# EDGAR Filing Document

**Accession Number:** 0000924383
**File Stem:** 0001193125-25-319294
**Filing Date:** 2025-12
**Character Count:** 669919
**Document Hash:** f84cfc52124cdcdd476e10ab2d0af376
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001193125-25-319294.hdr.sgml**: 20251215

**ACCESSION NUMBER**: 0001193125-25-319294

**CONFORMED SUBMISSION TYPE**: 10-K

**PUBLIC DOCUMENT COUNT**: 116

**CONFORMED PERIOD OF REPORT**: 20250930

**FILED AS OF DATE**: 20251215

**DATE AS OF CHANGE**: 20251215

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Genasys Inc.
- **CENTRAL INDEX KEY:** 0000924383
- **STANDARD INDUSTRIAL CLASSIFICATION:** HOUSEHOLD AUDIO & VIDEO EQUIPMENT [3651]
- **ORGANIZATION NAME:** 04 Manufacturing
- **EIN:** 870361799
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 0930

**FILING VALUES:**
- **FORM TYPE:** 10-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-24248
- **FILM NUMBER:** 251572089

**BUSINESS ADDRESS:**
- **STREET 1:** 16262 WEST BERNARDO DRIVE
- **CITY:** SAN DIEGO
- **STATE:** CA
- **ZIP:** 92127
- **BUSINESS PHONE:** 858-676-1112

**MAIL ADDRESS:**
- **STREET 1:** 16262 WEST BERNARDO DRIVE
- **CITY:** SAN DIEGO
- **STATE:** CA
- **ZIP:** 92127

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** LRAD Corp
- **DATE OF NAME CHANGE:** 20100326

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** AMERICAN TECHNOLOGY CORP /DE/
- **DATE OF NAME CHANGE:** 19940602

?xml version='1.0' encoding='ASCII'? 10-K

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549** 

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**FORM** 10-K

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

**For the fiscal year ended** September 30, 2025

**or**

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

**Commission File Number** 0-24248

![img26519456_0.jpg](img26519456_0.jpg)

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GENASYS INC.

**(Exact name of registrant as specified in its charter)** 

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| | |
|:---|:---|
| Delaware | 87-0361799 |
| **(State or other jurisdiction of**<br>**Incorporation or organization)** | **(I.R.S. Employer**<br>**Identification No.)** |
| 16262 West Bernardo Drive,<br>San Diego**,** California | 92127 |
| **(Address of principal executive offices)** | **(Zip Code)** |

---

**Registrant's telephone number, including area code: (**858**)** 676-1112

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**SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:** 

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

---

**SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None** 

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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

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

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

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

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

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

Indicate by check mark, whether the registrant has filed a report on and attestations to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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

The aggregate market value of the voting common stock held by nonaffiliates of the registrant as of March 31, 2025 (the last business day of the registrant's most recently completed second fiscal quarter) was $66.9 million based upon the closing price of the shares on the NASDAQ Capital Market on that date. This calculation does not reflect a determination that such persons are affiliates for any other purpose.

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date:

45,193,561 shares of common stock, par value $0.00001 per share, as of December 5, 2025.

**DOCUMENTS INCORPORATED BY REFERENCE** 

Portions of the registrant's definitive proxy statement filed with the Commission pursuant to Regulation 14A in connection with the registrant's 2026 Annual Meeting of Stockholders, or the information included in an amendment to this report filed with the Commission, in either case, to be filed subsequent to the date of this report, are incorporated by reference into Part III of this report. Such definitive proxy statement or amendment will be filed with the Commission not later than 120 days after the conclusion of the registrant's fiscal year ended September 30, 2025.

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**TABLE OF CONTENTS** 

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| | | |
|:---|:---|:---|
|  |  | &nbsp;&nbsp;**Page** <br>|
| **PART I**  | **PART I**  | **PART I**  |
| &nbsp;&nbsp;&nbsp;&nbsp;ITEM 1. | &nbsp;&nbsp;&nbsp;&nbsp;[<u>Business</u>](#item_1_business) | &nbsp;&nbsp;1 |
| &nbsp;&nbsp;&nbsp;&nbsp;ITEM 1A. | &nbsp;&nbsp;&nbsp;&nbsp;[<u>Risk Factors</u>](#item_1a_risk_factors) | &nbsp;&nbsp;13 |
| &nbsp;&nbsp;&nbsp;&nbsp;ITEM 1B. | &nbsp;&nbsp;&nbsp;&nbsp;[<u>Unresolved Staff Comments</u>](#item_1b) | &nbsp;&nbsp;26 |
| &nbsp;&nbsp;&nbsp;&nbsp;ITEM 1C. | &nbsp;&nbsp;&nbsp;&nbsp;[<u>Cybersecurity</u>](#item_1c_cybersecurity) | &nbsp;&nbsp;26 |
| &nbsp;&nbsp;&nbsp;&nbsp;ITEM 2. | &nbsp;&nbsp;&nbsp;&nbsp;[<u>Properties</u>](#item_2) | &nbsp;&nbsp;27 |
| &nbsp;&nbsp;&nbsp;&nbsp;ITEM 3. | &nbsp;&nbsp;&nbsp;&nbsp;[<u>Legal Proceedings</u>](#item_3) | &nbsp;&nbsp;27 |
| &nbsp;&nbsp;&nbsp;&nbsp;ITEM 4. | &nbsp;&nbsp;&nbsp;&nbsp;[<u>Mine Safety Disclosures</u>](#item_4) | &nbsp;&nbsp;27 |
| **PART II**  | **PART II**  | **PART II**  |
| &nbsp;&nbsp;&nbsp;&nbsp;ITEM 5. | &nbsp;&nbsp;&nbsp;&nbsp;[<u>Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities</u>](#item_5) | &nbsp;&nbsp;28 |
| &nbsp;&nbsp;&nbsp;&nbsp;ITEM 6. | &nbsp;&nbsp;&nbsp;&nbsp;[<u>Reserved</u>](#item_6) | &nbsp;&nbsp;28 |
| &nbsp;&nbsp;&nbsp;&nbsp;ITEM 7. | &nbsp;&nbsp;&nbsp;&nbsp;[<u>Management's Discussion and Analysis of Financial Condition and Results of Operations</u>](#item_7_mda) | &nbsp;&nbsp;29 |
| &nbsp;&nbsp;&nbsp;&nbsp;ITEM 7A. | &nbsp;&nbsp;&nbsp;&nbsp;[<u>Quantitative and Qualitative Disclosures About Market Risk</u>](#item_7a) | &nbsp;&nbsp;40 |
| &nbsp;&nbsp;&nbsp;&nbsp;ITEM 8. | &nbsp;&nbsp;&nbsp;&nbsp;[<u>Financial Statements and Supplementary Data</u>](#item_8) | &nbsp;&nbsp;40 |
| &nbsp;&nbsp;&nbsp;&nbsp;ITEM 9. | &nbsp;&nbsp;&nbsp;&nbsp;[<u>Changes in and Disagreements with Accountants on Accounting and Financial Disclosure</u>](#item_9) | &nbsp;&nbsp;41 |
| &nbsp;&nbsp;&nbsp;&nbsp;ITEM 9A. | &nbsp;&nbsp;&nbsp;&nbsp;[<u>Controls and Procedures</u>](#item_9a) | &nbsp;&nbsp;41 |
| &nbsp;&nbsp;&nbsp;&nbsp;ITEM 9B. | &nbsp;&nbsp;&nbsp;&nbsp;[<u>Other Information</u>](#item_9b) | &nbsp;&nbsp;41 |
| &nbsp;&nbsp;&nbsp;&nbsp;ITEM 9C. | &nbsp;&nbsp;&nbsp;&nbsp;[<u>Disclosure Regarding Foreign Jurisdictions that Prevent Inspections</u>](#item_9c) | &nbsp;&nbsp;41 |
| **PART III**  | **PART III**  | **PART III**  |
| &nbsp;&nbsp;&nbsp;&nbsp;ITEM 10. | &nbsp;&nbsp;&nbsp;&nbsp;[<u>Directors, Executive Officers and Corporate Governance</u>](#item_10) | &nbsp;&nbsp;42 |
| &nbsp;&nbsp;&nbsp;&nbsp;ITEM 11. | &nbsp;&nbsp;&nbsp;&nbsp;[<u>Executive Compensation</u>](#item_11) | &nbsp;&nbsp;42 |
| &nbsp;&nbsp;&nbsp;&nbsp;ITEM 12. | &nbsp;&nbsp;&nbsp;&nbsp;[<u>Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters</u>](#item_12) | &nbsp;&nbsp;42 |
| &nbsp;&nbsp;&nbsp;&nbsp;ITEM 13. | &nbsp;&nbsp;&nbsp;&nbsp;[<u>Certain Relationships and Related Transactions, and Director Independence</u>](#item_13) | &nbsp;&nbsp;42 |
| &nbsp;&nbsp;&nbsp;&nbsp;ITEM 14. | &nbsp;&nbsp;&nbsp;&nbsp;[<u>Principal Accountant Fees and Services</u>](#item_14) | &nbsp;&nbsp;42 |
| **PART IV**  | **PART IV**  | **PART IV**  |
| &nbsp;&nbsp;&nbsp;&nbsp;ITEM 15. | &nbsp;&nbsp;&nbsp;&nbsp;[<u>Exhibits and Financial Statement Schedules</u>](#item_15) | &nbsp;&nbsp;43 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;[<u>Index to Consolidated Financial Statements</u>](#consolidated_financial_statements) | &nbsp;&nbsp;F-i |
|  | &nbsp;&nbsp;&nbsp;&nbsp;[<u>Signatures</u>](#signatures) | &nbsp;&nbsp;F-37 |

---

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**PART I**

**Forward Looking Statements** 

*This Annual Report on Form 10-K contains forward-looking statements relating to future events or the future performance of our company. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar expressions or variations of such words are intended to identify forward-looking statements but are not the only means of identifying forward-looking statements. Such statements are predictions; actual events or results may differ materially. In evaluating such statements, you should specifically consider various factors identified in this report, including the matters set forth below in "Item 1A. Risk Factors" of this Annual Report on Form 10-K, which could cause actual results to differ materially from those indicated by such forward-looking statements.* 

*For purposes of this Annual Report, the terms "we," "us," "our" "Genasys" and the "Company" refer to Genasys Inc. and its consolidated subsidiaries.*

**Item 1. Business.**

**Overview**

We are a global provider of Protective Communications™ ("Protective Communications") solutions, including our Genasys Protect™ software platform ("Genasys Protect") and Long Range Acoustic Device<sup>®</sup> ("LRAD<sup>®</sup>") hardware products. Our unified software platform receives information from a wide variety of sensors and Internet-of-Things ("IoT") inputs to collect real-time information on developing and active emergency situations. Genasys' customers use this information to create and disseminate alerts, warnings, notifications, and instructions through multiple channels before, during, and after public safety and enterprise threats, critical events, and other crisis situations.

Genasys Protect is a comprehensive portfolio of Protective Communications software and hardware systems serving federal governments and agencies; state and local governmental agencies, and education ("SLED"); and enterprise organizations in sectors including but not limited to oil and gas, utilities, manufacturing, automotive, and healthcare. Genasys Protect solutions have a diverse range of applications, including emergency warning and mass notification for public safety; critical event management for enterprise companies; de-escalation for defense and law enforcement; critical infrastructure protection; zone-based planning for accelerated, precise emergency response; secure and compliant cross-agency collaboration; and automated detection of real-time threats such as active shooters and severe weather.

LRAD by Genasys products broadcast audible voice messages with exceptional clarity from close range out to 5,000 meters. We have a history of successfully delivering innovative products, systems, and solutions for mission critical situations, pioneering the Acoustic Hailing Device ("AHD") market with the introduction of LRAD in 2002, creating the first multi-directional, voice-based public safety mass notification systems in 2012, and the first AHDs with a digital interface for remote operations in 2023. Building on our proven, best in class, and reliable solutions, we offer the first and only unified, end-to-end Protective Communications platform.

**Background**

Genasys entered the Protective Communications market following the October 2000 attack on the USS Cole, which led to the development of LRAD products capable of communicating to and determining the intent of potential threats from a safe distance. LRAD products broadcast audible alert tones and exceptionally intelligible voice messages in a focused 30° beam over long distances to specific targets. LRADs were quickly embraced by the U.S. Navy and then other domestic military branches, federal agencies, and police departments, and then throughout the world. By using long-range communication to initiate and manage the escalation of force, LRAD products provide a better non-kinetic solution for resolving potentially dangerous or hostile situations.

With devices capable of broadcasting audible alerts and notifications with exceptional vocal clarity over long distances, Genasys engineers enhanced the Company's Protective Communications technology to innovate a new generation of mass notification speaker systems. Most legacy outdoor mass notification systems are sirens, but have limited, if any, audible voice broadcast capability. Genasys' advanced mass notification systems feature the industry's highest Speech Transmission Index ("STI"), large directional and omni-directional broadcast coverage areas, and an array of options that are designed to enable continued operations when power and telecommunications infrastructure goes down.

Company engineers subsequently developed command-and-control software to enhance Genasys mass notification speakers with new technology options and remote functionality. In addition to remotely activating and controlling Genasys' advanced speaker systems, which also feature satellite connectivity, battery backup, and solar power options, Genasys' command-and-control software facilitates the dissemination of alerts, warnings, notifications, information and instructions through multiple channels, including location-based Short Message Service ("SMS"), Cell Broadcast Center ("CBC") mobile push, text, email, social media, TV, radio, and digital displays.

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These systems are used by government emergency services, schools, universities, and businesses to send emergency information and instructions to people at risk before, during, and after public safety and enterprise threats.

Genasys hardware systems and software solutions are designed to provide operators with the ability to deliver critical information rapidly and effectively through multiple channels.

**Principal Genasys Characteristics** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•<u>Scalable:</u> Genasys hardware products and software systems have been deployed throughout the world and can be scaled to meet the needs of government and enterprise customers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•<u>Dynamic and Real-time</u>: Emergencies are not static, and neither are effective emergency responses. Genasys emergency management products and systems are designed to constantly receive and analyze new information as a crisis unfolds, leveraging sensor data, dynamic maps, and first responder feedback to deliver notifications that reflect the most up-to-date information. Our evacuation software is built to track wildfires and other natural or man-made disasters and to model how a disaster is expected to move and develop in the critical minutes, hours or days that follow.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•<u>Customized and Focused</u>: Genasys can send specific alerts, pertinent information, and instructions to at-risk individuals or populations based on geographic location, group status, and other classifications.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•<u>Multiplatform Redundancy</u>: Alerts can be distributed using text messages, emails, voice calls, push notifications, social media, speaker systems, and other delivery channels, allowing critical communications to reach the greatest number of people possible.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•<u>Reach and Clarity</u>: Alerts and notifications transmitted through Genasys speaker systems have unprecedented reach and clarity. Genasys speakers attained an STI score of 0.95 out of 1.0, considered excellent by the International Electrotechnical Commission.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•<u>Reliable and Resilient</u>: Genasys hardware products are made with military-grade materials and undergo extensive laboratory testing seeking to ensure reliability and durability in most any environment, regardless of the conditions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•<u>Extensive Catalog</u>: Genasys offers multiple acoustic device and mass notification speaker options of varying ranges, sizes, weights, and colors. Similarly, we offer a variety of software alerting and notification suites, each with unique capabilities. This extensive catalog enables us to provide customized solutions designed to meet our clients' specific needs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•<u>Global Presence</u>: Genasys has physical offices in North America, Europe, and the Middle East. Sales and support teams at each office have cultural familiarity and a deep understanding of business practices in their region. We believe that our regional presence enables Genasys sales and support teams to develop close relationships with customers to best meet their needs while conducting business professionally and efficiently.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•<u>Proven Quality and Support</u>: All Genasys products are rigorously tested to meet our exacting standards. This commitment to providing the highest quality products earned Genasys ISO 9001 and 27001 certifications, universal indications of excellence and consistency. All Genasys products come with a one-year warranty and our customer service team is available 24/7 for personalized technical support.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•<u>Pioneering Philosophy</u>: With the introduction of LRAD in 2002, Genasys created the AHD market. Genasys continues to develop life safety communication solutions by innovating and enhancing the emergency warning and mass notification industry's only unified Protective Communications platform - Genasys Protect.

**Looking Forward:**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•<u>Acquisitions</u>: In October 2023, we completed the acquisition of Evertel Technologies, LLC ("Evertel"), a fully Criminal Justice Information Services ("CJIS") compliant, cross agency collaboration software solution designed specifically for emergency managers and first responders. In Fiscal 2021, we completed acquisitions of Zonehaven, a software-based evacuation and repopulation management platform, and the assets of Amika Mobile, a physical security information management company. These acquisitions, along with the January 2018 addition of Genasys Spain, expanded Genasys'

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strong suite of software solutions. We may consider strategic acquisitions in the future, particularly in the SaaS industry, as opportunities arise and if they are consistent with our business objectives and our capital positions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•<u>Team Expansion</u>: Along with new businesses, we intend to continue to invest in new engineering, sales, marketing, production, and quality assurance talent to support Genasys' expected growth.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•<u>Market Expansion</u>: By acquiring Evertel, Zonehaven, and Amika Mobile, and adding new sales and marketing personnel with connections to previously untapped markets and locations, we expect our critical communications suite to experience strong sales growth.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•<u>Geographical Expansion</u>: In fiscal year 2025, Genasys continued to expand into new regions, including a substantial project to monitor 37 dams across the Commonwealth of Puerto Rico and provide early warning communications to residents living downstream during hurricanes, flooding, and earthquakes; coverage across Los Angeles County, California, and expansion with local governments and agencies across the United States.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•<u>R&D Facilities</u>: Genasys' research and development offices, located in North America and Europe, feature state-of-the art equipment and facilities that help fuel innovation. Notable features include hardware and software development laboratories, an acoustic testing chamber, and mechanical design and manufacturing facilities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•<u>Continued Software Development</u>: Increased software development and new acquisitions have expanded Genasys' SaaS portfolio. In fiscal year 2026 and beyond, we are focused on expanding and proliferating our unified software and connected-speaker platform.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•<u>Hardware Development:</u> LRAD technological advancements are anticipated to drive product enhancements in fiscal year 2026.

**Software Products**

**The Genasys Protect Platform**

*The Complete Protective Communications Platform*

The Genasys Protect platform provides a full suite of Protective Communications tools for many hazards, designed to provide targeted emergency communication, data-driven decision making, secure inter- and intra-agency collaboration, and more. By enabling communications with precision, speed, and clarity, Genasys Protect helps to enable preparedness, responsiveness, and collaboration to keep people, assets, and operations protected against the impacts of natural disasters, terrorism, violent civil unrest, and other dangerous situations, as well as power failures, facility shutdowns, and other non-emergency operational disruptions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.**Proven Technology:** Genasys solutions have been on the front lines for more than 40 years, providing targeted communications capabilities designed to ensure the right people get the right message - right away.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.**Modular Suite:** Built on open standards, Genasys software and hardware systems are designed to easily integrate, whether using the full Genasys suite or complementing the notification platforms customers already have in place.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.**Predictive Simulation:** Genasys Protect is designed to permit customers to test response plans preemptively with advanced simulation of evacuation-level events, including fires and floods, and their impact on infrastructure, including traffic patterns and perimeter establishment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.**Unified Viewpoint:** One common safety operating picture provides real-time visibility into our customers' people, assets, and environment by combining first-party data from asset / people-management platforms and IoT sensors with third-party data sources, including the Federal Emergency Management Agency ("FEMA"), National Oceanic and Atmospheric Administration ("NOAA"), Department of Homeland Security ("DHS"), and more.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.**Unmatched Precision:** Customized zone mapping enables targeting of mass notifications at the street level, making it easier to sequence response areas from most to least critical.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.**Multichannel:** Genasys Protect is designed to allow operators to saturate their notification area by simultaneously alerting people across location-based SMS, CBC mobile push, text, email, social media, TV, radio, digital displays and acoustic devices.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.**Network Effect:** Implementation in neighboring municipalities and across public- and private-sector organizations within the same municipality extends coverage and enables greater precision when notifying people of threats.

Genasys Protect is a cloud-based SaaS solution that provides multichannel alerting, targeted communications, map-based updates, and planning and modeling designed to enable SLED and enterprise customers to send critical information to at-risk individuals or groups when an emergency occurs. Genasys Protect acts as both a communications input and output, receiving information from state-of-the-art sensors and emergency services, and quickly relaying notifications, alerts, and instructions to first responders, who can in turn relay it to at-risk populations. Communications to the public can be enhanced via Genasys Acoustics - connected, voice broadcast

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speakers - while Genasys Protect communications among first responders and emergency personnel can be augmented and accelerated with Genasys Evertel<sup>®</sup>, formerly Genasys Connect ("Genasys Evertel"). Genasys Protect clients can create and send critical, verified, and secure notifications and messages that are geographically specific and targeted using location-based SMS, CBC mobile push, text, email, social media, TV, radio, digital displays and acoustic devices, panic buttons, desktop alerts, TV, social media, and more. Additionally, Genasys is a certified provider of Integrated Public Alert and Warning System ("IPAWS") notifications. IPAWS is the federal public notification platform for the United States, which Genasys Protect customers can use to deliver critical communications in multiple languages to specific populations.

Similarly, enterprise customers are able to send critical communications to employees, contractors, visitors, or groups based on geographic location or team status. Enterprises often use Genasys Protect to distribute targeted notifications to customers, including billing updates, downtime notices, and more. Operated and controlled via a single dashboard that includes two-way polling, duress buttons, field check-ins and recipient locations, Genasys Protect integrates with various data sources, including sensors, panic buttons, emergency services, active directories, human resources, visitor management, and building control systems to find and deliver safety alerts and notifications to residents, employees, staff, contractors, temporary workers, and visitors.

Our customers use Genasys Protect to send targeted messages based on geographic location, permitting relevant information and instructions to be sent to the appropriate populations. Emergency managers can prepare for natural or man-made disasters by developing evacuation plans that map routes, shelters, traffic control locations, and road closures. Our customers can easily share this information with the public and reduce the time it takes to execute emergency evacuations and conduct orderly repopulations. Auto-Discovery, an innovative feature of the platform, locates and connects with anyone on a wired or wireless network in a fixed area with no opt-in required. When discovered, Genasys Protect anonymizes all recipient information and data. When an emergency occurs, these tools allow Genasys Protect customers to notify at-risk groups or individuals as quickly as possible without sacrificing their privacy.

In addition to disseminating alerts and notifications, Genasys Protect uses two-way communication tools, including polls and check-ins, to receive feedback for enterprise clients. With direct feedback, operators can survey the safety and status of at-risk individuals, learn of developments, update notifications and/or instructions in response to new information, and more.

Genasys Protect also enables responding agencies to react swiftly, make collaborative decisions, and communicate event status in real time to other agencies, businesses, and the public. The use of Genasys Protect helps determine and communicate the proper scope of a response or evacuation by replacing guesswork with data-driven, zone-based intelligence. Genasys Protect enhances safety levels for first responders, communities, and large campuses by providing:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Intelligent zones to improve evacuation planning and communication. Genasys Protect users can build, edit, and act upon geographical location data, including shelters, facilities, and traffic;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Modeling behaviors to plan for effective responses and/or evacuation scenarios covering emergencies that include wildfires, floods, active shooters, hurricanes, and more;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Actionable communication through the Genasys Protect mobile app to keep people informed before, during, and after a critical event;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•A common operating picture across agencies to reduce response times as much as 90%; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Targeted notifications and updates to community members through a public website and free mobile app.

***Genasys Protect Public Safety Case Study***

Genasys Protect coverage has expanded into cities and counties in 40 states, including the States of Oregon and New Hampshire, Los Angeles County, San Diego County, and the City of Boston to help safeguard millions of residents during severe storms, tornadoes, wildfires, flood, debris flows, tsunamis, active shooter incidents, epidemics, civil unrest, and other disasters and life safety threats. Genasys Protect is also used to communicate other critical information to the public, including road closures, power outages, storm warnings, and more.

***Genasys Protect Enterprise Case Study***

Two global auto manufacturers and Aramco, the world's largest oil and gas company, rely on Genasys Protect to create, manage, and deliver geo-targeted, multichannel notifications to thousands of employees in North America and the Middle East, respectively.

Genasys Protect integrates with active directories, human resources, visitor management, and building control systems to empower enterprise customers to protect workers, traveling employees, contractors, and visitors. By adding a powerful and intuitive orchestration and management layer on top of existing physical and digital infrastructure, Genasys Protect extends the clarity, reach and range of Protective Communications.

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***The Genasys Evertel Platform***

Genasys Evertel is a leading cross-agency, CJIS compliant, collaboration platform that streamlines and secures team and one-on-one communications for first responders and public safety agencies. With real-time intelligence sharing that exceeds regulatory privacy requirements for public agencies, Genasys Evertel's instant communication platform empowers first responders and public safety personnel to collaborate and share information in a single space with text, videos, images, and audio from any location. Genasys Evertel provides a secure space where professionals can exchange information, make decisions, and collaborate with trust in data security. Record retention policies drive compliance that allows agencies and personnel to communicate securely.

Enabling public safety professionals to collaborate with other agencies throughout their region, state, and country, Genasys Evertel provides real-time interoperability to address critical events and crisis situations through coordinated efforts. Genasys Evertel data is protected and secured through high-level data encryption within a secure, U.S. based, government-only cloud environment.

***Genasys Evertel Large-Scale Public Event Case Study***

Genasys Evertel is utilized by the Newport Festivals Foundation to coordinate public safety for its annual 10-day music event in Newport, Rhode Island, which draws over 10,000 attendees daily and numerous vessels watching from the harbor. The secure and compliant cross-agency messaging platform ensures effective collaboration and consistent coordination between diverse groups, including the U.S. Coast Guard, State Police, Department of Emergency Management, local fire/police departments, and private security. By providing real-time communication, and the ability to securely share text, audio, video, and imagery, Genasys Evertel has been used by event organizers to keep performers and visitors safe during the event.

***Genasys Evertel Law Enforcement and First Responders Case Study***

The Mansfield Police Department in Mansfield, Texas, a suburban community of more than 73,000 residents, uses Genasys Evertel to solve communication gaps that hinder response times and deployment speed. Previously, officers who were constantly mobile struggled to receive critical updates via email or manage multiple phone calls. Genasys Evertel provides police personnel with a secure, encrypted, and compliant (CJIS, FOIA, HIPAA) messaging platform that ensures all team members receive the same real-time information simultaneously. This helps officers quickly share intelligence, including crime scene photos, and collaborate with sister agencies across North Texas to improve suspect apprehension and streamline workflow for all types of incidents.

**Hardware Products** 

**Genasys Acoustics**

Acoustics unites Genasys' next generation of mass notification speaker systems with Genasys Protect command-and-control software. Most legacy mass notification systems are sirens with limited, if any, voice broadcast capability. Acoustics systems feature the industry's highest STI, large directional and omni-directional broadcast coverage areas, and an array of options, including solar power, battery backup, and satellite connectivity that enable the systems to continue to operate when power and telecommunications infrastructure goes down.

Acoustics gives operators the ability to send critical alerts and notifications from emergency operations centers, and authorized computers or smart phones. Acoustics provides highly audible, clear voice messaging thousands of meters away, staying on and connected even during broad power outages and network failures. Acoustics provides networked, remotely operated devices optimized with advanced driver and waveguide technology so that voice broadcasts are clearly heard and understood above loud background noise and over long distances. Acoustics' reliability enables a constant stream of information, providing redundancy when key infrastructure fails during critical events.

***Acoustics Case Study***

Faced with wildfires, flooding, debris flows, earthquakes, tsunamis, severe weather, and other public safety threats, the city of Laguna Beach, California, selected Acoustics to deliver emergency alerts and notifications to its 23,000 residents and 6 million annual visitors. More than 20 Acoustics installations are in place throughout the city with more installations planned. The installations can be activated individually, in groups, or simultaneously to provide area specific or citywide emergency warning coverage. The Acoustics outdoor speaker installations are equipped with solar power, battery backup, and satellite connectivity in the event power and telecommunications infrastructure goes down.

**LRAD by Genasys**

LRAD is the world's leading AHD, with the ability to project alert tones and audible voice messages with exceptional vocal clarity in a 30° beam from close range to 5,000 meters. LRADs are used throughout the world in multiple applications and

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circumstances to safely hail, warn, inform, direct, prevent misunderstandings, determine intent, establish large safety zones, resolve uncertain situations, and save lives. LRADs have been deployed in defense, law enforcement, fire rescue, critical infrastructure protection, maritime, border, and homeland security installations and applications where clear, intelligible voice communications are essential.

LRAD product models are available in varying audio outputs, communication coverage areas, sizes, functionalities, and mounting options. Several accessories and options (cameras, searchlights, mounts, and more) are also available to enhance LRAD capabilities.

All LRAD products are defined by their unparalleled audio output and clarity. LRADs use Genasys' proprietary XL driver technology, which generates higher audio output in a smaller, lighter form factor. The technology also enables voice messages and alert tones to cut through background noise and be clearly heard and understood. These competitive advantages, and constant innovation, have made LRAD the de facto standard of the global AHD industry.

***LRAD Case Study***

SWAT teams respond to potentially dangerous situations where communication is vital. Previously, SWAT teams used bullhorns and vehicle public address ("PA") systems to communicate with violent suspects. Because of the poor intelligibility and limited broadcast range of these systems, SWAT team members often had to closely engage with suspects, putting themselves, suspects, and bystanders in harm's way.

Many SWAT teams now use LRADs for serving high risk warrants, and during hostage and barricaded suspect negotiations, active shooter situations, and other SWAT operations. LRAD systems are portable and adaptable in most any situation to provide clear voice broadcasts over long distances. By effectively communicating from safe standoff distances, LRAD helps resolve uncertain situations, safeguards operators, and protects the public.

**End Markets** 

**Government**

Genasys Protect provides state, local, and federal agencies with a feature-rich system that combines physical security integrations with multichannel emergency alerting. Automated integrations include fire system, access control, IPAWS, and mobile and desktop panic buttons. Output channels include 2-way SMS, email, pop-ups, callouts, PA speakers, and land mobile radio outputs.

Genasys Protect can be used by state, local, or national agencies to deliver emergency alerts and life safety information to residents in certain areas, regionally, or countrywide. Genasys Protect is used by state and local governments to produce data-driven zones for planning and targeted community notifications. Genasys Evertel enables real-time, inter- and intra-agency collaboration across a secure, compliant platform. Acoustics broadcasts highly audible and clear voice messaging thousands of meters away, staying on and connected even during broad power outages and network downtime.

Partnering with national governments and mobile telecom networks, Genasys NEWS delivers CBC alerts and geo-targeted SMS notifications that can be sent to anyone, anywhere, with no recipient opt-in, registration, or download required.

LRAD systems enhance the safety and security of government-owned critical infrastructure, including dams, power plants, water treatment plants, and government facilities. Unlike traditional monitoring and surveillance networks, LRAD systems provide a vital first response capability missing from observe-only integrated security installations. LRAD turns passive monitoring systems into first responders by broadcasting attention-commanding alerts, warnings, and critical notifications with industry-leading audibility and clarity.

**Towns, Cities, Counties** 

Genasys Protect's scalable mass notification software is used by communities of all sizes to issue emergency warnings, provide important instructions, and receive community feedback quickly and directly.

Genasys Protect serves communities by providing digital communications capabilities through SMS, email, social media, and other channels. In addition, Acoustics installations can be used to broadcast audible messages. During wildfires, flooding, tornadoes, hurricanes and other emergencies, power and telecom outages frequently disrupt legacy emergency warning systems. Acoustics systems are made with rugged, military-grade materials that can withstand the elements, and feature solar power, satellite connectivity, and battery backup options that enable emergency services personnel to disseminate critical information even when power and telecommunications infrastructure goes down.

Genasys Protect is used by communities and counties to create disaster response plans, track emergency events, and execute timely emergency evacuations and orderly repopulations. Genasys Protect also empowers emergency services to effectively collaborate

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across jurisdictions to respond quickly and efficiently to disasters. Genasys Evertel is a fully CJIS compliant solution that enables collaboration in a secure platform across or within agencies. Genasys Protect emergency services include notifications, alerts, and instructions that can be sent directly to community members through several channels, including SMS, email, mobile applications, and more. Genasys customers use the Genasys Protect citizen-facing website and mobile app to keep communities informed and updated.

**Enterprise**

Genasys provides businesses the ability to communicate with all stakeholders, enhance safety levels, and improve business continuity, boosting credibility with customers and within the industry. Enterprises use Genasys to keep stakeholders safe through quick, targeted communications that can reach individuals, groups, or everyone within facilities in the event of unexpected critical events. Facilities take advantage of integrated external sensors to automate alerts when dangerous readings are detected, greatly accelerating response times to potential points of failure. Businesses use Genasys Protect to tackle unexpected interruptions in operations for events ranging from large scale disasters to smaller infrastructure or machinery failures.

Employees can make use of integrated panic buttons to alert Genasys users and relevant teams, further improving safety for lone workers on the move. Genasys Protect communications directed to customers keep them informed and can address even day-to-day communications such as delinquent billing. Genasys Protect also uses targeted zones to segment facilities and campuses to keep communications focused to those in need.

LRAD systems are being used for commercial security applications at large data centers, manufacturing plants, and other enterprise facilities.

**Gas, Oil, Utilities**

Genasys Protect integrates with a variety of industrial technologies, including gas leak sensors, 'man down' alarms, access control systems, and badge scanners for workforce safety and accountability. Genasys Protect can be used to deliver notifications to employees, contractors, visitors, and guests in corporate offices and at field sites. When integrated with human resources systems, Genasys Protect provides employee notifications, guest management systems for contractors and visitors, auto discovery alerts to anyone present on-site, and SMS opt-in for temporary enrollment to receive alerts and notifications.

Two-way enterprise-ready feedback built into Genasys Protect helps promote safety during an emergency. Genasys Protect also helps large facilities target communication by building, campus, or area. In addition to providing real-time safety alerts and notifications through multiple channels, Genasys Protect provides service outage, system maintenance, and other utility customer communications.

Acoustics is being used for emergency warning, industrial safety notification, and facility public address. Acoustics can be integrated with gas detection and other sensors to provide automated alerts that protect workers and minimize infrastructure damage. Acoustics alert tones and voice messages cut though mechanical and ambient background noise to be clearly heard and understood, before, during, and in the aftermath of emergency events.

LRAD systems enhance perimeter security by providing a vital first response capability missing from observe-only integrated security installations. LRAD turns passive monitoring systems into first responders by broadcasting attention-commanding alerts, warnings, and commands to direct fishing boats away from offshore platforms and trespassers from critical infrastructure. LRAD is also integrated with avian radar systems for bird and wildlife protection. LRAD customers use these systems to humanely detect birds and other wildlife and deter them from entering hazardous areas.

**Campuses**

Genasys Protect unifies emergency alerting software and highly intelligible indoor/outdoor speaker systems providing multiple channels to deliver notifications, instructions, and information to students, staff, faculty, and employees. Using Genasys Protect command-and-control software, safety warnings can be delivered campus-wide across several channels, or to specific areas and student populations using select channels. Genasys Protect helps break large campuses into zones to send targeted messages when emergencies arise. Genasys Evertel enables campus security teams to communicate safely and securely and collaborate with public safety and law enforcement agencies.

LRADs are used by campus police and security to broadcast clear communications to students, visitors, and activists present on campus. Campus police rely on LRAD for communication while de-escalating tense civil protests.

**Industrial Facilities**

Genasys solutions provide facility managers the data and tools to initiate critical safety notifications. These notifications can be delivered throughout a facility or targeted to areas affected by industrial accidents, hazmat incidents, unauthorized entries, and other worker safety threats. Genasys Protect can send multichannel communications, and Acoustics and LRAD can broadcast messages across

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facilities, into distant buildings, and over loud machinery noise. Genasys Protect can also segment large industrial complexes into targeted zones for precise actions and communication.

**Defense**

LRADs broadcast audible warning tones and voice messages with exceptional clarity from close range to 5,000 meters, enabling operators on the ground, in vehicles, on ships, or in helicopters, to increase the decision time and distance to differentiate between security threats and non-combatants, resolve uncertain situations, respond safely, and limit the escalation of force.

**First Response**

Genasys Protect accelerates and optimizes emergency management and response to protect civilians and make first responders' duties safer. Genasys Protect's geographically tailored automated map zones enable public safety personnel to make and communicate quick decisions, and direct evacuations easily. A common operating picture accelerates information sharing among first responders and emergency managers during the initial attack phase of a disaster and beyond. This information includes traffic monitoring, road closures, disaster paths, event simulation and modeling, and more. Genasys Evertel helps law enforcement and other agencies to collaborate securely and is fully compliant with federal and state data retention guidelines.

Police and fire departments are using LRAD systems in everyday duties and elevated risk operations to issue warnings, commands, and notifications that are clearly heard and understood above crowd, engine, and background noise. Rugged, reliable, and easy to operate, LRAD systems resolve uncertain situations, safeguard the public, and protect first responders.

**Stadiums and Events**

Genasys Protect keeps attendees, fans, participants, and staff safe through audible broadcasts, quick decision-making, team coordination, and cohesive emergency communications that can reach everyone at an event. With Genasys Protect, event managers use voice calls, SMS messages, images, video, email, stadium Wi-Fi, IPAWS, and Wireless Emergency Alerts ("WEA"), to contact anyone in or near a stadium. Genasys Protect also helps contact individuals, without the need for opt-in, through Wi-Fi auto discovery, Acoustics, and digital signage. Satellite connected, solar powered Acoustics systems broadcast live or prerecorded voice messages over loud background noise and into buildings, even if power and telecommunications fail. Genasys Protect can also segment stadiums into zoned sections, target facilities and event buildings, and help communicate safely in emergencies.

**Strategy and Market**

Our products, systems and solutions continue to gain awareness and recognition through increased marketing efforts, product demonstrations, and word of mouth because of positive responses and increased acceptance. We believe we have a solid global brand, technology, and product foundation, which we continue to expand to serve new markets and customers. We believe we have strong market opportunities for our product offerings throughout the world in the defense, public safety, emergency warning, mass notification, critical event management, enterprise safety, and law enforcement sectors as a result of increasing threats to government, commerce, law enforcement, homeland security, and critical infrastructure. Our products, systems, and solutions also have many applications within the fire rescue, maritime, asset protection, and wildlife control and preservation business segments.

Genasys has developed a global market for LRAD communications systems. We have a reputation for producing quality products that feature industry-leading broadcast area coverage, vocal intelligibility, and product reliability. We plan to continue building on our AHD market leadership position by offering enhanced voice broadcast systems and accessories for an expanding range of applications. In executing our strategy, we use direct sales to governments, militaries, large end-users, system integrators, and prime vendors. We have also built a worldwide distribution channel consisting of partners and resellers that have expertise and experience selling integrated communication solutions into our various target markets. As our primary AHD sales opportunities are with domestic and international governments, military branches, and law enforcement agencies, we are subject to each customer's unique budget cycle, which leads to long selling cycles and uneven revenue flow, complicating our product planning.

The proliferation of natural and man-made disasters, emergency events and civil unrest require technologically advanced, multichannel solutions to deliver clear and timely critical communications to help keep people safe during crisis situations. Businesses are also incorporating critical communication and emergency management systems that locate and help safeguard employees when crises occur.

While the mass notification markets for software and hardware are mature with many established manufacturers and suppliers, we believe that our advanced technology and unified platform provide opportunities to succeed in the large and growing public safety, emergency warning, and Protective Communications markets.

In Fiscal 2026, we intend to continue pursuing domestic and international business opportunities with the support of business development consultants, key representatives, and resellers. We plan to grow our revenues through increased direct sales to governments

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and agencies that desire to integrate our communication technologies into their homeland security and public safety systems. This includes building on Fiscal 2025 domestic defense sales by expanding and pursuing further U.S. military opportunities. We also plan to pursue both domestic and international emergency warning, enterprise and critical event management, government, law enforcement, fire rescue, homeland and international security, private and commercial security, border security, maritime security, and wildlife preservation and control business opportunities.

Our research and development strategy includes incorporating further innovations and capabilities into our Genasys Protect systems, solutions, and LRAD products, to meet the needs of our target markets.

Our Genasys Protect software solutions are more complex offerings. We are pursuing certain certifications, which are often required when bidding on government and mass notification opportunities. We intend to invest engineering resources to enhance our Genasys Protect software solutions to compete for larger emergency warning and critical communications business opportunities. We are also configuring alternative solutions to achieve lower price points to meet the needs of certain customers or applications. We also engage in ongoing value engineering to reduce the cost and simplify the manufacturing of our products.

**Manufacturing and Suppliers**

**Manufacturing**

As an ISO 9001:2015 manufacturer, we believe maintaining quality manufacturing capacity is essential to the performance of our products and the growth of our business. Our technologies are different from mass-produced designs, and our manufacturing and assembly involves unique processes and materials. We contract with third-party suppliers to produce various components and sub-assemblies. In our facility, we complete the final assembly, test, and ship our products. We have refined our internal processes to improve how we design, test, and qualify products. We continue to implement rigorous manufacturing and quality processes to track production and field failures. We also perform third-party testing and certification of our products to ensure that they meet military and commercial specifications. We implement design and component changes periodically to reduce our product costs and improve product reliability and manufacturability.

**Suppliers**

We minimize inventories and maximize the efficiency of our supply chain by having a large number of components and sub-assemblies produced by outside suppliers mainly located within 50 miles of our facility. The Company relies on one supplier for compression drivers for its LRAD products and is working to obtain alternative suppliers to reduce such reliance. The Company's ability to manufacture its products could be adversely affected if it were to lose this sole source supplier and was unable to find an alternative supplier. We also purchase several key components and sub-assemblies from foreign suppliers. Consequently, we are subject to the impact that supply chain issues and economic conditions can have on such suppliers. The fluctuations of foreign currency exchange rates could also impact our product costs. We have developed strong relationships with a number of our key suppliers. If these suppliers experience supply chain issues, quality problems or part shortages, our production schedules could be significantly delayed, or our costs could significantly increase.

**Sales and Marketing**

We market and sell products and services through our salesforce based in Alabama, California, Delaware, Florida, Idaho, Nevada, New York, North Carolina, Oregon, Texas, Utah, Wisconsin, Spain, United Kingdom, and the U.A.E. Our corporate and administrative offices are located in San Diego, California.

We sell directly to governments, militaries, large end-users, and commercial companies. We use independent representatives on a commission basis to assist in our direct sales efforts. We also use a channel distribution model, in which we sell our products directly to independent resellers and system integrators around the world, who then sell (or integrate products with other systems and then sell) to end-user customers. We are focusing our internal business development resources on building relationships with governments and other large direct customers. In addition, we utilize part-time consultants with expertise in various government and defense sectors to advise us on procedures and budgetary policies in an effort to be successful in these areas.

We have built a global reputation for providing high quality, innovative voice broadcast systems and mobile alert solutions that have made Genasys and LRAD internationally recognized product brands. We actively promote our brands and products through our website, social media, podcasts, trade shows, media journals and publications, and advertising. We intend to increase the use of our trademarks throughout our product distribution chain and believe growing brand awareness will assist in expanding our business.

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**Customer Concentration**

For the fiscal year ended September 30, 2025, one customer accounted for 32% of revenues, with no other single customer accounting for more than 10% of revenues. For the fiscal year ended September 30, 2024, one customer accounted for 18% of revenues, with no other single customer accounting for more than 10% of revenues.

Our revenues to date have relied on a few major customers. The loss of any customer could have a materially adverse effect on our financial condition, results of operations, and cash flow.

**Partnerships**

We partner with leading businesses to market our solutions, integrate our software for feature enhancement, and to provide additional channels to drive sales. Our partnerships include Esri, Intterra, First Due, Tablet Command, Waze, the NOAA, and more.

**Backlog**

Our order backlog for products that are deliverable in the next 12 months was approximately $60.0 million as of September 30, 2025 largely related to one customer, compared with $40.3 million as of September 30, 2024. The amount of backlog at any point in time is dependent upon scheduled delivery dates to our customers and product lead times. Our backlog orders are supported by firm purchase orders.

**Warranties**

We generally warrant our products to be free from material and workmanship defects for a period up to one year from the date of purchase. The warranty is generally a limited warranty, and in some instances imposes certain shipping costs on the customer. We generally provide direct warranty service, but at times we may establish warranty service through third parties.

We also provide repair and maintenance agreements and extended warranty contracts at market rates, with terms ranging from one year to several years, as an additional source of revenue and to provide increased customer satisfaction.

**Competition**

A number of large companies currently have a substantial share of the emergency response and mass notification market. We are competing against established competitors that have greater resources and have successfully penetrated the market, and we expect to confront pricing pressures, which may negatively impact our overall margins.

Nevertheless, our technologies and products compete with those of other companies. Our LRAD and Acoustics systems are part of the commercial and government audio industry and mass notification markets that are fragmented and include numerous manufacturers with products that vary widely in price, quality, and distribution channels. Present and potential competitors have, or may have, substantially greater resources to devote to product development. We believe we compete primarily on the originality of our products, the uniqueness of our technology and designs, and our responsiveness to customers and the ability to meet their needs. We believe the quality, reliability, and superior performance of our products, which have been developed by incorporating feedback from our customers and our desire to provide the highest quality products, also provide us with competitive advantages.

Our LRAD products includes the leading long-range voice broadcast systems for military and other applications. Our AHD competitors include Ultra Electronics/USSI, IML Sound Commander, and others. We do not believe these competitors have achieved significant global market penetration in the AHD market to date. We believe our LRAD products have demonstrated acceptance, performed extremely well in harsh environments, and can continue to compete on the basis of technical features, performance, ease of use, quality, and cost. As we continue to grow this market, future competitors may enter, which could impact our competitiveness.

Our advanced Acoustics mass notification systems compete against several domestic and international companies, including Federal Signal, Whelen Engineering Company, Hoermann, and others. We believe our industry-leading voice intelligibility and area coverage, as well as our satellite connectivity and solar power options, provide key advantages that distinguish us from our competitors. When integrated with our Genasys Protect command-and-control software to provide multiple remote activation and control options, we believe our mass notification speakers are among the most technologically advanced and easiest to operate in the world.

In the more mature and established critical communications and event management software markets, we compete against several competitors, including Everbridge, OnSolve, Rave Alert, and others. We believe our ability to unify sensors and IoT inputs with the multichannel, multiagency dissemination of geolocation-targeted alerts, notifications and instructions before, during, and after public safety and enterprise threats, critical events, and other crisis situations, gives us competitive advantages against these established organizations. Our reliable, fast, and intuitive solution for sending warnings and information via location-based SMS, CBC, mobile

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push, text, email, social media, TV, radio, digital displays, sirens and speaker arrays, and our platform's compatibility with major emergency warning protocols, including IPAWS, WEA, and others, provide additional competitive advantages. We believe the domestic and international markets for public safety, emergency warning, and critical communications are substantial and growing.

**Seasonality**

Because our sales are primarily to domestic and international government departments or agencies, our selling cycles tend to be long and difficult to forecast. We have not experienced any significant seasonality trends to date, but we may experience increased seasonality in the future.

**Government Regulation**

We are subject to a variety of government laws and regulations that apply to companies engaged in international operations, including, among others, the Foreign Corrupt Practices Act, U.S. Department of Commerce export controls, local government regulations, and procurement policies and practices (including regulations relating to import-export control, investments, exchange controls, and repatriation of earnings). We maintain controls and procedures to comply with laws and regulations associated with our international operations. If we are unable to remain compliant with such laws and regulations, our business may be adversely affected.

Our products are produced to comply with standard product safety requirements for sale in the U.S. and similar requirements for sale in Europe and Canada. We expect to meet the electrical and other regulatory requirements for electronic systems or components we sell throughout the world.

**Financial Information about Segments and Geographic Areas**

Financial information regarding our segments and the geographic areas in which we operate is contained in Note 19, Segment Information, and Note 20, Major Customers, Suppliers and Related Information in our consolidated financial statements included in this report.

**Intellectual Property Rights and Proprietary Information**

We operate in an industry where innovation, investment in new ideas, and protection of resulting intellectual property rights are important drivers of success. We rely on a variety of intellectual property protections for our products and technologies, including patent, trademark and trade secret laws, and contractual obligations. We pursue a policy of vigorously enforcing our intellectual property rights.

In addition to such factors as innovation, technological expertise, and experienced personnel, we believe strong product offerings that are continually upgraded and enhanced will keep us competitive, and we seek patent protection on important technological improvements that we make. We file patent applications to seek protection for novel features of our products and technologies. Prior to the filing and granting of patents, we disclose key features to patent counsel and maintain these features as trade secrets prior to product introduction. Patent applications may not result in issued patents covering all important claims and could be denied in their entirety. In addition to relying on issued patents and patent filings, we also file for trade name and trademark protection when appropriate. We are the owner of several registered trademarks.

Our policy is to enter into nondisclosure agreements with each employee and consultant or third party to whom any of our proprietary information is disclosed. These agreements prohibit the disclosure of confidential information to others, both during and subsequent to employment, or the duration of the working relationship. These agreements may not prevent disclosure of confidential information or provide adequate remedies for any breach.

**Research and Development**

The software and sound reproduction markets are subject to rapid changes in technology and design with frequent improvements and new product introductions, as well as customized solutions for specific customer applications. We believe our future success will depend on our ability to enhance and improve existing technologies and to introduce new technologies and products on a competitive basis that meet the needs of our customers. Accordingly, we are continuing to invest in significant research and new product development activities.

For the fiscal years ended September 30, 2025 and 2024, we spent approximately $8.1 million and $9.6 million, respectively, on company-sponsored research and development. Future levels of research and development expenditure will vary depending on the timing of further new product development and the availability of funds to carry out additional research and development on currently owned technologies or in other areas.

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**Human Capital**

As of September 30, 2025, we employed a total of 187 full-time employees, of which 109 were located in the United States and 78 were located internationally. Our full-time employees as of such date included: 86 in engineering, 27 in production, quality assurance and materials control, 20 in general and administrative and 54 in sales and marketing. We contract technical and production personnel from time to time on an as needed basis and use outside consultants for various services. We have not experienced any work stoppages and are not a party to a collective bargaining agreement.

We are dedicated to preserving operational excellence and remaining an employer of choice. We provide and maintain a work environment designed to attract, develop, and retain top talent through offering our employees an engaging work experience that contributes to their career development. We recognize that our success is based on the collective talents and dedication of those we employ, and we are highly invested in their success.

**Available Information**

Our shares of common stock trade on the NASDAQ Capital Market under the symbol "GNSS".

We were incorporated initially in Utah in 1980. We changed our jurisdiction of organization from Utah to Delaware in 1992. Our address is 16262 West Bernardo Drive, San Diego, California, 92127, our telephone number is 858-676-1112, and our website is located at www.genasys.com. We make available, free of charge through our website, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, reports filed by our directors, executive officers and certain significant shareholders pursuant to Section 16 of the Securities Exchange Act, and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act of 1934, as soon as reasonably practical after the reports are electronically filed with or furnished to the Securities and Exchange Commission ("SEC"). The information on our website is not incorporated by reference into this report nor is it part of this report.

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**Item 1A. Risk Factors** 

*An investment in our company involves a high degree of risk. In addition to the other information included in this report, you should carefully consider the following risk factors in evaluating an investment in our company. You should consider these matters in conjunction with the other information included or incorporated by reference in this report. Our results of operations or financial condition could be seriously harmed, and the trading price of our common stock may decline due to any of these or other risks.* 

**Risks Related to Our Business and Industry**

***We have historically had a high concentration of revenues from a limited number of customers. We expect to continue to be dependent on a limited number of customers.***

In fiscal year 2025, one customer accounted for 32% of revenues and no other customers accounted for more than 10% of revenues. In fiscal year 2024, one customer accounted for 18% of revenues, and no other customers accounted for more than 10% of revenues. Historically, our revenues have been dependent upon a limited number of customers, and we expect that we will continue to have some significant customers in future years. We do not have long-term purchase commitments with these or other significant customers, and our customers have the right to cease doing business with us at any time. Military contracts that we have been awarded have terms of indefinite delivery/indefinite quantity during the term of the contract, so there are no guaranteed purchases under these contracts. No assurance can be given that these or other customers will continue to do business with us or that they will maintain their historical levels of business. If our relationship with any material customer were to cease, then our revenues would decline and negatively impact our results of operations. Any such decline could result in us increasing our accumulated deficit and a need to raise additional capital to fund our operations. If our expectations regarding future sales are inaccurate, we may be unable to reduce costs in a timely manner to adjust for sales shortfalls.

***We may need additional capital for growth.***

We may need additional capital to support our growth. While we expect to generate these funds from operations, we may not be able to do so, or may be able to do so only on terms unfavorable to us. Principal factors that could affect the availability of our internally generated funds include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•failure of sales to, or delays in payment from, customers in the government, military, and commercial markets to meet planned projections;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•government spending levels impacting sales of our products;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•political or economic uncertainty;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•foreign currency fluctuations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•working capital requirements to support business growth;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•our ability to control spending;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•our ability to integrate future acquisitions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•management of new business opportunities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•introduction of new competing technologies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•product mix and effect on margins; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•acceptance of our existing and future products in existing and new markets.

Should we require additional funds, general market conditions or the then-current market price of our common stock may not support equity or debt capital raising transactions and any such financing may require advance approval of our stockholders under the rules of the NASDAQ Capital Market. As a result of the size of our public float, we are limited in our ability to raise significant equity capital in a public offering. Our ability to obtain financing may be further constrained by prevailing economic conditions. We may be required to reduce costs, including the scaling back of research and development into new products, which could have a negative impact on our ability to compete and to innovate. If we raise additional funds by selling additional shares of our capital stock or securities convertible into or exercisable for common stock (assuming we are able to obtain additional financing), the ownership interest of our stockholders will be diluted, which could have a material negative impact on the market value of our common stock. If we raise additional funds through debt financing, the terms of such financing may not be favorable to us, and may also restrict our strategic or operational flexibility.

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***Risks related to global economic instability, including global supply chain issues, inflation, labor costs, and fuel and energy costs, may affect the Company's business.***

The volatile global economic environment has created market uncertainty. A slowdown in the financial markets or other economic conditions, including but not limited to global supply chain issues, inflation, fuel and energy costs, freight costs, lack of available credit, sovereign debt crises, interest rates, and tax rates, may adversely affect the Company's growth and profitability. Fluctuation of prices and availability of commodities and materials used in the manufacture of our products may affect the cost of operations. In addition, increasing wage inflation and challenges hiring qualified personnel may impact our ability to meet customer demand. While we expect the impacts of market uncertainty and inflation could have an effect on our business, financial condition and results of operations, we are unable to predict the extent or nature of these impacts at this time.

***Actual or perceived failures or breaches of our information and security systems, or those of our customers, suppliers or business partners, could expose us to losses.***

We rely on computer systems, hardware, software, technology infrastructure and online sites and networks (collectively, "IT Systems") for both internal and external operations that are critical to our business. We own and manage some of these IT Systems but also rely on third parties for a range of IT Systems and related products and services.

We have experienced cybersecurity incidents in the past, though none have materially impacted our Company, including our operations or financial condition. There can be no guarantee that future cyberattacks or incidents will not materially impact our Company generally or our IT Systems or data or that of critical service providers specifically. We face numerous and evolving cybersecurity risks that threaten the confidentiality, integrity and availability of our IT Systems and data. Those risks include data security incidents, cybersecurity events, data breaches, ransomware attacks or other compromises of the IT Systems that we or our vendors use to provide services or process data on our behalf, which may lead to compromised network security and misappropriation or compromise of our information, our customer's information or that of third parties, to system disruptions or to shutdowns. Cyberattack actors include criminal hackers, hacktivists, and state-sponsored intrusions, and may involve industrial espionage, employee malfeasance and human or technological error. Computer hackers and others routinely attempt to breach the security of technology products, services and systems, and to fraudulently induce employees, customers and other third parties to disclose information or unwittingly provide access to systems or data. The risk of such attacks includes attempted breaches not only of our own products, services and systems, but also those of customers, contractors, business partners, vendors and other third parties.

Our products, services and systems may be used in critical government, company, customer or other third-party operations, or involve the storage, processing and transmission of sensitive data, including valuable intellectual property, classified information, other proprietary or confidential data, regulated data and personal information of employees, customers and others. In our command-and-control software systems, we process, store and transmit data provided by our customers, which is vital to our customer's businesses and operations and may include sensitive and personal data. We also manage, store, transmit and otherwise process various sensitive personal or confidential data related to our company and our employees in the regular course of business. Successful breaches, employee malfeasance or human or technological error could result in, for example, unauthorized access to, disclosure, modification, misuse, loss or destruction of government company, customer or other third party data or systems; theft of sensitive, regulated, classified or confidential data including personal information and intellectual property; the loss of access to critical data or systems through distributed denial-of-service attacks, denial-of-service attacks, ransomware attacks, supply chain attacks, destructive attacks or other means; and business delays, service or system disruptions or denials of service. Further, hardware and operating system software and applications that we produce or procure from third parties may contain defects in design or manufacture, including "bugs" and other problems that could interfere with the operation of such systems. Given the nature of complex systems, software and services like ours, and the scanning tools that we deploy across our networks, infrastructure and products, we regularly identify and track security vulnerabilities. We are unable to comprehensively guarantee patches or confirm that measures are in place to mitigate all such vulnerabilities, or that patches will be applied before vulnerabilities are exploited by a threat actor. If attackers are able to exploit critical vulnerabilities before patches are installed or mitigating measures are implemented, significant compromises could impact our and our customers' systems and data.

The information technology systems we and our vendors use are vulnerable to outages, breakdowns or other damage or interruption from service interruptions, system malfunction, natural disasters, terrorism, war, and telecommunication and electrical failures. For example, in July 2024, a software update by CrowdStrike Holdings, Inc. ("CrowdStrike"), a cybersecurity technology company, caused widespread crashes of Windows systems into which it was integrated. Although we have not experienced any material impacts as a result of the CrowdStrike software update, we could in the future experience similar third-party software-induced interruptions to our operations, which would adversely affect our business, results of operations and financial condition.

Cyberattacks are expected to accelerate on a global basis in both frequency and magnitude as threat actors are becoming increasingly sophisticated in using techniques and tools (including AI) that circumvent controls, evade detection and even remove forensic evidence. Further, the use of AI by us, our customers, suppliers, and third-party service providers, among others, may also

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introduce unique vulnerabilities. As a result, there can be no assurance that the systems we have designed to protect against cyberattacks, or our cybersecurity risk management program and processes, will be fully implemented, complied with or sufficient to identify, detect or prevent material consequences arising from such attacks in the future. In addition, we have acquired and continue to acquire companies that may have cybersecurity vulnerabilities and/or unsophisticated security measures, which could expose us to significant cybersecurity, operational, and financial risks.

The costs to address product defects or any of the foregoing security problems and security vulnerabilities before or after a cyber incident could be significant. Remediation efforts may not be successful and could result in interruptions, delays or cessation of service and loss of existing or potential customers that may impede our sales, manufacturing, distribution or other critical functions. We could lose existing or potential customers for outsourcing services or other information technology solutions in connection with any actual or perceived security vulnerabilities in our products. In addition, breaches of our IT Systems or security measures and the unapproved dissemination of proprietary information or sensitive or confidential data about us or our customers or other third parties could expose us, our customers or other third parties affected to a risk of loss or misuse of this information, result in regulatory enforcement, litigation and potential liability, damage our brand and reputation or otherwise harm our business. Further, we rely in certain limited capacities on third-party data management providers and other vendors whose own security vulnerabilities or problems may have similar detrimental effects on us.

***Actual or perceived non-compliance with applicable data privacy and security laws, or that of our customers, suppliers or business partners, could expose us to losses.***

We are subject to laws, rules and regulations in the United States and other countries relating to the collection, use, transmission, processing and security of user and other data. Our ability to execute transactions and to possess, process, transmit and use personal information and data in conducting our business, for example with respect to our marketing efforts, which include email marketing and telemarketing, subjects us to legislative and regulatory obligations that, among other things, may require us to expend time, financial and other resources to monitor and interpret ever-evolving and complex data privacy and security laws.

In particular, certain states have adopted new or modified privacy and security laws and regulations that may apply to our business, for example, the California Consumer Privacy Act ("CCPA") imposes obligations on businesses that process personal information of California residents. Among other things, the CCPA: requires disclosures to such residents about the data collection, use and disclosure practices of covered businesses; provides such individuals expanded rights to access, delete and correct their personal information and opt-out of certain transfers of personal information; and provides such individuals with a private right of action and statutory damages for data breaches. The enactment of the CCPA has prompted a wave of similar laws being passed in the United States, which creates the potential for a patchwork of overlapping but different state laws. For example, since the CCPA went into effect, other states, including Colorado, Connecticut, Delaware, Florida, Indiana, Iowa, Kentucky, Maryland, Minnesota, Montana, Nebraska, Nevada, New Hampshire, Oregon, Rhode Island, Tennessee, Texas, Utah and Virginia, have all enacted comprehensive data privacy legislation. We cannot predict the full impact of these laws on our business or operations. Many other states are currently reviewing or proposing the need for greater regulation of the collection, sharing, use and other processing of information related to individuals for marketing purposes or otherwise, and there remains increased interest at the federal level as well. Additionally, other jurisdictions outside of the United States have or have recently enacted privacy and cybersecurity laws, such as the EU and the European Union where the General Data Protection Regulation ("GDPR") took effect in 2018, creating the potential for a patchwork of overlapping but different laws.

We have incurred, and will continue to incur, significant expenses to comply with mandatory privacy and security standards and protocols under applicable laws, regulations, industry standards and contractual obligations. Despite such expenditures, we may face regulatory and other legal actions in the event of perceived or actual non-compliance with such applicable obligations. Many of these laws would also require us to notify regulators and customers, employees or other individuals of any data security breach as described above. The various data privacy enactments impose significant obligations and compliance with these requirements depends in part on how particular regulators apply and interpret them. Even though we believe we are generally in compliance with applicable laws, rules and regulations relating to privacy and data security, these laws are in some cases relatively new and the interpretation and application of these laws are uncertain. Any failure or perceived failure by us to comply with data privacy laws, rules, regulations, industry standards and other requirements could result in proceedings or actions against us by individuals, consumer rights groups, government agencies or others. We could incur significant costs in investigating and defending such claims and, if found liable, pay significant damages or fines or be required to make changes to our business. Further, these proceedings and any subsequent adverse outcomes may subject us to significant negative publicity and an erosion of trust. If any of these events were to occur, our business, results of operations and financial condition could be materially adversely affected.

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***We have current government contracts, and our future growth is dependent, in large part, on continued sales to U.S. and international governments and businesses that sell to governments, which in turn are dependent on adequate government funding. In this context, we note a recent decline in federal funding in the United States.*** 

In fiscal year 2025, direct and indirect sales to the U.S. government accounted for approximately 56% of our total net sales, compared with 29% of our total net sales in fiscal year 2024. Changes in defense and other government spending could have an adverse effect on our current and future revenues. Sales of our products to U.S. government agencies and organizations, including, for example, our recently received LRAD order for CROWS, are subject to the overall U.S. government budget and congressional appropriation decisions and processes which are driven by numerous factors, including domestic political conditions, geopolitical events and macroeconomic conditions, and are beyond our control. Even awards granted may not result in orders due to spending constraints or Congressional delays in passing the federal budget. Similar issues apply to sales to international governments. Furthermore, we have no assurance that military interest in communication devices to minimize unnecessary use of force will continue or will provide future growth opportunities for our business.

The funding of U.S. government programs is subject to an annual congressional budget authorization and appropriations process. In years when the U.S. government does not complete its appropriations before the beginning of the new fiscal year on October 1, government operations are typically funded pursuant to a "continuing resolution," which allows federal government agencies to operate at spending levels approved in the previous appropriations cycle, but does not authorize new spending initiatives. When the U.S. government operates under a continuing resolution, delays can occur in the procurement of the products, services and solutions that we provide and may result in new initiatives being canceled. We have on occasion experienced delays in contract awards which affect our future revenues as a result of this annual appropriations cycle, and we could experience similar declines in revenues from future delays in the appropriations process. When the U.S. government fails to complete its appropriations process or to provide for a continuing resolution, a full or partial federal government shutdown may result. A federal government shutdown could result in delays or cancellations of key programs or during extended government shutdown periods, the delay of contract payments, which could have a negative effect on our cash flows and adversely affect our future results.

A decline in, and delays in the receipt of, federal funding is currently impacting many of our software and hardware customers, and may lead to a reduction in demand for our products. FEMA funding freezes and related uncertainty has recently introduced friction in procurement across multiple jurisdictions. Ongoing uncertainty regarding funding policies may also complicate our short- and long-term strategic planning, and that of our partners and customers, including decisions regarding hiring, product strategy, capital investment, supply chain design and geographic expansion.

While we continue to monitor federal funding developments, the ultimate impact of these risks remains uncertain and any prolonged governmental funding shortfalls could materially and adversely affect our business, results of operations, financial condition and prospects.

***Disruption and fluctuations in financial and currency markets could have a negative effect on our business.*** 

Financial markets in the U.S., Europe, and Asia have experienced extreme volatility and uncertainty in recent years. Governments have taken unprecedented actions intended to address these market conditions. It is difficult to assess the extent to which these conditions have impacted our business, and the effect this has had on certain of our customers and suppliers. These economic developments affect businesses like ours in a number of ways. Any tightening of credit in financial markets may adversely affect the ability of commercial customers to finance purchases and operations and could result in a decrease in orders and spending for our products as well as create supplier disruptions. Reductions in tax revenues, rating downgrades, and other economic developments could also reduce future government spending on our products. There can be no assurance that there will not be further volatility and uncertainty in financial markets, which can then lead to challenges in the operation of our business. We are unable to predict the likely effects that negative economic conditions will have on our business and financial condition.

We purchase a number of key components and sub-assemblies from foreign suppliers. Consequently, we are subject to the impact economic conditions can have on such suppliers and fluctuations in foreign currency exchange rates. Increases in our cost of purchasing these items could negatively impact our financial results if we are not able to pass these increased costs on to our customers.

***International trade policies, including tariffs, sanctions and trade barriers, may adversely affect our business, financial condition, results of operations and prospects.***

Beginning in our fiscal year 2025, significant new and expanded tariffs, reciprocal tariffs and other trade restrictions have been imposed with selective tariff exemptions impacting global trade.

Current or future tariffs or other restrictive trade measures may raise the costs of raw materials, components or finished goods, which may adversely impact both our product offerings and our operational expenses. Such cost increases may reduce our margins and

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require us to increase prices, which could harm our competitive position, reduce customer demand and damage customer relationships.

Trade disputes, trade restrictions, tariffs and other political tensions between the U.S. and other countries may also exacerbate unfavorable macroeconomic conditions including inflationary pressures, foreign exchange volatility, financial market instability, and economic recessions or downturns, which may also negatively impact customer demand for our products or services, delay purchases or renewals, limit expansion opportunities with customers, limit our access to capital, or otherwise negatively impact our business and operations. Ongoing tariff policies, trade restrictions and macroeconomic uncertainty have and may continue to contribute to volatility in the price of our common stock.

Ongoing uncertainty regarding trade policies may also complicate our short- and long-term strategic planning, and that of our partners and customers, including decisions regarding hiring, product strategy, capital investment, supply chain design and geographic expansion. While we continue to monitor trade developments, the ultimate impact of these risks remains uncertain and any prolonged economic downturn, escalation in trade tensions, or deterioration in international perception of U.S.-based companies could materially and adversely affect our business, results of operations, financial condition and prospects.

***Our future success depends upon our ability to execute our business strategy, to continue to innovate and improve our existing products as well as design, develop, and produce new products to provide protective communications solutions****.*

Our future success significantly depends on our ability to execute our business strategy, continue to innovate, improve our existing products, and design, develop, and produce innovative new products and solutions, including those that may incorporate, or are based upon, artificial intelligence technology. Product design, development, innovation, and enhancement is often a complex, time-consuming, and costly process involving significant investment in research and development with no assurance of return on investment. There can be no assurance that we will be able to develop and introduce new and improved products in a timely or efficient manner or that new and improved products, if developed, will achieve market acceptance. Our products generally must conform to various evolving and sometimes competing industry standards, which may adversely affect our ability to compete in certain markets or require us to incur significant costs. In addition, our customers generally impose very high quality and reliability standards on our products, which often change and may be difficult or costly to satisfy. Any inability to satisfy customer quality and reliability standards or comply with industry standards and technical requirements may adversely affect demand for our products and our results of operations.

***We must expand our customer base to grow our business.*** 

To grow our business, in addition to continuing to obtain additional orders from our existing customers, we must develop relationships with new customers and obtain and fulfill orders from new customers. We are competing against a number of large competitors in the mass notification market, and we need to establish our product offerings as competitive to win awards against these competitors, increase our customer base, and gain market share. We cannot guarantee that we will be able to increase our customer base. Further, even if we do obtain new customers, we cannot guarantee that those customers will purchase from us in sufficient quantities or at product prices that will enable us to recover our costs in acquiring those customers and fulfilling those orders. Whether we will be able to sell more of our products will depend on several factors, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•our ability to design and manufacture reliable products that have the features that are required by our customers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the global economy;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•our ability to expand relationships with existing customers and to develop relationships with new customers that will lead to additional orders for our products;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•our ability to develop and expand new markets for directed sound products, mobile mass messaging services, and integrated solutions; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•our ability to develop international product distribution directly or through strategic partners.

***We may not be able to successfully integrate acquisitions in the future, and we may not be able to realize anticipated cost savings, revenue enhancements, or other synergies from such acquisitions.***

Since early 2018, we have completed several acquisitions, including Genasys Spain, Amika Mobile assets, Zonehaven and most recently Evertel. Our ability to successfully implement our business plan and achieve targeted financial results and other benefits including, among other things, greater market presence and development, and enhancements to our product portfolio and customer base, is dependent on our ability to successfully identify, consummate and integrate acquisitions. We may not realize the intended benefits of these acquisitions, or the acquisition of other businesses in the future as rapidly as, or to the extent, anticipated by our management. There can be no assurance that we will be able to successfully integrate these businesses, products or technologies without substantial expenses, delays or other operational or financial problems. Acquisitions involve a number of risks, some or all which could have a material adverse effect on our acquired businesses, products or technologies. Furthermore, there can be no assurance that these businesses, or any other acquired business, product, or technology will be profitable or achieve anticipated revenues and income. Our

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failure to manage our acquisition and integration strategy successfully could have a material adverse effect on our business, results of operations, and financial condition. The process of integrating an acquired business involves risks, including but not limited to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•demands on management related to changes in the size and possible locations of our businesses and employees;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•diversion of management's attention from the management of daily operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•difficulties in the assimilation of different corporate cultures, employees and business practices;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•difficulties in conforming the acquired businesses' accounting policies to ours;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•retaining the loyalty and business of the employees or customers of acquired businesses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•retaining employees that may be vital to the integration of acquired businesses or to the future prospects of the combined businesses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•difficulties and unanticipated expenses related to the integration of departments and information technology systems, including accounting systems, technologies, books and records, procedures, and maintaining uniform standards, such as internal accounting controls, procedures, and policies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•costs and expenses associated with any undisclosed or potential liabilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the use of more cash or other financial resources on integration and implementation activities than we expect; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•our ability to avoid labor disruptions in connection with any integration, particularly in connection with any headcount reduction.

Failure to successfully integrate acquired businesses may result in reduced levels of anticipated revenue, earnings, or operating efficiency than might have been achieved if we had not acquired such businesses.

In addition, acquisitions could result in the incurrence of additional debt and related interest expense, contingent liabilities, and amortization expenses related to intangible assets, as well as the issuance of our common stock, which could have a material adverse effect on our financial condition, operating results, and cash flow.

***Perceptions that long-range hailing devices are unsafe or may be used in an abusive manner may hurt sales of our products, which could cause our revenues to decline.***

Potential customers for our products, including government, military, and emergency response agencies, may be influenced by claims or perceptions that long-range hailing devices are unsafe or may be used in an abusive manner. These claims have been voiced and exploited by third parties in the past, including on network television and social media. Such claims or perceptions, which we believe are unsubstantiated, could reduce our product sales and harm our reputation.

***A significant portion of our revenue is derived from our core product category.***

We are dependent on our core directional product category to generate our revenues. While we have expanded our product offering to include omnidirectional products and SaaS systems and solutions, no assurance can be given that our core directional products will continue to have market acceptance or that they will maintain their historical levels of sales. The loss or reduction of sales of this product category could have a material adverse effect on our business, results of operations, financial condition, and liquidity.

***We may not successfully expand our position in the mass notification market, and our margins may be affected.***

The emergency response and mass notification market is substantial and projected to grow globally over the near future. Our sales strategy for fiscal year 2026 and beyond is to increase our share of the growing emergency response and mass notification market with our Protective Communications solutions. However, we may be unable to do so as a result of competition or otherwise.

***We may incur significant and unpredictable warranty costs.***

Our products are substantially different from proven, mass produced sound transducer designs and are often employed in harsh environments. We may incur substantial and unpredictable warranty costs from post-production product or component failures. We generally warrant our products to be free from defects in materials and workmanship for a period up to one year from the date of purchase. We also sell extended repair and maintenance contracts with terms ranging from one to several years, which provide repair and maintenance services after expiration of the original limited warranty. As of September 30, 2025, we had a warranty reserve of $62 thousand. While our warranty experience with our product line has been favorable, as we build more complexity into the product, and as we expand our supplier base, issues could arise that could affect future warranty costs, which could adversely affect our financial position, results of operations and business prospects.

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***System disruptions and security threats to our computer networks, including breach of our or our customers' confidential information, could have a material adverse effect on our business and our reputation*.**

Our computer systems as well as those of our service providers are vulnerable to interruption, malfunction or damage due to events beyond our control, including malicious human acts committed by foreign or domestic persons, natural disasters, and network and communications failures. We periodically perform vulnerability self-assessments and engage service providers to perform independent vulnerability assessments and penetration tests. However, despite network security measures, our servers and the servers at our service providers are potentially vulnerable to physical or electronic unauthorized access, computer hackers, computer viruses, malicious code, organized cyberattacks, and other security problems and system disruptions. Increasing socioeconomic and political instability in some countries has heightened these risks. Despite the precautions we and our service providers have taken, our systems may still be vulnerable to these threats. A user who circumvents security measures could misappropriate proprietary information or cause interruptions or malfunctions in operations.

Additionally, the confidential information that we collect subjects us to additional risks and costs that could harm our business and our reputation. We collect, retain, and use personal information of our employees, including personally identifiable information, tax return information, financial data, bank account information, and other data. Although we employ various network and business security measures to limit access to and use of such personal information, we cannot guarantee that a third party will not circumvent such security measures, resulting in the breach, loss or theft of the personal information of our employees. Possession and use of personal information in our operations also subjects us to legislative and regulatory burdens that could restrict our use of personal information and require notification of data breaches. A violation of any laws or regulations relating to the collection, retention or use of personal information could also result in the imposition of fines or lawsuits against us.

Sustained or repeated system failures or security breaches that interrupt our ability to process information in a timely manner, or that result in a breach of proprietary or personal information, could have a material adverse effect on our operations and our reputation. Although we maintain insurance in respect of these types of events, available insurance proceeds may not be adequate to compensate us for damages sustained due to these events.

***We could incur additional charges for excess and obsolete inventory.***

While we strive to effectively manage our inventory, rapidly changing technology and uneven customer demand may result in short product cycles. The value of our inventory may be adversely affected by changes in technology that affect our ability to sell the products in our inventory. If we do not effectively forecast and manage our inventory, we may need to write off inventory as excess or obsolete, which in turn can adversely affect cost of sales and gross profit.

We have previously experienced, and may in the future experience, reductions in sales of older generation products as customers delay or defer purchases in anticipation of new product introductions. We have established reserves for slow moving or obsolete inventory of $1.3 million as of September 30, 2025. The reserves we have established for potential losses due to obsolete inventory may, however, prove to be inadequate and may give rise to additional charges for obsolete or excess inventory.

***Many potential competitors who have greater resources and experience than we do may develop products and technologies that make ours obsolete or inferior.***

Technological competition from larger, more established electronic and loudspeaker manufacturers and software providers is expected to increase. Most of the companies with which we expect to compete have substantially greater capital resources, research and development staffs, marketing and distribution programs, and facilities, and many of them have substantially greater experience in the production and marketing of products. In addition, one or more of our competitors may have developed, or may succeed in developing, technologies and products that are more effective than ours, rendering our technology and products obsolete or noncompetitive.

***Adverse resolution of disputes, litigation, and claims may harm our business, operating results or financial condition.***

We may become a party to litigation, disputes, and claims in the normal course of our business. Litigation is uncertain and unpredictable and there can be no assurance that the ultimate resolution of such claims will not exceed the amounts accrued for such claims, if any. Litigation can be expensive, lengthy, and disruptive to normal business operations. An unfavorable resolution of a legal matter could have a material adverse effect on our business, operating results or financial condition.

***Our competitive position will be seriously damaged if we cannot protect intellectual property rights and trade secrets in our technology.***

We rely on a combination of contracts, trademarks, and trade secret laws to establish and protect our proprietary rights in our technology. However, we may not be able to prevent misappropriation of our intellectual property, and our competitors may be able to independently develop competing technologies, or the agreements we enter into may not be enforceable. A competitor may

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independently develop or patent technologies that are substantially equivalent to, or superior to, our technology. If this happens, our competitive position could be significantly harmed.

***We may face wrongful death, personal injury and other product liability claims that may result in significant costs, harm our reputation and adversely affect our operating results and financial condition*.**

While our hardware products have been engineered to reduce the risk of damage to human hearing or human health, we could be exposed to claims of hearing damage if the product is not properly operated. A person injured in connection with the use of our products may bring legal action against us to recover damages on the basis of various legal theories including personal injury, negligent design, dangerous product or inadequate warning. We may also be subject to lawsuits involving allegations of defects in or misuse of our hardware or software products, including allegations that such products failed to protect lives.

Our software collects real-time information on developing and active emergency situations and can create alerts, warnings, notifications and instructions to be disseminated and relayed as directed or programmed by our customers, which include governments and first responders. Potential misunderstandings regarding the role of our software in disseminating important alerts and information to at-risk populations may lead to product liability, negligent design, personal injury, and in some severe cases, wrongful death claims being brought against us. See also "Item 3. Legal Proceedings."

Our product liability insurance coverage may be insufficient to pay all such claims. Product liability insurance may also become too costly for us or may become unavailable to us in the future. We may not have sufficient resources to satisfy any product liability claims not covered by insurance, which would materially and adversely affect our operating results and financial condition.

Even if without merit, any lawsuits brought against us could result in significant costs, negative publicity, diversion of management time and resources and adverse outcomes, including settlements, judgments, penalties or required changes to business practices. The frequency and magnitude of such claims may increase as we expand into new markets and introduce new products or features. The outcome of any proceeding is inherently uncertain, and we may not be able to estimate reasonably the likelihood or range of potential loss.

***Our international operations could be harmed by factors including political instability, natural disasters, fluctuations in currency exchange rates, and changes in regulations that govern international transactions.***

We sell our products worldwide. In fiscal years 2025 and 2024, revenues outside of the U.S. accounted for approximately 17% and 30% of net revenues, respectively. The risks inherent in international trade may reduce our international sales and harm our business and the businesses of our customers and our suppliers. These risks include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•changes in tariff regulations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•political instability, war, terrorism, and other political risks;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•foreign currency exchange rate fluctuations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•establishing and maintaining relationships with local distributors and dealers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•lengthy shipping times and accounts receivable payment cycles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•import and export control and licensing requirements, particularly in connection with sales and licensing to foreign governments and other customers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•compliance with a variety of U.S. laws, including the Foreign Corrupt Practices Act, by us or key subcontractors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•compliance with a variety of foreign laws and regulations, including unexpected changes in taxation and regulatory requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•greater difficulty in safeguarding our technology, proprietary data, and intellectual property in international jurisdictions than in the U.S.; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•difficulty in staffing and managing geographically diverse operations.

These and other risks may preclude or curtail international sales or increase the relative price of our products compared to those manufactured in other countries, reducing the demand for our products. Failure to comply with U.S. and foreign governmental laws and regulations applicable to international business, such as the Foreign Corrupt Practices Act or U.S. export control regulations, could have an adverse impact on our business with the U.S. and foreign governments.

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***Worldwide armed conflicts and the related implications may negatively impact our operations.***

Current conflicts around the world, including Ukraine and the Middle East, and related sanctions have damaged and disrupted, and could continue to damage or disrupt, international commerce and the global economy. It is not possible to predict the broader or longer-term consequences of these conflicts or the impact of sanctions, embargoes, regional instability, geopolitical shifts and adverse effects on macroeconomic conditions, security conditions, currency exchange rates, and financial markets. Such geopolitical instability and uncertainty could have a negative impact on our ability to sell, ship products, collect payments, and support customers in certain regions based on trade restrictions, embargoes and export control law restrictions, and could result in supply disruptions and logistics restrictions, including closures of air space. Given the evolving nature of these conflicts, the related sanctions, potential governmental actions and economic impact, such potential impacts remain uncertain. While we expect the impacts of these conflicts could have an effect on our business, financial condition, and results of operations, we are unable to predict the extent or nature of these impacts at this time.

***Current environmental laws, or laws enacted in the future, may harm our business.*** 

Our operations are subject to environmental regulation in areas in which we conduct business. Our product design and procurement operations must comply with new and future requirements relating to the materials composition of our products, including restrictions on lead, cadmium, and other substances. We do not expect that the impact of these environmental laws and other similar legislation adopted in the U.S. and other countries will have a substantial unfavorable impact on our business. However, the costs and timing of costs under environmental laws are difficult to predict.

***Errors or defects contained in our products, failure to comply with applicable safety standards or a product recall could result in delayed shipments or rejection of our products, damage to our reputation, and expose us to regulatory or other legal action.*** 

Any defects or errors in the operation of our products may result in delays in their introduction. In addition, errors or defects may be uncovered after commercial shipments have begun, which could result in the rejection of our products by our customers, damage to our reputation, lost sales, diverted development resources, and increased customer service and support costs and warranty claims, any of which could harm our business. Third parties could sustain injuries from our products, and we may be subject to claims or lawsuits resulting from such injuries. There is a risk that these claims or liabilities may exceed, or fall outside the scope of, our insurance coverage. We may also be unable to obtain adequate liability insurance in the future. Because we are a smaller company, a product recall would be particularly harmful to us because we have limited financial and administrative resources to effectively manage a product recall, and it would detract management's attention from implementing our core business strategies. A significant product defect or product recall could materially and adversely affect our brand image, causing a decline in our sales, and could reduce or deplete our financial resources.

***We rely on outside manufacturers and suppliers to provide a large number of components and sub-assemblies incorporated in our products, and the ability of these manufacturers and suppliers to deliver components to our manufacturing facilities, and our ability to manufacture without disruption, could affect our results of operations.*** 

Our products are made from a wide range of materials and have a large number of components and sub-assemblies (including semiconductors and other electronic components) produced by numerous outside suppliers around the world. Because not all of our supply arrangements provide for guaranteed supply and some key parts may be available only from a single supplier or a limited group of suppliers, we are subject to supply and pricing risk. For example, we rely on one supplier for compression drivers for our LRAD products. Our operations and those of our suppliers are subject to disruption for a variety of reasons, including pandemic related supplier plant shutdowns or slowdowns, transportation delays, work stoppages, labor relations, labor shortages, price inflation, governmental regulatory and enforcement actions, intellectual property claims against suppliers, financial issues such as supplier bankruptcy, information technology failures, and hazards such as fire, earthquakes, flooding, or other natural disasters. For example, we expect to continue to be impacted by the following supply chain issues, due to economic, political and other factors largely beyond our control: increased input material costs and component shortages; supply chain disruptions and delays and cost inflation, all of which could continue or escalate in the future. The effects of climate change, including extreme weather events, long-term changes in temperature levels, water availability, increased cost for decarbonizing process heating, supply costs impacted by increasing energy costs, or energy costs impacted by carbon prices or offsets may exacerbate these risks. If these disruptions occur, or if we experience quality problems with suppliers, then our production schedules could be significantly delayed or costs significantly increased, which would have a material adverse effect on our business, liquidity, results of operations, and financial position.

Although we assemble our products internally, we have some sub-assemblies and components produced by third party manufacturers. We may be required to outsource manufacturing if sales of our products increase significantly. We may be unable to obtain acceptable manufacturing sources on a timely basis. In addition, from time to time we may change manufacturers and any new manufacturer engaged by us may not perform as expected. An extended interruption in the supply of our products could result in a substantial loss of sales. Furthermore, any actual or perceived degradation of product quality as a result of our reliance on third party

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manufacturers may have an adverse effect on sales or result in increased warranty costs, product returns, and buybacks. Failure to maintain quality manufacturing could reduce future revenues, adversely affecting our financial condition and results of operations.

Material supply disruptions and delays in deliveries, along with other factors such as price inflation, can also result in increased pricing. While many of our customers permit quarterly or other periodic adjustments to pricing based on changes in component prices and other factors, we may bear the risk of price increases that occur between any such repricing or, if such repricing is not permitted, during the balance of the term of the particular customer contract.

***We derive revenue from government contracts and subcontracts, which are often non-standard, may involve competitive bidding, may be subject to cancellation with or without penalty, and may produce volatility in earnings and revenue*.**

Our sales to government customers have involved, and are expected in the future to involve, providing products and services under contracts or subcontracts with U.S. federal, state, local, and foreign government agencies. Obtaining contracts and subcontracts from government agencies is challenging, and contracts often include provisions that are not standard in private commercial transactions. For example, government contracts may:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•include provisions that allow the government agency to terminate the contract without penalty under some circumstances;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•be subject to purchasing decisions of agencies that are subject to political influence;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•contain onerous procurement procedures; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•be subject to cancellation if government funding becomes unavailable.

Securing government contracts can be a protracted process involving competitive bidding. In many cases, unsuccessful bidders may challenge contract awards, which can lead to increased costs, delays, and possible loss of the contract for the winning bidder.

***Our short-term liquidity may be materially adversely affected by administrative complexities surrounding the disbursement of funds under our Puerto Rico Early Warning System project. Furthermore, our ability to receive the full benefits of such project could be materially and adversely affected by the economic, governmental, and environmental conditions in Puerto Rico and by natural disasters impacting our operations or delivery of products in a timely manner.***

As a result of administrative complexities surrounding the approval process within the authority responsible for electricity generation, distribution and transmission in Puerto Rico, which is responsible for requesting disbursement of funds from FEMA, we have recently experienced delays in receiving payments under our contract to provide the Puerto Rico Electric Power Authority with an Emergency Warning System (the " Puerto Rico Early Warning System Project"). A continuation or exacerbation of these delays could materially adversely affect our liquidity position in the short term.

Furthermore, Puerto Rico's ongoing fiscal challenges, including government debt restructuring, austerity measures, and political instability, may result in regulatory uncertainties, delays in contract execution, delays in timely payment of contract amounts due, or disruptions in governmental support or funding tied to our services related to the Puerto Rico Early Warning System Project. Additionally, Puerto Rico's geographic location in the Caribbean makes it highly susceptible to hurricanes, tropical storms, earthquakes, and other natural disasters. These events can severely damage infrastructure, disrupt power and telecommunications, and hinder our ability to deliver contracted services in a timely and effective manner. The increasing frequency and intensity of such events, potentially driven by climate change, heightens the risk of prolonged service interruptions and inability to meet contractual obligations.

If the government of Puerto Rico is unable to maintain essential public services, or fund projects we are engaged in, including the Puerto Rico Early Warning System Project, or if future weather events or other disasters impair our operations or supply chain, we may face significant challenges in meeting our performance obligations, which could result in penalties, , including under our agreement with the Puerto Rico Electric Power Authority, reputational harm, or loss of future business, and we may not timely achieve the anticipated benefits related to the project. Any of these factors could materially adversely affect our business, results of operations, and financial condition.

**Risks Related to Our Financial Statements and Operating Results**

***We do not have the ability to accurately predict future operating results. Our quarterly and annual revenues are likely to fluctuate significantly due to many factors, most of which are beyond our control and could result in our failure to achieve our revenue expectations.***

We expect our proprietary acoustic products, software products, and integrated solutions will be the source of substantially all our revenues for at least the near future. Revenues from these products and solutions are expected to vary significantly due to a number of factors, many of which are beyond our control. Any one or more of the factors listed below or other factors could cause us to fail to achieve our revenue expectations. These factors include:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•delays in funding approval by U.S. and foreign government and military customers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•unpredictable volume and timing of customer orders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•gains or losses of significant customers, distributors or strategic relationships;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•market acceptance of and changes in demand for our products or products of our customers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the availability, pricing, and timeliness of delivery of components for our products and original equipment manufacturers ("OEMs") products;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•our ability to develop and supply sound reproduction components to customers, distributors or OEMs or to license our technologies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•fluctuations in the availability of manufacturing capacity or manufacturing yields and related manufacturing costs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•production delays by customers, distributors, OEMs, or by us or our suppliers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the timing of new technological advances, product announcements or introductions by us, by OEMs or licensees, and by our competitors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•general economic conditions that could affect the timing of customer orders and capital spending and result in order cancellations or rescheduling;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the conditions of other industries, such as military and commercial industries, into which our technologies may be sold;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•general electronics industry conditions, including changes in demand and associated effects on inventory and inventory practices;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•increased competition in this market; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•general political conditions in this country and in various other parts of the world that could affect spending for the products that we offer.

Some or all of these factors could adversely affect demand for our products or technologies, and therefore adversely affect our future operating results.

Most of our operating expenses are relatively fixed in the short term. We may be unable to rapidly adjust spending to compensate for any unexpected sales shortfalls, which could harm our quarterly operating results. We do not have the ability to predict future operating results with any certainty.

***The agreements governing our Term Loans impose financial and operating restrictions on us and any failure to meet our payment or other obligations under our Term Loans could have a material adverse effect on us, including permitting the lenders under our Term Loans to foreclose on, and acquire control of, substantially all of our assets.***

On May 13, 2024, we entered into a term loan and security agreement (the "Loan Agreement"), pursuant to which we received $14.7 million in cash proceeds in exchange for a $15 million term loan (the "Close Date Term Loan") and the issuance of warrants to purchase up to 3,068,182 shares of our common stock. On May 9, 2025, we entered into a First Amendment to Term Loan and Security Agreement, pursuant to which the lenders under the Loan Agreement (the "Lenders") agreed to extend an additional term loan to us in the aggregate principal amount of $4 million (the "First Amendment Term Loan" and with the Close Date Term Loan, the "Term Loans") and provide a process to obtain, at the Lenders' sole discretion, an additional term loan of up to $4 million.

Our Term Loans impose, and the terms of any future debt may impose, operating and other restrictions on us. These restrictions could affect, and in many respects limit or prohibit, among other items, our ability to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•incur additional indebtedness;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•create liens;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•enter into certain fundamental transactions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•sell assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•change the nature of our business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•prepay any other indebtedness;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•amend certain of our contracts or governing documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•complete a change of control;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•modify our accounting methods;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•make investments;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•enter into transactions with affiliates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•issue or sell capital stock of certain of our subsidiaries;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•enter into consignment or bailee arrangements of our inventory;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•declare or pay dividends or other distributions to stockholders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•repurchase our common stock or other securities; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•adopt certain benefits plans.

Our Term Loans also require us to achieve and maintain compliance with a minimum liquidity covenant. A breach of any of these restrictive covenants or the inability to comply with the financial metrics could result in a default under our Term Loans. Further, our Term Loans are jointly and severally guaranteed by us and certain of our subsidiaries. Borrowings under our Term Loans are secured by liens on substantially all of our assets, including the capital stock of certain of our subsidiaries, and the assets of our subsidiaries that are loan party guarantors. If we are unable to repay outstanding borrowings when due or comply with other obligations and covenants under our Term Loans, the lenders under our Term Loans will have the right to proceed against these pledged capital stock and take control of substantially all of our assets.

***Our cash requirements may require us to seek additional debt or equity financing and we may not be able to obtain such financing on favorable terms, or at all.***

Our Term Loans may not be sufficient for our future working capital, investments and cash requirements, in which case we would need to seek additional debt or equity financing or scale back our operations. In addition, we may need to seek additional financing to achieve and maintain compliance with specified financial criteria under our Term Loans. We may not be able to access additional capital resources due to a variety of reasons, including the restrictive covenants in our Term Loans and the lack of available capital due to global economic conditions. If our financing requirements are not met and we are unable to access additional financing on favorable terms, or at all, our business, financial condition, operating results, and future growth prospects could be materially adversely affected.

***Our indebtedness could expose us to interest rate risk to the extent of our variable rate debt.***

Our Term Loans provide for interest to be calculated based on the prime rate, the federal funds rate and/or the secured overnight financing rate. While the Federal Reserve lowered interest rates slightly during 2025, future increases in benchmark rates would raise the interest rates applicable to our Term Loans. Any such increases would result in higher interest expense and could materially adversely impact our operating results, liquidity, and cash flows.

***If our goodwill is impaired, we will record a non-cash charge to our results of operations and the amount of the charge may be material.***

At least annually, or whenever events or circumstances arise indicating impairment may exist, we review goodwill for impairment as required by generally accepted accounting principles in the United States. The estimated fair value of our goodwill could change if there are future changes in our capital structure, cost of debt, interest rates, capital expenditure levels, ability to perform at levels that were forecasted or a permanent change to our market capitalization. In the future, we may need to reduce the carrying amount of goodwill by taking a non-cash charge to our results of operations. Such a charge would have the effect of reducing goodwill with a corresponding impairment expense and may have a material effect upon our reported results. The additional expense may reduce our reported profitability or increase our reported losses in future periods and could negatively affect the market for our securities, our ability to obtain other sources of capital, and may generally have a negative effect on our future operations.

**Risks Related to Our Capital Stock**

***Sales of common stock issuable on the exercise of outstanding options and warrants, may depress the price of our common stock.***

As of September 30, 2025, we had outstanding options granted to our employees, consultants, advisors, and directors to purchase 3,999,116 shares of our common stock and we had 277,342 restricted stock units outstanding. As of September 30, 2025, the exercise prices for the options ranged from $1.70 to $6.87 per share. We also have outstanding warrants to purchase 3,068,182 shares of our common stock at an exercise price of $2.53, which warrants will expire May 14, 2029. The issuance of shares of common stock upon the exercise of outstanding options and warrants and the release of outstanding restricted stock units could cause substantial dilution to holders of our common stock, and the sale of those shares in the market could cause the market price of our common stock to decline. The potential dilution from these shares could negatively affect the terms on which we could obtain equity financing.

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***Our stock price is volatile and may continue to be volatile in the future.***

The market price of our common stock has fluctuated significantly to date. In the future, the market price of our common stock could be subject to significant fluctuations due to general market conditions and in response to quarter-to-quarter variations in:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•our anticipated or actual operating results;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•developments concerning our software and sound reproduction technologies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•technological innovations or setbacks by us or our competitors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•announcements of merger or acquisition transactions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•changes in personnel within our company; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•other events or factors and general economic and market conditions.

The stock market in recent years has experienced extreme price and volume fluctuations that have affected the market price of many technology companies, and that have often been unrelated or disproportionate to the operating performance of companies.

***Our common stock is thinly traded; therefore, our stock price may fluctuate more than the stock market as a whole and it may be difficult to sell large numbers of our shares at prevailing trading prices.***

As a result of the thin trading market for shares of our common stock, our stock price may fluctuate significantly more than the stock market as a whole or the stock prices of similar companies. Without a larger public float, shares of our common stock will be less liquid than the shares of common stock of companies with broader public ownership, and as a result, it may be difficult for investors to sell the number of shares they desire at an acceptable price. Trading of a relatively small volume of shares of our common stock may have a greater effect on the trading price than would be the case if our public float were larger. We cannot assure you that an active trading market for our common stock will develop or, if developed, that any market will be sustained. Accordingly, we cannot assure you of the likelihood that an active trading market for our common stock will develop or be maintained, your ability to sell your shares of our common stock when desired or the prices that you may obtain for your shares.

***We may issue preferred stock in the future, and the terms of the preferred stock may reduce the value of your common stock.***

We are authorized to issue up to 5,000,000 shares of preferred stock in one or more series. Our board of directors may determine the terms of future preferred stock offerings without further action by our stockholders. If we issue preferred stock, it could affect the rights or reduce the value of our common stock. In particular, specific rights granted to future holders of preferred stock could be used to restrict our ability to merge with or sell our assets to a third party. These terms may include voting rights, preferences as to dividends and liquidation, conversion and redemption rights, and sinking fund provisions.

**General Risk Factors**

***Our success is dependent on the performance of our executive team, and the cooperation, performance, and retention of our executive officers and key employees.***

Our business and operations are substantially dependent on the performance of our current executive team including our Chief Executive Officer and our Chief Financial Officer. We do not maintain "key person" life insurance on any of our executive officers. The loss of one or several key employees could seriously harm our business. We cannot ensure that employees will not leave and subsequently compete against us.

We are also dependent on our ability to retain and motivate high quality personnel, especially sales and skilled engineering personnel. Competition for such personnel is intense, and we may not be able to attract, assimilate or retain other highly qualified managerial, sales, and technical personnel in the future. The inability to attract and retain the necessary managerial, sales and technical personnel could cause our business, operating results or financial condition to suffer.

***General economic and political conditions may adversely affect our business, operating results and financial condition.***

Our operations and performance depend significantly on worldwide economic and political conditions and their impact on levels of capital investment and government spending. Global economic and political uncertainties and foreign currency rate fluctuations could adversely influence demand for our products leading to reduced levels of investments, reductions in government spending and budgets and changes in spending priorities and behavior.

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***Changes in laws or regulations or the manner of their interpretation or enforcement could adversely impact our financial performance and restrict our ability to operate our business or execute our strategies.***

New laws, regulations, and standards, or changes in existing laws or regulations or the manner of their interpretation or enforcement, could increase our cost of doing business and restrict our ability to operate our business or execute our strategies.

We continually evaluate and monitor developments with respect to new and proposed rules and cannot predict or estimate the amount of the additional costs we may incur or the timing of such costs. These new or changed laws, regulations, and standards are subject to varying interpretations, in many cases due to their lack of specificity, and as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.

***Our disclosure controls and procedures may not prevent or detect all acts of fraud.***

Our disclosure controls and procedures are designed to reasonably assure that information required to be disclosed in reports filed or submitted under the Securities Exchange Act is accumulated and communicated to management and is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms. Our management expects that our disclosure controls and procedures and internal controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, they cannot provide absolute assurance that all control issues and instances of fraud, if any, within our company have been prevented or detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by an unauthorized override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and we cannot assure that any design will succeed in achieving its stated goals under all potential future conditions. Accordingly, because of the inherent limitations in a cost effective control system, misstatements due to error or fraud may occur and not be detected.

***Failure to maintain an effective system of internal control over financial reporting could harm stockholders and business confidence in our financial reporting, our ability to obtain financing, and other aspects of our business*.**

Maintaining an effective system of internal control over financial reporting is necessary for us to provide reliable financial reports. Section 404 of the Sarbanes-Oxley Act of 2002 and the related rules and regulations promulgated by the SEC require us to include in our Form 10-K a report by management regarding the effectiveness of our internal control over financial reporting. The report includes, among other things, an assessment of the effectiveness of our internal control over financial reporting as of the end of the respective fiscal year, including a statement as to whether or not our internal control over financial reporting is effective. This assessment must include disclosure of any material weaknesses in our internal control over financial reporting identified by management. While our management has concluded that our internal control over financial reporting was effective as of September 30, 2025, it is possible that material weaknesses will be identified in the future. In addition, components of our internal control over financial reporting may require improvement from time to time. If management is unable to assert that our internal control over financial reporting is effective in any future period, investors may lose confidence in the accuracy and completeness of our financial reports, which could have an adverse effect on the Company's stock price.

**Item 1B. Unresolved Staff Comments.**

**None.**

**Item 1C. Cybersecurity**

**Cybersecurity Risk Management and Strategy**

At Genasys, cybersecurity risk management is integrated into our overall risk management program through regular internal risk assessments and continuous monitoring. Under the leadership of the Information Technology ("IT") Director, IT developed, implemented, and maintain a broad range of processes and protocols designed to monitor, identify, mitigate, and prevent material risks associated with cybersecurity threats and incidents relevant to internal networks, business applications, customer-facing applications, customer payment systems, and business operations. Our protocols include a third-party provided 24/7 Security Operations Center (SOC), which is designed to oversee our Endpoint Detection and Response (EDR) system and a robust Security Information and Event Management (SIEM) system that aggregates logs for real-time threat detection.

Our cybersecurity risk management program applies information and direction from industry-recognized cybersecurity frameworks, including the National Institute of Standards and Technology (NIST) Cybersecurity Framework 2.0 (CSF), specifically the NIST 800-171, the Department of Defense Cybersecurity Maturity Model Certification (CMMC) Level 2, Sarbanes Oxley (SOX), and Services Organization Controls (SOC) 2. Risks from cybersecurity threats associated with the Company's use of third-party service

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providers are managed through vendor assessments and SOC 2 report requests, designed to ensure that our partners adhere to strict cybersecurity standards.

Notwithstanding the foregoing, we have not identified and are not aware of any risks from cybersecurity threats, including as a result of any prior cybersecurity incidents, which have materially affected or are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition. Despite our security measures, however, there can be no assurance that we, or third parties with which we interact, will not experience a cybersecurity incident in the future that will materially affect us. See "Risk Factors – Actual or perceived failures or breaches of our information and security systems, or those of our customers, suppliers or business partners, could expose us to losses."

**Cybersecurity Governance**

*Board Oversight*

Our Board of Directors considers cybersecurity risk as critical to the enterprise and includes it as part of the full Board's oversight function. The full Board is updated on cybersecurity risks and compliance with relevant standards and regulations as part of its overall governance responsibilities, including quarterly Board meeting reports. Our Director of IT, who is responsible for the oversight and implementation of the cybersecurity program, also periodically makes presentations to Board members on cybersecurity topics as part of the Board's continuing education on topics that impact our company. Additionally, we have an escalation process to inform the Board of high-severity cybersecurity incidents that may occur. Our Board also periodically engages independent third-party technology experts to test our information technology systems, including cybersecurity.

*Management Role*

The Director of IT leads the day-to-day management of cybersecurity at Genasys, supported by a team of two IT professionals with a combined 45 years of IT and cybersecurity experience. This team handles ongoing risk assessments, manages threat detection through our SOC and Security Information and Event Management (SIEM), ensures compliance with industry regulations, and informs executive management about ongoing efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means. This may include briefings from internal security personnel; sharing publicly or privately available threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and forwarding alerts and reports produced by network monitoring and security tools we deploy. Management also ensures that employees and contractors undergo quarterly cybersecurity training and phishing simulations, as part of a comprehensive awareness program.

**Item 2. Properties**

Our executive offices, sales, research and development and production facilities for all our Protective Communications, including Genasys Protect and LRAD, are located at 16262 West Bernardo Drive, San Diego, California. The lease of 55,766 square feet commenced July 1, 2018 and expires August 31, 2028. The aggregate monthly payments, with abatements, are $89 thousand, $92 thousand and $94 thousand per month for the eighth through tenth years of the lease, respectively, plus other certain costs and charges as specified in the lease agreement, including the Company's proportionate share of the building operating expenses and real estate taxes.

**Item 3. Legal Proceedings** 

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

On November 19, 2025, Gerry Darden, individually and as representative of the estate of Stacey Darden, filed a lawsuit in Los Angeles Superior Court against the Company, Southern California Edison Company, and Edison International related to the wildfire that occurred in early January, 2025 in the Eaton Canyon/Altadena area of Los Angeles County. In the complaint, the plaintiff alleges products liability and negligence claims against the Company based on Los Angeles County's use of the Company's products and seeks unspecified damages. As of the date of this Annual Report on Form 10-K, the Company has not been served the complaint and cannot assess with any meaningful probability the likelihood of an adverse outcome or the possible loss or range of loss, if any, related to this lawsuit. The Company will vigorously defend itself in the lawsuit.

**Item 4. Mine Safety Disclosure**

Not applicable.

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**PART II** 

**Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.**

**Market Information**

Our common stock is traded and quoted on the NASDAQ Capital Market under the symbol "GNSS."

**Holders** 

We had 45,193,561 shares of our common stock issued and outstanding held by 911 holders of record as of December 5, 2025.

**Dividends** 

There were no dividends declared or paid during the years ended September 30, 2025 and 2024. The declaration of future cash dividends, if any, will be at the discretion of the Board of Directors and will depend on the Company's earnings, if any, capital requirements and financial position, general economic conditions and other pertinent conditions. It is our present intention not to pay any cash dividends in the near future.

Our Term Loans restrict our ability to pay dividends.

**Equity Compensation Plan Information**

The information required by this item is incorporated by reference to the information set forth in Item 12 of this Annual Report on Form 10-K.

**Recent Sales of Unregistered Securities** 

None.

**Item 6. Reserved**

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**Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.**

The discussion and analysis set forth below should be read in conjunction with the information presented in other sections of this Annual Report on Form 10-K, including "Item 1. Business," "Item 1A. Risk Factors," and "Item 8. Financial Statements and Supplementary Data." This discussion contains forward-looking statements which are based on our current expectations and industry experience, as well as our perception of historical trends, current market conditions, current economic data, expected future developments, and other factors that we believe are appropriate under the circumstances. These statements involve risks and uncertainties that could cause actual results to differ materially from those suggested in the forward-looking statements.

**Overview**

We are a global provider of Protective Communications solutions including our Genasys Protect software platform and LRAD by Genasys hardware products. Our unified software platform receives information from a wide variety of sensors and IoT inputs to collect real-time information on developing and active emergency situations. Genasys uses this information to create and disseminate alerts, warnings, notifications, and instructions through multiple channels before, during, and after public safety and enterprise threats, critical events, and other crisis situations.

Genasys Protect is a comprehensive portfolio of Protective Communications software and hardware systems serving federal governments and agencies; SLED; and enterprise organizations in sectors including, but not limited to, oil and gas, utilities, manufacturing, automotive, and healthcare. Genasys Protect solutions have a diverse range of applications, including emergency warning and mass notification for public safety; critical event management for enterprise companies; de-escalation for defense and law enforcement; critical infrastructure protection; zone-based planning for accelerated, precise emergency response; secure and complaint cross-agency collaboration; and automated detection of real-time threats such as active shooters and severe weather.

LRAD products provide audible voice messages with exceptional vocal clarity from close range out to 5,000 meters. We have a history of successfully delivering innovative systems and solutions in mission critical situations, pioneering the AHD market with the introduction of LRAD in 2002, creating the first multidirectional voice-based public safety mass notification systems in 2012, and the first AHDs with a digital interface for remote operation in 2023. Building on our proven, best in class, and reliable solutions and systems, we offer the first and only unified, end-to-end Protective Communications platform.

**Recent Developments**

Business developments during fiscal year 2025:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Received $9 million in LRAD system orders for Common Remotely Operated Weapon Stations (CROWS)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Initiated deliveries and installation of hardware for the Puerto Rico Early Warning System Project

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Awarded a four-year contract by the Maui Emergency Management Agency to provide Genasys Protect and AI-powered traffic management solutions by Ladris to the island of Maui

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Received a four-year contract from Los Angeles County to provide Genasys Protect alerting and evacuation management software services

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Expanded the Board of Directors to include new independent director R. Rimmy Malhotra

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Appointed Cassandra Hernandez-Monteon as Interim Chief Financial Officer

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Entered into a partnership with FloodMapp to combine dynamic emergency management and flood preparedness

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Entered into the First Amendment to Term Loan and Security Agreement to obtain $4 million First Amendment Term Loan

**Business Outlook** 

Our products, systems, and solutions continue to gain worldwide awareness and recognition through increased marketing efforts, product demonstrations, and word of mouth as a result of positive responses and increased acceptance. We believe we have a solid global brand, technology, and product foundation, which we continue to expand to serve new markets and customers for greater business growth. We believe we have strong market opportunities for our product offerings throughout the world in the defense, public safety, emergency warning, mass notification, critical event management, enterprise safety, and law enforcement sectors as a result of increasing threats to government, commerce, law enforcement, homeland security, and critical infrastructure. Our products, systems, and solutions also have many applications within the fire rescue, maritime, asset protection, and wildlife control and preservation business segments.

Genasys has developed a global market and an increased demand for LRADs and advanced mass notification speakers. We have a reputation for producing quality products that feature industry-leading broadcast area coverage, vocal intelligibility, and product

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reliability. We intend to continue building on our AHD market leadership position by offering enhanced voice broadcast systems and accessories for an expanding range of applications. In executing our strategy, we use direct sales to governments, militaries, large end-users, system integrators, and prime vendors. We have built a worldwide distribution channel consisting of partners and resellers that have significant expertise and experience selling integrated communication solutions into our various target markets. As our primary AHD sales opportunities are with domestic and international governments, military branches, and law enforcement agencies, we are subject to each customer's unique budget cycle, which leads to long selling cycles and uneven revenue flow, complicating our product planning, and our ability to forecast the timing of sales outcomes which leads to significant fluctuations in our quarterly financial results.

The proliferation of natural and man-made disasters, crisis situations, and civil unrest require technologically advanced, multichannel solutions to deliver clear and timely protective communications to help keep people safe during critical events. Businesses are also incorporating protective communication and emergency management systems that locate and help safeguard employees and infrastructure when crises occur.

By providing the only SaaS platform that unifies sensors and IoT inputs with multichannel, multiagency alerting and notifications, Genasys seeks to deliver reliable, fast, and intuitive solutions for creating and disseminating geolocation-targeted warnings, information, and instructions before, during, and after public safety and enterprise threats.

While the software and hardware mass notification markets are more mature with many established manufacturers and suppliers, we believe that our advanced technology and unified platform provides opportunities to succeed in the large and growing public safety, emergency warning and critical communications markets.

In fiscal year 2026, we intend to continue pursuing domestic and international business opportunities with the support of business development consultants, key representatives, and resellers. We plan to grow our revenues through increased direct sales to governments and agencies that desire to integrate our communication technologies into their homeland security and public safety systems. This includes building on fiscal year 2025 domestic defense sales by expanding and pursuing further U.S. military opportunities. We also plan to pursue domestic and international emergency warning, enterprise and critical event management, government, law enforcement, fire rescue, homeland and international security, private and commercial security, border security, maritime security, and wildlife preservation and control business opportunities.

Our research and development strategy involves incorporating further innovations and capabilities into our Genasys Protect platform to meet the needs of our target markets.

Our Genasys Protect software solutions are more complex offerings. We are pursuing certain certifications, which are often required when bidding on government and mass notification opportunities. We intend to invest engineering resources to enhance our Genasys Protect software solutions to compete for larger emergency warning and critical communications business opportunities. We are also configuring alternative solutions to achieve lower price points to meet the needs of certain customers or applications. We also engage in ongoing value engineering to reduce the cost and simplify the manufacturing of our products.

A large number of LRAD and Acoustics components and sub-assemblies manufactured by outside suppliers within our supply chain are produced within 50 miles of our facility. We do not source component parts from suppliers in China. It is likely that some of our suppliers source parts in China. Negative impacts on our supply chain could have a material adverse effect on our business. We communicate with our suppliers regarding measures to alleviate ongoing worldwide supply chain issues.

We have been affected by price increases from our suppliers and logistics and other inflationary factors such as increased salary, labor, and overhead costs. We regularly review and adjust the sales price of our finished goods to offset these inflationary factors. Although we do not believe that inflation has had a material impact on our financial results through September 30, 2025, sustained or increased inflation in the future may have a negative effect on our ability to achieve certain expectations in gross margin and operating expenses. If we are unable to offset the negative impacts of inflation with increased prices, our future results could be materially affected.

In addition, the United States has recently experienced a decline in federal funding. Changes in defense and other government spending could have an adverse effect on our current and future revenues. Sales of our products to U.S. government agencies and organizations, including, for example, our recently received LRAD order for CROWS, are subject to the overall U.S. government budget and congressional appropriation decisions and processes which are driven by numerous factors, including domestic political conditions, geopolitical events and macroeconomic conditions, and are beyond our control. Even awards granted may not result in orders due to spending constraints or Congressional delays in passing the federal budget.

The funding of U.S. government programs is subject to an annual congressional budget authorization and appropriations process. In years when the U.S. government does not complete its appropriations before the beginning of the new fiscal year on October 1, government operations are typically funded pursuant to a "continuing resolution," which allows federal government agencies to operate

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at spending levels approved in the previous appropriations cycle, but does not authorize new spending initiatives. When the U.S. government operates under a continuing resolution, delays can occur in the procurement of the products, services and solutions that we provide and may result in new initiatives being canceled. We have on occasion experienced delays in contract awards which affect our future revenues as a result of this annual appropriations cycle, and we could experience similar declines in revenues from future delays in the appropriations process. When the U.S. government fails to complete its appropriations process or to provide for a continuing resolution, a full or partial federal government shutdown may result. A federal government shutdown could result in delays or cancellations of key programs or during extended government shutdown periods, the delay of contract payments, which could have a negative effect on our cash flows and adversely affect our future results.

**Critical Accounting Policies and Estimates**

We have identified the policies below as critical to our business operations and to understanding our results of operations. Our accounting policies are more fully described in our consolidated financial statements and related notes located in "Item 8. Financial Statements and Supplementary Data." The impact and any associated risks related to these policies on our business operations are discussed in "Item 1A. Risk Factors" and throughout "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" when such policies affect our reported and expected financial results.

The methods, estimates, and judgments we use in applying our accounting policies, in conformity with generally accepted accounting principles in the United States of America ("U.S. GAAP"), have a significant impact on the results we report in our financial statements. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. These estimates affect the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions.

*Revenue Recognition*

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.Identify the contract(s) with customers

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Identify the performance obligations

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.Determine the transaction price

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.Allocate the transaction price to the performance obligations

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.Recognize revenue when or as the performance obligations have been satisfied

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

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

*Product Revenue*

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

*Long-Term Contracts - Over-Time Revenue Recognition Using Input Cost Measures*

We recognize revenue for our Puerto Rico Early Warning System Project over time in accordance with ASC 606-10-25-27(c), using a cost-to-cost input method that includes a zero-margin approach for uninstalled materials. As hardware costs are incurred, we

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record an equal amount of revenue, resulting in zero margin. We then measure overall project progress by comparing labor costs incurred to total estimated labor costs, excluding hardware from the calculation. This labor-based percentage of completion is applied to determine both the portion of hardware margin to be recognized on previously recorded zero-margin hardware and the amount of non-hardware revenue to record for the period.

*Perpetual Licensed Software*

The sale and/or license of software products is deemed to have occurred when a customer either has taken possession of, or has the ability to take immediate possession of, the software and the software key. Perpetual software licenses can include one-year maintenance and support services. In addition, we sell maintenance services on a stand-alone basis and are therefore capable of determining their fair value. On this basis, the amount of the embedded maintenance is separated from the fee for the perpetual license and is recognized on a straight-line basis over the period to which the maintenance relates.

*Time-Based Licensed Software*

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

*Warranty, Maintenance, and Services*

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

*Multiple Performance Obligations within an Arrangement*

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

Revenue is allocated to each deliverable based on the stand-alone selling price of each individual element and is recognized when the revenue recognition criteria described above are met, except for time-based licenses which are not unbundled. When software development services are performed to customize the functionality of the software, we recognize revenue from the software development services over time using milestones as the measure of progress, and the revenue from the software when the related development services have been completed.

We currently disaggregate revenue by reporting segment (Hardware and Software) and geographically to depict the nature of revenue in a manner consistent with our business operations and to be consistent with other communications and public filings. Refer to Note 19, Segment Information and Note 20, Major Customers, Suppliers and Related Information in the consolidated financial statements included in this report for additional details of revenues by reporting segment and disaggregation of revenue.

*Share-Based Compensation*

We account for share-based compensation in accordance with the provisions of Financial Accounting Standards Board ("FASB") ASC 718, "*Compensation—Stock Compensation*" ("ASC 718") which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees, consultants, and directors based on estimated fair values. ASC 718 requires the use of subjective assumptions, including expected stock price volatility and the estimated term of each award. We estimate the fair value of stock options granted using the Black-Scholes option-pricing model, which is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. This model also utilizes the fair value of our common stock and requires that, at the date of grant, we use the expected term of the share-based award, the expected volatility of the price of our common stock over the expected term, the risk-free interest rate, and the expected dividend yield of our common stock to determine the estimated fair value. We determine the amount of share-based compensation expense based on awards that we ultimately

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expect to vest, reduced for estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

*Allowance for Doubtful Accounts for Expected Credit Losses*

Our products are sold to customers in many different markets and geographic locations. We estimate our allowance for doubtful accounts for expected credit losses on a case-by-case basis due to a limited number of customers. We base these estimates on many factors, including customer credit worthiness, past transaction history with the customer, current economic industry trends, and changes in customer payment terms. Our judgments and estimates regarding the collectability of accounts receivable have an impact on our financial statements. We record the adjustment to the allowance for doubtful accounts for expected credit losses in SG&A expenses in the consolidated statement of operations.

*Valuation of Inventory*

Our inventory is comprised of raw materials, assemblies, and finished products. We must periodically make judgments and estimates regarding the future utility and carrying value of our inventory. The carrying value of our inventory is periodically reviewed and impairments, if any, are recognized when the expected future benefit from our inventory is less than its carrying value.

*Valuation of Intangible Assets*

Intangible assets consist of technology, customer relationships, and trade name portfolio acquired in the acquisitions of Genasys Spain, Zonehaven, Evertel, and the Amika Mobile asset purchase, and patents and trademarks that are amortized over their estimated useful lives. We must make judgments and estimates regarding the future utility and carrying value of intangible assets. The carrying values of such assets are periodically reviewed and impairments, if any, are recognized when the expected future benefit to be derived from an individual intangible asset is less than its carrying value. This generally occurs when certain assets are no longer consistent with our business strategy and whose expected future value has decreased.

*Valuation of Goodwill*

Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the acquired net tangible and intangible assets acquired. We evaluate goodwill for impairment on an annual basis in our fiscal fourth quarter or more frequently if indicators of impairment exist that would more likely than not reduce the fair value of a single reporting unit below the carrying amount. We assess qualitative factors in order to determine whether it is more likely than not that the fair value of a reporting unit is less than the carrying amount. The qualitative factors evaluated by management include: macro-economic conditions of the local business environment, overall financial performance, and other entity specific factors as deemed appropriate. If, through this qualitative assessment, the conclusion is made that it is more likely than not that a reporting unit's fair value is less than the carrying amount, a two-step impairment test is performed. For reporting units where we perform the quantitative goodwill impairment test, an impairment loss is recorded to the extent that the reporting unit's carrying amount exceeds the reporting unit's fair value. An impairment loss cannot exceed the total amount of goodwill allocated to the reporting unit.

*Accrued Warranty*

We establish a warranty reserve based on anticipated warranty claims at the time product revenue is recognized. This reserve requires us to make estimates regarding the amount and costs of warranty repairs we expect to make over a period of time. Factors affecting warranty reserve levels include the number of units sold, anticipated cost of warranty repairs, and anticipated rates of warranty claims. Warranty expense is recorded in cost of revenues. We evaluate the adequacy of this reserve each reporting period.

*Deferred Tax Asset*

We evaluate quarterly the realizability of the deferred tax assets and assess the need for a valuation allowance. We record valuation allowances to reduce our deferred tax assets to an amount that we believe is more likely than not to be realized. Realization is dependent on generating sufficient taxable income prior to expiration of the loss carryforwards. As of September 30, 2025, we do not believe that it is more likely than not that our deferred tax assets will be realized; accordingly, a full valuation allowance has been established and no deferred tax asset is shown in the accompanying balance sheet. Utilization of the net operating loss ("NOL") carryforwards in future years could be substantially limited due to restrictions imposed under federal and state laws upon a change in ownership or control. In determining taxable income for financial statement reporting purposes, we must make certain estimates and judgments. These estimates and judgments are applied in the calculation of certain tax liabilities and in the determination of the ability to recover deferred tax assets. We will continue to evaluate the ability to realize our net deferred tax assets on an ongoing basis to identify whether any significant changes in circumstances or assumptions have occurred that could materially affect the ability to realize deferred tax assets and will adjust the valuation accordingly.

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*Fair Value of the Term Loan and Warrant Liabilities*

We measure the fair value of the term loan and warrant liabilities at each reporting date in accordance with ASC 820, "*Fair Value Measurement*". We elected the Fair Value Option (FVO) for its term loan, recording it at fair value upon issuance and remeasuring it at each reporting date. Changes in fair value, including accrued interest, are recognized in other income (expense) on the condensed consolidated statements of operations, with related costs expensed as incurred. Fair value is determined using a discounted cash flow method and Monte Carlo simulation. Warrant liabilities are also recorded at fair value at issuance and remeasured each reporting period, with changes recognized in other income (expense) using a Monte Carlo simulation model.

*Business Combination*

We account for business combinations using the acquisition method of accounting, which requires that assets acquired and liabilities assumed be recorded at their respective fair values as of the acquisition date. The excess of the purchase price over those fair values is recorded as goodwill. The determination of fair values of identifiable assets and liabilities involves significant estimates and assumptions, including the use of valuation techniques such as discounted cash flow analyses. Goodwill and indefinite-lived intangible assets are tested for impairment annually, or more frequently if events or changes in circumstances indicate that they might be impaired.

**Recent Accounting Pronouncements** 

New pronouncements issued for future implementation are discussed in Note 3, Recent Accounting Pronouncements, to our consolidated financial statements.

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**Segment and Related Information** 

We are engaged in the design, development, and commercialization of critical communications hardware and software solutions designed to alert, inform, and protect people. The Company operates in two business segments. Hardware and Software and its principal markets are North and South America, Europe, Middle East and Asia. As reviewed by the Company's chief operating decision maker, the Chief Executive Officer, the Company evaluates the performance of each segment based on sales and operating income. Cash and cash equivalents, marketable securities, accounts receivable, inventory, property and equipment, deferred tax assets, goodwill, and intangible assets are primary assets identified by segment. The accounting policies for segment reporting are the same for the Company as a whole and transactions between the two operating segments are eliminated in consolidation. Refer to Note 19, Segment Information, in our consolidated financial statements for further discussion.

**Comparison of Results of Operations for Fiscal Years Ended September 30, 2025 and 2024**

All dollar amounts presented in this section are in thousands. The following table provides for the periods indicated certain items of our consolidated statements of operations expressed in thousands of dollars and as a percentage of net sales. The financial information and discussion below should be read in conjunction with the consolidated financial statements and notes contained in this Annual Report.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Years Ended** | **Years Ended** | **Years Ended** | **Years Ended** |  |  |
|  | **September 30, 2025** | **September 30, 2025** | **September 30, 2024** | **September 30, 2024** |  |  |
|  |  | **% of** |  | **% of** |  |  |
|  |  | **Total** |  | **Total** | **Fav (Unfav)** | **Fav (Unfav)** |
|  | **Amount** | **Revenue** | **Amount** | **Revenue** | **Amount** | **%** |
| Revenues: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Product revenue | $28455 | 69.8% | $14384 | 59.9% | $14071 | 97.8% |
| &nbsp;&nbsp;&nbsp;&nbsp;Contract and other | 12302 | 30.2% | 9624 | 40.1% | 2678 | 27.8% |
| Total revenues | 40757 | 100.0% | 24008 | 100.0% | 16749 | 69.8% |
| Cost of revenues | 23801 | 58.4% | 13819 | 57.6% | (9982) | (72.2)% |
| Gross Profit | 16956 | 41.6% | 10189 | 42.4% | 6767 | 66.4% |
| Operating expenses |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Selling, general and administrative | 25660 | 63.0% | 27261 | 113.5% | 1601 | 5.9% |
| &nbsp;&nbsp;&nbsp;&nbsp;Research and development | 8106 | 19.9% | 9644 | 40.2% | 1538 | 15.9% |
| Total operating expenses | 33766 | 82.8% | 36905 | 153.7% | 3139 | 8.5% |
| Loss from operations | (16810) | (41.2%) | (26716) | (111.3%) | 9906 | 37.1% |
| Other expense, net | (1183) | (2.9%) | (5419) | (22.6%) | 4236 | 78.2% |
| Loss before income taxes | (17993) | (44.1%) | (32135) | (133.9%) | 14142 | 44.0% |
| Income tax (benefit) expense | 119 | 0.3% | (405) | (1.7%) | (524) | (129.4%) |
| Net loss | $(18112) | (44.4%) | $(31730) | (132.2%) | $13618 | 42.9% |
| Net revenue |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Hardware | $31839 | 78.1% | $16668 | 69.4% | 15171 | 91.0% |
| &nbsp;&nbsp;&nbsp;&nbsp;Software | 8918 | 21.9% | 7340 | 30.6% | 1578 | 21.5% |
| Total net revenue | $40757 | 100.0% | $24008 | 100.0% | $16749 | 69.8% |
| US v International Revenue |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;US Revenue | $33922 | 83.2% | $16888 | 70.3% | 17034 | 100.9% |
| &nbsp;&nbsp;&nbsp;&nbsp;International Revenue | 6835 | 16.8% | 7120 | 29.7% | (285) | (4.0%) |
| Total | $40757 | 100.0% | $24008 | 100.0% | $16749 | 69.8% |

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***Revenues*** 

Revenues increased $16,749 for fiscal year 2025, compared with fiscal year 2024 including a $15,171 increase in hardware revenue and a $1,578 increase in software revenue compared with the prior fiscal year. Higher hardware revenue was largely due to

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higher backlog at the start of the fiscal year which included revenue from the Puerto Rico Early Warning System Project. Fiscal year 2025 revenue included $13,211 from this project, of which $108 was related to software, where fiscal year 2024 revenue did not include any revenue from this project. The increase in software revenue in fiscal year 2025 is primarily due to growth in recurring SaaS revenue. As of September 30, 2025, we had aggregate deferred revenue and prepayments from customers in advance of product shipment of $25,412. The receipt of orders will often be uneven due to the timing of customers' approval or budget cycles.

***Gross Profit*** 

Gross profit for fiscal year 2025 increased $6,767, compared with fiscal year 2024. The increase in gross profit was primarily due to higher revenues driven by the hardware segment. Gross margin as a percentage of sales was 41.6% in fiscal year 2025, compared with 42.4% in fiscal year 2024. The lower gross margin percentage in fiscal year 2025 reflects the revenue recognition pattern for the early-stage Puerto Rico Early Warning System Project. Hardware revenue for this project is recognized at zero margin until installation activities progress, and a significant portion of the hardware delivered in 2025 had not yet reached the installation stage. Software margins were slightly higher at 58.8% compared to 54.5% in fiscal year 2024.

Our products have varying gross margins and product mix may affect gross profits. In addition, our margins vary based on the sales channels through which our products are sold in a given period. We continue to implement product updates and changes, including raw material and component changes that may impact product costs. With such product updates and changes we have limited warranty cost experience and estimated future warranty costs can impact our gross margins. We do not believe that historical gross profit margins should be relied upon as an indicator of future gross profit margins.

***Selling, General and Administrative Expenses***

Selling, general and administrative expenses decreased by $1,601, or 5.9%. The decrease was primarily due to a reduction in professional services expense of $1,243, a decrease in marketing expenses of $532, the receipt in fiscal year 2025 of $525 of COVID employer tax credits for fiscal year 2020 and fiscal year 2021, and a decrease in travel expenses of $228, offset by an increase in commission expense of $177 and an increase in consulting expense of $144.

We incurred non-cash share-based compensation expenses allocated to selling, general and administrative expenses of $1,418 and $1,378 for fiscal years 2025 and 2024, respectively.

We may expend additional resources on the marketing and selling of our products in future periods as we identify ways to optimize potential business opportunities. Commission expense will fluctuate based on the nature of our sales.

***Research and Development Expenses***

R&D expenses decreased by $1,538, or 15.9%, primarily due to a decrease in employee expenses of $920, of which $288 resulted from COVID employer tax credits received in fiscal year 2025 for fiscal year 2020 and fiscal year 2021, and the capitalization of software development costs of $500 in fiscal year 2025 related to the Puerto Rico Early Warning System Project.

We incurred non-cash share-based compensation expenses allocated to research and development expenses of $170 and $207 for the fiscal years 2025 and 2024, respectively.

***Other Expense, net***

Other expense, net, decreased by $4,236. This decrease was primarily driven by a reduction in the fair value of the warrants issued in connection with the Close Date Term Loan of $6,585, offset by an increase in the fair value of the Term Loans of $1,905.

***Net Loss***

The net loss of $18,112 for fiscal year 2025 was a decrease of $13,618 compared with the net loss of $31,730 in fiscal year 2024.

***Other Metrics***

We monitor a number of financial and operating metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions, including the following key metrics. Our other business metrics may be calculated in a manner different than similar other business metrics used by other companies (in thousands):

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***Non-U.S. GAAP Financial Measure: Adjusted EBITDA*** 

Adjusted EBITDA is a non-GAAP financial measure. We define EBITDA as net income (loss) before interest income, interest expense, income tax expense (benefit), and depreciation and amortization expense. We define adjusted EBITDA as EBITDA further adjusted for share-based compensation, fair value measurements of our Term Loans and warrants, and other items that we do not consider indicative of our core operating performance.

EBITDA and Adjusted EBITDA are measures used by management to understand and evaluate our core operating performance and trends and to generate future operating plans, make strategic decisions regarding allocation of capital, and invest in initiatives that are focused on cultivating new markets for our solutions. In particular, the exclusion of certain expenses in calculating adjusted EBITDA facilitates comparisons of our operating performance on a period-to-period basis. We believe that adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.

Adjusted EBITDA has limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are: (1) although depreciation and amortization are non-cash charges, the intangible assets that are amortized and property and equipment that is depreciated, will need to be replaced in the future, and adjusted EBITDA does not reflect cash capital expenditure requirements for such replacement or for new capital expenditure requirements; (2) adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; (3) adjusted EBITDA does not reflect the potentially dilutive impact of equity-based compensation; (4) adjusted EBITDA does not reflect tax payments or receipts that may represent a reduction or increase in cash available to us; and (5) other companies, including companies in our industry, may calculate adjusted EBITDA or similarly titled measures differently, which reduces the usefulness of the metric as a comparative measure. Because of these and other limitations, you should consider adjusted EBITDA alongside our other U.S. GAAP-based financial performance measures, net income, and our other U.S. GAAP financial results.

The following table presents a reconciliation of adjusted EBITDA to net income, the most directly comparable U.S. GAAP measure, for each of the periods indicated (in thousands):

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| | | |
|:---|:---|:---|
|  | **Years ended** | **Years ended** |
|  | **September 30,** | **September 30,** |
|  | **2025** | **2024** |
| Net loss | $(18112) | $(31730) |
| Interest income | 285 | 237 |
| Interest expense | 1575 | 603 |
| Income tax expense (benefit) | 119 | (405) |
| Depreciation and amortization | 2779 | 2929 |
| EBITDA | (13924) | (28840) |
| Non-GAAP adjustments |  |  |
| &nbsp;&nbsp;Share-based compensation | 1663 | 1652 |
| &nbsp;&nbsp;Change in fair value of Term Loans and warrants | 730 | (3950) |
| &nbsp;&nbsp;Other non-recurring expense\* | 623 | 1103 |
| Adjusted EBITDA | $(12368) | $(22135) |

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*\* Other non-recurring expense consists of loss on term loan issuance, one-time legal fees and consulting fees, which we do not consider indicative of ongoing operations.*

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**Segment Results**

Segment results include net sales and operating income by segment. Corporate expenses, including various administrative expenses and costs of a publicly traded company, are included in the Hardware segment as per historical financial reporting.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Software** | **Software** | **Software** | **Hardware** | **Hardware** | **Hardware** |
|  | **Years ended** | **Years ended** |  | **Years ended** | **Years ended** |  |
|  | **September 30,** | **September 30,** | **Fav (Unfav)** | **September 30,** | **September 30,** | **Fav (Unfav)** |
|  | **2025** | **2024** | **%** | **2025** | **2024** | **%** |
| Revenue | $8918 | $7340 | 21.5% | $31839 | $16668 | 91.0% |
| Operating (loss) income | (11883) | (14898) | 20.2% | (4927) | (11818) | 58.3% |
| Net income (loss) | (11765) | (14433) | 18.5% | (6347) | (17297) | 63.3% |
| <u>Reconciliation of U.S. GAAP to Non-GAAP</u> |  |  |  |  |  |  |
| Other (income) expense, net | (116) | (3) | 3766.7% | 1299 | 5422 | 76.0% |
| Income tax expense (benefit) | (2) | (463) | (99.6%) | 121 | 58) | (108.6%) |
| Depreciation and amortization | 2421 | 2535 | 4.5% | 358 | 394 | 9.1% |
| Share-based compensation | 319 | 487 | 34.5% | 1344 | 1165) | (15.4%) |
| Adjusted EBITDA | $(9143) | $(11877) | 23.0% | $(3225) | $(10258) | (68.6%) |

---

***Software Segment***

Software segment revenue increased $1,578, or 21.5%, compared to the prior fiscal year. Both recurring revenue and non-recurring revenue increased 21.5% and 20%, respectively, compared with the prior fiscal year.

Operating loss improved by $3,015 for fiscal year 2025 compared to fiscal year 2024, primarily driven by an increase in gross profit of $1,243 and a reduction in operating expenses, including a decrease of $500 as a result of the capitalization of direct labor for the Puerto Rico software development, and reductions of $456 in marketing cost, $418 in employee related compensation, $262 in professional services expense, and $193 in commission expense.

***Hardware Segment***

Hardware segment revenue increased $15,171, or 91.0%, compared to the prior fiscal year. The increase was largely driven by increases of $13,103 from the Puerto Rico Early Warning System Project.

Operating loss was $4,927 in the current fiscal year, compared to $11,818 in the prior fiscal year, an improvement of $6,891. The improvement was primarily driven by an increase in revenue combined with a reduction in operating expenses including a reduction of $1,167 in professional services expense and $163 in prototype spending.

**Liquidity and Capital Resources**

All dollar amounts presented in this section are in thousands.

Cash and cash equivalents as of September 30, 2025 were $7,969, compared with $4,945 as of September 30, 2024. In addition, we had $70 in short-term marketable securities as of September 30, 2025, compared with $7,945 as of September 30, 2024. We had no long-term marketable securities as of September 30, 2025, compared with $249 in long-term marketable securities as of September 30, 2024. We also had restricted cash of $585 as of September 30, 2025 and $345 as of September 30, 2024. On October 4, 2023, we completed an underwritten public offering of 5,750,000 shares of our common stock at a public offering price of $2.00 per share. We received gross proceeds of approximately $11,500 from the offering, before underwriting discounts and commissions and offering expenses of $1,051. We have used the net proceeds of the offering for general corporate purposes, including funding organic growth, working capital, capital expenditures, and continued research and development with respect to products and technologies, as well as costs related to post-closing integration with our business and research and development activities related to the integrated business. Other than cash, proceeds from the underwritten public offering, and expected future cash flows from operating activities in subsequent periods, we have no other unused sources of liquidity at this time.

***Loan Agreements***

On May 13, 2024, we entered into the Loan Agreement, pursuant to which we received gross proceeds of $15,000, before generating professional expenses of $1,121 related to the Close Date Term Loan. The principal of the Close Date Term Loan is

------

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

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

The Term Loans include financial covenants and contain other customary affirmative and negative covenants and events of default. All obligations under the Term Loans are secured by substantially all of our assets. As of September 30, 2025, we were in compliance with all financial and reporting covenants of the Term Loans and we paid all interest in cash through September 30, 2025.

Principal factors that could affect the availability of our internally generated funds include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•ability to meet sales projections;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•government spending levels;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•ability to implement current contract programs timely;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•timely collection of customer contract receivables;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•introduction of competing technologies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•product mix and effect on margins, including the impact of tariffs on margin;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•ability to reduce and manage current inventory levels and manage our supply chain; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•product acceptance in new markets.

Principal factors that could affect our ability to obtain cash from external sources include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•volatility in the capital markets; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•market price and trading volume of our common stock.

Based on our current cash position, our order backlog, and assuming the accuracy of our currently planned revenues and expenditures, we believe we have sufficient capital to fund planned levels of operations for at least the next twelve months. However, we operate in a rapidly evolving and often unpredictable business environment that may change the timing or amount of expected future cash receipts and expenditures. Accordingly, there can be no assurance that we may not be required to raise additional funds through the sale of equity or debt securities or from credit facilities. Additional capital, if needed, may not be available on satisfactory terms, if at all.

***Accrued Liabilities***

Our accrued liabilities as of September 30, 2025 included $15,122 in customer deposits for the Puerto Rico Early Warning System Project.

***Cash Flows***

Our cash flows from operating, investing and financing activities, as reflected in the consolidated statements of cash flows, are summarized in the table below (in thousands):

---

| | | |
|:---|:---|:---|
|  | **Years ended** | **Years ended** |
|  | **September 30,** | **September 30,** |
|  | **2025** | **2024** |
| Cash provided by (used in): |  |  |
| Operating activities | $(8762) | $(19454) |
| Investing activities | 7902 | (8666) |
| Financing activities | 4031 | 23873 |

---

------

*Operating Activities*

During the year ended September 30, 2025, net cash used in operating activities was $8,762, primarily resulting from net loss of $18,112, offset by a net cash increase from changes in our operating assets and liabilities of $4,061 and non-cash expenses of $5,289. Net cash increase from changes in our operating assets and liabilities, consisted primarily of a $18,062 increase in customer deposits mostly related to the Puerto Rico Early Warning System Project, a $4,114 increase in accounts payable related to procurement for increased 2026 sales projection, and a $35 increase in accrued and other liabilities, which included customer deposits, accrued payroll, deferred revenue, and operating lease liabilities, partially offset by a $5,967 increase in contract assets mostly related to the Puerto Rico Early Warning System Project, a $5,937 increase in prepaid expenses and other current assets, which includes deposits paid on inventory purchases, prepaid rent and prepaid insurance, a $4,303 increase in accounts receivable due to increased hardware sales, and a $1,943 increase in inventory.

*Investing Activities*

During the year ended September 30, 2025, net cash provided by investing activities was $7,902, primarily due to $9,557 proceeds received from maturities of available for sale marketable securities, partially offset by purchasing $1,400 of short-term marketable securities, and $255 in cash used for capital expenditure, which includes the purchase of product tooling, computer equipment, and leasehold improvements for our operating facilities.

*Financing Activities*

During the year ended September 30, 2025, net cash provided by financing activities was $4,031, primarily due to loan proceeds of $4,000 from the First Amendment Term Loan in May 2025, and $49 cash proceeds received from the exercise of stock options, offset by $18 for settlement of statutory tax withholding requirements upon vesting of restricted stock units.

*Commitments* 

We are committed for our San Diego headquarters facility lease through August 30, 2028, as more fully described in Note 13, Leases, in our consolidated financial statements.

The Company has a bonus plan for employees, in accordance with their terms of employment, whereby they can earn a percentage of their salary based on meeting targeted objectives for orders received, revenue, operating income, and operating cash flow. All of the Company's key employees are entitled to participate in the bonus plan. During the years ended September 30, 2025 and September 30, 2024, the Company recorded $319 and $508, respectively, in bonus expense, and related payroll tax expense in connection with the bonus plans. Unpaid bonus related expense is included in "Accrued liabilities" on the consolidated balance sheet.

The Company is party to an employment agreement with our Chief Executive Officer that provides for termination severance benefits, including twelve months' salary and health benefits, a pro-rata share of his annual cash bonus for the fiscal year in which the termination occurs to which he would have become entitled had he remained employed through the end of the fiscal year, and vesting of a portion of stock options held by the employee at the time of termination. The agreement also has a change in control clause whereby the Chief Executive Officer would be entitled to receive specific severance and equity vesting benefits if specified termination events occur.

There were no other employment agreements with executive officers or other employees providing future benefits or severance arrangements.

The disclosure provided in *Note 15. Commitments and Contingencies* is incorporated herein by reference to such note.

**Item 7A. Quantitative and Qualitative Disclosures about Market Risk.** 

Information requested by this Item is not included as we are electing scaled disclosure requirements available to Smaller Reporting Companies.

**Item 8. Financial Statements and Supplementary Data.** 

The financial statements required by this item begin on page F-1 with the index to financial statements followed by the consolidated financial statements.

**Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.** 

------

There have been no disagreements or any reportable events requiring disclosure under Item 304(b) of Regulation S-K.

**Item 9A. Controls and Procedures.** 

We are required to maintain disclosure controls and procedures designed to ensure that material information related to us, including our consolidated subsidiaries, is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms.

**Evaluation of Disclosure Controls and Procedures**

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) that are designed to ensure that information required to be disclosed in our Exchange Act Reports is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms. Our disclosure controls and procedures are also designed to ensure that information required to be disclosed in our Exchange Act Reports is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2025 and, based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective at a reasonable assurance level.

**Management's Report on Internal Control Over Financial Reporting**

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of September 30, 2025, based on the guidelines established in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Our internal control over financial reporting includes policies and procedures that provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principles in the U.S. Based on this evaluation, management has concluded that the Company's internal control over financial reporting was effective as of September 30, 2025.

This Annual Report does not include an attestation report of the Company's independent registered public accounting firm regarding internal control over financial reporting. Pursuant to rules of the SEC, such attestation is not required for smaller reporting companies, which permit the Company to provide only management's report in this Annual Report.

**Changes in Internal Controls**

There have been no changes in our internal control over financial reporting in the quarter ended September 30, 2025, in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Our process for evaluating controls and procedures is continuous and encompasses constant improvement of the design and effectiveness of established controls and procedures and the remediation of any deficiencies, which may be identified during this process.

**Item 9B. Other Information.**

*Rule 10b5-1 Trading Plans*

During the three months ended September 30, 2025, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act or any "non-Rule 10b5-1 trading arrangement" as defined in Item 408(c) of Regulation S-K.

**Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.**

Not Applicable

------

**PART III**

Certain information required by this Part III is omitted from this report and is incorporated by reference to our Definitive Proxy Statement to be filed with the SEC in connection with the Annual Meeting of Stockholders to be held in 2026 (the "Proxy Statement") or an amendment to this Annual Report on Form 10-K.

**Item 10. Directors, Executive Officers and Corporate Governance.**

The information required by this item is incorporated by reference to the information in the Proxy Statement or such amendment under the captions "Executive Officers and Board of Directors", "Election of Directors", "Board and Committee Matters and Corporate Governance Matters", and "Delinquent Section 16(a) Reports" contained in the Proxy Statement or such amendment.

**Item 11. Executive Compensation.**

The information required by this item is incorporated by reference to the information in the Proxy Statement or such amendment under the caption "Executive Compensation."

**Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.**

The information required by this item is incorporated by reference to the information in the Proxy Statement or such amendment under the captions "Security Ownership of Certain Beneficial Owners and Management" and "Equity Compensation Plan Information."

**Item 13. Certain Relationships and Related Transactions, and Director Independence.**

The information required by this item is incorporated by reference to the information in the Proxy Statement or such amendment under the captions "Certain Transactions" and "Independence of the Board of Directors."

**Item 14. Principal Accountant Fees and Services.**

The information required by this item is incorporated by reference to the Proxy Statement or such amendment under the heading "Principal Accountant Fees and Services."

------

**PART IV** 

**Item 15. Exhibits and Financial Statement Schedules.**

**Index to Consolidated Financial Statements**

The financial statements required by this item are submitted in a separate section beginning on page F-1 of this annual report.

**Financial Statement Schedules:**

None.

**Exhibits:**

The following exhibits are incorporated by reference or filed as part of this report.

---

| | |
|:---|:---|
| **2.** | **Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession** |
| 2.1 | [<u>Membership Interest Purchase Agreement, dated as of September 20, 2023, by and between Genasys Inc., Word Systems Operations, LLC and Evertel Technologies, LLC Incorporated by reference to Exhibit 2.1 on Form 8-K, September 26, 2023.</u>](https://www.sec.gov/ix?doc=/Archives/edgar/data/0000924383/000143774923026784/gnss20230926_8k.htm) |
| **3.** | **Articles of Incorporation and Bylaws** |
| 3.1 | [<u>Certificate of Incorporation dated March 1, 1992, as amended to date.</u>](gnss-ex3_1.htm) |
| 3.2 | [<u>Restated Bylaws. Incorporated by reference to Exhibit 3.1 on Form 10 Q for the quarter ended March 31, 2006, filed May 10, 2006.</u>](https://www.sec.gov/Archives/edgar/data/924383/000119312506107678/dex31.htm)\* |
| **4.** | **Instruments Defining the Rights of Securities Holders,** |
| 4.1 | [<u>Description of the Securities of the Registrant. Incorporated by reference to Exhibit 4.1 on Form 10-K for the year ended September 30, 2023, filed December 7, 2023.</u>](https://www.sec.gov/Archives/edgar/data/924383/000143774923033895/ex_600592.htm) |
| 4.2 | [<u>Warrant Agreement. Incorporated by reference to Exhibit 4.1 on Form 8-K filed May 14, 2024</u>](https://www.sec.gov/Archives/edgar/data/924383/000143774924016642/ex_673330.htm). |
| **10.** | **Material Contracts** |
| 10.1 | [<u>Form of Stock Option Agreement under the 2005 Equity Incentive Plan for grants on or after August 5, 2005. Incorporated by reference to Exhibit 10.11 on Form 10-Q for the quarter ended June 30, 2005 filed August 9, 2005.</u>](https://www.sec.gov/Archives/edgar/data/924383/000101968705002158/ex_10-11.htm)+ |
| 10.2 | [<u>Form of Indemnification Agreement. Incorporated by reference to Exhibit 10.1 on Form 8-K filed June 27, 2013.</u>](https://www.sec.gov/Archives/edgar/data/924383/000119312513274940/d558196dex101.htm) |
| 10.3 | [<u>LRAD Corporation Amended and Restated 2015 Equity Incentive Plan. Incorporated by reference to Exhibit 10.1 on Form 8-K filed March 16, 2017.</u>](https://www.sec.gov/Archives/edgar/data/924383/000143774917004699/ex10-1.htm)+ |
| 10.4 | [<u>First Amendment to the Amended and Restated 2015 Equity Incentive Plan. Incorporated by reference to Exhibit 10.1 on Form 8-K filed March 19, 2021.</u>](https://www.sec.gov/Archives/edgar/data/924383/000143774921006593/ex_235361.htm)+ |
| 10.5 | [<u>Form of Stock Award Agreement under the Amended and Restated 2015 Equity Incentive Plan. Incorporated by reference to Exhibit 10.2 on Form 8-K filed March 24, 2015.</u>](https://www.sec.gov/Archives/edgar/data/924383/000143774915005936/ex10-2.htm)+ |
| 10.6 | [<u>Form of Restricted Stock Unit Award Agreement For Non-Employee Directors under the Amended and Restated 2015 Equity Incentive Plan. Incorporated by reference to Exhibit 10.2 on Form 8-K filed March 16, 2017.</u>](https://www.sec.gov/Archives/edgar/data/924383/000143774917004699/ex10-2.htm)+ |
| 10.7 | [<u>Form of Restricted Stock Unit Award Agreement For Employees under the Amended and Restated 2015 Equity Incentive Plan. Incorporated by reference to Exhibit 10.8 on Form 10-K for the year ended September 30, 2018, filed December 21, 2018.</u>](https://www.sec.gov/Archives/edgar/data/924383/000143774918022542/ex_131737.htm)+ |
| 10.8 | [<u>Genasys Inc. 2025 Equity Incentive Plan. Incorporated by reference to Exhibit 10.1 on Form 8-K filed March 19, 2025.</u>](https://www.sec.gov/Archives/edgar/data/924383/000095017025042007/gnss-ex10_1.htm)+ |
| 10.9 | [<u>Form of Stock Option Agreement under the Genasys Inc. 2025 Equity Incentive Plan. Incorporated by reference to Exhibit 10.2 on Form 8-K filed March 19, 2025.</u>](https://www.sec.gov/Archives/edgar/data/924383/000095017025042007/gnss-ex10_2.htm)+ |
| 10.10 | [<u>Form of Restricted Stock Unit Agreement under then Genasys Inc. 2025 Equity Incentive Plan. Incorporated by reference to Exhibit 10.3 on Form 8-K filed March 19, 2025.</u>](https://www.sec.gov/Archives/edgar/data/924383/000095017025042007/gnss-ex10_3.htm)+ |

---

------

---

| | |
|:---|:---|
| 10.11 | [<u>Amended and Restated Employment Agreement, dated November 29, 2022, by and among Genasys Inc. and Richard Danforth. Incorporated by reference to Exhibit 10.1 on Form 8-K filed November 30, 2022.</u>](https://www.sec.gov/Archives/edgar/data/924383/000143774922028195/ex_451637.htm) + |
| 10.12 | [<u>Change in Control Severance Benefit Plan. Incorporated by reference to Exhibit 10.1 on Form 10-Q for the quarter ended December 31, 2021 filed February 7, 2022.</u>](https://www.sec.gov/Archives/edgar/data/924383/000143774922002633/ex_332328.htm)+ |
| 10.13 | [<u>Term Loan and Security Agreement. Incorporated by reference to Exhibit 10.1 on Form 8-K filed May 14, 2024</u>](https://www.sec.gov/Archives/edgar/data/924383/000143774924016642/ex_673670.htm). |
| 10.14 | [<u>First Amendment to Term Loan and Security Agreement, dated May 9, 2025 among Genasys Inc., Evertel Technologies, LLC, Zonehaven LLC, Genasys Puerto Rico, LLC, the lenders party thereto and Cantor Fitzgerald Securities, as administrative agent and collateral agent. Incorporated by reference to Exhibit 10.4 on Form 10-Q for the quarter ended March 31, 2025, filed May 13, 2015.</u>](https://www.sec.gov/Archives/edgar/data/924383/000095017025070476/gnss-ex10_4.htm) |
| 10.15 | [<u>Right of First Refusal Agreement. Incorporated by reference to Exhibit 10.2 on Form 8-K filed May 14, 2024</u>](https://www.sec.gov/Archives/edgar/data/924383/000143774924016642/ex_673331.htm). |
| 10.16 | [<u>Genasys Puerto Rico LLC Contract with Commonwealth of Puerto Rico Electric Power Authority.\*</u>](gnss-ex10_16.htm) |
| **19.** | Insider Trading Policies and Procedures |
| 19.1 | [<u>Genasys Inc. Insider Trading Policy. Incorporated by reference to Exhibit 19.1 on Form 10-K for the year ended September 30, 2023, filed December 7, 2023</u>](https://www.sec.gov/Archives/edgar/data/924383/000143774923033895/ex_600855.htm). |
| **21.** | **Subsidiaries of the Registrant** |
| 21.1 | [<u>Subsidiaries of the Registrant.\*</u>](gnss-ex21_1.htm) |
| **23.** | **Consents of Experts and Counsel** |
| 23.1 | [<u>Consent of Baker Tilly US, LLP.\*</u>](gnss-ex23_1.htm) |
| **24.** | **Power of Attorney** |
| 24.1 | Power of Attorney. Included on signature page.\* |
| **31.** | **Certifications** |
| 31.1 | [<u>Certification of Richard S. Danforth, Principal Executive Officer, pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.\*</u>](gnss-ex31_1.htm) |
| 31.2 | [<u>Certification of Cassandra L. Hernandez-Monteon, Principal Financial Officer, pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.\*</u>](gnss-ex31_2.htm) |
| 32.1 | [<u>Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by Richard S. Danforth, Principal Executive Officer, and Cassandra L. Hernandez-Monteon, Principal Financial Officer.\*</u>](gnss-ex32_1.htm) |
| **97** | **Clawback Policies** |
| 97.1 | [<u>Genasys Inc. Clawback Policy. Incorporated by reference to Exhibit 97.1 on Form 10-K for the year ended September 30, 2023, filed December 7, 2023.</u>](https://www.sec.gov/Archives/edgar/data/924383/000143774923033895/ex_600598.htm) |
| **99.** | **Additional Exhibits** |
| 101.INS | Inline XBRL Instance Document-the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document |
| 101.SCH | Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
| 104 | Cover page formatted as Inline XBRL and contained in Exhibit 101 |

---

------

\* Filed herewith.

+ Management contract or compensatory plan or arrangement.

------

**Genasys Inc.** 

**Index to Consolidated Financial Statements** 

---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;[<u>Report of Independent Registered Public Accounting Firm (PCAOB ID</u> 23<u>)</u>](#report_of_independent) | F-1 |
| &nbsp;&nbsp;&nbsp;&nbsp;[<u>Consolidated Balance Sheets as of September 30, 2025 and 2024</u>](#consolidated_balance_sheets) | F-3 |
| &nbsp;&nbsp;&nbsp;&nbsp;[<u>Consolidated Statements of Operations for the Years Ended September 30, 2025 and 2024</u>](#consolidated_statements_of_operations) | F-4 |
| &nbsp;&nbsp;&nbsp;&nbsp;[<u>Consolidated Statements of Comprehensive Loss for the Years Ended September 30, 2025 and 2024</u>](#consolidated_statements_of_comprehensiv) | F-5 |
| &nbsp;&nbsp;&nbsp;&nbsp;[<u>Consolidated Statements of Stockholders' Equity for the Years Ended September 30, 2025 and 2024</u>](#consolidated_statements_of_stockholders) | F-6 |
| &nbsp;&nbsp;&nbsp;&nbsp;[<u>Consolidated Statements of Cash Flows for the Years Ended September 30, 2025 and 2024</u>](#consolidated_statements_of_cash_flows) | F-7 |
| &nbsp;&nbsp;&nbsp;&nbsp;[<u>Notes to the Consolidated Financial Statements</u>](#notes_to_the_consolidated_financial) | F-9  |

---

F-i

------

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** 

To the shareholders and the board of directors of Genasys Inc:

**Opinion on the Financial Statements**

We have audited the accompanying consolidated balance sheets of Genasys Inc. (the "Company") as of September 30, 2025 and 2024, the related consolidated statements of operations, comprehensive loss, stockholders' equity, and cash flows, for each of the two years in the period ended September 30, 2025, 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 September 30, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended September 30, 2025, in conformity with accounting principles generally accepted in the United States of America.

**Basis for Opinion**

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated 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.

We 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 consolidated 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.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated 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 consolidated 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 consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

**Critical Audit Matter**

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates 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 matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

**Over-time Revenue Recognition – Refer to Note 5 to the Financial Statements**

*Critical Audit Matter Description*

The Company entered into a long-term contract with Puerto Rico to provide them with a protective communications technology platform that operates as an early warning system and helps local authorities in Puerto Rico disseminate critical information, manage emergencies, and enhance overall public safety by delivering alerts and notifications to residents and emergency responders in the vicinity of dams. The technology platform will be installed at multiple existing dam sites. The contract includes multiple performance obligations including obligations requiring significant management estimates that are recognized over-time using a cost-to-cost method, including a zero-margin approach for uninstalled materials.

We identified over-time revenue recognition related to the Puerto Rico contract as a critical audit matter due to the significant judgment required in allocating the transaction price to the distinct performance obligations, as well as estimating costs to complete and measuring the related progress in satisfying the related performance obligations. There was a high degree of auditor judgment and subjectivity in applying audit procedures and evaluating the significant assumptions relating to these revenue estimates.

*How We Addressed the Matter in Our Audit*

------

The primary procedures we performed to address this critical audit matter included:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;▪We analyzed the conclusions underlying all five steps of the revenue recognition model in accordance with Accounting Standards Codification Topic 606, including the identification of all distinct performance obligations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;▪We verified the reasonableness of the standalone selling price of all distinct performance obligations and the related transaction price allocations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;▪We evaluated the design and implementation of the Company's process and controls surrounding the accounting for the long-term contract with Puerto Rico.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;▪When assessing the appropriateness of assumptions related to standalone selling price and costs to complete estimates, we evaluated whether the assumptions used were reasonable considering historical financial information of the Company, and available third-party evidence, including assessing the reasonableness of costs incurred to date and estimated remaining costs to complete.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;▪We evaluated the appropriateness of estimated gross margins recognized for all distinct performance obligations.

/s/ BAKER TILLY US, LLP

We have served as the Company's auditor since 2007.

Chicago, Illinois

December 15, 2025

------

**Genasys Inc.** 

**Consolidated Balance Sheets** 

(in thousands, except par value and share amounts)

---

| | | |
|:---|:---|:---|
|  | **September 30,** | **September 30,** |
|  | **2025** | **2024** |
| ASSETS |  |  |
| Current assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | $7969 | $4945 |
| &nbsp;&nbsp;&nbsp;&nbsp;Short-term marketable securities | 70 | 7945 |
| &nbsp;&nbsp;&nbsp;&nbsp;Restricted cash |  | 95 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net of allowance for doubtful accounts for expected credit losses of $65 | 7596 | 3283 |
| &nbsp;&nbsp;&nbsp;&nbsp;Contract assets | 6117 | 150 |
| &nbsp;&nbsp;&nbsp;&nbsp;Inventories, net | 8805 | 7313 |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other | 8742 | 2409 |
| Total current assets | 39299 | 26140 |
| Long-term marketable securities |  | 249 |
| Long-term restricted cash | 585 | 250 |
| Property and equipment, net | 1125 | 1291 |
| Goodwill | 13450 | 13329 |
| Intangible assets, net | 6147 | 8506 |
| Operating lease right of use assets, net | 2419 | 3110 |
| Other assets | 844 | 1061 |
| Total assets | $63869 | $53936 |
| LIABILITIES AND STOCKHOLDERS' EQUITY |  |  |
| Current liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | $8181 | $4034 |
| &nbsp;&nbsp;&nbsp;&nbsp;Customer deposit | 19669 | 1606 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued liabilities | 7451 | 7424 |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating lease liabilities, current portion | 1125 | 1021 |
| &nbsp;&nbsp;&nbsp;&nbsp;Notes payable, at fair value | 18010 |  |
| Total current liabilities | 54436 | 14085 |
| Notes payable, at fair value |  | 12010 |
| Warrant liability | 3570 | 6640 |
| Long-term deferred revenue | 1478 | 369 |
| Operating lease liabilities, noncurrent | 2218 | 3269 |
| Total liabilities | 61702 | 36373 |
| Commitments and Contingencies (Note 15) |  |  |
| Stockholders' equity: |  |  |
| Preferred stock, $0.00001 par value; 5,000,000 shares authorized;<br> none issued and outstanding |  |  |
| Common stock, $0.00001 par value; 100,000,000 shares authorized; 45,161,172 and 44,631,030 shares issued and outstanding, respectively |  |  |
| Additional paid-in capital | 127384 | 125690 |
| Accumulated deficit | (125904) | (107792) |
| Accumulated other comprehensive income (loss) | 687 | (335) |
| Total stockholders' equity | 2167 | 17563 |
| Total liabilities and stockholders' equity | $63869 | $53936 |

---

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

------

**Genasys Inc.** 

**Consolidated Statements of Operations**

(in thousands, except share and per share amounts)

---

| | | |
|:---|:---|:---|
|  | **Years ended** | **Years ended** |
|  | **September 30,** | **September 30,** |
|  | **2025** | **2024** |
| Revenues: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Product sales | $28455 | $14384 |
| &nbsp;&nbsp;&nbsp;&nbsp;Contract and other | 12302 | 9624 |
| Total revenues | 40757 | 24008 |
| Cost of revenues | 23801 | 13819 |
| Gross profit | 16956 | 10189 |
| Operating expenses |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Selling, general and administrative | 25660 | 27261 |
| &nbsp;&nbsp;&nbsp;&nbsp;Research and development | 8106 | 9644 |
| Total operating expenses | 33766 | 36905 |
| Loss from operations | (16810) | (26716) |
| Other expenses |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest income | 285 | 237 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest expense | (1575) | (603) |
| &nbsp;&nbsp;&nbsp;&nbsp;Change in fair value of Term Loans and warrants | 730 | (3950) |
| &nbsp;&nbsp;&nbsp;&nbsp;Other | (623) | (1103) |
| Other expenses, net | (1183) | (5419) |
| Loss before income taxes | (17993) | (32135) |
| Income tax expense (benefit) | 119 | (405) |
| Net loss | $(18112) | $(31730) |
| Net loss per common share - basic and diluted | $(0.40) | $(0.72) |
| Weighted average common shares outstanding: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Basic and diluted | 45056436 | 44316865 |

---

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

------

**Genasys Inc.** 

**Consolidated Statements of Comprehensive Loss**

(in thousands)

---

| | | |
|:---|:---|:---|
|  | **Years ended** | **Years ended** |
|  | **September 30,** | **September 30,** |
|  | **2025** | **2024** |
| Net loss | $(18112) | $(31730) |
| &nbsp;&nbsp;&nbsp;&nbsp;Unrealized (loss) gain on marketable securities | (8) | 18 |
| &nbsp;&nbsp;&nbsp;&nbsp;Unrealized foreign currency translation gain | 210 | 152 |
| &nbsp;&nbsp;&nbsp;&nbsp;Change in fair value of Term Loans related to credit risk | 820 |  |
| Comprehensive loss | $(17090) | $(31560) |

---

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

------

**Genasys Inc.**

**Consolidated Statements of Stockholders' Equity** 

(in thousands, except par value and share amounts)

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  | **Accumulated** |  |
|  |  |  | **Additional** |  | **Other** | **Total** |
|  | **Common Stock** | **Common Stock** | **Paid-in** | **Accumulated** | **Comprehensive** | **Stockholders'** |
|  | **Shares** | **Par Value** | **Capital** | **Deficit** | **Income (Loss)** | **Equity** |
| Balance as of September 30, 2023 | 37211071 | $372 | $110379 | $(76062) | $(505) | $33812 |
| Share-based compensation expense |  |  | 1652 |  |  | 1652 |
| Issuance of common stock in business combination | 1303912 | 14 | 3265 |  |  | 3265 |
| Release of obligation to issue common stock | 69564 | 1 |  |  |  |  |
| Issuance of common stock upon cashless exercise of stock options, net | 27016 |  | (43) |  |  | (43) |
| Issuance of common stock upon offering, net of issuance costs of $1,051 | 5750000 | 57 | 10449 |  |  | 10449 |
| Issuance of common stock upon vesting of restricted stock units | 276313 | 2 |  |  |  |  |
| Shares retained for payment of taxes in connection with net share settlement of restricted stock units | (6846) |  | (12) |  |  | (12) |
| Accumulated other comprehensive income |  |  |  |  | 170 | 170 |
| Net loss |  |  |  | (31730) |  | (31730) |
| Balance as of September 30, 2024 | 44631030 | $446 | $125690 | $(107792) | $(335) | $17563 |
| Share-based compensation expense |  |  | 1663 |  |  | 1663 |
| Obligation to issue common stock in Evertel acquisition | 270271 | 3 |  |  |  |  |
| Issuance of common stock upon exercise of stock options, net | 27481 |  | 49 |  |  | 49 |
| Issuance of common stock upon vesting of restricted stock units | 237867 | 2 |  |  |  |  |
| Shares retained for payment of taxes in connection with net share settlement of restricted stock units | (5477) |  | (18) |  |  | (18) |
| Accumulated other comprehensive income |  |  |  |  | 1022 | 1022 |
| Net loss |  |  |  | (18112) |  | (18112) |
| Balance as of September 30, 2025 | 45161172 | $451 | $127384 | $(125904) | $687 | $2167 |

---

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

------

**Genasys Inc.** 

**Consolidated Statements of Cash Flows**

(in thousands)

---

| | | |
|:---|:---|:---|
|  | **Years ended** | **Years ended** |
|  | **September 30,** | **September 30,** |
|  | **2025** | **2024** |
| Operating Activities: |  |  |
| Net loss | $(18112) | $(31730) |
| Adjustments to reconcile net loss to net cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 2779 | 2929 |
| &nbsp;&nbsp;&nbsp;&nbsp;Warranty provision | (14) | (56) |
| &nbsp;&nbsp;&nbsp;&nbsp;Inventory obsolescence | 451 | 4 |
| &nbsp;&nbsp;&nbsp;&nbsp;Share-based compensation | 1663 | 1652 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Gain) loss on change in fair value of warrants | (3070) | 3515 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss on change in fair value of Term Loans | 2340 | 435 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss on issuance of First Amendment Term Loan | 480 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred income taxes |  | (525) |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss on disposal of fixed asset | 1 | 6 |
| &nbsp;&nbsp;&nbsp;&nbsp;Addition of operating lease right of use asset | (67) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of operating lease right of use asset | 767 | 794 |
| &nbsp;&nbsp;&nbsp;&nbsp;Remeasurement of acquisition contingent consideration |  | (16) |
| &nbsp;&nbsp;&nbsp;&nbsp;Accretion of acquisition holdback liability |  | 20 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Amortization) accretion of investment of marketable securities | (41) | 110 |
| Changes in operating assets and liabilities, net of the effects from acquisition: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net | (4303) | 2819 |
| &nbsp;&nbsp;&nbsp;&nbsp;Contract assets | (5967) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Inventories, net | (1943) | (816) |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other | (5937) | (1272) |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | 4114 | 2235 |
| &nbsp;&nbsp;&nbsp;&nbsp; Customer deposit | 18062 | 840 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued and other liabilities | 35 | (398) |
| Net cash used in operating activities | (8762) | (19454) |
| Investing Activities: |  |  |
| Purchases of marketable securities | (1400) | (16206) |
| Proceeds from maturities of marketable securities | 9557 | 9403 |
| Cash paid for acquisitions net of cash acquired |  | (908) |
| Cash paid for asset purchase holdback liability |  | (764) |
| Capital expenditures | (255) | (191) |
| Net cash provided by (used in) investing activities | 7902 | (8666) |
| Financing Activities: |  |  |
| Proceeds from issuance of Close Date Term Loan and warrants, net of issuance cost |  | 13698 |
| Proceeds from issuance of First Amendment Term Loan | 4000 |  |
| Proceeds from offering of common stock, net of issuance costs |  | 10449 |
| Proceeds from exercise of stock options | 49 |  |
| Payment of contingent consideration |  | (219) |
| Shares retained for payment of taxes in connection with settlement of restricted stock units | (18) | (12) |
| Shares retained for payment of taxes in connection with the exercise of stock options |  | (43) |
| Net cash provided by financing activities | 4031 | 23873 |
| Effect of foreign exchange rate on cash | 93 | 18 |
| Net increase (decrease) in cash, cash equivalents, and restricted cash | 3264 | (4229) |
| Cash, cash equivalents and restricted cash, beginning of period | 5290 | 9519 |
| Cash, cash equivalents and restricted cash, end of period | $8554 | $5290 |

---

------

**Genasys Inc.**

**Consolidated Statements of Cash Flows** 

(in thousands)

---

| | | |
|:---|:---|:---|
|  | **September 30,** | **September 30,** |
|  | **2025** | **2024** |
| Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheets: |  |  |
| Cash and cash equivalents | $7969 | $4945 |
| Restricted cash, current portion |  | 95 |
| Long-term restricted cash | 585 | 250 |
| Total cash, cash equivalents and restricted cash shown in the consolidated<br> statement of cash flows | $8554 | $5290 |

---

---

| | | |
|:---|:---|:---|
|  | **Years ended** | **Years ended** |
|  | **September 30,** | **September 30,** |
|  | **2025** | **2024** |
| Noncash investing and financing activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Change in unrealized loss on marketable securities | $(8) | $18 |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchases of property and equipment included in accounts payable and<br> accrued liabilities | $— | $21 |
| &nbsp;&nbsp;&nbsp;&nbsp;Initial measurement of operating lease right of use assets | $67 | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;Initial measurement of operating lease liabilities | $67 | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;Obligation to issue common stock in connection with the Evertel acquisition | $— | $(685) |
| &nbsp;&nbsp;&nbsp;&nbsp;Shares issued in connection with the Evertel acquisition | $— | $(1924) |
| &nbsp;&nbsp;&nbsp;&nbsp;Settlement of contingent consideration in shares of common stock | $— | $(656) |
| &nbsp;&nbsp;&nbsp;&nbsp;Holdback liability payable in connection with the Evertel acquisition | $— | $(250) |
| Supplemental disclosure of cash flow information |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash paid for interest | $1575 | $603 |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash paid for taxes | $235 | $52 |

---

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

------

**Genasys Inc.**

**Notes to the Consolidated Financial Statements** 

(in thousands, except per share and share amounts)

**1. OPERATIONS**

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

**2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES**

**PRINCIPLES OF CONSOLIDATION**

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

**USE OF ESTIMATES**

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

**CONCENTRATION OF CREDIT RISK**

The Company sells its products to a large number of geographically diverse customers. The Company routinely assesses the financial strength of its customers. It is customary for the Company to require a deposit as collateral. As of September 30, 2025, accounts receivable from three customers accounted for 30%, 13% and 12% of total accounts receivable with no other single customer accounting for more than 10% of the accounts receivable balance. As of September 30, 2024, accounts receivable from three customers accounted for 15%, 14% and 11% of total accounts receivable with no other single customer accounting for more than 10% of the accounts receivable balance.

The Company maintains cash and cash equivalent bank deposit accounts which, at times, may exceed federally insured limits guaranteed by the Federal Deposit Insurance Corporation ("FDIC"). As of September 30, 2025, there are $222 of cash and cash equivalents retained in foreign banks. The Company has not experienced any losses in such accounts. The Company limits its exposure to credit loss by depositing its cash with high credit quality financial institutions. The Company also invests cash in instruments that meet high credit quality standards, as specified in the Company's policy guidelines such as money market funds, corporate bonds, municipal bonds and Certificates of Deposit. These guidelines also limit the amount of credit exposure to any one issue, issuer or type of instrument. It is generally the Company's policy to invest in instruments that have a final maturity of no longer than three years, with a portfolio weighted average maturity of no longer than 18 months.

**CASH, CASH EQUIVALENTS AND RESTRICTED CASH** 

The Company considers all highly liquid investments with an original maturity of three months or less, when purchased, to be cash equivalents. As of September 30, 2025 and 2024, the amount of cash and cash equivalents was $7,969 and $4,945, respectively.

The Company considers any amounts pledged as collateral or otherwise restricted for use in current operations to be restricted cash. In addition, the Company excludes from cash and cash equivalents cash required to fund specific future contractual obligations related to business combinations. Restricted cash is classified as a current asset unless amounts are not expected to be released and available for use in operations within one year. As of September 30, 2025 and 2024, the amount of restricted cash was $585 and $345, respectively, which is included in "Restricted cash" and "Long-term restricted cash" in the consolidated balance sheet, related to the Company's a maintenance contract and corporate credit card program.

------

**MARKETABLE SECURITIES**

The Company's investments in debt instruments are classified as available-for-sale. Management determines the appropriate classification of such securities at the time of purchase and re-evaluates such classification and impairment on a quarterly basis. If the fair value of a debt security is less than its amortized cost, the Company evaluates whether the impairment is considered other-than-temporary. This assessment considers management's intent to sell the security, whether it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, and whether the present value of expected future cash flows is less than the amortized cost basis. If management intends to sell the security or it is more likely than not that the Company will be required to sell the security before recovery, the full impairment is recognized in earnings. If a credit loss exists but the Company does not intend to sell the security and it is not more likely than not that the security will be sold before recovery, the impairment is bifurcated into a credit loss component, recognized in earnings, and a noncredit loss component, recognized in other comprehensive income.

**ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS FOR EXPECTED CREDIT LOSSES**

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

The Company's allowance for doubtful accounts for expected credit losses was $65, as of both September 30, 2025 and 2024.

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

**CONTRACT MANUFACTURERS** 

The Company employs contract manufacturers for production of certain components and sub-assemblies. The Company may provide parts and components to such parties from time to time but recognizes no revenue or markup on such transactions. During fiscal years 2025 and 2024, the Company performed assembly of products in-house using components and sub-assemblies from a variety of contract manufacturers and suppliers.

**INVENTORIES** 

Inventories are valued at the lower of cost or net realizable value. Cost is determined using the First-In, First-Out (FIFO) method. Inventory is comprised of raw materials, assemblies and finished products intended for sale*.* The Company periodically makes judgments and estimates regarding the future utility and carrying value of inventory. The carrying value of inventory is periodically reviewed and impairments, if any, are recognized when the expected net realizable value is less than carrying value. The Company has inventory reserves for estimated obsolescence or unmarketable inventory, which is equal to the difference between the cost of inventory and the estimated market value, based upon assumptions about future demand and market conditions. During the year ended September 30, 2025, the Company disposed of $2 of obsolete parts inventory that was included in the inventory reserve as of September 30, 2024. The Company then increased its inventory reserve by $453 during the year ended September 30, 2025, for parts and demo equipment that may not be utilized.

**EQUIPMENT AND DEPRECIATION**

Equipment is stated at cost. Depreciation on machinery and equipment and office furniture and equipment is computed over the estimated useful lives of two to seven years using the straight-line method. Leasehold improvements are amortized over the lesser of the estimated useful life of the asset or expected lease term. Upon retirement or disposition of equipment, the related cost and accumulated depreciation is removed, and a gain or loss is recorded.

**BUSINESS COMBINATIONS**

The acquisition method of accounting for business combinations requires the Company to use significant estimates and assumptions, including fair value estimates, as of the business combination date and to refine those estimates as necessary during the measurement period (defined as the period, not to exceed one year, in which the Company may adjust the provisional amounts recognized for a business combination).

------

Under the acquisition method of accounting the Company recognizes separately from goodwill the identifiable assets acquired, the liabilities assumed generally at the acquisition date fair value. The Company measures goodwill as of the acquisition date as the excess of consideration transferred, which the Company also measures at fair value, over the net of the acquisition date amounts of the identifiable assets acquired and liabilities assumed. Costs that the Company incurs to complete the business combination such as investment banking, legal and other professional fees are not considered part of consideration and the Company charges them to general and administrative expense as they are incurred.

Under the acquisition method of accounting for business combinations, if the Company identifies changes to acquired deferred tax asset valuation allowances or liabilities related to uncertain tax positions during the measurement period and they relate to new information obtained about facts and circumstances that existed as of the acquisition date, those changes are considered a measurement period adjustment and the Company records the offset to goodwill. The Company records all other changes to deferred tax asset valuation allowances and liabilities related to uncertain tax positions in current period income tax expense.

**GOODWILL AND INTANGIBLE ASSETS** 

Identifiable intangible assets, which consist of technology, customer relationships, patents, trade names and trademarks, are carried at cost less accumulated amortization. Intangible assets are amortized over their estimated useful lives, based on a number of assumptions including estimated periodic economic benefit and utilization. The estimated useful lives of identifiable intangible assets have been estimated to be between three and fifteen years. The Company periodically evaluates the carrying value of intangible assets, considering factors such as technological advancements, market trends, and the introduction of competing innovations. The carrying value of intangibles is periodically reviewed and impairments, if any, are recognized when the carrying value exceeds fair value.

Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the acquired net tangible and intangible assets acquired. The Company evaluates goodwill for impairment on an annual basis in our fiscal fourth quarter or more frequently if indicators of impairment exist that would more likely than not reduce the fair value of a single reporting unit below the carrying amount. The Company assesses qualitative factors in order to determine whether it is more likely than not that the fair value of a reporting unit is less than the carrying amount. The qualitative factors evaluated by the Company include: macro-economic conditions of the business environment, overall financial performance, and other entity specific factors as deemed appropriate. If, through this qualitative assessment, the conclusion is made that it is more likely than not that a reporting unit's fair value is less than its carrying amount, a two-step impairment test is performed. For reporting units where the Company performs the quantitative goodwill impairment test, an impairment loss is recorded to the extent that the reporting unit's carrying amount exceeds the reporting unit's fair value. The Company did not record a goodwill impairment charge for the year ended September 30, 2025 and 2024. Refer to Note 9, Goodwill and Intangible Assets for more information.

**LEASES** 

In accordance with the guidance in ASC 842, the Company recognizes lease liabilities and corresponding right-of-use-assets for all leases with terms of greater than 12 months. Refer to Note 13, Leases for more information.

**SHIPPING AND HANDLING COSTS** 

Shipping and handling costs are included in cost of revenues. Shipping and handling costs invoiced to customers are included in revenue. Actual shipping and handling costs were $139 and $128 for the fiscal years ended September 30, 2025 and 2024, respectively. Actual revenues from shipping and handling were $181 and $187 for the fiscal years ended September 30, 2025 and 2024, respectively.

**ADVERTISING** 

Advertising costs are charged to expense as incurred and were $90 and $454 for the years ended September 30, 2025 and 2024, respectively.

**RESEARCH AND DEVELOPMENT COSTS**

Technological feasibility for products is reached shortly before the products are released to manufacturing. Costs incurred after technological feasibility is established are not material, and accordingly, the Company expenses all research and development costs as incurred.

**WARRANTY RESERVES**

The Company warrants its products to be free from defects in materials and workmanship for a period of one year from the date of purchase. The warranty is generally limited. The Company currently provides direct warranty service. Some agreements with OEM

------

customers, from time to time, may require that certain quantities of product be made available for use as warranty replacements. International market warranties are generally similar to the U.S. market. The Company also sells extended warranty contracts and maintenance agreements.

The Company establishes a warranty reserve based on anticipated warranty claims at the time product revenues are recognized. Factors affecting warranty reserve levels include the number of units sold, anticipated cost of warranty repairs and anticipated rates of warranty claims. The Company evaluates the adequacy of the provision for warranty costs each reporting period. The warranty reserve was $62 and $76 as of September 30, 2025 and 2024, respectively.

**INCOME TAXES**

The Company determines its income tax provision using the asset and liability method. Temporary differences are differences between the tax basis of assets and liabilities and their reported amounts in the financial statements that will result in taxable or deductible amounts in future years. A valuation allowance is recorded by the Company to the extent it is more likely than not that some portion or all of the deferred tax asset will not be realized. Significant management judgment is required in assessing the ability to realize the Company's deferred tax assets. The ultimate realization of deferred tax assets is dependent upon generation of future taxable income and the tax rates in effect at that time. Additional information regarding income taxes appears in Note 14, Income Taxes.

**IMPAIRMENT OF LONG-LIVED ASSETS**

Long-lived assets and finite-lived intangibles held for use are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the carrying value of an intangible asset exceeds the fair value, or if changes in facts and circumstances indicate impairment, an impairment loss is measured and recognized using the asset's fair value. There was no impairment of long-lived assets for the years ended September 30, 2025 and September 30, 2024. Refer to Note 6, Fair Value Measurements and Note 9, Goodwill and Intangible Assets for additional information.

**SEGMENT INFORMATION**

The Company is a global provider of critical communications hardware and software solutions designed to alert, inform, and protect people. The Company operates in two business segments. Hardware and Software and its principal markets are North and South America, Europe, the Middle East and Asia. As reviewed by the Company's chief operating decision maker ("CODM"), the Company evaluates the performance of each segment based on sales and operating income. Cash and cash equivalents, marketable securities, accounts receivable, inventory, property and equipment, deferred tax assets, goodwill and intangible assets are primary assets identified by segment. The accounting policies for segment reporting are the same for the Company as a whole and transactions between the two operating segments are eliminated in consolidation. Refer to Note 19, Segment Information, for additional information.

**NET LOSS PER SHARE**

Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. Diluted net loss per share reflects the potential dilution of securities that could occur if outstanding securities convertible into common stock were exercised or converted. Diluted net loss per share is the same as the basic net loss per common share, since the effects of potentially dilutive securities are anti-dilutive due to the net loss position of all periods presented. Refer to Note 18, Net Loss Per Share, for additional information.

**FOREIGN CURRENCY TRANSLATION** 

The Company's reporting currency is U.S. dollars. The functional currency of the Company is the U.S. dollar. The functional currency of Genasys Spain is the Euro and the functional currency of Genasys Canada is the Canadian dollar. The Company translates the assets and liabilities of Genasys Spain and Genasys Canada to the U.S. dollar at the exchange rates in effect on the balance sheet date. The Company translates the revenue, costs and expenses of Genasys Spain and Genasys Canada to the U.S. dollar at the average rates of exchange in effect during the period. The Company includes translation gains and losses in the stockholders' equity section of the Company's consolidated balance sheets in accumulated other comprehensive income or loss. Transactions undertaken in other currencies are translated using the exchange rate in effect as of the transaction date and any transaction exchange gains and losses resulting from these transactions, are included in the consolidated statements of operations. The translation gain for the period ending September 30, 2025 was $210 resulting from transactions between Genasys U.S. and Genasys Spain and Genasys Canada. For the year ended September 30, 2024, there was a translation gain of $152.

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**SHARE-BASED COMPENSATION** 

The Company recognized share-based compensation expense related to qualified and non-qualified stock options and restricted stock units (RSUs) issued to employees, directors and consultants. For stock options, compensation expense is measured at the grant date fair value and recognized over the requisite service period, typically the vesting period. The fair value is estimated using the Black-Scholes option-pricing model. For RSUs, compensation expense is measured based on the fair market value of the Company's common stock on the grant date and recognized over the vesting period. For RSUs with performance conditions, expense recognition is based on the probability of achieving the specified performance targets. Forfeitures are estimated at the time of the grant and revised in subsequent periods if actual forfeitures differ from those estimates or if the Company updates its estimated forfeiture rate. Refer to Note 16, Share-based Compensation, for additional information.

**TERM LOANS**

The Company determined that it is eligible for the fair value option ("FVO") election in connection with the Term Loans. The Term Loans meet the definition of a "recognized financial liability" which is an acceptable financial instrument eligible for the FVO under ASC 825-10-15-4 and do not meet the definition of any of the financial instruments found within ASC 825-10-15-5 that are not eligible for the FVO. The FVO election was made to enhance the relevance and transparency of information presented related to the features embedded in the Term Loans. At the date of issuance, the fair value of the Term Loans was estimated using a discounted cash flow method. Changes in the fair value of the Term Loans, other than changes associated with the Company's own credit risk, are recorded as gains or losses in other income/expense in the Company's condensed consolidated statements of operations and comprehensive loss in each reporting period. Changes in fair value attributable to the Company's own credit risk are recorded in other comprehensive income or loss in the Company's condensed consolidated statements of operations and comprehensive loss in each reporting period. There was $820 gain recorded in the comprehensive loss for the year ended September 30, 2025, and there was no such changes for the year ended September 30, 2024. Under the FVO, debt issuance costs are recorded in other expenses in the Company's condensed consolidated statements of operations and comprehensive loss. Refer to Note 12, Term Loans and Warrant Liabilities, for additional information.

**WARRANTS**

The warrants issued in conjunction with the Term Loan are classified as liabilities under ASC 815-40 due to not being indexed to the Company's stock. The warrants are measured at fair value using Monte Carlo simulation to capture the down-round provision in the warrant agreement. Changes in fair value of the warrants, are recorded as gains or losses in other income/expense in the Company's condensed consolidated statements of operations and comprehensive loss in each reporting period. Refer to Note 12, Term Loans and Warrant Liabilities, for additional information.

**3. RECENT ACCOUNTING PRONOUNCEMENTS** 

*Recently adopted pronouncements* 

In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU No. 2023-07, "*Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures*" ("ASU 2023-07"). ASU 2023-07 expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, which means that it will be effective for the Company's annual periods beginning October 1, 2024, and interim periods beginning October 1, 2025. The adoption of this standard did not have a material effect on the Company's condensed consolidated financial statements. Refer to Note 19, Segment Information, for additional information.

*Accounting pronouncements not yet adopted*

In December 2023, the FASB issued ASU No. 2023-09, "*Income Taxes (Topic 740): Improvements to Income Tax Disclosures*" ("ASU 2023-09"). ASU 2023-09 requires disaggregated information about a reporting entity's effective tax rate reconciliation as well as disaggregated information on income tax paid. The standard is effective for fiscal years beginning after December 15, 2024, which means it will be effective for the Company's fiscal years beginning October 1, 2025. Early adoption is permitted. The Company is currently evaluating the impact the updated standard will have on its disclosure within the consolidated financial statements.

In November 2024, the FASB issued ASU No. 2024-03. "*Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses*" ("ASU 2024-03"). ASU 2024-03 requires public business entities to disclose, in tabular form, the disaggregation of relevant income statement expense captions into specified natural expense categories. In addition, in January 2025, the FASB issued ASU No. 2025-01 "*Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Interim Disclosure Effective Date Clarification*" ("ASU 2025-01"). ASU 2025-01 clarifies that the new disaggregation disclosure requirements are effective for annual reporting periods beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027,which

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means it will be effective for the Company's annual periods beginning October 1, 2027, and interim periods beginning October 1, 2028. The Company is currently evaluating the impact these updated standards will have on its disclosures within the consolidated financial statements.

In February 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The ASU provides clarifications and targeted improvements related to the application of the CECL model to trade receivables and contract assets. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, including interim periods within those years. For the Company, this standard will be effective beginning October 1, 2026. The Company is currently evaluating the impact of this ASU, but does not expect it to have a material effect on its consolidated financial statements.

**4. BUSINESS COMBINATION**

On October 4, 2023, the Company completed the acquisition of all of the membership interests in Evertel Technologies, LLC. ("Evertel"), pursuant to a Membership Interest Purchase Agreement ("Purchase Agreement") with Word Systems Operations, LLC ("Seller") and Evertel.

Evertel offers a secure and compliant mission-critical collaboration platform for the public safety market that connects public safety personnel, information, and tools in one space.

The Evertel acquisition was accounted for as a business combination using the acquisition method pursuant to ASC Topic 805*.* As the acquirer for accounting purposes, the Company has estimated the purchase consideration, assets acquired and liabilities assumed as of the acquisition date, with the excess of the purchase consideration over the fair value of net assets acquired recognized as goodwill. The estimated fair value of assets purchased, and liabilities assumed, in certain cases may be subject to revision based on the final determination of fair value.

The consideration consisted of the following:

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| | |
|:---|:---|
| Cash paid | $923 |
| Common stock issued | 2082 |
| Contingent Consideration | 890 |
| Acquisition holdback liability | 230 |
| Common stock to be issued | 527 |
| Working capital adjustment | (15) |
|  | $4637 |

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The Company funded the cash portion of the total consideration with available cash on hand. The Company also issued 986,486 shares of the Company's common stock to the former owners of Evertel on the acquisition date. The fair value of the Company's stock on the closing date was $1.95, resulting in the addition of $1,924 to additional-paid-in-capital. The contingent consideration liability was a current liability and recorded in the current portion of accrued liabilities. Under the terms of the Purchase Agreement, the Company recorded a $158 credit to additional-paid-in-capital and an addition to goodwill as this was consideration transferred to the former owners of Evertel during the second quarter of fiscal year 2024, and the Company issued common stock of 81,083 shares to the former owners of Evertel and three key employees during the third quarter of 2024 to settle the obligation.

The Company also recorded a holdback liability and an obligation to issue common stock as security for potential indemnification claims against the seller. The holdback liability was initially recorded at $230, which represented the fair value of the holdback liability as of the acquisition date, and was subsequently adjusted with the change in fair value recorded in the condensed consolidated statement of operations at each reporting period. The holdback liability was recorded at $250 as of September 30, 2024, and released on October 4, 2025.

The obligation to issue common stock was recorded as a credit to additional paid in capital for $527 on the acquisition date, and 270,271 shares of common stock were issued on October 4, 2024 to settle the obligation. During the second quarter of 2024, the Company and the former owners of Evertel, agreed on a working capital adjustment that resulted in a payment of $15 to the Company.

During the second quarter of fiscal year 2024, $874 of the contingent consideration was issued to the former owners of Evertel, including $219 paid in cash and 236,343 shares of common stock. During the third quarter of fiscal year 2024, it was determined the additional $60 contingent consideration was not eligible for payout, and as of September 30, 2024, no contingent consideration liability remained outstanding.

The Company incurred $151 in expenses related to this business combination, of which $112 were recorded in selling, general and administrative expenses in the consolidated statement of operations during fiscal year 2024.

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The final allocation of the purchase price was as follows:

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| | |
|:---|:---|
| Assets acquired |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | $142 |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses | 27 |
| &nbsp;&nbsp;&nbsp;&nbsp;Intangible assets | 2550 |
| &nbsp;&nbsp;&nbsp;&nbsp;Goodwill | 2923 |
| Total Assets | $5642 |
| Liabilities assumed |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued commissions | $10 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred revenue | 470 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred tax liability | 525 |
| Total liabilities | 1005 |
| Net assets acquired | $4637 |

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The estimated fair value of identifiable intangible assets acquired and their estimated useful lives were as follows:

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| | | |
|:---|:---|:---|
|  | **Fair Value** | **Est. Useful Life (in years)** |
| Developed technology | $2290 | 7 |
| Customer relationships | 260 | 5 |
|  | $2550 |  |

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Identifiable intangible assets consist of certain technology and customer relationships purchased from Evertel. Identifiable intangible assets are amortized over their estimated useful lives based upon several assumptions, including the estimated period of economic benefit and utilization. The weighted average amortization period for identifiable intangible assets acquired was 6.8 years. These intangible assets were classified as Level 3 in the ASC Topic 820 three-tier fair value hierarchy.

The goodwill for Evertel was attributable to combining the Company's existing emergency communications solutions with the software and software development capabilities of Evertel to enhance product offerings. Goodwill was also attributable to the skill level of the acquired workforce. Goodwill from the Evertel acquisition was not be deductible for tax purposes.

**5. REVENUE RECOGNITION**

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.Identify the contract(s) with customers

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Identify the performance obligations

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.Determine the transaction price

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.Allocate the transaction price to the performance obligations

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.Recognize revenue when or as the performance obligations have been satisfied

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

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

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*Product Revenue*

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

*Long-Term Contracts - Over-Time Revenue Recognition Using Input Cost Measures*

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

*Perpetual Licensed Software*

The sale and/or license of software products is deemed to have occurred when a customer either has taken possession of, or has the ability to take immediate possession of, the software and the software key. Perpetual software licenses can include one-year maintenance and support services. In addition, the Company sells maintenance services on a stand-alone basis and is therefore capable of determining their fair value. On this basis, the amount of the embedded maintenance is separated from the fee for the perpetual license and is recognized on a straight-line basis over the period to which the maintenance relates.

*Time-Based Licensed Software*

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

*Warranty, Maintenance and Services*

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

*Multiple Performance Obligations within an Arrangement*

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

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

The Company disaggregates revenue by reporting segment (Hardware and Software) and geographically to depict the nature of revenue in a manner consistent with its business operations and to be consistent with other communications and public filings. Refer to Note 19, Segment Information and Note 20, Major Customers, Suppliers and Related Information for additional details of revenues by reporting segment and disaggregation of revenue.

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*Variable Consideration*

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

*Contract Assets and Liabilities*

The Company enters into contracts to sell products and provide services and recognizes contract assets and liabilities that arise from these transactions. The Company recognizes revenue and corresponding accounts receivable according to ASC 606 and, at times, recognizes revenue in advance of the time when contracts give the Company the right to invoice a customer. Sales commissions are considered incremental and recoverable costs of obtaining a contract with a customer. Subscription related commission costs are deferred and then amortized on a straight-line basis over the period of benefit. The Company may also receive consideration, per terms of a contract, from customers prior to transferring goods to the customer. The Company records customer deposits as a contract liability. Additionally, the Company may receive payments, most typically for service and warranty contracts, at the onset of the contract and before the services have been performed. In such instances, a deferred revenue liability is recorded. The Company recognizes these contract liabilities as revenue after all revenue recognition criteria are met. The table below reflects the balances of contract liabilities as of September 30, 2025 and September 30, 2024, including the change between the periods. The current portion of contract liabilities and the noncurrent portion are included in "Accrued liabilities" and "Other liabilities, noncurrent", respectively, on the accompanying condensed consolidated balance sheets. Refer to Note 11, Accrued and Other Liabilities for additional details. Contract asset balance was $6,117 as of September 30, 2025, of which $6,025 related to the Puerto Rico Early Warning System Project. Contract asset balance was $150 as of September 30, 2024, none related to the Puerto Rico Early Warning System Project.

The Company's contract liabilities were as follows:

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| | | | |
|:---|:---|:---|:---|
|  | **Customer <br>deposits** | **Deferred <br>revenue** | **Total contract<br>liabilities** |
| Balance as of September 30, 2023 | $766 | $3254 | $4020 |
| New performance obligations | 6294 | 8163 | 14457 |
| Recognition of revenue as a result of satisfying performance obligations | (5454) | (7411) | (12865) |
| Effect of exchange rate on deferred revenue |  | 6 | 6 |
| Balance as of September 30, 2024 | 1606 | 4012 | 5618 |
| New performance obligations | 34925 | 12358 | 47283 |
| Recognition of revenue as a result of satisfying performance obligations | (16862) | (10618) | (27480) |
| Effect of exchange rate on deferred revenue |  | (9) | (9) |
| Balance as of September 30, 2025 | $19669 | $5743 | $25412 |
| &nbsp;&nbsp;&nbsp;&nbsp;Less: non-current portion |  | (1478) | (1478) |
| &nbsp;&nbsp;&nbsp;&nbsp;Current portion as of September 30, 2025 | $19669 | $4265 | $23934 |

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*Remaining Performance Obligations*

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

As of September 30, 2025, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $25,412. The Company expects to recognize revenue on approximately $23,934, or 94%, of the remaining performance obligations over the next 12 months, and the remainder is expected to be recognized thereafter. The Puerto Rico Early Warning System Project related contract liabilities are $16,956, 67% of the total performance obligations. The customer deposit balance as of September 30, 2025 included $15,122 for the Puerto Rico Early Warning System Project.

During the year ended September 30, 2025, the Company recognized $1,413 from customer deposit balance and $3,665 from deferred revenue balance, each as of September 30, 2024. During the year ended September 30, 2024, the Company recognized $661 from customer deposit balance and $2,686 from deferred revenue balance, each as of September 30, 2023.

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*Practical Expedients* 

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

**6. FAIR VALUE MEASUREMENTS** 

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

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

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The fair value of the Company's cash equivalents and marketable securities were determined based on Level 1 and Level 2 inputs. The valuation techniques used to measure the fair value of the "Level 2" instruments were based on quoted market prices or model-driven valuations using significant inputs derived from or corroborated by observable market data. The valuation techniques used to measure the Term Loan debt and warrant liabilities were determined based on Level 3 inputs not observable in the market and significant to the instruments' valuations. Refer to Note 12, Term Loan and Warrant Liabilities, for additional information regarding the valuation techniques and significant inputs used.

Other than the Term Loan and the warrant liabilities, the Company did not have any financial instruments in the Level 3 category as of September 30, 2025. The Company did not have any financial instruments in the Level 3 category as of September 30, 2024. The Company believes that the recorded values of its other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations. There have been no changes in Level 3 and no changes in valuation techniques for financial instruments measured at fair value on a recurring basis for the periods ended September 30, 2025 and September 30, 2024.

*<u>Instruments Measured at Fair Value on a Recurring Basis</u>*

*Cash equivalents and marketable securities*: The following tables present the Company's cash equivalents and marketable securities' costs, gross unrealized gains and losses, and fair value by major security type recorded as cash equivalents or short-term or long-term marketable securities as of September 30, 2025 and 2024. Unrealized gains and losses from the remeasurement of marketable securities are recorded in accumulated other comprehensive loss until recognized in earnings upon the sale or maturity of the security.

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** |
|  | **Cost Basis** | **Unrealized<br>Gain** | **Unrealized <br>Loss** | **Fair Value** | **Cash<br>Equivalents** | **Short-term <br>Securities** | **Long-term <br>Securities** |
| Level 1: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Money market funds | $105 | $— | $— | $105 | $105 | $— | $— |
| Level 2: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Municipal securities | 70 |  |  | 70 |  | 70 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subtotal | 70 |  |  | 70 |  | 70 |  |
| Total | $175 | $— | $— | $175 | $105 | $70 | $— |

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **September 30, 2024** | **September 30, 2024** | **September 30, 2024** | **September 30, 2024** | **September 30, 2024** | **September 30, 2024** | **September 30, 2024** |
|  | **Cost Basis** | **Unrealized<br>Gain** | **Unrealized <br>Loss** | **Fair Value** | **Cash <br>Equivalents** | **Short-term<br>Securities** | **Long-term <br>Securities** |
| Level 1: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Money market funds | $301 | $— | $— | $301 | $301 | $— | $— |
| Level 2: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Certificates of deposit | 401 |  |  | 401 | 152 |  | 249 |
| &nbsp;&nbsp;&nbsp;&nbsp;U.S. government agency bonds | 2591 | 3 |  | 2594 |  | 2594 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Municipal securities | 2127 | 2 |  | 2129 |  | 2129 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Corporate bonds | 3219 | 3 |  | 3222 |  | 3222 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subtotal | 8338 | 8 |  | 8346 | 152 | 7945 | 249 |
| Total | $8639 | $8 | $— | $8647 | $453 | $7945 | $249 |

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The Company manages debt investments as a single portfolio of highly marketable securities that is intended to be available to meet current cash requirements. Historically, the gross unrealized losses related to the Company's portfolio of available-for-sale debt securities were immaterial, and primarily due to normal market fluctuations and not due to increased credit risk or other valuation concerns. There were no gross unrealized losses on available-for-sale debt securities as of September 30, 2025, and historically, such gross unrealized losses have been temporary in nature. The Company believes that it is probable the principal and interest will be collected in accordance with the contractual terms. The debt investment portfolio is reviewed at least quarterly, or when there are changes in credit risks or other potential valuation concerns, to identify and evaluate whether an allowance for doubtful accounts for expected credit losses or impairment would be necessary. Factors considered in determining whether a loss is temporary include the magnitude of the decline in market value, the length of time the market value has been below cost (or adjusted cost), credit quality, and the Company's ability and intent to hold the securities for a period of time sufficient to allow for any anticipated recovery in market value.

As of September 30, 2025 and September 30, 2024, there were no unrealized loss positions related to available-for-sale debt securities.

*<u>Instruments measured at Fair Value on a Non-Recurring Basis</u>*

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

Goodwill and intangible assets are recognized at fair value during the period in which an acquisition is completed, from updated estimates during the measurement period, or when they are considered to be impaired. These non-recurring fair value measurements, primarily for goodwill and intangible assets acquired, were based on Level 3 inputs. The Company estimates the fair value of long-lived assets on a non-recurring basis based on a market valuation approach, engaging independent valuation experts to assist in the determination of fair value. There was no goodwill impairment charge for the year ended September 30, 2025 or September 30, 2024.

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

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

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The following table presents nonfinancial assets that were subject to fair value measurement during the twelve months ended September 30, 2024. Certain intangible assets, operating lease ROU assets and goodwill are subject to foreign currency translation adjustments.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | **Fair Value Measurements at September 30, 2024** | **Fair Value Measurements at September 30, 2024** | **Fair Value Measurements at September 30, 2024** | **Fair Value Measurements at September 30, 2024** |
| **Carrying Value** | **Carrying Value** | **(Level 1)** | **(Level 2)** | **(Level 3)** | **Gain (Loss)** |
| Intangible assets from Evertel acquisition | $2550 | $— | $— | $2550 | $— |
| Goodwill from Evertel acquisition | $2923 | $— | $— | $2923 | $— |

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*Contingent consideration liability*: In connection with the Evertel acquisition, the Company recorded a liability related to future performance criteria. A payment of up to $1,050 is payable based on future performance. The Company engaged independent valuation experts to assist in determining the fair value of the contingent consideration. The contingent liability was recorded at the fair value at the acquisition date and subject to subsequent remeasurement adjustment if performance criteria were not achieved. The change in fair value was recorded in other income/expense in the accompanying consolidated statement of operations. The change in the carrying amount of the contingent liability is as follows:

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| | |
|:---|:---|
| Balance as of acquisition date | $890 |
| Remeasurement adjustment | (16) |
| Payment | (874) |
| Balance as of September 30, 2024 | $— |

---

The Company paid $219 in cash and issued 236,343 shares of common stock to the former owners of Evertel during the third quarter of 2024. As of September 30, 2024, there was no remaining contingent consideration liability.

*Acquisition Holdback Liability*: In connection with the Evertel acquisition, the Company recorded a holdback liability related to potential future misrepresentations and indemnifications against third-party claims. The holdback liability will be released twelve months from the closing date, subject to amounts withheld for actual, pending or potential claims. The holdback liability was recorded at the present value, which was the fair value at the acquisition date. The Company engaged independent valuation experts to assist in determining the present value of the holdback liability. The expected future payment was discounted using a rate representative of the Company's payment risk and credit rating. Accretion is recorded in each subsequent reporting period based on the discount factor used to arrive at the original fair value. This change in fair value is recorded in other income/expense in the accompanying consolidated statement of operations. The changes in the carrying amount of the holdback liability is as follows:

---

| | |
|:---|:---|
| Balance as of acquisition date | $230 |
| Accretion | 20 |
| Balance as of September 30, 2024 | 250 |
| Payment | (250) |
| Balance as of September 30, 2025 | $— |

---

The Company paid $250 in cash during the fiscal year 2025. As of September 30, 2025, there was no remaining acquisition holdback liability.

------

**7. INVENTORIES** 

Inventories consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **September 30,** | **September 30,** |
|  | **2025** | **2024** |
| Raw materials | $2470 | $5442 |
| Finished goods | 4987 | 1377 |
| Work in process | 2636 | 1331 |
| Inventories, gross | 10093 | 8150 |
| Reserve for obsolescence | (1288) | (837) |
| Inventories, net | $8805 | $7313 |

---

**8. PROPERTY AND EQUIPMENT** 

Property and equipment consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **September 30,** | **September 30,** |
|  | **2025** | **2024** |
| Office furniture and equipment | $1633 | $1697 |
| Machinery and equipment | 1480 | 1480 |
| Leasehold improvements | 2294 | 2312 |
| Construction in progress | 183 | 30 |
| Property and equipment, gross | 5590 | 5519 |
| Accumulated depreciation | (4465) | (4228) |
| Property and equipment, net | $1125 | $1291 |

---

---

| | | |
|:---|:---|:---|
|  | **Years ended** | **Years ended** |
|  | **September 30,** | **September 30,** |
|  | **2025** | **2024** |
| Depreciation expense | $422 | $451 |

---

**9. GOODWILL AND INTANGIBLE ASSETS** 

Goodwill is attributable to the acquisitions of Genasys Spain, Zonehaven, the Amika Mobile asset purchase, and Evertel, and is due to combining the integrated emergency critical communications, mass messaging solutions and software development capabilities with existing hardware products for enhanced offerings and the skill level of the acquired workforces. The Company periodically reviews goodwill for impairment in accordance with relevant accounting standards. As of September 30, 2025 and September 30, 2024, goodwill was $13,450 and $13,329, respectively. There were no impairments to goodwill during the years ended September 30, 2025 and September 30, 2024.

The changes in the carrying amount of goodwill by segment for the year ended September 30, 2025, were as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **Hardware** | **Software** | **Total** |
| Balance as of September 30, 2023 | $— | $10282 | $10282 |
| Acquisition |  | 2923 | 2923 |
| Currency translation |  | 124 | 124 |
| Balance as of September 30, 2024 | $— | $13329 | $13329 |
| Currency translation |  | 121 | 121 |
| Balance as of September 30, 2025 | $— | $13450 | $13450 |

---

------

The changes in the carrying amount of intangible assets by segment for the year ended September 30, 2025, were as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **Hardware** | **Software** | **Total** |
| Balance as of September 30, 2023 | $17 | $8410 | $8427 |
| Acquisitions |  | 2550 | 2550 |
| Amortization | (3) | (2475) | (2478) |
| Currency translation |  | 7 | 7 |
| Balance as of September 30, 2024 | $14 | $8492 | $8506 |
| Amortization | (2) | (2355) | (2357) |
| Currency translation |  | (2) | (2) |
| Balance as of September 30, 2025 | $12 | $6135 | $6147 |

---

Intangible assets and goodwill related to Genasys Spain are translated from Euro to U.S. dollars at the balance sheet date. The net impact of foreign currency exchange differences arising during the period related to goodwill and intangible assets was an increase of $119.

The Company's intangible assets consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **September 30,** | **September 30,** |
|  | **2025** | **2024** |
| Technology | $14234 | $14252 |
| Customer relationships | 2063 | 2081 |
| Trade name portfolio | 610 | 617 |
| Patents | 72 | 72 |
|  | 16979 | 17022 |
| Accumulated amortization | (10832) | (8516) |
|  | $6147 | $8506 |

---

---

| | | |
|:---|:---|:---|
|  | **Years ended** | **Years ended** |
|  | **September 30,** | **September 30,** |
|  | **2025** | **2024** |
| Amortization expense | $2357 | $2478 |

---

Estimated amortization expense for the fiscal year ending September 30 was as the follows:

---

| | |
|:---|:---|
| Fiscal year ending September 30, |  |
| 2026 | $2221 |
| 2027 | 2048 |
| 2028 | 1220 |
| 2029 | 329 |
| 2030 | 328 |
| Thereafter | 1 |
| Total estimated amortization expense | $6147 |

---

------

**10. PREPAID EXPENSES AND OTHER** 

---

| | | |
|:---|:---|:---|
|  | **September 30,** | **September 30,** |
|  | **2025** | **2024** |
| Deposits for inventory | $6617 | $4 |
| Puerto Rico sales tax receivable | 491 |  |
| Prepaid commissions | 410 | 540 |
| Spain value-added tax receivable and bank withholdings | 360 | 225 |
| Prepaid professional services | 345 | 595 |
| Dues and subscriptions | 207 | 516 |
| Prepaid insurance | 185 | 288 |
| Trade shows and travel | 60 | 116 |
| Canadian goods and services and harmonized sales tax receivable | 29 | 69 |
| Other | 38 | 56 |
|  | $8742 | $2409 |

---

*Deposits for inventory*

Deposits for inventory consisted of cash payments to vendors for inventory to be delivered in the future. The balance as of September 30, 2025 included $6,331 for the Puerto Rico Early Warning System Project.

*Puerto Rico sales tax receivable*

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

*Prepaid commissions*

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

*Spain value-added tax receivable and bank withholdings*

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

*Prepaid professional services*

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

*Dues and subscriptions*

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

*Prepaid insurance*

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

*Trade shows and travel*

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

------

*Canadian goods and services and harmonized sales tax receivable*

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

**11. ACCRUED AND OTHER LIABILITIES** 

Accrued liabilities consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **September 30,** | **September 30,** |
|  | **2025** | **2024** |
| Deferred revenue | 4265 | 3643 |
| Payroll and related | 2471 | 3249 |
| Accrued contract costs | 550 |  |
| Short-term provision | 83 | 155 |
| Warranty reserve | 62 | 76 |
| Acquisition or asset purchase holdback liability |  | 250 |
| Other | 20 | 51 |
| Total | $7451 | $7424 |

---

*Deferred revenue*

Deferred revenue as of September 30, 2025, included prepayments from customers for services, including extended warranties, scheduled to be performed in the next twelve months. Deferred extended warranty revenue consisted of warranties purchased in excess of the Company's standard warranty. Extended warranties typically range from one to two years.

*Payroll and related*

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

*Accrued contract costs*

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

*Warranty reserve*

Details of the estimated warranty reserve were as follows:

---

| | | |
|:---|:---|:---|
|  | **September 30,** | **September 30,** |
|  | **2025** | **2024** |
| Beginning balance | $76 | $132 |
| Warranty provision | 5 | (35) |
| Warranty settlements | (19) | (21) |
| Ending balance | $62 | $76 |

---

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

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*Asset purchase holdback liability*

In connection with the Evertel acquisition, the Company recorded a holdback liability related to potential future adjustments to assets and liabilities, misrepresentations and indemnifications against third-party claims. The holdback was paid to the seller of Evertel on October 4, 2024.

**12. TERM LOANS AND WARRANT LIABILITIES**

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

On May 9, 2025, the Company entered into a First Amendment to Term Loan and Security Agreement (the "First Amendment"), which amended the terms of the Loan Agreement. Pursuant to the First Amendment, the lenders (the "Lenders") agreed to: (i) extend an additional term loan to the Company in the aggregate principal amount of $4,000 (the "First Amendment Term Loan" and with the First Amendment Term Loan, the "Term Loans"), and (ii) provide a process to obtain, at the Lenders' sole discretion, an additional term loan of up to $4,000 (the "Additional Term Loan"). The terms of the existing $15,000 Close Date Term Loan remain unchanged. As of September 30, 2025, the Additional Term Loan had not been drawn.

The Loan Agreement contains customary representation and warranties of the Company, affirmative and negative covenants, including without limitation restricting the Company from certain distributions, investments, indebtedness, sales of assets, loans and payments, of the Company, events of default and remedies thereupon, indemnification obligations of the Company, termination provisions, and other obligations and rights of the parties. All obligations under the Loan Agreement are secured by substantially all of the Company's assets. As of September 30, 2025, the Company was in compliance with all financial and reporting covenants of the Loan Agreement.

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

***Close Date Term Loan***

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

The Company utilized the discounted cash flow method with reliance on the Monte Carlo simulation model to determine the fair value of the Close Date Term Loan at issuance and subsequently at each reporting date. The fair value of the Close Date Term Loan was determined based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The significant fair value assumption is the discount rate, which was 36.1% and 26.0% as of September 30, 2025 and September 30, 2024, respectively.

------

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

---

| | | |
|:---|:---|:---|
|  | **Year Ended** | **Year Ended** |
|  | **September 30, 2025** | **September 30, 2024** |
| Beginning balance | $12010 | $— |
| Transfer in |  | 11575 |
| Change in fair value related to non-credit risk recorded within net loss | 1910 | 435 |
| Change in fair value related to credit risk in other comprehensive income | (820) |  |
| Ending balance | $13100 | $12010 |

---

***First Amendment Term Loan***

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

The Company utilized the discounted cash flow method with reliance on the Monte Carlo simulation model to determine the fair value of the First Amendment Term Loan at issuance and subsequently at each reporting date. The fair value of the First Amendment Term Loan was determined based on significant inputs not observable in the market, which represent a Level 3 measurement within the fair value hierarchy. One of the significant fair value assumptions is the discount rate, which was 34.8% and 35.0% as of September 30, 2025 and May 9, 2025, respectively.

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

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

---

| | |
|:---|:---|
|  | **Year Ended** |
|  | **September 30, 2025** |
| Beginning balance | $— |
| Transfer in | 4480 |
| Change in fair value related to non-credit risk recorded within net loss | 430 |
| Ending balance | $4910 |

---

***Warrant Liabilities***

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

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

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

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

---

| | | |
|:---|:---|:---|
|  | **Year Ended** | **Year Ended** |
|  | **September 30, 2025** | **September 30, 2024** |
| Beginning balance | $6640 | $— |
| Transfer in |  | 3125 |
| Change in fair value within net loss | (3070) | 3515 |
| Ending balance | $3570 | $6640 |

---

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

---

| | | |
|:---|:---|:---|
|  | **September 30,** | **September 30,** |
|  | **2025** | **2024** |
| Discount Rate | 3.7% | 3.6% |
| Volatility | 62.6% | 58.0% |

---

**13. LEASES**

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

The Company is party to operating leases for office and production facilities and equipment under agreements that expire at various dates through 2028. The Company elected the package of practical expedients permitted under the new lease standard. In electing the practical expedient package, the Company is not required to reassess whether an existing or expired contract is or contains a lease, reassess the lease classification for expired or existing leases nor reassess the initial direct costs for leases that commenced before the adoption of ASC 842. The Company also elected the short-term lease exemption such that the new lease standard was applied to leases greater than one year in duration. Leases with an initial term of twelve months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term.

For leases beginning on or after October 1, 2019, lease components are accounted for separately from non-lease components for all asset classes. Certain of the Company's leases contain renewal provisions and escalating rental clauses and generally require the Company to pay utilities, insurance, taxes and other operating expenses. The renewal provisions of existing lease agreements were not included in the determination of the operating lease liabilities and the ROU assets. Variable payments such as excess usage fees on existing equipment leases were not included in the determination of the lease liabilities and the ROU assets as the achievement of the specified target that triggers the variable lease payment is not considered probable. In addition, the Company's facility lease in Spain has an escalating lease clause based on a consumer price index which is considered a variable lease payment and is not included in the determination of the lease liability and ROU asset. A 10% increase in the index would increase the total lease liability approximately $42. The Company's leases do not contain any residual value guarantees or material restrictive covenants.

------

During the year ended September 30, 2025, the Company added an additional operating ROU asset of $67 and operating lease liabilities of $67 for Puerto Rico project-based employee housing. The tables below show the operating ROU assets and liabilities as of September 30, 2024, and the balances as of September 30, 2025, including the changes during the periods.

---

| | |
|:---|:---|
|  | **Operating lease<br>ROU assets** |
| Operating lease ROU assets as of September 30, 2024 | $3110 |
| Additional operating lease ROU assets | 67 |
| Less amortization of operating lease ROU assets | (767) |
| Effect of exchange rate on operating lease ROU assets | 9 |
| Operating lease ROU assets as of September 30, 2025 | $2419 |

---

---

| | |
|:---|:---|
|  | **Operating lease<br>liabilities** |
| Operating lease liabilities as of September 30, 2024 | $4290 |
| Additional operating lease liabilities | 67 |
| Less lease principal payments on operating lease liabilities | (1024) |
| Effect of exchange rate on operating lease liabilities | 10 |
| Operating lease liabilities as of September 30, 2025 | 3343 |
| Less non-current portion | (2218) |
| Current portion as of September 30, 2025 | $1125 |

---

As of September 30, 2025, the Company's operating leases have a weighted-average remaining lease term of 2.8 years and a weighted-average discount rate of 4.2%. The maturities of the operating lease liabilities were as follows:

---

| | |
|:---|:---|
| Fiscal year ending September 30, |  |
| 2026 | $1243 |
| 2027 | 1260 |
| 2028 | 1047 |
| 2029 |  |
| 2030 |  |
| Thereafter |  |
| Total undiscounted operating lease payments | 3550 |
| Less imputed interest | (207) |
| Present value of operating lease liabilities | $3343 |

---

For the years ended September 30, 2025 and September 30, 2024, total lease expense under operating leases was approximately $923 and $982, respectively.

**14. INCOME TAXES** 

Pre-tax income/(loss) was attributed to the following jurisdictions:

---

| | | |
|:---|:---|:---|
|  | **Years ended September 30,** | **Years ended September 30,** |
|  | **2025** | **2024** |
| Domestic operations | $(18660) | $(31964) |
| Foreign operations | 667 | (171) |
|  | $(17993) | $(32135) |

---

------

Income taxes consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **Years ended September 30,** | **Years ended September 30,** |
|  | **2025** | **2024** |
| Current tax provision |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Federal | $— | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;State | (2) | 11 |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign | 121 | 109 |
| Total current tax provision | 119 | 120 |
| Deferred provision |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Federal |  | (390) |
| &nbsp;&nbsp;&nbsp;&nbsp;State |  | (135) |
| Total deferred provision |  | (525) |
| Provision (benefit) for income taxes | $119 | $(405) |

---

A reconciliation of income taxes at the federal statutory rate of 21% to the effective tax rate was as follows:

---

| | | |
|:---|:---|:---|
|  | **Years ended September 30,** | **Years ended September 30,** |
|  | **2025** | **2024** |
| Income taxes computed at the federal statutory rate | $(3780) | $(6744) |
| Change in valuation allowance | 2867 | 3466 |
| Nondeductible compensation, interest expense and other | (898) | 956 |
| State income taxes, net of federal tax benefit | (583) | (334) |
| Change in R&D credit carryover | (407) | (379) |
| NOL expirations and other prior year true-ups | 2725 | 3051 |
| Foreign rate differential & foreign taxes | 195 | 104 |
| Tax impacts of Evertel acquisition accounting |  | (525) |
|  | $119 | $(405) |

---

The types of temporary differences between the tax basis of assets and liabilities and their approximate tax effects that give rise to a significant portion of the net deferred tax asset as of September 30, 2025 and 2024 were as follows:

---

| | | |
|:---|:---|:---|
|  | **September 30,** | **September 30,** |
|  | **2025** | **2024** |
| Deferred tax assets |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net operating loss carryforwards | $13070 | $12357 |
| &nbsp;&nbsp;&nbsp;&nbsp;Research and development credit | 4242 | 4639 |
| &nbsp;&nbsp;&nbsp;&nbsp;Share-based compensation | 543 | 562 |
| &nbsp;&nbsp;&nbsp;&nbsp;Patents | 1859 | 1770 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accruals and other | 2621 | 2227 |
| &nbsp;&nbsp;&nbsp;&nbsp;Capitalized R&E expenses | 5257 | 3893 |
| &nbsp;&nbsp;&nbsp;&nbsp;Allowances | 327 | 199 |
| Gross deferred tax assets | 27919 | 25647 |
| Deferred tax liabilities |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Equipment | (144) | (216) |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating ROU assets | (517) | (619) |
| &nbsp;&nbsp;&nbsp;&nbsp;Acquired intangible assets | (1171) | (1592) |
| Gross deferred tax liabilities | (1832) | (2427) |
| Less valuation allowance | (26087) | (23220) |
| Net deferred tax assets and liabilities | $— | $— |

---

As of September 30, 2025, the Company had net deferred tax assets and liabilities of approximately $0 due to the establishment of a full valuation allowance against its net deferred tax assets. The deferred tax assets are primarily comprised of federal and state NOL carryforwards and federal and state research and development ("R&D") tax credit carryforwards offset by valuation allowance. As of September 30, 2025, the Company had federal, California, and other state NOL carryforwards of approximately $42,427 and $19,297, and $458, respectively. The federal NOLs if not utilized will expire from tax years September 30, 2026 through 2037, except for $26,737 which have an indefinite carryforward period. The California NOLs if not utilized will expire from tax years September 30, 2043 through 2045. Other state NOLs if not utilized will expire from tax years September 30, 2038 through 2045. The Company

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also has an estimated $3,003 and $434 of federal and California R&D tax credits, respectively, as of September 30, 2025, where a portion of federal R&D tax credits will begin to expire next year. The California R&D tax credits do not expire.

The Company reviews its ability to realize its deferred tax assets on a quarterly basis. In doing so, management considers historical and projected taxable income of the Company, along with any tax planning strategies and any other positive or negative evidence. Realization is dependent on generating sufficient taxable income prior to the expiration of the loss carryforwards and other deferred assets. As of September 30, 2025, the Company does not believe that it is more likely than not that its deferred tax assets will be realized; accordingly, a full valuation allowance has been established and no deferred tax asset is shown in the accompanying balance sheet.

As of September 30, 2025, the Company had no unrecognized tax benefits. The Company's practice is to recognize interest and/or penalties related to income tax matters in income tax expense.

Pursuant to Internal Revenue Code (IRC) Sections 382 and 383, the annual use of the Company's net operating loss and R&D tax credit carryforwards may be limited in the event a cumulative change in ownership of more than 50% occurs within a three-year period. The Company has not completed an IRC Section 382/383 analysis regarding the limitation of net operating loss and research and development credit carryforwards. Due to the existence of the valuation allowance, any permanent limitations on the use of the Company's net operating loss and research and development credit carryforwards will not impact the Company's effective tax rate.

The Company is subject to taxation in the U.S. and various foreign jurisdictions. The Company's U.S. federal tax returns since September 30, 2005 are subject to examination by the Internal Revenue Service due to the generation of U.S. federal NOL and credit carryforwards. The Company's U.S. state returns are generally subject to examination for four years after the filing date.

**15. COMMITMENTS AND CONTINGENCIES**

*Employment Agreements*

The Company entered into an employment agreement with our chief executive officer that provides for severance benefits including twelve months' salary and health benefits, a pro-rata share of his annual cash bonus for the fiscal year in which the termination occurs to which he would have become entitled had he remained employed through the end of the fiscal year and vesting of a share of stock options held by him that are subject to performance-based vesting. The agreement also has a change in control clause whereby the chief executive officer would be entitled to receive specific severance and equity vesting benefits if specified termination events occur.

There were no other employment agreements with executive officers or other employees providing future benefits or severance arrangements.

*Employee Benefit—401K Plan*

The Company has a defined contribution plan (401(k)) covering its employees. Matching contributions are made on behalf of all participants at the discretion of the board of directors. During the years ended September 30, 2025 and September 30, 2024, the Company made matching contributions of $451 and $455, respectively.

*Litigation*

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

*Guarantees and Indemnifications*

The Company enters into indemnification provisions under (i) its agreements with other companies in its ordinary course of business, typically with business partners, contractors, customers and landlords and (ii) its agreements with investors. Under these arrangements, the Company may indemnify other parties such as business partners, customers, underwriters, and investors for certain losses suffered, claims of intellectual property infringement, negligence and intentional acts in the performance of services, and violations of laws including certain violations of securities laws. The Company's obligation to provide such indemnification in such circumstances would arise if, for example, a third party sued a customer for intellectual property infringement and the Company agreed to indemnify the customer against such claims. The Company is unable to estimate with any reasonable accuracy the liability that may be incurred pursuant to such indemnification obligations. Some of the factors that would affect this assessment include, but are not limited to, the nature of the claim asserted, the relative merits of the claim, the financial ability of the parties, the nature and amount of damages claimed, insurance coverage that the Company may have to cover such claims, and the willingness of the parties to reach settlement, if any. Because of the uncertainty surrounding these circumstances, the Company's indemnification obligations

------

could range from immaterial to having a material adverse impact on its financial position and its ability to continue in the ordinary course of business. The Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification agreements in the past, and the Company had no liabilities recorded for these agreements as of September 30, 2025 and 2024.

Under its bylaws, the Company has agreed to indemnify its officers and directors for certain events or occurrences arising as a result of the officer or director serving in such capacity. All directors and officers have executed indemnification agreements. The term of the indemnification period is for the officer or director's lifetime. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. However, the Company has a director and officers' liability insurance policy that limits its exposure and enables it to recover a portion of any future amounts paid. As a result of its insurance policy coverage, the Company does not believe that a material loss exposure related to these agreements is either probable or can be reasonably estimated. Accordingly, the Company has no liability recorded for these agreements as of September 30, 2025 and 2024.

**16. SHARE-BASED COMPENSATION**

*Equity compensation plans*

The Amended and Restated 2015 Equity Incentive Plan ("2015 Equity Plan") expired on January 19, 2025, with awards relating to 4,918,238 shares of common stock remaining outstanding under such plan. The 2025 Equity Incentive Plan ("2025 Equity Plan" and, together with the 2015 Equity Plan, the "Equity Plans") was adopted by the Company's Board of Directors on January 27, 2025 and approved by the Company's stockholders on March 17, 2025. The 2025 Equity Plan authorizes the issuance of stock options, restricted stock, stock appreciation rights, restricted stock units ("RSUs") and performance awards up to an aggregate of 6,000,000 shares of common stock to employees, directors, advisors or consultants. As of September 30, 2025, there were options and restricted stock units outstanding covering 4,276,458 shares of common stock under the Equity Plans, and 5,686,184 shares of common stock available for grant, for a total of 9,962,642 shares of common stock authorized and unissued under the Equity Plans.

*Share-based compensation*

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

*Stock options*

A summary of the activity in options to purchase the common stock of the Company as of September 30, 2025, is presented below:

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| | | |
|:---|:---|:---|
|  | **Number of Shares** | **Weighted Average Exercise Price** |
| Outstanding September 30, 2024 | 3695740 | $2.84 |
| &nbsp;&nbsp;&nbsp;&nbsp;Granted | 1063250 | $2.76 |
| &nbsp;&nbsp;&nbsp;&nbsp;Forfeited/expired | (732393) | $3.47 |
| &nbsp;&nbsp;&nbsp;&nbsp;Exercised | (27481) | $1.77 |
| Outstanding September 30, 2025 | 3999116 | $2.71 |
| Exercisable September 30, 2025 | 1530276 | $2.98 |

---

The aggregate intrinsic value for options outstanding and options exercisable as of September 30, 2025 was $538 and $161, respectively. The aggregate intrinsic value represents the difference between the Company's closing stock price on the last day of trading during the year, which was $2.45 per share, and the exercise price multiplied by the number of applicable options. The total value of stock options exercised during the year ended September 30, 2025, was $91 and no proceeds were received from these exercises. The total value of stock options exercised during the year ended September 30, 2024, was $300 and no proceeds were received from these exercises. The Company recognized $42 and $124 as a tax benefit in the income tax provision for the years ended September 30, 2025 and 2024, respectively.

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The following table summarizes information about stock options outstanding as of September 30, 2025:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Range of <br>Exercise Prices** | **Number<br>Outstanding** | **Weighted Average<br>Remaining<br>Contractual Term** | **Weighted Average<br>Exercise<br>Price** | **Number<br>Exercisable** | **Weighted Average<br>Exercise<br>Price** |
| $1.70 - $1.70 | 707876 | 5.16 | $1.70 | 211765 | $1.70 |
| $2.20 - $2.45 | 40000 | 5.67 | $2.26 | 12084 | $2.25 |
| $2.59 - $2.59 | 701750 | 6.18 | $2.59 |  | $— |
| $2.64 - $2.68 | 85000 | 4.75 | $2.67 | 48542 | $2.67 |
| $2.69 - $2.69 | 1000000 | 4.02 | $2.69 | 200000 | $2.69 |
| $2.70 - $3.40 | 1127365 | 3.06 | $3.09 | 958511 | $3.15 |
| $3.46 - $6.87 | 337125 | 5.30 | $3.95 | 99374 | $4.90 |
|  | 3999116 | 4.47 | $2.71 | 1530276 | $2.98 |

---

The Company recorded $993 and $626 of stock option compensation expense for employees, directors and consultants for the years ended September 30, 2025 and 2024, respectively.

As of September 30, 2025, there was approximately $1,497 of total unrecognized compensation costs related to outstanding stock options. This amount is expected to be recognized over a weighted average period of 1.4 years. To the extent the forfeiture rate is different from what the Company anticipated, share-based compensation related to these awards will be different from the Company's expectations.

Stock options that do not contain market-based vesting conditions are valued using the Black-Scholes option pricing model. The weighted average estimated fair value of employee stock options granted, that vest without a market condition, during the years ended September 30, 2025 and 2024, was calculated with the following weighted average assumptions (annualized percentages):

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| | | |
|:---|:---|:---|
|  | **Years ended** | **Years ended** |
|  | **September 30,** | **September 30,** |
|  | **2025** | **2024** |
| Volatility | 60.8% | 58.0% |
| Risk-free interest rate | 4.1% | 4.2% |
| Dividend yield | 0.0% | 0.0% |
| Expected term in years | 3.7 | 4.2 |

---

Expected volatility is based on the historical volatility of the Company's common stock over the period commensurate with the expected term of the options. The risk-free interest rate is based on rates published by the Federal Reserve Board. The contractual term of the options was seven years. The expected term of the Company's stock options has been determined utilizing the "simplified" method for awards that qualify as "plain-vanilla". The expected forfeiture rate is based on past experience and employee retention data. Forfeitures are estimated at the time of the grant and revised in subsequent periods if actual forfeitures differ from those estimates. Such revision adjustments to expense will be recorded as a cumulative adjustment in the period in which the estimate is changed. The Company did not pay a dividend in Fiscal 2025 or Fiscal 2024.

For stock options that contain market-based vesting conditions, the fair value of these options was determined using a Monte Carlo valuation approach. A Monte Carlo simulation is used to model the probability of different outcomes in a process that cannot easily be predicted due to the intervention of random variables. It is a technique used to understand the impact of risk and uncertainty and establishes a fair value based on the most likely outcome.

*Performance-based stock options*

On October 8, 2022, the Company awarded additional performance-based stock options ("PVOs") to purchase 800,000 shares of the Company's common stock to a key executive, with a contractual term of seven years. Vesting is based upon the achievement of certain performance criteria for each of Fiscal 2025 and 2026, and amended for combined Fiscal 2025 and 2026, including a minimum free cash flow margin and net revenue targets. Additionally, vesting is subject to the executive being employed by the Company at the time the Company achieves such financial targets. The Company did not record compensation expense related to these options for the year ended September 30, 2025 and 2024.

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On March 20, 2023, the Company granted PVOs to purchase up to 450,000 shares of the Company's stock to a key member of management with a contractual term of seven years. Vesting is based upon the achievement of certain performance criteria for each of the first three twelve-month periods following the employee's start date, including targets related to growth in the institutional ownership of the Company's common stock and growth in the trading volume of the Company's common stock during such periods. Additionally, vesting is subject to the employee being employed by the Company on each of the first three anniversaries of the employee's start date. 225,000 of these options contain a market-based vesting condition and accounting principles do not require the market condition to be achieved in order for compensation expense to be recognized. The Company recorded $10 of compensation expense related to these options during the year ended September 30, 2025. The Company recorded $130 of compensation expense related to these options during the year ended September 30, 2024. This key member of management is no longer employed by the Company as of September 30, 2025, thus unvested PVOs are forfeited.

The Company did not grant any PVOs during the year ended September 30, 2025. As of September 30, 2025, there was no unrecognized compensation related to PVOs.

*Restricted stock units*

A summary of restricted stock units of the Company as of September 30, 2025, is presented below:

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| | | |
|:---|:---|:---|
|  | **Number of <br>Shares** | **Weighted <br>Average Grant <br>Date Fair Value** |
| Outstanding September 30, 2024 | 288059 | $2.78 |
| &nbsp;&nbsp;&nbsp;&nbsp;Granted | 253816 | $2.35 |
| &nbsp;&nbsp;&nbsp;&nbsp;Vested | (237867) | $2.56 |
| &nbsp;&nbsp;&nbsp;&nbsp;Forfeited/cancelled | (26666) | $2.28 |
| Outstanding September 30, 2025 | 277342 | $2.62 |

---

Compensation expense for RSUs was $660 for the year ended September 30, 2025. Compensation expense for RSUs was $896 for the year ended September 30, 2024. As of September 30, 2025, there was approximately $318 of total unrecognized compensation costs related to outstanding RSUs. This amount is expected to be recognized over a weighted average period of 0.5 years.

The Company recorded share-based compensation expense for restricted stock units and stock options are classified in the consolidated statements of operations as follows:

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| | | |
|:---|:---|:---|
|  | **Years ended** | **Years ended** |
|  | **September 30,** | **September 30,** |
|  | **2025** | **2024** |
| Cost of revenues | $75 | $67 |
| Selling, general and administrative | 1418 | 1378 |
| Research and development | 170 | 207 |
|  | $1663 | $1652 |

---

**17. STOCKHOLDERS' EQUITY** 

*Common Stock Activity*

On October 4, 2023, the Company completed an underwritten public offering of 5,750,000 shares of its common stock at a public offering price of $2.00 per share of common stock. The Company received gross proceeds of approximately $11,500 from the offering, before underwriting discounts and commissions and offering expenses of $1,051. The Company intends to use the net proceeds from this offering for general corporate purposes, including funding organic growth, working capital, capital expenditures, and continued research and development with respect to products and technologies, as well as costs related to post-closing integration with the Evertel business and research and development activities related to the integrated business.

In connection with the Evertel acquisition, the Company issued 986,486 shares of common stock to the former owners of Evertel. The fair value of the Company's stock on the closing date was $1.95 which resulted in the addition of $1,924 to additional-paid-in-capital. The Company also issued 236,343 shares of common stock to the former owners of Evertel, in connection with the settlement of a portion of the contingent consideration liability. This resulted in the addition of $656 to additional-paid-in-capital.

Under the terms of the Purchase Agreement, the Company recorded an obligation to issue 81,083 shares of common stock to the former owners of Evertel and three key employees during the three months ended June 30, 2024, resulting in an addition of $158 to additional-paid-in-capital. Also, in connection with the Evertel acquisition, the Company agreed to issue 270,271 shares of the Company's common stock to the seller of Evertel twelve months from the closing date. The fair value of the Company's common

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stock on the closing date was $1.95, resulting in the addition of $527 to additional paid-in-capital. These shares were issued on October 4, 2024.

*Preferred Stock*

The Company is authorized under its certificate of incorporation and bylaws to issue 5,000,000 shares of preferred stock, $0.00001 par value, without any further action by the stockholders. The board of directors has the authority to divide any and all shares of preferred stock into series and to fix and determine the relative rights and preferences of the preferred stock, such as the designation of series and the number of shares constituting such series, dividend rights, redemption and sinking fund provisions, liquidation and dissolution preferences, conversion or exchange rights and voting rights, if any. Issuance of preferred stock by the board of directors could result in such shares having dividend and or liquidation preferences senior to the rights of the holders of common stock and could dilute the voting rights of the holders of common stock.

No shares of preferred stock were outstanding as of September 30, 2025 or 2024.

*Dividends*

There were no dividends declared in the year ended September 30, 2025 and 2024.

**18. NET LOSS PER SHARE** 

Basic earnings per share are computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period increased to include the number of dilutive potential common shares outstanding during the period. The dilutive effect of outstanding stock options is reflected in diluted earnings per share by application of the treasury stock method, which assumes that the proceeds from the exercise of the outstanding options are used to repurchase common stock at market value. Under the treasury stock method, an increase in the fair market value of the Company's common stock can result in a greater dilutive effect from potentially dilutive securities. If the Company has losses for the period, the inclusion of potential common stock instruments outstanding would be anti-dilutive. In addition, under the treasury stock method, the inclusion of stock options with an exercise price greater than the per-share market value would be antidilutive. Potential common shares that would be antidilutive are excluded from the calculation of diluted income per share.

The following table sets forth the computation of basic and diluted earnings per share:

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| | | |
|:---|:---|:---|
|  | **Years ended** | **Years ended** |
|  | **September 30,** | **September 30,** |
|  | **2025** | **2024** |
| Net loss | $(18112) | $(31730) |
| Basic and diluted loss per share | $(0.40) | $(0.72) |
| Weighted average shares outstanding - basic | 45056436 | 44316865 |
| Weighted average shares outstanding - diluted | 45056436 | 44316865 |
| Potentially dilutive securities outstanding at period end excluded from diluted computation as the inclusion would have been antidilutive: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Options | 3999116 | 3695740 |
| &nbsp;&nbsp;&nbsp;&nbsp;RSU | 277342 | 288059 |
| &nbsp;&nbsp;&nbsp;&nbsp;Obligation to issue common stock |  | 270271 |
| &nbsp;&nbsp;&nbsp;&nbsp;Warrants | 3068182 | 3068182 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | 7344640 | 7322252 |

---

**19. SEGMENT INFORMATION**

The Company is engaged in the design, development and commercialization of critical communications hardware and software solutions designed to alert, inform, and protect. The Company operates in two business segments: Hardware and Software and its principal markets are North and South America, Europe, the Middle East and Asia.

Our CODM is our Chief Executive Officer, Richard Danforth. As reviewed by the CODM, the Company evaluates the performance of each segment based on sales, gross margin, operating income (loss), certain expenses including sales and marketing expense, research and development expense, depreciation and amortization expense, and stock-based compensation expense to

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allocate resources in the annual planning process. Cash and cash equivalents, marketable securities, accounts receivable, inventory, property and equipment, deferred tax assets, goodwill and intangible assets are primary assets identified by segment. The operating segments are not evaluated using asset information. The accounting policies for segment reporting are the same for the Company as a whole and transactions between the two operating segments are not material.

The following table presents the Company's segment disclosures for the year ended September 30, 2025:

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| | | |
|:---|:---|:---|
|  | **Years ended** | **Years ended** |
|  | **September 30, 2025** | **September 30, 2025** |
|  | **Hardware** | **Software** |
| Revenues | $31839 | $8918 |
| Cost of revenues | 20128 | 3673 |
| Gross profit | 11711 | 5245 |
| Gross margin | 37% | 59% |
| Operating expenses: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Selling, general and administrative | 13697 | 11963 |
| &nbsp;&nbsp;&nbsp;&nbsp;Research and development | 2941 | 5165 |
| Total operating expenses | 16638 | 17128 |
| Loss from operations | (4927) | (11883) |
| Other income (expenses): |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization expense | 357 | 2422 |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | 1344 | 319 |
| Loss before income taxes | (6226) | (11767) |
| Income tax (benefit) expense | 121 | (2) |
| Net loss | $(6347) | $(11765) |

---

The following table presents the Company's segment disclosures for the year ended September 30, 2024:

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| | | |
|:---|:---|:---|
|  | **Years ended** | **Years ended** |
|  | **September 30, 2024** | **September 30, 2024** |
|  | **Hardware** | **Software** |
| Revenues | $16668 | $7340 |
| Cost of revenues | 10481 | 3338 |
| Gross profit | 6187 | 4002 |
| Gross margin | 37% | 55% |
| Operating expenses: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Selling, general and administrative | 14665 | 12596 |
| &nbsp;&nbsp;&nbsp;&nbsp;Research and development | 3340 | 6304 |
| Total operating expenses | 18005 | 18900 |
| Loss from operations | (11818) | (14898) |
| Other income (expenses): |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization expense | 394 | 2535 |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | 1165 | 487 |
| Loss before income taxes | (17239) | (14896) |
| Income tax (benefit) expense | 58 | (463) |
| Net loss | $(17297) | $(14433) |

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The following table presents the Company's segment assets as of September 30, 2025 and September 30, 2024:

---

| | | |
|:---|:---|:---|
|  | **September 30,** | **September 30,** |
|  | **2025** | **2024** |
| Long-lived assets |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Hardware | $1046 | $1203 |
| &nbsp;&nbsp;&nbsp;&nbsp;Software | 6226 | 8594 |
|  | $7272 | $9797 |
| Total assets |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Hardware | $40908 | $30216 |
| &nbsp;&nbsp;&nbsp;&nbsp;Software | 22961 | 23720 |
|  | $63869 | $53936 |

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**20. MAJOR CUSTOMERS, SUPPLIERS AND RELATED INFORMATION** 

*Major Customers* 

For the fiscal year ended September 30, 2025, revenues from one customer accounted for 32% of total revenues with no other single customer accounting for more than 10% of total revenues. For the fiscal year ended September 30, 2024, revenues from one customer accounted for 18% of total revenues with no other single customer accounting for more than 10% of total revenues. As of September 30, 2025, accounts receivable from three customers accounted for 30%, 13% and 12% of total accounts receivable. As of September 30, 2024, accounts receivable from three customers accounted for 15%, 14% and 11% of total accounts receivable.

Revenue from customers in the United States was $33,922 for the year ended September 30, 2025. Revenue from customers in the United States was $16,888 for the year ended September 30, 2024.

The following table summarizes revenues by geographic region. Revenues are attributed to countries based on customer's delivery location.

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| | | |
|:---|:---|:---|
|  | **Years ended September 30,** | **Years ended September 30,** |
|  | **2025** | **2024** |
| Americas | $34417 | $17336 |
| Asia Pacific | 2381 | 1265 |
| Europe, Middle East and Africa | 3959 | 5407 |
| Total Revenues | $40757 | $24008 |

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The following table summarized long lived assets by geographic region.

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| | | |
|:---|:---|:---|
|  | **September 30,** | **September 30,** |
|  | **2025** | **2024** |
| United States | $7181 | $9644 |
| Europe, Middle East and Africa | 91 | 153 |
| Total long lived assets | $7272 | $9797 |

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*Suppliers* 

The Company has a large number of components and sub-assemblies produced by outside suppliers, some of which are sourced from a single supplier, which can magnify the risk of shortages and decrease the Company's ability to negotiate with suppliers on the basis of price. In particular, the Company depends on one supplier of compression drivers for its LRAD products. If supplier shortages occur, or quality problems arise, then production schedules could be significantly delayed or costs significantly increased, which could in turn have a material adverse effect on the Company's financial condition, results of operation and cash flows.

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**SIGNATURES**

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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| | |
|:---|:---|
| **GENASYS INC.** | **GENASYS INC.** |
| December 15, 2025 | December 15, 2025 |
| By: | /s/ Richard S. Danforth |
|  | **Richard S. Danforth** |
|  | **Chief Executive Officer** |

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**POWER OF ATTORNEY** 

Know all persons by these presents, that each person whose signature appears below constitutes and appoints Richard S. Danforth, as his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place, and stead, in any and all capacities, to sign any and all amendments to this report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming that said attorney-in-fact and agent or his substitute or substituted, may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of registrant in the capacities and on the dates indicated.

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| | | |
|:---|:---|:---|
| Date: December 15, 2025 | By | /s/ Richard S. Danforth |
|  |  | **Richard S. Danforth, Chief Executive Officer**<br>**(Principal Executive Officer)** |
| Date: December 15, 2025 | By | /s/ Cassandra L. Hernandez-Monteon |
|  |  | **Cassandra L. Hernandez-Monteon, Chief Financial Officer**<br>**(Principal Financial and Accounting Officer)** |
| Date: December 15, 2025 | By | /s/ Mark Culhane |
|  |  | **Mark Culhane**<br>**Director** |
| Date: December 15, 2025 | By | /s/ Bill Dodd |
|  |  | **Bill Dodd**<br>**Director** |
| Date: December 15, 2025 | By | /s/ Craig Fugate |
|  |  | **Craig Fugate**<br>**Director** |
| Date: December 15, 2025 | By | /s/ Richard H. Osgood III |
|  |  | **Richard H. Osgood III**<br>**Director** |
| Date: December 15, 2025 | By | /s/ R. Rimmy Malhotra |
|  |  | **R. Rimmy Malhotra**<br>**Director** |
| Date: December 15, 2025 | By | /s/ Susan Lee Schmeiser |
|  |  | **Susan Lee Schmeiser**<br>**Director** |

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## Exhibit 3.1

[Editor's Note dated December 8, 2025: All prior "Certificates of Designation" and preferred stock designations (including any series designations establishing the rights, preferences, privileges, and limitations of any class or series of preferred stock) have been intentionally omitted from this compiled Certificate of Incorporation because the authorized shares of the relevant preferred series have been redeemed and therefore such designations are of no continuing legal effect. References herein to "this Charter," "the Certificate of Incorporation," or similar terms are to the Certificate of Incorporation as in effect on the date of this compilation, exclusive of any superseded or eliminated preferred stock designations. For historical or archival copies of any eliminated designations, please refer to the Delaware Secretary of State or the Company's prior public filings.]

[Filed on 03/05/1992]

**CERTIFICATE OF INCORPORATION <br>of <br>AMERICAN TECHNOLOGY CORPORATION** <br> (A Delaware Corporation)

 **FIRST.** The name of this corporation is AMERICAN TECHNOLOGY CORPORATION.

 **SECOND.** The Corporation's *Registered Office* in the State of Delaware is located at 25 Greystone Manor, Lewes (Sussex County), Delaware 19958, and its *Registered Agent* at this address is Harvard Business Services, Inc.

 **THIRD.** The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. The Corporation shall have perpetual duration.

 **FOURTH.** The name of the *Incorporator* is John D. Brasher Jr., and his mailing address is 10020 East Girard Avenue, Suite 125, Denver, Colorado 80231.

Upon the filing of this Certificate of Incorporation the powers of the Incorporator shall terminate. The names and addresses of the person or persons who are to serve as directors until the first annual meeting of shareholders or until their successors are duly elected and have qualified are:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*Name Mailing Address*

Elwood G. Norris 12800 Brookprinter Place

Poway, California 92064

Robert Putnam 12800 Brookprinter Place

Poway, California 92064

Richard M. Wagner 12800 Brookprinter Place

Poway, California 92064

{CAPITAL STOCK}

**FIFTH.** The aggregate number of shares of capital stock of all classes which the Corporation shall have authority to issue is TWENTY MILLION (20,000,000), having a par value of $.00001 per share, all of which shall be designated "*Common Stock*" (or "*Common Shares*'). All shares of the Corporation shall be issued for such consideration or considerations as the Board of Directors may from time to time determine. The designations, voting powers, preferences, optional or other special rights and qualifications, limitations, or restrictions of the above classes of stock shall be as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)** **Issuance.** The Common Stock may be issued from time to time in one or more classes or series in any manner permitted by law, as determined by the Board of Directors and stated in the resolution or resolutions providing for issuance thereof. Each class or series shall be appropriately designated, prior to issuance of any shares thereof, by some distinguishing letter, number or title. All shares of each class or series of Common Stock shall be alike in every particular and shall be of equal rank and have the same power, preferences and rights, and shall be subject to the same qualifications, limitations and restrictions, if any.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)** **Voting Powers.** The Common Stock may have such voting powers (full, limited, contingent or no voting powers), such designations, preferences and relative, participating, optional or other special rights, and be subject to such qualifications, limitations and restrictions, as the Board of Directors shall determine by resolution or resolutions. Unless otherwise resolved by the Board of Directors, each Common Stock share shall be of the same class, without any designation, preference or relative, participating, optional or other special rights, and subject to no qualification, limitation or restriction, and each share of Common Stock shall have one vote in respect of all matters voted upon by the shareholders. Cumulative voting shall not be allowed in the election of directors or as to any other matter presented for shareholder approval.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)** **Dividends.** After the requirements with respect to preferential dividends, if any, on any preferred stock which may hereafter exist, and after the Corporation shall have complied with all requirements, if any, with respect to the setting aside of sums in a sinking fund for the purchase or redemption of shares of any class or series of preferred stock which may hereafter exist, then and not otherwise, the holders of Common Stock shall receive, to the extent permitted by law, such dividends as may be declared from time to time by the Board of Directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)** **Dissolution or Liquidation.** After distribution in full of the preferential amount, if any, to be distributed to the holders of Preferred Stock, in the event of the voluntary or involuntary liquidation, dissolution, distribution of assets or winding-up of the Corporation, the holders of Common Stock shall be entitled to receive all the remaining assets of the Corporation of whatever kind available for distribution to shareholders ratably in proportion to the number of shares of Common Stock respectively held by them.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)** **Convertibility.** Common Shares or other shares of any class or series may be made convertible into or exchangeable for, at the option of the Corporation or the holder or upon the occurrence of a specified event, shares of any other class or classes or any other series of the same or any other class or classes of shares of the Corporation, at such price or prices or at such rate or rates of exchange and with such adjustments as shall be set forth in the resolution or resolutions providing for the issuance of such convertible or exchangeable shares adopted by the Board of Directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f)** **Redeemability.** Common Shares may be made redeemable at the option of the Corporation, of the holder thereof, of another person, or upon the occurrence of a designated event, if and to the extent now or subsequently allowed by the General Corporation Law of Delaware, as such law may subsequently be amended, and the terms and conditions of redemption, including the date or dates upon or after which they shall be redeemable, the amount per share payable in case of redemption and any variance in the amount or amounts payable, among other terms, conditions and limitations which may be imposed, may be fixed and established by the Board of Directors in the resolution or resolutions authorizing the issuance of redeemable Common Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(g)** **Capital.** The portion of the consideration received by the Corporation upon issuance of any of its shares that shall constitute "capital" within the meaning of the General Corporation Law of Delaware shall be (1) in the case of *par-value* shares, the par value thereof, and (2) in the case of *shares without par value*, the stated value of such shares as determined by the Board of Directors at the time of issuance; *provided*, that if no stated value is determined at the time that shares without par value are issued, the entire consideration to be received for the shares shall constitute capital.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(h)** **Fully Paid and Nonassessable.** Any and all shares issued by the Corporation for which not less than the portion of the consideration to be received determined to be "capital" has been paid to the Corporation, provided the Corporation has received a promissory note or other binding legal obligation of the purchaser to pay the balance thereof, shall be deemed fully paid and nonassessable shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)** **Amendment of Shareholder Rights.** So long as no shares of any class or series established by resolution of the Board of Directors have been issued, the voting rights, designations, preferences and relative, optional, participating or other rights of these shares may be amended by resolution of the Board of Directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(j)** **Status of Certain Shares.** Shares which have redeemed, converted, exchanged, purchased, retired or surrendered to the Corporation, or which have been reacquired in any other manner, shall have the status of authorized and unissued shares and may be reissued by the Board of Directors as shares of the same or any other series, unless otherwise provided herein or in the resolution authorizing and establishing the shares.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(k)** **Denial of Preemptive Rights.** No holder of any shares of the Corporation shall be entitled as a matter of right to subscribe for or purchase any part of any new or additional issue of stock of any class or of securities convertible into or exchangeable for stock of any class, whether now or hereafter authorized or whether issued for money, for a consideration other than money, or by way of dividend.

{VOTING OF SHAREHOLDERS}

 **SIXTH.** The following provisions are hereby adopted for the purpose of regulating certain matters relating to the voting of shareholders of the Corporation:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)** **Definitions.** Whenever the term "*total voting power*" appears in this Charter, it shall mean all shares of the Corporation entitled to vote at a meeting or on a question presented for shareholder approval, and of every class or series of shares entitled to vote by class or series. Whenever the term "*votes cast*" appears in this Charter, it shall mean the total number of voting shares which were unequivocally voted in favor of or against a director standing for election or a matter presented for shareholder approval at a legal meeting which commenced with a quorum.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)** **Quorum.** A majority of the total voting power, or where a separate vote by class or series is required, a majority of the voting shares of each such class or series, represented in person or by proxy, shall constitute a quorum at any meeting of the Corporation's shareholders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)** **Vote Required.** Any election of directors and any other action to be taken by the Corporation's shareholders shall require only a majority of the votes cast, except where this Charter or the Corporation's Bylaws then in effect requires a higher proportion of the votes cast or requires a proportion of the total voting power. Abstentions from voting shall not be considered in the tallying of votes. Nothing contained in this Article SIXTH shall affect the voting rights of holders of any class or series of shares entitled to vote as a class or by series. The Bylaws may provide for the vote necessary at any adjournment of a duly called meeting for which a quorum was not obtained.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)** **Manner of Voting.** The vote of shareholders may be taken at a meeting by a show of hands or other method authorized by the Board of Directors. Written ballots shall be used only upon authorization of the Board of Directors or as provided in the Corporation's Bylaws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)** **Action Without Meeting.** Any action by the shareholders may be taken by written consent, in lieu of a meeting and without prior notice or vote, by the holders of a majority of the total voting power, except where a higher proportion of the total voting power is expressly required herein to authorize such action. The manner of obtaining any such written consent shall be governed by the Corporation's Bylaws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f)** **Shareholder Ratification.** Any contract, transaction, or act of the Corporation or of the directors which shall be ratified by a majority of the voting power present at any annual meeting, or at any special meeting called for such purpose, or by means of a written consent of the holders of at least a majority of the total voting power in lieu of a meeting, shall so far as permitted by law be as valid and as binding as though ratified by every shareholder of the Corporation.

{CONCERNING SHAREHOLDERS, DIRECTORS AND OFFICERS}

**SEVENTH.** The following provisions are hereby adopted for the purpose of defining, limiting, and regulating the powers of the Corporation and of the directors, officers and shareholders:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)** **Number of Directors.** The number of Directors shall be as fixed in the Bylaws. In the absence of such provision in the Bylaws, the Corporation shall have three Directors. Directors shall be elected by plurality vote and need not be elected by written ballot, except as prescribed in the Bylaws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)** **Removal of Directors.** A director of the Corporation, or the entire Board of Directors of the Corporation, may be removed by the shareholders, with or without cause, upon the affirmative vote of the holders of a majority of the total voting power, without considering the vote of the director sought to be removed.

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As used herein, "*cause*" for the removal of a director shall be deemed to exist if (A) there has been a finding by not less than 2/3 of the entire Board of Directors that cause exists and the directors have recommended removal to the shareholders, or (B) any other cause defined by law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)** **Removal of Officers and Employees.** Unless the Bylaws otherwise provide, any officer or employee of the Corporation (including a director) may be removed at any time with or without cause by the Board of Directors or by any committee or superior officer upon whom such power of removal may be conferred by the Bylaws or by authority of the Board of Directors, without prejudice, however, to existing contractual rights.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)** **Corporate Opportunities.** The officers, directors and other members of management of the Corporation shall be subject to the doctrine of "*corporate opportunities*" only insofar as it applies to any business opportunity in which the Corporation has expressed an interest as determined from time to time by the Corporation's Board of Directors as evidenced by resolutions appearing in the Corporation's minutes. Once such areas of interest are delineated, all such business opportunities within such areas of interest which come to the attention of the officers, directors, and other members of management of the Corporation shall be disclosed promptly to the Corporation and made available to it. The Board of Directors may reject any business opportunity presented to it, and only thereafter may any officer, director or other member of management avail himself of such opportunity. Until such time as the Corporation, through its Board of Directors, has designated an area of interest, the officers, directors and other members of management of this Corporation shall be free to engage in such area of interest on their own, and this doctrine shall not limit the rights of any officer, director or other member of management of the Corporation to continue a business existing prior to the time that such area of interest is designated by the Corporation. This provision shall not be construed to release any employee of the Corporation from any duties which he may have to this Corporation.

{BYLAWS}

**EIGHTH.** The initial Bylaws of the Corporation may be adopted by its Board of Directors. The power to alter, amend or repeal the Bylaws or adopt new Bylaws shall be vested in the Board of Directors, subject to the right of the shareholders to alter, amend or repeal such Bylaws or adopt new Bylaws by the affirmative vote of at least two-thirds (2/3) of the total voting power. The Bylaws may not contain any provision inconsistent with law or this Charter.

{INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS}

**NINTH.** The following provisions are hereby adopted for the purpose of defining and regulating certain rights of directors, officers and others in respect of indemnification and related matters.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)** **Actions, Suits or Proceedings Other than by or in the Right of the Corporation.** The Corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation), by reason of the fact that he is or was or has agreed to become a director, officer, employee or agent of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, against costs, charges, expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with such action, suit or proceeding and any appeal therefrom, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of *nolo contendere* or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation or that, with respect to any criminal proceeding, he had reasonable cause to believe that his conduct was unlawful.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)** **Actions or Suits by or in the Right of the Corporation.** The Corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was or has agreed to become a director, officer, employee or agent of the Corporation, or is or was serving or has

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agreed to serve at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, against costs, charges and expenses (including amounts paid in settlement and attorney's fees) actually and reasonably incurred by him or on his behalf in connection with the defense or settlement of such action or suit and any appeal therefrom, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of such liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such costs, charges and expenses which the Court of Chancery or such other court shall deem proper.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)** **Indemnification for Costs, Charges and Expenses of Successful Party.** Notwithstanding the other provisions of this Article NINTH, to the extent that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise, including, without limitation, the dismissal of an action without prejudice, in defense of any action, suit or proceeding referred to in Sections (a) and (b) of this Article NINTH, or in defense of any claim, issue or matter therein, he shall be indemnified against all costs, charges and expenses (including attorney's fees) actually and reasonably incurred by him or on his behalf in connection therewith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)** **Determination of Right to Indemnification.** Any indemnification under Sections (a) and (b) of this Article NINTH (unless ordered by a court) shall be made by the Corporation unless a determination is made (i) by a disinterested majority of the Board of Directors who were not parties to such action, suit or proceeding, or (ii) if such disinterested majority of the Board of Directors so directs, by independent legal counsel in a written opinion, or (iii) by the shareholders, that indemnification of the director or officer is not proper in the circumstances because he has not met the applicable standard of conduct set forth in Sections (a) and (b) of this Article NINTH.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)** **Advances of Costs, Charges and Expenses.** Costs, charges and expenses (including attorney's fees) incurred by a person referred to in Sections (a) or (b) of this Article NINTH in defending a civil or criminal action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding; provided, however, that the payment of such costs, charges and expenses incurred by a director or officer in his capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer) in advance of the final disposition of such action, suit or proceeding shall be made only upon receipt of an undertaking by or on behalf of the director or officer to repay all amounts so advanced in the event that it shall ultimately be determined that such director or officer is not entitled to be indemnified by the Corporation as authorized in this Article, accompanied by evidence satisfactory to the Board of Directors of ability to make such repayment. Such costs, charges and expenses incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the majority of the Directors deems appropriate. The majority of the Directors may, in the manner set forth above, and upon approval of such director, officer, employee or agent of the Corporation, authorize the Corporation's counsel to represent such person, in any action, suit or proceeding, whether or not the Corporation is a party to such action, suit or proceeding.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f)** **Procedure for Indemnification.** Any indemnification under Sections (a), (b) and (c), or advance of costs, charges and expenses under Section (e) of this Article NINTH, shall be made promptly, and in any event within 60 days, upon the written request of the director or officer. The right to indemnification or advances as granted by this Article shall be enforceable by the director or officer in any court of competent jurisdiction if the Corporation denies such request, in whole or in part, or if no disposition thereof is made within 60 days. Such person's costs and expenses incurred in connection with successfully establishing his right to indemnification, in whole or in part, in any such action shall also be indemnified by the Corporation. It shall be a defense to any such action (other than an action brought to enforce a claim for the advance of costs, charges and expenses under Section (e) of this Article NINTH where the required undertaking, if any, has been received by the Corporation) that the claimant has not met the standard of conduct set forth in Sections (a) or (b) of this Article NINTH, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, its independent legal counsel and its shareholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he has met the applicable standard of conduct set forth in Sections (a) or (b) of this Article NINTH, nor the fact that there has been an actual determination by the Corporation (including its Board of Directors, its independent legal counsel and its shareholders) that the claimant has not met such applicable

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standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(g)** **Settlement.** If in any action, suit or proceeding, including any appeal, within the scope of Sections (a) or (b) of this Article NINTH, the person to be indemnified shall have unreasonably failed to enter into a settlement thereof, then, notwithstanding any other provision hereof, the indemnification obligation of the Corporation to such person in connection with such action, suit or proceeding shall not exceed the total of the amount at which settlement could have been made and the expenses by such person prior to the time such settlement could reasonably have been effected.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(h)** **Other Rights; Continuation of Right to Indemnification.** The indemnification provided by this Article shall not be deemed exclusive of any other rights to which any director, officer, employee or agent seeking indemnification may be entitled under any law (common or statutory), agreement, vote of shareholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding office or while employed by or acting as agent for the Corporation, and shall continue as to a person who has ceased to be a director, officer, employee or agent, and shall inure to the benefit of the estate, heirs, executors and administrators of such person. All rights to indemnification under this Article shall be deemed to be a contract between the Corporation and each director or officer of the Corporation who serves or served in such capacity at any time while this Article NINTH is in effect, Any repeal or modification of this Article NINTH or any repeal or modification of relevant provisions of the General Corporation Law of Delaware or any other applicable laws shall not in any way diminish any rights to indemnification of such director, officer, employee or agent or the obligations of the Corporation arising hereunder. This Article NINTH shall be binding upon any successor corporation to this Corporation, whether by way of acquisition, merger, consolidation or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)** **Exceptions to Indemnification Right.** Notwithstanding any other language in this Charter, the Company shall not be obligated pursuant to the terms of this Charter:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.*Claims Initiated by Indemnitee.* To indemnify or advance expenses to any person with respect to proceedings or claims initiated or brought voluntarily by him or her and not by way of defense, expect with respect to proceedings brought to establish or enforce a right to indemnification under this Charter or any other statute or law or otherwise as required under Section 145 of the General Corporation Law of Delaware, but such indemnification or advancement of expenses may be provided by the Corporation in specific cases if the Board of Directors finds it to be appropriate; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.*Lack of Good Faith.* To indemnify any person for any expenses incurred by him or her with respect to any proceeding instituted by him or her to enforce or interpret this Agreement, if a court of competent jurisdiction determines that each of the material assertions made by him or her in such proceeding was not made in good faith or was frivolous;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.*Insured Claims.* To indemnify any person for expenses or liabilities of any type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes or penalties, and amounts paid in settlement) which have been paid directly to him or her by an insurance carrier under a policy of officers' and directors' liability insurance maintained by the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.*Claims Under Section 16(b).* To indemnify any person for expenses or the payment of profits arising from the purchase and sale by him or her of securities in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended, or any similar or successor statute.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(j)** **Insurance.** The Corporation may purchase and maintain insurance on behalf of any person who is or was or has agreed to become a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him or on his behalf in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article NINTH; provided, however, that such insurance is available on acceptable terms, which determination shall be made by a vote of a majority of the Directors.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(k)** **Savings Clause.** If this Article NINTH or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation (i) shall nevertheless indemnify each director and officer of the Corporation and (ii) may nevertheless indemnify each employee and agent of the Corporation, as to any cost, charge and expense (including attorney's fees), judgment, fine and amount paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative, including an action by or in the right of the Corporation, to the full extent permitted by any applicable portion of this Article NINTH that shall not have been invalidated and to the full extent permitted by applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(l)** **Amendment.** The affirmative vote of at least a majority of the total voting power shall be required to amend, repeal, or adopt any provision inconsistent with, this Article NINTH. No amendment, termination or repeal of this Article NINTH shall affect or impair in any way the rights of any director or officer of the Corporation to indemnification under the provisions hereof with respect to any action, suit or proceeding arising out of, or relating to, any actions, transactions or facts occurring prior to the final adoption of such amendment, termination or appeal.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(m)** **Subsequent Legislation.** If the General Corporation Law of Delaware is amended after adoption of this Charter to further expand the indemnification permitted to directors, officers, employees or agents of the Corporation, then the Corporation shall indemnify such persons to the fullest extent permitted by the General Corporation Law of Delaware, as so amended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(n)** **Restriction.** Notwithstanding any other provision hereof whatsoever, no person shall be indemnified under this Article NINTH who is adjudged liable for (i) a breach of duty to the Company or its shareholders that resulted in personal enrichment to which he was not legally entitled, (ii) intentional fraud or dishonesty or illegal conduct, or (iii) for any other cause prohibited by applicable state or federal law, unless a court determines otherwise.

{EXCLUSION OF DIRECTOR LIABILITY}

**TENTH.** As authorized by Section 102(b)(7) of the General Corporation Law of Delaware, no director of the Corporation shall be personally liable to the Corporation or any shareholder thereof for monetary damages for breach of his fiduciary duty as a director, except for liability (i) for any breach of a Director's duty of loyalty to the Corporation or its shareholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for acts in violation of Section 174 of the General Corporation Law of Delaware, as it now exists or may hereafter be amended, or (iv) for any transaction from which the director derives an improper personal benefit. This Article TENTH shall apply to a person who has ceased to be a director of the Corporation with respect to any breach of fiduciary duty which occurred when such person was serving as a director. This Article TENTH shall not be construed to limit or modify in any way any director's right to indemnification or other right whatsoever under this Charter, the Corporation's Bylaws or the General Corporation Law of Delaware.

If the General Corporation Law of Delaware hereafter is amended to authorize the further elimination or limitation of the liability of directors, then the liability of the Corporation's directors, in addition to the limitation on personal liability provided herein, shall be limited to the fullest extent permitted by the General Corporation Law of Delaware as so amended. Any repeal or modification of this Article TENTH by the shareholders shall be prospective only and shall not adversely affect any limitation on the personal liability of any director existing at the time of such repeal or modification. The affirmative vote of at least two-thirds (2/3) of the total voting power shall be required to amend or repeal, or adopt any provision inconsistent with, this Article TENTH.

**ELEVENTH.** The Corporation reserves the right to amend, restate or repeal any provision contained in this Charter, in the manner now or hereafter prescribed by statute, and all rights conferred on shareholders are granted subject to this reservation. The affirmative vote of a majority of the votes cast is necessary to amend or restate provisions of this Charter, except such provisions which expressly require a higher proportion of the votes cast or require a proportion of the total voting power. The affirmative vote of a majority of the total voting power is necessary to repeal this Charter.

**TWELFTH.** The Corporation expressly elects not to be governed by Section 203 of the General Corporation Law of Delaware, as it now exists or hereafter may be amended, or any successor statute. The affirmative vote of at

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least a majority of the total voting power is necessary to repeal, amend or adopt any provision inconsistent with this Article TWELFTH.

**IN WITNESS WHEREOF,** the undersigned, being the Incorporator named above, for the purpose of forming a corporation pursuant to the General Corporation Law of Delaware does hereby make and file this Certificate of Incorporation for AMERICAN TECHNOLOGY CORPORATION.

**INCORPORATOR:**

DATED: March 1, 1992 By: <u>/s/ John D. Brusher, Jr.</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;John D. Brusher, Jr.

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[Filed on 06/23/1992]

**ARTICLES AND CERTIFICATE OF MERGER <br>of <br>AMERICAN TECHNOLOGY CORPORATION** <br> (A Utah Corporation) <br>Into <br>**AMERICAN TECHNOLOGY CORPORATION** <br> (A Delaware Corporation)

Pursuant to Section 252 of the General Corporation Law of Delaware and Section 1610-72 of the Utah Business Corporation Act the two undersigned corporations (the "*Constituent Corporations*") adopt the following Articles and Certificate of Merger for the purpose of merging them into one corporation (the "*Merger*"), and each Constituent Corporation hereby certifies to the information below with respect to the Merger:

**FIRST:** The names and state of incorporation of the two Constituent Corporations effecting the Merger are:

*<u>Name</u> <u>Domicile</u> <u>Status</u>* 

American Technology Corporation Delaware Surviving corporation

American Technology Corporation Utah Assimilated corporation

**SECOND:** The name of the surviving, corporation in the Merger shall be AMERICAN TECHNOLOGY CORPORATION, a *Delaware* corporation. Section 252 of the General Corporation Law of Delaware permits this Merger. The assimilated corporation has authorized 50,000,000 shares of common stock, $.02 par value, 36,456,081 of which are outstanding.

**THIRD:** The Merger shall not effect any change in the Certificate of Incorporation of the surviving corporation as in effect on the date these Articles of Merger are duly filed with the Secretary of State of the States of Delaware and Utah.

**FOURTH:** The Agreement and Plan of Merger dated May 12, 1992, setting forth the terms and conditions of the Merger and of the manner of converting the outstanding securities of the assimilated corporation into securities of the surviving corporation, is appended in the form executed to these Articles of Merger as Exhibit A and is herein fully incorporated by reference.

**FIFTH:** The Agreement and Plan of Merger has been approved and adopted by the respective boards of directors of the Constituent Corporations and certified, executed and acknowledged by each of the Constituent Corporations in the manner prescribed by the respectively applicable laws of Delaware and Utah.

**SIXTH:** The Agreement and Plan of Merger was duly approved by the respective shareholders of the Constituent Corporations on June 19, 1992, to wit: (a) by the shareholders of American Technology Corporation, the Utah corporation to be assimilated, voting 23,689,556 shares FOR and 88,283 shares AGAINST, out of a total of 36,456,081 voting shares issued and outstanding, all of a class, a number sufficient for approval; and (b) by the shareholders of American Technology Corporation, the surviving Delaware corporation, voting 100 shares FOR and none AGAINST, out of a total of 100 voting shares issued and outstanding, all of a class.

**SEVENTH:** An executed Agreement and Plan of Merger is on file at the principal place of business of the surviving corporation, which is located at 12800 Brookprinter Place, Poway, California 92064, and a copy thereof will be furnished without charge to any shareholder of a Constituent Corporation who so requests.

**EIGHTH:** The *Registered Office* of the surviving corporation in the State of Delaware is located at 25 Greystone Manor, Lewes (County of Sussex), Delaware 19958.

**NINTH:** The surviving corporation in this Merger by execution and the due filing of these Articles of Merger hereby (a) agrees that it may be served with process in the State of Utah in any proceeding for the enforcement of any

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obligation of the assimilated corporation and in any proceeding for the enforcement of the rights of any dissenting shareholder of the assimilated corporation against the surviving corporation, (b) irrevocably appoints the Director of the Division of Corporations and Commercial Code of the State of Utah as its agent to accept service of process in any such proceeding brought against the assimilated corporation in the State of Utah, which should be served on the surviving corporation at the address stated in Article SEVENTH above, and (0) agrees that it will promptly pay to the dissenting shareholders, if any, of the assimilated corporation the amount, if any, to which they are entitled under the provisions of the Utah Business Corporation Act with respect to the rights of dissenting shareholders.

**TENTH;** The Merger shall be effective when these Articles of Merger are duly filed for recordation with the office of the Secretary of State of the State of Utah.

Dated: June 19, 1992 **AMERICAN TECHNOLOGY CORPORATION**

A Delaware Corporation

ATTEST: By: <u>/s/ Elwood G. Norris</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Elwood G. Norris, President

By: <u>/s/ Robert Putnam</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Robert Putnam, Secretary

**AMERICAN TECHNOLOGY CORPORATION**

(SEAL) A Utah Corporation

ATTEST: By: <u>/s/ Elwood G. Norris</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Elwood G. Norris, President

By: <u>/s/ Robert Putnam</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Robert Putnam, Secretary

(SEAL)

**VERIFICATION**

**STATE OF CALIFORNIA)**

 **) ss.**

**COUNTY OF SAN DIEGO)**

On this 19th day of June, 1992, before me, a Notary Public duly commissioned and qualified in and for the above stated jurisdiction, personally came and appeared Elwood G. Norris, who being duly sworn, declared that he is the President of AMERICAN TECHNOLOGY CORPORATION a Delaware corporation, that he executed the foregoing Articles of Merger as the free act and deed of such corporation, and that he has signed his name thereto by order of the Board of Directors of such corporation.

<u>/s/ Elwood G. Norris</u> 

Elwood G. Norris Notary Public

My Commission Expires:

(SEAL)

------

**VERIFICATION**

**STATE OF CALIFORNIA)**

**) ss.**

**COUNTY OF SAN DIEGO)**

On this 19th day of June, 1992, before me, a Notary Public duly commissioned and qualified in and for the above stated jurisdiction, personally came and appeared Elwood G. Norris, who being duly sworn, declared that he is the President of AMERICAN TECHNOLOGY CORPORATION a Utah corporation, that he executed the foregoing Articles of Merger as the free act and deed of such corporation, and that he has signed his name thereto by order of the Board of Directors of such corporation.

<u>/s/ Elwood G. Norris</u> 

Elwood G. Norris Notary Public

My Commission Expires:

(SEAL)

------

EXHIBIT A

**AGREEMENT AND PLAN OF MERGER**

**of**

**AMERICAN TECHNOLOGY CORPORATION**

(A Delaware Corporation)

**and**

**AMERICAN TECHNOLOGY CORPORATION**

(A Utah Corporation)

This Agreement and Plan of Merger, dated as of the 12th of May, 1992, is entered into pursuant to the provisions of Section 252 of the General Corporation Law of Delaware and of Section 16-10-72 of the Utah Business Corporation Act, by and between AMERICAN TECHNOLOGY CORPORATION, a Delaware corporation (the "*Survivor*"), and AMERICAN TECHNOLOGY CORPORATION, a Utah corporation (the "*Assimilated*"), both corporations being sometimes referred to herein as the "*Constituent Corporations*."

**RECITALS:**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.Survivor is a corporation duly organized and existing under the laws of the State of Delaware and has an authorized capital of 20,000,000 shares, all of which are designated as common stock, par value $.00001, 100 shares of which are outstanding. No preferred shares are authorized.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.Assimilated is a corporation duly organized and existing under the laws of the State of Utah and has an authorized capital of 50,000,000 shares, $.02 par value, all of which are designated as Common Stock, 36,456,081 shares of which are outstanding. No preferred shares are authorized.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.Assimilated owns all of the issued and outstanding shares of the capital stock of Survivor, which is the - wholly owned subsidiary of Assimilated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D.The Board of Directors of Assimilated has determined that, for the purpose of effecting the reincorporation of Assimilated in the State of Delaware, it is advisable that Assimilated merge with and into Survivor upon the terms and conditions herein provided.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E.The respective Boards of directors of Survivor and Assimilated have approved this Agreement and have directed that this Agreement be submitted to a vote of their respective shareholders.

**Now, therefore,** in consideration of the premises and of the mutual representations, warranties and covenants herein contained, Survivor and Assimilated hereby agree, subject to the terms and conditions hereinafter set forth, as follows:

**ARTICLE I.** **MERGER.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.1** **Merger and Name Change.** In accordance with the provisions of this Agreement, the General Corporation Law of Delaware, and the Utah Business Corporation Act, Assimilated shall be merged with and into Survivor (the "*Merger*"), and the name of the surviving corporation shall be American Technology Corporation (a Delaware corporation).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.2** **Filing and Effectiveness.** The Merger shall become effective when the following actions shall have been completed:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)This Agreement and the Merger shall have been adopted and approved by the shareholders of each Constituent Corporation in accordance with the requirements of the General Corporation Law of Delaware and the Utah Business Corporation Act**.**

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)An executed counterpart of this Agreement shall have been died with the Secretary of State of the State of Delaware; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)Executed Articles of Merger, or a copy of the Certificate of Ownership, meeting the requirements of the Utah Business Corporation Act shall have been filed with the Director of the Division of Corporations and Commercial Code of the State of Utah.

The date and time when the Merger shall become effective, as aforesaid, is herein called the "*Effective Date*."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.3** **Certificate of Incorporation.** The Certificate of Incorporation of Survivor as in effect immediately prior to the Effective Date shall continue in full force and effect as the Certificate of Incorporation of the Survivor until duly amended in accordance with the provisions thereof and applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.4** **Bylaws.** The Bylaws of Survivor as in effect immediately prior to the Effective Date shall continue in full force and effect as the Bylaws of the Survivor until duly amended in accordance with the provisions thereof and applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.5** **Directors and Officers.** The directors and officers of Survivor in office immediately prior to the Effective Date shall continue in office and shall constitute the directors and officers of Survivor until their respective successors shall have been elected and duly qualified or until otherwise provided by law, the Certificate of Incorporation of Survivor and the Bylaws of Survivor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.6** **Effect of Merger.** Upon the Effective Date, the separate existence of Assimilated shall cease and the Survivor (i) shall continue to possess all of the assets, rights, powers and property of Survivor as constituted immediately prior to the Effective Date, shall be subject to all actions previously taken by the Board of Directors of Assimilated and shall succeed, without other transfer, to all of the assets, rights, powers and property of Assimilated, (ii) shall continue to be subject to all of the debts, liabilities and obligations of Assimilated as constituted immediately prior to the Effective Date and shall succeed, without other transfer, to all of the debts, liabilities and obligations of Assimilated in the same manner as if Survivor had itself incurred them, all as more fully provided under the applicable provisions of the General Corporation Law of Delaware and the Utah Business Corporation Act.

**ARTICLE II.** **MANNER OF CONVERSION OF COMMON STOCK.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.1** **Assimilated Common Stock.** Upon the Effective Date, each five (5) shares of common stock, 5.02 par value, of Assimilated issued and outstanding immediately prior thereto shall, by virtue of the Merger and without any action by any holder of such shares or any other person, be converted into and exchanged for one (1) fully paid and nonassessable share of Common Stock, $.00001 par value, of Survivor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.2** **Outstanding Common Stock of Survivor.** Upon the Effective Date, each share of the Common Stock of Assimilated issued and outstanding immediately prior thereto shall, by virtue of the Merger and without any action by the Survivor, be cancelled. The certificate representing the shares of Survivor owned by Assimilated shall be duly marked CANCELLED by the Secretary of Survivor and placed in the records of Survivor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.3** **Exchange of Certificates.** On or after the Effective Date of the Merger:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)All of the outstanding certificates which prior to that time represented the outstanding common shares of Assimilated shall be deemed for all purposes to evidence ownership of and to represent the shares of Survivor into which the shares of Assimilated represented by such certificates have been converted as herein provided. The registered owner on the books and records of Assimilated or its transfer agent of any such outstanding stock certificate shall, until such certificate shall have been surrendered for transfer or conversion or otherwise accounted for to Survivor or its transfer agent, have and be entitled to exercise any voting and other rights with respect to and to receive any dividend and other distributions upon the shares of Survivor evidenced by such outstanding certificate as above provided.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Each certificate representing common shares of Survivor so issued in the Merger shall bear the same legends, if any, with respect to the restrictions on transferability as the certificates of Assimilated so converted and given in exchange therefor, unless otherwise determined by the Board of Directors of Survivor in compliance with applicable laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)If any certificate for common stock of Survivor is to be issued in a name other than that in which the certificate surrendered in exchange therefor is registered, it shall be a condition of issuance thereof that the certificate so surrendered shall be properly endorsed and otherwise in proper form for transfer, that such transfer otherwise be proper and that the person requesting such transfer pay any transfer or other taxes payable by reason of the issuance of such new certificate in a name other than that of the registered holder of the certificate surrendered or establish to the satisfaction of Survivor that such tax has been paid or is not payable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.4** **Assumption of Stock Option Plans.** Upon the Effective Date, Survivor shall assume and continue both the 1992 Incentive Stock Option Plan and the 1992 Non-Statutory Stock Option Plan of Assimilated, without change, and Survivor and its Board of Directors shall have the same rights and powers in regard to such plan as Assimilated and its Board of Directors.

**ARTICLE III.** **GENERAL MATTERS.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.1** **Covenants of Survivor.** Survivor covenants and agrees that it will, on or before the Effective Date:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)Qualify to do business as a foreign corporation in the State of California and, in connection therewith, irrevocably appoint an agent for service of process as required under the provisions of the California General Corporation Law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)File all documents with the franchise tax authorities of the State of Utah necessary to the assumption by Survivor of all of the franchise tax liabilities of Assimilated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)Take such other actions as may be required by the Utah Business Corporation Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.2** **Abandonment.** At any time before the Effective Date, this Agreement may be terminated and the Merger abandoned for any reason whatever by the Board of Directors of Survivor or Assimilated, or bath, notwithstanding the approval of this Agreement and Merger by the shareholders of Assimilated or Survivor or both.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.3** **Amendment.** The Boards of Directors of the Constituent Corporations may amend this Agreement at any time prior to the filing of this Agreement (or a certificate in lieu thereof) with the Secretary of State of the State of Delaware, provided that an amendment made subsequent to the adoption of this Agreement by the shareholders of either Constituent Corporation shall not (i) alter or change the amount or kind of shares, securities, cash, property and/or rights to be received in exchange for or on conversion of all or any of the shares of any class or series thereof of such Constituent Corporation, (ii) alter or change any term of the Certificate of Incorporation of the Survivor to be effected by the Merger, or (iii) alter or change any of the terms and conditions of this Agreement if such alteration or change would adversely affect the holders of any class or series thereof of such Constituent Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.4** **Expenses.** Assimilated shall pay all costs related to the Merger and necessary filings and actions in connection therewith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.5** **Rule 145 Representation.** The sole purpose of this Merger is to change the domicile of Assimilated within the United States of America, to which end (a) the corporate structure of Survivor reflects only minor changes from that of Assimilated, and (b) the securities of Survivor into which the issued and outstanding securities of Assimilated are being converted are substantially identical to each other, excepting the combination of Assimilated shares into fewer Survivor shares. Accordingly, the Merger shall not be deemed to involve the offer or sale of a security, under authority of Rule 145(a)(2) of the Securities and Exchange Commission.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.6** **Mutual Covenants of Constituent Corporations.** Survivor and Assimilated each represents and warrants to the other that, between the date hereof and the Effective Date, it will not (i) enter into any employment

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contracts, (ii) grant any options, warrants or similar rights (nor any instrument or security containing such an option, warrant or similar right) exercisable for, exchangeable for or convertible into its common shares or other securities, (iii) issue any stock or other securities, including debt instruments, or (iv) declare or pay any dividends in stock or rash or make any other distribution on or with respect to its outstanding common stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.7** **Registered Office.** The *Registered Office* of the Survivor in the State of Delaware is located at 25 Greystone Manor, Lewes (County of Sussex), Delaware 19958, and Harvard Business Services, Inc. is the *Registered Agent* of the Survivor at such address.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.8** **Further Actions.** If at any time Survivor shall consider or be advised that any further assignment or assurances in law are necessary or desirable to vest or to perfect or confirm of record in Survivor the title to any property or rights of Assimilated, or to otherwise carry out the provisions of this Agreement, then the proper officers and directors of Assimilated as of the Effective Date shall execute and deliver to Survivor any and all proper deeds, assignments and assurances in law, and do all things necessary or proper to vest, perfect or confirm title to such property or rights in Survivor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.9** **Governing Law.** This Agreement shall in all respects be interpreted and enforced in accordance with and governed by the laws of the State of Delaware.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.10** **Counterparts.** In order to facilitate the filing and recording of this Agreement, it may be executed in any number of counterparts, each of which shall be deemed to be an original.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.11** **Agreement.** Executed copies of this Agreement will be on file at the principal place of business of Survivor at 12800 Brookprinter Place, Poway, California 92064, and copies thereof will be furnished to any shareholder of any Constituent Corporation upon request and without cost.

**IN WITNESS WHEREOF,** this Agreement, having first been approved by resolution of the Boards of Directors Assimilated and Survivor, is hereby executed on behalf of each of such corporations and attested by their respective officers thereto duly authorized.

**AMERICAN TECHNOLOGY CORPORATION**

A Delaware Corporation

ATTEST: By: <u>/s/ Elwood G. Norris</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Elwood G. Norris, President

By: <u>/s/ Robert Putnam</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Robert Putnam, Secretary

**AMERICAN TECHNOLOGY CORPORATION**

A Utah Corporation

ATTEST: By: <u>/s/ Elwood G. Norris</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Elwood G. Norris, President

By: <u>/s/ Robert Putnam</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Robert Putnam, Secretary

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**VERIFICATION**

**STATE OF CALIFORNIA)**

 **) ss.**

**COUNTY OF SAN DIEGO)**

On this 19th day of June, 1992, before me, a Notary Public duly commissioned and qualified in and for the above stated jurisdiction, personally came and appeared Elwood G. Norris, who being duly sworn, declared that he is the President of American Technology Corporation, a Delaware corporation, that he executed the foregoing Agreement and Plan of Merger as the free act and deed of such corporation, and that he has signed his name thereto by order of the Board of Directors of such corporation.

<u>/s/ Elwood G. Norris</u> 

Elwood G. Norris Notary Public

My Commission Expires:

(SEAL)

**VERIFICATION**

**STATE OF CALIFORNIA)**

**) ss.**

**COUNTY OF SAN DIEGO)**

On this 19th day of June, 1992, before me, a Notary Public duly commissioned and qualified in and for the above stated jurisdiction, personally came and appeared Elwood G. Norris, who being duly sworn, declared that he is the President of American Technology Corporation, a Utah corporation, that he executed the foregoing Agreement and Plan of Merger as the free act and deed of such corporation, and that he has signed his name thereto by order of the Board of Directors of such corporation.

<u>/s/ Elwood G. Norris</u> 

Elwood G. Norris Notary Public

My Commission Expires:

(SEAL)

------

[Filed on 06/21/1996]

**CERTIFICATE <br>FOR <br>RENEWAL AND REVIVAL OF CHARTER <br>OF <br><u>AMERICAN TECHNOLOGY CORPORATION</u>** 

<u>AMERICAN TECHNOLOGY CORPORATION,</u> a corporation organized under the laws of Delaware, the certificate of incorporation of which was filed in the office of the Secretary of State on the 5th day of March, 1992 and recorded in the office of the Recorder of Deeds for Sussex County, the charter of which was voided for failure to pay taxes and penalty, now desires to procure a restoration, renewal and revival of its charter, and hereby certifies as follows:

FIRST: The name of this corporation is: <br> <u>AMERICAN TECHNOLOGY CORPORATION,</u>

SECOND: Its registered office in the State of Delaware is located at 25 Greystone Manor, Lewes, DE 19958, County of Sussex. The name of its registered agent is Harvard Business Services, Inc.

THIRD: The date when the restoration, renewal, and revival of the charter of this company is to commence is the Twenty-ninth day of February, 1996 same being prior to the date of the expiration of the charter. This renewal and revival of the charter of this corporation to be perpetual.

FOURTH: This corporation was duly organized and carried on the business authorized by its charter until the First day of March A.D. 1996, at which time its charter became inoperative and void for failure to pay taxes and penalty, and this certificate for renewal and revival is filed by authority of the duly elected directors of the corporation in accordance with the laws of the State of Delaware.

IN TESTIMONY WHEREOF, and in compliance with the provisions of Section 312 of the General Corporation Law of the State of Delaware, as amended, providing for the renewal, extension and restoration of charters, Robert Putnam, the Authorized Officer of AMERICAN TECHNOLOGY CORPORATION, have hereunto signed to this certificate this 12th day of June, 1996.

By: <u>/s/ Robert Putnam</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Robert Putnam

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;President

------

[Filed on 04/22/1997]

**CERTIFICATE OF AMENDMENT <br>TO THE <br>CERTIFICATE OF INCORPORATION <br>of <br>AMERICAN TECHNOLOGY CORPORATION**

(A Delaware Corporation)

AMERICAN TECHNOLOGY CORPORATION, a corporation organized on March 5, 1992 and existing under and by virtue of the General Corporation Law of Delaware, DOES HEREBY CERTIFY THAT:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.The Board of Directors of the Corporation by the unanimous written consent of its members, filed with the minutes of the Board, duly adopted resolutions setting forth a proposed amendment to the Certificate of Incorporation of the corporation, declaring such amendment to be advisable and directing that the proposal be placed before the shareholders of the corporation for consideration thereof and that the approval of the shareholders be solicited at an annual meeting of shareholders. The resolution setting forth the proposed amendment is as follows:

**RESOLVED,** that ARTICLE FIFTH of the Certificate of Incorporation of this corporation be amended to provide as set forth below, and such provisions shall supercede ARTICLE FIFTH of the existing Certificate of Incorporation in its entirety:

"**FIRST.** The name of this corporation is AMERICAN TECHNOLOGY CORPORATION.

(CAPITAL STOCK)

 **FIFTH.** The aggregate number of shares of capital stock of all classes which the Corporation shall have authority to issue is TWENTY-FIVE MILLION (25,000,000), of which TWENTY MILLION (20,000,000) shares having a par value of $.00001 per share shall be of a class designated "Common Stock" (or "Common Shares"), and FIVE MILLION (5,000,000) shares having a par value of $.00001 per share shall be of a class designated "Preferred Stock" (or "Preferred Shares"). All shares of the Corporation shall be issued for such consideration or considerations as the Board of Directors may from time to time determine. The designations, voting powers, preferences, optional or other special rights and qualifications, limitations, or restrictions of the above classes of stock shall be as follows:

**I. PREFERRED STOCK**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)** **Issuance in Class and Series.** Shares of Preferred Stock may be issued in one or more classes or series at such time or times as the Board of Directors may determine. All shares of any one series shall be of equal rank and identical in all respects.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)** **Authority of Board for Issuance.** Authority is hereby expressly granted to the Board of Directors to fix from time to time, by resolution or resolutions providing for the issuance of any class or series of Preferred Stock, the designation of such classes and series and the powers, preferences and rights of the shares of such classes and series, and the qualifications, limitations or restrictions thereof, including the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.The distinctive designation and number of shares comprising such class or series, which number may (except where otherwise provided by the Board of Directors in creating such class or series) be increased or decreased (but not below the number of shares then outstanding) from time to time by action of the Board of Directors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.The rate of dividend, if any, on the shares of that class or series, whether dividends shall be cumulative and, if so, from which date or dates, the relative rights of priority, if any, of payment of dividends on shares of that class or series over shares of any other class or series;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.Whether the shares of that class or series shall be redeemable at the option of the Corporation, at the option of the holder of shares of that class or series, at the option of another person, or

------

upon the occurrence of a designated event and, if so, the terms and conditions of such redemption, including the date or dates upon or after which they shall be redeemable, and the amount per share payable in case of redemption, which amount may vary under different conditions and different redemption dates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.Whether that class or series shall have a sinking fund for the redemption or purchase of shares of that class or series and, if so, the terms and amounts payable into such sinking fund;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.The rights to which the holders of the shares of that class or series shall be entitled in the event of voluntary or involuntary liquidation, dissolution, distribution of assets or winding-up of the Corporation, relative rights of priority; if any, of payment of shares of that class or series;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.Whether the shares of that class or series shall be convertible into or exchangeable for shares of stock of any class or any other series of Preferred Stock at the option of the Corporation or of the holder, or upon the occurrence of a specified event and, if so, the terms and conditions of such conversion or exchange, including the method of adjusting the rates of conversion or exchange in the event of a stock split, stock dividend, combination of shares or similar event;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.Whether the issuance of any additional shares of such class or series, or of any shares of any other class or series, shall be subject to restrictions as to issuance, or as to the powers, preferences or rights of any such other class or series;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.Any other preferences, privileges and powers, and relative, participating, optional or other special rights, and qualifications, limitations or restrictions of such class or series, as the Board of Directors may deem advisable and as shall not be inconsistent with the provisions of the Corporation's Charter, as from time to time amended, and to the full extent now or hereinafter permitted by the laws of Delaware.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)** **Dividends.** Payment of dividends shall be as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.The holders of Preferred Stock of each class or series, in preference to the holders of Common Stock, shall be entitled to receive, as and when declared by the Board of Directors out of funds legally available therefor, all dividends, at the rate for such class or series fixed in accordance with the provisions of this Article FIFTH and no more;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Dividends may be paid upon, or declared or set aside for, any class or series of Preferred Stock in preference to the holders of any other class or series of Preferred Stock in the manner determined by the resolutions of the Board of Directors authorizing and creating such class or series;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.So long as any shares of Preferred Stock shall be outstanding, in no event shall any dividend, whether in cash or in property, be paid or declared nor shall any distribution be made, on the Common Stock, nor shall any shares of Common Stock be purchased, redeemed or otherwise acquired for value by the Corporation, unless all dividends on all cumulative classes and series Preferred Stock with respect to all past dividend periods, and unless all dividends on all classes and series of Preferred Stock for the then current dividend period shall have been paid or declared, and provided for, and unless the Corporation shall not be in default with respect to any of Its obligations with respect to any sinking fund for any class or series of Preferred Stock. The foregoing provisions of this subparagraph (3) shall not, however, apply to any dividend payable in Common Stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.No dividend shall be deemed to have accrued on any share of Preferred Stock of any class or series with respect to any period prior to the date of the original issue of such share or the dividend payment date immediately preceding or following such date of original issue, as may be provided in the resolutions of the Board of Directors creating such class or series. Preferred Stock shall not be entitled to participate in any dividends declared and paid on Common Stock, whether payable in cash, stock or otherwise. Accruals of dividends shall not pay interest.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)** **Dissolution or Liquidation.** In the event of any voluntary or Involuntary liquidation, dissolution of assets or winding-up of the Corporation, the holders of the shares of each class and series of Preferred Stock then outstanding shall be entitled to receive out of the net assets of the Corporation, but only in accordance with the preferences, if any, provided for such class or series, before any distribution or payment shall be made to the holders of Common Stock, the amount per share fixed by the resolution or resolutions of the Board of Directors to be received by the holder of each such share on such voluntary or involuntary liquidation, dissolution, distribution of assets or winding-up, as the case may be. If such payment shall have been made in full to the holders of all outstanding Preferred Stock of all classes and series, or duly provided for, the remaining assets of the Corporation shall be available for distribution among the holders of Common Stock as provided in this Article FIFTH. if upon any such liquidation, dissolution, distribution of assets or winding-up, the net assets of the Corporation available for distribution among the holders of any one or more classes or series of Preferred Stock which (i) are entitled to a preference over the holders of Common Stock upon such liquidation, dissolution, distribution of assets or winding-up, and (ii) rank equally in connection therewith, shall be insufficient to make payment for the preferential amount to which the holders of such shares shall be entitled, then such assets shall be distributed among the holders of each such series of Preferred Stock ratably according to the respective amounts to which they would be entitled in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full. Neither the consolidation nor merger of the Corporation, nor the exchange, sale, lease or conveyance (whether for cash, securities or other property) of all, substantially all or any part of its assets, shall be deemed a liquidation, dissolution, distribution of assets or winding-up of the Corporation within the meaning of this provision.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)** **Voting Rights.** Except to the extent otherwise required by law or provided in the resolution of the Board of Directors adopted pursuant to authority granted in this Article FIFTH**,** the shares of Preferred Stock shall have no voting power with respect to any matter whatsoever. The Board of Directors may determine whether the shares of any class or series shall have limited, contingent, full or no voting rights, in addition to the voting rights provided by law and, if so, the terms of such voting rights. Whenever holders of Preferred Stock are entitled to vote on a matter, each holder of record of Preferred Stock shall be entitled to one vote for each share standing in his name on the books of the Corporation and entitled to vote.

**II. COMMON STOCK**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)** **Issuance.** The Common Stock may be issued from time to time In one or more classes or series in any manner permitted by law, as determined by the Board of Directors and stated in the resolution or resolutions providing for Issuance thereof. Each class or series shall be appropriately designated, prior to issuance of any shares thereof, by some distinguishing letter, number or title. All shares of each class or series of Common Stock shall be alike in every particular and shall be of equal rank and have the same power, preferences and rights, and shall be subject to the same qualifications, limitations and restrictions, if any.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)** **Voting Powers.** The Common Stock may have such voting powers (full, limited, contingent or no voting powers), such designations, preferences and relative, participating, optional or other special rights, and be subject to such qualifications, limitations and restrictions, as the Board of Directors shall determine by resolution or resolutions. Unless otherwise resolved by the Board of Directors at the time of issuing Common Shares, (i) each Common Stock share shall be of the same class, without any designation, preference or relative, participating, optional or other special rights, and subject to no qualification, limitation or restriction, and (ii) Common Shares shall have unlimited voting rights, including but not limited to the right to vote in elections for directors, and each holder of record of Common Shares entitled to vote shall have one vote for each share of stock standing in his name on the books of the Corporation and entitled to vote. Cumulative voting shall not be allowed in the election of directors or as to any other matter presented for shareholder approval.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)** **Dividends.** After the requirements with respect to preferential dividends, if any, on Preferred Stock, and after the Corporation shall have complied with all requirements, if any, with respect to the setting aside of sums in a sinking fund for the purchase or redemption of shares of any class or series of Preferred Stock, then and not otherwise, the holders of Common Stock shall receive, to the extent permitted by law, such dividends as may be declared from time to time by the Board of Directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)** **Dissolution or Liquidation.** After distribution in full of the preferential amount, if any, to be distributed to the holders of Preferred Stock, in the event of the voluntary or involuntary liquidation, dissolution,

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distribution of assets or winding-up of the Corporation, the holders of Common Stock shall be entitled to receive all the remaining assets of the Corporation of whatever kind available for distribution to shareholders ratably in proportion to the number of shares of Common Stock respectively held by them.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)** **Convertibility.** Common Shares or other shares of any class or series may be made convertible into or exchangeable for, at the option of the Corporation or the holder or upon the occurrence of a specified event, shares of any other class or classes or any other series of the same or any other class or classes of shares of the Corporation, at such price or prices or at such rate or rates of exchange and with such adjustments as shall be set forth in the resolution or resolutions providing for the issuance of such convertible or exchangeable shares adopted by the Board of Directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f)** **Redeemability.** Common Shares may be made redeemable at the option of the Corporation, of the holder thereof, of another person, or upon the occurrence of a designated event, if and to the extent now or subsequently allowed by the General Corporation Law of Delaware, as such law may subsequently be amended, and the terms and conditions of redemption, including the date or dates upon or after which they shall be redeemable, the amount per share payable in case of redemption and any variance in the amount or amounts payable, among other terms, conditions and limitations which may be imposed, may be fixed and established by the Board of Directors in the resolution or resolutions authorizing the issuance of redeemable Common Shares.

**III. GENERAL MATTERS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)** **Capital.** The portion of the consideration received by the Corporation upon issuance of any of its shares that shall constitute "capital" within the meaning of the General Corporation Law of Delaware shall be (1) in the case of par-value shares, the par value thereof, and (2) in the case of shares without par value, the stated value of such shares as determined by the Board of Directors at the time of issuance; provided, that if no stated value is determined at the time that shares without par value are issued, the entire consideration to be received for the shares shall constitute capital.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)** **Fully Paid and Nonassessable.** Any and all shares of Common or Preferred Stock or other shares Issued by the Corporation for which not less than the portion of the consideration to be received determined to be "capital" has been paid to the Corporation, provided the Corporation has received a promissory note or other binding legal obligation of the purchaser to pay the balance thereof, shall be deemed fully paid and nonassessable shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)** **Status of Certain Shares.** Shares of Preferred or Common Stock or other shares which have redeemed, converted, exchanged, purchased, retired or surrendered to the Corporation, or which have been reacquired in any other manner, shall have the status of authorized and unissued shares and may be reissued by the Board of Directors as shares of the same or any other series, unless otherwise provided herein or in the resolution authorizing and establishing the shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)** **Denial of Preemptive Rights.** No holder of any shares of the Corporation shall be entitled as a matter of right to subscribe for or purchase any part of any new or additional issue of stock of any class or of securities convertible into or exchangeable for stock of any class, whether now or hereafter authorized or whether issued for money, for a consideration other than money, or by way of dividend.

END OF TEXT OF AMENDMENT

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.Pursuant to resolution of the Corporation's Board of Directors, the Secretary of the corporation obtained the shareholders' approval of the proposed amendment and restatement at an annual meeting of the shareholders by the holders of 5,101,564 of the Corporation's 9,016,259 outstanding shares of common stock, constituting at least a majority of all shares entitled to vote thereon and therefore sufficient for approval, all in accordance with the General Corporation Law of Delaware and the existing Certificate of Incorporation and bylaws of the Corporation, as amended and corrected to date.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.This amendment and restatement was duly adopted and has been duly executed and acknowledged in accordance with the provisions of Section 245 of the General Corporation Law of Delaware.

**IN WITNESS WHEREOF,** AMERICAN TECHNOLOGY CORPORATION has caused this Certificate of Amendment to be signed by the duly authorized officers below on March 24, 1997.

**AMERICAN TECHNOLOGY CORPORATION**

By: <u>/s/ Robert Putnam</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Robert Putnam, President

ATTEST:

By: <u>/s/ Richard D. Wagner</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Richard D. Wagner, Secretary

(SEAL)

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**ACKNOWLEDGMENT**

**STATE OF CALIFORNIA)**

 **) ss.**

**COUNTY OF SAN DIEGO)**

**I HEREBY CERTIFY** that before me, a Notary Public duly commissioned and qualified in and for the above jurisdiction, personally came and appeared Robert Putnam, President and Richard D. Wagner, Secretary of AMERICAN TECHNOLOGY CORPORATION, who after being duly sworn declared that they executed the foregoing Certificate of Amendment as their free act and deed and that the statements therein set forth are true and correct.

**IN WITNESS WHEREOF,** I have hereunto set my hand and seal on ______________, 1997.

My

NOTARY PUBLIC Commission

Expires:

(SEAL)

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[Filed on 09/27/2002]

**AMERICAN TECHNOLOGY CORPORATION**

**CERTIFICATE OF AMENDMENT**

**OF**

**CERTIFICATE OF INCORPORATION**

Elwood G. Norris certifies that:

1. He is the Chief Executive Officer of American Technology Corporation, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "Corporation").

2. RESOLVED, that the first paragraph of ARTICLE FIFTH of the Certificate of Incorporation of the Corporation be amended to provide as set forth below, and such provisions shall supercede the first paragraph of ARTICLE FIFTH of the existing Certificate of Incorporation in its entirety:

"**FIFTH.** The aggregate number of shares of capital stock of all classes which the Corporation shall have authority to issue is fifty-five million (55,000,000), of which fifty million (50,000,000) shares having a par value of $.00001 per share shall be of a class designated "Common Stock" (or "Common Shares"), and FIVE MILLION (5,000,000) shares having a par value of 5.00001 per share shall be of a class designated "Preferred Stock" (or "Preferred Shares"). All shares of the Corporation shall be issued for such consideration or considerations as the Board of Directors may from time to time determine. The designations, voting powers, preferences, optional or other special rights and qualifications, limitations, or restrictions of the above classes of stock shall be as follows:"

3. RESOLVED, that Section 4(a) of the certificate of Designation of Series D Preferred Stock filed with the Secretary of State of the State of Delaware on May 3, 2002 (the "Series D Certificate of Designation") be amended to provide as set forth below, and such provisions shall supercede Section 4(a) of the existing Series D Certificate of Designation in its entirety:

"**(a) Voting.** Each holder of shares of Series D Preferred Stock shall be entitled to one (1) vote for each share of Common Stock then issuable upon conversion of each share of Series D Preferred Stock thereof held on any matter submitted to the Corporation's stockholders for their approval or consent, provided, however, that the number of such votes for each holder of Series D Preferred Stock shall in no event exceed the number of votes obtained by multiplying the number of shares of Series D Preferred Stock held by the fraction obtained by dividing the Original Issue Price by $4.03 (as adjusted for any stock splits, reorganizations, dividends, recapitalizations and the like). Except as otherwise required by law or expressly provided herein, the holders of the Series D Preferred Stock shall vole equally with the shares of Common Stock of the Company and not as a separate class on any matter to voted upon by the stockholders of the Company."

4. RESOLVED, that Section 5(1) of the Series D Certificate of Designation be amended to provide as set forth below, and such provisions shall supercede Section 5(l) of the existing Series D Certificate of Designation in its entirety-,

"**(l) Limitation on Issuance of Conversion Shares; Redemption.** Notwithstanding any adjustment of the Conversion Price made under this Section 5, and except as provided below, the Corporation shall not be obligated to issue upon conversion of the Series D Preferred Stock, in the aggregate, more than that number of shares of Common Stock, which when added to the maximum number of shares of Common Stock issuable upon exercise of all warrants issued by the Corporation in connection with the sale of the Series D Preferred Stock, is equal to 19.99% of the number of shares of Common Stock of the Corporation outstanding on the Original Issue Date

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(such amount to be proportionately and equitably adjusted from time to time in the event of stock splits, stock dividends, combinations, reverse stock splits, reclassifications, capital reorganization and similar events relating to the Common Stock) (the "Maximum Share Amount") if the issuance of shares of Common Stock in excess of the Maximum Share Amount (such number of execs\* shares referred to in the aggregate as the "Excess Shares") would constitute a breach or violation of the Corporation's obligations under the rules or regulations of Nasdaq or any other principal securities exchange or market upon which the Common Stock is or becomes traded (the "Exchange Rules"). To the extent the Corporation will be required, or it appears likely to the Board of Directors of the Corporation that it will be required, to issue any Excess Shares as a result of an adjustment to the Conversion Price, the Corporation shall, at its option, tither (i) promptly take such action that would enable it to issue such Excess Shares without breaching or violating any Exchange Rules, including without limitation, obtaining stockholder approval, or (ii) redeem the Excess Shares at a redemption price equal to the Conversion Price. The number of shares comprising the Maximum Share Amount (and if applicable, any Excess Shares to be issued) shall be allocated among the holders of the shares of Series D Preferred Stock pro rata based on the total number of shares of Series D Preferred Stock then outstanding."

5. The foregoing amendments to the Certificate of Incorporation have been duly approved by the Board of Directors.

6. The foregoing amendments to the Certificate of Incorporation have been duly approved by vote of the required number of shares of Common Stock and Series D Preferred Stock of the Corporation pursuant to Sections 228(a) and 242 of the General Corporation Law of the State of Delaware.

IN WITNESS WHEREOF, this Certificate of Amendment of the Certificate of Incorporation has been executed by the Chief Executive Officer of the Corporation on this 26th day of September, 2002.

AMERICAN TECHNOLOGY CORPORATION

By: <u>/s/ Elwood G. Norris</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Chief Executive Officer

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[Filed on 03/10/2008]

**STATE OF DELAWARE <br>CERTIFICATE OF CHANGE <br>OF REGISTERED AGENT AND/OR <br>REGISTERED OFFICE**

The Board of Directors of <u>American Technology Corporation</u> , a Delaware Corporation, on this <u>19</u><sup>th</sup> day of <u>December</u> , A.D. <u>2008</u> , do hereby resolve and order that the location of the Registered Office of this Corporation within this State be, and the same hereby is <u>Corporation Trust Center 1209 Orange</u> Street, in the City of <u>Wilmington</u> ,

County of <u>New Castle</u> Zip Code <u>19801</u> .

The name of the Registered Agent therein and in charge thereof upon whom process against this Corporation may be served, is <u>THE CORPORATION TRUST COMPANY .</u>

The Corporation does hereby certify that the foregoing is a true copy of a resolution adopted by the Board of Directors at a meeting held as herein stated.

IN WITNESS WHEREOF, said Corporation has caused this certificate to be signed by an authorized officer, the <u>10</u><sup>th</sup> day of <u>March</u> A.D., <u>2008</u> .

By: <u>/s/ Thomas R. Brown</u> 

Authorized Officer

Name: <u>Thomas R. Brown</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Print or Type

Title: <u>Chief Executive Officer</u> 

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[Filed on 03/24/2010]

**CERTIFICATE OF AMENDMENT <br>TO THE CERTIFICATE OF INCORPORATION <br>OF <br>AMERICAN TECHNOLOGY CORPORATION <br>(HEREAFTER TO BE KNOWN AS "LRAD CORPORATION")**

Pursuant to and in accordance with the provisions of the General Corporation Law of the <br>State of Delaware, as amended, (the "Law"), the undersigned, American Technology Corporation <br>(the "Corporation") hereby declares and certifies as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.The name of the Corporation is American Technology Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.The Certificate of Incorporation of said corporation was filed by the State of Delaware Secretary of State on March 5, 1992, under the name American Technology Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.The Certificate of Incorporation is amended to change the name of the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.To effect the foregoing, Paragraph FIRST of the Certificate of Incorporation is hereby amended in its entirety as follows:

"**FIRST.** The name of the corporation is LRAD Corporation."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.The amendment specified above does not provide for an exchange, reclassification, or cancellation of issued shares of the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.The amendment specified above has been duly authorized and approved by unanimous vote of the members of the board of directors at a meeting held on January 12, 2010 and approved by a majority vote of the stockholders pursuant to the requirements of Section 242 of the General Corporation Law of the State of Delaware at a meeting held on March 24, 2010. The total number of outstanding shares of the corporation is 30,552,498 shares of Common Stock. 15,808,524 shares of Common Stock voted for the name change and 1,603,214 shares of Common stock voted against the same and 147,557 abstained. Such votes were sufficient to approve the name change amendment.

------

IN WITNESS WHEREOF, this Certificate of Amendment of the Certificate of Incorporation of the Corporation is executed as of the 24th day of March, 2010.

AMERICAN TECHNOLOGY CORPORATION, a Delaware corporation

By: <u>/s/ Thomas R. Brown</u> 

Title: President and Chief Executive Officer

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[Filed on 01/06/2020]

**CERTIFICATE OF AMENDMENT <br>TO THE CERTIFICATE OF INCORPORATION <br>OF <br>LRAD CORPORATION**

Pursuant to and in accordance with the provisions of the General Corporation Law of the State of Delaware, as amended, the undersigned, LRAD Corporation (the "Corporation") hereby declares and certifies as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.The name of the Corporation is LRAD Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.The Certificate of Incorporation of said corporation was filed by the State of Delaware Secretary of State on March 5, 1992, under the name American Technology Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.The Certificate of Incorporation is amended to change the name of the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.To effect the foregoing, Paragraph FIRST of the Certificate of Incorporation is hereby amended in its entirety as follows:

"**FIRST.** The name of this corporation is Genasys Inc."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.The amendment specified above does not provide for an exchange, reclassification, or cancellation of issued shares of the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.The amendment specified above has been duly authorized and approved accordance with the provisions of Section 242 of the General Corporation Law by unanimous vote of the members of the board of directors of the Corporation at a meeting held on December 5, 2019.

IN WITNESS WHEREOF, this Certificate of Amendment of the Certificate of Incorporation of the Corporation is executed as of the 6th day of January, 2019.

LRAD CORPORATION, <br>a Delaware corporation

By: <u>/s/ Richard S. Danforth</u> 

Title: Chief Executive Officer <br>Richard S. Danforth

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[Filed on 03/18/2021]

**CERTIFICATE OF AMENDMENT <br>TO THE AMENDED CERTIFICATE OF INCORPORATION <br>OF <br>GENASYS INC.**

Pursuant to and in accordance with the provisions of the General Corporation Law of the State of Delaware, as amended, the undersigned, Genasys Inc. (the "Corporation") hereby declares and certifies as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.The name of the Corporation is Genasys Inc.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.The Certificate of Incorporation is amended to increase the number of authorized shares of the Corporation's common stock from 50,000,000 shares to 100,000,000 shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.To effect the foregoing, the first paragraph of ARTICLE FIFTH of the Certificate of Incorporation is hereby amended to provide as set forth below, and such provisions shall supersede the first paragraph of ARTICLE FIFTH of the existing Certificate of Incorporation in its entirety:

**"FIFTH.** The aggregate number of shares of capital stock of all classes which the Corporation shall have authority to issue is ONE HUNDRED FIVE MILLION (105,000,000), of which ONE HUNDRED MILLION (100,000,000) shares having a par value of $0.00001 per share shall be of a class designated "Common Stock" (or "Common Shares"), and FIVE MILLION (5,000,000) shares having a par value of $0.00001 per share shall be of a class designated "Preferred Stock" (or "Preferred Shares"). All shares of the Corporation shall be issued for such consideration or considerations as the Board of Directors may from time to time determine. The designations, voting powers, preferences, optional or other special rights and qualifications, limitations, or restrictions of the above classes of stock shall be as follows:"

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.The amendment specified above does not provide for an exchange, reclassification, or cancellation of issued shares of the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.The amendment specified above has been duly authorized and approved by unanimous vote of the members of the board of directors at a meeting held on December 8, 2020, and approved by a majority vote of the stockholders pursuant to the requirements of Section 242 of the General Corporation Law of the State of Delaware at a meeting held on March 16, 2021.

IN WITNESS WHEREOF, this Certificate of Amendment of the Certificate of Incorporation of the Corporation is executed as of the 16th day of March, 2021.

GENASYS INC.,

a Delaware corporation

By: <u>/s/ Richard S. Danforth</u> 

Title: Chief Executive Officer

Richard S. Danforth

21816407v3

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## Exhibit 10.16

[Executed on 08/07/2024]

**COMMONWEALTH OF PUERTO RICO PUERTO RICO ELECTRIC POWER**

**AUTHORITY**

**CONTRACT NUM. <u>2025-P00024</u>** 

**ENGINEERING, PROCUREMENT, CONSTRUCTION CONTRACT FOR THE AN**

**EARLY WARNING SYSTEM (EWS) ON 34 PUERTO RICO DAMS**

**Req.** 

APPEAR

AS SECOND PARTY: Genasys Puerto Rico, LLC, hereinafter referred to as "the Contractor", a corporation organized and existing under the laws of the Commonwealth of Puerto Rico, authorized to do business in Puerto Rico, represented in this act by its Chief Executive Officer, Richard S. Danforth, of legal age, married, and resident of San Diego, California, by Corporate Resolution dated August 2, 2024.

Both, PREPA and Contractor which are hereinafter referred to individually as a "Party" and jointly as "Parties",

WHEREAS PREPA, by virtue of its enabling act, Act 83, has the authority to engage those professional, technical and consulting services necessary and convenient to the activities, programs, and operations of PREPA.

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Early Warning System Project

Engineering, Procurement, Construction (EPC) Contract Page 2 of NUMPAGES \\* Arabic \\* MERGEFORMAT 51

WHEREAS, this Contract was awarded to the Contractor on February 9, 2024, by means of a competitive process (RFP-20231010), Power Advocate Event Number 201537.

WITNESSETH

THEREFORE, IN CONSIDERATION of the mutual covenants hereinafter stated, the Parties agree themselves, their personal representatives, successors, and assignees, as follows:

TERMS AND CONDITIONS

ARTICLE 1. <u>Scope of Work and Deliverables</u> 

The purpose of this project is to design, procure, install, and implement an Early Warning System (EWS) for thirty-four (34) existing dams in Puerto Rico. Owners and number of dams are as follows: seventeen (17) PREPA, eight (8) Puerto Rico Aqueduct and Sewer Authority (PRASA), four (4) Department of Natural Resources (DNR), two (2) Municipality of Comerio (Comerio), and three (3) Empresas Serralles (Serralles). The intention of this Contract is to cover all 34 dams. Equipment is also to be installed in eight (8) assigned Emergency Operations Centers (EOC): four (4) EOC's located at PREPA's Irrigation District Offices, two (2) at PREPA's Hydroelectric Plants, one (1) at PRASA's headquarters, and one (1) at Puerto Rico Emergency Management (PREMA) headquarters. Instrumentation and video surveillance systems, excluding sirens, will be designed, procured, installed, and implemented in Carite, Patillas, and Melania dams. All this scope is detailed in Genasys, Puerto Rico, LLC Statement of Work, dated July 8, 2024, which is part of this Contract.

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Early Warning System Project

Engineering, Procurement, Construction (EPC) Contract Page 3 of NUMPAGES \\* Arabic \\* MERGEFORMAT 51

The work shall be performed in accordance with all Conditions of Approval, set forth by FEMA for the HMGP Project 4339-0012.

The scope of work includes cellular phone message alerts, reverse 911 dialing, siren system in selected floodable areas, installation of the dam instrumentation, all communication and integration systems, preparation of evacuation routes with the appropriate signaling, flood poles in the designated areas, and preparation of community outreach program with training for all the people at risk. The EWS shall be compatible and connected to PREMA's IPAWS system.

In addition, the work shall include but not limited to the following:

Site visits to each dam to locate the instrumentation with consideration of the present condition.

Surveying as necessary to collect design inputs.

Furnishing all erection and installation equipment and tools, including calibrated instruments required for monitoring and testing.

Excavated material shall be reutilized on-site in a location designated by the Owner of the property. Construction debris disposal shall comply with Puerto Rico's requirements for the treatment and disposal of non-hazardous waste.

Maintaining a record of installation (i.e., as-built drawings) in accordance with the technical requirements of this specification.

Furnishing the services of qualified personnel at the project site to perform field services, such as inspections, welding, and testing.

Providing a qualified third-party inspection service to monitor the quality of the work as indicated in Section 014500 of this specification.

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Progress reporting as specified in the commercial terms and conditions.

Daily site cleanup and disposal of waste and debris.

Participation in an OSHA approved Safety Program.

ARTICLE 2. <u>Definitions</u> 

Whenever the words defined in this Article or their pronouns are used or mentioned in this Contract, they shall have the meanings here given:

2.1Contracting Officer – shall mean the Executive Director of PREPA, acting directly or through his properly authorized agents.

2.2Contract – shall mean, collectively, the documents listed below and all supplementary documents thereto that are incorporated by reference. In the event of a conflict between any such documents, the following descending order from top to bottom shall constitute the order of priority governing the interpretation of the

Contract (beginning with the Contract as the top priority):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.Contract

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Terms and Conditions

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.Special Conditions and Technical Specifications

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.Instructions to Proponents Questions and Answers during the procurement process

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e.Contractor's Proposal

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f.Performance and Payment Bonds

In case of any difference between the terms and conditions of this Contract and the terms of Contractor's Proposals, the terms and conditions of this Contract shall govern.

2.3Completion Date – date in which all tasks and project scope had completed.

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2.4Change Order – a written agreement between the Parties that sets out changes in price, time, or the Scope of Work. All Scope of Work changes must be approved by FEMA prior to final approval.

2.5Engineer – shall mean PREPA's Generation Director, acting directly or through his properly authorized agents.

2.6Final Acceptance – shall mean written approval by PREPA that the entire work has been completed, the final cleaning up of the site has been performed and all Punch List items have been rectified.

2.7Notice to Proceed – a written order sent to the Contractor by the Contracting Officer or the Engineer, notifying the Contractor giving authority to begin the Work or separate portions of the Work, as established in this Contract.

2.8Punch List – shall mean the list of non-conforming or incomplete works items identified by PREPA to be completed by the Contractor before the Final Acceptance of the Work.

2.9Special Conditions – are all the specific requirements, regulations and/or directions covering particular conditions of the project.

2.10Substantial Completion – shall mean the date certified by PREPA, that the Contractor shall reach the stage of completion of the Works, when PREPA accepts the safe use of the facility or the system for its intended purposes, even though all Work is not completed.

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2.11Environmental Compliance Officer – PREPA's personnel in charge of project inspections and environmental regulations compliance, who has the authority to stop the project execution until any environmental deficiencies or violations in the project, identified by PREPA or any environmental regulatory agency, are corrected.

2.12Health and Security Officer – The Contractor and/or Subcontractor shall provide a health and security officer on the project site, which will oversee the prevention of accidents, security enforcement program and work plan in coordination with PREPA's designated security officer. The Contractor or subcontractor security officer must have at least 30 hours of basic training in health standards and occupational security for construction projects, provided by a recognized institution approved by the Occupational Safety and Health Administration. The Contractor shall install security barriers around the project boundaries to avoid non-authorized personnel in the area.

ARTICLE 3. <u>Consideration</u> 

The Contract Amount is an estimate based on time and material rates. As compensation for services rendered under this Contract, PREPA and the Contractor agree that the total amount to be paid under this Contract shall not exceed seventy-five million dollars (***US$75,000,000***). PREPA shall have no obligation to pay the Contractor any amounts in excess of the Contract ceiling price. Contractor shall have no obligation to perform any work in excess of the Contract ceiling price. The Contractor will be the only one responsible for any work it or any of its subcontractors, if any, do in excess of the Contract Amount, unless otherwise agreed to in writing, signed by the Parties.

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The rates quoted in Contractor's Proposal shall constitute full compensation for the Engineering, Procurement Construction (EPC) project for an Early Warning System on all Puerto Rico Dams including but, not limited to labor, tools, equipment, other accessories, cost of all insurance, profit, Contractor's overhead, profit, taxes, etc.

The Contractor shall submit invoices for completed work according to the payment schedule approved by the Engineer, together with the supporting documents.

The invoices submitted by the Contractor must be approved by the Engineer and be accompanied by the proper supporting documentation (including but not limited to inspection certifications, work reports and third-party invoices). Invoice will not be accepted for evaluation without the required documentation.

PREPA reserves the right to deduct or withhold any payment under this Contract, until the Contractor complies with any debts or liabilities as a result of poor performance or negligence during the performance of the Work.

All invoices shall be subject to PREPA's approval before being paid, and payment shall be made within thirty (30) days after the date of PREPA's approval.

Upon completion and Final Acceptance of all works required hereunder, the amount due to the Contractor, under this Contract, will be paid upon the presentation of a properly executed and duly certified invoice the amount of such excepted claims is not included in the invoice for final payment.

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All invoices submitted by the Contractor shall include the following Certification in order to proceed with its payment. This is an essential requirement and those invoices without this Certification, will not be processed for payment.

No interest Certification:

We certify under penalty of absolute nullity that no public servant of PREPA is a party or has any interest in the benefit or profit product of the Contract, which is the basis of this invoice. If such benefit or profit exists, the required waiver has been obtained prior to entering into the Contract. The only consideration to be received in exchange for the delivery of Services provided is the agreed-upon price that has been negotiated with an authorized representative of PREPA. The total amount shown on this invoice is true and correct. The Services have been rendered, and no payment has been received.

<u>/s/ Richard S. Danforth</u>

Contractor's Signature

Nothing herein shall preclude the Parties from agreeing to increase the Contract Amount by written amendment signed by both Parties.

The funds to pay for the services performed by the Contractor will come from account 01-1831-18301-550-169.

ARTICLE 4. <u>Commencement, Prosecution and Completion of Work</u>

PREPA will provide a mobilization letter to the Contractor, prior to beginning the Work. All Work until reaching 100% of design, including all final biding and construction support package, shall be completed, and performed in accordance with a mutually agreed upon schedule initially estimated to span three (3) years, after the commencement date, specified by PREPA in the mobilization letter. All Work shall be previously coordinated with the Engineer on a schedule

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mutually agreed upon by the Parties. Any Work performed without the Engineer's approval will not be subject to payment by PREPA.

The Contractor will be responsible to obtain all the necessary permits for the Work, including the operation of emergency electric power generators, fuel and oil storage tanks, use of crane and transportation of equipment in state roads and highways. All copies of approved permits must be on the project site. The Contractor must submit a copy of the approved permits to PREPA's Environmental Protection Quality Assurance Division (EPQAD).

The Contractor must provide and install construction and maintenance signs in a visible area of the project. These signs must comply with the state and federal codes for regulatory, warning and guide signs.

<u>Schedule of Proposed Progress</u>

All work on a particular Group shall be carried out on a continuous schedule following the commencement date specified by PREPA. For the avoidance of doubt, all work shall only be performed on weekdays, during normal business hours unless otherwise mutually agreed to by the Parties in writing. The Contractor shall present the Baseline Schedule for the approval of PREPA. A revised updated schedule shall be presented in accordance with a mutually agreed upon schedule.

ARTICLE 5. <u>Suspension of Work</u>

The Contracting Officer or the Engineer may, at any time, suspend the whole or any portion of the works under this Contract, by providing the Contractor with a written notice stating the reasons for the suspension, at least five (5) days in advance of the day the suspension. The right of PREPA

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to suspend the services shall not be construed as denying the Contractor reimburse for actual reasonable, and necessary expenses due to delays, caused by such suspension, it is understood that expenses will not be allowed for such suspension when ordered by the Contracting Officer or the Engineer on account of a force majeure event, as defined in Article 14, <u>Force Majeure</u>, of this Contract.

ARTICLE 6. <u>Specifications and Drawings</u> 

Anything called for in the Specifications and not shown in the drawings or shown in the drawings and not mentioned in the Specifications shall be deemed to have been called for or shown in both. In case of any difference between drawings and Specifications, the specifications shall govern. In case of discrepancy in the specifications and drawings, the matter shall immediately be submitted to the Engineer, without whose decision said discrepancy in the specifications and drawings shall not be adjusted by Contractor, and Contractor shall not proceed with the work affected thereby until he has received written orders from the Engineer.

The Engineer will, from time to time, furnish such additional detailed drawings or other information as he may consider necessary for carrying out the work.

ARTICLE 7. <u>Changes and/or Extra Work</u>

PREPA may, at any time, make changes or order extra work within the Scope of Work subject to previous written approval of the Contracting Officer. Changes requested by PREPA may include, but not limited to, changes:

1. In the Scope of Work.

2. In the method or schedule of performance of the Works.

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3. Acceleration in the performance of the Works.

Within ten (10) working days after receipt of PREPA's written Change Order (or such shorter or longer period of time as may be reasonably required as agree by PREPA and the Contractor), Contractor shall promptly notify PREPA of the cost, schedule and other impact(s) Contractor anticipates as a result of the change. If PREPA agrees with the Contractor's statement as to the impact of the change, the Parties shall proceed promptly to enter into a written change order and amendment to the Contract, in connection with such change to equitably adjust: Contractor's cost (increase or decrease), schedule (lengthen or shorten), or other obligations under the Contract regarding such change.

PREPA shall promptly notify Contractor in writing of the basis for any disagreement and PREPA and Contractor shall negotiate in good faith to resolve any issues in order to, when applicable, enter into a written change order to: equitably adjust Contractor's cost (increase or decrease), schedule (lengthen or shorten), or other obligations under the Contract regarding such change. The acceptance of the Change Order and an adjustment in the Contract Amount and/or Contract Term shall not be unreasonably withheld.

To facilitate review of quotations for extras or credits, all proposals submitted by Contractor in connection with a Change Order shall be accompanied with a complete breakdown of the costs that include labor, materials, equipment, and subcontracts.

ARTICLE 8. <u>Other Work at the Site</u> 

PREPA reserves the right to perform other work by force account and/or enter into other contracts related with these Works. The Contractor shall afford and coordinate with PREPA and the other

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contractors, reasonable opportunity to introduce and store materials and execute work. If any part of Contractor's Work, depends for proper execution or results, upon the work of PREPA or of any other contractor, the Contractor shall inspect the works and promptly report to PREPA any defects in such work or any conflicts between such work and Contractor's Work, for PREPA to decide, if necessary, the course of action to be followed by each Party.

Wherever work being done by PREPA's own forces or by other contractors is contiguous to work covered by this Contract, the respective rights of the various interests involved shall be established by PREPA to secure the completion of the various portions of the work in general harmony. Whenever, in the opinion of PREPA, the orderly progress of the entire services requires the use of PREPA's own forces or by other contractors, PREPA will arrange with the Contractor for such use, at times, and in locations which will not interfere with the work being done under this Contract.

ARTICLE 9. <u>Inspection</u>

9.1.1 <u>Periodic Inspection</u> 

All material and workmanship (if not otherwise designated by the Specifications) shall be subject to inspection and testing by PREPA's inspectors, at all reasonable times, during the performance of the Work. PREPA shall have the right to reject defective material, equipment or workmanship or require correction. Rejected workmanship shall be satisfactorily corrected and rejected material and equipment shall be satisfactorily replaced with proper material and equipment, without charge to PREPA. The Contractor shall promptly remove rejected material from the premises. The Contractor shall furnish

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promptly all reasonable facilities, labor, materials, and equipment necessary for the safe and convenient inspection and tests that may be performed in such manners as not to unnecessarily delay the Work.

The Contractor must meet all the conditions and recommendations established by PREPA's Environmental, Health and Securities Officers.

Upon completion of the Work, the Contractor shall ensure the Work area is free of contaminants.

9.1.2 <u>Final Inspection</u> 

Whenever all the materials have been furnished and all Work has been performed, including final cleaning up, as contemplated in Article 43, <u>Cleaning Up</u>, of this Contract, all in accordance with the Technical Specifications, the Contractor shall notify in the Engineer writing that the Work is completed and ready for Final Inspection. Final inspection shall occur within ten (10) working days after the Engineer has received Contractor's notice of completion of Work. PREPA will notify the Contractor of the Final Inspection date and time. If all the Work included in the Scope of the Contract, is found completed in accordance with the Specifications, this inspection shall constitute the Final Inspection and the Completion Date shall be the date of receipt of Contractor's notice of completion of Work. If, however, upon inspection by the Engineer it is found that any work, in whole or in part, is unsatisfactory, the Engineer shall give the Contractor the instructions as to replacement of material and performance of work necessary for final completion and acceptance, and the Contractor shall immediately comply with and execute

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such instructions. Upon satisfactory replacement and performance of such work, the Contractor shall notify the Engineer, and another inspection shall be made which will constitute the Final Inspection if said material is found to have been acceptably replaced and the work completed satisfactorily.

In such event, the date of receipt of this last Contractor's notice will be established as the Completion Date of the Work or any separable part thereof under the Contract. The Completion Date, thus established, shall be used in calculating the real time of performance of the Work.

The determination of whether a project is substantially completed is at the discretion of PREPA. This project shall be considered substantially completed when PREPA accepts the safe use of the facility or system for its intended purposes and can do so even though not all work is completed. At this stage, the time for completion of the entire work shall cease and the accruing of penalties. However, the Contractor shall finish all items included in the Punch List before Final Acceptance of Services, including items listed in Article 2.10, Substantial Completion, of this Contract.

ARTICLE 10. <u>Submittals</u>

The Engineer shall evaluate submittals within ten (10) calendar days of receipt to disapprove; approve as corrected or approve as submitted. The Contractor shall submit three (3) sets of each submittal. All disapproved submittals shall be amended or corrected as directed and resubmitted for PREPA's evaluation. In case of discrepancy in the submittals, including Contractor's disagreement with corrections requested by the Engineer or PREPA, the matter shall be submitted

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to the Engineer, and the Contractor shall not proceed with the work so affected until the Parties resolve such discrepancy in good faith.

Review or approval of Contractor's submittals shall in no way relieve the Contractor from the responsibilities, obligations or liabilities under this Contract. The Contractor shall obtain all reviews or approvals in writing from PREPA. The Contractor shall keep at the site one hard copy of the Contract documents, Specifications and drawings, and shall give the Engineer access thereto. Anything identified in the Specifications and not shown or shown on the drawings and not referenced in the Specifications shall be of like effect as if called for or shown on both. All Work called for in the Specifications and/or shown on the drawings to be performed by the Contractor shall be performed in strict accordance with the Technical Requirements of the Specifications.

Before commencement of Work, the Contractor shall submit for PREPA's approval the Occupational Safety and Health Program, required in Article 44, <u>Safety Provisions</u>.

ARTICLE 11. <u>Superintendence by the Contractor</u>

Before commencement of the Work, the Contractor shall designate a qualified Site Manager, approved by the Engineer, with the expertise and resources necessary to provide management of the Work. The Site Manager must be available at all times, during progress of the Work and have the authority to act on the Contractor's behalf.

The Site

Manager shall represent the Contractor and directives given to him by the Engineer shall be as binding as if given to the Contractor. The Contractor shall, at all times, enforce strict discipline

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and good order among his employees and shall not employ on the Work any unskilled person. In addition, the Contractor shall be fully responsible for the negligent or wrongful acts or omissions of subcontractors, if any, or of persons both directly or indirectly employed by the Contractor and shall be liable to PREPA and/or any affected third parties for any acts or omissions.

ARTICLE 12. <u>Sanitary Facilities</u>

The Contractor shall furnish and maintain satisfactory sanitary facilities for the use of the workers engaged in the Work, as required by law or regulations.

ARTICLE 13. <u>Access to Work</u> 

The Contractor shall always permit all persons appointed or authorized by PREPA to visit and inspect the Work or any part thereof.

ARTICLE 14. <u>Force Majeure</u> 

The Parties hereto shall be excused from performing hereunder and shall not be liable in damages or otherwise, if and only to the extent that they shall be unable to perform or are prevented from performing by a force majeure event. For purposes of this Contract, force majeure means any event not caused by the fault or negligence of, and beyond the reasonable control of, the party claiming the occurrence of a force majeure event.

Force majeure may include, but not be limited to, the following: Acts of God, industrial disturbances, acts of the public enemy, war, blockages, boycotts, riots, insurrections, epidemics, earthquakes, storms, floods, civil disturbances, lockouts, fires, explosions, interruptions of services due to the acts or failure to act of any governmental authority, provided that these events, or any other claimed as a force majeure event, and/or its effects, are beyond the reasonable control and

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were not caused by the fault or negligence of the Party claiming the force majeure event, and that such party, within ten (10) days after the occurrence of the alleged force majeure, gives the other party written notice describing the particulars of the occurrence and its estimated duration. The burden of proof as to whether a force majeure has occurred shall be on the party claiming the force majeure. Both Parties will be responsible under a predicted force majeure event to take immediate action and employ emergency plans to avoid human hazards and protect public and private properties within or adjacent Work's areas and Contractor will not be responsible for PREPA failure to take appropriate action to mitigate any predicted force majeure events.

ARTICLE 15. <u>Penalties for Delays</u>

If the Contractor fails to complete the work, or any separable part thereof, within the time established in Article 4, <u>Commencement, Prosecution and Completion of Work</u>, the Contractor shall pay to PREPA a penalty of five hundred dollars ($500) for each day of delay up to one point five percent (1.5%) of the Contract Amount, and the Contractor and his sureties shall be jointly and severally liable for said amount. In the event that the Contractor, due to his delay, has payed the total amount of the penalty as mentioned above, and has failed to complete the work or any separate part thereof, it could be considered a breach of Contract, and PREPA may execute the Performance Bond.

In case of delay, the Contractor shall within five (5) days from the beginning of any such delay shall notify the Engineer in writing of the causes of the delay, who shall find out the facts and the extent of the delay and extend the time for completing the Work when, in his judgment, the

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findings of facts justify an extension, and his findings of facts thereon shall be final and conclusive for the Parties hereto, subject only to appeal by the Contractor as provided in Article 34, <u>Disputes</u>, hereof; provided that, no claim shall be made by the Contractor against PREPA, its agents, contractors, subcontractors, employees, successors, assignees, for any cause whatsoever, during the progress of any portion of the Work. Any damages by delays or interruptions caused exclusively by PREPA shall be considered as fully compensated for by the extensions of time as provided above.

If PREPA does not terminate the right of the Contractor to proceed, the Contractor shall continue with the Work, in which event shall pay to PREPA a penalty in the amount set forth above for each calendar day of delay until the Work is completed, and the Contractor and his sureties shall be liable for the amount thereof. Provided that, the right of the Contractor to proceed shall not be terminated or the Contractor charged with a penalty because of any delays in the completion of the Work due to force majeure event, or PREPA's failure to carry out its obligations.

PREPA shall have the right to the payment of the penalty or the withholding of Contractor's payments, in case of Contractor's delay in completion of the Work. The Contractor agrees that the penalty shall not be subject to reduction, moderation or modification, since this penalty is a pecuniary punishment for the delay, and not a liquidation of damages.

ARTICLE 16. <u>Liabilities</u>

16.1<u>Civil Responsibility</u>

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The appearing Parties agree that their responsibilities for damages under this Contract will be governed by the Puerto Rico Civil Code and its case law, as dictated by the Supreme Court of Puerto Rico.

16.2<u>Indirect or Consequential Damages</u> 

The Contractor shall not be responsible for indirect, consequential damages or punitive damages, cost of procurement of substitute goods, or lost profits, whether or not such losses or damages are foreseeable that may occur in relation to the Works.

16.3<u>Direct Damages to PREPA's Property</u>

The Contractor shall be insured for all direct damages to PREPA's property that occur as a result of his fault or negligence in connection with the prosecution of the Work and shall be responsible for the proper care and protection of all materials, equipment and work performed until completion of Work. Notwithstanding anything to the contrary in this Contract, Contractor's aggregate liability under this Contract shall not exceed the total compensation paid to it in connection with applicable dam group to which any such liability relates. Each Party has the obligation to mitigate damages it may suffer hereunder.

16.4<u>Protection against the Occurrence of Damages</u>

The Contractor agrees to make, use, provide, and take all proper, reasonably necessary and enough precautions, safeguards, and protection against the occurrence of injuries, death and/or damages to any person or property during the progress of the Work. In the

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performance of its obligations under the Contract, Contractor agrees to comply with all applicable local and federal laws and regulations.

16.5<u>Save and Hold Harmless Clause</u>

The Contractor agrees to indemnify and save harmless PREPA for all expenses and costs of any nature (including attorneys' fees) incurred by PREPA arising out of any claim made by any third party for personal injuries, including death, sustained by any person, including Contractor's employees, and for damages to third party property to the extent such injuries, death or third party damages are caused by the fault, negligent or intentional acts or omission of Contractor, its employees, subcontractors or affiliated companies, arising out of its or their performance and/or failure to perform the Works.

16.6<u>Save Harmless for Operation of PREPA's Equipment</u>

The operation of PREPA's equipment by PREPA at its plant site is within the exclusive control of PREPA. PREPA shall indemnify and save harmless the Contractor from loss, expense or liability imposed upon the Contractor for any injury to a person, including death resulting therefrom or damage to any property resulting from the operation of such equipment by PREPA.

If the Contractor is allowed to operate PREPA's equipment at the plant, the Contractor shall indemnify and save harmless PREPA from loss, expense or liability imposed upon PREPA for any injury to a person, including death resulting therefrom or damage to any property resulting from the operation of such equipment by the Contractor.

ARTICLE 17. <u>Independent Contractor</u> 

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The Contractor shall be considered as an independent contractor, for all material purposes under this Contract, and all persons engaged or contracted by the Contractor for the performance of its obligations herein, shall not be considered as employees or agents of PREPA. In consequence, the Contractor is not entitled to any fringe benefits, such as, but not limited to vacations, sick leave, and others.

Contractor is an independent contractor and as such shall be responsible for the payment of all its income taxes, its subcontractors and its individual and employers' withholdings under the applicable tax laws of Puerto Rico or the U.S. Internal Revenue Code.

ARTICLE 18. <u>Termination</u>

PREPA shall have the right to terminate this Contract for convenience, at any moment, by providing the Contractor thirty (30) days written notice by registered mail, return receipt requested, or overnight express mail. If notice is given, this Contract shall terminate upon the expiration of thirty (30) days and PREPA shall be obligated to pay all fees and expenses incurred up to the day of effective termination, in accordance with the terms of this Contract. The rights, duties and responsibilities of the Parties shall continue in full force and effect during the thirty (30) day notice period. Contractor shall have no further right to compensation except for what has been accrued for services rendered under this Contract until said date of effective termination.

PREPA shall have the right to terminate this Contract immediately in the event of negligence, dereliction of duty, noncompliance, or material breach by the Contractor, as determined in the sole discretion of PREPA, or for any other reason described elsewhere in this Contract as a basis for termination. In the event the Contract is terminated by PREPA for cause, PREPA shall be

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obligated to pay all fees and expenses incurred up to the day of effective termination, in accordance with the terms of this Contract. Contractor shall have no further right to compensation except for what has been accrued for services rendered under this Contract until said date of effective termination.

The Parties acknowledge that PREPA is undergoing a transformation process, and therefore, both Parties agree that after the front-end transition period of a Partnership, Contract, Sale Contract, or any other PREPA Transaction (as these terms are defined in Act 120-2018), PREPA may sell, assign, convey, transfer, pledge, mortgage, sublease, delegate, hypothecate, or otherwise dispose (each, a "Transfer") any of its rights, title, or interest in this Contract as permitted by applicable law and at any time, without Contractor's consent, and without cost, expense, or incremental liability to PREPA, to any future operator of Puerto Rico's generation system or any of its affiliates, or to any governmental agency, body, public corporation or municipality of Puerto Rico; provided, that PREPA shall notify Contractor no later than thirty (30) days before the effective date of any such Transfer. The Contractor acknowledges that all his responsibilities and obligations under the Contract, such as work to be performed and services to be provided, etc., will continue in full force and effect until the expiration of the thirty (30) day period.

ARTICLE 19. <u>Insurance and Bonds</u> 

The Contractor shall secure and maintain in full force and effect during the life of this Contract as provided herein, policies of insurance covering all operations engaged in by the Contract as follows:

19.1<u>Commonwealth of Puerto Rico Workmen's Compensation Insurance</u>:

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The Contractor shall provide workmen's compensation insurance as required by Act No. 45 of April 18, 1935, as amended, known as the Workmen's Compensation Act of the Commonwealth of Puerto Rico ("Act 45"). Contractor shall also be responsible for compliance with Act 45 by all its subcontractors, agents and invitees, if any, or shall certify that such subcontractors, agents and invitees have obtained said policies on their own behalf. Contractor shall furnish to PREPA a certificate from the Puerto Rico's State Insurance Fund showing that all personnel employed in the work are covered by the workmen's compensation insurance, in accordance with this Contract.

19.2<u>Commercial General Liability Insurance</u>:

The Contractor shall provide a Commercial General Liability Insurance with limits of at least $1,000,000 per occurrence and at least $1,000,000 aggregate.

19.3<u>Commercial Automobile Liability Insurance</u>:

The Contractor shall provide a Commercial Automobile Liability Insurance with limits of at least $1,000,000 combined single limit covering all owned or scheduled autos, non-owned and hired automobiles.

19.4<u>Employer's Liability Insurance</u>:

The Contractor shall provide Employer's Liability Insurance with minimum bodily injury limits of at least $1,000,000 for each employee and at least $1,000,000 for each accident covering against the liability imposed by Law upon the Contractor as result of bodily injury, by accident or disease, including death arising out of and in the course of

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employment, and outside of and distinct from any claim under the Workmen's Compensation Act of the Commonwealth of Puerto Rico.

19.5<u>Professional Liability Insurance</u>:

The Contractor shall provide a Professional Liability Insurance with limits of at least $1,000,000 per claim and at least $1,000,000 aggregate.

<u>Requirements Under the Policies</u>:

The Commercial General Liability and Commercial Automobile Liability Insurance required under this Contract shall be endorsed to include:

a.As Additional Insured:

Puerto Rico Electric Power Authority

Risk Management Office

PO Box 364267

San Juan, PR 00936-4267

b.A 30-day cancellation or nonrenewable notice to be sent to the above address.

c.An endorsement including this Contract under contractual liability coverage and identifying it by number, date and Parties to the Contract.

d.Waiver of Subrogation in favor of Puerto Rico Electric Power Authority (PREPA).

e.Breach of Warranties or Conditions:

"The Breach of any of the Warranties or Conditions in this policy by the Insured shall not prejudice PREPA's rights under this policy."

<u>Bonds</u>:

As a Contract security, the Contractor shall furnish at the time of the execution of the Contract:

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a.A Performance Bond in the amount of one hundred percent (100%) of the Contract Price per Group, with good and sufficient surety satisfactory to PREPA guaranteeing that the Contractor will well and faithfully perform the contract work will be secured by Contractor. Each Group will have a separate Performance Bond and any and all right of recovery against such performance bond will be limited to claims to said applicable Group. Upon Final Acceptance, the applicable Performance Bond will terminate.

b.A Payment Bond in the amount of one hundred percent (100%) of the Contract Price per Group, with good and sufficient surety satisfactory to PREPA to guarantee the prompt payment of all labor, supervision, equipment, and materials required in the performance of the work for each Group. Each Group will have a separate Payment Bond and any and all right of recovery against such Payment Bond will be limited to claims to said applicable Group. Upon Final Acceptance, the applicable Payment Bond will terminate.

All bonds shall be presented to PREPA before commencement of any work and shall be issued in the required official PREPA forms.

<u>Furnishing of Policies</u>:

All required policies of insurance and bonds shall be in a form acceptable to PREPA and shall be issued only by insurance companies authorized to do business in Puerto Rico. The Contractor shall furnish a certificate of insurance in original signed by an authorized representative of the insurer in Puerto Rico, describing the coverage afforded.

ARTICLE 20. <u>Permits and Licenses</u>

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The Contractor shall obtain and maintain all the licenses, permits, and authorizations required to perform all Works and tasks under this Contract, and shall send all notices, pay all fees and related costs, and will comply and will have its subcontractors, if any, and agents comply with all laws, ordinances, rules, and regulations applicable to the Work, in accordance with the drawings and Specifications. Should the Contractor find any discrepancy between the drawings and Specifications and the permits, laws, ordinances, rules, and regulations referred to herein, the Contractor shall proceed immediately to notify PREPA of the discrepancy and shall not continue with the Work until PREPA issues and notifies an order informing the Contractor what changes are necessary and when to proceed with the Work as changed.

ARTICLE 21. <u>Contingent Fees</u>

The Contractor guarantees that he has not employed any person to solicit or secure this Contract upon any agreement for a commission percentage, brokerage or contingent fee. Breach of this guarantee shall give PREPA the right to terminate the Contract or, at its discretion to withhold from the Contract Amount the amount of such commission, percentage, brokerage or contingent fees. This guarantee shall not apply to commission's payable by contractors upon Contract or sales secured or made through bona fide established commercial or selling agencies maintained by the Contractor for the purpose of securing business.

ARTICLE 22. <u>Transfer of Funds</u>

If Contractor decides to assign or transfer an amount, due or payable, to which he is entitled for services rendered or goods provided during the term of this Contract, Contractor shall notify PREPA of such transfer of funds, in accordance with the provisions of Act 21-2012. Said notice

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shall clearly indicate the rights granted, including a copy of the contract under which the assignment or transfer of funds is made, the exact amount of funds to be assigned or transferred, and specific identification information regarding the assignee (full name of the person or company), address and any other contact information.

Contractor acknowledges and agrees that PREPA may deduct any amount, due or payable under this Contract, that Contractor owes; PREPA may retain any said amount if Contractor fails to fulfill its obligations and responsibilities under this Contract, or a claim arises for warranty or defects regarding the services rendered or goods provided under this Contract. Contractor also acknowledges and agrees that PREPA's payment obligation under any assignment of funds will cease upon payment of the outstanding amounts under this Contract. PREPA shall not be required to make payments or transfer any funds for an amount that exceeds the payment to which Contractor is entitled to under this Contract.

Contractor shall include with its notice of assignment of funds a cashier's check or money order for two hundred dollars ($200), payable to "Puerto Rico Electric Power Authority", to cover administrative costs in processing such assignment.

ARTICLE 23. <u>Conflict of Interest</u>

The Contractor certifies that he does not receive payment or benefit of any nature for services rendered regularly through an appointment to a governmental agency, body, public corporation or municipality of Puerto Rico.

The Contractor represents conflicting interests when on behalf of a client he must contend for that which it is his duty to oppose to comply with its obligations with another previous, present or

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potential client. Also, the Contractor represents conflicting interests when his conduct is described as such in the canons of ethic applicable to the Contractor and his personnel or in the laws or regulations of the Commonwealth of Puerto Rico.

In contracts with partnerships or firms, if any of the partners, directors or employees of the Contractor should incur in the conduct described herein, said conduct shall constitute a violation to the prohibitions provided herein. The Contractor shall avoid even the appearance of the existence of conflicting interests.

The Contractor acknowledges that the Contracting Officer shall have the power to intervene the acts of the Contractor and/or its agents, employees, and subcontractors regarding the enforcement of the prohibitions contained herein. If PREPA should discover the existence of adverse interests with the Contractor, the Contracting Officer shall inform the Contractor, in writing, of PREPA's intention to terminate this Contract within a thirty (30) day period. During said period, the Contractor may request a meeting with the Contracting Officer to present his arguments regarding the alleged conflict of interests, which meeting shall be granted by PREPA in every case of alleged conflict of interests. If the Contractor does not request such a meeting during the specified thirty (30) day period or the controversy is not satisfactorily settled during the meeting, this Contract shall be cancelled.

The Contractor certifies that, at the time of award of this Contract, it does not have any other contractual relation that can enter in a conflict of interest with this Contract. The Contractor also certifies that no public employee has any personal or economical interest in this Contract.

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ARTICLE 24. <u>Claims for Labor and Materials</u>

The Contractor shall, at his own expense, assume the defense of and save harmless PREPA from claims for labor and materials and not suffer any procedure or other liens to remain outstanding against any of the property used in connection with the Work; and shall, on request, furnish satisfactory evidence that all persons who have done work or furnished materials have been fully paid. If the Contractor fails to comply with his obligations in this respect, PREPA may take such liens or claims and may withhold from any monies due to the Contractor such amounts as may be necessary to satisfy and discharge any such claims and any cost and expenses incidental thereto.

ARTICLE 25. <u>Other Contracts</u>

PREPA may award other contracts for additional work, and the Contractor shall fully cooperate with such other contractors, in accordance with Article 8, <u>Other Work at the Site</u>, of this Contract, and carefully fit his own work to that provided under other contracts as may be directed by the Contracting Officer. The Contractor shall not commit or permit any acts which interfere with the performance of work by any other Contractor.

ARTICLE 26. <u>Minimum Wage Rates</u>

Laborers and other employees engaged under this Contract shall be paid not less than the minimum wages rates prescribed by law. PREPA may withhold from any payment due to the Contractor any amount necessary to make up the full number of wages due under this Contract and may distribute it directly to those entitled thereto hereunder.

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ARTICLE 27. <u>Unfair Labor Practice</u>

In the event that the Contractor or any of his subcontractors or agents do not comply with an order issued by the Puerto Rico Labor Relations Board and/or the National Labor Relations Board upon their finding that the Contractor or any of his subcontractors or agents have committed an unfair labor practice, no further payments shall be made by PREPA to the Contractor after the date of said order. In addition, the Contract may be terminated by PREPA, in which case PREPA may take possession of the materials, tools, and appliances on the job site and finish the work by whatever method it may deem expedient.

Any declaration by the Puerto Rico Labor Relations Board and/or by the National Labor Relation Board that the Contractor or its agents have not complied with an order issued by the Board relating to any unfair labor practice, shall be binding, final and conclusive unless such order is reversed or set aside by a Court of competent jurisdiction.

ARTICLE 28. <u>Assignment</u>

The Contractor shall not subcontract or assign its obligations under this Contract, without PREPA's previous written authorization for such actions. Provided, that no subcontract shall be considered for PREPA's approval, except when the following requirements are met: (1) Contractor delivers PREPA a copy of the subcontract, not less than thirty (30) days prior to the effective date of the proposed subcontract; (2) the subcontract includes, as a condition for its legal validity and enforceability, a provision whereby PREPA has the right to substitute, subrogate or assume Contractor's rights under the subcontract, in the event that PREPA declares the Contractor in breach or default of any of the Contract terms and conditions; and (3) the subcontract includes, as

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a condition for its validity and enforceability, a provision establishing for the subcontractor the obligation to comply with all of Contractor's obligations under the Contract (mirror image clause), except for such obligations, terms and conditions which exclusively related with works or services not included under the subcontract.

If the Contractor decides to assign any due or payables, to which he is entitled for services rendered or goods provided during the term of this Contract to a different company affiliate or any third party, provisions in Article 22, <u>Transfer of Funds</u>, of this Contract, shall apply.

ARTICLE 29. <u>Subcontractors</u> 

PREPA may invalidate any of the contracts with the subcontractors if PREPA determines that they are detrimental to its best interests.

ARTICLE 30. <u>Novation</u> 

The Contractor and PREPA expressly agree that no amendment or change order which could be made to this Contract, during its term, shall be understood as a contractual novation, unless both Parties agree to the contrary, specifically and in writing. This previous provision shall be equally applicable in such other cases where PREPA gives the Contractor a time extension for the compliance of any of its obligations under the Contract or where PREPA dispenses the claim or demand of any of its credits or rights under this Contract.

ARTICLE 31. <u>Patents and Copyrights</u>

The Contractor, at its own expense, shall defend any suit or action brought against PREPA based on a claim that any equipment or part thereof, copyright or un-copyrighted composition, secret process, patented or unpatented invention, article, or appliance manufactured or used in the

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performance of this Contract, including their use by PREPA, constitutes an infringement of any patents or copyrights of the United States, if notified promptly in writing by PREPA, and given the authority, information, and assistance for the defense of the same, and the Contractor shall pay all damages and costs awarded therein against PREPA. If in such suit the equipment or any part thereof, or the composition, secret process, invention, article or appliance, is held to constitute infringement and its use is enjoined, the Contractor, at its option and expense, shall either procure for PREPA the right to continue using the same or replace it with non-infringing equipment, composition, secret process, invention, article or appliance, or modify it so it becomes non-infringing; or remove it and refund the purchase price.

ARTICLE 32. <u>Waivers</u>

No waiver of any breach of this Contract shall be held to be a waiver of any other subsequent breach. All remedies afforded by PREPA in this Contract shall be taken and construed as cumulative, that is, in addition to every other remedy provided herein or by law.

ARTICLE 33. <u>Correction of Work After Final Payment</u>

The final certificate for payment shall not relieve the Contractor of responsibility for faulty materials or workmanship and, unless otherwise specified, Contractor shall remedy any defects due thereto in accordance with the Warranty provisions of this Contract, PREPA shall give notice of observed defects with reasonable promptness. All questions arising under this Article shall be decided by the Engineer, subject to appeal by the Contractor, as provided in Article 34, <u>Disputes</u>, in this Contract.

ARTICLE 34. <u>Disputes</u>

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All disputes concerning questions of fact arising under this Contract shall be decided by the Contracting Officer within ten (10) days from the submission of the dispute by Contractor, subject to written appeal by Contractor to the Contracting Officer within thirty (30) days. Within ten (10) days thereafter, the Contracting Officer shall inform each Party hereto of his decision regarding the dispute. Contractor, at its option, may elect to accept such decision or pursue remedies at law or equity. Contractor may directly pursue the remedies at law or equity for all other disputes other than questions of fact. Notwithstanding the terms above, each Party has the right at any time, at its option and where legally available, to commence an action or proceeding in a court of competent jurisdiction to apply for interim or conservatory measures, but not monetary damages. In the event of a dispute arising during the warranty period, Contractor shall ensure that the Performance Bond remains in full force and effect until such dispute is resolved and all obligations of Contractor under the agreement are duly performed.

ARTICLE 35. <u>Laws to be Observed</u>.

Contractor shall observe and comply with any and all federal, state, and municipal laws, ordinances, and regulations that in any manner affect the Work, the equipment or the materials used in connection with the Works and shall observe all such orders and decrees as exist at present or may be enacted prior to the completion of the Works by agencies or courts having any jurisdiction or authority. Contractor shall save harmless and indemnify PREPA and its representatives, officers, agents and servants for fines and penalties paid by PREPA, including attorney's fees, to governmental authorities as sole result of Contractor's violation of any such

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law, ordinance, regulation, order or decree, whether by the Contractor or its subsidiaries, affiliates and employees, subject to limits of liability in Article 16, <u>Liabilities</u>, of this Contract.

All permits must always be available on site. The Contractor will be responsible to request any extension to the permits before their expiration that may be due to Work schedules delays. Otherwise, the Contractor will assume the responsibility to pay any late fees or fines.

ARTICLE 36. <u>Change in Law</u>

During the term of this Contract, any change in law, including, but not limited to changes in applicable tax law, which causes an increase in Contractors costs when supplying the products or services to be acquired by PREPA, shall be of Contractor's responsibility and PREPA shall not be obliged to make additional payments nor to pay additional sums to the price or canon originally agreed for those products or services.

ARTICLE 37. <u>Choice of Law and Venue</u>

This Contract shall be governed by and construed in accordance with the laws of the Commonwealth of Puerto Rico. Also, the contracting Parties expressly agree that only the state courts of Puerto Rico will be the courts of competent and exclusive jurisdiction to decide over the judicial controversies that the appearing Parties may have among them regarding the terms and conditions of this Contract.

ARTICLE 38. <u>Separability</u> 

If a court of competent jurisdiction declares any of the Contract provisions as null or invalid, such holding will not affect the validity and effectiveness of the remaining provisions of the Contract

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and the Parties agree to comply with their respective obligations under such provisions not included by the judicial declaration.

ARTICLE 39. <u>Discrimination</u>

The Contractor certifies that he is an employer with equal opportunity employment, and does not discriminate against any employee or applicant for employment on account of race, color, gender, age, sex, national or social origin, social status, political ideas or affiliation, religion, for being or perceived to be a victim of domestic violence, sexual aggression or harassment, regardless of marital status, sexual orientation, gender identity or immigrant status, for physical or mental disability, for veteran status or genetic information.

ARTICLE 40. <u>Warranty</u>

The Contractor warrants to PREPA that the Works shall be performed in a competent, diligent manner in accordance with any mutually agreed Specifications. The foregoing warranty for services work shall expire one (1) year after the performance of the Works. No warranty claim shall extend the applicable warranty period.

If the works do not meet the above warranties, PREPA shall promptly notify the Contractor in writing prior to expiration of the warranty period. The Contractor shall at its option, reperform defective Work. If regardless of the Contractor's reasonable efforts, a deficient Work cannot be re-performed; the Contractor shall refund or credit the amounts paid by PREPA for such deficient Work. Warranty re-performance by the Contractor shall not extend or renew the applicable warranty period. PREPA shall obtain Contractor's agreement on the execution of any tests it plans

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to perform to determine if any part of the Work does not comply with the Specifications and warranties.

The Contractor will provide the necessary skill labor for any warranty work that has to be performed in order to comply with the requirements established under this Article. The Performance Bond shall cover and serve as guarantee for this warranty.

Upon expiration of the warranty period, the Performance Bond shall expire.

The warranties and remedies are conditioned upon: (a) proper storage, installation, use, operation, and maintenance of products, (b) PREPA keeping accurate and complete records of operation and maintenance during the warranty period and providing Contractor with access to those records, and (c) modification or repair of products or services only as authorized by the Contractor in writing. Failure to meet any such conditions make the warranty null and void. The Contractor is not responsible for normal wear and tear.

Except as expressly set forth in this article 40, all products and services are provided by Contractor under this Contract are "as is" and Contractor makes no other warranties, express or implied, and disclaims any implied warranties of merchantability, title, non-infringement or fitness for any particular purpose or use, whether arising by law, by reason of custom or usage of trade, or by course of dealing. Contractor is not responsible or liable for any problems or interruptions to any software due to issues with third-party hosting services or Internet service providers.

ARTICLE 41. <u>Notice</u> 

Any required notice to be given hereunder shall be in writing and will be sufficiently served when delivered in person or properly mailed to the following addresses:

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To PREPA: Puerto Rico Electric Power Authority

PO Box 364267

San Juan, Puerto Rico 00936-4267

Attention: Josué A. Colón Ortiz

Executive Director

To Contractor: Genasys Puerto Rico, LLC

16262 West Bernando Drive

San Diego CA 92127

Attention: Richard S. Danforth

CEO

ARTICLE 42. <u>Other Taxes</u>

All unemployment, retirement, and other Social Security contributions and taxes; all sales, use and excise, privilege, business and occupational taxes, and any other taxes or fees payable by the Contractor are and shall be included as part of his prices.

ARTICLE 43. <u>Cleaning Up</u> 

The Contractor shall, from time to time, as directed by the Engineer, remove from PREPA's property and from all public and private property all waste and materials resulting from his operations.

Upon completion of the Works, the Contractor shall remove from the area of the Works all remaining rubbish, unused materials, and other like material, belonging to him or used under his direction, and shall hand-in the work area free of contaminants. In the event of his failure to do so, PREPA may proceed with cleanup of the affected areas at Contractor's expense, and his surety or sureties shall be liable, therefore.

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ARTICLE 44. <u>Safety Provisions</u> 

44.1The Contractor shall have an Occupational Safety and Health Program and a Safety Officer on the site. A copy of this Program will be delivered to PREPA's Occupational Safety Division. The Program shall comply with the following minimum requirements of a health and safety program:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.It shall comply with all requirements from all applicable regulations included in the 29 CFR 1900.1. The Program shall have been updated within the past year from the delivery date to PREPA.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.It shall establish the mechanisms used to update and audit compliance with itself.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.It shall include an accident or incident investigation procedure. This procedure will always include the preparation of a report, which will be submitted to the Occupational Safety Division of PREPA.

44.2The Contractor shall submit, for evaluation by the Occupational Safety Division, a copy of a Site-Specific Work Plan. This plan shall include, but not be limited to, the following aspects:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.Objectives of the Work Plan

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Description of the activities

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.Occupational safety and health considerations to be addressed before commencement of the project.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.Procedures for achieving compliance with the applicable regulations, including, but not limited to:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.Occupational Exposure to Lead (29 CFR 1926.62)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii.Scaffolds (29 CFR 1926 Subpart L)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii.Confined spaces (29 CFR 1910.146)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iv.Occupational Exposure to Noise (29 CFR 1910.95)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;v.Hazardous Materials (29 CFR 1910 Subpart H)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;vi.Personal Protective Equipment (29 CFR Subpart 1)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;vii.Hazard Communication (29 CFR 1910.1200)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;viii.HAZWOPER (29 CFR 1910.120)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ix.Fire Protection (29 CFR 1910 Subpart L)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;x.Commercial Diving (29 CFR 1910 Subpart T)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;xi.Respiratory Protection (29 CFR 1910.134)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;xii.Fall Protection (29 CFR 1926 Subpart M)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;xiii.Electrical (29 CFR 1926 Subpart K)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;xiv.Welding (29 CFR 1926 Subpart J)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;xv.Excavations (29 CFR 1926 Subpart P)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;xvi.Demolitions (29 CFR 1926 Subpart T)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;xvii.Blasting & Explosives (29 CFR 1926 Subpart U)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;xviii.Ventilation (29 CFR 1926.57)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;xix.Tools, Hand, and Powered (1926 Subpart I)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;xx.Electric Industry (29 CFR 1910.269)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;xxi.Lockout/Tagout (29 CFR 1910.147)

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;xxii.Asbestos (29 CFR 1910.1001)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e.It will also include any other regulation or guidelines related to safety and health that could be applicable to the scope of work, and contingency procedures that include how to proceed in an emergency situation, such as fire or chemical spill, among others.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f.A list of all specialized personnel needed. Also, include copy of all training certificates, licenses or certifications required, according to the scope of work, send it via safety@prepa.pr.gov. For example: pesticide applicator, electrician, spill responder, refrigeration technician, DOT training for hazardous substances, etc. All these certificates and licenses shall be up to date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g.Copy of the Safety Data Sheets (SDS) of all chemical products to be used during the project, for evaluation and approval by PREPA's Occupational Safety and Health Office (Hazard Communication Section).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h.Certification of compliance with medical surveillance requirements, according to scope of work.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.Certification of compliance with Fit Test requirements for the use of respirators that make a face seal.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;j.Safety equipment and materials to be used during the project.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;k.Procedures to verify the work area after each workday and at the end of the project.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;l.Each Contractor/Subcontractor shall comply with a 100% drug /alcohol free work zone. At minimum, pre-project and post-accident testing is required. A positive

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post-accident test or positive pre-project test will result in worker dismissal from the project. Testing will be performed in following closely the NIDA standards.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;m.Certification of compliance for general workers ten (10) hours Occupational Safety and Health Administration course in occupational safety and health standards for the construction industry or general industry. Also, to the managers levels and safety officer present certification of compliance thirty (30) hours Occupational Safety and Health Administration course in occupational safety and health standards for the construction industry or general industry.

44.3Before commencement of work, the Contractor shall take part in a coordination meeting with the designated Safety Officer and Construction Site Manager, and the project manager on PREPA's behalf. During this meeting the areas to be worked on will be toured, the site-specific work plan will be discussed and reviewed, and amendments to it could be required.

44.4If the contracted services include demolition activities (as defined per ANSI A10.6 – 1990: Demolition – the dismantling, razing or wrecking of any fixed building or structure or any part thereof) that will be carried out in buildings or structures, that because of their construction date or prior use, are suspected to contain asbestos, lead based paint or other hazardous materials, the Contractor will require a certification from the project manager or owner stating that the building or structure is free of such materials.

44.5Services including activities inside buildings occupied by working personnel, that could create a hazard to their safety or health, will be offered AFTER PREPA'S WORKING HOURS. The Contractor will take all steps necessary to assure the area will be free of

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nuisance odors or vapors before is reoccupy by PREPA's personnel. All these will be done in coordination with PREPA's local supervisor.

44.6The Contractor shall assure that all wastes are removed and properly disposed of, in accordance with all applicable laws and regulations, at the end of every work shift and after the completion of the project.

44.7All chemical products to be used shall be classified as Approved or Conditionally Approved by PREPA's Hazard Communication Section.

44.8Welding operations will comply with the requirements of OSHA, ANSI and NFPA.

44.9If the project involves the handling of non-asbestos insulation or other dust generating materials, like gypsum board, steps shall be taken to prevent the release of the dust to adjacent areas. The Contractor shall take all reasonable precautions for the safety of, and shall provide all reasonable protection to prevent damage, injury or loss to all employees on the work and all other persons who may be affected. Also, to the work, property, material and equipment on or off the site, under the care, custody or control of the Contractor or any of his subcontractors.

44.10The Contractor shall comply with all applicable laws, ordinances, rules, regulations and lawful orders of any public authority having jurisdiction for the safety of persons or property or to protect them from damage, injury or loss. He shall erect and maintain, as required by existing conditions and progress of the work, all reasonable safeguards for safety and protection, including posting danger signs and other warnings against hazards, promulgating safety regulations and notifying owners and users of adjacent utilities.

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44.11The Contractor shall designate a responsible Safety Officer of his organization, evaluated and approved by PREPA, who shall be at all times at the project site, whose only duty shall be the prevention of accidents, implement both the Safety and Health Program and the Site-Specific Work Plan in coordination with the Safety Officer from PREPA. The Contractor's Safety Officer shall have successfully completed the thirty (30) hours Occupational Safety and Health Administration course in occupational safety and health standards for the construction industry.

Contractor shall also have on site available at any time the latest revision of the OSHA Standards for the Construction Industry Manual.

44.12Compliance with all safety provisions by subcontractors shall be the responsibility of the Contractor.

44.13Contractor agrees that it shall perform all work in compliance with federal, state and local occupational safety and health regulations, as described in the Site-Specific Work Plan.

44.14Contractor will obtain and maintain, during the duration of the Contract, the proper permits from all federal, state and local regulatory authorities or other applicable government agency with respect to discharge, disposal, use, storage, handling and transportation of hazardous chemicals and substances as and when applicable law or regulation requires. For projects including the handling of asbestos, lead, or spilled hazardous substances, the notification to EPA or the EQB will be done by the Contractor, but in coordination with the Safety Officer and the Environmental Advisor or Officer.

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44.15Contractor will not cause or permit any hazardous chemical or product containing a hazardous chemical to be at, or in the vicinity of, any place where any employee, agent, or contractor of PREPA, or any employee of any such agent or Contractor, may be at risk or exposed to hazard as a result thereof during normal use or any foreseeable emergency.

44.16Contractor will defend, indemnify and hold harmless, PREPA, its employees, agents or assignees for any and all direct liabilities and expenses arising out of Contractor noncompliance with these clauses irrespective of any other terms of this Contract.

44.17PREPA may unilaterally terminate this contract upon the Contractor's non – observance of any of the foregoing or for any failure to comply with any of the safety provisions on this Contract upon thirty (30) days of a written notice to Contractor.

ARTICLE 45. <u>Environmental Conditions</u>

45.1The Contractor covenants and agrees that it shall, at all times during the term of the Contract, and at its sole cost and expense, comply with and assume sole responsibility and liability under all environmental laws applicable to use of or operations at the project site by Contractors, its agents, assigns, and/or employees. Contractor agrees that should it or any of its agents, assigns, or employees know of (a) any violation of environmental law relating to the project site, or (b) the escape, release, or threatened release of any hazardous materials in, on under, or about the project site, Contractor shall promptly notify PREPA in writing of such, and that it will provide all warnings of exposure to hazardous materials in, on, under, or about the project site, in strict compliance with all applicable environmental laws. Further, Contractor covenants and agrees that it shall at no time use,

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analyze, generate, manufacture, produce, transport, store, treat, release, dispose of, or permit the escape of, or otherwise deposit in, on, under, or about the project site, any hazardous materials, or permit or allow any of its agents, assigns, or employees to do so. Prior to use of the project site, Contractor shall provide to PREPA an inventory of all equipment and materials stored and/or to be stored at the project site.

45.2For purposes of this Contract, hazardous materials shall include but is not limited to, any and all substances, chemicals, wastes, sewage, or other materials that are now or hereafter regulated, controlled or prohibited by any environmental laws, including, without limitation: any (a) substance defined as a hazardous substance, extremely hazardous substance, hazardous material, hazardous chemical, hazardous waste, toxic substance, or air pollutant by federal laws (b) any chemical, compound, material, substance, or other matter that: (1) is a flammable explosive, asbestos, radioactive material, nuclear material, drug, vaccine, bacteria, virus, hazardous waste, toxic substance, injurious by itself or in combination with other materials; (2) is, controlled, designated in, or governed by any hazardous materials law; (3) gives rise to any reporting, notice, or publication requirements under any hazardous materials laws.

45.3The Contractor must provide and maintain environmental protection measurements during the commencement, construction and completion of the project, as defined under this Contract. Environmental protection measures must be provided by the Contractor to correct conditions that emerge or develop during the construction, as well, the recondition

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of all environmental measurements or controls employed at the project that do not fulfill their purpose.

45.4The Contractor must comply with all environmental laws and regulations, as well as any terms or conditions specify under any approved plan, permit or endorsement by local, state or federal agencies. The Contractor must obtain, and submit to PREPA, any type of permit required for their operation, such as but not limited to fuel or wastewater storage tanks, storage of remain material of excavations or any landfill required for the project, use and storage of chemicals, cranes and transportation permits, etc. Furthermore, the Contractor shall comply immediately with any recommendation, required response or mitigation action for any environmental concern or deficiency found by PREPA's personnel, or any State or Federal regulatory agency. The Contractor will be responsible to notify PREPA immediately of any findings resulting from inspections performed by regulatory agency.

45.5The Contractor and its subcontractors must comply with the provisions to attend all discharge of waste waters to comply with the federal and State regulations of the Clean Water Act (40CFR 112.7 y 122), the Spill Prevention Control and Countermeasure and the EQB's Water Quality Standards.

45.6The Contractor agrees to indemnify PREPA for all expenses and costs of any nature arising out of any claim due to an environmental violation, caused by his agents, employees, subcontractors or assigns during the performance or non-performance of its obligations under the Contract.

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45.7The Contractor shall have available, and close to the working area, the necessary equipment to control, pick-up and clean up any spill that could occur during the performance of the work required by the Contract. The equipment should include all the necessary materials for waste disposal.

45.8All Contractor's equipment, including vehicles, to be used in the work area should have an inspection and maintenance program, and be free of any hydrocarbon or hydraulic fluid leakage. If the equipment develops a leakage during the work process, it should be repaired or replaced immediately. While the leaking equipment is removed of the work or it is repaired, it is the Contractor's responsibility the replacement of cloth or absorbent material and drip pans. Traces of hydraulic leakages found during the repairs or modification works must be removed and clean immediately in order to prevent Power Plant Outfalls discharge contamination.

45.9The Contractor shall inform and coordinate with the Plant's Compliance Regulations Supervisor any work to be done to avoid any environmental violation.

45.10The Contractor shall comply with all the arrangements established in the Consent Decree between PREPA and the Environmental Protection Agency (EPA).

45.11All areas must be clean and organized to prevent accidents or violations of regulations. All equipment to be used in the work area should be in perfect conditions and have a good maintenance program. A monthly record of maintenance shall be filed by the Contractors and submitted to PREPA. Also, will be responsible to maintain their Operation Center and project area clean and organized.

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45.12The Contractor shall dispose the wastes stipulated in the Technical Specifications according to the Environmental regulations. The use of PREPA's waste disposal equipment is not permitted. Hazardous wastes shall not be discharged into sanitary sewers or storm water drainage system. All waste products shall be disposed of in accordance with applicable regulations.

45.13The Contractor will be responsible to contain, mitigate and dispose any type of fuel spill, oils or any other substances due to rupture of generator and rotor equipment, as well as auxiliary's related equipment and over and underground pipelines, tanks or storage containers.

45.14All work shall be performed in compliance with the Spill Prevention and Control and Countermeasure Plan (SPCCP). Contractor and subcontractors shall attend to an orientation about the SPCCP.

45.15The Contractor shall submit work plan and the SPCCP to the Environmental Engineer. The construction process should be performed in such a manner that any adverse environmental impacts, where applicable, are reduced to minimum. and acceptable level in fulfillment to PREPA.

45.16All chemical products to be used shall be classified as "Approved" or "Conditional Approved" by PREPA's Hazard Communication Section and by Substances and Wastes Management Department, before entering the work area of PREPA's premises.

45.17The Contractor, upon completion of the work, must leave all the work area clean, organized and free of contaminants, according to the laboratory analysis before and after the work.

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Before starting the work, the Contractor shall submit the work plan to PREPA for evaluation of the Environmental Protection Division. The storage area for the removed equipment and parts must be appropriate to avoid contaminants dispersion to the ground or water.

45.18All chemical analysis shall be performed by an approved laboratory and shall be included in PREPA's Materials Management Division Supplier's Register as companies that are properly qualified and evaluated to perform this type of work.

45.19The disposal of non-hazardous and hazardous waste material shall be done in a Treatment Storage Disposal Facility (TSDF) previously approved by PREPA.

45.20The Contractor shall submit evidence of compliance with DOT's Hazardous Materials Transportation, 49 CFR 172 Sub. Part H (DOT).

45.21All remedial actions and environmental work will be performed by a company previously approved by PREPA.

45.22All work shall be performed according to the Best Management Practice Plan (BMPP), which is part of the Special Conditions of the NPDES Permit.

45.23Any chemical product should not reach any internal waste stream or outfall of the Plant in order to comply with the NPDES Permit.

45.24Temporary storage areas of construction and disposal materials shall be protected with dikes. In the absence of dikes, the Contractor shall prepare temporary areas with dikes to avoid materials exposure.

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45.25All the construction and disposal materials shall be covered to avoid rainfall exposure during the work activities.

45.26The Contractor shall keep a chemical inventory for products with ingredients regulated by the EPA's Toxic Release Inventory (SARA title III, 313). The Contractor should do a quantity report for all the material used and disposed in the project. This report will include a copy for all the analysis taken during the project and a copy or copies of the manifest of the waste generated. This report should be submitted to the Plant's Regulations Compliance Supervisor and to the Quality Assurance Environmental Protection Division.

45.27The Contractor shall be responsible to obtain the requirement air permits for the control of fugitive emission that may be causes by process or work operations.

45.28The Contractor shall be responsible to obtain all the necessary permits for the proposed activity, including the operation of emergency electric power generators, fuel and oil storage tanks, use of crane and transportation of equipment in state roads and highways. All copies of approved permits must be on the site project. The Contractor must submit a copy of the approved permits to the Environmental Protection Quality Assurance Division (EPQAD).

45.29The Contractor must locate construction and maintenance signs in a visible area of the project. These signs must comply with the states and federal codes for regulatory, warning and guide signs.

45.30Water flooding of trenches with potable water will not be permitted.

45.31All paints applied by sprayers shall be of a water-based type.

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45.32Provisions shall be made to prevent the discharge of construction silt, mud, and debris into storm water drains or power plant outfalls.

45.33Contractor shall take whatever steps, procedures, or means to prevent abnormal, material spillage, or tracking conditions due to their construction operations in connection with the Contract. The dust control measures shall always be maintained during construction of the project, to the satisfaction of PREPA's Environmental and Engineers Personnel, in accordance with Air Pollution Control Regulations.

45.34All materials supplied by Contractor shall be one hundred percent (100%) asbestos free.

45.35When archaeological features are encountered or unearthed, Contractor shall promptly report PREPA's Environmental Division. Excavation shall not resume in the identified area until approved by State Regulatory Officers.

45.36Contractor is solely responsible for, and assumes full liability for, the traffic control relating to this project. Contractor is solely responsible for any and all loss, damage, replacement, or repair necessitated to any traffic signal equipment, traffic signal conduit, and/or circuits, arising from or relating to Contractor's work or services performed hereunder. Contractor shall have all repairs performed immediately at its sole expense by a licensed electrical contractor with experience in traffic signal repair, subject to pre-approval by State the Roads and Transportation Department. Any and all repairs and/or replacement costs expended by the State in this regard shall be reimbursed immediately by the Contractor.

ARTICLE 46. <u>Use of Completed Portions</u>

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PREPA shall have the right to take possession of and use any completed or partially completed portions of the Work, notwithstanding the fact that the time for completion of the entire Works may not have expired, but such taking possession and use shall not be deemed an acceptance of the Work so taken or used or any part thereof. PREPA may require the Contractor to expedite the completion of any part of the Work for provisional use by PREPA and the Contractor shall comply with such request. If such order of completion or prior use increases the cost of the work or delays the work, the Contractor shall be entitled to such extra compensation or extension of time as agreed by the Parties.

ARTICLE 47. <u>Quality Assurance</u> 

The Contractor shall submit for evaluation and approval by PREPA a quality control program and establish a quality assurance program, also evaluated and approved by PREPA, to satisfy all applicable regulation and requirements specified in the procurement documents and satisfactory to PREPA. The program shall contain all those measures necessary to assure that all basic technical requisites ask for in the drawings, codes, tests, and inspections for design, fabrication, cleaning, installation, packing, handling, shipping, long term storage, when necessary, and test equipment are fulfilled. PREPA reserves the right to conduct audits and inspections to the facilities, activities, and/or documents when estimated and without previous notification necessary in order to assure that the quality control program is adequate and properly implemented.

The Contractor shall allow PREPA access to its facilities and documents, so that PREPA, through audits and inspections can verify the quality of the labor, equipment, products, services, and any other related items provided by the Contractor. In every case in which the materials or services

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furnished to PREPA are subcontracted partially or totally, by the Contractor, the Contractor shall request the subcontractor to accept and comply with all the requirements of this Article.

ARTICLE 48. <u>Compliance with the Commonwealth of Puerto Rico Contracting Requirements</u>

The Contractor will comply with all applicable laws, regulations and executive orders that regulate the contracting process and requirements of the Government of Puerto Rico, including Act No. 73-2019, as amended, known as the "2019 General Services Administration Act for the Centralization of Purchases of the Government of Puerto Rico" ("Act 73-2019"). In compliance with the provisions of Act 73-2019, the Contractor has provided PREPA the Certification of Eligibility of the Unique Registry of Professional Services Providers (known in Spanish as "*Certificado de Elegibilidad del Registro Único de Proveedores de Servicios Profesionales*", and hereinafter referred to as the "RUP Certification"), issued by the General Services Administration. It is hereby acknowledged that pursuant to the provisions of Article 42 of Act 73-2019, a valid RUP Certification serves as evidence of compliance with the documentation requirements necessary for contracting professional services with the Government of Puerto Rico, particularly those applicable under Act 237-2004, as amended, which establishes uniform contracting requirements for professional and consultant services for the agencies and governmental entities of the Commonwealth of Puerto Rico (3 L.P.R.A. § 8611 et seq.), the Puerto Rico Department of Treasury Circular Letter Number 1300-16-16 issued on January 22, 2016, as amended, and the sworn statement before notary public required pursuant to Article 3.3 of Act 2-2018.

Further, the Contractor hereby certifies, guarantees, acknowledges and agrees to the following:

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A.The Contractor hereby certifies that as of the execution of this Contract, it has filed income, sales, and use ("IVU" for its Spanish acronym), and property taxes returns, in Puerto Rico for the past five (5) years. The Contractor also certifies that it does not have any outstanding debt or other debts with the Government of Puerto Rico for income, IVU taxes (collected by the Department of the Treasury), real or chattel property taxes (collected by the "*Centro de Recaudación de lngresos Municipales*" ("CRIM")), unemployment insurance premiums, workers' compensation payments, Social Security for chauffeurs from the Department of Labor and Human Resources, nor have debts with the Puerto Rico Child Support Administration (known in Spanish as the *Administración Para El Sustento de Menores* (ASUME). If the Contractor owes taxes or premiums to said government agencies, it agrees that PREPA may withhold any monies due to the Contractor under this Contract to be applied to the payment and cancellation of said debt. The Contractor also certifies that it is in corporate "Good Standing" at the Department of State of Puerto Rico. The Contractor hereby represents and certifies that it is duly authorized to do business under the laws of Puerto Rico by the Department of State and the execution, delivery, and performance of all the services under this Contract are within the Contractor authorized powers and are not in contravention of law. The Contractor also certifies that it is in compliance with the Merchant's Registration. Accordingly, the Contractor has submitted to PREPA its RUP Certification from the General Services Administration. The Contractor shall maintain its certificate valid for the duration of this Contract.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.Special Contribution for Professional and Consulting Services: As required by Act 48-2013, as amended, PREPA will withhold a special contribution of one point five percent (1.5%) of the gross amounts paid under this Contract.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.Social Security and Income Tax Retentions: In compliance with Executive Order 1991 OE-24; and C.F.R. Part 404 et. Seq., Contractor will be responsible for rendering and paying the Federal Social Security and Income Tax Contributions for any amount owed as a result of the income, from this Contract.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D.Income Tax Retention Law: PREPA shall deduct and withhold ten percent (10%) of all payments to residents of the Commonwealth of Puerto Rico as required by the Internal Revenue Code of Puerto Rico. In case of US citizens and non-US citizens, which are nonresidents of the Commonwealth of Puerto Rico, PREPA will retain twenty percent (20%) and twenty-nine percent (29%) respectively. PREPA will remit such withholdings to the Government of Puerto Rico's Treasury Department (known in Spanish as *Departamento de Hacienda de Puerto Rico*). Contractor will request PREPA not to make such withholdings if, to the satisfaction of PREPA, Contractor timely provides a release from such obligation by the Government of Puerto Rico's Treasury Department Act 1-2011, section 1062.03.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E.Compliance with Governmental Ethics, Act 1-2012: Contractor will certify compliance with Act 1 of January 3, 2012, as amended (Act 1-2012), known as the Ethics Act of the Government of Puerto Rico, which stipulates that no employee or executive of PREPA nor any member of his/he immediate family (spouse, dependent children or other members of

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his/her household or any individual whose financial affairs are under the control of the employee) shall have any direct or indirect pecuniary interest in the services to be rendered under this Contract, except as may be expressly authorized by the Governor of Puerto Rico in consultation with the Secretary of Treasury and the Secretary of Justice of the Government. 3 L.P.R.A. § 8611 et seq.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;F.Act 168-2000: Law for the Strengthening of the Family Support and Livelihood of Elderly People: Contractor will certify that if there is any Judicial or Administrative Order demanding payment or any economic support regarding Act 168-2000, as amended, the same is current and in all aspects in compliance. Act 168-2000 "*Law for the Strengthening of the Family Support and Livelihood of Elderly People*" in Spanish: "*Ley para el Fortalecimiento del Apoyo Familiar y Sustento de Personas de Edad Avanzada*", 3 L.P.R.A. §8611 et seq.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;G.Act 127-2004: Contract Registration in the Comptroller's Office of Puerto Rico Act: Payment for services object of this Contract will not be made until this Contract is properly registered in the Office of the Comptroller of the Government of Puerto Rico pursuant to Act 18 of October 30, 1975, as amended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;H.Prohibition with respect to execution by public officers: 3 L.P.R.A. §8615(c): No public officer or employee authorized to contract on behalf of the executive agency for which he/she works may execute a contract between the agency for which he/she works and an entity or business in which he/she or any member of his/her family unit has or has had

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direct or indirect economic interest during the last four (4) years prior to his/her holding office.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;I.Prohibition with respect to contracting with officers or employees: 3 L.P.R.A. §8615(d): No executive agency may execute a contract in which any of its officers or employees or any member of their family units has or has had direct or indirect economic interest during the last four (4) years prior to their holding office, unless the Governor gives authorization thereto with the previous recommendation of the Secretary of the Treasury and the Secretary of Justice.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;J.Prohibition with respect to contracts with officers and employees of other Government entities: 3 L.P.R.A. §8615(e): No public officer or employee may be a party to or have any interest in any profits or benefits produced by a contract with any other executive agency or government dependency unless the Governor gives express authorization thereto with previous recommendation from the Secretary of the Treasury and the Secretary of Justice.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;K.Prohibition with respect to evaluation and approval by public officers: 3 L.P.R.A. §8615(f): No public officer or employee who has the power to approve or authorize contracts shall evaluate, consider, approve or authorize any contract between an executive agency and an entity or business in which he/she or any member of his/her family unit has or has had direct or indirect economic interest during the last four (4) years prior to his/her holding office.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;L.Prohibition with respect to execution by public officers' contracts with former public officers: 3 L.P.R.A. §8615(h): No executive agency shall execute contracts with or for the

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benefit of persons who have been public officers or employees of said executive agency until after two (2) years have elapsed from the time said person has ceased working as such.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;M.Dispensation: Any and all necessary dispensations have been obtained from any government entity and that said dispensations shall become part of the contracting record.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;N.Rules of Professional Ethics: The Contractor acknowledges and accepts that it is knowledgeable of the rules of ethics of his/her profession and assumes responsibility for his/her own actions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;O.Provisions Required under Act 14-2004: The Contractor agrees that articles extracted, produced, assembled, packaged or distributed in Puerto Rico by enterprises with operations in Puerto Rico, or distributed by agents established in Puerto Rico shall be used when the service is rendered, if they are available.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;P.The Contractor certifies that at the time of execution of this Contract it has no other contracts with other agencies, public corporations, municipalities, and/or instrumentalities of the Government of Puerto Rico. The Contractor acknowledges and accepts that the failure to list any current contractual relationship with any governmental entity may result in the termination of this Contract if required by PREPA.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Q.The Contractor certifies that at the time of the execution of this Contract, it is not a public company with shares that are traded on a regulated stock exchange. The Contractor certifies that prior to the execution of this Contract, it has submitted to PREPA a Certification of Legal Entity (known in Spanish as "*Certificación sobre Personas Jurídicas*").

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;R.Interagency Services Clause

Pursuant to Memorandum No. 2023-001, Circular Letter 008-2023, of the Office of the Governor of Puerto Rico (*Oficina del Gobernador de Puerto Rico*) and the Office of Management and Budget (*Oficina de Gerencia y Presupuesto de Puerto Rico  OGP*), both Parties acknowledge and agree that the contracted services herein may be provided to any entity of the Executive Branch which enters into an interagency agreement with the contracting entity (PREPA)  or by direct provision of the Office of the Chief of Staff of the Governor of Puerto Rico (*Secretaría de la Gobernación*). These services will be performed under the same terms and conditions regarding hours of work and compensation set forth in this Contract.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;S.Termination Clause

The Chief Executive Officer has the authority to terminate this Contract at any time. If any of the previously required Certifications shows a debt, and Contractor has requested a review or adjustment of this debt, Contractor will certify that it has made such request at the time of the Contract execution. If the requested review or adjustment is denied and such determination is final, Contractor will provide, immediately, to PREPA a proof of payment of this debt; otherwise, Contractor accepts that the owed amount be offset by PREPA and retained at the origin, deducted from the corresponding payments.

ARTICLE 49. <u>Anti-Corruption Code for a New Puerto Rico</u>

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Contractor agrees to comply with the provisions of Act 2-2018, as the same may be amended from time to time, which establishes the Anti-Corruption Code for a New Puerto Rico (Act 2-2018). The Contractor hereby certifies that it does not represent interests in cases or matters that imply a conflict of interest, or of public policy, between the executive agency and the interests it represents.

Contractor shall furnish a sworn statement to the effect that neither Contractor nor any president, vice president, executive director or any member of a board of officials or board of directors, or any person performing equivalent functions for Contractor has been convicted of or has pled guilty to any of the crimes listed in Article 6.8 of Act 8-2017, as amended, known as the Act for the Administration and Transformation of Human Resources in the Government of Puerto Rico (Act 8-2017) or any of the crimes included in Act 2-2018.

Contractor hereby certifies that it has not been convicted in Puerto Rico or United States Federal court for under Articles 4.2, 4.3 or 5.7 of Act 1-2012, as amended, known as the Organic Act of the Office of Government Ethics of Puerto Rico (Act 1-2012), any of the crimes listed in Articles 250 through 266 of Act 146-2012, as amended, known as the Puerto Rico Penal Code (Act 146-2012), any of the crimes typified in Act 2-2018, or any other felony that involves misuse of public funds or property, including but not limited to the crimes mentioned in Article 6.8 of Act 8-2017.

PREPA shall have the right to terminate the Contract in the event Contractor is convicted in Puerto Rico or United States Federal court for under Act 1 Articles 4.2, 4.3 or 5.7 of 2012, any of the crimes listed in Articles 250 through 266 of Act 146-2012, any of the crimes typified in Act 2-2018 or any other felony that involves misuse of public funds or property, including but not limited to the crimes mentioned in Article 6.8 of Act 8-2017.

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<u>Consequences of Non-Compliance</u>: The Contractor expressly agrees that the conditions outlined throughout this Article are essential requirements of this Contract. Consequently, should any one of these representations, warranties or certifications be incorrect, inaccurate or misleading, in whole or in part, there shall be sufficient cause for PREPA to render this Contract null and void, and the Contractor shall reimburse PREPA all money received under this Contract.

ARTICLE 50. <u>Federal Contracting Provisions</u>

Since the work under this Contract will be funded in whole or in part by grants through the Federal Emergency Management Agency (FEMA) Public Assistance program and the U.S. Department of Housing and Urban Development (HUD) Community Development Block Grant Disaster Recovery program (CDBG-DR), the following provisions shall apply as applicable to professional services:

50.1<u>Remedies</u>: Any violation or breach of terms of this Contract on the part of Contractor or a subcontractor may result in the suspension or termination of this Contract or such other action, including the recovery of damages, as may be necessary to enforce the rights of PREPA. The duties and obligations imposed by this Contract and the rights and remedies available hereunder shall be in addition to, and not a limitation of, any duties, obligations, rights, and remedies otherwise imposed or available by law. Upon a material breach by Contractor, PREPA may utilize any remedy available by law, including precluding Contractor from further work with PREPA in the future and recommending suspension and debarment.

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50.2<u>Equal Employment Opportunity</u>: For all services under the Contract consisting of "federally assisted construction work," as defined at 41 C.F.R. § 60-1.3, Contractor agrees as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.Contractor shall not discriminate against any employee or applicant for employment because of race, color, religion, sex, sexual orientation, gender identity, or national origin. Contractor shall take affirmative action to ensure that applicants are employed, and that employees are treated during employment without regard to their race, color, religion, sex, sexual orientation, gender identity, or national origin. Such action shall include, but not be limited to the following: Employment, upgrading, demotion, or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship. Contractor agrees to post in conspicuous places, available to employees and applicants for employment, notices to be provided setting forth the provisions of this nondiscrimination clause.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Contractor shall, in all solicitations or advertisements for employees placed by or on behalf of Contractor, state that all qualified applicants will receive consideration for employment without regard to race, color, religion, sex, sexual orientation, gender identity, or national origin.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.Contractor shall not discharge or in any other manner discriminate against any employee or applicant for employment because such employee or applicant has inquired about, discussed, or disclosed the compensation of the employee or applicant or another employee or applicant. This provision shall not apply to instances in which an employee who has

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access to the compensation information of other employees or applicants as a part of such employee's essential job functions discloses the compensation of such other employees or applicants to individuals who do not otherwise have access to such information, unless such disclosure is in response to a formal complaint or charge, in furtherance of an investigation, proceeding, hearing, or action, including an investigation conducted by the employer, or is consistent with Contractors legal duty to furnish information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.Contractor shall send to each labor union or representative of workers with which it has a collective bargaining agreement or other contract or understanding, a notice to be provided advising the said labor union or workers' representatives of Contractor's commitments under this section, and shall post copies of the notice in conspicuous places available to employees and applicants for employment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.Contractor shall comply with all provisions of Executive Order 11246 of September 24, 1965, and of the rules, regulations, and relevant orders of the Secretary of Labor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.Contractor shall furnish all information and reports required by Executive Order 11246 of September 24, 1965, and by rules, regulations, and orders of the Secretary of Labor, or pursuant thereto, and will permit access to his books, records, and accounts by the administering agency and the Secretary of Labor for purposes of investigation to ascertain compliance with such rules, regulations, and orders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.In the event of Contractor's noncompliance with the nondiscrimination clauses of this Contract or with any of the said rules, regulations, or orders, this Contract may be canceled, terminated, or suspended in whole or in part and Contractor may be declared ineligible for

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further Government contracts or federally assisted construction contracts in accordance with procedures authorized in Executive Order 11246 of September 24, 1965, and such other sanctions may be imposed and remedies invoked as provided in Executive Order 11246 of September 24, 1965, or by rule, regulation, or order of the Secretary of Labor, or as otherwise provided by law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.Contractor shall include the portion of the sentence immediately preceding paragraph (1) and the provisions of paragraphs (1) through (8) in every subcontract or purchase order unless exempted by rules, regulations, or orders of the Secretary of Labor issued pursuant to section 204 of Executive Order 11246 of September 24, 1965, so that such provisions will be binding upon each subcontractor, subcontractor, or vendor. Contractor shall take such action with respect to any subcontract or purchase order as the administering agency may direct as a means of enforcing such provisions, including sanctions for noncompliance:

Provided, however, that in the event Contractor becomes involved in, or is threatened with, litigation with a subcontractor, subcontractor or vendor as a result of such direction by the administering agency, Contractor may request the United States to enter into such litigation to protect the interests of the United States.

50.3<u>Employment Practices</u>: PREPA further agrees that it will be bound by the above equal opportunity clause with respect to its own employment practices when it participates in federally assisted construction work, provided, that if PREPA is a State or local government, the above equal

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opportunity clause is not applicable to any agency, instrumentality or subdivision of such government which does not participate in work on or under this Contract.

50.4<u>Cooperation</u>: PREPA agrees that it will assist and cooperate actively with the administering agency and the Secretary of Labor in obtaining the compliance of consultants and subcontractors with the equal opportunity clause and the rules, regulations, and relevant orders of the Secretary of Labor, that it will furnish the administering agency and the Secretary of Labor such information as they may require for the supervision of such compliance, and that it will otherwise assist the administering agency in the discharge of the agency's primary responsibility for securing compliance.

50.5<u>Contracting Prohibition</u>: PREPA further agrees that it will refrain from entering into any contract or contract modification subject to Executive Order 11246 of September 24, 1965, with a consultant debarred from, or who has not demonstrated eligibility for, Government contracts and federally assisted construction contracts pursuant to the Executive Order and will carry out such sanctions and penalties for violation of the equal opportunity clause as may be imposed upon consultants and subcontractors and or subcontractor by the administering agency or the Secretary of Labor pursuant to Part II, Subpart D of the Executive Order. In addition, PREPA agrees that if it fails or refuses to comply with these undertakings, the administering agency may take any or all of the following actions: Cancel, terminate, or suspend in whole or in part this grant (contract, loan, insurance, guarantee); refrain from extending any further assistance to PREPA under the program with respect to which the failure or refund occurred until satisfactory assurance of future

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compliance has been received from PREPA; and refer the case to the Department of Justice for appropriate legal proceedings.

50.6<u>Contract Work Hours and Safety Standards Act (40 U.S.C. §§ 3701-3708)</u>: To the extent this Contract involves the employment of mechanics or laborers, the following provisions apply:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.In accordance with 40 U.S. 3701 et seq., no contractor or subcontractor contracting for any part of the contract work which may require or involve the employment of laborers or mechanics shall require or permit any such laborer or mechanic in any workweek in which he or she is employed on such work to work in excess of forty hours in such workweek unless such laborer or mechanic receives compensation at a rate not less than one and one-half times the basic rate of pay for all hours worked in excess of forty hours in such workweek.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.In the event of any violation of the clause set forth in paragraph (1) of this Section 50.6 Contractor and any subcontractor of its subcontractor responsible therefor shall be liable for the unpaid wages. In addition, Contractor and subcontractor or subcontractor shall be liable to the United States (in the case of work done under contract for the District of Columbia or a territory, to such District or to such territory), for liquidated damages. Such liquidated damages shall be computed with respect to each individual laborer or mechanic, including watchmen and guards, employed in violation of the clause set forth in paragraph (1) of this Section 50.5, in the sum of $27 for each calendar day on which such individual was required or permitted to work in excess of the standard workweek of forty hours

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without payment of the overtime wages required by the clause set forth in paragraph (1) of this Section 50.6.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.PREPA shall upon its own action or upon written request of an authorized representative of the Department of Labor withhold or cause to be withheld, from any moneys payable on account of work performed by the Contractor or subcontractor under any such contract or any other Federal contract with the same Contractor, or any other federally-assisted contract subject to the Contract Work Hours and Safety Standards Act, which is held by the same Contractor, such sums as may be determined to be necessary to satisfy any liabilities of such Contractor or subcontractor for unpaid wages and liquidated damages as provided in the clause set forth in paragraph (2) of this Section 50.6. Contractor or subcontractor shall insert in any subcontracts the clauses set forth in this Section 50.6 and also a clause requiring the subcontractor to include these clauses in any lower tier subcontracts. Contractor shall be responsible for compliance by any subcontractor or lower tier subcontractor with the clauses set forth in set forth in this Section 50.6.

50.7<u>Clean Air and the Federal Water Pollution Control Act</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.Clean Air Act Clause:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Contractor agrees to comply with all applicable standards, orders or regulations issued pursuant to the Clean Air Act, as amended, 42 U.S.C. § 7401 et seq.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Contractor agrees to report each violation to PREPA and understands and agrees that PREPA will, in turn, report each violation as required to assure notification to the Federal Emergency Management Agency, and the appropriate Environmental Protection Agency Regional Office.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Contractor agrees to include these requirements in each subcontract exceeding $150,000 financed in whole or in part with Federal assistance provided by FEMA.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Federal Water Pollution Control Act Clause:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Contractor agrees to comply with all applicable standards, orders, or regulations issued pursuant to the Federal Water Pollution Control Act, as amended, 33 U.S.C. § 1251 et seq.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Contractor agrees to report each violation to PREPA and understands and agrees that PREPA will, in turn, report each violation as required to assure notification to the Federal Emergency Management Agency, and the appropriate Environmental Protection Agency Regional Office.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Contractor agrees to include these requirements in each subcontract exceeding $150,000 financed in whole or in part with Federal assistance provided by FEMA.

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50.8<u>Suspension and Debarment Clause</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.This Contract is a covered transaction for purposes of 2 C.F.R. pt. 180 and 2 C.F.R. pt. 3000. As such, Contractor is required to verify that none of the Contractor's principals (defined at 2 C.F.R. § 180.995) or its affiliates (defined at 2 C.F.R. § 180.905) are excluded (defined at 2 C.F.R. § 180.940) or disqualified (defined at 2 C.F.R. § 180.935).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Contractor shall comply with 2 C.F.R. pt. 180, subpart C and 2 C.F.R. pt. 3000, subpart C, and must include a requirement to comply with these regulations in any lower tier covered transaction it enters into.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.Contractor shall execute the certification attached hereto as an Annex (Certification Regarding Debarment, Suspension and Other Responsibility Matters). This certification is a material representation of fact relied upon by PREPA. If it is later determined that Contractor did not comply with 2 C.F.R. pt. 180, subpart C and 2 C.F.R. pt. 3000, subpart C, in addition to remedies available to PREPA, the Federal Government may pursue available remedies, including but not limited to suspension and/or debarment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.Contractor shall, and shall cause all subcontractors of every tier to, comply with the requirements of 2 C.F.R. pt. 180, subpart C and 2 C.F.R. pt. 3000, subpart C.

50.9<u>Byrd Anti-Lobbying Amendment, 31 U.S.C. § 1352 (as amended)</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.Contractors that apply or bid for an award exceeding $100,000 shall file the required certification. Contractor shall cause every subcontractor of every tier above that it will not and has not used Federal appropriated funds to pay any person or organization for influencing or attempting to influence an officer or employee of any agency, a member of

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Congress, officer or employee of Congress, or an employee of a member of Congress in connection with obtaining any Federal contract, grant or any other award covered by 31 U.S.C. 1352. Contractor shall cause every subcontractor of every tier to disclose any lobbying with non-Federal funds that takes place in connection with obtaining any Federal award. Such disclosures are forwarded from tier to tier up to the recipient (PREPA). Contractor shall also submit to PREPA the required certification regarding lobbying at Appendix B, 44 C.F.R. Part 18 attached to this Contract as an Annex (Certification Regarding Lobbying for Contracts, Grants, Loans, and Cooperative Agreements).

50.10<u>Procurement of Recovered Materials</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.In the performance of this Contract, Contractor shall make maximum use of products containing recovered materials that are Environmental Protection Agency (EPA) designated items unless the product cannot be acquired:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Competitively within a timeframe providing for compliance with the Contract performance schedule;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Meeting Contract performance requirements; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•At a reasonable price.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Information about this requirement, along with the list of EPA-designated items, is available at EPA's Comprehensive Procurement Guidelines web site, https://www.epa.gov/smm/comprehensive-procurement-guideline-cpg-program.

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Contractor also agrees to comply with all other applicable requirements of Section 6002 of Solid Waste Disposal Act.

50.11<u>Changes</u>: At any time, and only through a written change order instruction, PREPA may make changes in the Services or work to be performed within the general scope of this Contract. To the extent Contractor can demonstrate such changes cause an increase or decrease in Contractor's cost of, or time required for, performance of any services under this Contract, an equitable adjustment shall be made and this Contract shall be modified in writing accordingly, provided, however, that no changes shall be made to the scope of the Services that would render the costs incurred in the performance of this Contract ineligible for, unallowable or not allocable under, outside the scope of, or not reasonable for the completion of, Federal grant awards from FEMA or any other U.S. federal agency.

50.12<u>Sufficiency of Funds</u>: Contractor recognizes and agrees that all or a portion of the funding for this Contract shall be derived from assistance awarded by Federal agencies of the United States of America to PREPA or the Government of Puerto Rico. As part of its obligations under this Contract, Contractor shall ensure that the work performed hereunder is eligible for funding by complying with all applicable Federal law, regulations, executive orders, Federal agency policy, procedures, directives and guidelines. If during the term of this Contract, Federal or local funding is reduced, deobligated, or withdrawn, PREPA may reduce the scope of or terminate the Contract, without penalty, by providing written notice to Contractor of the changes in scope or termination. PREPA shall not be obligated to pay nor shall be held financially liable if any work performed by Contractor under this Contract is deemed ineligible by any Federal agency. If this occurs,

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Contractor shall have the right to terminate this Contract, by providing PREPA an immediate notice by registered mail. The rights, duties and responsibilities of the Parties shall continue in full force and effect until the date of notification of the termination of the Contract. Contractor shall have the right to compensation for what has been accrued for services rendered under this Contract until said date of termination. The Federal Government is not a party to this Contract and is not subject to any obligations or liabilities to PREPA, Contractor, or any other party pertaining to any matter resulting from this Contract.

50.13<u>FEMA Disaster Assistance Survivor/Registrant Data</u>:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.If Contractor has access to Disaster Assistance Survivor/Registrant data or any other personally identifiable information, Contractor shall comply with the provisions of the Terms and Conditions for Sharing FEMA Disaster Assistance Survivor/Registrant Data with State Governments set forth in the FEMA-Government of Puerto Rico Contract for FEMA-4339-DR-PR.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Contractor shall indemnify, defend, and hold harmless PREPA and the Government of Puerto Rico for any and all costs associated with the defense of that litigation, including costs and attorneys' fees, settlements, or adverse judgments arising from Contractor's failure to comply with the requirements under Contract.

50.14<u>Costs</u>: All costs incurred by Contractor performance of this Contract must be in accord with the cost principles of 2 C.F.R. pt. 200, Subpart E. PREPA shall not be required to make payments to Contractor for costs which are found to be contrary to the cost principles 2 C.F.R. pt. 200, Subpart E.

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50.15<u>Financial Management System</u>: Contractor's financial management system shall provide for the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Accurate, current and complete disclosure of the financial results of this Contract and any other contract, grant, program, or other activity administered by Contractor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Records adequately identifying the source and application of all Contractor funds all funds administered by Contractor which shall contain information pertaining all contract and grant awards and authorizations, obligations, unobligated balances, assets, liabilities, outlays and income, and shall be segregated by contract or on a contract-by-contract basis;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Effective internal control structure over all funds, property and other assets, sufficient to allow Contractor to adequately safeguard all such assets and shall ensure that they are used solely for authorized purposes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Comparison of actual outlays with budgeted amounts for this Contract and for any other contract, grant, program or other activity administered by Contractor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Accounting records supported by source documentation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Procedures to minimize elapsed time between any advance payment issued and the disbursement of such advance funds by Contractor; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Procedures consistent with the provisions of any applicable policies of the Federal Government and the Government of Puerto Rico and procedures for determining the reasonableness, eligibility, allowability and allocability of costs under this Contract.

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50.16<u>Penalties, Fines and Disallowed Costs</u>: In the event that any U.S. Federal agency or the Government of Puerto Rico disallows or demands repayment for costs incurred in the performance of this Contract, or if any penalty is imposed due to an act or omission by Contractor, Contractor shall be solely responsible for such penalty, disallowed costs, or repayment demand, and shall reimburse PREPA in full within ten (10) days of receiving notice from PREPA of such penalty, disallowance, or repayment demand. Any monies paid by Contractor pursuant to this provision shall not relieve Contractor of liability to PREPA for damages sustained by PREPA by virtue of any other provision of this Contract.

50.17<u>Reporting Requirements</u>: Contractor shall complete and submit all reports, in such form and according to such schedule, as may be required by PREPA.

50.18<u>Review of Laws</u>: Contractor certifies that it will access online and read each law that is cited in the aforementioned clauses and that, in the event it cannot access the online version, it will notify PREPA in order to obtain printed copies of the laws. Not requiring a printed copy of the laws to PREPA will be evidence that Contractor was able to find it online and read it as required.

50.19<u>Notice of Federal Emergency Management Agency (FEMA) Reporting Requirements and Regulations</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.PREPA is using Federal grant funding awarded or administered by FEMA to the Government of Puerto Rico and/or PREPA to pay, in full, for the costs incurred under this Contract. As a condition of FEMA funding under major disaster declaration FEMA-4339-DR-PR, FEMA requires the Government of Puerto Rico PREPA to provide various financial and performance reporting. Contractor agrees to provide all information,

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documentation, and reports necessary to satisfy these reporting requirements. Failure by Contractor to provide information necessary to satisfy these reporting requirements may result in loss of Federal funding for this Contract, and such failure shall be a material breach of this Contract.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Applicable regulations, FEMA policy, and other sources setting forth these reporting requirements include, but are not limited to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•2 C.F.R. § 200.327 (Financial Reporting);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•2 C.F.R. § 200.328 (Monitoring and Reporting Program Performance); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Performance and financial reporting requirements set forth in 2 C.F.R. Part 206.

50.20<u>Access to Records</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.Contractor agrees to provide PREPA, the Government of Puerto Rico, the FEMA Administrator, the Secretary of HUD, the Comptroller General of the United States, or any of their authorized representatives access to any books, documents, papers, and records of Contractor which are directly pertinent to this Contract for the purposes of making audits, examinations, excerpts, and transcriptions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Contractor agrees to permit any of the foregoing parties to reproduce by any means whatsoever or to copy excerpts and transcriptions as reasonably needed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.Contractor agrees to provide the FEMA Administrator, the Secretary of HUD, or their authorized representatives access to construction or other work sites pertaining to the work being completed under the Contract.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.In compliance with the Disaster Recovery Act of 2018, PREPA and Contractor acknowledge and agree that no language in this Contract is intended to prohibit audits or internal review by the FEMA Administrator, the Secretary of HUD, or the Comptroller General of the United States.

50.21<u>Record Retention Requirements</u>: Contractor agrees to maintain all books, records, accounts, and reports and all other records produced or collected in connection with this Contract for a period of not less than three (3) years after the date of final payment and closeout of all pending matters related to this Contract. If any litigation, claim, or audit is reasonably anticipated to arise or is started before the expiration of the 3-year period, the records must be retained until all litigation, claims, or audit findings involving the records have been resolved and final action taken.

50.22<u>Program Fraud and False or Fraudulent Statements or Related Acts</u>: Contractor acknowledges that 31 U.S.C. Chap. 38 (Administrative Remedies for False Claims and Statements) applies to Contractor's actions pertaining to this Contract.

50.23<u>Energy Efficiency</u>: Contractor agrees to comply with the requirements of 42 U.S.C. § 6201, which contain policies relating to energy efficiency that are defined in the Government of Puerto Rico's energy conservation plan issued in compliance with said statute.

50.24<u>Age Discrimination Act of 1975</u>: Contractor shall comply with the provisions of the Age Discrimination Act of 1975. No person in the United States shall, on the basis of age, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under, any program or activity receiving federal financial assistance.

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50.25<u>Americans with Disabilities Act</u>: Contractor shall comply with the appropriate areas of the Americans with Disabilities Act of 1990, as enacted and from time to time amended, and any other applicable federal regulation. A signed written certificate stating compliance with the Americans with Disabilities Act may be requested at any time during the term of this Contract.

50.26<u>Title VI of the Civil Rights Act of 1964</u>: Contractor shall comply with the provisions of Title VI of the Civil Rights Act of 1964. No person shall, on the grounds of race, color, or national origin, be excluded from participation in, be denied the benefits of or be subjected to discrimination under any program or activity receiving federal financial assistance.

50.27<u>Section 504 of the Rehabilitation Act of 1973, as amended</u>: Contractor agrees that no otherwise qualified individual with disabilities shall, solely by reason of his disability, be denied the benefits, or be subjected to discrimination including discrimination in employment, any program or activity that receives the benefits from the federal financial assistance.

50.28<u>Drug-Free Workplace</u>: Contractor shall maintain a drug-free work environment in accordance with the Drug-Free Workplace Act of 1988 (41 U.S.C. § 8101 et seq.) and implementing regulations at 2 C.F.R Part 3001.

50.29<u>Compliance with Laws, Regulations, and Executive Orders</u>: Contractor acknowledges that FEMA and HUD financial assistance will be used to fund this Contract. Contractor shall, as and when applicable shall comply will all applicable Federal and Government of Puerto Rico law, regulations, executive orders, policies, procedures, and directives, including but not limited to all Federal Cost Principles set forth in 2 C.F.R. Part 200, and all applicable FEMA regulations in 44 C.F.R. Chapter I, and 2 C.F.R. Part 200.

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50.30<u>Provisions Required by Law Deemed Inserted</u>: Each and every provision required by law regulation, executive order, policy, procedure, directive, Federal grant award or agreement, or cooperative agreement with any Federal agency to be inserted in this Contract shall be deemed to be inserted herein and the Contract shall be read and enforced as though it were included herein. If, through mistake or otherwise, any provision is not inserted, or is not correctly inserted, then upon the application of either party the Contract shall be amended to make such insertion or correction.

50.31<u>Agreement to Execute Other Required Documents</u>: Contractor and all subcontractors, by entering into the Contract, understand and agree that funding for the Services is provided under Federal programs with specific contracting requirements. To the extent any such requirement is not otherwise set forth herein, Contractor agrees to execute such amendments or further agreements as may be necessary to ensure that PREPA receive Federal funding for this Contract.

50.32<u>U.S. Department of Homeland Security Seal, Logo and Flags; DHS Seal, Logo and Flags</u>: Contractor shall not use the U.S. Department of Homeland Security seal(s), logos, crests, or reproductions of flags or likenesses of DHS agency officials without specific FEMA pre-approval. Contractor shall include this provision in any subcontracts.

50.33<u>Davis-Bacon Act</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.All transactions regarding this Contract shall be done in compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) and the requirements of 29 C.F.R. pt. 5 as may be applicable. Contractor shall comply with 40 U.S.C. 31413144, and 3146-3148 and the requirements of 29 C.F.R. pt. 5 as applicable.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Contractor shall pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.Additionally, Contractor shall pay wages not less than once a week.

50.34<u>Copeland Anti-Kickback Act</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.Contractor shall comply with 18 U.S.C. § 874, 40 U.S.C. § 3145, and the requirements of 29 C.F.R. pt. 3 as may be applicable, which are incorporated by reference into this Contract.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Contractor or subcontractor shall insert in any subcontracts the clause above and such other clauses as FEMA may by appropriate instructions require, and also a clause requiring the subcontractors to include these clauses in any lower tier subcontracts. Contractor shall be responsible for the compliance by any subcontractor or lower tier subcontractor with all of these Contract clauses.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.A breach of the Contract clauses above may be grounds for termination of the Contract, and for debarment as a consultant, contractor and subcontractor as provided in 29 C.F.R. § 5.12.

50.35<u>HUD Section 3 Clause</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.The work to be performed under this Contract is subject to the requirements of section 3 of the Housing and Urban Development Act of 1968, as amended, 12 U.S.C. 1701u (section 3). The purpose of section 3 is to ensure that employment and other economic opportunities generated by HUD assistance or HUD-assisted projects covered by section 3, shall, to the greatest extent feasible, be directed to low and very low-income persons, particularly persons who are recipients of HUD assistance for housing.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.The Parties to this Contract agree to comply with HUD's regulations in 24 C.F.R. part 135, which implement section 3. As evidenced by their execution of this Contract, the parties to this Contract certify that they are under no contractual or other impediment that would prevent them from complying with the part 135 regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.Contractor agrees to send to each labor organization or representative of workers with which the Contractor has a collective bargaining agreement or other understanding, if any, a notice advising the labor organization or workers' representative of the Contractor's commitments under the section 3 clause, and will post copies of the notice in conspicuous places at the work site where both employees and applicants for training and employment positions can see the notice. The notice shall describe the section 3 preference, shall set forth minimum number and job titles subject to hire, availability of apprenticeship and training positions, the qualifications for each, the name and location of the person(s) taking applications for each of the positions, and the anticipated date the work shall begin.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.Contractor agrees to include the section 3 clause in every subcontract subject to compliance with regulations in 24 C.F.R. part 135, and agrees to take appropriate action, as provided in an applicable provision of the subcontract or in the section 3 clause, upon a finding that the subcontractor is in violation of the regulations in 24 C.F.R. part 135. Contractor will not subcontract with any subcontractor where Contractor has notice or knowledge that the subcontractor has been found in violation of the regulations in 24 C.F.R. part 135.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.Contractor will certify that any vacant employment positions, including training positions, that are filled (1) after Contractor is selected but before the Contract is executed, and (2)

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with persons other than those to whom the regulations of 24 C.F.R. part 135 require employment opportunities to be directed, were not filled to circumvent Contractor's obligations under 24 C.F.R. part 135.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.Noncompliance with HUD's regulations in 24 C.F.R. part 135 may result in sanctions, termination of this Contract for default, and debarment or suspension from future HUD assisted contracts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.With respect to work performed in connection with section 3 covered Indian housing assistance, section 7(b) of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450e) also applies to the work to be performed under this Contract. Section 7(b) requires that to the greatest extent feasible (i) preference and opportunities for training and employment shall be given to Indians, and (ii) preference in the award of contracts and subcontracts shall be given to Indian organizations and Indian-owned Economic Enterprises. Parties to this Contract that are subject to the provisions of section 3 and section 7(b) agree to comply with section 3 to the maximum extent feasible, but not in derogation of compliance with section 7(b).

50.36 <u>Additional Fair Labor Standards Provisions (HUD Form 4010)</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.The project or program to which the construction work covered by this Contract pertains is being assisted by the United States of America and the following Federal Labor Standards Provisions are included in this Contract pursuant to the provisions applicable to such Federal assistance.

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2. All laborers and mechanics employed or working upon the site of the work, will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 C.F.R. Part 3)), the full amount of wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in a wage determination of the Secretary of Labor, regardless of any contractual relationship which may be alleged to exist between Contractor and such laborers and mechanics. Contributions made or costs reasonably anticipated for bona fide fringe benefits under Section I(b)(2) of the Davis-Bacon Act on behalf of laborers or mechanics are considered wages paid to such laborers or mechanics, subject to the provisions of 29 C.F.R. 5.5(a)(1)(iv); also, regular contributions made or costs incurred for more than a weekly period (but not less often than quarterly) under plans, funds, or programs, which cover the particular weekly period, are deemed to be constructively made or incurred during such weekly period. Such laborers and mechanics shall be paid the appropriate wage rate and fringe benefits on the wage determination for the classification of work actually performed, without regard to skill, except as provided in 29 C.F.R. 5.5(a)(4). Laborers or mechanics performing work in more than one classification may be compensated at the rate specified for each classification for the time actually worked therein, provided, that the employer's payroll records accurately set forth the time spent in each classification in which work is performed. The wage determination (including any additional classification and wage

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rates conformed under 29 C.F.R. 5.5(a)(1)(ii) and the Davis-Bacon poster (WH-1321) shall be posted at all times by Contractor and its subcontractors and subcontractors at the site of the work in a prominent and accessible place where it can be easily seen by the workers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.Any class of laborers or mechanics which is not listed in the wage determination and which is to be employed under the contract shall be classified in conformance with the wage determination. HUD shall approve an additional classification and wage rate and fringe benefits therefor only when the following criteria have been met:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•The work to be performed by the classification requested is not performed by a classification in the wage determination; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•The classification is utilized in the area by the construction industry; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•The proposed wage rate, including any bona fide fringe benefits, bears a reasonable relationship to the wage rates contained in the wage determination.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.If Contractor and the laborers and mechanics to be employed in the classification (if known), or their representatives, and HUD or its designee agree on the classification and wage rate (including the amount designated for fringe benefits where appropriate), a report of the action taken shall be sent by HUD or its designee to the Administrator of the Wage and Hour Division, Employment Standards Administration, U.S. Department of Labor, Washington, D.C. 20210. The Administrator, or an authorized representative, will approve, modify, or disapprove every additional classification action within 30 days of

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receipt and so advise HUD or its designee or will notify HUD or its designee within the 30-day period that additional time is necessary. (Approved by the Office of Management and Budget under OMB control number 1215-0140.).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.In the event Contractor, the laborers or mechanics to be employed in the classification or their representatives, and HUD or its designee do not agree on the proposed classification and wage rate (including the amount designated for fringe benefits, where appropriate), HUD or its designee shall refer the questions, including the views of all interested parties and the recommendation of HUD or its designee, to the Administrator for determination. The Administrator, or an authorized representative, will issue a determination within 30 days of receipt and so advise HUD or its designee or will notify HUD or its designee within the 30-day period that additional time is necessary. (Approved by the Office of Management and Budget under OMB Control Number 1215-0140.).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.The wage rate (including fringe benefits where appropriate) determined pursuant to subparagraphs (B)(1)(b) or (c) of this paragraph, shall be paid to all workers performing work in the classification under this Contract from the first day on which work is performed in the classification.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.Whenever the minimum wage rate prescribed in this Contract for a class of laborer or mechanics includes a fringe benefit which is not expressed as an hourly rate, Contractor shall either pay the benefit as stated in the wage determination or shall pay another bona fide fringe benefit or an hourly cash equivalent thereof.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.If Contractor does not make payments to a trustee or other third person, Contractor may consider as part of the wages of any laborer or mechanic the amount of any costs reasonably anticipated in providing bona fide fringe benefits under a plan or program, provided that the Secretary of Labor has found, upon the written request of the Contractor, that the applicable standards of the Davis-Bacon Act have been met. The Secretary of Labor may require Contractor to set aside in a separate account assets for the meeting of obligations under the plan or program. (Approved by the Office of Management and Budget under OMB Control Number 1215-0140.).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.HUD or its designee shall upon its own action or upon written request of an authorized representative of the Department of Labor withhold or cause to be withheld from Contractor under this Contract or any other Federal contract with the same Contractor, or any other Federally-assisted contract subject to Davis-Bacon prevailing wage requirements, which is held by the same Contractor so much of the accrued payments or advances as may be considered necessary to pay laborers and mechanics, including apprentices, trainees and helpers, employed by Contractor or any subcontractor the full amount of wages required by the applicable contract. In the event of failure to pay any laborer or mechanic, including any apprentice, trainee or helper, employed or working on the site of the work, all or part of the wages required by the contract, HUD or its designee may, after written notice to Contractor, sponsor, applicant, or owner, take such action as may be necessary to cause the suspension of any further payment, advance, or guarantee of funds until such violations have ceased. HUD or its designee may, after written notice

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to Contractor, disburse such amounts withheld for and on account of Contractor or subcontractor to the respective employees to whom they are due. The Comptroller General shall make such disbursements in the case of direct Davis-Bacon Act contracts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.Payrolls and basic records relating thereto shall be maintained by Contractor during the course of the work preserved for a period of three years thereafter for all laborers and mechanics working at the site of the work. Such records shall contain the name, address, and social security number of each such worker, his or her correct classification, hourly rates of wages paid (including rates of contributions or costs anticipated for bona fide fringe benefits or cash equivalents thereof of the types described in Section l(b)(2)(B) of the Davis-Bacon Act), daily and weekly number of hours worked, deductions made and actual wages paid. Whenever the Secretary of Labor has found under 29 CFR 5.5 (a)(1)(iv) that the wages of any laborer or mechanic include the amount of any costs reasonably anticipated in providing benefits under a plan or program described in Section l(b)(2)(B) of the Davis-Bacon Act, Contractor shall maintain records which show that the commitment to provide such benefits is enforceable, that the plan or program is financially responsible, and that the plan or program has been communicated in writing to the laborers or mechanics affected, and records which show the costs anticipated or the actual cost incurred in providing such benefits. Contractors employing apprentices or trainees under approved programs shall maintain written evidence of the registration of apprenticeship programs and certification of trainee programs, the registration of the apprentices and trainees, and the ratios and wage rates prescribed in the applicable programs. (Approved

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by the Office of Management and Budget under OMB Control Numbers 1215-0140 and 1215-0017.).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.Contractor shall submit weekly for each week in which any contract work is performed a copy of all payrolls to HUD or its designee if the agency is a Party to the contract, but if the agency is not such a Party, Contractor will submit the payrolls to the applicant sponsor, or owner, as the case may be, for transmission to HUD or its designee. The payrolls submitted shall set out accurately and completely all of the information required to be maintained under 29 C.F.R. 5.5(a)(3)(i) except that full social security numbers and home addresses shall not be included on weekly transmittals. Instead the payrolls shall only need to include an individually identifying number for each employee (e.g., the last four digits of the employee's social security number). The required weekly payroll information may be submitted in any form desired. Optional Form WH-347 is available for this purpose from the Wage and Hour Division Website at https://www.dol.gov/esa/whd/forms/wh347instr.htm or its successor site. Contractor is responsible for the submission of copies of payrolls by all subcontractors. Contractors and subcontractors shall maintain the full social security number and current address of each covered worker, and shall provide them upon request to HUD or its designee if the agency is a Party to the contract, but if the agency is not such a Party, Contractor will submit the payrolls to the applicant sponsor, or owner, as the case may be, for transmission to HUD or its designee, Contractor, or the Wage and Hour Division of the Department of Labor for purposes of an investigation or audit of compliance with prevailing wage

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requirements. It is not a violation of this subparagraph for Contractor to require a subcontractor to provide addresses and social security numbers to Contractor for its own records, without weekly submission to HUD or its designee. (Approved by the Office of Management and Budget under OMB Control Number 1215-0149.).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.Each payroll submitted shall be accompanied by a "Statement of Compliance," signed by Contractor or subcontractor or his or her agent who pays or supervises the payment of the persons employed under the contract and shall certify the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•That the payroll for the payroll period contains the information required to be provided under 29 C.F.R. 5.5(a)(3)(ii), the appropriate information is being maintained under 29 C.F.R. 5.5(a)(3)(i), and that such information is correct and complete;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•That each laborer or mechanic (including each helper, apprentice, and trainee) employed on the contract during the payroll period has been paid the full weekly wages earned, without rebate, either directly or indirectly, and that no deductions have been made either directly or indirectly from the full wages earned, other than permissible deductions as set forth in 29 C.F.R. Part 3;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•The weekly submission of a properly executed certification set forth on the reverse side of Optional Form WH-347 shall satisfy the requirement for submission of the "Statement of Compliance" required by subparagraph A.3.(ii)(b);

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•The falsification of any of the above certifications may subject Contractor or any subcontractor to civil or criminal prosecution under Section 1001 of Title 18 and Section 231 of Title 31 of the United States Code;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Contractor or subcontractor shall make the records required under subparagraph A.3.(i) available for inspection, copying, or transcription by authorized representatives of HUD or its designee or the Department of Labor, and shall permit such representatives to interview employees during working hours on the job. If Contractor or subcontractor fails to submit the required records or to make them available, HUD or its designee may, after written notice to the Contractor, sponsor, applicant or owner, take such action as may be necessary to cause the suspension of any further payment, advance, or guarantee of funds. Furthermore, failure to submit the required records upon request or to make such records available may be grounds for debarment action pursuant to 29 C.F.R. 5.12.

50.37<u>Apprentices and Trainees</u>:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.Apprentices will be permitted to work at less than the predetermined rate for the work they performed when they are employed pursuant to and individually registered in a bona fide apprenticeship program registered with the U.S. Department of Labor, Employment and Training Administration, Office of Apprenticeship Training, Employer and Labor Services, or with a State Apprenticeship Agency recognized by the Office, or if a person is employed in his or her first 90 days of probationary employment as an apprentice in such

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an apprenticeship program, who is not individually registered in the program, but who has been certified by the Office of Apprenticeship Training, Employer and Labor Services or a State Apprenticeship Agency (where appropriate) to be eligible for probationary employment as an apprentice. The allowable ratio of apprentices to journeymen on the job site in any craft classification shall not be greater than the ratio permitted to Contractor to the entire work force under the registered program. Any worker listed on a payroll at an apprentice wage rate, who is not registered or otherwise employed as stated above, shall be paid not less than the applicable wage rate on the wage determination for the classification of work actually performed. In addition, any apprentice performing work on the job site in excess of the ratio permitted under the registered program shall be paid not less than the applicable wage rate on the wage determination for the work actually performed. Where a Contractor is performing construction on a project in a locality other than that in which its program is registered, the ratios and wage rates (expressed in percentages of the journeyman's hourly rate) specified in the Contractor's or subcontractor's registered program shall be observed. Every apprentice must be paid at not less than the rate specified in the registered program for the apprentice's level of progress, expressed as a percentage of the journeymen hourly rate specified in the applicable wage determination. Apprentices shall be paid fringe benefits in accordance with the provisions of the apprenticeship program. If the apprenticeship program does not specify fringe benefits, apprentices must be paid the full amount of fringe benefits listed on the wage determination for the applicable classification. If the Administrator

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determines that a different practice prevails for the applicable apprentice classification, fringes shall be paid in accordance with that determination. In the event the Office of Apprenticeship Training, Employer and Labor Services, or a State Apprenticeship Agency recognized by the Office, withdraws approval of an apprenticeship program, Contractor will no longer be permitted to utilize apprentices at less than the applicable predetermined rate for the work performed until an acceptable program is approved.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Except as provided in 29 C.F.R. 5.16, trainees will not be permitted to work at less than the predetermined rate for the work performed unless they are employed pursuant to and individually registered in a program which has received prior approval, evidenced by formal certification by the U.S. Department of Labor, Employment and Training Administration. The ratio of trainees to journeymen on the job site shall not be greater than permitted under the plan approved by the Employment and Training Administration. Every trainee must be paid at not less than the rate specified in the approved program for the trainee's level of progress, expressed as a percentage of the journeyman hourly rate specified in the applicable wage determination. Trainees shall be paid fringe benefits in accordance with the provisions of the trainee program. If the trainee program does not mention fringe benefits, trainees shall be paid the full amount of fringe benefits listed on the wage determination unless the Administrator of the Wage and Hour Division determines that there is an apprenticeship program associated with the corresponding journeyman wage rate on the wage determination which provides for less than full fringe benefits for apprentices. Any employee listed on the payroll at a trainee rate who is not

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registered and participating in a training plan approved by the Employment and Training Administration shall be paid not less than the applicable wage rate on the wage determination for the work actually performed. In addition, any trainee performing work on the job site in excess of the ratio permitted under the registered program shall be paid not less than the applicable wage rate on the wage determination for the work actually performed. In the event the Employment and Training Administration withdraws approval of a training program, Contractor will no longer be permitted to utilize trainees at less than the applicable predetermined rate for the work performed until an acceptable program is approved.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.The utilization of apprentices, trainees and journeymen under 29 C.F.R. Part 5 shall be in conformity with the equal employment opportunity requirements of Executive Order 11246, as amended, and 29 C.F.R. Part 30.

50.38<u>Compliance with Copeland Act</u>: Contractor shall comply with the requirements of 29 C.F.R. Part 3 which are incorporated by reference in this Contract.

50.39<u>Subcontracts</u>: Contractor or subcontractor will insert in any subcontracts the clauses contained in Section 50.36 (Additional Fair Labor Standards Provisions (HUD Form 4010)) to Section 50.44 (Complaints, Proceedings, or Testimony by Employees) and such other clauses as HUD or its designee may by appropriate instructions require, and a copy of the applicable prevailing wage decision, and also a clause requiring the subcontractors to include these clauses in any lower tier subcontracts. Contractor shall be responsible for the compliance by any subcontractor or lower tier subcontractor with all the contract clauses in this Section.

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50.40<u>Contract Termination; Debarment</u>: A breach of the contract clauses in 29 C.F.R. 5.5 may be grounds for termination of this Contract and for debarment as a consultant, Contractor and a subcontractor as provided in 29 C.F.R. 5.12.

50.41<u>Compliance with Davis-Bacon and Related Act Requirements</u>: All rulings and interpretations of the Davis-Bacon and Related Acts contained in 29 C.F.R. Parts 1, 3, and 5 are herein incorporated by reference in this Contract.

50.42<u>Disputes Concerning Labor Standards</u>: Disputes arising out of the labor standards provisions of this Contract shall not be subject to the general dispute's clause of this Contract. Such disputes shall be resolved in accordance with the procedures of the Department of Labor set forth in 29 C.F.R. Parts 5, 6, and 7. Disputes within the meaning of this clause include disputes between Contractor (or any of its subcontractors) and HUD or its designee, the U.S. Department of Labor, or the employees or their representatives.

50.43<u>Certification of Eligibility</u>:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.By entering into this Contract, Contractor certifies that neither it (nor he or she) nor any Person or firm who has an interest in the Contractor's firm is a person or firm ineligible to be awarded Government contracts by virtue of Section 3(a) of the Davis-Bacon Act or 29 C.F.R. 5.12(a)(1) or to be awarded HUD contracts or participate in HUD programs pursuant to 24 C.F.R. Part 24.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.No part of this Contract shall be subcontracted to any person or firm ineligible for award of a Government contract by virtue of Section 3(a) of the Davis-Bacon Act or 29 C.F.R.

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5.12(a)(1) or to be awarded HUD contracts or participate in HUD programs pursuant to 24 C.F.R. Part 24.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.The penalty for making false statements is prescribed in the U.S. Criminal Code, 18 U.S.C. 1001. Additionally, U.S. Criminal Code, Section 1 01 0, Title 18, U.S.C., "Federal Housing Administration transactions", provides in part: "Whoever, for the purpose of . . . influencing in any way the action of such Administration. . . . makes, utters or publishes any statement knowing the same to be false. . . . shall be fined not more than $5,000 or imprisoned not more than two years, or both."

50.44<u>Complaints, Proceedings, or Testimony by Employees</u>: No laborer or mechanic to whom the wage, salary, or other labor standards provisions of this Contract are applicable shall be discharged or in any other manner discriminated against by Contractor or any subcontractor because such employee has filed any complaint or instituted or caused to be instituted any proceeding or has testified or is about to testify in any proceeding under or relating to the labor standards applicable under this Contract to his employer.

50.45<u>Health and Safety</u>: The provisions of this paragraph are applicable where the amount of the prime contract exceeds $100,000:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.No laborer or mechanic shall be required to work in surroundings or under working conditions which are unsanitary, hazardous, or dangerous to his health and safety as determined under construction safety and health standards promulgated by the Secretary of Labor by regulation.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Contractor shall comply with all regulations issued by the Secretary of Labor pursuant to Title 29 Part 1926 and failure to comply may result in imposition of sanctions pursuant to the Contract Work Hours and Safety Standards Act, (Public Law 91-54, 83 Stat 96). 40 USC 3701 et seq.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.Contractor shall include the provisions of this paragraph in every subcontract so that such provisions will be binding on each subcontractor. Contractor shall take such action with respect to any subcontractor as the Secretary of Housing and Urban Development or the Secretary of Labor shall direct as a means of enforcing such provisions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.Contractor shall include all of the above-detailed provisions in any and all subcontract agreements and shall be responsible to PREPA for its compliance.

50.46<u>No obligation by the Federal Government</u>: The Federal Government is not a party to this Contract and is not subject to any obligation or liabilities to the non-Federal entity, Contractor, or any other party pertaining to any matter resulting from the Contract.

50.47<u>General</u>: All contracts shall contain a clause identifying the type of contract and the mandatory clauses contained on the latest released HUD forms, as applicable to the Contract type. All contracts, except for general management consulting services, will include performance requirements and liquidated damages.

50.48<u>Puerto Rico Energy Conservation Plant</u>: Contractor must act in compliance, when applicable, with the mandatory standards and policies relating to energy efficiency which are contained in the Commonwealth's energy conservation plan.

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50.49<u>Patent Rights</u>: All contracts are subject to the patent rights with respect to any discovery or invention which arises or is developed during or under such Contract in accordance with 37 C.F.R. Section 401.2(a) and 37 C.F.R. Part 401.

50.50<u>Prohibition on Contracting for Covered Telecommunications Equipment or Services</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)<u>Definitions</u>. As used in this clause, the terms backhaul; covered foreign country; covered telecommunications equipment or services; interconnection arrangements; roaming; substantial or essential component; and telecommunications equipment or services have the meaning as defined in FEMA Policy 405-143-1, Prohibitions on Expending FEMA Award Funds for Covered Telecommunications Equipment or Services (Interim), as used in this clause.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)<u>Prohibitions</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)Section 889(b) of the John S. McCain National Defense Authorization Act for Fiscal Year 2019, Pub. L. No. 115-232, and 2 C.F.R. § 200.216 prohibit the head of an executive agency on or after Aug. 13, 2020, from obligating or expending grant, cooperative agreement, loan, or loan guarantee funds on certain telecommunications products or from certain entities for national security reasons.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)Unless an exception in paragraph (c) of this clause applies, Contractor and its subcontractors may not use grant, cooperative agreement, loan, or loan guarantee funds from the Federal Emergency Management Agency to:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)Procure or obtain any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology of any system;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)Enter into, extend, or renew a contract to procure or obtain any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology of any system;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)Enter into, extend, or renew contracts with entities that use covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)Provide, as part of its performance of this contract, subcontract, or other contractual instrument, any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)<u>Exceptions</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)This clause does not prohibit Contractors from providing:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)A service that connects to the facilities of a third-party, such as backhaul, roaming, or interconnection arrangements; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)Telecommunications equipment that cannot route or redirect user data traffic or permit visibility into any user data or packets that such equipment transmits or otherwise handles.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)By necessary implication and regulation, the prohibitions also do not apply to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)Covered telecommunications equipment or services that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.Are not used as a substantial or essential component of any system; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii.Are not used as critical technology of any system.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)Other telecommunications equipment or services that are not considered covered telecommunications equipment or services.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)<u>Reporting requirement</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)In the event Contractor identifies covered telecommunications equipment or services used as a substantial or essential component of any system, or as critical technology as part of any system, during contract performance, or Contractor is notified of such by a subcontractor at any tier or by any other source, Contractor shall report the information in paragraph (d)(2) of this clause to the recipient or subrecipient, unless elsewhere in this contract are established procedures for reporting the information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)Contractor report the following information pursuant to paragraph (d)(1) of this clause:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)Within one business day from the date of such identification or notification: The contract number; the order number(s), if applicable; supplier name; supplier unique entity identifier (if known); supplier Commercial and Government Entity (CAGE) code (if known); brand; model number (original equipment manufacturer number, manufacturer part number, or wholesaler number); item description; and any readily available information about mitigation actions undertaken or recommended.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Within 10 business days of submitting the information in paragraph (d)(2)(i) of this clause: Any further available information about mitigation actions undertaken or recommended. In addition, Contractor shall describe the efforts it undertook to prevent use or submission of covered telecommunications equipment or services, and any additional efforts that will be incorporated to prevent future use or submission of covered telecommunications equipment or services.

1. Subcontracts. Contractor shall insert the substance of this clause, including this paragraph (e), in all subcontracts and other contractual instruments.

50.51<u>Domestic Preferences for Procurements</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.As appropriate, and to the extent consistent with law, Contractor should, to the greatest extent practicable, provide a preference for the purchase, acquisition, or use of goods, products, or materials produced in the United States.

This includes, but is not limited to iron, aluminum, steel, cement, and other manufactured products.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.For purposes of this clause:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.Produced in the United States means, for iron and steel products, that all manufacturing processes, from the initial melting stage through the application of coatings, occurred in the United States.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Manufactured products mean items and construction materials composed in whole or in part of non-ferrous metals such as aluminum; plastics and polymer-based products

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such as polyvinyl chloride pipe; aggregates such as concrete; glass, including optical fiber, and lumber.

50.52<u>Contracting with Small and Minority Businesses, Women's Business Enterprises, and Labor Surplus Area Firms</u>

If Contractor intends to subcontract any portion of the work covered by this Contract, Contractor must take all necessary affirmative steps to assure that small and minority businesses, women's business enterprises and labor surplus area firms are solicited and used when possible, Affirmative steps must include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.Placing qualified small and minority businesses and women's business enterprises on solicitation lists;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)Assuring that small and minority businesses, and women's business enterprises are solicited whenever they are potential sources;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)Dividing total requirements, when economically feasible, into smaller tasks or quantities to permit maximum participation by small and minority businesses, and women's business enterprises;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)Establishing delivery schedules, where the requirement permits, which encourage participation by small and minority businesses, and women's business enterprises; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Using the services and assistance, as appropriate, of such organizations as the Small Business Administration and the Minority Business Development Agency of the Department of Commerce.

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50.53<u>Copyright and Data Rights</u> 

License and Delivery of Works Subject to Copyright and Data Rights

The Contractor grants to PREPA, a paid-up, royalty-free, nonexclusive, irrevocable, worldwide license in data first produced in the performance of this contract to reproduce, publish, or otherwise use, including prepare derivative works, distribute copies to the public, and perform publicly and display publicly such data. For data required by the contract but not first produced in the performance of this contract, Contractor will identify such data and grant to PREPA or acquires on its behalf a license of the same scope as for data first produced in the performance of this contract. Data, as used herein, shall include any work subject to copyright under 17 U.S.C. § 102, for example, any written reports or literary works, software and/or source code, music, choreography, pictures or images, graphics, sculptures, videos, motion pictures or other audiovisual works, sound and/or video recordings, and architectural works. Upon or before the completion of this Contract, Contractor will deliver to PREPA data first produced in the performance of this contract and data required by the contract but not first produced in the performance of this contract in formats acceptable by PREPA.

ARTICLE 51. <u>Term of Contract</u>

This Contract shall be in effect for a period of three hundred sixty-five (365) natural days from its signing by all Parties, with two (2) additional extensions of three hundred sixty-five (365) natural days each, subject to the availability of funds and the previous required authorizations.

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ARTICLE 52. <u>Contract Review Policy of the Financial Oversight and Management Board for Puerto Rico</u> 

The Parties acknowledge that the Contractor has submitted the certification titled "Contractor Certification Requirement" required in accordance with the Contract Review Policy of the Financial Oversight and Management Board for Puerto Rico, effective as of November 6, 2017, as amended, signed by the Contractor's Executive Director (or another official with an equivalent position or authority to issue such certifications). A signed copy of the "Contractor Certification Requirement" is included as an annex to this Contract.

The Contractor represents and warrants that the information included in the Contractor Certification Requirement is complete, accurate and correct, and that any misrepresentation, inaccuracy of falseness in such Certification will render the Contract null and void and the Contractor will have the obligation to reimburse immediately to the Commonwealth any amounts, payments or benefits received from the Commonwealth under the Contract.

For this Contract, the transfer of skills and technical knowledge required by the Certified Fiscal Plan is inapplicable given the non-recurring or specialized nature of the contracted services.

ARTICLE 53. <u>Correlation of Documents</u>

In case of discrepancy or in the event of conflict among the different Contract documents such as: Contract and the Contractors Proposal, these shall take precedence in the order given. The terms and conditions contained in the Contract shall prevail over any conflictive terms and conditions contained in the Contractor's Proposal.

ARTICLE 54. <u>Complete Agreement</u>

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This document, together with ail attachments referenced herein, constitutes the complete agreement between the Parties.

IN WITNESS WHEREOF, the Parties hereto have executed this Contract this <u>7</u><sup>th</sup> day of <u>August</u> of 2024, in San Juan, Puerto Rico.

Puerto Rico Electric Power Authority Genasys Puerto Rico, LLC

By: <u>/s/ Josué A. Colón Ortiz</u> By: <u>/s/ Richard S. Danforth</u> 

Josué A. Colón Ortiz Richard S. Danforth

Executive Director CEO

Social Security Number Social Security Number

Email: rdanforth@genasys.com

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21865128v1**[Payment Terms under Genasys Puerto Rico LLC Statement of Work for Puerto Rico Electric Power Authority, dated as of July 8, 2024]**

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| | |
|:---|:---|
| &nbsp;&nbsp;New Proposal | &nbsp;&nbsp;Group Pricing |
| &nbsp;&nbsp;Group 1 | &nbsp;&nbsp;$14006179.15 |
| &nbsp;&nbsp;Group 2 | &nbsp;&nbsp;$6848517.92 |
| &nbsp;&nbsp;Group 3 | &nbsp;&nbsp;$18115917.36 |
| &nbsp;&nbsp;Group 4 | &nbsp;&nbsp;$5989714.27 |
| &nbsp;&nbsp;Group 5 | &nbsp;&nbsp;$3771904.72 |
| &nbsp;&nbsp;Group 6 | &nbsp;&nbsp;$13338394.15 |
| &nbsp;&nbsp;Group 7 | &nbsp;&nbsp;$9798733.87 |
| &nbsp;&nbsp;Software License | &nbsp;&nbsp;$1941767.65 |
| &nbsp;&nbsp;Trailer | &nbsp;&nbsp;$345079.58 |
| &nbsp;&nbsp;Total Pricing: | &nbsp;&nbsp;$74156208.66 |

---

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| | |
|:---|:---|
| &nbsp;&nbsp;Optional | &nbsp;&nbsp;Optional |
| &nbsp;&nbsp;Microwave\*\* | &nbsp;&nbsp;$409626.37 |
| &nbsp;&nbsp;Fiber Run | &nbsp;&nbsp;$365156.25 |
| &nbsp;&nbsp;Optional Total: | &nbsp;&nbsp;$774782.62 |

---

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| | |
|:---|:---|
| &nbsp;&nbsp;Total with Options | &nbsp;&nbsp;$74930991.27 |

---

\*\* *Pricing includes an 80% reduced scope of the Microwave installation*

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## Exhibit 21.1

**Exhibit 21.1**

**SUBSIDIARIES OF THE REGISTRANT**

Genasys America de CV<br>(Organized under the laws of Mexico)

Genasys Communications Canada ULC<br>(Organized under the laws of British Columbia, Canada)

Genasys II Spain, S.A.U.<br>(Organized under the laws of Spain)

Genasys Puerto Rico, LLC<br>(Organized under the laws of Puerto Rico)

Zonehaven LLC<br>(Organized in the State of Delaware)

Evertel Technologies, LLC<br>(Organized in the State of Nevada)

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## Exhibit 23.1

**Exhibit 23.1** 

**CONSENT OF INDEPENDENT** 

**REGISTERED PUBLIC ACCOUNTING FIRM**

We hereby consent to the incorporation by reference in the Registration Statements (No. 333-286417) on Form S-8 and (No. 333-280137) and (No. 333-274161) on Form S-3 of our report dated December 15, 2025, relating to the consolidated financial statements, which appears on page F-1 of this annual report on Form 10-K for the year ended September 30, 2025.

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| |
|:---|
| /s/ BAKER TILLY US, LLP  |
| Chicago, IL |
| December 15, 2025 |

---

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## Exhibit 31.1

**Exhibit 31.1** 

**CERTIFICATIONS** 

I, Richard S. Danforth, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this annual report on Form 10-K of Genasys Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: December 15, 2025

---

| |
|:---|
| **/s/ Richard S. Danforth** |
| **Richard S. Danforth,**<br>**Chief Executive Officer**<br>**(Principal Executive Officer)** |

---

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## Exhibit 31.2

**Exhibit 31.2** 

**CERTIFICATIONS** 

I, Cassandra L. Hernandez-Monteon, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this annual report on Form 10-K of Genasys Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: December 15, 2025

---

| |
|:---|
| /s/ **Cassandra L. Hernandez-Monteon** |
| **Cassandra L. Hernandez-Monteon**<br>**Chief Financial Officer**<br>**(Principal Financial Officer)** |

---

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## Exhibit 32.1

**Exhibit 32.1** 

**CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL** 

**FINANCIAL OFFICER** 

**PURSUANT TO** 

**18 U.S.C. SECTION 1350,** 

**AS ADOPTED PURSUANT TO** 

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002** 

Each of the undersigned hereby certifies, in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in his or her capacity as an officer of Genasys Inc. (the "Company"), that, to his or her knowledge, the Annual Report of the Company on Form 10-K for the fiscal year ended September 30, 2025 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (except as to the due date for filing) and that the information contained in such report fairly presents, in all material respects, the financial condition and results of operation of the Company as of the dates and for the periods presented in the financial statements included in such report.

Dated: December 15, 2025

---

| |
|:---|
| **/s/ Richard S. Danforth** |
| **Richard S. Danforth,**<br>**Chief Executive Officer** |
| **(Principal Executive Officer)** |
| **/s/ Cassandra L. Hernandez-Monteon** |
| **Cassandra L. Hernandez-Monteon**<br>**Chief Financial Officer** |
| **(Principal Financial Officer)** |

---

This certification accompanies the Form 10-K to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Genasys Inc. under the Securities Act of 1934, as amended (whether made before or after the date of the Form 10-K), irrespective of any general incorporation language contained in such filing.

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