{"url_path":"/sec/vivs/10-k/2026/item-8","section_key":"item-8","section_title":"Item 8 Consolidated Financial Statements.","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-07-14","source_url":"https://www.sec.gov/Archives/edgar/data/1497253/0001193125-26-303316-index.html","accession_number":"0001193125-26-303316","cik":"0001497253","ticker":"VIVS","issuer_name":"VivoSim Labs, INC.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1497253/0001193125-26-303316-index.html","primary_entity_key":"0001497253","primary_entity_name":"VivoSim Labs, INC."},"word_count":14214,"has_tables":true,"body_markdown":"Item 8. Consolidated Financial Statements.\n\nVivoSim Labs, Inc.\n\nIndex to Consolidated Financial Statements\n\n \n\n \n\nPage\n\nNumber\n\n[Report of Independent Registered Public Accounting Firm (PCAOB #89)](#report_of_independent_audit_firm)\n\n \n\nF-2\n\n[Consolidated Balance Sheets as of March 31, 2026 and 2025](#consolidated_balance_sheets)\n\n \n\nF-4\n\n[Consolidated Statements of Operations and Other Comprehensive Loss for the years ended March 31, 2026 and 2025](#consolidated_statements_operations_or_co)\n\n \n\nF-5\n\n[Consolidated Statements of Stockholders’ Equity for the years ended March 31, 2026 and 2025](#consolidated_statements_stockholders_equ)\n\n \n\nF-6\n\n[Consolidated Statements of Cash Flows for the years ended March 31, 2026 and 2025](#consolidated_statements_cash_flows)\n\n \n\nF-7\n\n[Notes to Consolidated Financial Statements](#notes_to_consolidated_financial_stat)\n\n \n\nF-9\n\n \n\n \n\nF-1\n\n \n\nReport of Independent Registered Public Accounting Firm\n\n \n\n \n\nTo the Board of Directors and Stockholders of:\n\nVivoSim Labs, Inc.\n\n \n\nOpinion on the Financial Statements\n\nWe have audited the accompanying consolidated balance sheets of VivoSim Labs, Inc., formerly known as Organovo Holdings, Inc., (the “Company”) as of March 31, 2026 and 2025, and the related statements of operations and other comprehensive loss, stockholders’ equity, and cash flows for each of the years in the two-year period ended March 31, 2026, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2026 and 2025, and the results of its operations and its cash flows for each of the years in the two-year period ended March 31, 2026, in conformity with accounting principles generally accepted in the United States of America.\n\n \n\nGoing Concern Uncertainty\n\nThe accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has incurred recurring losses and negative cash flows from operations and is dependent on additional financing to fund operations. These conditions raise substantial doubt about its ability to continue as a going concern. Management’s plans regarding these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.\n\n \n\nBasis for Opinion\n\nThese financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\n \n\nWe conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.\n\n \n\nOur audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.\n\nCritical Audit Matters\n\nThe critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.\n\nAccounting for and Valuation of Warrants\n\nAs described in Notes 2 and 6 to the financial statements, the Company completed an offering on March 31, 2026 that included common stock, pre-funded warrants, common warrants, and placement agent warrants. Management evaluated the warrants to determine whether they should be classified as equity or liabilities in accordance with ASC 480 and ASC 815. Certain warrant terms, including exercise price adjustments, beneficial ownership limitations, cashless exercise provisions, and price protection features, required management to apply significant judgment in evaluating the appropriate accounting classification. To the extent warrants were classified as liabilities, management measured the warrants at fair value using valuation techniques that required significant assumptions.\n\n \n\nWe identified the classification and valuation of the warrants issued in the March 31, 2026 offering as a critical audit matter. The principal considerations for our determination were the significant judgment required by management to evaluate the contractual terms\n\nF-2\n\n \n\nof the warrant agreements and determine whether the warrants should be classified as equity or liabilities under ASC 480 and ASC 815. In particular, the evaluation required consideration of complex warrant provisions, including cashless exercise rights, beneficial ownership limitations, anti-dilution and price protection provisions, exercise price adjustments, settlement provisions, term, and the Black-Scholes exchange feature. In addition, for any warrants classified as liabilities, the determination of fair value required the use of valuation models and significant assumptions. Auditing these judgments involved especially challenging and complex auditor judgment, including the need to evaluate the application of complex accounting guidance to the specific terms of the warrant agreements and, as applicable, the reasonableness of the valuation methodology and significant assumptions used in measuring the warrant liability.\n\n \n\nOur audit procedures related to the classification and valuation of the warrants included the following, among others:\n\n•\nWe obtained and inspected the warrant agreements, securities purchase agreement, placement agent agreement, and other offering documents related to the March 31, 2026 offering.\n\n•\nWe evaluated whether management appropriately identified the relevant contractual terms of the common warrants, pre-funded warrants, and placement agent warrants, including provisions related to exercise price, term, cashless exercise, beneficial ownership limitations, anti-dilution and price protection adjustments, settlement alternatives, and the Black-Scholes exchange feature.\n\n•\nWe evaluated management’s accounting analysis under ASC 480 and ASC 815, including management’s conclusions regarding whether the warrants represented freestanding financial instruments and whether the warrants met the criteria for equity classification or liability classification.\n\n•\nWe assessed management’s consideration of whether the warrant provisions could require settlement in a manner that would preclude equity classification, including provisions related to price protection, exercise price adjustments, and cashless or exchange settlement features.\n\n•\nWe tested the mathematical accuracy of management’s analysis and agreed key terms used in the analysis to the executed warrant agreements and related offering documents.\n\n•\nFor any warrants classified as liabilities, we evaluated the valuation methodology used by management to estimate fair value and tested significant inputs and assumptions, including the Company’s stock price, exercise price, expected term, volatility, risk-free interest rate, expected dividends, and assumptions related to the Black-Scholes exchange feature.\n\n•\nWe involved valuation specialists, to assist in evaluating the appropriateness of the valuation model and the reasonableness of significant assumptions used to estimate the fair value of any liability-classified warrants.\n\n•\nWe evaluated the adequacy of the Company’s disclosures in Notes 2 and 6 related to the warrant terms, accounting policy, classification conclusions, and valuation of any liability-classified warrants.\n\n \n\n/s/ Rosenberg Rich Baker Berman, P.A.\n\n \n\n \n\nWe have served as the Company’s auditor since 2023.\n\nSomerset, New Jersey\n\nJuly 14, 2026\n\n \n\nF-3\n\n \n\nVIVOSIM LABS, INC.\n\nCONSOLIDATED BALANCE SHEETS\n\n(in thousands except for share and per share data)\n\n \n\n \n\nMarch 31, 2026\n\n \n\n \n\nMarch 31, 2025\n\n \n\nAssets\n\n \n\n \n\n \n\n \n\n \n\n \n\nCurrent Assets\n\n \n\n \n\n \n\n \n\n \n\n \n\nCash and cash equivalents\n\n \n\n$\n\n5,024\n\n \n\n \n\n$\n\n11,312\n\n \n\nAccounts receivable\n\n \n\n \n\n32\n\n \n\n \n\n \n\n30\n\n \n\nEscrow receivable\n\n \n\n \n\n1,014\n\n \n\n \n\n \n\n—\n\n \n\nPrepaid expenses and other current assets\n\n \n\n \n\n557\n\n \n\n \n\n \n\n789\n\n \n\nTotal current assets\n\n \n\n \n\n6,627\n\n \n\n \n\n \n\n12,131\n\n \n\nFixed assets, net\n\n \n\n \n\n206\n\n \n\n \n\n \n\n419\n\n \n\nRestricted cash\n\n \n\n \n\n143\n\n \n\n \n\n \n\n143\n\n \n\nOperating lease right-of-use assets\n\n \n\n \n\n407\n\n \n\n \n\n \n\n867\n\n \n\nEscrow receivable\n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,000\n\n \n\nPrepaid expenses and other assets, net\n\n \n\n \n\n3\n\n \n\n \n\n \n\n90\n\n \n\nTotal assets\n\n \n\n$\n\n7,386\n\n \n\n \n\n$\n\n14,650\n\n \n\nLiabilities and Stockholders' (Deficit) Equity\n\n \n\n \n\n \n\n \n\n \n\n \n\nCurrent Liabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\nAccounts payable\n\n \n\n$\n\n1,021\n\n \n\n \n\n$\n\n1,644\n\n \n\nAccrued expenses\n\n \n\n \n\n981\n\n \n\n \n\n \n\n1,226\n\n \n\nInsurance premium financing liability\n\n \n\n \n\n118\n\n \n\n \n\n \n\n128\n\n \n\nLiability to be settled in equity\n\n \n\n \n\n218\n\n \n\n \n\n \n\n218\n\n \n\nOperating lease liability, current portion\n\n \n\n \n\n447\n\n \n\n \n\n \n\n521\n\n \n\nTotal current liabilities\n\n \n\n \n\n2,785\n\n \n\n \n\n \n\n3,737\n\n \n\nCommon stock warrant liabilities\n\n \n\n \n\n5,700\n\n \n\n \n\n \n\n—\n\n \n\nOperating lease liability, net of current portion\n\n \n\n \n\n—\n\n \n\n \n\n \n\n421\n\n \n\nTotal liabilities\n\n \n\n \n\n8,485\n\n \n\n \n\n \n\n4,158\n\n \n\nCommitments and Contingencies (Note 8)\n\n \n\n \n\n \n\n \n\n \n\n \n\nStockholders' (Deficit) Equity\n\n \n\n \n\n \n\n \n\n \n\n \n\nCommon stock, $0.001 par value; 200,000,000 shares authorized,\n2,894,519 and 1,898,068 shares issued and outstanding at\n   March 31, 2026 and 2025, respectively\n\n \n\n \n\n3\n\n \n\n \n\n \n\n2\n\n \n\nAdditional paid-in capital\n\n \n\n \n\n354,898\n\n \n\n \n\n \n\n352,648\n\n \n\nAccumulated deficit\n\n \n\n \n\n(356,000\n\n)\n\n \n\n \n\n(342,157\n\n)\n\nTreasury stock, 3 shares at cost\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(1\n\n)\n\nTotal stockholders' (deficit) equity\n\n \n\n \n\n(1,099\n\n)\n\n \n\n \n\n10,492\n\n \n\nTotal Liabilities and Stockholders' (Deficit) Equity\n\n \n\n$\n\n7,386\n\n \n\n \n\n$\n\n14,650\n\n \n\n \n\nThe accompanying notes are an integral part of these Consolidated Financial Statements.\n\n \n\nF-4\n\n \n\nVIVOSIM LABS, INC.\n\nCONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE LOSS\n\n(in thousands except for share and per share data)\n\n \n\n \n\nYear Ended\n\n \n\n \n\nYear Ended\n\n \n\n \n\n \n\nMarch 31,\n2026\n\n \n\n \n\nMarch 31,\n2025\n\n \n\nRevenues\n\n \n\n \n\n \n\n \n\n \n\n \n\nRoyalty revenue\n\n \n\n$\n\n131\n\n \n\n \n\n$\n\n119\n\n \n\nProduct revenue\n\n \n\n \n\n—\n\n \n\n \n\n \n\n25\n\n \n\nTotal Revenues\n\n \n\n \n\n131\n\n \n\n \n\n \n\n144\n\n \n\nCost of revenues\n\n \n\n \n\n—\n\n \n\n \n\n \n\n5\n\n \n\nResearch and development expenses\n\n \n\n \n\n4,189\n\n \n\n \n\n \n\n5,025\n\n \n\nSelling, general, and administrative expenses\n\n \n\n \n\n7,429\n\n \n\n \n\n \n\n7,730\n\n \n\nTotal costs and expenses\n\n \n\n \n\n11,618\n\n \n\n \n\n12,760\n\n \n\nLoss from Operations\n\n \n\n \n\n(11,487\n\n)\n\n \n\n \n\n(12,616\n\n)\n\nOther Income (Expense)\n\n \n\n \n\n \n\n \n\n \n\n \n\nLoss on issuance of common stock\n\n \n\n \n\n(2,703\n\n)\n\n \n\n \n\n—\n\n \n\nGain on investment in equity securities\n\n \n\n \n\n94\n\n \n\n \n\n \n\n—\n\n \n\nGain on sale of asset\n\n \n\n \n\n—\n\n \n\n \n\n \n\n10,000\n\n \n\nInterest income\n\n \n\n \n\n267\n\n \n\n \n\n \n\n140\n\n \n\nInterest expense\n\n \n\n \n\n(12\n\n)\n\n \n\n \n\n(10\n\n)\n\nTotal Other Income (Expense)\n\n \n\n \n\n(2,354\n\n)\n\n \n\n \n\n10,130\n\n \n\nIncome Tax Expense\n\n \n\n \n\n(2\n\n)\n\n \n\n \n\n(2\n\n)\n\nNet Loss\n\n \n\n$\n\n(13,843\n\n)\n\n \n\n$\n\n(2,488\n\n)\n\nComprehensive Loss\n\n \n\n$\n\n(13,843\n\n)\n\n \n\n$\n\n(2,488\n\n)\n\nNet loss per common share—basic and diluted\n\n \n\n$\n\n(5.35\n\n)\n\n \n\n$\n\n(1.70\n\n)\n\nWeighted average shares used in computing net loss per common share—basic\n   and diluted\n\n \n\n \n\n2,588,327\n\n \n\n \n\n \n\n1,463,609\n\n \n\n \n\nThe accompanying notes are an integral part of these Consolidated Financial Statements.\n\nF-5\n\n \n\nVIVOSIM LABS, INC.\n\nCONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY\n\n(in thousands)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCommon Stock\n\n \n\n \n\n \n\n \n\n \n\nTreasury Stock\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nShares\n\n \n\n \n\nAmount\n\n \n\n \n\nAdditional Paid-in Capital\n\n \n\n \n\nShares\n\n \n\nAmount\n\n \n\n \n\nAccumulated Deficit\n\n \n\n \n\nTotal\n\n \n\nBalance at March 31, 2024\n\n \n\n \n\n840\n\n \n\n \n\n$\n\n1\n\n \n\n \n\n$\n\n343,270\n\n \n\n \n\n \n\n—\n\n \n\n$\n\n(1\n\n)\n\n \n\n$\n\n(339,669\n\n)\n\n \n\n$\n\n3,601\n\n \n\nIssuance of common stock under employee and\n   director stock option, RSU and purchase plans\n\n \n\n \n\n10\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nIssuance of common stock under warrants exercise\n\n \n\n \n\n425\n\n \n\n \n\n \n\n \n\n \n\n \n\n80\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n80\n\n \n\nStock-based compensation expense\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n532\n\n \n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n532\n\n \n\nIssuance of common stock from public offering,\n   net\n\n \n\n \n\n623\n\n \n\n \n\n \n\n1\n\n \n\n \n\n \n\n8,766\n\n \n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n8,767\n\n \n\nNet loss\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(2,488\n\n)\n\n \n\n \n\n(2,488\n\n)\n\nBalance at March 31, 2025\n\n \n\n \n\n1,898\n\n \n\n \n\n$\n\n2\n\n \n\n \n\n$\n\n352,648\n\n \n\n \n\n \n\n—\n\n \n\n$\n\n(1\n\n)\n\n \n\n$\n\n(342,157\n\n)\n\n \n\n$\n\n10,492\n\n \n\nIssuance of common stock under employee and\n   director stock option, RSU and purchase plans\n\n \n\n \n\n8\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nRetirement of treasury stock\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(1\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n1\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nStock-based compensation expense\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n303\n\n \n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n303\n\n \n\nIssuance of common stock from public offering,\n   net\n\n \n\n \n\n989\n\n \n\n \n\n \n\n1\n\n \n\n \n\n \n\n1,948\n\n \n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,949\n\n \n\nNet loss\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(13,843\n\n)\n\n \n\n \n\n(13,843\n\n)\n\nBalance at March 31, 2026\n\n \n\n \n\n2,895\n\n \n\n \n\n$\n\n3\n\n \n\n \n\n$\n\n354,898\n\n \n\n \n\n \n\n—\n\n \n\n$\n\n—\n\n \n\n \n\n$\n\n(356,000\n\n)\n\n \n\n$\n\n(1,099\n\n)\n\n \n\nThe accompanying notes are an integral part of these Consolidated Financial Statements.\n\nF-6\n\n \n\nVIVOSIM LABS, INC.\n\nCONSOLIDATED STATEMENTS OF CASH FLOWS\n\n(in thousands)\n\n \n\n \n\nYear Ended\n\n \n\n \n\nYear Ended\n\n \n\n \n\n \n\nMarch 31, 2026\n\n \n\n \n\nMarch 31, 2025\n\n \n\nCash Flows From Operating Activities\n\n \n\n \n\n \n\n \n\n \n\n \n\nNet loss\n\n \n\n$\n\n(13,843\n\n)\n\n \n\n$\n\n(2,488\n\n)\n\nAdjustments to reconcile net loss to net cash used in operating activities:\n\n \n\n \n\n \n\n \n\n \n\n \n\nLoss on issuance of common stock\n\n \n\n \n\n2,703\n\n \n\n \n\n \n\n—\n\n \n\nPlacement agent warrant offering expense\n\n \n\n \n\n138\n\n \n\n \n\n \n\n—\n\n \n\nGain on previously liquidated equity securities\n\n \n\n \n\n(94\n\n)\n\n \n\n \n\n—\n\n \n\nGain on sale of asset\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(10,000\n\n)\n\nInterest accretion on escrow receivable\n\n \n\n \n\n(14\n\n)\n\n \n\n \n\n—\n\n \n\nAccretion on investments\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(38\n\n)\n\nDepreciation and amortization\n\n \n\n \n\n215\n\n \n\n \n\n \n\n266\n\n \n\nStock-based compensation\n\n \n\n \n\n303\n\n \n\n \n\n \n\n532\n\n \n\nNon-cash lease expense\n\n \n\n \n\n460\n\n \n\n \n\n \n\n432\n\n \n\nInventory write-off\n\n \n\n \n\n—\n\n \n\n \n\n \n\n798\n\n \n\nIncrease (decrease) in cash resulting from changes in:\n\n \n\n \n\n \n\n \n\nAccounts receivable\n\n \n\n \n\n(2\n\n)\n\n \n\n \n\n3\n\n \n\nInventory\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(501\n\n)\n\nPrepaid expenses and other assets\n\n \n\n \n\n670\n\n \n\n \n\n \n\n253\n\n \n\nAccounts payable\n\n \n\n \n\n(623\n\n)\n\n \n\n \n\n1,017\n\n \n\nAccrued expenses\n\n \n\n \n\n(245\n\n)\n\n \n\n \n\n717\n\n \n\nOperating lease liability\n\n \n\n \n\n(495\n\n)\n\n \n\n \n\n(452\n\n)\n\nNet cash used in operating activities\n\n \n\n \n\n(10,827\n\n)\n\n \n\n \n\n(9,461\n\n)\n\nCash Flows From Investing Activities\n\n \n\n \n\n \n\n \n\n \n\n \n\nPurchases of fixed assets\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(13\n\n)\n\nProceeds from sale of asset\n\n \n\n \n\n—\n\n \n\n \n\n \n\n9,000\n\n \n\nPurchases of investments\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(2,962\n\n)\n\nMaturities of investments\n\n \n\n \n\n—\n\n \n\n \n\n \n\n3,000\n\n \n\nProceeds from previously liquidated equity securities\n\n \n\n \n\n94\n\n \n\n \n\n \n\n—\n\n \n\nNet cash provided by investing activities\n\n \n\n \n\n94\n\n \n\n \n\n \n\n9,025\n\n \n\nCash Flows From Financing Activities\n\n \n\n \n\n \n\n \n\n \n\n \n\nProceeds from issuance of common stock, net\n\n \n\n \n\n4,808\n\n \n\n \n\n \n\n8,847\n\n \n\nRepayment of insurance premium financing liability\n\n \n\n \n\n(363\n\n)\n\n \n\n \n\n—\n\n \n\nNet cash provided by financing activities\n\n \n\n \n\n4,445\n\n \n\n \n\n \n\n8,847\n\n \n\nNet (Decrease) Increase in Cash, Cash Equivalents, and Restricted Cash\n\n \n\n \n\n(6,288\n\n)\n\n \n\n \n\n8,411\n\n \n\nCash, cash equivalents, and restricted cash at beginning of period\n\n \n\n \n\n11,455\n\n \n\n \n\n \n\n3,044\n\n \n\nCash, cash equivalents, and restricted cash at end of period\n\n \n\n$\n\n5,167\n\n \n\n \n\n$\n\n11,455\n\n \n\nReconciliation of cash, cash equivalents, and restricted cash to the\n   consolidated balance sheets\n\n \n\n \n\n \n\n \n\n \n\n \n\nCash and cash equivalents\n\n \n\n$\n\n5,024\n\n \n\n \n\n$\n\n11,312\n\n \n\nRestricted cash\n\n \n\n \n\n143\n\n \n\n \n\n \n\n143\n\n \n\nTotal cash, cash equivalents and restricted cash\n\n \n\n$\n\n5,167\n\n \n\n \n\n$\n\n11,455\n\n \n\nSupplemental Disclosure of Cash Flow Information:\n\n \n\n \n\n \n\n \n\n \n\n \n\nEscrow receivable\n\n \n\n$\n\n—\n\n \n\n \n\n$\n\n1,000\n\n \n\nIncome taxes paid\n\n \n\n$\n\n2\n\n \n\n \n\n$\n\n2\n\n \n\nInterest paid\n\n \n\n$\n\n12\n\n \n\n \n\n$\n\n10\n\n \n\nLiability to be settled in equity\n\n \n\n$\n\n—\n\n \n\n \n\n$\n\n218\n\n \n\nFinanced insurance premium exchanged for prepaid insurance\n\n \n\n$\n\n353\n\n \n\n \n\n$\n\n128\n\n \n\nCommon stock warrant liabilities\n\n \n\n$\n\n5,700\n\n \n\n \n\n$\n\n—\n\n \n\n \n\nThe accompanying notes are an integral part of these Consolidated Financial Statements.\n\nF-7\n\n \n\n \n\nF-8\n\n \n\nVivoSim Labs, Inc.\n\nNotes to Consolidated Financial Statements\n\nNote 1. Description of Business and Summary of Significant Accounting Policies\n\nNature of Operations\n\nVivoSim Labs, Inc., formerly known as Organovo Holdings, Inc. (\"VivoSim\" and the “Company”), is a pharmaceutical and biotechnology services company that is focused on providing testing of drugs and drug candidates in three-dimensional (“3D”) human tissue models of liver and intestine. The Company offers partners liver and intestinal toxicology insights using its new approach methodologies (\"NAM\") models. The Company anticipates accelerated adoption of human tissue models following the U.S. Food and Drug Administration (“FDA\") announcement on April 10, 2025 to refine animal testing requirements in favor of these non-animal NAM methods. The Company will also offer bespoke services in the areas of investigational toxicology, mechanism of drug action elucidation, and other applications of these complex human tissue models.\n\nPrior to March 2025, the Company was a clinical stage biotechnology company that was focused on developing FXR314 in inflammatory bowel disease (\"IBD\"), including ulcerative colitis (\"UC\"), based on demonstration of clinical promise in 3D human tissues as well as strong preclinical data. The Company's clinical focus was in advancing FXR314 in IBD, including UC and Crohn’s disease. The Company planned to start a Phase 2a clinical trial in UC in the calendar year 2025 and was also exploring the potential for combination therapies using FXR314 and approved mechanisms in preclinical animal studies and the Company's IBD disease models.\n\nIn March 2025, the Company sold its FXR program for $10.0 million, with $9.0 million paid at closing and $1.0 million held in escrow for a period of 15 months, with future milestones of up to $50.0 million in the aggregate to be paid if the lead asset, FXR314, hits key development, regulatory and commercial milestones.\n\n \n\nEffective April 24, 2025, the Company changed its corporate name to VivoSim Labs, Inc. by filing a Certificate of Amendment to its Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware. The Company changed its name to reflect its new business model, which includes the use of other longstanding assets of the Company, intestinal and liver tox models and expertise, and its IP portfolio for 3D bioprinting.\n\n \n\nThe Company is now offering liver toxicology predictive screening and research services as well as working on predicting and studying the intestinal side effect profiles of drugs that are therapeutic candidates of pharmaceutical and biotech companies at all stages of drug development. The Company's services offer the potential benefit of reducing the significant risk and cost of bringing therapeutics to market through the regulatory process. It is estimated that less than 10% of drug candidates entering clinical trials are approved, with a portion of the failures due to unexpected liver toxicity or intestinal intolerability. In addition, even approved drugs are occasionally withdrawn after liver toxicity is determined to be caused by the drug in a phenomenon called drug induced liver injury. The Company presented findings at the May 2025 Digestive Disease Week scientific conference showing that the liver toxicology platform had a best-in-class predictive power. VivoSim's liver predictive power was shown to be 87.5% for a set of challenging liver toxicity cases – inclusive of classic cases of “liver tox misses” drugs with unforeseen liver toxicity found in clinical trials or drugs that were withdrawn from the market after liver toxicity issues emerged later. The platform identified correctly that 87.5% of the known liver-toxic drugs could be seen as liver toxic using NAMkind™ liver. This is known as the sensitivity of the platform, which at 87.5% is a world’s best. Importantly, the specificity was 100%, meaning that none of the compounds tested that are not liver toxic were incorrectly identified as having liver toxicity issues by the platform.\n\n \n\nThe Company uses its proprietary technologies to build functional 3D human tissues that mimic key aspects of native human tissue composition, architecture, function, and disease. The Company believes these attributes can enable critical complex, multicellular disease models that can be used to study and develop clinically effective drugs across multiple therapeutic areas.\n\nThe Company has also used these human disease models to identify new molecular targets responsible for driving IBD and to explore the mechanism of action of known drugs including JAK inhibitors and related molecules. A portion of its internal research continues to focus on early stage internal drug discovery programs, validating targets, and testing potentially licensable or transactable external drug compounds to identify drug candidates for partnering and/or internal clinical development.\n\nIn February 2024, the Company formed its Mosaic Cell Sciences division (“Mosaic”) that was intended to serve as a key source of certain primary human cells that the Company utilizes in its research and development efforts. Mosaic provided the Company with qualified human cells for use in its clinical research and development programs. In addition to supplying the Company with primary human cells, Mosaic offered human cells for sale to life science customers, both directly and through distribution partners, which the Company expected to offset costs and over time become a profit center that offset overall research and development (\"R&D\") spending by the Company. The Company ended Mosaic's commercial sales operations in the third quarter of fiscal 2025, and any remaining saleable inventory was internally transferred to R&D at that time.\n\nF-9\n\n \n\nLiquidity and Going Concern\n\nThe accompanying Consolidated Financial Statements have been prepared on the basis that the Company is a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. As of March 31, 2026, the Company had cash and cash equivalents of approximately $5.0 million, restricted cash of approximately $0.1 million and an accumulated deficit of approximately $356.0 million. The restricted cash was pledged as collateral for a letter of credit that the Company is required to maintain as a security deposit under the terms of the lease agreements for its facilities. The Company also had negative cash flows from operations of approximately $10.8 million during the year ended March 31, 2026. As of March 31, 2026, the Company had total current assets of approximately $6.6 million and current liabilities of approximately $2.8 million, resulting in working capital of $3.8 million.\n\nThrough March 31, 2026, the Company has financed its operations primarily through the sale of common stock through public and at-the-market (“ATM”) offerings, the private placement of equity securities, from revenue derived from the licensing of intellectual property, products and research-based services, grants, and collaborative research agreements, the sale of the Company’s FXR program, and from the sale of convertible notes. During the year ended March 31, 2026, the Company issued 701,729 shares of its common stock through its ATM facility, for net proceeds of approximately $1.8 million.\n\n \n\nMarch 2026 Best Efforts Public Offering\n\nOn March 31, 2026, the Company priced a best efforts public offering (the “2026 Offering”) of: (i) 286,557 shares of its common stock and 429,836 accompanying common warrants to purchase up to 429,836 shares of common stock at a combined public offering price of $1.14 per share and accompanying one and a half common warrants to purchase one share common stock and (ii) 2,345,022 pre-funded warrants to purchase 2,345,022 shares of common stock and 3,517,533 accompanying common warrants to purchase up to 3,517,533 shares of common stock at a combined public offering price of $1.139 per pre-funded warrant and accompanying one and a half common warrants to purchase one share of common stock. Each common warrant has an exercise price of $1.71 per share of common stock. The closing of the 2026 Offering occurred on March 31, 2026. In connection with the 2026 Offering, the Company received approximately $3.0 million of gross proceeds and $2.4 million of net proceeds, after deducting the offering expenses payable by the Company, including placement agent fees. The fair value of the placement agent warrants was approximately $0.1 million and was also considered an offering expense. All offering expenses were included within selling, general, and administrative expenses in the consolidated statement of operations and comprehensive loss during the year ended March 31, 2026. Additionally, in connection with the common warrants issued as part of the 2026 Offering, the Company recognized a common stock warrant liability of $5.7 million. As the fair value of the common stock warrant liability exceeded the gross proceeds from the offering, the Company recognized a $2.7 million loss on issuance of common stock during the year ended March 31, 2026. Please refer to \"Note 6. Stockholders Equity\" for more information regarding the 2026 Offering.\n\n \n\nBased on the Company's current operating plan and available cash resources, the Company will need substantial additional funding to support future operating activities. The Company has concluded that the prevailing conditions and ongoing liquidity risks faced by the Company raise substantial doubt about its ability to continue as a going concern for at least one year following the date these Consolidated Financial Statements are issued. The accompanying Consolidated Financial Statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. As the Company continues its operations and is focusing its efforts on services, research, and development, the Company will need to raise additional capital to implement this business plan. The Company cannot predict with certainty the exact amount or timing for any future capital raises. The Company will seek to raise additional capital through debt or equity financings, or through some other financing arrangement. However, the Company cannot be sure that additional financing will be available if and when needed, or that, if available, it can obtain financing on terms favorable to its stockholders. Any failure to obtain financing when required will have a material adverse effect on the Company’s business, operating results, and financial condition.\n\nBasis of Presentation and Principles of Consolidation\n\nThe accompanying Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (\"GAAP\"). Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP as found in the Accounting Standards Codification (\"ASC\") and Accounting Standards Updates promulgated by the Financial Accounting Standards Board (\"FASB\").\n\nThe Consolidated Financial Statements include the accounts of VivoSim and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.\n\nF-10\n\n \n\nUse of Estimates\n\nThe preparation of the Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. On an ongoing basis, management reviews these estimates and assumptions.\n\nFinancial Instruments\n\nFor certain of the Company’s financial instruments, including cash and cash equivalents, accounts payable, accrued expenses, the carrying amounts are generally considered to be representative of their respective fair values because of the short-term nature of those instruments.\n\n \n\nCash and Cash Equivalents\n\nThe Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.\n\n \n\nCredit Risk and Significant Customers\n\nFinancial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash equivalents. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. The Company has not experienced any material losses in such accounts and believes it is not exposed to significant risk. The Company has invested its excess cash primarily in money market funds and U.S. Treasury securities. Additionally, the Company adheres to established guidelines regarding approved investments and maturities of investments, which are designed to preserve their principal value and maintain liquidity.\n\nThe Company is also potentially subject to concentrations of credit risk in its revenues and receivable accounts. The Company’s receivables to date have been derived from a relatively small number of customers and third parties. The Company makes judgment as to its ability to collect outstanding receivables and provides reserves against receivables for estimated losses that may result from a customer or third party's ability to pay. Specific amounts determined to be uncollectable are charged against the reserve. The Company has not historically experienced any receivable write-downs and management does not believe significant credit risk exists as of March 31, 2026.\n\n \n\nRestricted Cash\n\nAs of March 31, 2026 and 2025, the Company had approximately $0.1 million of restricted cash, deposited with a financial institution. The entire amount was held in certificates of deposit to support a letter of credit agreement related to the Company’s facility leases entered into in November 2020 and amended in November 2021.\n\n \n\nFair Value Measurement\n\n \n\nFinancial assets and liabilities are measured at fair value, which is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The following is a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value:\n\n•\nLevel 1 — Quoted prices in active markets for identical assets or liabilities.\n\n•\nLevel 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.\n\n•\nLevel 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.\n\n \n\nWarrants\n\nThe Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant's specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (\"ASC 480\") and ASC 815, Derivatives and Hedging (\"ASC 815\"). This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent reporting period while the warrants are outstanding. Please refer to \"Note 6. Stockholders Equity\" for more information regarding outstanding warrants and their classification.\n\n \n\nF-11\n\n \n\nInsurance Premium Financing Liability\n\n \n\nIn September 2025, the Company entered into an insurance premium financing agreement for $0.4 million, with a term of nine months and an annual interest rate of 7.82%. The Company made a down payment of 10% and is required to make monthly principal and interest payments of $40,468 over the term of the agreement, which will mature in June 2026. The insurance premium financing liability was approximately $0.1 million as of March 31, 2026 and 2025, respectively. Related prepaid insurance at March 31, 2026 and March 31, 2025 was approximately $0.2 million, respectively, and is included in prepaid expenses and other current assets on the accompanying consolidated balance sheets.\n\n \n\nFixed Assets and Depreciation\n\nFixed assets are carried at cost less accumulated depreciation. Expenditures that extend the life of the asset are capitalized and depreciated. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the related assets or, in the case of leasehold improvements, over the lesser of the useful life of the related asset or the remaining lease term. The estimated useful lives of the fixed assets range between one and seven years.\n\nImpairment of Long-Lived Assets\n\nIn accordance with authoritative guidance, the Company reviews its long-lived assets, including fixed assets and other assets, for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. To determine recoverability of its long-lived assets, the Company evaluates whether future undiscounted net cash flows will be less than the carrying amount of the assets and adjusts the carrying amount of its assets to fair value. Management has determined that no impairment of long-lived assets occurred as of March 31, 2026 and 2025.\n\nResearch and Development\n\nResearch and development expenses, including direct and allocated expenses, consist of independent research and development costs, as well as costs associated with sponsored research and development. Research and development costs are expensed as incurred.\n\nAcquired In-Process Research and Development\n\nFXR Program\n\nIn March 2023, the Company acquired Metacrine's FXR program for $4.0 million. The FXR program was determined to have no alternative future use, and therefore was considered acquired in-process research and development and fully expensed. Acquired in-process research and development expenses were included in total research and development expenses on the Consolidated Statements of Operations and Other Comprehensive Loss. In the year ended March 31, 2023, the Company paid a $2.0 million upfront payment, and the remaining $2.0 million was paid in the year ended March 31, 2024, upon the final transfer of the drug compounds, related data, and IP.\n\nF-12\n\n \n\nOn March 25, 2025, the Company sold its FXR program and related assets to Eli Lilly and Company (the “FXR Asset Sale”). The consideration for the FXR Asset Sale consisted of (i) an upfront cash payment by Lilly to the Company equal to $10.0 million, of which $9.0 million was paid at closing and the remaining $1.0 million was deposited into escrow for 15 months to satisfy any claims for indemnification during such period, (ii) the assumption by Eli Lilly and Company of certain liabilities related to the FXR program, and (iii) potential milestone payments by Eli Lilly and Company of up to $50.0 million in the aggregate, which are contingent upon the achievement of certain development, regulatory and commercial milestones.\n\nThe Company assessed whether this agreement was considered a contract with a customer pursuant to Topic 606 or subject to guidance pursuant to ASC Topic 610, Other Income (\"Topic 610\"). The Company considered a variety of factors in determining the appropriate assumptions under this arrangement, such as whether the counterparty was a customer, the nature of its operations, both historically and ongoing, and any contingent consideration constraints. The Company determined the counterparty was not a customer based on the nature of its ordinary business operations and recorded the transaction within other income under Topic 610. Furthermore, the Company determined the $1.0 million held in escrow was not constrained due to the terms of the indemnification language and it was therefore recognized as a component of the consideration received at the time of closing; however, the Company did determine future potential milestone payments that may be made by Eli Lilly and Company were constrained due to the uncertainty of the milestones being met. If and when the future milestone payments are no longer considered constrained, the Company will record such payments in other income.\n\nSegment Reporting\n\nOperating segments are defined as components of an enterprise about which separate financial information is available that is evaluated on a regular basis by the chief operating decision maker in deciding how to allocate resources to an individual segment and in assessing performance. As of March 31, 2026, the Company identified only one operating segment. Please refer to \"Note 13. Business Segment Information\" for further information.\n\nIncome Taxes\n\nDeferred income taxes are recognized for the tax consequences in future years for differences between the tax basis of assets and liabilities and their financial reporting amounts at each year end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the combination of the tax payable for the year and the change during the year in deferred tax assets and liabilities. The Company’s policy regarding uncertainty in income taxes is pursuant to ASC Topic 740-10. Interest and penalties that would be assessed in relation to the settlement value of unrecognized tax benefits is recognized as a component of income tax expense.\n\nRevenue Recognition\n\nRoyalty revenue\n\nThe Company has entered into a license agreement with a company that includes the following: (i) non-refundable upfront fees and (ii) royalties based on specified percentages of net product sales, if any. At the initiation of the agreement, the Company has analyzed whether it results in a contract with a customer under Topic 606.\n\nThe Company has considered a variety of factors in determining the appropriate estimates and assumptions under these arrangements, such as whether the Company is a principal or agent, whether the elements are distinct performance obligations, whether there are determinable stand-alone prices, and whether any licenses are functional or symbolic. The Company has evaluated each performance obligation to determine if it can be satisfied and recognized as revenue at a point in time or over time. Typically, non-refundable upfront fees have been considered fixed, while sales-based royalty payments have been identified as variable consideration which must be evaluated to determine if it has been constrained and, therefore, excluded from the transaction price. Please refer to “Note 5. Collaborative Research, Development, and License Agreements” for further information.\n\nProduct revenue, net\n\n \n\nThe Company’s former product-based division, Mosaic, which was established in the fourth quarter of fiscal 2024, produced high-quality cell-based products for use in its R&D and for use by life science customers. The Company recognized product revenue when the performance obligation is satisfied, which was at the point in time the customer obtained control of the Company’s product, typically upon delivery. Product revenues were recorded at the transaction price under Topic 606. The Company provided no right of return to its customers except in cases where a customer obtained authorization from the Company for the return. To date, there have been no product returns. The Company ended Mosaic's commercial operations during the third quarter of fiscal 2025.\n\nF-13\n\n \n\nStock-Based Compensation\n\nThe Company accounts for stock-based compensation in accordance with the ASC Topic 718, Compensation — Stock Compensation, which establishes accounting for equity instruments exchanged for employee and non-employee services. Under such provisions, stock-based compensation cost is measured at the grant date, based on the calculated fair value of the award (determined using either the Black-Scholes or Monte Carlo option-pricing models, depending on the complexity of the equity grant), and is recognized as an expense, under the straight-line method, over the employee or non-employee's requisite service period (generally the vesting period of the equity grant). The assumed dividend yield is based on the Company’s expectation of not paying dividends in the foreseeable future. The Company uses its Company-specific historical volatility rate. The risk-free interest rate assumption is based on U.S. Treasury rates. The weighted average expected life of options is estimated using the average of the contractual term and the weighted average vesting term of the options. Option forfeitures are treated as a reduction of stock-based compensation expense and accounted for as they occur.\n\nComprehensive Income (Loss)\n\nComprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. The Company is required to record all components of comprehensive income (loss) in the consolidated financial statements in the period in which they are recognized. Net income (loss) and other comprehensive income (loss) are reported, net of their related tax effect, to arrive at comprehensive income (loss).\n\nNet Loss Per Share\n\nBasic and diluted net loss per share has been computed using the weighted-average number of shares of common stock outstanding during the period. The weighted-average number of shares used to compute diluted loss per share includes the assumed exercise of any outstanding pre-funded warrants, and excludes any assumed exercise of stock options, shares reserved for purchase under the Company’s 2023 Employee Stock Purchase Plan, the assumed vesting of restricted stock units, the exercise of common warrants, and shares subject to repurchase as the effect would be anti-dilutive. No dilutive effect was calculated for the years ended March 31, 2026 and 2025 as the Company reported a net loss for each respective period and the effect would have been anti-dilutive.\n\nCommon stock equivalents excluded from computing diluted net loss per share due to their anti-dilutive effect were approximately 5.0 million shares and 0.7 million shares for the years ended March 31, 2026 and 2025, respectively.\n\n \n\nNote 2. Prepaid Expenses and Other Current Assets\n\nPrepaid expenses and other current assets consisted of the following (in thousands):\n\n \n\n \n\n \n\nMarch 31,\n2026\n\n \n\n \n\nMarch 31,\n2025\n\n \n\nPrepaid insurance\n\n \n\n$\n\n280\n\n \n\n \n\n$\n\n417\n\n \n\nPrepaid expenses\n\n \n\n \n\n277\n\n \n\n \n\n \n\n360\n\n \n\nOther current assets\n\n \n\n \n\n—\n\n \n\n \n\n \n\n12\n\n \n\nTotal prepaid expenses and other current assets\n\n \n\n$\n\n557\n\n \n\n \n\n$\n\n789\n\n \n\n \n\nNote 3. Fixed Assets\n\nFixed assets consisted of the following (in thousands):\n\n \n\n \n\n \n\nMarch 31,\n2026\n\n \n\n \n\nMarch 31,\n2025\n\n \n\nLaboratory equipment\n\n \n\n$\n\n1,630\n\n \n\n \n\n$\n\n1,630\n\n \n\nFurniture and fixtures\n\n \n\n \n\n66\n\n \n\n \n\n \n\n66\n\n \n\nComputer software and equipment\n\n \n\n \n\n244\n\n \n\n \n\n \n\n244\n\n \n\nFixed Assets, gross\n\n \n\n \n\n1,940\n\n \n\n \n\n \n\n1,940\n\n \n\nLess accumulated depreciation\n\n \n\n \n\n(1,734\n\n)\n\n \n\n \n\n(1,521\n\n)\n\nFixed Assets, net\n\n \n\n$\n\n206\n\n \n\n \n\n$\n\n419\n\n \n\n \n\nAs of March 31, 2026 and 2025, all of the Company’s fixed assets were active and in use. Depreciation expense for each of the years ended March 31, 2026 and 2025 was approximately $0.2 and $0.3 million, respectively.\n\nF-14\n\n \n\n \n\nNote 4. Accrued Expenses\n\nAccrued expenses consisted of the following (in thousands):\n\n \n\n \n\n \n\nMarch 31,\n2026\n\n \n\n \n\nMarch 31,\n2025\n\n \n\nAccrued payroll and other employee benefits\n\n \n\n$\n\n422\n\n \n\n \n\n$\n\n652\n\n \n\nAccrued legal and professional fees\n\n \n\n \n\n523\n\n \n\n \n\n \n\n515\n\n \n\nOther accrued expenses\n\n \n\n \n\n36\n\n \n\n \n\n \n\n59\n\n \n\nTotal accrued expenses\n\n \n\n$\n\n981\n\n \n\n \n\n$\n\n1,226\n\n \n\n \n\nNote 5. Collaborative Research, Development, and License Agreements\n\nLicense Agreements\n\nBICO Group AB\n\n \n\nIn February 2022, the Company entered into a license agreement with Cellink AB and its subsidiaries (collectively, “BICO Group AB”), where the Company agreed to grant a non-exclusive license to BICO Group AB to use the Company’s aforementioned patents for its business operations of manufacturing and selling bioprinters as well as bioinks. As part of the license agreement, BICO Group AB agreed to pay the Company a one time, nonrefundable upfront fee of $1,500,000, as well as ongoing sales-based royalties (based on percentages of BICO Group AB’s net sales) for the use of the granted license, which was recorded as revenue. The sales-based royalties became effective beginning on February 22, 2022, the effective date of the license agreement, and continues until the expiration of the last surviving licensed patent. As the sales-based royalties are required to be paid 45 days after the end of every quarter, there is variable consideration that must be estimated to determine royalty revenue within a given reporting period. Once actual revenue earned is determined in the following fiscal quarter, an adjustment is made from the previously estimated amount. For the years ended March 31, 2026 and 2025, the Company recorded $131,000 and $119,000, respectively, of royalty revenue based on sales-based royalties from the license agreement.\n\n \n\nAlso as part of the license agreement, certain patents involved in the agreement are sublicensed by the Company from the University of Missouri and certain patents were previously sublicensed by the Company from Clemson University. See below for further information.\n\n \n\nUniversity of Missouri\n\nIn March 2009, the Company entered into a license agreement with the Curators of the University of Missouri to in-license certain technology and intellectual property relating to self-assembling cell aggregates and to intermediate cellular units. The Company received the exclusive worldwide rights to commercialize products comprising this technology for all fields of use. The Company is required to pay the University of Missouri royalties ranging from 1% to 3% of net sales of covered tissue products, and of the fair market value of covered tissues transferred internally for use in the Company’s commercial service business, depending on the level of net sales achieved by the Company each year.\n\n \n\nOn December 5, 2022, the Company amended the license agreement with the University of Missouri, whereby the Company agreed to pay a single, upfront payment of $50,000 to the University of Missouri in exchange for the aforementioned licensed intellectual property to be fully paid up by the Company. As a result, the Company will continue to have rights to the licensed intellectual property until its expiration in June 2028, but will no longer owe minimum annual royalty payments, royalty payments based on net sales, or any other payments (other than patent annuities and any prosecution costs) in the future.\n\n \n\nClemson University\n\nIn May 2011, the Company entered into a license agreement with Clemson University Research Foundation (\"CURF\") to in-license certain technology and intellectual property relating to ink-jet printing of viable cells. The Company received the exclusive worldwide rights to commercialize products comprising this technology for all fields of use. The Company was required to pay the university royalties ranging from 1.5% to 3% of net sales of covered tissue products and the fair market value of covered tissues transferred internally for use in the Company’s commercial service business, depending on the level of net sales reached each year. The license agreement terminated in May 2024 upon expiration of the patents licensed and was subject to certain conditions as defined in the license agreement. Minimum annual royalty payments of $40,000 per year were due beginning in calendar 2016. Royalty payments of zero and $40,000 were made for the years ended March 31, 2026 and 2025. The annual minimum royalty was creditable against royalties owed during the same calendar year.\n\nF-15\n\n \n\n \n\nIn addition to the annual royalty noted above, CURF was owed 40% of all payments including but not limited to, upfront payments, license fees, issue fees, maintenance fees, and milestone payments received from third parties, including sublicensees, in consideration for sublicensing rights to licensed products. However, per the agreement, in the event that the Company defended the technology by litigation, it could offset any royalties due by legal expenses incurred. As of the expiration of the license agreement in May 2024, the Company’s legal expenses exceeded royalties owed from the upfront payment and sales-based royalties related to the BICO Group AB license agreement. Therefore, no royalty expense to CURF was recorded for the year ended March 31, 2026 and no royalty expense related to sales-based royalties was ever recorded under the agreement.\n\nNote 6. Stockholders’ Equity\n\nPreferred stock\n\nThe Company is authorized to issue 25,000,000 shares of preferred stock. There are no shares of preferred stock currently outstanding, and the Company has no present plans to issue shares of preferred stock.\n\nCommon stock\n\nIn January 2012, the Company's Board of Directors (\"Board\") approved the 2012 Amended and Restated Equity Incentive Plan (\"2012 Plan\"). The 2012 Plan initially authorized the issuance of up to 27,308 shares of common stock for awards of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, RSUs, performance units, performance shares, and other stock or cash awards, and the number of shares issuable pursuant thereto was increased several times to an aggregate of 193,974 shares.\n\nIn March 2021, the Board approved the 2021 Inducement Equity Incentive Plan (\"Inducement Plan\"). The Inducement Plan authorized the issuance of up to 62,500 shares of common stock for awards of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, RSUs, performance units, performance shares, and other stock or cash awards. In February 2022, 4,166 incentive stock options were issued under the Inducement Plan.\n\n \n\nOn October 12, 2022, the Company's stockholders and the Board approved the 2022 Equity Incentive Plan (\"2022 Plan\"), and it became effective on that date. The 2022 Plan replaced the 2012 Plan on the effective date. Upon the effective date, the Company ceased granting awards under the 2012 Plan and any shares remaining available for future issuance under the 2012 Plan were cancelled and are no longer available for future issuance. The 2012 Plan continues to govern awards previously granted under it. At the time the Board approved the 2022 Plan, an aggregate of 113,583 shares of the Company’s common stock was initially reserved for issuance under the 2022 Plan. The Company committed to reducing the new 2022 Plan share reserve by the number of shares that were granted under the 2012 Plan and the Inducement Plan between July 25, 2022 and October 12, 2022. From July 25, 2022 to October 12, 2022, the Company issued 10,521 shares of its common stock under the 2012 Plan. As a result, the number of shares reserved for future issuance under the 2022 Plan was 103,062 shares of common stock. The Company also committed to reducing the aggregate number of shares of its common stock issuable pursuant to the Inducement Plan from 62,500 shares to 4,250 shares (which includes 4,166 shares of its common stock issuable pursuant to an outstanding option to purchase common stock with an exercise price of $33 per share, leaving only 83 shares available for future issuance under the Inducement Plan) and the share reserve was reduced effective October 12, 2022. On November 20, 2024, the Company’s stockholders approved the amendment and restatement of the 2022 Plan (the “A&R 2022 Plan”) to increase the number of shares reserved for issuance thereunder by 147,916 shares.\n\nThe Company previously had an effective shelf registration statement on Form S-3 (File No. 333-252224), declared effective by the SEC on January 29, 2021 (the “2021 Shelf”), which registered $150.0 million of common stock, preferred stock, warrants and units, or any combination of the foregoing, that expired on January 29, 2024. On January 26, 2024, the Company filed a new shelf registration statement on Form S-3 (File No. 333-276722) to register $150.0 million of the Company's common stock, preferred stock, debt securities, warrants and units, or any combination of the foregoing (the \"2024 Shelf\"). The 2024 Shelf was declared effective by the SEC on February 8, 2024 and replaced the 2021 Shelf at that time.\n\nOn March 16, 2018, the Company entered into a Sales Agreement with Jones Trading Institutional Services LLC (the “Agent”). On January 29, 2021, the Company filed a prospectus supplement to the 2021 Shelf, pursuant to which the Company may offer and sell, from time to time through the Agent, shares of its common stock in ATM sales transactions having an aggregate offering price of up to $50.0 million. Any shares offered and sold were issued pursuant to the 2021 Shelf until it was replaced by the 2024 Shelf.\n\n \n\nOn January 26, 2024, the Company filed a prospectus with the 2024 Shelf (the \"2024 ATM Prospectus\"), pursuant to which the Company may offer and sell, from time to time through the Agent, shares of its common stock in ATM sales transactions having an aggregate offering price of up to $2,605,728. The Company filed amendments to the 2024 ATM Prospectus on February 26, 2025 and again on April 11, 2025, providing that the Company may offer and sell, from time to time through the Agent, shares of its common\n\nF-16\n\n \n\nstock in ATM sales transactions having an additional aggregate offering price of up to $5,311,508 and $4,766,105, respectively. Any shares offered and sold in these ATM transactions will be issued pursuant to the 2024 Shelf.\n\nDuring the year ended March 31, 2026, the Company issued 701,729 shares of common stock in ATM offerings, pursuant to the 2024 Shelf. As of March 31, 2026, the Company has sold an aggregate of 1,198,134 shares of common stock in ATM offerings under the 2024 ATM Prospectus, with gross proceeds of approximately $6.9 million. As of March 31, 2026, there was approximately $140.1 million unallocated and available for future offerings under the 2024 Shelf, and approximately $3.1 million available for future offerings through the Company’s ATM program under the 2024 ATM Prospectus.\n\n \n\nIn the event that the aggregate market value of the Company’s common stock held by non-affiliates (“public float”) is less than $75.0 million, the amount the Company can raise through primary public offerings of securities, including sales under the Sales Agreement, in any twelve-month period using shelf registration statements is limited to an aggregate of one-third of its public float. As of the date of filing of this Annual Report, the Company’s public float was less than $75.0 million, and therefore it is limited to an aggregate of one-third of its public float in the amount it could raise through primary public offerings of securities in any twelve-month period using shelf registration statements, with such public float recalculated at the time of sale. If the Company’s public float meets or exceeds $75.0 million at any time, the Company will no longer be subject to the restrictions set forth in General Instruction I.B.6 of Form S-3.\n\n \n\nMarch 2026 Best Efforts Public Offering\n\n \n\nOn March 31, 2026, the Company priced the 2026 Offering which consisted of: (i) 286,557 shares of its common stock and 429,836 accompanying common warrants (“2026 Common Warrants”) to purchase up to 429,836 shares of common stock at a combined public offering price of $1.14 per share and accompanying one and a half common warrants to purchase one share common stock and (ii) 2,345,022 pre-funded warrants (“2026 Pre-Funded Warrants”) to purchase 2,345,022 shares of common stock and 3,517,533 accompanying 2026 Common Warrants to purchase up to 3,517,533 shares of common stock at a combined public offering price of $1.139 per pre-funded warrant and accompanying one and a half common warrants to purchase one share of common stock. Each 2026 Common Warrant will have an exercise price of $1.71 per share of common stock.\n\n \n\nThe per share exercise price for the 2026 Pre-Funded Warrants is $0.001, subject to adjustment as provided therein. The 2026 Pre-Funded Warrants were immediately exercisable, subject to certain beneficial ownership limitations, and will expire when exercised in full. The holder can exercise the 2026 Pre-Funded Warrants by means of a “cashless exercise.”\n\n \n\nThe per share exercise price for the 2026 Common Warrants is $1.71, subject to adjustment as provided therein. The 2026 Common Warrants were immediately exercisable, subject to certain beneficial ownership limitations, and will expire on the date that is five years following the original issuance date. The 2026 Common Warrants have price protection against subsequent dilutive issuances of shares of common stock, options, warrants and convertible securities, subject to a $0.01 per share of common stock floor, as further described in the 2026 Common Warrants. The holders of the 2026 Common Warrants may exchange the 2026 Common Warrants on a cashless basis for a number of shares of common stock determined by multiplying the total number of shares of common stock with respect to which the 2026 Common Warrant is then being exercised by the Black Scholes Value (as defined in the 2026 Common Warrant) divided by the lower of the two closing bid prices of the common stock in the two days prior to the time of such exercise, but in any event not less than $0.01.\n\n \n\nIn connection with the 2026 Offering, the Company paid Joseph Gunnar & Co. LLC (the \"Placement Agent\"), which acted as the placement agent in connection with the 2026 Offering, a cash fee of 7.5% of the aggregate gross proceeds raised in the 2026 Offering. Additionally, in connection with the 2026 Offering, the Company issued to the Placement Agent 131,579 warrants to purchase 131,579 shares of common stock (\"Placement Agent Warrants\") with an exercise price of $1.425 per share of common stock.\n\n \n\nThe closing of the 2026 Offering occurred on March 31, 2026. The Company received gross proceeds of approximately $3.0 million and net proceeds of approximately $2.4 million from the 2026 Offering, after deducting the offering expenses payable by the Company, including the Placement Agent fees.\n\nF-17\n\n \n\nRestricted stock units\n\nThe following table summarizes the Company’s RSUs activity for the year ended March 31, 2026:\n\n \n\n \n\n \n\nNumber of\nShares\n\n \n\n \n\nWeighted\nAverage Price\n\n \n\nUnvested at March 31, 2025\n\n \n\n \n\n8,165\n\n \n\n \n\n$\n\n6.57\n\n \n\nGranted\n\n \n\n \n\n75,000\n\n \n\n \n\n$\n\n1.73\n\n \n\nVested\n\n \n\n \n\n(8,165\n\n)\n\n \n\n$\n\n6.57\n\n \n\nCancelled / forfeited\n\n \n\n \n\n—\n\n \n\n \n\n$\n\n—\n\n \n\nUnvested at March 31, 2026\n\n \n\n \n\n75,000\n\n \n\n \n\n$\n\n1.73\n\n \n\n \n\nStock options\n\nDuring the year ended March 31, 2026, under the A&R 2022 Plan, 127,952 stock options were granted at various exercise prices.\n\n \n\nOn August 5, 2024, the Company granted 83,841 stock options to its Executive Chairman under the A&R 2022 Plan. Of the stock options granted, 47,910 will vest evenly on an annual basis over three years. 11,977 of the options granted have unique vesting criteria based on market conditions, more specifically the Company's stock price. As the market condition based stock options require significant estimates and assumptions to calculate their fair value, the Company engaged with valuation specialists to calculate the fair value and requisite service periods using Monte Carlo simulations. The stock options will be expensed over their determined requisite service periods. The remaining 23,954 options granted have unique vesting criteria based on specific Company performance conditions. The vesting criteria for 11,977 of these options includes the Company achieving cumulative revenue of $1.5 million. The vesting criteria for the remaining 11,977 options includes the Company entering into a definitive agreement that constitutes a major strategic partnership, at the discretion of the Board. As of March 31, 2026, no performance conditions have been met. The grant date fair value of the performance based awards is $118,000 in the aggregate, which will be recognized when the performance condition is satisfied.\n\nThe following table summarizes stock option activity for the year ended March 31, 2026:\n\n \n\n \n\n \n\nOptions\nOutstanding\n\n \n\n \n\nWeighted-\nAverage\nExercise Price\n\n \n\n \n\nAggregate\nIntrinsic\nValue\n\n \n\nOutstanding at March 31, 2025\n\n \n\n \n\n141,397\n\n \n\n \n\n$\n\n22.66\n\n \n\n \n\n$\n\n—\n\n \n\nOptions granted\n\n \n\n \n\n127,952\n\n \n\n \n\n$\n\n2.05\n\n \n\n \n\n$\n\n—\n\n \n\nOptions canceled\n\n \n\n \n\n(2,552\n\n)\n\n \n\n$\n\n14.51\n\n \n\n \n\n$\n\n—\n\n \n\nOptions expired\n\n \n\n \n\n(5,713\n\n)\n\n \n\n$\n\n33.63\n\n \n\n \n\n$\n\n—\n\n \n\nOutstanding at March 31, 2026\n\n \n\n \n\n261,084\n\n \n\n \n\n$\n\n12.40\n\n \n\n \n\n$\n\n—\n\n \n\nVested and Exercisable at March 31, 2026\n\n \n\n \n\n60,045\n\n \n\n \n\n$\n\n40.47\n\n \n\n \n\n$\n\n—\n\n \n\n \n\nThe weighted-average remaining contractual term of stock options exercisable and outstanding at March 31, 2026 was approximately 8.5 years.\n\n \n\nWarrants\n\n2024 Offering\n\nIn connection with a best efforts public offering that occurred in May 2024 (\"2024 Offering\"), the Company issued common warrants (\"2024 Common Warrants\") to purchase up to 130,202 shares of common stock at a combined public offering price of $9.60 per share and accompanying common warrant to purchase one share of common stock and (ii) pre-funded warrants (\"2024 Pre-Funded Warrants\") to purchase 416,666 shares of common stock and accompanying 2024 Common Warrants to purchase up to 416,666 shares of common stock at a combined public offering price of $9.588 per 2024 Pre-Funded Warrant and accompanying 2024 Common Warrant to purchase one share of common stock. The Company has determined that these warrants should be classified as equity instruments since they do not require the Company to repurchase the underlying common stock and do not require the Company to issue a variable amount of common stock. In addition, these warrants are indexed to common stock and do not have any antidilution rights. As of March 31, 2026, all 2024 Pre-Funded Warrants associated with the 2024 Offering were fully exercised and 7,810 of the 2024 Common Warrants were exercised during the year ended March 31, 2025.\n\n \n\nThe following table summarizes the Company’s 2024 Common Warrants activity from March 31, 2025 to March 31, 2026:\n\nF-18\n\n \n\n \n\n \n\nNumber of Warrants\n\n \n\n \n\nExercise Price\n\n \n\nOutstanding at March 31, 2025\n\n \n\n \n\n539,060\n\n \n\n \n\n$\n\n9.60\n\n \n\nIssued\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nExercised\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nOutstanding at March 31, 2026\n\n \n\n \n\n539,060\n\n \n\n \n\n$\n\n9.60\n\n \n\n2026 Offering\n\nIn connection with the 2026 Offering, the Company issued (i) 286,557 shares of its common stock and 429,836 accompanying 2026 Common Warrants to purchase up to 429,836 shares of common stock at a combined public offering price of $1.14 per share and accompanying one and a half 2026 Common Warrants to purchase one share common stock and (ii) 2,345,022 2026 Pre-Funded Warrants to purchase 2,345,022 shares of common stock and 3,517,533 accompanying 2026 Common Warrants to purchase up to 3,517,533 shares of common stock at a combined public offering price of $1.139 per 2026 Pre-Funded Warrant and accompanying one and a half 2026 Common Warrants to purchase one share of common stock. The Company has determined that the 2026 Pre-Funded Warrants should be classified as equity instruments since they do not require the Company to repurchase the underlying common stock and do not require the Company to issue a variable amount of common stock. Each 2026 Common Warrant has an exercise price of $1.71 per share of common stock. The Company has determined that the 2026 Common Warrants should be classified as a common stock warrant liability as the instrument contains a leverage factor and therefore is not considered indexed to the Company's own stock.\n\n \n\nIn connection with the 2026 Offering, the Company issued 131,579 Placement Agent Warrants to purchase 131,579 shares of common stock with an exercise price of $1.425 per share of common stock.\n\n \n\nThe following table summarizes information about shares issuable under the 2026 Pre-Funded Warrants, the 2026 Common Warrants, and the Placement Agent Warrants from March 31, 2025 to March 31, 2026:\n\n \n\n \n\n \n\n2026 Pre-Funded Warrants\n\n \n\nExercise Price\n\n \n\n2026 Common Warrants\n\n \n\nExercise Price\n\n \n\nPlacement Agent Warrants\n\n \n\nExercise Price\n\n \n\nOutstanding at March 31, 2025\n\n \n\n \n\n—\n\n \n\n$\n\n—\n\n \n\n \n\n—\n\n \n\n$\n\n—\n\n \n\n \n\n—\n\n \n\n$\n\n—\n\n \n\nIssued\n\n \n\n \n\n2,345,022\n\n \n\n$\n\n0.001\n\n \n\n \n\n3,947,369\n\n \n\n$\n\n1.71\n\n \n\n \n\n131,579\n\n \n\n$\n\n1.43\n\n \n\nExercised\n\n \n\n \n\n—\n\n \n\n$\n\n—\n\n \n\n \n\n—\n\n \n\n$\n\n—\n\n \n\n \n\n—\n\n \n\n$\n\n—\n\n \n\nOutstanding at March 31, 2026\n\n \n\n \n\n2,345,022\n\n \n\n$\n\n0.001\n\n \n\n \n\n3,947,369\n\n \n\n$\n\n1.71\n\n \n\n \n\n131,579\n\n \n\n$\n\n1.43\n\n \n\n \n\nThe fair value of the placement agent warrants was approximately $0.1 million, which was measured using a Black Scholes model, and was expensed during the year ended March 31, 2026 as an offering expense. The expense was included in selling, general, and administrative expenses in the consolidated statement of operations and comprehensive loss. The assumptions that the Company used to determine the fair value of the placement agent warrants were as follows:\n\n \n\n \n\n \n\nYear Ended\nMarch 31, 2026\n\n \n\nDividend yield\n\n \n\n \n\n—\n\n \n\nVolatility\n\n \n\n \n\n124.02\n\n%\n\nRisk-free interest rate\n\n \n\n \n\n3.81\n\n%\n\nExpected life of warrants\n\n \n\n3.00 years\n\n \n\nWeighted average grant date fair value\n\n \n\n$\n\n1.43\n\n \n\n \n\nThe following table summarizes the Company’s common stock warrant liability, which represents a recurring measurement that is classified with Level 3 of the fair value hierarchy wherein the fair value is estimated using significant unobservable inputs (in thousands):\n\n \n\n \n\n \n\nMarch 31, 2026\n\n \n\nBeginning common stock warrant liability\n\n \n\n$\n\n—\n\n \n\nCommon warrants issued\n\n \n\n \n\n5,700\n\n \n\nCommon warrants exercised\n\n \n\n \n\n—\n\n \n\nChange in fair value\n\n \n\n \n\n—\n\n \n\nEnding common stock warrant liability\n\n \n\n$\n\n5,700\n\n \n\n \n\nF-19\n\n \n\nThe fair value of the common stock warrant liability was measured using a Monte Carlo model and will be remeasured each reporting period, and the change in fair value will be recorded in earnings. The fair value of the 2026 Common Warrants is inherently sensitive to changes in the Company's stock price and related volatility assumptions. The assumptions that the Company used to determine the fair value at the reporting date were as follows:\n\n \n\n \n\n \n\nYear Ended\nMarch 31, 2026\n\n \n\nDividend yield\n\n \n\n \n\n—\n\n \n\nVolatility\n\n \n\n \n\n110.00\n\n%\n\nRisk-free interest rate\n\n \n\n \n\n3.90\n\n%\n\nExpected life of warrants\n\n \n\n5.00 years\n\n \n\nWeighted average grant date fair value\n\n \n\n$\n\n1.71\n\n \n\nEmployee Stock Purchase Plan\n\nIn July 2023, the Board adopted, and subsequently on October 31, 2023, the Company's stockholders approved, the ESPP. The ESPP became effective on October 31, 2023. The Company reserved 3,750 shares of common stock for issuance thereunder. The ESPP permits employees to purchase common stock through payroll deductions, limited to 15 percent of each employee’s compensation up to $25,000 per employee per year or 42 shares per employee per six-month purchase period. Shares under the ESPP are purchased at 85 percent of the fair market value at the lower of (i) the closing price on the first trading day of the six-month purchase period or (ii) the closing price on the last trading day of the six-month purchase period. The initial offering under the ESPP commenced on March 1, 2024. During the year ended March 31, 2026, there were no shares issued under the ESPP. At March 31, 2026, there were 3,708 shares remaining available for purchase under the ESPP.\n\nCommon stock reserved for future issuance\n\nCommon stock reserved for future issuance consisted of the following at March 31, 2026:\n\n \n\nCommon stock issuable pursuant to options outstanding and reserved under the 2012 Plan\n\n \n\n \n\n27,565\n\n \n\nCommon stock issuable pursuant to options outstanding and reserved under the A&R 2022 Plan\n\n \n\n \n\n229,353\n\n \n\nCommon stock reserved under the A&R 2022 Plan\n\n \n\n \n\n12,252\n\n \n\nCommon stock reserved under the ESPP\n\n \n\n \n\n3,708\n\n \n\nCommon stock reserved under the 2021 Inducement Equity Plan\n\n \n\n \n\n83\n\n \n\nCommon stock issuable pursuant to restricted stock units outstanding under the A&R 2022 Plan\n\n \n\n \n\n75,000\n\n \n\nCommon stock issuable pursuant to options outstanding and reserved under the Inducement Plan\n\n \n\n \n\n4,166\n\n \n\nCommon stock issuable pursuant to outstanding 2024 Common Warrants\n\n \n\n \n\n539,060\n\n \n\nCommon stock issuable pursuant to outstanding 2026 Pre-Funded Warrants\n\n \n\n \n\n2,345,022\n\n \n\nCommon stock issuable pursuant to outstanding 2026 Common Warrants\n\n \n\n \n\n3,947,369\n\n \n\nCommon stock issuable pursuant to outstanding Placement Agent Warrants\n\n \n\n \n\n131,579\n\n \n\nTotal at March 31, 2026\n\n \n\n \n\n7,315,157\n\n \n\n \n\nStock-based compensation expense and valuation information\n\nStock-based awards include stock options and RSUs under the Company's A&R 2022 Plan, 2012 Plan, inducement awards, performance-based RSUs under an Incentive Award Performance-Based Restricted Stock Unit Agreement, the Inducement Plan, and rights to purchase stock under the ESPP.\n\nStock-based compensation expense for all stock-based awards consists of the following (in thousands):\n\n \n\n \n\n \n\nYear Ended\nMarch 31, 2026\n\n \n\n \n\nYear Ended\nMarch 31, 2025\n\n \n\nResearch and development\n\n \n\n$\n\n56\n\n \n\n \n\n$\n\n86\n\n \n\nGeneral and administrative\n\n \n\n \n\n247\n\n \n\n \n\n \n\n446\n\n \n\nTotal\n\n \n\n$\n\n303\n\n \n\n \n\n$\n\n532\n\n \n\n \n\nThe total unrecognized compensation cost related to unvested stock option grants as of March 31, 2026 was approximately $0.5 million and the weighted average period over which these grants are expected to vest is 2.68 years.\n\nF-20\n\n \n\nThe total unrecognized stock-based compensation cost related to unvested RSUs as of March 31, 2026 was $0.1 million, which will be recognized over a weighted average period of 0.83 years.\n\n \n\nThe Company uses either the Black-Scholes or Monte Carlo option-pricing models to calculate the fair value of stock options, depending on the complexity of the equity grants. Stock-based compensation expense is recognized over the vesting period using the straight-line method. The assumed dividend yield is based on the Company’s expectation of not paying dividends in the foreseeable future. The Company uses the Company-specific historical volatility rate as the indicator of expected volatility. The risk-free interest rate assumption is based on U.S. Treasury rates. The weighted average expected life of options was estimated using the average of the contractual term and the weighted average vesting term of the options. The measurement and classification of share-based payments to non-employees is consistent with the measurement and classification of share-based payments to employees. The fair value of stock options was estimated at the grant date using the following weighted average assumptions:\n\n \n\n \n\n \n\nYear Ended\nMarch 31, 2026\n\n \n\n \n\nYear Ended\nMarch 31, 2025\n\n \n\nDividend yield\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nVolatility\n\n \n\n \n\n113.22\n\n%\n\n \n\n \n\n99.38\n\n%\n\nRisk-free interest rate\n\n \n\n \n\n3.68\n\n%\n\n \n\n \n\n3.75\n\n%\n\nExpected life of options\n\n \n\n6.00 years\n\n \n\n \n\n5.75 years\n\n \n\nWeighted average grant date fair value\n\n \n\n$\n\n1.74\n\n \n\n \n\n$\n\n5.67\n\n \n\nThe fair value of each RSU is recognized as stock-based compensation expense over the vesting term of the award. The fair value is based on the closing stock price on the date of the grant.\n\nThe Company uses the Black-Scholes valuation model to calculate the fair value of shares issued pursuant to the ESPP. Stock-based compensation expense is recognized over the purchase period using the straight-line method. The fair value of the ESPP shares was estimated at the purchase period commencement date using the following assumptions:\n\n \n\n \n\n \n\nYear Ended\nMarch 31, 2026\n\n \n\n \n\nYear Ended\nMarch 31, 2025\n\n \n\nDividend yield\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nVolatility\n\n \n\n \n\n0.00\n\n%\n\n \n\n \n\n95.20\n\n%\n\nRisk-free interest rate\n\n \n\n \n\n0.00\n\n%\n\n \n\n \n\n5.27\n\n%\n\nExpected term\n\n \n\n \n\n—\n\n \n\n \n\n6 months\n\n \n\nGrant date fair value\n\n \n\n$\n\n—\n\n \n\n \n\n$\n\n0.39\n\n \n\n \n\nThe assumed dividend yield was based on the Company’s expectation of not paying dividends in the foreseeable future. The Company uses the Company-specific historical volatility rate as the indicator of expected volatility. The risk-free interest rate assumption was based on U.S. Treasury rates. The expected life is the 6-month purchase period.\n\n \n\nNote 7. Leases\n\n \n\nAfter the initial adoption of ASC Topic 842, on an on-going basis, the Company evaluates all contracts upon inception and determines whether the contract contains a lease by assessing whether there is an identified asset and whether the contract conveys the right to control the use of the identified asset in exchange for consideration over a period of time. If a lease is identified, the Company will apply the guidance from ASC Topic 842 to properly account for the lease.\n\n \n\nOperating Leases\n\nOn November 23, 2020, the Company entered into a lease agreement, pursuant to which the Company permanently leased approximately 8,051 square feet of office space (the “Permanent Lease”) in San Diego once certain tenant improvements were completed by the landlord and the premises were ready for occupancy. Additionally, on November 17, 2021, the Permanent Lease was amended to add an additional 2,892 square feet of office space in the same building. The Permanent Lease commenced on December\n\nF-21\n\n \n\n17, 2021 and is intended to serve as the Company’s permanent premises for approximately sixty-two months. Monthly rental payments are approximately $40,800 with 3% annual escalators.\n\nThe Company determined that the Permanent Lease is considered an operating lease under ASC Topic 842, and therefore upon the lease commencement date of December 17, 2021, recognized lease liabilities and corresponding right-of-use assets of $2.3 million. The Company records operating lease expense on a straight-line basis over the life of the lease (referred to as “operating lease expense”). Variable lease expenses associated with the Company’s leases, such as payments for additional monthly fees to cover the Company’s share of certain facility expenses (common area maintenance) are expensed as incurred.\n\nThe table below summarizes the Company’s lease liabilities and corresponding right-of-use assets as of March 31, 2026 (in thousands):\n\n \n\n \n\n \n\nMarch 31, 2026\n\n \n\nASSETS\n\n \n\n \n\n \n\nOperating lease right-of-use assets\n\n \n\n$\n\n407\n\n \n\nTotal lease right-of-use assets\n\n \n\n$\n\n407\n\n \n\n \n\n \n\n \n\n \n\nLIABILITIES\n\n \n\n \n\n \n\nCurrent\n\n \n\n \n\n \n\nOperating lease liability\n\n \n\n \n\n447\n\n \n\nTotal lease liabilities\n\n \n\n$\n\n447\n\n \n\n \n\n \n\n \n\n \n\nWeighted average remaining lease term:\n\n \n\n0.83 years\n\n \n\nWeighted average discount rate:\n\n \n\n \n\n6\n\n%\n\n \n\nVariable lease expense was approximately $143,000 and $93,000 for the years ended March 31, 2026 and 2025, respectively. Operating lease expense was approximately $503,000 for each of the years ended March 31, 2026 and 2025, respectively.\n\n \n\nCash outflows associated with the Company’s operating lease for the years ended March 31, 2026 and 2025 were approximately $539,000 and $524,000, respectively.\n\n \n\nFuture lease payments relating to the Company’s operating lease liabilities as of March, 31, 2026 are as follows (in thousands):\n\n \n\nFiscal year ending March 31, 2027\n\n \n\n \n\n459\n\n \n\nTotal future lease payments\n\n \n\n \n\n459\n\n \n\nLess: Imputed Interest\n\n \n\n \n\n(12\n\n)\n\nTotal lease obligations\n\n \n\n \n\n447\n\n \n\nLess: Current obligations\n\n \n\n \n\n(447\n\n)\n\nNoncurrent lease obligations\n\n \n\n$\n\n—\n\n \n\n \n\nNote 8. Commitments and Contingencies\n\nLegal matters\n\nIn addition to commitments and obligations in the ordinary course of business, the Company may be subject, from time to time, to various claims and pending and potential legal actions arising out of the normal conduct of its business.\n\nOn August 27, 2024, H.C. Wainwright & Co., LLC (“H.C. Wainwright”) filed a complaint against the Company in the Supreme Court of the State of New York, County of New York alleging that the Company breached a tail financing provision included in an engagement agreement the Company entered into with H.C. Wainwright in May 2023. In its complaint, H.C. Wainwright is seeking compensatory and consequential damages and attorneys’ fees. On October 18, 2024, the Company filed an answer to the complaint and on September 2, 2025, the Company filed counterclaims for rescission, fraudulent inducement, and breach of contract against H.C. Wainwright. H.C. Wainwright moved to dismiss the Company’s counterclaims in November 2025. The parties fully briefed that motion between November 2025 and January 2026 and the court has set oral argument for July 15, 2026. The Company is defending against H.C. Wainwright’s claims and pursuing its own counterclaims vigorously, but there is no guarantee that it will be successful in these efforts.\n\nF-22\n\n \n\nThe Company assesses contingencies to determine the degree of probability and range of possible loss for potential accrual in its Consolidated Financial Statements. Accruals are recognized when it is probable that a liability will be incurred and the amount of loss can be reasonably estimated. Gain contingencies are not recognized until realized. Legal fees are expensed as incurred. Because litigation is inherently unpredictable and unfavorable resolutions could occur, assessing litigation contingencies is subjective and requires judgments about future events. When evaluating contingencies, the Company may be unable to provide a meaningful estimate due to a number of factors, including the procedural status of the matter in question, the presence of complex or novel legal theories, and/or the ongoing discovery and development of information important to the matters. In addition, damage amounts claimed in litigation against it may be unsupported, exaggerated or unrelated to possible outcomes, and as such are not meaningful indicators of its potential liability.\n\nThe Company regularly reviews contingencies to determine the adequacy of its accruals and related disclosures and monitors each related legal issue and adjusts accruals as might be warranted based on new information and further developments. During the three months ended September 30, 2024, the Company recognized an accrual of $0.6 million (which was considered a financing fee related to the 2024 Offering discussed in Note 6. Stockholders' Equity) for the loss contingencies associated with the above described H.C. Wainwright complaint. As of March 31, 2026, the accrual has not changed. Of the $0.6 million loss contingency accrual, $0.4 million is included in accrued expenses on the accompanying consolidated balance sheets. The remaining $0.2 million of the loss contingency accrual is classified as a liability to be settled in equity on the accompanying consolidated balance sheets. The liability to be settled in equity relates to a fixed number of warrants that were included in the complaint as part of the sought compensatory damages. The Company recorded the loss contingency accrual as it determined that an unfavorable outcome is probable or reasonably possible and believed that the amount or range of any possible loss was reasonably estimable. However, amounts accrued for legal contingencies often result from a complex series of judgments about future events and uncertainties that rely heavily on estimates and assumptions including timing of related payments, and the outcome of legal proceedings and claims brought against the Company is subject to significant uncertainty. If one or more legal matters were resolved against the Company in a reporting period, the Company’s consolidated financial statements for that reporting period could be materially adversely affected.\n\nNote 9. Income Taxes\n\nThe following table summarizes the (loss) income before income tax expense by jurisdiction for the period indicated (in thousands):\n\n \n\n \n\nMarch 31,\n2026\n\n \n\n \n\nMarch 31,\n2025\n\n \n\nPre-tax book income (loss)\n\n \n\n \n\n \n\n \n\n \n\nDomestic\n\n$\n\n(13,841\n\n)\n\n \n\n$\n\n(2,486\n\n)\n\nForeign\n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nTotal\n\n$\n\n(13,841\n\n)\n\n \n\n$\n\n(2,486\n\n)\n\nA reconciliation of the statutory federal rate and the effective rate, for operations, is as follows for the years ended March 31, 2026 and 2025 (in thousands, except percentages):\n\n \n\n \n\nMarch 31,\n2026\n\n \n\n \n\n \n\n \n\nMarch 31,\n2025\n\n \n\n \n\n \n\nIncome taxes (benefit) at statutory federal rate\n\n$\n\n(2,907\n\n)\n\n \n\n21.0\n\n%\n\n \n\n$\n\n(522\n\n)\n\n \n\n21.0\n\n%\n\nState and local taxes, net of federal benefit (1)\n\n \n\n(21\n\n)\n\n \n\n0.2\n\n%\n\n \n\n \n\n(31\n\n)\n\n \n\n1.2\n\n%\n\n Tax credits\n\n \n\n(179\n\n)\n\n \n\n1.3\n\n%\n\n \n\n \n\n(321\n\n)\n\n \n\n12.9\n\n%\n\n Changes in valuation allowance\n\n \n\n152\n\n \n\n \n\n(1.1\n\n)%\n\n \n\n \n\n(141\n\n)\n\n \n\n5.7\n\n%\n\nNontaxable or nondeductible items\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nChange in fair value of derivative liability\n\n \n\n568\n\n \n\n \n\n(4.1\n\n)%\n\n \n\n \n\n—\n\n \n\n \n\n0.0\n\n%\n\n Stock-based compensation\n\n \n\n55\n\n \n\n \n\n(0.4\n\n)%\n\n \n\n \n\n75\n\n \n\n \n\n(3.0\n\n)%\n\nFinancing fees\n\n \n\n156\n\n \n\n \n\n(1.1\n\n)%\n\n \n\n \n\n—\n\n \n\n \n\n0.0\n\n%\n\nOther\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n Removal of federal net operating losses and research development credits\n\n \n\n2,126\n\n \n\n \n\n(15.4\n\n)%\n\n \n\n \n\n867\n\n \n\n \n\n(34.9\n\n)%\n\n Other true-ups\n\n \n\n(7\n\n)\n\n \n\n0.0\n\n%\n\n \n\n \n\n(21\n\n)\n\n \n\n1.0\n\n%\n\nChanges in unrecognized tax benefits\n\n \n\n59\n\n \n\n \n\n(0.4\n\n)%\n\n \n\n \n\n96\n\n \n\n \n\n(3.9\n\n)%\n\nProvision for income taxes\n\n$\n\n2\n\n \n\n \n\n(0.0\n\n)%\n\n \n\n$\n\n2\n\n \n\n \n\n0.0\n\n%\n\n \n\nF-23\n\n \n\n(1) State taxes in California comprise the majority (greater than 50%) of the tax effect in this category.\n\nFor the years ended March 31, 2026 and 2025, federal and state income tax payments were insignificant and therefore are not presented in disaggregated detail.\n\n \n\nDeferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s net deferred tax assets are as follows as of March 31, 2026 and 2025 (in thousands, except percentages):\n\n \n\nMarch 31,\n2026\n\n \n\n \n\nMarch 31,\n2025\n\n \n\nDeferred tax assets:\n\n \n\n \n\n \n\n \n\n \n\nAmortization\n\n$\n\n861\n\n \n\n \n\n$\n\n1\n\n \n\nSection 174 R&D capitalization\n\n \n\n1,730\n\n \n\n \n\n \n\n2,380\n\n \n\nAccrued expenses and reserves\n\n \n\n78\n\n \n\n \n\n \n\n132\n\n \n\nOperating lease liability\n\n \n\n99\n\n \n\n \n\n \n\n207\n\n \n\nStock-based compensation\n\n \n\n342\n\n \n\n \n\n \n\n336\n\n \n\nOther, net\n\n \n\n4\n\n \n\n \n\n \n\n5\n\n \n\nTotal deferred tax assets\n\n \n\n3,114\n\n \n\n \n\n \n\n3,061\n\n \n\nValuation allowance\n\n \n\n(2,997\n\n)\n\n \n\n \n\n(2,807\n\n)\n\n     Net deferred tax assets\n\n$\n\n117\n\n \n\n \n\n$\n\n254\n\n \n\nDeferred tax liabilities:\n\n \n\n \n\n \n\n \n\n \n\nOperating lease right-of-use assets\n\n \n\n(90\n\n)\n\n \n\n \n\n(191\n\n)\n\nDepreciation\n\n \n\n(27\n\n)\n\n \n\n \n\n(63\n\n)\n\n     Total deferred tax liabilities\n\n$\n\n(117\n\n)\n\n \n\n$\n\n(254\n\n)\n\n \n\n$\n\n—\n\n \n\n \n\n$\n\n—\n\n \n\n \n\nA full valuation allowance has been established to offset the deferred tax assets as management cannot conclude that realization of such assets is more likely than not. Under the Internal Revenue Code (“IRC”) Sections 382 and 383, annual use of the Company's net operating loss and research tax credit carryforwards to offset taxable income may be limited based on cumulative changes in ownership. The Company has not completed an analysis to determine whether any such limitations have been triggered as of March 31, 2026. Until this analysis is completed, the Company has removed the deferred tax assets related to net operating losses from deferred tax asset schedule. Further, until a study is completed and any limitation known, approximately $1.8 million for each of the years ended March 31, 2026 and 2025, are being considered as an uncertain tax position netted against the deferred tax asset. Due to the existence of the valuation allowance, future changes in the Company’s unrecognized tax benefits will not impact its effective tax rate. Any carryforwards that will expire prior to utilization as a result of such limitations will be removed from deferred tax assets with a corresponding reduction of the valuation allowance. The valuation allowance increased by approximately $190,000 and decreased by approximately $177,000 for the years ended March 31, 2026 and 2025, respectively.\n\n \n\nFederal and State NOLs that have not been recognized as a DTA are $231.6 million and $43.9 million, respectively, as of March 31, 2026.\n\n \n\nFederal net operating loss carryforwards (\"NOLs\") of approximately $88 million will carryforward indefinitely and be available to offset up to 80% of future taxable income each year. The remaining federal net operating losses will begin to expire in 2028, unless previously utilized. The state net operating loss carryforwards will begin to expire in 2028, unless previously utilized.\n\nFederal and State research tax credit carryforwards that have not been recognized as a DTA are $5.5 million and $4.9 million at March 31, 2026, respectively. The federal research tax credit carryforwards begin to expire in 2028. The state research tax credit carryforwards do not expire.\n\nThe Company did not record any accruals for income tax accounting uncertainties for the year ended March 31, 2026.\n\nThe Company recognizes interest expense and penalties associated with uncertain tax positions as a component of income tax expense. Accruals for interest and penalties related to income tax matters were not material as of March 31, 2026.\n\nThe Company is subject to tax in the United States and California. As of March 31, 2026, the Company's tax years from inception are subject to examination by the tax authorities due to the generation of net operating losses. The Company is not currently under examination by any jurisdiction.\n\nF-24\n\n \n\nNote 10. Related Parties\n\nFrom time to time, the Company enters into agreements with one or more related parties in the ordinary course of its business. These agreements are ratified by the Board or a committee thereof pursuant to its related party transaction policy.\n\n \n\nViscient Biosciences (“Viscient”) is an entity for which Keith Murphy, the Company’s Executive Chairman, serves as the Chief Executive Officer and President.\n\n \n\nViscient Biosciences\n\n \n\nOn December 28, 2020, the Company entered into an intercompany agreement (the “Intercompany Agreement”) with Viscient and Organovo, Inc., the Company’s wholly-owned subsidiary, which included an asset purchase agreement for certain lab equipment. Pursuant to the Intercompany Agreement, the Company agreed to provide Viscient certain services related to 3D bioprinting technology, which includes, but is not limited to, histology services, cell isolation, and proliferation of cells and Viscient agreed to provide the Company certain services related to 3D bioprinting technology, including bioprinter training, bioprinting services, and qPCR assays, in each case on payment terms specified in the Intercompany Agreement and as may be further determined by the parties. In addition, the Company and Viscient each agreed to share certain facilities and equipment and, subject to further agreement, to each make certain employees available for specified projects for the other party at prices to be determined in good faith by the parties. During fiscal 2025 and fiscal 2026, the companies added Statements of Work to the Intercompany Agreement, where Viscient agreed to provide the Company with certain consulting and testing services related to the Company's ongoing R&D. The Company evaluated the accounting for the Intercompany Agreement and concluded that any services provided by Viscient to the Company will be expensed as incurred, and any compensation for services provided by the Company to Viscient will be considered a reduction of personnel related expenses. Any services provided to Viscient do not fall under Topic 606 as the Intercompany Agreement is not a contract with a customer. For the fiscal years ended March 31, 2026 and 2025, the Company incurred approximately $604,000 and $118,000 in R&D consulting expenses from Viscient, respectively. As of March 31, 2026 and 2025, the accounts payable balance to Viscient was approximately $56,000 and zero, respectively. Additionally, for the fiscal years ended March 31, 2026 and 2025, the Company provided approximately $5,000 and $3,000 of histology services to Viscient, respectively.\n\nNote 11. Defined Contribution Plan\n\nThe Company has a defined contribution 401(k) plan covering substantially all employees. Under the terms of the 401(k) plan, the Company makes matching contributions on up to the first 6% of compensation contributed by its employees. Amounts expensed under the Company’s 401(k) plan for the years ended March 31, 2026 and 2025 were approximately $71,000 and $66,000, respectively.\n\nNote 12. Recent Accounting Pronouncements\n\nFrom time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies. Unless otherwise stated, the Company believes that the impact of the recently issued accounting pronouncements that are not yet effective will not have a material impact on its consolidated financial position or results of operations upon adoption.\n\nRecently Adopted Accounting Pronouncements\n\nIn December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The update requires a public business entity to disclose, on an annual basis, a tabular rate reconciliation using both percentages and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold. In addition, all entities are required to disclose income taxes paid, net of refunds received disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received. Adoption of the ASU allows for either the prospective or retrospective application of the amendment and is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The new disclosure requirements are included in the Company's Form 10-K for fiscal year ending March 31, 2026, and were applied on a retrospective basis.\n\nRecently Issued Accounting Pronouncements\n\nOn July 4, 2025, the U.S. government enacted comprehensive legislation commonly referred to as the One Big Beautiful Bill Act, or the 2025 Act. The 2025 Act makes changes to U.S. corporate income taxes including reinstating the option to claim 100% accelerated depreciation deductions on qualified property, with prospective application beginning January 20, 2025 and immediate expensing of domestic research and development costs, with prospective application beginning January 1, 2025. The impact of this legislation was not material to the Company's consolidated financial position and results of operations for the year ended March 31, 2026.\n\nIn November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which is intended to improve the disclosures of expenses by providing more detailed information about the types of expenses in commonly presented expense captions. The standard\n\nF-25\n\n \n\nis effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The standard can be applied either prospectively or retrospectively. The Company has not yet completed its assessment of the impact of ASU 2024-03 on the Company’s Consolidated Financial Statements.\n\n \n\nNote 13. Business Segment Information\n\nOperating segments are defined as components of an enterprise about which separate financial information is available that is evaluated on a regular basis by the CODM in deciding how to allocate resources to an individual segment and in assessing performance. The Company identified one operating segment in fiscal 2026, named the R&D segment, which did not impact prior periods. During fiscal 2026, the Company's operating segment was as follows:\n\nResearch & Development\n\nThe R&D segment focuses on providing testing of drugs and drug candidates in 3D human tissue models of liver and intestine, offering partners liver and intestinal toxicology insights using its NAM models. The Company plans to work with pharmaceutical and biotech companies at all stages of drug development to reduce the significant risk and cost of bringing therapeutics to market through the regulatory process and offer bespoke services in the areas of investigational toxicology, mechanism of drug action elucidation, and other applications of these complex human tissue models.\n\n \n\nFor purposes of evaluating performance and allocating resources, the Company’s CODM, its Executive Chairman, regularly reviews Consolidated Net Loss as reported in the Company’s Consolidated Statements of Operations and Comprehensive Loss as compared to budget. The measure of segment assets is reported in the Consolidated Balance Sheets as Total Consolidated Assets.\n\n \n\nIn addition to the significant expense categories included within Consolidated Net Loss presented in the Company’s Consolidated Statements of Operations and Other Comprehensive Loss, see below for disaggregated expense amounts for the years ended March 31, 2026 and 2025 (in thousands):\n\n \n\n \n\nYear Ended\n\n \n\n \n\nYear Ended\n\n \n\n \n\nMarch 31, 2026\n\n \n\n \n\nMarch 31, 2025\n\n \n\nRevenue\n\n \n\n \n\n \n\n \n\n \n\n    Royalty revenue\n\n$\n\n131\n\n \n\n \n\n$\n\n119\n\n \n\n    Product revenue\n\n \n\n—\n\n \n\n \n\n \n\n25\n\n \n\nTotal revenue\n\n \n\n131\n\n \n\n \n\n \n\n144\n\n \n\nOperating expenses\n\n \n\n \n\n \n\n \n\n \n\n    Cost of revenues\n\n \n\n—\n\n \n\n \n\n \n\n5\n\n \n\n    Research and development (a) (b)\n\n \n\n3,934\n\n \n\n \n\n \n\n4,712\n\n \n\n    Selling, general, and administrative expenses (a)(b)\n\n \n\n7,166\n\n \n\n \n\n \n\n7,245\n\n \n\n    Non-cash stock-based compensation (see Note 6)\n\n \n\n303\n\n \n\n \n\n \n\n532\n\n \n\n    Depreciation and amortization (see Note 3)\n\n \n\n215\n\n \n\n \n\n \n\n266\n\n \n\nTotal operating expenses\n\n$\n\n11,618\n\n \n\n \n\n$\n\n12,760\n\n \n\nConsolidated operating loss\n\n$\n\n(11,487\n\n)\n\n \n\n$\n\n(12,616\n\n)\n\n \n\n(a) Stock-based compensation expense of $56,000 and $86,000 related to research and development and $247,000 and $446,000, related to selling, general, and administration have been excluded for the years ended March 31, 2026 and 2025, respectively.\n\n(b) Depreciation and amortization expense of $199,000 and $227,000 related to research and development and $16,000 and $39,000 related to selling, general, and administration have been excluded for the years ended March 31, 2026 and 2025, respectively.\n\nNote 14. Subsequent Events\n\n \n\nIn July 2026, the Company received a milestone payment of $5.0 million in connection with the FXR Asset Sale upon the achievement of a certain development milestone.\n\n \n\nF-26"}