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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2025


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number: 000-24248

GENASYS INC.

(Exact name of registrant as specified in its charter)



Delaware	87-0361799
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

16262 West Bernardo Drive, San Diego, California	92127
(Address of principal executive offices)	(Zip Code)

(858) 676-1112

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which securities are registered
Common stock, $0.00001 par value per share	GNSS	NASDAQ Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

The number of shares of Common Stock, $0.00001 par value, outstanding on February 4, 2026 was 45,212,311.

Table of Contents


		Page

PART I.	FINANCIAL INFORMATION	1

Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Comprehensive Loss	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	34

PART II.	OTHER INFORMATION	34

Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3.	Defaults Upon Senior Securities	35
Item 4.	Mine Safety Disclosures	35
Item 5.	Other Information	35
Item 6.	Exhibits	36
Signatures		37

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Genasys Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value and share amounts)


	December 31, 2025			September 30, 2025
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	10,286		$	7,969
Short-term marketable securities		30			70
Accounts receivable, net of allowance for credit losses of $65		8,882			7,596
Contract assets		7,150			6,117
Inventories, net		8,573			8,805
Prepaid expenses and other		9,079			8,742
Total current assets		44,000			39,299

Long-term restricted cash		585			585
Property and equipment, net		1,020			1,125
Goodwill		13,451			13,450
Intangible assets, net		5,570			6,147
Operating lease right of use assets, net		2,214			2,419
Other assets		806			844
Total assets	$	67,646		$	63,869

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	7,463		$	8,181
Customer deposit		30,305			19,669
Accrued liabilities		7,276			7,451
Operating lease liabilities, current portion		1,145			1,125
Notes payable, at fair value - short term		13,820			18,010
Total current liabilities		60,009			54,436

Warrant liability		2,700			3,570
Deferred revenue, noncurrent		1,209			1,478
Operating lease liabilities, noncurrent		1,922			2,218
Total liabilities		65,840			61,702

Stockholders' equity:
Preferred stock, $0.00001 par value; 5,000,000 shares authorized; none issued and outstanding		—			—
Common stock, $0.00001 par value; 100,000,000 shares authorized; 45,212,311 and 45,161,172 shares issued and outstanding as of December 31, 2025 and September 30, 2025, respectively		—			—
Additional paid-in capital		127,835			127,384
Accumulated deficit		(126,721	)		(125,904	)
Accumulated other comprehensive income		692			687
Total stockholders' equity		1,806			2,167
Total liabilities and stockholders' equity	$	67,646		$	63,869

The accompanying notes are an integral part of these condensed consolidated financial statements

Genasys Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share and share amounts)

(Unaudited)


	Three Months Ended December 31,
	2025			2024
Revenues:
Product sales	$	14,261		$	4,144
Contract and other		2,804			2,796
Total revenues		17,065			6,940
Cost of revenues		8,882			3,762

Gross profit		8,183			3,178

Operating expenses
Selling, general and administrative		6,640			6,834
Research and development		1,895			2,285
Total operating expenses		8,535			9,119

Loss from operations		(352	)		(5,941	)

Other (expenses) income
Interest income		7			62
Interest expense		(435	)		(368	)
Change in fair value of Term Loans and warrants		99			2,100
Other		(11	)		69
Other (expense) income, net		(340	)		1,863

Loss before income taxes		(692	)		(4,078	)
Income tax expense		125			—
Net loss	$	(817	)	$	(4,078	)

Net loss per common share - basic and diluted	$	(0.02	)	$	(0.09	)
Weighted average common shares outstanding:
Basic and diluted		45,197,278			44,912,206

The accompanying notes are an integral part of these condensed consolidated financial statements

Genasys Inc.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

(Unaudited)


	Three Months Ended December 31,
	2025			2024
Net loss	$	(817	)	$	(4,078	)
Unrealized gain on marketable securities		—			7
Unrealized foreign currency gain (loss)		5			(214	)
Comprehensive loss	$	(812	)	$	(4,285	)

The accompanying notes are an integral part of these condensed consolidated financial statements

Genasys Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)


	Three Months Ended December 31,
	2025			2024
Operating Activities:
Net loss	$	(817	)	$	(4,078	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		682			737
Warranty provision (settlement)		20			(6	)
Inventory obsolescence		26			73
Share-based compensation		419			391
Gain on change in fair value of warrants		(870	)		(2,470	)
Loss on change in fair value of Term Loans		771			370
Amortization of operating lease right of use asset		205			192
Accretion of investment of marketable securities		—			33
Changes in operating assets and liabilities:
Accounts receivable, net		(1,287	)		259
Contract assets		(1,033	)		—
Inventories, net		206			(260	)
Prepaid expenses and other		(513	)		(1,084	)
Accounts payable		(711	)		500
Customer deposit		10,636			—
Accrued and other liabilities		(534	)		6,290
Net cash provided by operating activities		7,200			947
Investing Activities:
Purchases of marketable securities		—			(1,400	)
Proceeds from maturities of marketable securities		41			4,102
Capital expenditures		—			(69	)
Net cash provided by investing activities		41			2,633
Financing Activities:
Proceeds from exercise of stock options	34				1
Repayment of First Amendment Term Loan principal		(4,000	)		—
Payment of minimum return on First Amendment Term Loan		(961	)		—
Shares retained for payment of taxes in connection with exercise of stock options		(2	)		—
Net cash (used in) provided by financing activities		(4,929	)		1
Effect of foreign exchange rate on cash		5			(55	)
Net increase in cash, cash equivalents, and restricted cash		2,317			3,526
Cash, cash equivalents and restricted cash, beginning of period		8,554			5,288
Cash, cash equivalents and restricted cash, end of period	$	10,871		$	8,814

Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheets:
Cash and cash equivalents	$	10,286		$	8,469
Restricted cash, current portion		—			95
Long-term restricted cash		585			250
Total cash, cash equivalents and restricted cash shown in the consolidated balance sheets	$	10,871		$	8,814

The accompanying notes are an integral part of these condensed consolidated financial statements

Genasys Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(in thousands)

(Unaudited)


	Three Months Ended December 31,
	2025		2024
Noncash investing and financing activities:
Change in unrealized gain on marketable securities	$	—	$	7
Purchases of property and equipment included in accounts payable and accrued liabilities	$	—	$	3

Supplemental disclosure of cash flow information
Cash paid for interest	$	435	$	368
Cash paid for taxes	$	109	$	11

Genasys Inc.

Notes to the Condensed Consolidated Financial Statements

(in thousands, except per share and share amounts)

(Unaudited)

1. OPERATIONS

Genasys Inc. (“Genasys” or the “Company”) is a global provider of Protective Communications™ solutions including its Genasys Protect™ software platform and Genasys Long Range Acoustic Devices (“LRAD”). Genasys’ unified platform receives information from a wide variety of sensors and Internet-of-Things (“IoT”) inputs to collect real-time information on developing and active emergency situations. The Company’s customers can use this information to create and disseminate alerts, warnings, notifications, and instructions through multiple channels before, during, and after public safety and enterprise threats, critical events, and other crisis situations.

2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

General

The Company’s unaudited interim condensed consolidated financial statements included herein have been prepared in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X and the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In management’s opinion, the accompanying financial statements reflect adjustments necessary to present fairly the financial position, results of operations, and cash flows for those periods indicated, and contain adequate disclosure to make the information presented not misleading. Adjustments included herein are of a normal, recurring nature unless otherwise disclosed in the footnotes. The condensed consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended September 30, 2025, included in the Company’s Annual Report on Form 10-K, as filed with the SEC on December 15, 2025. The accompanying condensed consolidated balance sheet as of September 30, 2025, has been derived from the audited consolidated balance sheet as of September 30, 2025, contained in the above referenced Form 10-K. Results of operations for interim periods are not necessarily indicative of the results of operations for a full year.

Principles of consolidation

The Company has six wholly owned subsidiaries, Genasys II Spain, S.A.U. (“Genasys Spain”), Genasys Communications Canada ULC, Genasys Puerto Rico, LLC, Zonehaven LLC (“Zonehaven”), Evertel Technologies LLC (“Evertel”), and one currently inactive subsidiary, Genasys America de CV. The consolidated financial statements include the accounts of these subsidiaries after elimination of intercompany transactions and accounts.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions (e.g., share-based compensation valuation, allowance for doubtful accounts for expected credit losses, fair value of term loans and warrant liabilities, valuation of inventory, goodwill and intangible assets, warranty reserve, valuation of operating lease right of use assets and operating lease liabilities, accrued bonus and valuation allowance related to deferred tax assets) that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and that affect the reported amounts of revenues and expenses during the reporting periods. Actual results could materially differ from those estimates.

Cash, cash equivalents and restricted cash

The Company considers all highly liquid investments with an original maturity of three months or less, when purchased, to be cash equivalents. As of December 31, 2025, the amount of cash and cash equivalents was $10,286. As of September 30, 2025, the amount of cash and cash equivalents was $7,969.

The Company considers any amounts pledged as collateral or otherwise restricted for use in current operations to be restricted cash. In addition, the Company excludes from cash and cash equivalents cash required to fund specific future contractual obligations related to business combinations. Restricted cash is classified as a current asset unless amounts are not expected to be released and available for use in operations within one year. As of December 31, 2025 and September 30, 2025, restricted cash was $585 at both dates, and was restricted for a maintenance contract and corporate card program.

Accounts receivable and allowance for credit losses

The Company maintains an allowance for credit losses primarily for estimated losses resulting from the inability or failure of individual customers to make required payments. The Company maintains an allowance under Accounting Standards Codification (“ASC”) Topic 326, based on historical losses, changes in payment history, customer-specific information, current economic conditions, and reasonable and supportable forecasts of future economic conditions. The allowance under ASC 326 is updated as additional losses are incurred or information becomes available related to the customer or economic conditions.

Genasys Inc.

Notes to the Condensed Consolidated Financial Statements

(in thousands, except per share and share amounts)

(Unaudited)

The Company’s allowance for credit losses was $65 as of both December 31, 2025 and September 30, 2025.

The Company writes off accounts receivable based on the age of the receivable and the facts and circumstances surrounding the customer and reasons for non-payment. Actual write-offs might differ from the recorded allowance. The Company’s historical credit losses have not been significant due to this dispersion and the financial stability of the Company’s customers. The Company considers its historical credit losses to be immaterial to its business and, therefore, has not provided all the disclosures otherwise required by the standard.

Term Loans

The Company determined that it is eligible for the fair value option (“FVO”) election in connection with the Term Loans (as defined below). The Term Loans meet the definition of a “recognized financial liability” which is an acceptable financial instrument eligible for the FVO under ASC 825-10-15-4 and do not meet the definition of any of the financial instruments found within ASC 825-10-15-5 that are not eligible for the FVO. The FVO election was made to enhance the relevance and transparency of information presented related to the features embedded in the Term Loan. At the date of issuance, the fair value of the Term Loans were estimated using a discounted cash flow method. Changes in the fair value of the Term Loan, other than changes associated with the Company's own credit risk, are recorded as gains or losses in the Company’s condensed consolidated statements of operations and comprehensive loss in each reporting period. Changes in fair value attributable to the Company’s own credit risk are recorded in other comprehensive income or loss in the Company’s condensed consolidated statements of operations and comprehensive loss in each reporting period. Under the FVO, debt issuance costs are expensed as incurred and recorded in other expenses in the Company’s condensed consolidated statements of operations and comprehensive loss.

Warrants

The warrants issued in conjunction with the Close Date Term Loan are classified as liabilities under ASC 815-40 due to not being indexed to the Company’s stock. The warrants are measured at fair value using a Monte Carlo simulation to capture the down-round provision in the warrant agreement. Changes in fair value of the warrants, are recorded as gains or losses in other income in the Company’s condensed consolidated statements of operations and comprehensive loss in each reporting period.

3. RECENT ACCOUNTING PRONOUNCEMENTS

Recently adopted pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”). ASU 2023-07 expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, which means that it will be effective for the Company’s annual periods beginning October 1, 2024, and interim periods beginning October 1, 2025. The adoption of this standard did not have a material effect on the Company’s condensed consolidated financial statements. Refer to “Note 18. Segment Information”, for additional information.

Accounting pronouncements not yet adopted

In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”). ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as disaggregated information on income tax paid. The standard is effective for fiscal years beginning after December 15, 2024, which means it will be effective for the Company’s fiscal year beginning October 1, 2025. The Company expects to adopt the standard in its consolidated financial statements for the fiscal year ending September 30, 2026 and is currently evaluating the impact of the adoption; however, the Company does not expect the adoption to have a material effect on its consolidated financial statements.

In November 2024, the FASB issued ASU No. 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” (“ASU 2024-03”). ASU 2024-03 requires public business entities to disclose, in tabular form, the disaggregation of relevant income statement expense captions into specified natural expense categories. In addition, in January 2025, the FASB issued ASU No. 2025-01 “ Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Interim Disclosure Effective Date Clarification” (“ASU 2025-01”). ASU 2025-01 clarifies that the new disaggregation disclosure requirements are effective for annual reporting periods beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027,which means it will be effective for the Company’s annual periods beginning October 1, 2027, and interim periods beginning October 1, 2028. The Company is currently evaluating the impact these updated standards will have on its disclosures within the consolidated financial statements.

In February 2025, the FASB issued ASU 2025-05, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets.” The ASU provides clarifications and targeted improvements related to the application of the CECL model to trade receivables and contract assets. ASU 2025-05 is effective for fiscal years beginning after

Genasys Inc.

Notes to the Condensed Consolidated Financial Statements

(in thousands, except per share and share amounts)

(Unaudited)

December 15, 2025, including interim periods within those years. For the Company, this standard will be effective beginning October 1, 2026. The Company is currently evaluating the impact of this ASU, but does not expect it to have a material effect on its consolidated financial statements.

4. REVENUE RECOGNITION

ASC 606, Revenue from Contracts with Customers (“ASC 606”), outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most revenue recognition guidance, including industry-specific guidance. This new revenue recognition model provides a five-step analysis in determining when and how revenue is recognized:

Identify the contract(s) with customers

Identify the performance obligations

Determine the transaction price

Allocate the transaction price to the performance obligations

Recognize revenue when or as the performance obligations have been satisfied

ASC 606 requires revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration a company expects to receive in exchange for those goods or services.

The Company derives its revenue from the sale of products to customers, contracts, software license fees, other services and freight. The Company sells its products through its direct sales force and through authorized resellers and system integrators. The Company recognizes revenue for goods, including software, when all the significant risks and rewards have been transferred to the customer, no continuing managerial involvement usually associated with ownership of the goods is retained, no effective control over the goods sold is retained, the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transactions will flow to the Company and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Software license revenue, maintenance and/or software development service fees may be bundled in one arrangement or may be sold separately.

Product revenue

Product revenue is recognized as a distinct single performance obligation when products are tendered to a carrier for delivery, which represents the point in time that the Company’s customer obtains control of the products. A smaller portion of product revenue is recognized when the customer receives delivery of the products. A portion of products are sold through resellers and system integrators based on firm commitments from an end user, and as a result, resellers and system integrators carry little or no inventory. The Company’s customers do not have a right to return product unless the product is found defective and therefore the Company’s estimate for returns has historically been insignificant.

Long-term contracts - over-time revenue recognition using input cost measures

We recognize revenue for our Puerto Rico Early Warning System (EWS) project (the “Puerto Rico EWS Project”) over time in accordance with ASC 606-10-25-27(c), using a cost-to-cost input method that includes a zero-margin approach for uninstalled materials. As hardware costs are incurred, we record an equal amount of revenue, resulting in zero margin. We then measure overall project progress by comparing labor costs incurred to total estimated labor costs, excluding hardware from the calculation. This labor-based percentage of completion is applied to determine both the portion of hardware margin to be recognized on previously recorded zero-margin hardware and the amount of non-hardware revenue to record for the period.

Time-based licensed software

The time-based license agreements include the use of a software license for a fixed term, generally one-year, and maintenance and support services during the same period. The Company does not sell time-based licenses without maintenance and support services and therefore revenues for the entire arrangements are recognized on a straight-line basis over the term.

Warranty, maintenance and services

The Company offers extended warranty, maintenance and other services. Extended warranty and maintenance contracts are offered with terms ranging from one to several years, which provide repair and maintenance services after expiration of the original one-year warranty term. Revenues from separately priced extended warranty and maintenance contracts are recognized based on time elapsed over the service period and classified as contract and other revenues. Revenue from other services such as training or installation is recognized when the service is completed.

Genasys Inc.

Notes to the Condensed Consolidated Financial Statements

(in thousands, except per share and share amounts)

(Unaudited)

Multiple performance obligation arrangements

The Company has entered into a number of arrangements that contain multiple performance obligations, such as the sale of a product or perpetual software licenses that may include maintenance and support (included in price of perpetual licenses) and time-based software licenses (that include embedded maintenance and support, both of which may be sold with software development services, training, and other product sales). In some cases, the Company delivers software development services bundled with the sale of the software. In an arrangement with multiple performance obligations, the Company allocates the fair value of each element within the arrangement, including software and software-related services such as maintenance and support, using the known stand-alone selling price, or if unknown, an expected cost-plus margin approach to determine the stand-alone selling price. In general, elements in such arrangements are also sold on a stand-alone basis and stand-alone selling prices are observable.

Revenue is allocated to each deliverable based on the fair value of each individual element and is recognized when the revenue recognition criteria described above are met, except for time-based licenses which are not unbundled. When software development services are performed and are considered essential to the functionality of the software, the Company recognizes revenue from the software development services on a stage of completion basis, and the revenue from the software when the related development services have been completed.

The Company disaggregates revenue by reporting segment (Hardware and Software) and geographically to depict the nature of revenue in a manner consistent with its business operations and to be consistent with other communications and public filings. Refer to “Note 18. Segment Information” and “Note 19. Major Customers, Suppliers and Related Information” for additional details of revenues by reporting segment and disaggregation of revenue.

Variable consideration

The transaction price may include variable consideration, such as rebates, discounts, and returns, estimated using the expected value or most likely amount method. These estimates are based on historical experience and contractual terms and are constrained to avoid significant revenue reversals. Adjustments are recognized when new information becomes available, and variable consideration is allocated to performance obligations as applicable.

Contract assets and liabilities

The Company enters into contracts to sell products and provide services and recognizes contract assets and liabilities that arise from these transactions. The Company recognizes revenue and corresponding accounts receivable according to ASC 606 and, at times, recognizes revenue in advance of the time when contracts give the Company the right to invoice a customer. Sales commissions are considered incremental and recoverable costs of obtaining a contract with a customer. Subscription related commission costs are deferred and then amortized on a straight-line basis over the period of benefit. The Company may also receive consideration, per terms of a contract, from customers prior to transferring goods to the customer. The Company records customer deposits as a contract liability. Additionally, the Company may receive payments, most typically for service and warranty contracts, at the onset of the contract and before the services have been performed. In such instances, a deferred revenue liability is recorded. The Company recognizes these contract liabilities as revenue after all revenue recognition criteria are met. The table below reflects the balances of contract liabilities as of December 31, 2025 and September 30, 2025, including the change between the periods. The current portion of contract liabilities and the noncurrent portion are included in “Accrued liabilities” and “Other liabilities, noncurrent”, respectively, on the accompanying condensed consolidated balance sheets. Refer to “Note 9. Accrued and Other Liabilities” for additional details. Contract asset balance was $7,150 as of December 31, 2025, of which $7,058 related to the Puerto Rico EWS Project. Contract asset balance was $6,117 as of September 30, 2025, of which $6,025 related to the Puerto Rico EWS Project.

Genasys Inc.

Notes to the Condensed Consolidated Financial Statements

(in thousands, except per share and share amounts)

(Unaudited)

The Company’s contract liabilities were as follows:


	Customer deposits			Deferred revenue			Total contract liabilities
Balance as of September 30, 2025	$	19,669		$	5,743		$	25,412
New performance obligations		22,785			1,822			24,607
Recognition of revenue as a result of satisfying performance obligations		(12,149	)		(2,532	)		(14,681	)
Effect of exchange rate on deferred revenue		—			(1	)		(1	)
Balance as of December 31, 2025	$	30,305		$	5,032		$	35,337
Less: non-current portion		—			(1,209	)		(1,209	)
Current portion as of December 31, 2025	$	30,305		$	3,823		$	34,128

Remaining performance obligations

Remaining performance obligations related to ASC 606 represent the aggregate transaction price allocated to performance obligations under an original contract with a term greater than one year, which are fully or partially unsatisfied at the end of the period.

As of December 31, 2025, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $35,337, of which $25,289 , or 72% of the total performance obligations, was related to the Puerto Rico EWS Project. The Company expects to recognize revenue on approximately $34,128 or 97% of the remaining performance obligations over the next 12 months, and the remainder is expected to be recognized thereafter. The customer deposit balance as of December 31, 2025 included $25,038 for the Puerto Rico EWS Project.

For the three months ended December 31, 2025, the Company recognized $6,475 from the customer deposit balance and $2,188 from the deferred revenue balance, both as of September 30, 2025.

Practical expedients

In cases where the Company is responsible for shipping after the customer has obtained control of the goods, the Company has elected to treat these activities as fulfillment activities rather than as a separate performance obligation. Additionally, the Company has elected to capitalize the cost to obtain a contract only if the period of amortization would be longer than one year. The Company only gives consideration to whether a customer agreement has a financing component if the period of time between transfer of goods and services and customer payment is greater than one year. The Company also utilizes the “as invoiced” practical expedient in certain cases where performance obligations are satisfied over time and the invoiced amount corresponds directly with the value provided to the customer.

5. FAIR VALUE MEASUREMENTS

The Company’s financial instruments consist principally of cash equivalents, short and long-term marketable securities, accounts receivable, accounts payable, Term Loans, and warrant liabilities. The fair value of a financial instrument is the amount that would be received in an asset sale or paid to transfer a liability in an orderly transaction between unaffiliated market participants. Assets and liabilities measured at fair value are categorized based on whether or not the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial instruments within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The hierarchy is prioritized into three levels (with Level 3 being the lowest) defined as follows:


Level 1:	Inputs are based on quoted market prices for identical assets or liabilities in active markets at the measurement date.
Level 2:	Inputs include quoted prices for similar assets or liabilities in active markets and/or quoted prices for identical or similar assets or liabilities in markets that are not active near the measurement date.
Level 3:	Inputs include management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument’s valuation.

The fair value of the Company’s cash equivalents and marketable securities were determined based on Level 1 and Level 2 inputs. The valuation techniques used to measure the fair value of the “Level 2” instruments were based on quoted market prices or model-driven valuations using significant inputs derived from or corroborated by observable market data. The valuation techniques used to measure the Term Loans and warrant liabilities were determined based on Level 3 inputs not observable in the market and

Genasys Inc.

Notes to the Condensed Consolidated Financial Statements

(in thousands, except per share and share amounts)

(Unaudited)

significant to the instruments’ valuations. Refer to “Note 11. Term Loans and Warrant Liabilities”, for additional information regarding the valuation techniques and significant inputs used.

Other than the Term Loans and the warrant liabilities, the Company did not have any financial instruments in the Level 3 category as of December 31, 2025 or September 30, 2025. The Company believes that the recorded values of its other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations. There have been no changes in Level 1, Level 2, and Level 3 and no changes in valuation techniques for financial instruments measured at fair value on a recurring basis for the periods ended December 31, 2025 and September 30, 2025.

Instruments measured at fair value on a recurring basis

Cash equivalents and marketable securities: The following tables present the Company’s cash equivalents and marketable securities’ costs, gross unrealized gains and losses, and fair value by major security type recorded as cash equivalents or short-term or long-term marketable securities as of December 31, 2025, and September 30, 2025. Unrealized gains and losses from the remeasurement of marketable securities are recorded in accumulated other comprehensive income until recognized in earnings upon the sale or maturity of the security.


	December 31, 2025
	Cost Basis		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value		Cash Equivalents		Short-term Securities		Long-term Securities
Level 1:
Money market funds	$	1,152	$	—	$	—	$	1,152	$	1,152	$	—	$	—

Level 2:
Municipal securities		30		—		—		30		—		30		—
Subtotal		30		—		—		30		—		30		—

Total	$	1,182	$	—	$	—	$	1,182	$	1,152	$	30	$	—


	September 30, 2025
	Cost Basis		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value		Cash Equivalents		Short-term Securities		Long-term Securities
Level 1:
Money market funds	$	105	$	—	$	—	$	105	$	105	$	—	$	—

Level 2:
Municipal securities		70		—		—		70		—		70		—
Subtotal		70		—		—		70		—		70		—

Total	$	175	$	—	$	—	$	175	$	105	$	70	$	—

The Company manages debt investments as a single portfolio of highly marketable securities that is intended to be available to meet current cash requirements. Historically, the gross unrealized losses related to the Company’s portfolio of available-for-sale debt securities were immaterial, and primarily due to normal market fluctuations and not due to increased credit risk or other valuation concerns. There were no gross unrealized losses on available-for-sale debt securities as of December 31, 2025, and historically, such gross unrealized losses have been temporary in nature. The Company believes that it is probable the principal and interest will be collected in accordance with the contractual terms. The debt investment portfolio is reviewed at least quarterly, or when there are changes in credit risks or other potential valuation concerns, to identify and evaluate whether an allowance for credit losses or impairment would be necessary. Factors considered in determining whether a loss is temporary include the magnitude of the decline in market value, the length of time the market value has been below cost (or adjusted cost), credit quality, and the Company’s ability and intent to hold the securities for a period of time sufficient to allow for any anticipated recovery in market value.

As of December 31, 2025 and September 30, 2025, there were no unrealized loss positions related to available-for-sale debt securities.

Genasys Inc.

Notes to the Condensed Consolidated Financial Statements

(in thousands, except per share and share amounts)

(Unaudited)

Instruments measured at fair value on a non-recurring basis

Nonfinancial assets: Nonfinancial assets such as goodwill, other intangible assets, long-lived assets held and used, and right-of-use (“ROU”) assets are measured at fair value when there is an indicator of impairment and recorded at fair value only when impairment is recognized or for a business combination.

Goodwill and intangible assets are recognized at fair value during the period in which an acquisition is completed, from updated estimates during the measurement period, or when they are considered to be impaired. These non-recurring fair value measurements, primarily for intangible assets acquired, were based on Level 3 inputs. The Company estimates the fair value of these long-lived assets on a non-recurring basis based on a market valuation approach, engaging independent valuation experts to assist in the determination of fair value. There were no impairments during the three months ended December 31, 2025 or December 31, 2024, respectively.

The following table presents nonfinancial assets that were subject to fair value measurement during the twelve months ended September 30, 2025. Certain intangible assets, operating lease ROU assets and goodwill are subject to foreign currency translation adjustments.


			Fair Value Measurements at September 30, 2025
Carrying Value	Carrying Value		(Level 1)		(Level 2)		(Level 3)		Gain (Loss)
Operating Lease ROU Asset	$	67	$	—	$	—	$	67	$	—

6. INVENTORIES, NET

Inventories, net consisted of the following:


	December 31, 2025			September 30, 2025
Raw materials	$	205		$	2,470
Finished goods		6,938			4,987
Work in process		2,744			2,636
Inventories, gross		9,887			10,093
Reserve for obsolescence		(1,314	)		(1,288	)
Inventories, net	$	8,573		$	8,805

7. PROPERTY AND EQUIPMENT, NET

Property and equipment, net consisted of the following:


	December 31, 2025			September 30, 2025
Office furniture and equipment	$	1,633		$	1,633
Machinery and equipment		1,663			1,480
Leasehold improvements		2,294			2,294
Construction in progress		—			183
Property and equipment, gross		5,590			5,590
Accumulated depreciation		(4,570	)		(4,465	)
Property and equipment, net	$	1,020		$	1,125

Depreciation and amortization expense for property and equipment was $105 and $118 for the three months ended December 31, 2025 and 2024, respectively.

8. GOODWILL AND INTANGIBLE ASSETS

Goodwill is attributable to the acquisitions of Genasys Spain, Zonehaven, Evertel, and the Amika Mobile asset purchase and is due to combining the integrated emergency critical communications, mass messaging solutions and software development capabilities with existing hardware products for enhanced offerings and the skill level of the acquired workforces. The Company periodically reviews goodwill for impairment in accordance with relevant accounting standards. As of December 31, 2025 and September 30, 2025, goodwill was $13,451 and $13,450, respectively. There were no additions or impairments to goodwill during the three months ended December 31, 2025 or December 31, 2024.

Genasys Inc.

Notes to the Condensed Consolidated Financial Statements

(in thousands, except per share and share amounts)

(Unaudited)

The changes in the carrying amount of goodwill by segment as of December 31, 2025, were as follows:


	Hardware		Software		Total
Balance as of September 30, 2025	$	—	$	13,450	$	13,450
Currency translation		—		1		1
Balance as of December 31, 2025	$	—	$	13,451	$	13,451

The changes in the carrying amount of intangible assets by segment as of December 31, 2025, were as follows:


	Hardware			Software			Total
Balance as of September 30, 2025	$	12		$	6,135		$	6,147
Amortization		(1	)		(576	)		(577	)
Currency translation		—			—			—
Balance as of December 31, 2025	$	11		$	5,559		$	5,570

Intangible assets and goodwill related to Genasys Spain are translated from Euros to U.S. dollars at the balance sheet date. The net impact of foreign currency exchange differences arising during the period related to goodwill and intangible assets was an increase of $1.

The Company’s consolidated intangible assets consisted of the following:


	December 31, 2025			September 30, 2025
Technology	$	14,285		$	14,234
Customer relationships		2,112			2,063
Trade name portfolio		628			610
Patents		72			72
		17,097			16,979
Accumulated amortization		(11,527	)		(10,832	)
	$	5,570		$	6,147

As of December 31, 2025, future amortization expense was as follows:


Fiscal year ending September 30,
2026 (remaining nine months)		1,644
2027		2,048
2028		1,220
2029		329
2030		328
Thereafter		1
Total estimated amortization expense	$	5,570

Amortization expense was $577 and $618 for the three months ended December 31, 2025 and 2024, respectively.

Genasys Inc.

Notes to the Condensed Consolidated Financial Statements

(in thousands, except per share and share amounts)

(Unaudited)

9. PREPAID EXPENSES AND OTHER

Prepaid expenses and other current assets consisted of the following:


	December 31, 2025		September 30, 2025
Deposits for inventory	$	6,689	$	6,617
Puerto Rico sales tax receivable		602		491
Prepaid commissions		394		410
Spain value-added tax and bank withholdings		394		360
Prepaid professional services		311		345
Dues and subscriptions		244		207
Prepaid insurance		220		185
Trade shows and travel		61		60
Canadian goods and services and harmonized sales tax receivable		10		29
Other		154		38
	$	9,079	$	8,742

Deposits for inventory

Deposits for inventory consisted of cash payments to vendors for inventory to be delivered in the future. The balance as of December 31, 2025 included $6,056 for the Puerto Rico EWS Project.

Puerto Rico sales tax receivable

Puerto Rico sales tax receivable represents sales and use tax paid on importations into Puerto Rico that is recoverable from the Puerto Rico Treasury Department (“Hacienda”). The balance is eligible to be credited, refunded, or applied to other tax obligations and is expected to be applied against the Company’s Puerto Rico income tax liability in its annual return.

Prepaid commissions

Prepaid commissions represented the current portion of sales commissions paid in connection with obtaining a contract with a customer. These costs are deferred and are amortized on a straight-line basis over the period of benefit, which is typically between three and five years. Amortization of prepaid commissions is included in selling, general and administrative expenses in the accompanying condensed consolidated statement of operations.

Spain value-added tax receivable and bank withholdings

Spain value-added tax (“VAT”) is a consumption tax applied to most goods and services. Registered businesses can recover VAT paid on eligible purchases by submitting periodic tax returns. The VAT receivable represents the amount refundable from the Spanish tax authorities.

Prepaid professional services

Prepaid professional services consisted of payments made in advance for services such as accounting and legal services.

Dues and subscriptions

Dues and subscriptions consisted of payments made in advance for software subscriptions and trade and professional organizations. These payments are amortized on a straight-line basis over the term of the agreements.

Prepaid insurance

Prepaid insurance consisted of premiums paid for health, commercial and corporate insurance. These premiums are amortized on a straight-line basis over the term of the agreements.

Trade shows and travel

Trade shows and travel consisted of payments made in advance for trade show events.

Canadian goods and services and harmonized sales tax receivable

The goods and services tax and harmonized sales tax (“GST/HST”) is a Canadian value-added tax that applies to many goods and services. Registrants may claim refundable tax credits for GST/HST incurred through filing periodic tax returns. This GST/HST receivable is a receivable from the Canadian Revenue Agency.

Genasys Inc.

Notes to the Condensed Consolidated Financial Statements

(in thousands, except per share and share amounts)

(Unaudited)

10. ACCRUED AND OTHER LIABILITIES

Accrued liabilities consisted of the following:


	December 31, 2025		September 30, 2025
Deferred revenue	$	3,823	$	4,265
Payroll and related		2,480		2,471
Accrued contract costs		688		550
Warranty reserve		82		62
Short-term provision		58		83
Other		145		20
Total	$	7,276	$	7,451

Deferred revenue

Deferred revenue as of December 31, 2025, included prepayments from customers for services, including extended warranty, scheduled to be performed within the next twelve months. Deferred extended warranty consisted of warranties purchased in excess of the Company’s standard warranty. Extended warranties typically range from one to two years.

Payroll and related

Accrued payroll and related obligations consisted primarily of accrued bonus, accrued vacation, accrued sales commissions and benefits.

Accrued contract costs

Accrued contract costs consisted of accrued expenses for contracting a third-party service provider to fulfill repair and maintenance obligations required under a contract with a foreign military for units sold in the year ended September 30, 2011. Payments to the service provider will be made annually upon completion of each year of service. The Company is contractually obligated to provide such repair and maintenance services through November 2027. These services are being recorded in cost of revenues to correspond with the revenues for these services.

Warranty reserve

Changes in the warranty reserve and extended warranty were as follows:


	Three Months Ended December 31,
	2025			2024
Beginning balance	$	62		$	76
Warranty provision		27			—
Warranty settlements		(7	)		(6	)
Ending balance	$	82		$	70

The Company establishes a warranty reserve based on anticipated warranty claims at the time product revenue is recognized. Factors affecting warranty reserve levels include the number of units sold, anticipated cost of warranty repairs and anticipated rates of warranty claims. The Company evaluates the adequacy of the provision for warranty costs each reporting period and adjusts the accrued warranty liability to an amount equal to estimated warranty expense for products currently under warranty.

11. TERM LOANS AND WARRANT LIABILITIES

On May 13, 2024, the Company entered into a term loan and security agreement (the “Loan Agreement”), pursuant to which the Company received $14,700 in cash proceeds in exchange for a $15,000 term loan (the “Close Date Term Loan”) and the issuance of warrants to purchase up to 3,068,182 shares of the Company’s common stock (“Warrants”). Because the Close Date Term Loan and Warrants were determined to be freestanding financial instruments both recorded subsequently at fair value, the proceeds received were allocated to each instrument on a relative fair value basis.

On May 9, 2025, the Company entered into a First Amendment to Term Loan and Security Agreement (the “First Amendment”), which amended the terms of the Loan Agreement. Pursuant to the First Amendment, the lenders (the “Lenders”) agreed to: (i) extend an additional term loan to the Company in the aggregate principal amount of $4,000 (the “First Amendment Term Loan” and with the Close Date Term Loan, the “Term Loans”), and (ii) provide a process to obtain, at the Lenders’ sole discretion, an additional term loan of up to $4,000 (the “Additional Term Loan”). The terms of the existing $15,000 Close Date Term Loan remain

Genasys Inc.

Notes to the Condensed Consolidated Financial Statements

(in thousands, except per share and share amounts)

(Unaudited)

unchanged. As of December 31, 2025, the Additional Term Loan had not been drawn.

The Loan Agreement contains customary representation and warranties of the Company, affirmative and negative covenants, including without limitation restricting the Company from certain distributions, investments, indebtedness, sales of assets, loans and payments, of the Company, events of default and remedies thereupon, indemnification obligations of the Company, termination provisions, and other obligations and rights of the parties. All obligations under the Loan Agreement are secured by substantially all of the Company’s assets. As of December 31, 2025, the Company was in compliance with all financial and reporting covenants of the Loan Agreement.

The Company determined that the Term Loans were eligible for the FVO and accordingly elected the FVO for the Term Loans. This election was made because of operational efficiencies in valuing and reporting for the Term Loans in their entirety at each reporting date. As a result of electing the FVO, the Term Loans were recorded at fair value at issuance with subsequent remeasurements at fair value each reporting period. The Company recognizes the resulting gain or loss related to changes to the fair value of the Term Loans, other than changes associated with the Company’s own credit risk, on the condensed consolidated statements of operations within other income. The change in fair value related to the accrued interest components of the Term Loans is also included within other income on the condensed consolidated statement of operations. The change in fair value attributable to the Company’s own credit risk is recorded in other comprehensive income or loss in the Company’s condensed consolidated statements of operations and comprehensive loss. Direct costs and fees related to the Term Loans were expensed as incurred within other income on the condensed consolidated statement of operations.

Close Date Term Loan

The principal amount of the Close Date Term Loan is $15,000 and is payable upon maturity on May 13, 2026. The Close Date Term Loan provides a two percent original issue discount to the lenders. The Company is required to make quarterly interest payments on the Close Date Term Loan. The Company may elect to pay quarterly interest on the Close Date Term Loan based on the three-month Secured Overnight Financing Rate (“SOFR”) plus five percent (5%) in cash or the Company may elect to pay interest based on the three-month SOFR plus six percent (6%) with 50% paid in cash and the remainder paid by issuing shares of the Company’s common stock. The Company may voluntarily redeem the Close Date Term Loan within one year of the issuance at 101% of the principal amount and after one year at par value.

The Company utilized the discounted cash flow method with reliance on the Monte Carlo simulation model to determine the fair value of the Close Date Term Loan at issuance and subsequently at each reporting date. The fair value of the Close Date Term Loan was determined based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. One of the significant fair value assumptions is the discount rate, which was 36.0% and 36.1% as of December 31, 2025 and September 30, 2025, respectively.

A summary of the changes in the fair value of the Close Date Term Loan Level 3 rollforward is as follows:


	Three Months Ended
	December 31, 2025		December 31, 2024
Beginning balance	$	13,100	$	12,010
Change in fair value in net loss		720		370
Ending balance	$	13,820	$	12,380

First Amendment Term Loan

The principal of the First Amendment Term Loan is $4,000 and is payable upon maturity on December 31, 2025. The First Amendment Term Loan and any Additional Term Loan provided under the First Amendment will bear interest at a rate equal to the three-month Term SOFR plus five percent (5.00%) per annum. Interest on the outstanding principal balance of the First Amendment Term Loan and any Additional Term Loan is payable quarterly in arrears in cash. In addition, the Company will be required to pay to the Lenders, concurrently with each payment of principal under the First Amendment Term Loan and any Additional Term Loan, an additional amount such that the Lenders receive a total return equal to 30% of the principal amount being repaid, including the interest paid on such principal amount and such additional payment amount (“Minimum Return Amount”).

The Company utilized the discounted cash flow method with reliance on the Monte Carlo simulation model to determine the fair value of the First Amendment Term Loan at issuance and subsequently at each reporting date. The fair value of the First Amendment Term Loan was determined based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. One of the significant fair value assumptions is the discount rate, which was 34.8% as of September 30, 2025.

Genasys Inc.

Notes to the Condensed Consolidated Financial Statements

(in thousands, except per share and share amounts)

(Unaudited)

The Company recognized a loss on issuance of the First Amendment Term Loan of $480 which represents the difference between the cash received for the First Amendment Term Loan and the fair value of the First Amendment Term Loan at issuance. The loss on issuance of the First Amendment Term Loan is recorded within other income on the condensed consolidated statement of operations.

The Company paid off the First Amendment Term Loan as of December 31, 2025.


	Three Months Ended
	December 31, 2025
Beginning balance	$	4,910
Change in fair value in net loss		51
Payment		(4,961	)
Ending balance	$	—

Warrant Liabilities

The Company issued Warrants to the lenders to purchase up to 3,068,182 shares of the Company’s common stock at an initial exercise price of $2.53 per share, subject to certain adjustments. The Warrants are exercisable upon issuance through May 13, 2029 and may be exercised via cashless exercise.

The Warrants are recognized as liabilities in the condensed consolidated balance sheet and are subject to remeasurement at each balance sheet date from issuance. Any change in fair value is recognized in other income within the condensed consolidated statement of operations.

The Company utilized the Monte Carlo simulation model to determine the fair value of the warrant liabilities at issuance and subsequently at each reporting date. The fair value of the warrant liabilities is the present value of the warrant payoff at expiration; discounted at the risk-free rate. The fair value of the warrant liabilities was determined based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy.

The following is a summary of the fair value assumptions applied in determining the initial fair value and the subsequent fair value of the warrant liabilities as of each respective date:


	December 31,			September 30
	2025			2025
Discount Rate		3.6	%		3.7	%
Volatility		62.0	%		62.6	%

A summary of the changes in the fair value of the warrant liabilities Level 3 rollforward is as follows:


	Three Months Ended
	December 31, 2025			December 31, 2024
Beginning balance	$	3,570		$	6,640
Change in fair value in net loss		(870	)		(2,470	)
Ending balance	$	2,700		$	4,170

12. LEASES

The Company determines if an arrangement is a lease at inception. The guidance in ASC 842 defines a lease as a contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration. Operating lease ROU assets and lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date. The Company’s leases do not provide an implicit rate. The Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. Additionally, the portfolio approach is used in determining the discount rate used to present value lease payments. The ROU asset includes any lease payments made and excludes lease incentives and initial direct costs incurred.

The Company is party to operating leases for office and production facilities and equipment under agreements that expire at various dates through fiscal year 2028. The Company elected the package of practical expedients permitted under the lease standard. In electing the practical expedient package, the Company is not required to reassess whether an existing or expired contract is or contains a lease, reassess the lease classification for expired or existing leases nor reassess the initial direct costs for leases that

Genasys Inc.

Notes to the Condensed Consolidated Financial Statements

(in thousands, except per share and share amounts)

(Unaudited)

commenced before the adoption of ASC 842. The Company also elected the short-term lease exemption such that the lease standard was applied to leases greater than one year in duration. Leases with an initial term of twelve months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term.

The tables below show the operating lease ROU assets and liabilities as of September 30, 2025, and the balances as of December 31, 2025, including the changes during the periods.


	Operating lease ROU assets
Operating lease ROU assets as of September 30, 2025	$	2,419
Less amortization of operating lease ROU assets		(205	)
Operating lease ROU assets as of December 31, 2025	$	2,214


	Operating lease liabilities
Operating lease liabilities at September 30, 2025	$	3,343
Less lease principal payments on operating lease liabilities		(276	)
Operating lease liabilities as of December 31, 2025		3,067
Less non-current portion		(1,922	)
Current portion as of December 31, 2025	$	1,145

As of December 31, 2025, the Company’s operating leases have a weighted-average remaining lease term of 2.6 years and a weighted-average incremental borrowing rate of 4.23%. The maturities of the operating lease liabilities are as follows:


Fiscal year ending September 30,
2026 (remaining nine months)	$	933
2027		1,260
2028		1,047
2029		—
2030		—
Thereafter		—
Total undiscounted operating lease payments		3,240
Less imputed interest		(173	)
Present value of operating lease liabilities	$	3,067

For the three months ended December 31, 2025 and 2024, total lease expense under operating leases was approximately $239 and $235, respectively.

13. INCOME TAXES

The Company’s effective tax rate for the three months ended December 31, 2025 and 2024 was negative 18.1% and 0%, respectively.

For the three months ended December 31, 2025, the Company recorded an income tax expense of $125 using an estimated annual effective tax rate approach pursuant to ASC 740-270-25-2. For the three months ended December 31, 2024, the Company did not record an income tax benefit for the current period tax loss as the benefits were not expected to be realized during the current or future periods.

The Company continues to maintain a full valuation allowance against its U.S. and foreign deferred tax assets.

ASC 740, Income Taxes, requires the Company to recognize in its consolidated financial statements uncertainties in tax positions taken that may not be sustained upon examination by the taxing authorities. If interest or penalties are assessed, the Company would recognize these charges as income tax expense. The Company has not recorded any income tax expense or benefit for uncertain tax positions.

Genasys Inc.

Notes to the Condensed Consolidated Financial Statements

(in thousands, except per share and share amounts)

(Unaudited)

14. COMMITMENTS AND CONTINGENCIES

Litigation

We may at times be involved in litigation in the ordinary course of business. We will also, from time to time, when appropriate in management’s estimation, record adequate reserves in our financial statements for pending litigation.

On November 19, 2025, Gerry Darden, individually and as representative of the estate of Stacey Darden, filed a lawsuit in Los Angeles Superior Court against Southern California Edison Company and Edison International (collectively, the “Edison Defendants”) and the Company, related to the wildfire that occurred in early January 2025 in the Eaton Canyon/Altadena area of Los Angeles County. In the complaint, the plaintiff alleges products liability and negligence claims against the Company based on Los Angeles County’s use of the Company’s products and seeks unspecified damages. The Company cannot assess with any meaningful probability the likelihood of an adverse outcome or the possible loss or range of loss, if any, related to this lawsuit. The Company will vigorously defend itself in the lawsuit.

On January 20, 2026, the Edison Defendants filed a cross-complaint in Los Angeles Superior Court against the Company and 11 other public and private entities related to the same wildfire, in a lawsuit that had been filed by Jeremy Gursey against the Edison Defendants. In the cross-complaint, the Edison Defendants allege negligence claims against the Company based on Los Angeles County’s use of the Company’s products and seek unspecified contribution. The Company cannot assess with any meaningful probability the likelihood of an adverse outcome or the possible loss or range of loss, if any, related to this lawsuit. The Company will vigorously defend itself in the lawsuit.

15. SHARE-BASED COMPENSATION

Equity compensation plans

The Amended and Restated 2015 Equity Incentive Plan (“2015 Equity Plan”) expired on January 19, 2025, with awards relating to 4,918,238 shares of common stock remaining outstanding under such plan. The 2025 Equity Incentive Plan (“2025 Equity Plan” and, together with the 2015 Equity Plan, the “Equity Plans”) was adopted by the Company’s Board of Directors on January 27, 2025 and approved by the Company’s stockholders on March 17, 2025. The 2025 Equity Plan authorizes the issuance of stock options, restricted stock, stock appreciation rights, restricted stock units (“RSUs”) and performance awards, up to an aggregate of 6,000,000 shares of common stock to employees, directors, advisors or consultants. As of December 31, 2025, there were options and restricted stock units outstanding covering 4,592,248 shares of common stock under the Equity Plans, and 5,197,129 shares of common stock available for grant, for a total of 9,789,377 shares of common stock authorized and unissued under the Equity Plans.

Share-based compensation

The Company’s stock options have various restrictions that reduce option value, including vesting provisions and restrictions on transfer and hedging, among others, and are often exercised prior to their contractual maturity. Share-based compensation is accounted for in accordance with ASC Topic 718: Compensation - Stock Compensation. Total compensation expense for all share-based awards is based on the estimated fair market value of the equity instrument issued on the grant date. For share-based awards that vest based solely on a service condition, compensation expense is recognized on a straight-line basis over the total requisite service period for the entire award. For share-based awards that vest based on a market condition, compensation expense is recognized on a straight-line basis over the requisite service period of each separately vesting tranche. For share-based awards that vest based on a performance condition, compensation expense is recognized for the number of awards that are expected to vest based on the probable outcome of the performance condition. Compensation cost for these awards will be adjusted to reflect the number of awards that ultimately vest.

Stock options

A summary of the activity in options of the Company as of December 31, 2025, is presented below:


	Number of Shares			Weighted Average Exercise Price
Outstanding September 30, 2025		3,999,116		$	2.71
Granted		279,500		$	2.15
Forfeited/expired		(132,126	)	$	2.94
Exercised		(19,084	)	$	1.70
Outstanding December 31, 2025		4,127,406		$	2.67
Exercisable December 31, 2025		1,946,720		$	2.84

The aggregate intrinsic value of options outstanding and exercisable as of December 31, 2025 was $295 and $169, respectively. The aggregate intrinsic value represents the difference between the Company’s closing stock price on the last day of trading for the

Genasys Inc.

Notes to the Condensed Consolidated Financial Statements

(in thousands, except per share and share amounts)

(Unaudited)

quarter, which was $2.15 per share, and the exercise price multiplied by the number of applicable options. The total intrinsic value of stock options exercised during the three months ended December 31, 2025 was $32 and proceeds from these exercises were $32. The total intrinsic value of stock options exercised during the three months ended December 31, 2024 was $1 and proceeds from these exercises were $1.

The following table summarizes information about stock options outstanding as of December 31, 2025:


Range of Exercise Prices	Number Outstanding		Weighted Average Remaining Contractual Term		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$1.70-$1.70		662,791		5.17	$	1.70		380,222	$	1.70
$2.15-$2.45		319,500		9.38	$	2.16		13,959	$	2.26
$2.59-$2.59		694,750		5.93	$	2.59		227,852	$	2.59
$2.64-$2.68		85,000		4.49	$	2.67		52,292	$	2.67
$2.69-$2.69		1,000,000		3.77	$	2.69		200,000	$	2.69
$2.70-$3.39		702,138		4.16	$	2.92		542,763	$	2.98
$3.40-$6.87		663,227		2.89	$	3.68		529,632	$	3.71
		4,127,406		4.73	$	2.67		1,946,720	$	2.84

The Company recorded $229 and $242 of stock option compensation expense for employees, directors and consultants for the three months ended December 31, 2025 and 2024, respectively.

As of December 31, 2025, there were approximately $1,505 of total unrecognized compensation costs related to outstanding stock options. This amount is expected to be recognized over a weighted average period of 1.5 years. To the extent the forfeiture rate is different from what the Company anticipated, share-based compensation related to these awards will be different from the Company’s expectations.

Stock options that do not contain market-based vesting conditions are valued using the Black-Scholes option pricing model. The weighted average estimated fair value of employee stock options that vest without a market condition granted during the three months ended December 31, 2025 and 2024, was calculated using the Black-Scholes option-pricing model with the following weighted average assumptions (annualized percentages):


	Three Months Ended December 31,
	2025			2024
Volatility		61.6	%		60.7	%
Risk-free interest rate		3.6	%		4.1	%
Dividend yield		0.0	%		0.0	%
Expected term in years		3.7			3.6

Expected volatility is based on the historical volatility of the Company’s common stock over the period commensurate with the expected term of the options. The risk-free interest rate is based on rates published by the Federal Reserve Board. The contractual term of the options granted under the Company’s 2015 Equity Plan was seven years, and ten years for options granted under the Company’s 2025 Equity Plan. The expected term is based on observed and expected time to post-vesting exercise. The expected forfeiture rate is based on past experience and employee retention data. Forfeitures are estimated at the time of the grant and revised in subsequent periods if actual forfeitures differ from those estimates. Such revision adjustments to expense will be recorded as a cumulative adjustment in the period in which the estimate is changed. The Company has not paid a dividend for the three months ended December 31, 2025 and December 31, 2024.

Performance-based stock options

On October 8, 2022, the Company awarded performance-based stock options (“PVOs”) to purchase 800,000 shares of the Company’s common stock to an executive officer, with a contractual term of seven years. Vesting is based upon the achievement of certain performance criteria for each of fiscal year 2025 and 2026, including a minimum free cash flow margin and net revenue targets. Additionally, vesting is subject to the executive officer being employed by the Company at the time the Company achieves such financial targets. The Company did not record compensation expense related to these options. Those PVOs were cancelled in January 2026.

Genasys Inc.

Notes to the Condensed Consolidated Financial Statements

(in thousands, except per share and share amounts)

(Unaudited)

On March 20, 2023, the Company granted PVOs to purchase up to 450,000 shares of the Company’s stock to a key member of management with a contractual term of seven years. Vesting is based upon the achievement of certain performance criteria for each of the first three twelve-month periods following the employee’s start date, including targets related to growth in the institutional ownership of the Company’s common stock and growth in the trading volume of the Company’s common stock during such periods. Additionally, vesting is subject to the employee being employed by the Company on each of the first three anniversaries of the employee’s start date. 225,000 of these options contain a market-based vesting condition and accounting principles do not require the market condition to be achieved for compensation expense to be recognized. The Company recorded $3 of compensation expense related to these options during the three months ended December 31, 2024. The grant recipient is no longer employed by the Company, and the previously recorded PVO expense was reversed and included in the stock option compensation expense above.

The Company did not grant any PVOs during the three months ended December 31, 2025. As of December 31, 2025, there was no unrecognized compensation related to PVOs.

Restricted stock units

Compensation expense for RSUs was $190 and $149 for the three months ended December 31, 2025 and 2024, respectively. As of December 31, 2025, there was approximately $537 of total unrecognized compensation costs related to outstanding RSUs. This amount is expected to be recognized over a weighted average period of 1.2 years.

A summary of the Company’s RSUs as of December 31, 2025, is presented below:


	Number of Shares			Weighted Average Grant Date Fair Value
Outstanding September 30, 2025		277,342		$	2.62
Granted		219,555		$	2.20
Vested		(32,055	)	$	2.34
Forfeited/cancelled		—		$	—
Outstanding December 31, 2025		464,842		$	2.44

Performance-based units

On December 24, 2025, the Company granted 70,000 restricted stock units to its Chief Financial Officer, of which 35,000 were performance-based RSUs. Vesting is subject to the achievement of specified operational performance targets and continued employment. The Company has recognized compensation expense for the portion of the award deemed probable as of December 31, 2025. This RSU expense was included in the RSU expense above.

The Company recorded share-based compensation expense and classified it in the condensed consolidated statements of operations as follows:


	Three Months Ended December 31,
	2025		2024
Cost of revenues	$	21	$	17
Selling, general and administrative		353		326
Research and development		45		48
	$	419	$	391

Genasys Inc.

Notes to the Condensed Consolidated Financial Statements

(in thousands, except per share and share amounts)

(Unaudited)

16. STOCKHOLDERS’ EQUITY

Summary

The following table summarizes changes in the components of stockholders’ equity during the three months ended December 31, 2025 and 2024, respectively (amounts in thousands, except par value and share amounts):


	Common Stock
	Shares		Par Value Amount		Additional Paid-in Capital		Accumulated Deficit			Accumulated Other Comprehensive Income		Total Stockholders' Equity
Balance as of September 30, 2025		45,161,172	$	451	$	127,384	$	(125,904	)	$	687	$	2,167
Share-based compensation expense		—		—		419		—			—		419
Issuance of common stock upon exercise of stock options, net		19,084		—		32		—			—		32
Issuance of common stock upon vesting of restricted stock units		32,055		—		—		—			—		—
Other comprehensive income		—		—		—		—			5

Genasys Inc. 10-Q