Core Insights - Genasys Inc. is identified as an undervalued technology stock, with a recent $9 million order from the US Army for its Long Range Acoustic Device (LRAD) systems [1][3] - The order is part of the Common Remotely Operated Weapon Stations (CROWS) program, specifically the CROWS II Technical Refresh program, which aims to enhance existing weapon stations with LRAD systems [1][2] Group 1 - The $9 million order marks the first production order for the Acoustic Hailing Device (AHD) within the CROWS program, following successful design and testing of the LRAD-450XL-RT model [2][3] - Genasys expects to generate revenue from the CROWS program for several years, indicating a long-term revenue stream [2] - The integration of LRAD-450XL-RT systems will enhance communication capabilities for CROWS operators, allowing them to engage threats non-lethally, which can help de-escalate situations and improve overall combat effectiveness [3] Group 2 - Genasys specializes in designing and commercializing critical communications hardware and software solutions aimed at alerting and protecting people across various global regions, including Asia Pacific, North and South America, Europe, the Middle East, and Africa [4]

Core Viewpoint - Genasys Inc. has secured a $9.0 million order for Long Range Acoustic Device® (LRAD®) systems from the U.S. Army, marking a significant development in the company's involvement with the Common Remotely Operated Weapon Stations (CROWS) program [1] Group 1 - The order is part of the CROWS II Technical Refresh program managed by the U.S. Army, indicating ongoing modernization efforts within the military [1] - This order represents the first production order for Acoustic Hailing Device (AHD) systems for the CROWS program, highlighting the successful completion of prior evaluations [1]

Core Insights - Microchip Technology has launched a portfolio of GNSS Disciplined Oscillator (GNSSDO) Modules that integrate advanced timing technologies for aerospace and defense applications, enhancing mission-critical accuracy and reliability [1][2]. Product Features - The GNSSDO modules process reference signals from GNSS or alternative clock sources, providing precise timing and stability for military and defense applications, including radar and satellite communications [2][3]. - The modules serve as PNT subsystems or stand-alone systems, featuring local oscillators engineered by Microchip, ensuring reliability [3]. - The MD-013 ULTRA CLEAN module supports multiple GNSS constellations and features ultra-low phase noise with specifications of −119 dBc/Hz at a 1 Hz offset and a noise floor of −165 dBc/Hz [7]. - The MD-300 module is designed for harsh environments, with a compact footprint of 1.5 × 2.5 inches, suitable for applications like drones [7]. - The LM-010 module provides precise timing for Low Earth Orbit applications, emphasizing radiation tolerance and stability [7]. Development and Support - Microchip provides VDOM3 software and GUI tools to assist developers in adjusting performance parameters and integrating GNSSDO modules into their systems [8]. - The MD-01X Evaluation Kit is available for easy connection and monitoring of the MD-01 series of GNSSDOs [8]. Availability - The GNSSDO modules are available for purchase in production quantities through Microchip sales representatives or authorized distributors [9].

Company Performance - Genasys reported a quarterly loss of $0.14 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.11, but an improvement from a loss of $0.15 per share a year ago [1][2] - The company posted revenues of $9.86 million for the quarter ended June 2025, exceeding the Zacks Consensus Estimate by 1.10% and showing a year-over-year increase from $7.17 million [3] - Genasys has surpassed consensus revenue estimates two times over the last four quarters [3] Earnings Outlook - The current consensus EPS estimate for the coming quarter is -$0.03 on revenues of $21.9 million, and for the current fiscal year, it is -$0.38 on revenues of $45.55 million [8] - The estimate revisions trend for Genasys was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [7] Industry Context - Genasys operates within the Zacks Consumer Services - Miscellaneous industry, which is currently in the top 40% of over 250 Zacks industries [9] - Research indicates that the top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1 [9]

Financial Data and Key Metrics Changes - Total revenues for Q3 2025 were $9,900,000, reflecting a 42% sequential increase and a 38% year-over-year increase [17] - Hardware revenues grew approximately 50% year-over-year, driven by $4,300,000 from the Puerto Rico project [17] - Gross profit margins for June were 26.3%, lower than both the prior year and previous quarter, primarily due to accounting methods and higher tariff costs [17][18] - Operating loss for Q3 was $5,900,000, compared to a loss of $5,400,000 in the prior year [19] Business Line Data and Key Metrics Changes - Software revenues grew 7% year-over-year but were flat sequentially due to limited bookings offset by slight churn [17] - The backlog of business amounted to over $60,000,000 as of June 2025, indicating strong future revenue potential [5][15] Market Data and Key Metrics Changes - The software pipeline is at an all-time high, with significant growth in interest from customers located East of the Rockies, contributing over 25% of the software pipeline in the past year [10][11] - More than $9,000,000 of software bookings are currently awaiting funding from federal programs [9] Company Strategy and Development Direction - The company is focusing on cost discipline and has implemented targeted headcount reductions to save $2,500,000 annually [9][19] - The Puerto Rico project, valued at $75,000,000, is a key strategic initiative, with construction underway on multiple dams and expected to generate significant revenue [11][12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in the operating environment, including funding delays from federal programs, but expressed confidence in the growing backlog and pipeline [16][20] - Future revenue from Puerto Rico is projected to significantly increase, with expectations of $1,520,000,000 in total revenues for fiscal 2025 [20] Other Important Information - The company has secured $4,000,000 through an amendment to its term loan to support operations [20] - The integration of FloodMap with the company's products has increased interest in flood-related solutions, particularly in areas affected by recent weather events [42][44] Q&A Session Summary Question: What are the gross margin expectations for the Puerto Rico contract? - Management indicated that gross margins for Puerto Rico are expected to be higher than normal LRAD gross margins, with substantial improvements anticipated in Q4 [25][29] Question: How does cash flow work with the Puerto Rico project? - Cash flow from operations is expected to be healthy as dams are completed and payments are received, with 60% of each group's value paid upfront as a deposit [32] Question: What is the outlook for CROWS revenue? - Initial revenue from CROWS is expected to be larger than the initial tranche of $8 to $8.5 million, with historical numbers indicating potential revenues between $10 million and $15 million [34][35] Question: Is there a steady state level of business that is immune to federal funding constraints? - Most revenue is generated from state and local governments, indicating some vulnerability to federal funding chaos, but a current backlog of over $60,000,000 provides some resilience [36][38]

PART I. FINANCIAL INFORMATION This section presents Genasys Inc.'s unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) Presents Genasys Inc.'s unaudited condensed consolidated financial statements and detailed accounting notes for the periods [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Details Genasys Inc.'s financial position, including assets, liabilities, and equity, for the specified periods **Condensed Consolidated Balance Sheets (in thousands):** | Metric | June 30, 2025 | September 30, 2024 | Change ($) | Change (%) | | :-------------------------------- | :------------ | :----------------- | :--------- | :--------- | | Total Assets | $57,393 | $53,936 | $3,457 | 6.4% | | Total Liabilities | $54,234 | $36,373 | $17,861 | 49.1% | | Total Stockholders' Equity | $3,159 | $17,563 | $(14,404) | -82.0% | | Cash and cash equivalents | $5,339 | $4,945 | $394 | 8.0% | | Short-term marketable securities | $120 | $7,945 | $(7,825) | -98.5% | | Accounts receivable, net | $4,648 | $3,283 | $1,365 | 41.6% | | Inventories, net | $11,426 | $7,313 | $4,113 | 56.2% | | Prepaid expenses and other | $7,458 | $2,559 | $4,899 | 191.4% | | Accounts payable | $7,797 | $4,034 | $3,763 | 93.3% | | Accrued liabilities | $23,473 | $9,030 | $14,443 | 159.9% | | Notes payable, at fair value - short term | $17,050 | $— | $17,050 | N/A | | Warrant liability | $2,080 | $6,640 | $(4,560) | -68.7% | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Details Genasys Inc.'s revenues, expenses, and net loss for the three and nine-month periods **Condensed Consolidated Statements of Operations (in thousands, except per share amounts):** | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------------------- | :------------------------------- | :------------------------------- | :--------- | :--------- | | Total revenues | $9,857 | $7,167 | $2,690 | 37.5% | | Product sales | $7,001 | $4,576 | $2,425 | 53.0% | | Contract and other revenue | $2,856 | $2,591 | $265 | 10.2% | | Cost of revenues | $7,260 | $3,383 | $3,877 | 114.6% | | Gross profit | $2,597 | $3,784 | $(1,187) | -31.4% | | Selling, general and administrative | $6,422 | $6,649 | $(227) | -3.4% | | Research and development | $2,100 | $2,496 | $(396) | -15.9% | | Total operating expenses | $8,522 | $9,145 | $(623) | -6.8% | | Loss from operations | $(5,925) | $(5,361) | $(564) | 10.5% | | Net loss | $(6,487) | $(6,682) | $195 | -2.9% | | Net loss per common share - basic and diluted | $(0.14) | $(0.15) | $0.01 | -6.7% | **Condensed Consolidated Statements of Operations (in thousands, except per share amounts):** | Metric | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------------------- | :------------------------------ | :------------------------------ | :--------- | :--------- | | Total revenues | $23,729 | $17,267 | $6,462 | 37.4% | | Product sales | $14,215 | $9,951 | $4,264 | 42.8% | | Contract and other revenue | $9,514 | $7,316 | $2,198 | 30.0% | | Cost of revenues | $15,344 | $9,827 | $5,517 | 56.1% | | Gross profit | $8,385 | $7,440 | $945 | 12.7% | | Selling, general and administrative | $19,904 | $19,806 | $98 | 0.5% | | Research and development | $6,602 | $7,218 | $(616) | -8.5% | | Total operating expenses | $26,506 | $27,024 | $(518) | -1.9% | | Loss from operations | $(18,121) | $(19,584) | $1,463 | -7.5% | | Net loss | $(16,704) | $(20,344) | $3,640 | -17.9% | | Net loss per common share - basic and diluted | $(0.37) | $(0.46) | $0.09 | -19.6% | [Condensed Consolidated Statements of Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Presents Genasys Inc.'s net loss and other comprehensive income (loss) for the three and nine-month periods **Condensed Consolidated Statements of Comprehensive Loss (in thousands):** | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net loss | $(6,487) | $(6,682) | $(16,704) | $(20,344) | | Unrealized (loss) gain on marketable securities | $— | $1 | $(8) | $8 | | Unrealized foreign currency gain (loss) | $311 | $(26) | $199 | $27 | | Change in fair value of Term Loans related to credit risk | $820 | $— | $820 | $— | | Comprehensive loss | $(5,356) | $(6,707) | $(15,693) | $(20,309) | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Summarizes Genasys Inc.'s cash flows from operating, investing, and financing activities for the nine-month periods **Condensed Consolidated Statements of Cash Flows (in thousands) - Nine Months Ended June 30:** | Activity | 2025 | 2024 | | :------------------------------------------ | :----- | :----- | | Net cash used in operating activities | $(11,271) | $(20,010) | | Net cash provided by (used in) investing activities | $7,893 | $(4,389) | | Net cash provided by financing activities | $4,025 | $23,916 | | Effect of foreign exchange rate on cash | $82 | $(18) | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $729 | $(501) | | Cash, cash equivalents and restricted cash, beginning of period | $5,290 | $9,519 | | Cash, cash equivalents and restricted cash, end of period | $6,019 | $9,018 | - Noncash investing and financing activities for the nine months ended June 30, 2025, included an unrealized loss on marketable securities of **$8**, and purchases of property and equipment included in accounts payable and accrued liabilities of **$2**[16](index=16&type=chunk) - For the same period in 2024, these activities included an unrealized gain on marketable securities of **$8**, and significant non-cash items related to the Evertel acquisition, such as obligations to issue common stock (**$685**), shares issued (**$1,924**), settlement of contingent consideration in shares (**$656**), and holdback liability payable (**$245**)[16](index=16&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations of Genasys Inc.'s accounting policies and other significant financial disclosures [1. OPERATIONS](index=8&type=section&id=1.%20OPERATIONS) Genasys Inc. provides Protective Communications™ solutions, integrating its software platform with LRAD hardware - Genasys Inc. provides Protective Communications™ solutions, integrating its Genasys Protect™ software platform with Long Range Acoustic Devices ("LRAD") hardware[18](index=18&type=chunk) - The platform collects real-time information from various sensors and IoT inputs to create and disseminate alerts, warnings, notifications, and instructions across multiple channels for public safety and enterprise threats[18](index=18&type=chunk) [2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES](index=8&type=section&id=2.%20BASIS%20OF%20PRESENTATION%20AND%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Outlines Genasys Inc.'s unaudited interim financial statements, prepared under SEC regulations and U.S. GAAP - The financial statements are unaudited and prepared in accordance with Form 10-Q and Article 8 of Regulation S-X, condensing or omitting certain GAAP disclosures[19](index=19&type=chunk) - Management believes the statements fairly present the financial position, results of operations, and cash flows, with adjustments being normal and recurring[19](index=19&type=chunk) - The Company's consolidated financial statements include seven wholly-owned subsidiaries, with intercompany transactions eliminated[20](index=20&type=chunk) - The Company elected the fair value option for its Term Loans to enhance transparency, recording changes in fair value (excluding credit risk) in the statements of operations and comprehensive loss[27](index=27&type=chunk)[28](index=28&type=chunk) - Warrants are classified as liabilities and measured at fair value using a Monte Carlo simulation, with changes recorded in other income[27](index=27&type=chunk)[28](index=28&type=chunk) [3. RECENT ACCOUNTING PRONOUNCEMENTS](index=10&type=section&id=3.%20RECENT%20ACCOUNTING%20PRONOUNCEMENTS) Genasys Inc. is evaluating new FASB ASUs on segment reporting, income tax, and income statement expenses - The Company is evaluating ASU 2023-07 (Segment Reporting), effective for annual periods beginning October 1, 2024, and interim periods beginning October 1, 2025, which expands disclosures about significant segment expenses[29](index=29&type=chunk) - The Company is evaluating ASU 2023-09 (Income Taxes), effective for fiscal years beginning October 1, 2025, requiring disaggregated information on effective tax rate reconciliation and income tax paid[30](index=30&type=chunk) - The Company is evaluating ASU 2024-03 (Income Statement Expenses), effective for fiscal years beginning October 1, 2026, and interim periods beginning October 1, 2027, which mandates additional disclosure of specific expense types[31](index=31&type=chunk) [4. BUSINESS COMBINATIONS](index=10&type=section&id=4.%20BUSINESS%20COMBINATIONS) Details Genasys Inc.'s October 2023 acquisition of Evertel, resulting in goodwill and subsequent liability settlements - On October 4, 2023, Genasys Inc. acquired Evertel, a secure and compliant mission-critical collaboration platform for the public safety market[32](index=32&type=chunk) **Evertel Acquisition Consideration (in thousands):** | Component | Amount | | :---------------------- | :----- | | Cash paid | $923 | | Common stock issued | $2,609 | | Contingent consideration | $890 | | Acquisition holdback liability | $230 | | Working capital adjustment | $(15) | | **Total** | **$4,637** | - The acquisition resulted in **$2,923 thousand** in goodwill, attributable to combining Genasys's existing emergency communications solutions with Evertel's software capabilities and the skill level of the acquired workforce[38](index=38&type=chunk) - As of June 30, 2025, both the contingent consideration liability and the acquisition holdback liability were fully settled[41](index=41&type=chunk)[42](index=42&type=chunk)[72](index=72&type=chunk)[74](index=74&type=chunk) [5. REVENUE RECOGNITION](index=14&type=section&id=5.%20REVENUE%20RECOGNITION) Genasys Inc. recognizes revenue under ASC 606 from product sales, contracts, and software licenses - Genasys Inc. applies ASC 606, Revenue from Contracts with Customers, using a five-step model to recognize revenue from product sales, contracts, software license fees, and other services[44](index=44&type=chunk)[45](index=45&type=chunk)[48](index=48&type=chunk) - Product revenue is recognized when products are tendered to a carrier for delivery, transferring control to the customer[46](index=46&type=chunk) - Software license revenue, including perpetual and time-based licenses, is recognized over the service period, often bundled with maintenance and support[47](index=47&type=chunk) **Contract Liabilities (in thousands):** | Metric | Customer Deposits | Deferred Revenue | Total Contract Liabilities | | :------------------------------------------ | :---------------- | :--------------- | :------------------------- | | Balance as of September 30, 2024 | $1,606 | $4,012 | $5,618 | | New performance obligations | $22,241 | $6,672 | $28,913 | | Recognition of revenue | $(7,210) | $(7,131) | $(14,341) | | Effect of exchange rate | $— | $(9) | $(9) | | Balance as of June 30, 2025 | $16,637 | $3,544 | $20,181 | | Less: non-current portion | $— | $(294) | $(294) | | Current portion as of June 30, 2025 | $16,637 | $3,250 | $19,887 | - As of June 30, 2025, remaining performance obligations totaled approximately **$20,181 thousand**, with **$14,210 thousand** related to the Puerto Rico contract[58](index=58&type=chunk) - Approximately **99%** (**$19,887 thousand**) is expected to be recognized as revenue over the next 12 months[58](index=58&type=chunk) [6. FAIR VALUE MEASUREMENTS](index=18&type=section&id=6.%20FAIR%20VALUE%20MEASUREMENTS) Genasys Inc. categorizes financial instruments into a three-level fair value hierarchy, detailing measurements - The Company's financial instruments, including cash equivalents, marketable securities, Term Loans, and warrant liabilities, are categorized into a three-level fair value hierarchy (Level 1: quoted prices in active markets; Level 2: observable inputs other than quoted prices; Level 3: unobservable inputs)[60](index=60&type=chunk)[61](index=61&type=chunk)[64](index=64&type=chunk) **Fair Value of Cash Equivalents and Marketable Securities (in thousands):** | Category | June 30, 2025 Fair Value | September 30, 2024 Fair Value | | :---------------------- | :----------------------- | :------------------------ | | Level 1: Money market funds | $53 | $301 | | Level 2: Municipal securities | $120 | $2,129 | | Level 2: Certificates of deposit | $— | $401 | | Level 2: U.S. government agency bonds | $— | $2,594 | | Level 2: Corporate bonds | $— | $3,222 | | **Total** | **$173** | **$8,647** | - Nonfinancial assets such as goodwill and other intangible assets are measured at fair value on a non-recurring basis, primarily during acquisitions or when impairment is recognized[68](index=68&type=chunk) - There were no impairments during the nine months ended June 30, 2025 or 2024[69](index=69&type=chunk) - The contingent consideration liability from the Evertel acquisition, initially **$890 thousand**, was fully settled by June 30, 2025, through cash payments and common stock issuance[70](index=70&type=chunk)[72](index=72&type=chunk)[73](index=73&type=chunk) - The acquisition holdback liability, initially **$250 thousand**, was also fully paid by June 30, 2025[74](index=74&type=chunk) [7. INVENTORIES, NET](index=21&type=section&id=7.%20INVENTORIES%2C%20NET) Genasys Inc.'s net inventories increased by **56.2%** to **$11,426 thousand**, driven by raw materials and work in process **Inventories, Net (in thousands):** | Category | June 30, 2025 | September 30, 2024 | Change ($) | Change (%) | | :---------------------- | :------------ | :----------------- | :--------- | :--------- | | Raw materials | $7,989 | $5,442 | $2,547 | 46.8% | | Finished goods | $1,870 | $1,377 | $493 | 35.8% | | Work in process | $2,658 | $1,331 | $1,327 | 99.7% | | Inventories, gross | $12,517 | $8,150 | $4,367 | 53.6% | | Reserve for obsolescence | $(1,091) | $(837) | $(254) | 30.3% | | **Inventories, net** | **$11,426** | **$7,313** | **$4,113** | **56.2%** | [8. PROPERTY AND EQUIPMENT, NET](index=21&type=section&id=8.%20PROPERTY%20AND%20EQUIPMENT%2C%20NET) Genasys Inc.'s net property and equipment decreased by **9.5%** to **$1,169 thousand**, due to higher accumulated depreciation **Property and Equipment, Net (in thousands):** | Category | June 30, 2025 | September 30, 2024 | Change ($) | Change (%) | | :-------------------------- | :------------ | :----------------- | :--------- | :--------- | | Office furniture and equipment | $1,633 | $1,697 | $(64) | -3.8% | | Machinery and equipment | $1,480 | $1,480 | $0 | 0.0% | | Leasehold improvements | $2,294 | $2,312 | $(18) | -0.8% | | Construction in progress | $139 | $30 | $109 | 363.3% | | Property and equipment, gross | $5,546 | $5,519 | $27 | 0.5% | | Accumulated depreciation | $(4,377) | $(4,228) | $(149) | 3.5% | | **Property and equipment, net** | **$1,169** | **$1,291** | **$(122)** | **-9.5%** | - Depreciation and amortization expense for property and equipment was **$108 thousand** for the three months ended June 30, 2025, and **$335 thousand** for the nine months ended June 30, 2025, remaining consistent with the prior year periods[76](index=76&type=chunk) [9. GOODWILL AND INTANGIBLE ASSETS](index=21&type=section&id=9.%20GOODWILL%20AND%20INTANGIBLE%20ASSETS) Genasys Inc.'s goodwill increased to **$13,451 thousand** due to currency, while net intangible assets decreased by **20.9%** - Goodwill, primarily from acquisitions of Genasys Spain, Zonehaven, Evertel, and Amika Mobile, increased to **$13,451 thousand** as of June 30, 2025, from **$13,329 thousand** at September 30, 2024, mainly due to a **$122 thousand** currency translation impact[77](index=77&type=chunk)[79](index=79&type=chunk) - No additions or impairments occurred during the nine months ended June 30, 2025[79](index=79&type=chunk) **Consolidated Intangible Assets (in thousands):** | Category | June 30, 2025 | September 30, 2024 | Change ($) | Change (%) | | :---------------------- | :------------ | :----------------- | :--------- | :--------- | | Technology | $14,233 | $14,252 | $(19) | -0.1% | | Customer relationships | $2,063 | $2,081 | $(18) | -0.9% | | Trade name portfolio | $610 | $617 | $(7) | -1.1% | | Patents | $72 | $72 | $0 | 0.0% | | Gross Intangible Assets | $16,978 | $17,022 | $(44) | -0.3% | | Accumulated amortization | $(10,254) | $(8,516) | $(1,738) | 20.4% | | **Intangible assets, net** | **$6,724** | **$8,506** | **$(1,782)** | **-20.9%** | - Amortization expense for intangible assets was **$577 thousand** for the three months ended June 30, 2025, and **$1,779 thousand** for the nine months ended June 30, 2025[81](index=81&type=chunk) [10. PREPAID EXPENSES AND OTHER](index=24&type=section&id=10.%20PREPAID%20EXPENSES%20AND%20OTHER) Genasys Inc.'s prepaid expenses and other current assets increased to **$7,458 thousand**, primarily due to inventory deposits **Prepaid Expenses and Other Current Assets (in thousands):** | Category | June 30, 2025 | September 30, 2024 | Change ($) | Change (%) | | :------------------------------------------ | :------------ | :----------------- | :--------- | :--------- | | Deposits for inventory | $5,122 | $4 | $5,118 | 127950.0% | | Prepaid insurance | $414 | $288 | $126 | 43.8% | | Puerto Rico Income Tax Retention and Special Contribution Retention | $407 | $— | $407 | N/A | | Spain value-added tax and bank withholdings | $357 | $225 | $132 | 58.7% | | Prepaid professional services | $353 | $595 | $(242) | -40.7% | | Prepaid commissions | $345 | $540 | $(195) | -36.1% | | Dues and subscriptions | $305 | $516 | $(211) | -40.9% | | Trade shows and travel | $94 | $116 | $(22) | -19.0% | | Canadian goods and services and harmonized sales tax receivable | $37 | $69 | $(32) | -46.4% | | Other | $24 | $206 | $(182) | -88.3% | | **Total** | **$7,458** | **$2,559** | **$4,899** | **191.4%** | - Deposits for inventory at June 30, 2025, included **$4,728 thousand** specifically for the Puerto Rico project[84](index=84&type=chunk) [11. ACCRUED AND OTHER LIABILITIES](index=25&type=section&id=11.%20ACCRUED%20AND%20OTHER%20LIABILITIES) Genasys Inc.'s accrued liabilities increased to **$23,473 thousand**, driven by customer deposits and accrued contract costs **Accrued Liabilities (in thousands):** | Category | June 30, 2025 | September 30, 2024 | Change ($) | Change (%) | | :---------------------- | :------------ | :----------------- | :--------- | :--------- | | Customer deposits | $16,637 | $1,606 | $15,031 | 935.9% | | Deferred revenue | $3,250 | $3,643 | $(393) | -10.8% | | Payroll and related | $2,933 | $3,249 | $(316) | -9.7% | | Accrued contract costs | $403 | $— | $403 | N/A | | Short-term provision | $153 | $155 | $(2) | -1.3% | | Acquisition holdback liability | $— | $250 | $(250) | -100.0% | | Warranty reserve | $64 | $76 | $(12) | -15.8% | | Other | $33 | $51 | $(18) | -35.3% | | **Total** | **$23,473** | **$9,030** | **$14,443** | **159.9%** | - Customer deposits at June 30, 2025, included **$14,210 thousand** for the Puerto Rico project[97](index=97&type=chunk) **Warranty Reserve (in thousands) - Nine Months Ended June 30:** | Metric | 2025 | 2024 | | :------------------ | :--- | :--- | | Beginning balance | $76 | $132 | | Warranty provision | $5 | $(35) | | Warranty settlements | $(17) | $(21) | | Ending balance | $64 | $76 | [12. TERM LOANS AND WARRANT LIABILITIES](index=26&type=section&id=12.%20TERM%20LOANS%20AND%20WARRANT%20LIABILITIES) Genasys Inc. manages Term Loans and Warrant Liabilities at fair value, including a new loan and decreased warrant liabilities - On May 13, 2024, Genasys entered into a **$15,000 thousand** Close Date Term Loan and issued warrants[101](index=101&type=chunk) - On May 9, 2025, the Company secured a First Amendment Term Loan of **$4,000 thousand**, with an option for an additional **$4,000 thousand**, which had not been drawn as of June 30, 2025[102](index=102&type=chunk) - The Company elected the Fair Value Option (FVO) for both Term Loans, recording them at fair value with subsequent remeasurements[104](index=104&type=chunk) - Changes in fair value not related to credit risk are recognized in other income, while credit risk-related changes are in other comprehensive income[104](index=104&type=chunk) **Term Loan and Warrant Liabilities Fair Value (in thousands):** | Metric | June 30, 2025 | September 30, 2024 | | :------------------------------------------ | :------------ | :----------------- | | Close Date Term Loan fair value | $12,420 | $12,010 | | First Amendment Term Loan fair value | $4,630 | $— | | Warrant liabilities fair value | $2,080 | $6,640 | **Key Fair Value Assumptions:** | Metric | June 30, 2025 | September 30, 2024 | | :------------------------------------------ | :------------ | :----------------- | | Close Date Term Loan Discount Rate | 36.4% | 26.0% | | First Amendment Term Loan Discount Rate | 35.1% | N/A | | Warrant Liabilities Discount Rate | 3.7% | 3.6% | | Warrant Liabilities Volatility | 62.0% | 58.0% | - A loss of **$480 thousand** was recognized on the issuance of the First Amendment Term Loan, representing the difference between cash received and its fair value at issuance[111](index=111&type=chunk) - Warrant liabilities decreased by **$4,560 thousand** due to changes in fair value, recorded as non-cash income[115](index=115&type=chunk) [13. LEASES](index=29&type=section&id=13.%20LEASES) Genasys Inc. accounts for operating leases under ASC 842, recognizing ROU assets and lease liabilities based on future payments - Genasys Inc. recognizes operating lease Right-of-Use (ROU) assets and lease liabilities based on the present value of future minimum lease payments, using its incremental borrowing rate[117](index=117&type=chunk) **Operating Lease ROU Assets and Liabilities (in thousands):** | Metric | June 30, 2025 | September 30, 2024 | | :-------------------------------- | :------------ | :----------------- | | Operating lease ROU assets | $2,550 | $3,110 | | Operating lease liabilities | $3,540 | $4,290 | | Current portion of operating lease liabilities | $1,075 | $1,021 | | Non-current portion of operating lease liabilities | $2,465 | $3,269 | - As of June 30, 2025, the weighted-average remaining lease term for operating leases was **3.1 years**, and the weighted-average incremental borrowing rate was **4.16%**[121](index=121&type=chunk) - Total lease expense for the nine months ended June 30, 2025, was **$690 thousand**[122](index=122&type=chunk) [14. INCOME TAXES](index=31&type=section&id=14.%20INCOME%20TAXES) Genasys Inc.'s effective tax rate was **-0.5%**, resulting in an income tax expense, maintaining a full valuation allowance **Income Tax Expense (Benefit) (in thousands):** | Period | Effective Tax Rate | Income Tax Expense (Benefit) | | :------------------------------ | :----------------- | :--------------------------- | | Nine Months Ended June 30, 2025 | -0.5% | $79 | | Nine Months Ended June 30, 2024 | 2.3% | $(476) | - The income tax benefit in 2024 was primarily due to the partial release of a **$525 thousand** U.S. valuation allowance following the Evertel acquisition[124](index=124&type=chunk) - The Company maintains a full valuation allowance against its U.S. and foreign deferred tax assets[125](index=125&type=chunk) [15. COMMITMENTS AND CONTINGENCIES](index=31&type=section&id=15.%20COMMITMENTS%20AND%20CONTINGENCIES) Genasys Inc. has no pending material legal proceedings, maintaining reserves for potential litigation - Genasys Inc. is not currently a party to any pending material legal proceedings, nor is any of its property subject to such proceedings[126](index=126&type=chunk) [16. SHARE-BASED COMPENSATION](index=31&type=section&id=16.%20SHARE-BASED%20COMPENSATION) Genasys Inc.'s 2025 Equity Incentive Plan has outstanding stock options and RSUs, with **$1,264 thousand** compensation expense - The 2025 Equity Incentive Plan, approved in March 2025, authorizes the issuance of **6,000,000 shares** for stock options, restricted stock, RSUs, and performance awards[127](index=127&type=chunk) **Stock Option Activity (Shares):** | Metric | June 30, 2025 | | :-------------------------- | :------------ | | Outstanding September 30, 2024 | 3,695,740 | | Granted | 1,063,250 | | Forfeited/expired | (358,125) | | Exercised | (24,147) | | **Outstanding June 30, 2025** | **4,376,718** | | Exercisable June 30, 2025 | 1,383,228 | **Share-Based Compensation Expense (in thousands):** | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Cost of revenues | $18 | $27 | $55 | $69 | | Selling, general and administrative | $384 | $243 | $1,048 | $1,071 | | Research and development | $57 | $29 | $161 | $129 | | **Total** | **$459** | **$299** | **$1,264** | **$1,269** | - As of June 30, 2025, unrecognized compensation costs were **$1,935 thousand** for stock options (weighted average period of **1.6 years**) and **$558 thousand** for RSUs (weighted average period of **0.9 years**)[132](index=132&type=chunk)[139](index=139&type=chunk) [17. STOCKHOLDERS' EQUITY](index=35&type=section&id=17.%20STOCKHOLDERS%27%20EQUITY) Genasys Inc.'s stockholders' equity significantly decreased, driven by accumulated net losses and other comprehensive losses **Changes in Stockholders' Equity (in thousands, except share amounts) - Nine Months Ended June 30, 2025:** | Metric | Shares | Par Value Amount | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Total Stockholders' Equity | | :------------------------------------------ | :------- | :--------------- | :------------------------- | :------------------ | :-------------------------------------------- | :------------------------- | | Balance as of September 30, 2024 | 44,631,030 | $446 | $125,690 | $(107,792) | $(335) | $17,563 | | Share-based compensation expense | — | $— | $1,264 | $— | $— | $1,264 | | Net loss | — | $— | $— | $(16,704) | $— | $(16,704) | | Other comprehensive income (loss) | — | $— | $— | $— | $1,011 | $1,011 | | **Balance as of June 30, 2025** | **45,154,504** | **$451** | **$126,979** | **$(124,496)** | **$676** | **$3,159** | - Common stock activity included the issuance of **986,486 shares** for the Evertel acquisition, adding **$1,924 thousand** to additional paid-in capital, and **236,343 shares** for contingent consideration settlement, adding **$656 thousand**[145](index=145&type=chunk)[146](index=146&type=chunk) - An obligation to issue **270,271 shares** related to Evertel also added **$527 thousand** to additional paid-in capital[146](index=146&type=chunk) - The Company's share buyback program, authorized for up to **$5,000 thousand**, expired on December 31, 2024, with no shares repurchased during the nine months ended June 30, 2025 or 2024[148](index=148&type=chunk)[150](index=150&type=chunk) - No dividends were declared during these periods[151](index=151&type=chunk) [18. NET LOSS PER SHARE](index=37&type=section&id=18.%20NET%20LOSS%20PER%20SHARE) Genasys Inc. reported basic and diluted net loss per share of **$(0.14)** for the quarter and **$(0.37)** for nine months **Net Loss Per Share (in thousands, except per share amounts):** | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net loss | $(6,487) | $(6,682) | $(16,704) | $(20,344) | | Basic and diluted loss per share | $(0.14) | $(0.15) | $(0.37) | $(0.46) | | Weighted average shares outstanding – basic and diluted | 45,154,504 | 44,598,393 | 45,022,635 | 44,216,602 | | Potentially dilutive securities excluded | 7,752,242 | 6,977,251 | 7,752,242 | 6,977,251 | - Potentially dilutive securities, including options (**4,376,718**), RSUs (**307,342**), and warrants (**3,068,182**), were excluded from the diluted EPS computation for both periods as their inclusion would have been antidilutive due to the net loss[152](index=152&type=chunk) [19. SEGMENT INFORMATION](index=37&type=section&id=19.%20SEGMENT%20INFORMATION) Hardware segment revenue increased by **50%** for the quarter, while Software revenue grew by **7%**, both reporting operating losses - Genasys Inc. operates in two business segments: Hardware and Software, focusing on directed and multidirectional sound technologies, voice broadcast products, and location-based mass messaging software for emergency warning and evacuation management[153](index=153&type=chunk) **Segment Revenue and Operating Loss (in thousands):** | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :---------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Hardware Revenue | $7,656 | $5,108 | $16,966 | $12,053 | | Software Revenue | $2,201 | $2,059 | $6,763 | $5,214 | | Total Revenue | $9,857 | $7,167 | $23,729 | $17,267 | | Hardware Operating Loss | $(2,589) | $(1,920) | $(8,952) | $(7,867) | | Software Operating Loss | $(3,336) | $(3,441) | $(9,169) | $(11,717) | | Total Operating Loss | $(5,925) | $(5,361) | $(18,121) | $(19,584) | **Segment Assets (in thousands):** | Metric | June 30, 2025 | September 30, 2024 | | :---------------------- | :------------ | :----------------- | | Hardware Long-lived assets | $1,087 | $1,203 | | Software Long-lived assets | $6,806 | $8,594 | | Total Long-lived assets | $7,893 | $9,797 | | Hardware Total assets | $35,291 | $30,216 | | Software Total assets | $22,102 | $23,720 | | Total assets | $57,393 | $53,936 | [20. MAJOR CUSTOMERS, SUPPLIERS AND RELATED INFORMATION](index=38&type=section&id=20.%20MAJOR%20CUSTOMERS%2C%20SUPPLIERS%20AND%20RELATED%20INFORMATION) Two major customers accounted for **44%** and **17%** of quarterly revenue, with U.S. revenue significantly increasing - For the three months ended June 30, 2025, two customers accounted for **44%** and **17%** of total revenues[157](index=157&type=chunk) - For the nine months ended June 30, 2025, two customers accounted for **23%** and **10%** of total revenues[157](index=157&type=chunk) **Revenues by Geographic Region (in thousands):** | Region | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :---------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Americas | $8,786 | $6,220 | $19,568 | $12,837 | | Asia Pacific | $455 | $208 | $1,892 | $1,029 | | Europe, Middle East and Africa | $616 | $739 | $2,269 | $3,401 | | **Total Revenues** | **$9,857** | **$7,167** | **$23,729** | **$17,267** | **Long-Lived Assets by Geographic Region (in thousands):** | Region | June 30, 2025 | September 30, 2024 | | :---------------------------- | :------------ | :----------------- | | United States | $7,799 | $9,644 | | Europe, Middle East and Africa | $94 | $153 | | **Total long lived assets** | **$7,893** | **$9,797** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Genasys Inc.'s financial performance, highlighting revenue growth, gross profit decline, business outlook, and liquidity [Forward Looking Statements](index=40&type=section&id=Forward%20Looking%20Statements) The report contains forward-looking statements about future events, performance, and financial condition, subject to risks - The report contains forward-looking statements regarding future events and performance, including growth strategy, product development, financial performance, liquidity, and market conditions[163](index=163&type=chunk)[164](index=164&type=chunk) - These statements involve risks and uncertainties that could cause actual results to differ materially[165](index=165&type=chunk) [Overview](index=40&type=section&id=Overview) Genasys Inc. provides Protective Communications™ solutions, integrating its software platform with LRAD hardware products - Genasys Inc. is a global provider of Protective Communications™ solutions, including the Genasys Protect™ software platform and LRAD® hardware products[167](index=167&type=chunk) - The unified platform collects real-time emergency information from various sensors and IoT inputs to disseminate alerts, warnings, and instructions through multiple channels[167](index=167&type=chunk) - Genasys Protect offers a comprehensive suite of tools for public safety, critical event management, de-escalation, and critical infrastructure protection, serving federal, state, local, and enterprise clients across diverse sectors[168](index=168&type=chunk) - LRAD products are leading Acoustic Hailing Devices (AHDs), projecting clear voice messages up to **5,500 meters**, used globally in defense, law enforcement, and public safety applications[169](index=169&type=chunk)[179](index=179&type=chunk) - Genasys ACOUSTICS integrates mass notification speaker systems with the Genasys Protect software, providing highly audible voice messaging even during power and network outages[181](index=181&type=chunk) [Recent Developments](index=46&type=section&id=Recent%20Developments) Genasys Inc. secured a Puerto Rico contract, new software deals, LRAD orders, and raised capital - Genasys anticipates most revenue from the **$75,000 thousand** Early Warning System contract for Puerto Rico to be realized in fiscal years 2025 and 2026[186](index=186&type=chunk) - The Company secured a four-year contract from Los Angeles County for ALERT mass notification software services and expanded its Board of Directors with R. Rimmy Malhotra[189](index=189&type=chunk) - To address cash needs, Genasys completed an **$11,500 thousand** equity offering in October 2023, and entered into a **$15,000 thousand** senior secured Term Loan in May 2024, with a **$4,000 thousand** increase in May 2025[187](index=187&type=chunk)[189](index=189&type=chunk) - The Company received **$4,500 thousand** in new and follow-on LRAD orders from the U.S. Military and **$1,000 thousand** in domestic and international energy sector LRAD orders[189](index=189&type=chunk) [Business Outlook](index=46&type=section&id=Business%20Outlook) Genasys Inc. anticipates growth in LRADs and mass notification speakers, expanding sales, investing in R&D, and managing costs - Genasys expects increased demand for its LRADs and advanced mass notification speakers, aiming to expand its market leadership in defense, public safety, emergency warning, and critical event management sectors globally[188](index=188&type=chunk)[191](index=191&type=chunk) - The Company plans to grow revenues through increased direct sales to governments and agencies, pursuing further U.S. military opportunities, and expanding into various security and preservation markets[195](index=195&type=chunk) - R&D strategy involves incorporating innovations into the Genasys Protect platform, pursuing certifications for government opportunities, and enhancing ALERT, EVAC, and CONNECT software solutions[196](index=196&type=chunk) - Value engineering efforts are ongoing to reduce product costs[197](index=197&type=chunk) - Genasys is affected by price increases from suppliers, logistics, and inflationary factors like increased salary and labor costs[199](index=199&type=chunk) - The Company regularly adjusts sales prices to offset these impacts and monitors tariffs imposed by the U.S. government, which could affect margins and competitive position[200](index=200&type=chunk) [Critical Accounting Policies](index=50&type=section&id=Critical%20Accounting%20Policies) Genasys Inc. refers to its Annual Report for critical accounting policies, noting the impact of estimates on financial results - Critical accounting policies are detailed in the Company's Annual Report on Form 10-K for the year ended September 30, 2024[204](index=204&type=chunk) - The methods, estimates, and judgments used in applying accounting policies significantly impact reported financial results, and actual results may differ from these estimates[205](index=205&type=chunk) [Comparison of Results of Operations for the Three Months Ended June 30, 2025 and 2024](index=50&type=section&id=Comparison%20of%20Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20June%2030%2C%202025%20and%202024) Genasys Inc. reported **37.5%** revenue growth to **$9,857 thousand** for the quarter, but gross profit decreased due to project mix **Key Financial Highlights (in thousands) - Three Months Ended June 30:** | Metric | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------------- | :----- | :----- | :--------- | :--------- | | Total revenues | $9,857 | $7,167 | $2,690 | 37.5% | | Product sales | $7,001 | $4,576 | $2,425 | 53.0% | | Contract and other | $2,856 | $2,591 | $265 | 10.2% | | Cost of revenues | $7,260 | $3,383 | $3,877 | 114.6% | | Gross profit | $2,597 | $3,784 | $(1,187) | -31.4% | | Total operating expenses | $8,522 | $9,145 | $(623) | -6.8% | | Loss from operations | $(5,925) | $(5,361) | $(564) | 10.5% | | Net loss | $(6,487) | $(6,682) | $195 | -2.9% | | Hardware revenue | $7,656 | $5,108 | $2,548 | 49.9% | | Software revenue | $2,201 | $2,059 | $142 | 6.9% | | US Revenue | $8,632 | $6,220 | $2,412 | 38.8% | | International Revenue | $1,225 | $947 | $278 | 29.4% | - The increase in hardware revenue was largely due to **$4,333 thousand** from initial deliveries to the Puerto Rico customer, recognized using the percentage-of-completion methodology[208](index=208&type=chunk) - Software revenue increased primarily due to an **8%** rise in recurring revenue[208](index=208&type=chunk) - Gross profit decreased due to the impact of percentage-of-completion revenue recognition for the early-stage Puerto Rico project, a less favorable hardware mix, and increased tariff costs on imported components[210](index=210&type=chunk) - Selling, general and administrative expenses decreased by **3%** due to lower professional services[212](index=212&type=chunk) - Research and development expenses decreased by **16%** due to the capitalization of Puerto Rico-related software development resources[214](index=214&type=chunk) [Comparison of Results of Operations for the Nine Months Ended June 30, 2025 and 2024](index=52&type=section&id=Comparison%20of%20Results%20of%20Operations%20for%20the%20Nine%20Months%20Ended%20June%2030%2C%202025%20and%202024) Genasys Inc. reported **37.4%** revenue growth to **$23,729 thousand** for nine months, with gross profit up **12.7%** and net loss improving **Key Financial Highlights (in thousands) - Nine Months Ended June 30:** | Metric | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------------- | :----- | :----- | :--------- | :--------- | | Total revenues | $23,729 | $17,267 | $6,462 | 37.4% | | Product sales | $14,215 | $9,951 | $4,264 | 42.8% | | Contract and other | $9,514 | $7,316 | $2,198 | 30.0% | | Cost of revenues | $15,344 | $9,827 | $5,517 | 56.1% | | Gross profit | $8,385 | $7,440 | $945 | 12.7% | | Total operating expenses | $26,506 | $27,024 | $(518) | -1.9% | | Loss from operations | $(18,121) | $(19,584) | $1,463 | -7.5% | | Net loss | $(16,704) | $(20,344) | $3,640 | -17.9% | | Hardware revenue | $16,966 | $12,053 | $4,913 | 40.8% | | Software revenue | $6,763 | $5,214 | $1,549 | 29.7% | | US Revenue | $19,095 | $12,837 | $6,258 | 48.7% | | International Revenue | $4,634 | $4,430 | $204 | 4.6% | - Higher revenue was largely due to increased backlog at the start of fiscal year 2025, including **$5,563 thousand** from the Puerto Rico project[219](index=219&type=chunk) - Software revenue increased primarily due to a **31%** rise in recurring revenue[219](index=219&type=chunk) - Gross profit increased due to higher-margin software revenue, but hardware gross margin was lower due to the percentage-of-completion revenue recognition for early-stage Puerto Rico hardware deliveries[221](index=221&type=chunk) - Selling, general and administrative expenses were essentially unchanged, with increased salaries offset by reduced tradeshow and travel costs[223](index=223&type=chunk) - Research and development expenses decreased by **9%** due to **$351 thousand** capitalization of Puerto Rico-related software development and lower compensation and outside services costs[225](index=225&type=chunk) - Other income, net, was **$1,496 thousand**, a significant improvement from a **$1,236 thousand** expense in the prior year, driven by a **$4,560 thousand** non-cash income from changes in fair value of warrants, partially offset by Term Loan-related expenses[227](index=227&type=chunk) [Other Metrics](index=54&type=section&id=Other%20Metrics) Presents Adjusted EBITDA, a non-GAAP measure, to evaluate Genasys Inc.'s core operating performance by excluding non-cash and non-operating items - Adjusted EBITDA is a non-GAAP measure used by management to evaluate core operating performance, excluding other income, income tax expense (benefit), depreciation and amortization, and stock-based compensation[229](index=229&type=chunk) **Adjusted EBITDA Reconciliation (in thousands):** | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net loss | $(6,487) | $(6,682) | $(16,704) | $(20,344) | | Other expense (income), net | $554 | $1,363 | $(1,496) | $1,236 | | Income tax expense (benefit) | $8 | $(42) | $79 | $(476) | | Depreciation and amortization | $685 | $733 | $2,114 | $2,193 | | Stock-based compensation | $459 | $299 | $1,264 | $1,269 | | **Adjusted EBITDA** | **$(4,781)** | **$(4,329)** | **$(14,743)** | **$(16,122)** | [Segment Results](index=56&type=section&id=Segment%20Results) Hardware segment revenue increased by **50%** for the quarter, while Software revenue grew by **7%**, both reporting operating losses **Segment Adjusted EBITDA (in thousands) - Three Months Ended June 30:** | Metric | Hardware 2025 | Hardware 2024 | Software 2025 | Software 2024 | | :-------------------------- | :------------ | :------------ | :------------ | :------------ | | Revenue | $7,656 | $5,108 | $2,201 | $2,059 | | Operating loss | $(2,589) | $(1,920) | $(3,336) | $(3,441) | | Adjusted EBITDA | $(2,148) | $(1,672) | $(2,633) | $(2,657) | - Hardware segment revenue increased by **50%** for the three months ended June 30, 2025, largely due to **$4,333 thousand** from the Puerto Rico project[233](index=233&type=chunk) - Its operating loss increased due to lower gross profit from the project's percentage-of-completion revenue recognition[234](index=234&type=chunk) - Software segment revenue increased by **7%** for the three months ended June 30, 2025, primarily from an **8%** increase in recurring revenue[234](index=234&type=chunk) - Its operating loss decreased due to increased revenue and lower compensation and sales and marketing expenses[235](index=235&type=chunk) **Segment Adjusted EBITDA (in thousands) - Nine Months Ended June 30:** | Metric | Hardware 2025 | Hardware 2024 | Software 2025 | Software 2024 | | :-------------------------- | :------------ | :------------ | :------------ | :------------ | | Revenue | $16,966 | $12,053 | $6,763 | $5,214 | | Operating loss | $(8,952) | $(7,806) | $(9,169) | $(11,778) | | Adjusted EBITDA | $(7,703) | $(6,653) | $(7,040) | $(9,469) | - For the nine months ended June 30, 2025, Hardware segment revenue increased by **41%**, including **$5,563 thousand** from the Puerto Rico project[237](index=237&type=chunk) - Software segment revenue increased by **30%**, driven by a **31%** increase in recurring revenue, and its operating loss decreased by **$2,609 thousand** due to increased revenue, gross margin, and lower operating expenses[239](index=239&type=chunk) [Liquidity and Capital Resources](index=58&type=section&id=Liquidity%20and%20Capital%20Resources) Genasys Inc. relies on internal and external capital sources, with cash used in operating activities for the nine-month period **Cash and Marketable Securities (in thousands):** | Metric | June 30, 2025 | September 30, 2024 | | :-------------------------- | :------------ | :----------------- | | Cash and cash equivalents | $5,339 | $4,945 | | Short-term marketable securities | $120 | $7,945 | - Internal liquidity sources include cash, marketable securities, other working capital, and expected future cash flows[241](index=241&type=chunk) - External sources include Term Loans and potential future equity offerings[241](index=241&type=chunk) - Management believes the Company has sufficient capital to fund operations for the next twelve months, but acknowledges the need for potential additional funds through equity, debt, or credit facilities due to the unpredictable business environment[242](index=242&type=chunk) **Cash Flows Summary (in thousands) - Nine Months Ended June 30:** | Activity | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Operating activities | $(11,271) | $(20,010) | | Investing activities | $7,893 | $(4,389) | | Financing activities | $4,025 | $23,916 | - Operating activities used **$11,271 thousand**, primarily due to net loss, offset by non-cash expenses and a **$3,982 thousand** net cash increase from changes in operating assets and liabilities, including a **$13,604 thousand** increase in accrued liabilities (Puerto Rico project deposit) and a **$3,737 thousand** increase in accounts payable[245](index=245&type=chunk) - Investing activities provided **$7,893 thousand**, mainly from **$8,106 thousand** net proceeds from marketable securities maturities[246](index=246&type=chunk) - Financing activities provided **$4,025 thousand**, primarily from **$4,000 thousand** First Amendment Term Loan borrowings[247](index=247&type=chunk) [Recent Accounting Pronouncements](index=59&type=section&id=Recent%20Accounting%20Pronouncements) Refers to Note 3 for details on new accounting pronouncements and their potential impact on financial statements - New accounting pronouncements for future implementation are discussed in Note 3 to the condensed consolidated financial statements[248](index=248&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=59&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Genasys Inc. has minimal direct foreign exchange risk, but U.S. dollar fluctuations could impact pricing and costs - Genasys Inc. considers its direct exposure to foreign exchange rate fluctuations to be minimal, as transactions of its Spanish and Canadian subsidiaries are primarily denominated in Euros and Canadian dollars, respectively, providing a natural hedge[249](index=249&type=chunk) - Most other sales and third-party manufacturer arrangements are priced and paid in U.S. dollars[249](index=249&type=chunk) - Increases in the U.S. dollar's value could make products more expensive and negatively impact competitiveness, while decreases could lead to suppliers raising prices[249](index=249&type=chunk) [Item 4. Controls and Procedures](index=59&type=section&id=Item%204.%20Controls%20and%20Procedures) Genasys Inc.'s disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control - As of June 30, 2025, Genasys Inc.'s principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures were effective at the reasonable assurance level[251](index=251&type=chunk)[252](index=252&type=chunk) - There have been no material changes in internal control over financial reporting during the fiscal quarter ended June 30, 2025[253](index=253&type=chunk) - The Company's process for evaluating controls is continuous, focusing on improvement and remediation of deficiencies[253](index=253&type=chunk) PART II. OTHER INFORMATION This section covers Genasys Inc.'s legal proceedings, risk factors, equity sales, defaults, and other information [Item 1. Legal Proceedings](index=61&type=section&id=Item%201.%20Legal%20Proceedings) Genasys Inc. has no pending material legal proceedings, though it may engage in ordinary course litigation - Genasys Inc. is not currently involved in any pending material legal proceedings[255](index=255&type=chunk) [Item 1A. Risk Factors](index=61&type=section&id=Item%201A.%20Risk%20Factors) Genasys Inc. faces risks from international trade policies, tariffs, and liquidity challenges - New tariffs and restrictive trade policies may adversely impact Genasys Inc.'s business by raising raw material and component costs, potentially reducing margins, increasing prices, and harming competitive position[257](index=257&type=chunk) - Trade disputes and macroeconomic uncertainty can exacerbate inflationary pressures, foreign exchange volatility, and economic downturns, negatively affecting customer demand, expansion opportunities, and the Company's stock price[258](index=258&type=chunk) - The Company's short-term liquidity may be materially adversely affected by administrative complexities and delays in fund disbursement for the Puerto Rico Early Warning System project[260](index=260&type=chunk) - Puerto Rico's fiscal challenges, political instability, and susceptibility to natural disasters pose risks of regulatory uncertainties, contract delays, payment delays, and disruptions to the Company's ability to deliver contracted services[261](index=261&type=chunk)[262](index=262&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=63&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Genasys Inc. reported no unregistered sales of equity securities or use of proceeds during the period - There were no unregistered sales of equity securities or use of proceeds during the reporting period[263](index=263&type=chunk) [Item 3. Defaults Upon Senior Securities](index=63&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities during the reporting period[264](index=264&type=chunk) [Item 4. Mine Safety Disclosures](index=63&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine Safety Disclosures are not applicable to Genasys Inc. - Mine Safety Disclosures are not applicable to Genasys Inc.[265](index=265&type=chunk) [Item 5. Other Information](index=63&type=section&id=Item%205.%20Other%20Information) No directors or executive officers adopted, modified, or terminated any Rule 10b5-1 trading arrangements - No directors or executive officers adopted, modified, or terminated any Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025[266](index=266&type=chunk) [Item 6. Exhibits](index=64&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with Form 10-Q, including Term Loan amendment, officer certifications, and Inline XBRL documents - Exhibits include the First Amendment to Term Loan and Security Agreement (10.4), certifications from the Principal Executive Officer (31.1, 32.1) and Principal Financial Officer (31.2, 32.1), and Inline XBRL documents (101.INS, 101.SCH, 104)[269](index=269&type=chunk) SIGNATURES Details the signing of the report by Genasys Inc.'s Chief Financial Officer on August 14, 2025 - The report was signed on August 14, 2025, by Cassandra L. Hernandez-Monteon, Chief Financial Officer (Principal Financial Officer) of Genasys Inc.[271](index=271&type=chunk)[272](index=272&type=chunk)[273](index=273&type=chunk)

[Executive Summary](index=1&type=section&id=Item%201.%20Executive%20Summary) Genasys Inc. reported dramatic business acceleration in H2 FY2025, driven by the Puerto Rico project and a US Army order, alongside increased 3Q 2025 revenue but higher operating and net losses [CEO Commentary](index=1&type=section&id=Item%201.1%20CEO%20Commentary) Genasys Inc.'s CEO reported dramatic business acceleration in H2 FY2025, driven by the Puerto Rico project and a US Army order, despite software constraints from federal funding uncertainty - Business in the second half of fiscal 2025 has accelerated dramatically[2](index=2&type=chunk) - Installation on all nine dams in the first two groups of the Puerto Rico project is underway, with confirmation of the remaining deposit for the third group[2](index=2&type=chunk) - The US Army issued an RFQ for the initial production order in support of the CROWS program, with procurement nearly complete[2](index=2&type=chunk) - Software business materially constrained by temporary freezing and uncertainty of federal grant money, with over **$9 million** in current software bookings held up[2](index=2&type=chunk) - Sales efforts and nationwide awareness have driven the pipeline of software opportunities to unprecedented levels[2](index=2&type=chunk) [Fiscal 3Q 2025 Financial Summary](index=1&type=section&id=Item%201.2%20Fiscal%203Q%202025%20Financial%20Summary) Genasys Inc. reported increased revenue but higher operating and net losses in fiscal 3Q 2025 compared to 3Q 2024, with Adjusted EBITDA also showing a larger loss Fiscal 3Q 2025 Financial Summary | Metric | 3Q 2025 (Millions) | 3Q 2024 (Millions) | Change (YoY) | | :--------------------- | :------------------ | :------------------ | :----------- | | Revenue | $9.9 | $7.2 | +37.5% | | GAAP Operating Loss | ($5.9) | ($5.4) | -9.3% | | GAAP Net Loss | ($6.5) | ($6.7) | +3.0% | | GAAP Net Loss Per Share | ($0.14) | ($0.15) | +6.7% | | Adjusted EBITDA | ($4.8) | ($4.3) | -11.6% | [Business Highlights and Outlook](index=2&type=section&id=Item%202.%20Business%20Highlights%20and%20Outlook) Genasys achieved key milestones in 3Q 2025, including Puerto Rico EWS project acceptance and cost reductions, with expectations for accelerated revenue and profit growth in FY2026 [Key Business Highlights](index=2&type=section&id=Item%202.1%20Key%20Business%20Highlights) Genasys achieved significant milestones in 3Q 2025, including the acceptance of the first dam installation in Puerto Rico, the implementation of cost reduction measures, a change in interim CFO, and substantial revenue generation from the Puerto Rico EWS project - Received acceptance from Puerto Rico Electric Power Authority (PREPA) for the installation of instrumentation on the first dam and activation of the software system for the Early Warning System (EWS)[8](index=8&type=chunk) - Executed cost reduction actions expected to reduce operating expenses by **$2.5 million** annually, beginning 1Q 2026[8](index=8&type=chunk) - Named Cassandra Monteon interim Chief Financial Officer[8](index=8&type=chunk) - Generated **$4.3 million** in revenues from the Puerto Rico EWS project in fiscal 3Q 2025[8](index=8&type=chunk) [Business Outlook](index=2&type=section&id=Item%202.2%20Business%20Outlook) Genasys anticipates accelerated revenue and profit growth from the Puerto Rico EWS project in fiscal 2026, expects a significant US Army CROWS AHD order, and projects improved software deal conversions as federal funding normalizes, supported by annualized operating expense savings and a confident capital position - Revenue and profit recognition on the Puerto Rico EWS project is expected to accelerate significantly in fiscal 2026[5](index=5&type=chunk) - An initial US Army CROWS AHD order for **$8.0 million to $8.5 million** of LRAD equipment is expected, which will increase FY2025 hardware bookings (excluding Puerto Rico) by **10%** over FY2024[6](index=6&type=chunk) - Software pipeline continues to expand, with deal conversions expected to improve and accelerate as access to federal funds normalizes[7](index=7&type=chunk) - Actions taken to reduce operating expenses associated with the software business are expected to deliver approximately **$2.5 million** in annualized savings starting 1Q 2026[7](index=7&type=chunk) - Operating expenses in 3Q 2025 were down **3.9%** sequentially and **6.8%** year over year[8](index=8&type=chunk) - Cash, cash equivalents, and marketable securities totaled **$5.5 million** as of June 30, 2025, with confidence in adequate capital due to upcoming payments[10](index=10&type=chunk) [Puerto Rico EWS Project Outlook](index=2&type=section&id=Item%202.2.1%20Puerto%20Rico%20EWS%20Project%20Outlook) The Puerto Rico EWS project is expected to accelerate revenue and profit recognition in fiscal 2026, with improved margins as installations complete - Recorded **$4.3 million** in project-related revenue in 3Q 2025 with very little profit margin due to percentage-of-completion accounting[5](index=5&type=chunk) - Project margins are expected to improve significantly as installations are completed and prior instrumentation revenues are recognized at **100%** gross margin[5](index=5&type=chunk) - Genasys continues to expect to realize between **$15 million and $20 million** in Puerto Rico related revenue in fiscal 2025[5](index=5&type=chunk) - Revenue and profit recognition on the project is expected to accelerate significantly in fiscal 2026[5](index=5&type=chunk) [Hardware Business Outlook](index=2&type=section&id=Item%202.2.2%20Hardware%20Business%20Outlook) Hardware bookings are improving, with a significant US Army CROWS AHD order anticipated to boost FY2025 bookings and backlog - Hardware bookings continue to improve year over year, excluding the Puerto Rico project[6](index=6&type=chunk) - The US Army is finalizing procurement for an initial CROWS AHD program order, expected to be **$8.0 million to $8.5 million** of LRAD equipment[6](index=6&type=chunk) - This initial order will take fiscal 2025 hardware bookings (excluding Puerto Rico) **10%** higher than bookings for all fiscal 2024[6](index=6&type=chunk) - With the CROWS AHD order, Genasys' hardware backlog (excluding Puerto Rico) will be over **$16 million**[6](index=6&type=chunk) [Software Business Outlook](index=2&type=section&id=Item%202.2.3%20Software%20Business%20Outlook) Software bookings remain soft due to federal funding uncertainty, but the pipeline is expanding, and deal conversions are expected to improve - Software bookings continued to be soft in fiscal 3Q 2025 due to increased scrutiny and ongoing uncertainty of federal funding sources[7](index=7&type=chunk) - The Software pipeline continues to expand across all product offerings[7](index=7&type=chunk) - Deal conversions are expected to improve and accelerate as access to federal funds normalizes[7](index=7&type=chunk) - Actions have been taken to reduce operating expenses associated with the software business, expected to deliver approximately **$2.5 million** in annualized savings beginning 1Q 2026[7](index=7&type=chunk) [Operating Expenses and Capital Management](index=2&type=section&id=Item%202.2.4%20Operating%20Expenses%20and%20Capital%20Management) Operating expenses decreased due to cost discipline, with annualized savings expected in 1Q 2026, and the company maintains adequate capital - Operating expenses in 3Q 2025 were down **3.9%** sequentially and **6.8%** year over year due to operational and cost discipline[8](index=8&type=chunk) - Fiscal 4Q 2025 operating expenses, inclusive of severance costs, are expected to be similar to 3Q 2025 levels[9](index=9&type=chunk) - Annualized savings of approximately **$2.5 million** from cost reduction actions are expected to begin to be realized in 1Q 2026[7](index=7&type=chunk)[9](index=9&type=chunk) - Cash, cash equivalents, and marketable securities totaled **$5.5 million** as of June 30, 2025[10](index=10&type=chunk)[14](index=14&type=chunk) - The company is confident in having adequate capital due to upcoming payments for invoices from Puerto Rico and cash flows from the US Army order[10](index=10&type=chunk) [Fiscal 3Q 2025 Financial Review](index=3&type=section&id=Item%203.%20Fiscal%203Q%202025%20Financial%20Review) Fiscal 3Q 2025 saw revenue growth to $9.9 million, but gross profit margin declined significantly, leading to a GAAP net loss of ($6.5) million and decreased cash reserves [Revenue Performance](index=3&type=section&id=Item%203.1%20Revenue%20Performance) Fiscal 3Q 2025 revenue increased 38% YoY to $9.9 million, driven by a 50% increase in hardware revenue. Software revenue grew 7%, with quarterly recurring revenue up 8% YoY and Annual Recurring Revenue (ARR) reaching $8.7 million Revenue Performance (3 Months Ended June 30) | Metric | 2025 (Thousands) | 2024 (Thousands) | YoY Change | | :---------------- | :--------------- | :--------------- | :--------- | | Total Revenues | $9,857 | $7,167 | +37.5% | | Software Revenue | N/A | N/A | +7% | | Hardware Revenue | N/A | N/A | +50% | | Recurring Revenue | N/A | N/A | +8% | | ARR (End of Q) | $8,700 | N/A | N/A | [Gross Profit and Operating Expenses](index=3&type=section&id=Item%203.2%20Gross%20Profit%20and%20Operating%20Expenses) Gross profit margin significantly decreased to 26.3% in 3Q 2025 from 52.8% in 3Q 2024, primarily due to percentage-of-completion accounting for the Puerto Rico project and hardware revenue underutilization. Total operating expenses decreased 6.8% YoY to $8.5 million, with R&D expenses down 16% while SG&A remained flat Gross Profit and Operating Expenses (3 Months Ended June 30) | Metric | 2025 (Thousands) | 2024 (Thousands) | YoY Change | | :-------------------------- | :--------------- | :--------------- | :--------- | | Gross Profit | $2,597 | $3,784 | -31.4% | | Gross Profit Margin | 26.3% | 52.8% | -26.5 pp | | Total Operating Expenses | $8,522 | $9,145 | -6.8% | | Selling, General & Admin. | $6,422 | $6,649 | -3.4% | | Research & Development | $2,100 | $2,496 | -15.9% | - Depressed gross margin primarily attributable to percentage-of-completion accounting associated with the Puerto Rico project and underutilization of hardware revenue[12](index=12&type=chunk) [Net Loss and Adjusted EBITDA](index=3&type=section&id=Item%203.3%20Net%20Loss%20and%20Adjusted%20EBITDA) Genasys reported a GAAP net loss of ($6.5) million, or ($0.14) per share, in 3Q 2025, an improvement from ($6.7) million, or ($0.15) per share, in 3Q 2024. Adjusted EBITDA was ($4.8) million, compared to ($4.3) million in the prior year period Net Loss and Adjusted EBITDA (3 Months Ended June 30) | Metric | 2025 (Thousands) | 2024 (Thousands) | YoY Change | | :-------------------------- | :--------------- | :--------------- | :--------- | | GAAP Net Loss | ($6,487) | ($6,682) | +2.9% | | GAAP Net Loss Per Share | ($0.14) | ($0.15) | +6.7% | | Adjusted EBITDA | ($4,781) | ($4,329) | -10.4% | [Cash and Marketable Securities](index=3&type=section&id=Item%203.4%20Cash%20and%20Marketable%20Securities) Cash, cash equivalents, and marketable securities totaled $5.5 million as of June 30, 2025, a decrease from $13.1 million as of September 30, 2024 Cash and Marketable Securities | Metric | June 30, 2025 (Thousands) | September 30, 2024 (Thousands) | Change | | :-------------------------------- | :-------------------------- | :----------------------------- | :----- | | Cash, Cash Equivalents & Marketable Securities | $5,500 | $13,100 | -58.0% | [Non-GAAP Financial Measures Explanation](index=3&type=section&id=Item%203.5%20Non-GAAP%20Financial%20Measures%20Explanation) Adjusted EBITDA is presented as a non-GAAP metric to provide investors with helpful information for evaluating core operating performance, excluding items like other income/expense, income tax, depreciation, amortization, and stock-based compensation, which are not considered indicative of core operations - Adjusted EBITDA is a non-GAAP operational metric used by management to understand and evaluate core operating performance and trends[15](index=15&type=chunk)[16](index=16&type=chunk) - It represents net loss before other income and expense, net, income tax expense (benefit), depreciation and amortization expense, and stock-based compensation[15](index=15&type=chunk) - These excluded items are not considered indicative of core operating performance, and their exclusion facilitates period-to-period comparisons[15](index=15&type=chunk)[16](index=16&type=chunk) [Corporate Information](index=4&type=section&id=Item%204.%20Corporate%20Information) This section provides details on the upcoming financial results webcast, an overview of Genasys Inc.'s protective communications business, forward-looking statement disclaimers, and investor relations contacts [Webcast and Conference Call Details](index=4&type=section&id=Item%204.1%20Webcast%20and%20Conference%20Call%20Details) Genasys Inc. will host a conference call and webcast on August 14, 2025, at 4:30 p.m. Eastern Time to discuss its fiscal third quarter 2025 financial results, with details provided for access and submitting questions - Management will host a conference call on August 14, 2025, at 4:30 p.m. Eastern Time / 1:30 p.m. Pacific Time[17](index=17&type=chunk) - Access the conference call by dialing toll-free (888) 390-3967, or international at (862) 298-0702[17](index=17&type=chunk) - A webcast will be available at https://app.webinar.net/5vKnwNmje6L, with a replay available approximately four hours after the presentation[17](index=17&type=chunk) - Questions to management may be submitted before the call by emailing ir@genasys.com[17](index=17&type=chunk) [About Genasys Inc.](index=4&type=section&id=Item%204.2%20About%20Genasys%20Inc.) Genasys Inc. (NASDAQ: GNSS) is a global leader in Protective Communications, providing software and hardware systems like LRAD® to protect over 155 million people worldwide - Genasys Inc. (NASDAQ: GNSS) is the global leader in Protective Communications[18](index=18&type=chunk) - The company offers a comprehensive portfolio of preparedness, response, and analytics software and hardware systems, including the Long Range Acoustic Device® (LRAD®)[18](index=18&type=chunk) - The Genasys Protect platform is designed to ensure organizations and public safety agencies are 'Ready when it matters™'[18](index=18&type=chunk) - Genasys protects more than **155 million** people in all 50 states and in over 100 countries worldwide, with over **40 years** of experience[18](index=18&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Item%204.3%20Forward-Looking%20Statements) The report contains forward-looking statements, which are based on management's assumptions and are subject to various risks and uncertainties, including geopolitical conflicts and supply chain issues, that could cause actual results to differ materially. Genasys Inc. disclaims any obligation to publicly update or revise these statements - The matters discussed are forward-looking statements within the meaning of the 'safe harbor' provisions of the Private Securities Litigation Reform Act of 1995[19](index=19&type=chunk) - These statements are based on particular assumptions and involve risks and uncertainties that could cause actual results to differ materially[19](index=19&type=chunk) - Risks and uncertainties include the business impact of geopolitical conflicts and other causes affecting the supply chain[19](index=19&type=chunk) - Genasys Inc. disclaims any intent or obligation to publicly update or revise forward-looking statements, except as otherwise stated[19](index=19&type=chunk)[20](index=20&type=chunk) [Investor Relations Contacts](index=5&type=section&id=Item%204.4%20Investor%20Relations%20Contacts) Contact information for investor relations is provided for inquiries regarding Genasys Inc - Investor Relations Contact: Brian Alger, CFA, SVP, IR and Corporate Development[21](index=21&type=chunk) - Email: ir@genasys.com[21](index=21&type=chunk) - Phone: (858) 676-0582[21](index=21&type=chunk) [Consolidated Financial Statements](index=6&type=section&id=Item%205.%20Consolidated%20Financial%20Statements) The consolidated financial statements present the balance sheets, showing increased assets and liabilities, and statements of operations, detailing revenue, expenses, and net loss for 3Q and nine months ended June 30, 2025 [Consolidated Balance Sheets](index=6&type=section&id=Item%205.1%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to $57.4 million, driven by current asset growth. However, total liabilities significantly rose to $54.2 million, primarily due to increased current liabilities and notes payable, resulting in a substantial decrease in total stockholders' equity to $3.2 million Consolidated Balance Sheets (Selected Items, in thousands) | Metric | June 30, 2025 | September 30, 2024 | Change | | :-------------------------------- | :------------ | :----------------- | :----- | | **ASSETS** | | | | | Cash and cash equivalents | $5,339 | $4,945 | +$394 | | Short-term marketable securities | $120 | $7,945 | -$7,825 | | Accounts receivable, net | $4,648 | $3,283 | +$1,365 | | Contract assets | $2,846 | — | +$2,846 | | Inventories, net | $11,426 | $7,313 | +$4,113 | | Total current assets | $31,932 | $26,140 | +$5,792 | | Total assets | $57,393 | $53,936 | +$3,457 | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | | Accounts payable | $7,797 | $4,034 | +$3,763 | | Accrued liabilities | $23,473 | $9,030 | +$14,443 | | Notes payable, at fair value (current) | $17,050 | — | +$17,050 | | Total current liabilities | $49,395 | $14,085 | +$35,310 | | Total liabilities | $54,234 | $36,373 | +$17,861 | | Total stockholders' equity | $3,159 | $17,563 | -$14,404 | [Consolidated Statements of Operations](index=7&type=section&id=Item%205.2%20Consolidated%20Statements%20of%20Operations) For 3Q 2025, revenue grew 38% YoY to $9.9 million, but gross profit margin fell to 26.3%. Operating expenses decreased, leading to a GAAP net loss of ($6.5) million and Adjusted EBITDA of ($4.8) million. For the nine months, revenue increased, but the company reported a net loss of ($16.7) million and Adjusted EBITDA of ($14.7) million Consolidated Statements of Operations (Selected Items, in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Revenues | $9,857 | $7,167 | $23,729 | $17,267 | | Cost of revenues | $7,260 | $3,383 | $15,344 | $9,827 | | Gross profit | $2,597 | $3,784 | $8,385 | $7,440 | | Gross profit margin | 26.3% | 52.8% | 35.3% | 43.1% | | Total operating expenses | $8,522 | $9,145 | $26,506 | $27,024 | | Loss from operations | ($5,925) | ($5,361) | ($18,121) | ($19,584) | | Net loss | ($6,487) | ($6,682) | ($16,704) | ($20,344) | | Net loss per common share - basic and diluted | ($0.14) | ($0.15) | ($0.37) | ($0.46) | | Adjusted EBITDA | ($4,781) | ($4,329) | ($14,743) | ($16,122) |

Company Overview - Genasys has a market capitalization of $150 million, with $14 million in cash and $15 million in debt as of December 31, 2024[7] - The company estimates a total addressable market (TAM) of $5.5 billion[7] - Genasys Protect platform is used in over 100 countries worldwide[7] Recent Contracts and Projects - Genasys received over $10 million in cash deposits for the first two approved groups of Puerto Rico dams[13] - FEMA approved over $41.3 million for the construction phase of the Early Warning System (EWS) for 17 dams in 12 municipalities in Puerto Rico[16] - The Puerto Rico Early Warning System (EWS) project is fully funded by FEMA for $94.3 million[17] CROWS EOF Program - The FY24 DOD Appropriations Bill added $20 million to the CROWS program ($5 million for RDT&E and $15 million for Procurement)[25] - Tech Feasibility Study phase II cost $950K[25] California Market - Genasys Protect covers 25 million of California's 39.5 million population[32] - Genasys Protect is used in 36 of California's 58 counties[32]

Financial Data and Key Metrics Changes - In Q2 of fiscal 2025, the company reported flat revenues sequentially but a 21% increase year-over-year [22] - Hardware revenues grew slightly sequentially and were up 17% year-over-year, while total software revenue increased by 29% year-over-year but decreased by 3% sequentially [22] - Gross profit margin was 37.7%, flat compared to the prior year but down nearly eight points from the previous quarter [23] - The GAAP net loss for Q2 was $6.1 million, an improvement from a loss of $7 million in the same quarter last year [23] Business Line Data and Key Metrics Changes - The hardware business is expected to see significant growth in the second half of fiscal 2025, particularly from the Puerto Rico project [6][10] - Bookings for the LRAD business are tracking ahead of the previous year, contributing to an improved twelve-month backlog [10] - Software business is experiencing sequential growth despite some delays in closing larger deals, particularly at the state level [19] Market Data and Key Metrics Changes - Demand for both critical infrastructure and military needs is improving, with new use cases emerging [11] - The company remains a trusted communication partner across 39 states, with significant expansion in its software offerings [17] Company Strategy and Development Direction - The company is focused on maintaining momentum and capturing opportunities, particularly in hardware and software sectors [9][20] - The Puerto Rico project is a key strategic initiative, with expectations for substantial revenue recognition in the second half of the fiscal year [25][26] - The company is expanding into non-traditional markets, leveraging software to secure hardware opportunities [42] Management's Comments on Operating Environment and Future Outlook - Management acknowledges challenges in forecasting due to federal budget uncertainties but remains optimistic about growth and profitability in the fourth quarter [20] - The company expects to recognize significantly more revenues in the second half of the fiscal year compared to the first half [26] - Management is confident in the financial turnaround, supported by a growing backlog and expanding pipeline [27] Other Important Information - The company signed a $4 million bridge loan to maintain momentum while awaiting a down payment for the Puerto Rico project [9] - The CFO announced retirement plans, marking a transition period for the company [21] Q&A Session Summary Question: Can you clarify the revenue recognition process for the Puerto Rico project? - The initial material shipments will be recorded at cost, with higher gross margins expected as installation progresses [34] Question: What is the status of groups four to seven in the Puerto Rico project? - The third group has been approved, and detailed design processes for the next groups will begin shortly [36] Question: How dependent is the opportunity pipeline on federal funds? - The dependency on federal grants varies widely, particularly in the software sector [38] Question: What is the expected size of the CROs opportunity? - The CROs opportunity is expected to annualize at around $10 to $15 million [40] Question: Are there any pressures on supply chains related to the Puerto Rico deal? - Currently, there are no significant pressures on supply chains, and materials are being delivered as planned [44] Question: Have international opportunities experienced longer lead times due to federal budget issues? - No additional delays have been noted for international opportunities [56]

Financial Data and Key Metrics Changes - In Q2 of fiscal 2025, the company reported flat revenues sequentially and a 21% increase year-over-year [22] - Hardware revenues grew slightly sequentially and were up 17% year-over-year, while total software revenue grew 29% year-over-year but decreased 3% sequentially [22] - Gross profit margin was 37.7%, flat compared to the prior year but down nearly eight points from the previous quarter [23] - The GAAP net loss for Q2 was $6.1 million, an improvement from a loss of $7 million in the same quarter last year [24] Business Line Data and Key Metrics Changes - The hardware business is expected to see significant growth in the second half of fiscal 2025, particularly from the Puerto Rico project [6][10] - Bookings for the LRAD business are tracking ahead of the previous year, contributing to an improved twelve-month backlog [10] - Software business is experiencing a growing pipeline, with a more than 100% increase in pipeline measurement since the beginning of fiscal 2025 [13] Market Data and Key Metrics Changes - International and domestic demand for critical infrastructure and military needs is improving, with new use cases emerging [11] - The company remains a trusted communication partner across 39 states, with significant expansion in its software platform [16] Company Strategy and Development Direction - The company is focused on maintaining momentum and capturing opportunities, particularly in hardware and software sectors [8][20] - Management is optimistic about the growth trajectory, especially in the fourth quarter of fiscal 2025, with a broadening pipeline for both hardware and software offerings [20][28] Management's Comments on Operating Environment and Future Outlook - The operating environment is challenging to forecast due to federal budget uncertainties, but the company expects substantial growth and improved profitability [20] - Management anticipates significant revenue recognition in the second half of the fiscal year, particularly from the Puerto Rico project [27] Other Important Information - The company secured a $4 million bridge loan to maintain operational momentum while awaiting a deposit for the Puerto Rico project [9][26] - The company has implemented new safeguards and enhancements to its software platform following recent incidents during emergency situations [16] Q&A Session Summary Question: Clarification on revenue recognition and gross margins - The initial material shipments will be recorded at cost, leading to zero gross margin before higher margins kick in upon installation milestones [35][36] Question: Progress on additional groups for the Puerto Rico project - The third group has been approved, and the detailed design process for the next groups will begin shortly [38] Question: Impact of federal budgets on opportunity pipeline - The company did not provide a specific percentage but noted that many software opportunities are dependent on grants [40] Question: Size of the CROs opportunity - The expected annualized revenue from the CROs opportunity is projected to be between $10 million to $15 million [42] Question: Update on nontraditional markets and opportunities - The software is driving the company into different markets, including a recent $73 million hardware opportunity related to emergency messaging [45] Question: Supply chain pressures related to the Puerto Rico deal - The company is not experiencing additional pressures on supply chains, and materials are being delivered as planned [46][59]