Note 13. Business Segment Information

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated on a regular basis by the CODM in deciding how to allocate resources to an individual segment and in assessing performance. The Company identified one operating segment in fiscal 2026, named the R&D segment, which did not impact prior periods. During fiscal 2026, the Company's operating segment was as follows:

Research & Development

The R&D segment focuses on providing testing of drugs and drug candidates in 3D human tissue models of liver and intestine, offering partners liver and intestinal toxicology insights using its NAM models. The Company plans to work with pharmaceutical and biotech companies at all stages of drug development to reduce the significant risk and cost of bringing therapeutics to market through the regulatory process and offer bespoke services in the areas of investigational toxicology, mechanism of drug action elucidation, and other applications of these complex human tissue models.

 

For purposes of evaluating performance and allocating resources, the Company’s CODM, its Executive Chairman, regularly reviews Consolidated Net Loss as reported in the Company’s Consolidated Statements of Operations and Comprehensive Loss as compared to budget. The measure of segment assets is reported in the Consolidated Balance Sheets as Total Consolidated Assets.

 

In addition to the significant expense categories included within Consolidated Net Loss presented in the Company’s Consolidated Statements of Operations and Other Comprehensive Loss, see below for disaggregated expense amounts for the years ended March 31, 2026 and 2025 (in thousands):

 

 

Year Ended

 

 

Year Ended

 

 

March 31, 2026

 

 

March 31, 2025

 

Revenue

 

 

 

 

 

    Royalty revenue

$

131

 

 

$

119

 

    Product revenue

 

 

 

 

25

 

Total revenue

 

131

 

 

 

144

 

Operating expenses

 

 

 

 

 

    Cost of revenues

 

 

 

 

5

 

    Research and development (a) (b)

 

3,934

 

 

 

4,712

 

    Selling, general, and administrative expenses (a)(b)

 

7,166

 

 

 

7,245

 

    Non-cash stock-based compensation (see Note 6)

 

303

 

 

 

532

 

    Depreciation and amortization (see Note 3)

 

215

 

 

 

266

 

Total operating expenses

$

11,618

 

 

$

12,760

 

Consolidated operating loss

$

(11,487

)

 

$

(12,616

)

 

(a) Stock-based compensation expense of $56,000 and $86,000 related to research and development and $247,000 and $446,000, related to selling, general, and administration have been excluded for the years ended March 31, 2026 and 2025, respectively.

(b) Depreciation and amortization expense of $199,000 and $227,000 related to research and development and $16,000 and $39,000 related to selling, general, and administration have been excluded for the years ended March 31, 2026 and 2025, respectively.

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Historical Timeline

Fiscal YearFiled
2026Jul 14, 2026Showing above
2025Jun 5, 2025
2024May 31, 2024

About Segments Disclosures

Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.

Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.