for our software rather than as a business in itself. Historically, the majority of our revenue has been derived from bundled hardware and software systems sold under multi-year agreements together with professional services, technical support and software maintenance, with support and maintenance providing a recurring revenue component. Agentic AI software is now the primary focus of our product development efforts, and we are seeking to increase over time the proportion of our revenue derived from software subscriptions and consumption-based arrangements. This shift is at an early stage; see “Strategic Initiatives” above for a discussion of the related opportunities and risks.
Current report
Employees* *
Current report
We employed sixty four employees as of September 30, 2026. The employees are headquartered in Redmond, WA and are supported by a growing team at our Customer Center of Excellence located in Charlotte, NC. We employed nine research and development personnel in Taiwan as of September 30, 2026.
Current report
Other Income — Other income for the three months ended September 30, 2026 was $10,176,000 as compared to other income for the three months ended September 30, 2025 of $9,277,000. Other income for the three months ended September 30, 2026 consisted of (i) gain from change in fair value of earnout liability of $3,231,000; (ii) gain from change in fair value of warrant liability of $6,831,000; and (iii) interest income of $114,000. The gain from change in fair value of earnout liability resulted from a decrease in our share price, offset by increase in the volatility factor to 77%. The gain from change in fair value of warrant liability was primarily the result of a decrease in the trading price of the warrants.
Removed paragraphs (8)
Previous report
Backlog as of August 6, 2026 were approximately $6.9 million, representing firm fixed price contracts awarded in the first and second quarters of 2026 that are expected to be shipped and primarily invoiced in the third quarter of 2026.
Previous report
Robotics
Previous report
We are extending our edge AI and data management platform to ingest, structure and act on data from autonomous and robotic sensor platforms, with a particular focus on commercial customers as well as government customers, consistent with our broader commercial expansion. We are evaluating commercial models for these capabilities, including subscription and as-a-service arrangements. We can give no assurance regarding the timing, cost, market acceptance or financial contribution of this initiative, which is subject to development, integration, supply-chain and regulatory risks.
Previous report
We are an AI-driven data management platform that solves complex data challenges for large institutions operating in dynamic and mission-critical environments characterized by rapidly increasing volumes of data ingested from a rapidly growing number of data sources. We address these challenges by structuring “dark” or unstructured data at the edge, the location at which the data is generated and collected using purpose-built AI models, enabling real-time decision-making rather than transmitting raw data to a central location for processing.
Previous report
We specialize in ingesting metadata from edge-based sensors used by government and law enforcement agencies worldwide, including video, audio, telemetry, acoustic, seismic and autonomous devices, as well as by large commercial organizations with similar requirements. Our trained AI models detect and extract identifying characteristics of objects within a video frame (for example, a vehicle’s license plate characters and its make, model and color), a process we refer to as “structuring” the data, and allow customers to act on that data both in real time and through historical search.
Previous report
Our primary offerings include Outpost AI (edge structuring and analysis), Acropolis (enterprise management software backbone, deployable on-premises or in cloud/multi-cloud architectures), Airship Command (visualization across workstation, web and mobile) and Fortress Server (our on-premises data center server and storage platform). These product offerings allow customers to manage their data across the full data lifecycle through a secure, permission-based, single-pane-of-glass architecture.
Previous report
Other (Expense) — Other expense for the three months ended June 30, 2026 was $916,000 as compared to other expense for the three months ended June 30, 2025 was $21,735,000. Other expense for the three months ended June 30, 2026 consisted of (i) loss from change in fair value of earnout liability of $193,000; (ii) loss from change in fair value of warrant liability of $833,000; and offset by (iii) interest income of $110,000. The loss from change in fair value of earnout liability resulted from an increase in the our share price. The expense from change in fair value of warrant liability was primarily the result of an increase in our stock price.
Previous report
Net loss for the three months ended June 30, 2025 was $23,757,000 as compared to net income of $18,462,000 for the three months ended June 30, 2024. The net loss primarily related to noncash expenses of $22,264,000. Noncash items included (i) loss from change in warrant liability of $14,494,000; (ii) loss from change in earnout liability of $7,301,000; (iii) stock based compensation of $372,000; and (iv) net amortization of operating lease right of use asset of $97,000.
Reworded paragraphs (25)
Previous wording
Separately, our total validated pipeline as of August 6, 2026 was $206.1 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. Backlog reflects awards already executed, whereas pipeline reflects identified and qualified opportunities that have not yet resulted in awards. We can give no assurance as to whether, when, or in what amount pipeline opportunities will convert into backlog or revenue.
Current wording
Separately, our total validated pipeline as of October 1, 2026 was $215.1 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. The increase in our validated pipeline compared with prior periods reflects both continued progression of federal opportunities and a growing contribution from commercial opportunities sourced through our partner and channel relationships, which we discuss under “Strategic Initiatives” below. Backlog reflects awards already executed, whereas pipeline reflects identified and qualified opportunities that have not yet resulted in awards. We can give no assurance as to whether, when, or in what amount pipeline opportunities will convert into backlog or revenue.
Previous wording
We are developing Ask Airship, an agentic AI capability designed to allow users to query, analyze and act on structured data across our platform using natural language, which we intend to offer as a standalone product complementary to our Outpost AI, Acropolis, Airship Command and Fortress Server offerings. We intend to make Ask Airship available on a software-as-a-service (subscription) basis as well as on a pay-per-use, consumption-based basis. For deployments in federal and other security-sensitive environments, we expect on-premises inference to rely on Western open-weight models to satisfy applicable procurement and model-origin requirements.
Current wording
We are developing Ask Airship, an agentic AI capability designed to allow users to query, analyze and act on structured data across our platform using natural language, which we intend to offer as a standalone product complementary to our Outpost AI, Acropolis, Airship Command and Fortress Server offerings. We intend to make Ask Airship available on a software-as-a-service (subscription) basis as well as on a pay-per-use, consumption-based basis.
Previous wording
Our typical customer engagement is a multi-year agreement that includes our core offerings together with professional services, technical support and software maintenance, which we expect to result in predictable, long-term recurring revenue. From inception until the Merger in December 2023, we operated as a 100% employee-owned, bootstrapped company with no outside investment. As a U.S.-based company, we operate at the intersection of public safety and AI, in which we address a combined market we estimate at more than $70 billion in 2026 and growing, spanning edge AI hardware and software (approximately $30 billion, according to Grand View Research, 2026, service and professional robotics, including robotics-as-a-service (approximately $31 billion according to Fortune Business Insights, 2026), and agentic AI (approximately $10 billion according to multiple industry analysts, 2026).
Current wording
From inception until the Merger in December 2023, we operated as a 100% employee-owned, bootstrapped company with no outside investment. As a U.S.-based company, we operate at the intersection of public safety and AI, in which we address a combined market we estimate at approximately $40 billion in 2026 and growing, spanning edge AI hardware and software (approximately $30 billion, according to Grand View Research, 2026) and agentic AI (approximately $10 billion, according to multiple industry analysts, 2026).
Previous wording
The Financial Accounting Standards Board, or FASB, Accounting Standard Codification, or ASC, Topic 280, Segment Reporting, requires that an enterprise report selected information about reportable segments in its financial reports issued to its stockholders. Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Chief Executive Officer, Chief Financial Officer and President are the Company’s CODM. The CODM monitors the revenue and expense components of the various products and services we offer, but operations are managed and financial performance is evaluated on a corporation-wide basis in comparison to a business plan which is developed each year. Accordingly, all operations are considered by the CODM to be one operating segment and one reportable segment as contained in the Consolidated Statements of Operations and Comprehensive Loss to the consolidated financial statements. The CODM uses consolidated net income (loss) as its required measure of segment profit/loss, as such measure is determined in accordance with the measurement principles most consistent with the consolidated financial statements.
Current wording
The Financial Accounting Standards Board, or FASB, Accounting Standard Codification, or ASC, Topic 280, Segment Reporting, requires that an enterprise report selected information about reportable segments in its financial reports issued to its stockholders. Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Chief Executive Officer, Chief Financial Officer and President are the Company’s CODM. The CODM monitors the revenue and expense components of the various products and services we offer, but operations are managed and financial performance is evaluated on a corporation-wide basis in comparison to a business plan which is developed each year. Accordingly, all operations are considered by the CODM to be one operating segment and one reportable segment as contained in the Consolidated Statements of Operations and Comprehensive Income (Loss) to the consolidated financial statements. The CODM uses consolidated net income (loss) as its required measure of segment profit/loss, as such measure is determined in accordance with the measurement principles most consistent with the consolidated financial statements.
Previous wording
Net Revenues — Net revenues for the three months ended June 30, 2026 increased $1,977,000 to $4,124,000 as compared to $2,147,000 for the three months ended June 30, 2025. The increase was due to increased commercial orders, which more than offset variability in the timing of federal awards during the period. Consistent with the concentrated, enterprise nature of our customer base, two customers represented approximately 84% of revenue for the three months ended June 30, 2026. Backlog as of June 30, 2026 was approximately $6.9 million, representing firm fixed price contracts awarded in the first and second quarters of 2026 that are expected to be shipped and primarily invoiced in the third quarter of 2026.
Current wording
Net Revenues — Net revenues for the three months ended September 30, 2026 increased $5,054,000 to $6,231,000 as compared to $1,177,000 for the three months ended September 30, 2025. The increase was due to increased commercial orders, which more than offset variability in the timing of federal awards during the period. Consistent with the concentrated, enterprise nature of our customer base, four customers represented approximately 87.5% of revenue for the three months ended September 30, 2026. Backlog as of October 1, 2026 was approximately $28.3 million, representing firm fixed price contracts awarded in 2026 that are expected to be shipped during the remainder of 2026 and early 2027.
Previous wording
Cost of Net Revenues — Cost of net revenues primarily consists of product costs and post customer support. For the three months ended June 30, 2026, cost of sales increased $412,000 to $1,026,000 as compared to $614,000 for the three months ended June 30, 2025. The increase was due to increased sales and reflects product mix with increased higher margin commercial sales during the three months ended June 30, 2026, offset by raw material cost increases.
Current 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, 2026, cost of sales increased $2,154,000 to $2,728,000 as compared to $574,000 for the three months ended September 30, 2025. The increase was due to increased sales and reflects product mix with increased higher margin commercial sales during the three months ended September 30, 2026, offset by raw material cost increases.
Previous wording
Research and Development Expenses — Research and development expenses for the three months ended June 30, 2026 increased $113,000 to $854,000 as compared to $741,000 for the three months ended June 30, 2025. The increase was due to increased 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 September 30, 2026 increased $153,000 to $906,000 as compared to $753,000 for the three months ended September 30, 2025. The increase was due to increased expenses for product development in the United States and Taiwan, including the development of the Agentic AI product.
Previous wording
Selling, General and Administrative Expenses — Selling, general and administrative expenses for the three months ended June 30, 2026 increased $921,000 to $3,735,000 as compared to $2,814,000 for the three months ended June 30, 2025. The increase is primarily due to an increase in stock-based compensation expense of $579,000 and other personnel costs.
Current wording
Selling, General and Administrative Expenses — Selling, general and administrative expenses for the three months ended September 30, 2026 increased $441,000 to $3,158,000 as compared to $2,717,000 for the three months ended September 30, 2025. The increase is primarily due to an increase in stock-based compensation expense of $199,000 and other personnel costs.
Previous wording
Other expense for the three months ended June 30, 2025 was $21,735,000 as compared to other income of $17,486,000 for the three months ended June 30, 2024. Other expense for the three months ended June 30, 2025 consisted of (i) loss from change in fair value of earnout liability of $7,302,000; (ii) loss from change in fair value of warrant liability of $14,494,000; and (iii) other income of $61,000. The loss from change in fair value of various financial instruments was primarily the result of an increase in our stock price.
Current wording
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) interest 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.
Previous wording
Net (Loss)* *— Net loss for the three months ended June 30, 2026 was $2,407,000 as compared to net (loss) of $23,757,000 for the three months ended June 30, 2025. The net loss primarily related to increases in selling, general and administrative and research and development expenses.
Current wording
Net Income* *— Net income for the three months ended September 30, 2026 was $9,615,000 as compared to net income of $6,410,000 for the three months ended September 30, 2025. The net income primarily related to other income, offset by increases in selling, general and administrative and research and development expenses.
Previous wording
The following table sets forth key components of our results of operations during the six months ended June 30, 2026 and 2025.
Current wording
The following table sets forth key components of our results of operations during the nine months ended September 30, 2026 and 2025.
Previous wording
Net Revenues — Net revenues for the six months ended June 30, 2026 increased $2,827,000 to $10,477,000 as compared to $7,650,000 for the six months ended June 30, 2025. The increase was due to increased commercial orders, which more than offset variability in the timing of federal awards during the period. Consistent with the concentrated, enterprise nature of our customer base, four customers represented approximately 89% of revenue for the three months ended June 30, 2026. Backlog as of June 30, 2026 was approximately $6.9 million, representing firm fixed price contracts awarded in the first and second quarters of 2026 that are expected to be shipped and primarily invoiced in the third quarter of 2026.
Current wording
Net Revenues — Net revenues for the nine months ended September 30, 2026 increased $7,881,000 to $16,708,000 as compared to $8,827,000 for the nine months ended September 30, 2025. The increase was due to increased commercial orders, which more than offset variability in the timing of federal awards during the period. Consistent with the concentrated, enterprise nature of our customer base, four customers represented approximately 80.7% of revenue for the nine months ended September 30, 2026. Backlog as of October 1, 2026 was approximately $28.3 million, representing firm fixed price contracts awarded in 2026 that are expected to be shipped during the remainder of 2026 and early 2027.
Previous wording
Cost of Net Revenues — Cost of net revenues primarily consists of product costs and post customer support. For the six months ended June 30, 2026, cost of sales increased $331,000 to $4,213,000 as compared to $3,882,000 for the six months ended June 30, 2025. The increase was due to increased sales and reflects product mix with increased higher margin commercial sales during the six months ended June 30, 2026, offset by raw material cost increases.
Current wording
Cost of Net Revenues — Cost of net revenues primarily consists of product costs and post customer support. For the nine months ended September 30, 2026, cost of sales increased $2,486,000 to $6,942,000 as compared to $4,456,000 for the nine months ended September 30, 2025. The increase was due to increased sales and reflects product mix with increased higher margin commercial sales during the nine months ended September 30, 2026, offset by raw material cost increases.
Previous wording
Research and Development Expenses — Research and development expenses for the six months ended June 30, 2026 increased $238,000 to $1,698,000 as compared to $1,460,000 for the six months ended June 30, 2025. The increase was due to increased expenses for product development in the United States and Taiwan.
Current wording
Research and Development Expenses — Research and development expenses for the nine months ended September 30, 2026 increased $391,000 to $2,604,000 as compared to $2,213,000 for the nine months ended September 30, 2025. The increase was due to increased expenses for product development in the United States and Taiwan, including the development of the Agentic AI product.
Previous wording
Selling, General and Administrative Expenses — Selling, general and administrative expenses for the six months ended June 30, 2026 increased $1,594,000 to $7,638,000 as compared to $6,044,000 for the six months ended June 30, 2025. The increase is primarily due to an increase in stock-based compensation expense of $816,000 and other personnel costs.
Current wording
Selling, General and Administrative Expenses — Selling, general and administrative expenses for the nine months ended September 30, 2026 increased $2,034,000 to $10,795,000 as compared to $8,761,000 for the nine months ended September 30, 2025. The increase is primarily due to an increase in stock-based compensation expense of $1,015,000 and other personnel costs.
Previous wording
Other (Expense)Income — Other expense for the six months ended June 30, 2026 was $55,000 as compared to other income for the six months ended June 30, 2025 was $3,687,000. Other expense for the six months ended June 30, 2026 consisted of (i) loss from change in fair value of earnout liability of $919,000; offset by (ii) gain from change in fair value of warrant liability of $666,000; and (iii) interest income of $198,000. The loss from change in fair value of earnout liability resulted from the increase in the volatility factor to 76.8%. The reduction in gain from change in fair value of warrant liability was primarily the result of a decrease in our stock price as compared to the change in stock price during the six months ended June 30, 2025.
Current wording
Other Income — Other income for the nine months ended September 30, 2026 was $10,120,000 as compared to other income for the nine months ended September 30, 2025 was $12,964,000. Other Income for the nine months ended September 30, 2026 consisted of (i) gain from change in fair value of earnout liability of $2,312,000; (ii) gain from change in fair value of warrant liability of $7,497,000; and (iii) interest income of $311,000. The gain from change in fair value of earnout liability resulted from the increase in the volatility factor to 77%. The gain from change in fair value of earnout liability resulted from a decrease in our share price, offset by increase in the volatility factor to 77%. The gain from change in fair value of warrant liability was primarily the result of a decrease in the trading price of the warrants.
Previous wording
Other income for the six months ended June 30, 2025 was $3,687,000 as compared to other expense of $13,076,000 for the six months ended June 30, 2024. Other income for the six months ended June 30, 2025 consisted of (i) gain from change in fair value of earnout liability of $2,522,000; (ii) gain from change in fair value of warrant liability of $1,027,000; and (iii) other income of $138,000. The gain from change in fair value of various financial instruments was primarily the result of an increase in our stock price.
Current wording
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.
Previous wording
Net (Loss) — Net loss for the six months ended June 30, 2026 was $3,127,000 as compared to net loss of $49,000 for the six months ended June 30, 2025. The net loss primarily related to increases in selling, general and administrative and research and development expenses.
Current wording
Net Income (Loss) — Net income (loss) for the nine months ended September 30, 2026 was $6,487,000 as compared to net income of $6,361,000 for the nine months ended September 30, 2025. The net income primarily related to other income, offset by increases in selling, general and administrative and research and development expenses.
Previous wording
Net loss for the six months ended June 30, 2025 was $49,000. The net loss primarily related to an operating loss of $3,700,000 offset by noncash items of $2,569,000. Noncash items included (i) gain from change in warrant liability of $1,027,000; (ii) gain from change in earnout liability of 2,522,000; and offset by (iii) stock based compensation of $800,000; and (iv) net amortization of operating lease right of use asset of $180,000.
Current wording
Net income for the nine months ended September 30, 2025 was $6,361,000. 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.
Previous wording
Liquidity is our ability to generate funds to support our 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 $48.7 million as of June 30, 2026. As of June 30, 2026, we had cash and cash equivalents of $12.4 million and no outstanding debt. Based on our current available cash and operations, we have concluded there is no substantial doubt about our ability to continue as a going concern for at least twelve months from the issuance of these financial statements.
Current wording
Liquidity is our ability to generate funds to support our current and future operations, satisfy our 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 $39.1 million as of September 30, 2026. As of September 30, 2026, we had cash and cash equivalents of $12.7 million and no outstanding debt. Based on our current available cash and operations, we have concluded there is no substantial doubt about our ability to continue as a going concern for at least twelve months from the issuance of these financial statements.
Previous wording
Net cash generated by operating activities for the six months ended June 30, 2026 was $579,000. This amount was primarily related to (i) net loss of 3,127,000; offset by (ii) noncash items of $2,077,000; and (iii) operating assets and liabilities changes of $1,629,000 (including a $314,000 increase in deferred revenues). Noncash items included (iv) loss from change in earnout liability of $919,000; (v) stock based compensation of $1,617,000; (vi) net amortization of operating lease right of use asset of $207,000; and offset by gain from change in warrant liability of $666,000.
Current wording
Net cash generated by operating activities for the nine months ended September 30, 2026 was $963,000. This amount was primarily related to (i) net income of $6,487,000; (ii) operating assets and liabilities changes of $1,800,000 (including a $2,540,000 increase in deferred revenues); and offset by (iii) noncash items of $7,324,000. Noncash items included (iv) gain from change in earnout liability of $2,312,000; (v) gain from change in warrant liability of $7,497,000; and offset by (vi) stock based compensation of $2,172,000; and (vii) net amortization of operating lease right of use asset of $313,000.
Previous wording
Net cash used in operating activities for the six months ended June 30, 2025 was $3,919,000. This amount was primarily related to (i) net loss of $49,000; (ii) net working capital reductions of $1,301,000 (including a $606,000 reduction in deferred revenues); and offset by (iii) noncash items of $2,569,000. Noncash items included (iv) gain from change in warrant liability of $1,027,000; (v) gain from change in earnout liability of 2,522,000; and offset by (vi) stock based compensation of $800,000; and (vii) net amortization of operating lease right of use asset of $180,000.
Current 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 increase 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.
Previous wording
Net cash provided by financing activities for the six months ended June 30, 2026 was $56,000 and consisted of net proceeds from stock option and warrant exercises.
Current wording
Net cash provided by financing activities for the nine months ended September 30, 2026 was $56,000 and consisted of net proceeds from stock option and warrant exercises.
Previous wording
Net cash used in financing activities for the six months ended June 30, 2025 was $1,182,000 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 $58,000.
Current 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.
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 three and six months ended June 30, 2026 have not materially changed to those discussed in our Annual Report on Form 10-K for the year ended December 31, 2025.
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 and nine months ended September 30, 2026 have not materially changed to those discussed in our Annual Report on Form 10-K for the year ended December 31, 2025.