Financial Performance - For the three months ended September 30, 2025, net revenues decreased by $1,691,000 to $1,177,000, a decline of 59.0% compared to $2,868,000 in the same period of 2024 [182]. - Gross profit for the same period was $603,000, down 72.0% from $2,154,000 in Q3 2024 [182]. - Operating loss for the three months ended September 30, 2025, was $2,867,000, an increase of 80.7% compared to a loss of $1,587,000 in Q3 2024 [182]. - Net revenues for the nine months ended September 30, 2025 decreased by $11,017,000 to $8,827,000, a decline of 55.5% compared to $19,844,000 for the same period in 2024 [192]. - Operating loss for the nine months ended September 30, 2025 was $6,603,000, compared to an operating loss of $2,014,000 for the same period in 2024, an increase of $4,589,000 [193]. - Net income for the nine months ended September 30, 2025 was $6,361,000, compared to a net loss of $7,289,000 for the same period in 2024, representing a turnaround of $13,650,000 [201]. - Other income for the nine months ended September 30, 2025 was $12,964,000, compared to other expense of $5,275,000 for the same period in 2024, an increase of $18,239,000 [199]. Expenses - Research and development expenses for the three months ended September 30, 2025, were $753,000, a 29.9% decrease from $1,074,000 in the same period of 2024 [182]. - Research and development expenses for the nine months ended September 30, 2025 decreased by $259,000 to $2,213,000, a decline of 10.5% compared to $2,472,000 for the same period in 2024 [197]. - Selling, general and administrative expenses for the nine months ended September 30, 2025 increased by $69,000 to $8,761,000, a slight increase of 0.8% compared to $8,830,000 for the same period in 2024 [198]. Backlog and Pipeline - As of October 6, 2025, the backlog was approximately $11 million, representing firm fixed price contracts awarded in Q3 2025 [157]. - The total validated pipeline as of September 30, 2025, was $166 million, consisting of opportunities for AI-driven edge, video, and sensor and data management platforms [158]. Cash Flow and Liquidity - Net cash used in operating activities for the nine months ended September 30, 2025 was $4,502,000, primarily related to net income of $6,361,000 and noncash items of $11,339,000 [204]. - Liquidity assessment indicates no substantial doubt about the company's ability to continue as a going concern, with an accumulated deficit of $68.6 million as of September 30, 2025 [203]. Leases and Commitments - The company entered into a lease for 15,567 square feet of office and warehouse space in Redmond, WA, with a monthly payment of $25,000, expiring on October 31, 2027 [208]. - The company entered into an office lease in Mooresville, North Carolina, for 5,240 square feet with a net monthly payment of $9,105, expiring on January 31, 2028, with a 3% increase in payment starting February 1, 2026 [209]. Accounting and Reporting - The consolidated financial statements are prepared in accordance with U.S. GAAP, requiring estimates and assumptions that could differ materially from actual results due to economic uncertainties [212]. - The significant accounting policies have not materially changed from those discussed in the Annual Report for the year ended December 31, 2024 [213]. - The company does not have applicable quantitative and qualitative disclosures about market risk as it is classified as a smaller reporting company [214]. Strategic Focus - The company has historically evaluated its business based on revenue generated from customers and plans to develop more advanced performance indicators as it grows [175]. - The company aims to expand its operational footprint and increase sales of lower margin solutions while focusing on AI-driven software applications [177]. Fair Value Adjustments - The company reported a gain from the change in fair value of the earnout liability of $3,893,000, a decrease of 29.4% from $5,512,000 in the previous year [182]. - The gain from the change in fair value of warrant liability was $5,331,000, an increase of 115.7% compared to $2,471,000 in Q3 2024 [182].
BYTE Acquisition (BYTS) - 2025 Q3 - Quarterly Report