Financial Performance - Net revenues for the three months ended June 30, 2025, decreased by $4,254,000 to $2,147,000, a decline of 66.5% compared to $6,401,000 for the same period in 2024, primarily due to the shipment of over $13 million in purchase orders from federal government agency customers in the prior year [166]. - Gross profit for the three months ended June 30, 2025, was $1,533,000, down 66.0% from $4,506,000 in the same period of 2024 [164]. - Net loss for the three months ended June 30, 2025 was $23,757,000 compared to a net income of $18,462,000 for the same period in 2024, primarily due to noncash expenses of $22,264,000 [27]. - Net revenues for the six months ended June 30, 2025 decreased by $9,326,000 to $7,650,000, a decline of 54.9% compared to $16,976,000 for the same period in 2024, attributed to lower purchase orders from federal government agencies [175]. - Gross profit for the six months ended June 30, 2025 was $3,768,000, down 47.2% from $7,134,000 in 2024 [175]. - Other income for the six months ended June 30, 2025 was $3,687,000, a significant improvement from an expense of $13,076,000 in 2024, primarily due to gains from changes in fair value of earnout and warrant liabilities [181]. - The accumulated deficit as of June 30, 2025 was $75.0 million, reflecting the company's ongoing financial challenges [186]. Expenses - Cost of net revenues decreased by $1,281,000 to $614,000, a reduction of 67.6% compared to $1,895,000 for the three months ended June 30, 2024, attributed to lower sales and decreased equipment purchases [168]. - Other expense for the three months ended June 30, 2025, was $21,735,000, compared to other income of $17,486,000 in 2024, reflecting a negative variance of 224.3% [166]. - Research and development expenses increased by $38,000 to $741,000 for the three months ended June 30, 2025, compared to $703,000 in 2024, due to higher product development costs [169]. - Selling, general and administrative expenses decreased slightly by $13,000 to $2,814,000 for the three months ended June 30, 2025 [169]. - Cost of net revenues for the six months ended June 30, 2025 decreased by $5,960,000 to $3,882,000, a reduction of 60.6% compared to $9,842,000 for the same period in 2024 [178]. - Research and development expenses for the six months ended June 30, 2025 increased by $62,000 to $1,460,000, driven by product development efforts in the U.S. and Taiwan [179]. - Selling, general and administrative expenses for the six months ended June 30, 2025 decreased by $118,000 to $6,044,000, showing cost control measures [180]. Future Outlook - The company anticipates a shift towards cloud-based software solutions, which is expected to create additional subscription revenue in the future [158]. - The company is focused on expanding its edge AI-based solutions, which began sales in late 2022, to drive efficiency and cost savings for customers [160]. - The company has no substantial doubt about its ability to continue as a going concern, based on its current cash position and operations projected through August 2026 [186]. Operational Challenges - The company faces challenges from geopolitical supply-chain constraints, particularly regarding timely production and delivery of products from Taiwan [165]. - Operating loss for the three months ended June 30, 2025, was $(2,022,000), a significant increase in loss of 307.2% compared to a profit of $976,000 in 2024 [164]. - Net cash used in operating activities for the six months ended June 30, 2025 was $3,919,000, compared to $4,147,000 for the same period in 2024, indicating improved cash management despite ongoing losses [187].
BYTE Acquisition (BYTS) - 2025 Q2 - Quarterly Report