Niagen Bioscience Inc.

03/04/2026 | Press release | Distributed by Public on 03/04/2026 15:01

Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of financial condition and results of operations should be read in conjunction with the consolidated financial statements and accompanying notes included elsewhere this Form 10-K. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Annual Report on Form 10-K. We encourage you to review the risks and uncertainties described in Part I. Item 1A. Risk Factors and Cautionary Notice Regarding Forward-Looking Statements.
Overview
Niagen Bioscience, Inc. and its wholly owned subsidiaries, ChromaDex, Inc., ChromaDex International, Inc., ChromaDex Analytics, Inc., ChromaDex Asia Limited, Asia Pacific Scientific, Inc., ChromaDex Asia Pacific Ventures Limited, ChromaDex Europa B.V., and ChromaDex Trading (Shanghai) Co., Ltd. (collectively, "Niagen Bioscience," the "Company" or, in the first person as "we" "us" and "our") are a global bioscience company dedicated to promoting healthy aging. Our team, which includes world-renowned scientists, is pioneering research on nicotinamide adenine dinucleotide (NAD+), an essential coenzyme that regulates cellular metabolism and is present in every cell of the human body. NAD+ levels naturally decline with age, by up to 65% between ages 30 and 70, and can also be impacted by poor diet, excess alcohol consumption, and certain disease states. Increasing NAD+ levels through NAD+ precursors, calorie restriction, or moderate exercise has been shown to support healthy cellular function. We are at the forefront of developing and commercializing effective methods to support NAD+ levels and promote healthy aging.
In 2013, we commercialized food-grade Niagen®, a proprietary form of nicotinamide riboside chloride ("NRC" or "NRCL," commonly referred to as "NR"), a novel form of vitamin B3, as both a dietary and food ingredient. In 2017, we expanded our offerings with the launch of Tru Niagen®, a finished dietary supplement featuring Niagen®, available directly to consumers. In 2024, Niagen Plus products launched, which are products featuring pharmaceutical-grade Niagen®. We supply pharmaceutical-grade Niagen® to U.S. FDA-registered 503B outsourcing facilities, in addition to compound pharmacies abroad, which compound and distribute Niagen® intravenous (Niagen IV) and injectable Niagen® formulations for use under prescription. Food-grade Niagen® is authorized for human consumption as a dietary supplement and is generally recognized as safe (GRAS), while pharmaceutical-grade Niagen® is permitted by the FDA for compounding by 503B outsourcing facilities.
Our operations are subject to regulation by various state and federal agencies. Dietary supplements are subject to FDA, FTC and U.S. Department of Agriculture regulations relating to composition, labeling and advertising claims. These regulations may in some cases, particularly with respect to those applicable to new ingredients, require a notification that must be submitted to the FDA along with evidence of safety and similar regulations exist related to food additives.
Recent Activities
Queen's University Belfast Agreement
Effective December 16, 2025, the Company entered into an assignment agreement with Queen's University Belfast (QUB) that replaced the parties' prior intellectual property arrangements (the "Assignment Agreement"). Under the Assignment Agreement, QUB assigned to us all of its interest in certain patent rights that had been previously jointly owned with, or licensed from, QUB.
As a result of the transaction, we obtained full ownership of the applicable patent rights, terminated our prior royalty and license arrangements with QUB, and eliminated future royalty and sublicense obligations under those agreements. In connection with the Assignment Agreement, we recorded $5.5 million of intangible assets and corresponding deferred consideration related to the patents acquired.
In addition, previously accrued royalty and license liabilities totaling approximately $3.5 million were settled for consideration of approximately $1.5 million. As a result, we recognized a gain of approximately $2.0 million during the year ended December 31, 2025. The settlement consideration relates solely to royalty and license obligations incurred prior to termination of the agreements and is separate from the consideration attributable to the acquisition of patent rights. See Note 7. Intangible Assets, Netand Note 15. Commitments and Contingencies for further information.
Assets Held for Sale - Analytical Reference Standards and Services Segment
During the year ended December 31, 2025, we committed to a plan to sell substantially all of the assets of our analytical reference standards and services operating segment. As of December 31, 2025, the assets associated with this segment met the criteria to be classified as held for sale and were presented as assets held for sale in our consolidated balance sheets. The assets held for sale primarily consist of inventory, certain long-lived assets, customer lists and contracts, and a trade name.
On February 24, 2026, we entered into a definitive asset purchase agreement with a third party to sell substantially all of the assets of this operating segment for total consideration of approximately $6.0 million, less working capital adjustments of approximately $0.2 million. The buyer will assume operating liabilities arising after the closing date, while we will retain accounts receivable and accounts payable incurred prior to the date of the sale, related to the disposed assets.
In connection with the disposition, we entered into a transition services agreement pursuant to which we will continue to provide certain operational and administrative services to the buyer for a period of up to six months following the closing date. We will receive a service fee for these services, which will be recognized as the services are provided.
The results of operations of the analytical reference standards and services operating segment are included in continuing operations for all periods presented, as the disposition does not represent a strategic shift that will have a major effect on our operations or financial results, , therefore it does not meet the criteria for discontinued operations treatment.
Results of Operations
Our results of operations for the years ended December 31, 2025 and 2024 are as follows:
Year Ended December 31,
(In thousands) 2025 2024
Sales $ 129,423 $ 99,597
Cost of sales 46,234 38,011
Gross profit 83,189 61,586
Operating expenses (income)
Sales and marketing 35,506 29,469
Research and development 6,330 6,016
General and administrative 27,057 18,375
Gain on settlement of royalty obligation (1,983) -
Nonoperating income (expenses):
Interest income, net 2,127 1,129
IRS ERTC disallowance (214) -
Income before provision for income taxes 18,192 8,855
Provision for income taxes 810 305
Net income $ 17,382 $ 8,550
Our income per share applicable to common stockholders for the years indicated is calculated as follows:
Year Ended December 31,
(In thousands, except per share data) 2025 2024
Numerator:
Net income 17,382 8,550
Denominator:
Weighted average common shares outstanding for basic earnings per share (1) 79,178 75,929
Plus: incremental shares from assumed exercise of options and assumed vesting of restricted stock (2) 6,258 2,196
Adjusted weighted average common shares outstanding for diluted earnings per share 85,436 78,125
Earnings Per Share:
Basic net income per common share $ 0.22 $ 0.11
Diluted net income per common share $ 0.20 $ 0.11
(1) Includes a weighted average of approximately 167,000 nonvested shares of restricted stock for each of the years ended December 31, 2025 and 2024, which are participating securities that feature voting and dividend rights.
(2) For the years ended December 31, 2025 and 2024, the Company had outstanding restricted stock awards and stock options. Restricted stock awards were dilutive and included in the calculation of diluted earnings per share, while certain stock options outstanding were anti-dilutive and, accordingly, were excluded from the calculation of weighted-average common shares outstanding. The following table presents the anti-dilutive stock options for the periods presented:
Year Ended December 31,
(In thousands) 2025 2024
Stock options 1,682 4,087
Net Sales.Net sales consist of gross sales less discounts and returns. Our total net sales grew from $67.4 million in 2021 to $129.4 million in 2025, representing a compound annual growth rate of 18%.
Total net sales by reportable segment for the years ended December 31, 2025 and 2024 are as follows:
Year Ended December 31,
($ In thousands) 2025 2024 % Change
Net sales:
Consumer Products $ 97,672 $ 76,772 27 %
Ingredients 28,675 19,814 45
Analytical reference standards and services 3,076 3,011 2
Total net sales $ 129,423 $ 99,597 30 %
In 2025, our total net sales increased 30%, up $29.8 million, from 2024. The pharmaceutical segment did not generate revenue during the periods presented.
•In 2025, Tru Niagen® sales increased by $20.9 million, or 27%, compared to 2024. This growth was primarily driven by a $16.2 million increase in sales from our e-commerce business, reflecting continued growth in consumer demand and effective digital marketing initiatives. The remaining increase was attributable to higher sales to distributor partners of approximately $5.6 million. These increases were partially offset by a decline of approximately $0.9 million in sales to A.S. Watson.
•In 2025, total ingredient sales increased by $8.9 million, or 45%, compared to 2024. This growth was primarily driven by higher sales to existing food-grade Niagen® partners, which contributed approximately $6.6 million. In addition, sales of pharmaceutical-grade Niagen® ingredient increased by $2.1 million, reflecting the inclusion of a full year of post-launch sales activity compared to 2024.
•Net sales for our analytical reference standards and services segment increased slightly by approximately $0.1 million in 2025 compared to 2024.
Cost of Sales.Costs of sales include raw materials, labor, overhead and delivery costs. The following table sets forth our total cost of sales by reportable segment:
Year Ended December 31,
2025 2024 Change
($ In thousands) Amount % of
net sales 		Amount % of
net sales
% of
net sales (in basis points)
Cost of sales:
Consumer Products $ 32,784 34 % $ 27,478 36 % (200)
Ingredients 11,119 39 7,808 39 -
Analytical reference standards and services 2,331 76 2,725 91 (1,500)
Total cost of sales $ 46,234 36 % $ 38,011 38 % (200)
Total cost of sales, as a percentage of net sales, remained relatively stable improving a slight 200 basis points in 2025 compared to 2024. Changes in cost of sales, as a percentage of net sales, were primarily driven by the following:
•Cost of sales, as a percentage of net sales, for our consumer products segment can fluctuate due to business mix, product mix, inflationary costs, and optimization efforts in our supply chain, among other factors. For the year ended December 31, 2025, cost of sales as a percentage of net sales improved by 200 basis points compared to the same period in 2024. The improvement was attributable to a favorable shift in business mix and the use of lower-cost inventory purchases.
•Cost of sales as a percentage of net sales in our ingredients segment is influenced by various factors, including inventory purchase costs, fixed supply chain overhead, and transportation and storage expenses. For the year ended December 31, 2025, cost of sales for our ingredients segment as a percentage of net sales remained at 39%, unchanged from the prior year.
•Cost of sales as a percentage of net sales in our analytical reference standards and services segment is influenced by various factors, including inventory purchase costs, fixed supply chain overhead, and transportation and storage expenses. In 2025, cost of sales as a percentage of net sales improved by 1,500 basis points compared to 2024. Due to the segment's smaller scale, relatively small changes in cost structure have historically resulted in significant percentage variability. Net sales were relatively stable, while cost of sales declined modestly compared to the same period in 2024.
Gross Profit.Gross profit represents net sales less cost of sales and is affected by a number of factors, including business and product mix, pricing and costs of materials, labor, overhead, services and delivery. Since 2021, total gross profit increased from $41.5 million to $83.2 million in 2025, representing a compound annual growth rate of approximately 19%. For fiscal year 2025, gross profit increased $21.6 million, or 35%, compared to 2024. Our overall gross margin percentage was 64.3% for fiscal year 2025, an increase of 250 basis points compared to 2024.
The following table sets forth our total gross profit by reportable segment:
Year Ended December 31,
($ In thousands) 2025 2024 % Change
Gross profit:
Consumer Products $ 64,888 $ 49,294 32 %
Ingredients 17,556 12,006 46
Analytical reference standards and services 745 286 160
Total gross profit $ 83,189 $ 61,586 35 %
For details supporting year-over-year changes in gross profit refer to the discussions above surrounding changes in our net sales and cost of sales for each segment.
Operating Expenses - Sales and Marketing.Sales and marketing expense consists of salaries, advertising, public relations, marketing expenses and commissions. Sales and marketing expense by reportable segment is as follows:
Year Ended December 31,
2025 2024 Change
($ In thousands) Amount % of
net sales 		Amount % of
net sales
% of
net sales
(in basis points)
Advertising expenses:
Consumer Products $ 12,655 13 % $ 11,102 14 % (100)
Total advertising expenses $ 12,655 10 % $ 11,102 11 % (100)
Marketing expenses:
Consumer Products $ 11,490 12 % $ 8,346 11 % 100
Ingredients 102 - 195 1 (100)
Analytical reference standards and services 2 - 4 - -
Total marketing expenses $ 11,594 9 % $ 8,545 9 % -
Selling expenses:
Consumer Products $ 10,766 11 % $ 9,285 12 % (100)
Ingredients 144 1 40 - 100
Analytical reference standards and services 347 11 497 17 (600)
Total selling expenses $ 11,257 9 % $ 9,822 10 % (100)
Total sales and marketing expenses:
Consumer Products $ 34,911 36 % $ 28,733 37 % (100)
Ingredients 246 1 235 1 -
Analytical reference standards and services 349 11 501 17 (600)
Total sales and marketing expenses $ 35,506 27 % $ 29,469 30 % (300)
Total sales and marketing expenses increased by $6.0 million, or 20%, to $35.5 million in 2025 compared to $29.5 million in 2024. As a percentage of net sales, total sales and marketing expenses improved to 27% in 2025 from 30% in 2024, reflecting improved operating leverage. Changes in sales and marketing expense, as a percentage of net sales, were primarily driven by the following:
•For our consumer products segment, sales and marketing expenses increased by $6.2 million to $34.9 million in 2025 compared to $28.7 million in 2024. As a percentage of net sales, these expenses decreased to 36% of net sales in 2025 from 37% in 2024. The increase in spending was primarily driven by higher marketing investments, including public relations activities, personnel-related costs, professional services, and promotional initiatives, as well as increased advertising spend. Advertising expenses increased by $1.6 million compared to 2024; however, advertising expense as a percentage of net sales improved by 100 basis points to 13%, reflecting improved efficiency of advertising spend. Selling expenses increased by $1.5 million to $10.8 million in 2025 compared to $9.3 million in 2024. As a percentage of net sales, selling expenses decreased by 100 basis points to 11%, reflecting leverage from higher sales volumes.
•For our ingredients segment, sales and marketing expense remained approximately stable year-over-year at $0.2 million. As a percentage of net sales, sales and marketing expenses remained nominal at 1%. Year-over-year changes in sales and marketing expenses primarily reflected the timing of marketing activities, including higher marketing investment in 2024 related to the launch of our pharmaceutical-grade Niagen® ingredient. Selling expenses increased modestly in 2025 compared to 2024 but remained minimal in absolute dollars and as a percentage of net sales.
•For our analytical reference standards and services segment, sales and marketing expense decreased to approximately $0.3 million in 2025 from $0.5 million in 2024. As a percentage of net sales, these expenses decreased to 11% in 2025 from 17% in 2024. The decrease was primarily driven by lower selling expenses, reflecting more efficient allocation of sales resources. Marketing expenses also declined year-over-year and remained minimal in absolute dollars and as a percentage of net sales.
For our pharmaceuticals segment, no sales and marketing expenses were incurred in 2025 and 2024, as the segment remains in the research and development stage and has not yet commenced commercial activities.
Operating Expenses - Research and Development.Research and development (R&D) expenses consist primarily of personnel-related costs, clinical trials, product development, and process development expenses. Prior-period amounts have been recast to conform to the current period segment presentation. R&D expenses by reportable segment were as follows:
Year Ended December 31,
($ In thousands) 2025 2024 % Change
R&D expenses:
Consumer Products $ 3,166 $ 3,384 (6) %
Ingredients 930 873 7
Pharmaceuticals 2,234 1,759 27
Total R&D expenses $ 6,330 $ 6,016 5 %
•R&D expenses in our pharmaceuticals segment increased by $0.5 million for the year ended December 31, 2025 compared to 2024. This increase primarily reflects continued research and development of an NAD+ precursor-based candidate for potential therapeutic applications in rare diseases.
•The remaining R&D expenses related to our Niagen® branded ingredient are allocated to the consumer products and ingredients segments based on recorded revenues. For the year ended December 31, 2025, total R&D expenses allocated to consumer products and ingredients segments decreased by $0.2 million compared to 2024.
Operating Expenses - General and Administrative.General and administrative expense consists of general company administration, legal, royalties, IT, accounting and executive management expenses. General and administrative expenses are not allocated by segment and instead are classified under our Corporate and Other category. General and administrative expense for the years indicated were as follows:
Year Ended December 31,
($ In thousands) 2025 2024 % Change
General and administrative $ 27,057 $ 18,375 47 %
Total general and administrative expenses increased by $8.7 million, or 47%, for the year ended December 31, 2025, compared to 2024. The increase was primarily driven by $3.8 million in higher employee-related expenses and share-based compensation, $1.5 million in increased professional and consulting fees, and $2.9 million in higher royalty expense, with the remainder attributable to increases across various general and administrative cost categories. The increase in royalty expense was primarily due to the absence of a $3.5 million reversal of previously accrued royalties and license maintenance fees recognized in the year ended December 31, 2024.
Operating income - Gain on settlement of royalty obligation. Operating income for the year ended December 31, 2025 consisted of a gain of approximately $2.0 million related to the settlement of royalty and license obligations in connection with the Assignment Agreement with Queen's University Belfast.
Nonoperating income (expenses).Interest income, net consists of interest earned from bank deposit accounts and investments in money market funds managed by banks less interest expenses from the line of credit arrangement and finance leases. Interest income, net totaled $2.1 million and $1.1 million for the years ended December 31, 2025 and 2024, respectively. Additionally, nonoperating expenses included approximately $0.2 million related to the disallowance of previously claimed Employee Retention Tax Credits.
Net Income (Loss).Net income (loss) is gross profit less total operating expenses plus nonoperating income, net. Since 2021, total net loss has improved from $(27.1) million to a net income of $17.4 million in 2025. For the year ended December 31, 2025, net income improved $8.8 million, or 103%, compared to prior year ended December 31, 2024.
Depreciation and Amortization.Depreciation expense was $612,000 and $663,000 for the years ended December 31, 2025 and 2024, respectively. We depreciate our assets on a straight-line basis, based on the estimated useful lives of the respective assets.
Amortization expense of intangible assets was $173,000 and $151,000 for the years ended December 31, 2025 and 2024, respectively. We amortize intangible assets using a straight-line method, generally over 10 years. For licensed patent rights, the useful lives are 10 years or the remaining term of the patents underlying licensing rights, whichever is shorter. The useful life of subsequent milestone payments that are capitalized match the remaining useful life of the initial licensing payment that was originally capitalized. Noncash lease expense related to right-of-use assets for the year ended December 31, 2025 was $665,000 compared to $670,000 for the year ended December 31, 2024.
Income Taxes.Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. For the year ended December 31, 2025, the Company's effective tax rate was 4.5%. The Company reduced its valuation allowance by approximately $3.8 million to $40.5 million as of December 31, 2025 from $44.3 million as of December 31, 2024. For the year ended December 31, 2024, the Company maintained a full valuation allowance against the entire deferred income tax balance which resulted in an effective tax rate of 3.5%. As defined in ASC 740, Income Taxes, future realization of the tax benefit will depend on the existence of sufficient taxable income, including the expectation of continued future taxable income.
Trade Receivables.As of December 31, 2025, we had approximately $9.7 million in trade receivables, compared to approximately $7.8 million as of December 31, 2024. The increase in trade receivables is primarily attributable to higher net sales during the year ended December 31, 2025.
Inventories.As of December 31, 2025, we had approximately $20.4 million in inventory, compared to approximately $9.2 million as of December 31, 2024. The increase in inventory is primarily due to higher inventory levels maintained to support business growth and to build adequate reserves to meet increased demand.
As of December 31, 2025, our inventory consisted of approximately $13.0 million of consumer products and $7.5 million of bulk ingredients. Consumer products inventory consists of Tru Niagen® branded finished bottles of dietary supplement products and related work-in-process inventory. Bulk ingredients are proprietary compounds sold to customers in larger quantities, typically in kilograms, for use in the dietary supplement, food and beverage industries, as well as by 503B outsourcing facilities that compound our pharmaceutical-grade ingredient into intravenous and injectable forms.
We regularly review inventories on hand and reduce the carrying value for slow-moving and obsolete inventory, inventory not meeting quality standards, and inventory subject to expiration. Reductions in carrying value are based on current estimates of future product demand, market conditions and related management judgment. Any significant unanticipated changes in future product demand or market conditions that vary from current expectations could have an impact on the value of inventories. We continuously evaluate our supply chain and work with suppliers and manufacturing partners to improve sourcing and manufacturing efficiency, which we believe supports inventory cost management and gross margin performance.
Accounts Payable.As of December 31, 2025, we had $10.8 million in accounts payable compared to approximately $8.5 million as of December 31, 2024. The increase was primarily driven by higher accounts payable to inventory suppliers, reflecting increased inventory purchases, as well as changes in the timing of purchases and payments to our vendors.
Liquidity and Capital Resources
For the year ended December 31, 2025, we recorded a net income of approximately $17.4 million and operating activities provided cash of $13.5 million. While from inception through December 31, 2025 we have incurred aggregate losses of $164.5 million, these losses were primarily due to expenses associated with the development and expansion of our operations and investments to protect our intellectual property, including litigation-related expenses. Historically, our operations were financed primarily through capital contributions, including the issuance of common stock in private placements, as well as cash generated from sales. As our operating results and cash generation have improved, our liquidity profile has strengthened.
Our board of directors periodically reviews our capital requirements in light of our operating performance, growth initiatives, and long-term business objectives. Our future capital requirements will be influenced by several factors, including cash flows from operations, sales growth, gross margin performance, planned investments in research and development and commercialization activities, and the timing and scale of potential strategic initiatives. While we currently expect to fund our operations primarily through existing cash resources and cash generated from operations, we may, from time to time, consider additional financing to support strategic investments or growth opportunities. Any such financing may include equity or debt financings, collaborative arrangements, or other sources of capital.
As of December 31, 2025, our cash and cash equivalents totaled approximately $64.8 million, including $152,000 of restricted cash. Our cash and cash equivalents as of December 31, 2025 consisted of bank deposits and short-term investments of highly liquid investment-grade debt instruments with an original maturity of three months or less.In addition, as of December 31, 2025, we had purchase obligations of approximately $23.4 million related to inventory purchase commitments and approximately $3.2 million related to future minimum lease obligations to be paid over twelve months and five years, respectively, as well as fixed, unconditional deferred consideration obligations of approximately $9.5 million and £0.4 million payable through 2038 in connection with the assignment of certain patent rights. As of December 31, 2025 and 2024, we had no material off-balance sheet arrangements and no borrowings outstanding under our line of credit. We believe that our current unrestricted cash and cash equivalents, together with cash expected to be generated from operations will be sufficient to meet our financial obligations as they become due over at least the next twelve months and beyond.
Net cash provided by operating activities.Cash provided by operating activities is net income adjusted for certain non-cash items and changes in operating assets and liabilities. Net cash provided by operating activities was $13.5 million for the year ended December 31, 2025, compared to $12.1 million for the year ended December 31, 2024, increasing $1.4 million. Operating cash flow for the year ended December 31, 2025 was driven by improved operating results, partially offset by increased investment in working capital.
Net income for the year ended December 31, 2025 was $17.4 million, compared to $8.6 million in 2024. Net income was adjusted for several non-cash items, including $6.1 million of share-based compensation expense and a $2.0 million gain on the settlement of previously accrued royalty obligations related to the Queen's University Belfast patent assignment. In addition, the reversal of previously accrued royalty and license maintenance fees in 2024 did not recur in 2025.
Changes in working capital resulted in a net use of cash during 2025, primarily driven by inventory and accounts payable. Increased inventory purchases resulted in an $11.6 million use of cash during the year, reflecting higher inventory levels maintained to support business growth. This compares to a $5.3 million source of cash in 2024, when inventory balances declined. The increase in inventory was partially offset by a $2.3 million source of cash from higher accounts payable balances, primarily related to inventory suppliers. Changes in prepaid expenses, deferred revenue, and other operating assets and liabilities had a less significant impact on operating cash flows.
Net cash used in investing activities.Investing cash flows consist primarily of capital expenditures and investment activities. Net cash used in investing activities was approximately $0.3 million for the years ended December 31, 2025, compared to $0.1 million for the years ended December 31, 2024.
Net cash provided by financing activities.Financing cash flows consist primarily of exercise of stock options through employee equity incentive plans and shares repurchases. Net cash provided by financing activities was $6.9 million for the year ended December 31, 2025, compared to $5.4 million for the year ended December 31, 2024, representing an increase of $1.5 million. The increase in net cash provided by financing activities was primarily driven by a $1.8 million increase in proceeds from stock option exercises in 2025, partially offset by a $0.3 million of common stock repurchase in 2025.
Dividend Policy
We have not declared or paid any cash dividends on our common stock. We presently intend to retain earnings for use in our operations and to finance our business. Any change in our dividend policy is within the discretion of our board of directors and will depend, among other things, on our earnings, debt service and capital requirements, restrictions in financing agreements, if any, business conditions, legal restrictions and other factors that our board of directors deems relevant.
Stock Repurchase Program
On November 6, 2025, our board of directors approved a share repurchase program (the "Share Repurchase Program") authorizing the Company to repurchase up to $10.0 million of its common stock. The Share Repurchase Program expires October 31, 2027, and may be modified, suspended, or discontinued at any time. During the three months ended December 31, 2025, the Company repurchased 35,840 shares of common stock under the Share Repurchase Program for aggregate purchases of approximately $0.3 million.
Critical Accounting Estimates
The discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures. On an ongoing basis, we evaluate these estimates, including those related to deferred revenue recognition. We base our estimates on historical experience and other various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. For a summary of our significant accounting policies, including the accounting policy discussed below, see Note 2 of the Financial Statements, set forth in Item 8 of this Form 10-K.
Revenue recognition:We recognize revenue in accordance with Financial Accounting Standards Board (FASB) Topic 606 - Revenue for Contracts from Customers which provides a single, comprehensive set of criteria for revenue recognition within and across all industries.
The revenue standard provides a five-step framework for recognizing revenue as control of promised goods or services is transferred to a customer at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To determine revenue recognition for arrangements that are within the scope of the revenue standard, we perform the following five step analyses: (i) identify the contract; (ii) identify the performance obligations; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) we satisfy a performance obligation. We recognize sales and the related cost of sales when the performance obligations are satisfied. The performance obligations are typically satisfied upon shipment of physical goods or as the services are performed over time. Discounts, returns and allowances related to sales, including an estimated reserve for the returns and allowances, are recorded as reduction of revenue.
Whenever we determine that goods or services promised in a contract should be accounted for as a combined performance obligation over time, we determine the period over which the performance obligations will be performed and revenue will be recognized. If we determine that the performance obligation is satisfied over time, any upfront payment received is initially recorded as deferred revenue on our consolidated balance sheets.
Revenue is then recognized utilizing the output method based on an estimated rate to allocate the transaction price for this performance obligation as products or services are supplied over the duration of the contract. We believe this most appropriately depicts our performance towards complete satisfaction of the performance obligation to our customer. Certain judgments affect the application of our revenue recognition policy. For example, when utilizing the output method, we estimate total delivery volume based on our current operating plan, forecast inputs received from the customer for expected purchases, minimum purchase commitments by the customer and historical experience with similar customer contracts. Accordingly, we may recognize a different amount of deferred revenue over the next 12-month period if our plan changes in the future or if our customer informs us of changes to their expected purchases. As of December 31, 2025 and 2024, we held deferred revenue balances of $2.7 million and $2.6 million, respectively.
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