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Item 1A. Risk Factors

2026-09-25 compared with 2025-09-26 · 184 added, 42 removed, 514 unchanged (31% of the section changed)

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Repair or replacement costs due to warranties we provide on our products could have a material adverse effect on our business, financial condition and results of operations.

We intend to explore expanding our business into our Lunar Initiatives and we may not be able to successfully transition our business and may not realize the anticipated synergies and benefits of such proposed transition.

The development and maintenance of the technologies and infrastructure necessary to support our new Lunar Initiatives will require significant capital expenditures, and if we are unable to generate sufficient cash flow from operations or obtain additional financing on acceptable terms, our business, financial condition, results of operations, and future prospects could be materially and adversely affected.

We are substantially dependent on the outcome of government solicitations and awards, including Appendix A Program and CLPS2 Program, and there can be no assurance that we will submit a proposal or be selected for any contract, award or funding.

Many of our Lunar Initiatives involve significant technical complexity, unproven technologies, or technologies that do not exist or may require significant advancement, and such Lunar Initiatives may not achieve commercial viability.

Our future revenue and operating results depend upon our ability to develop new technologies and respond to changes in customer demands and industry standards in highly competitive markets, and if we are unable to do so, our business, financial condition, results of operations, and future prospects may be materially and adversely affected.

The commercial lunar market is undeveloped and uncertain, and there may be insufficient demand for the products and services we intend to develop.

We expect to face significant competition from well-capitalized commercial entities and government-sponsored programs in the markets we intend to enter, and if we are unable to compete effectively, our business, financial condition and results of operations could be harmed.

We may not be successful in the proposed sale of 1st Detect, and the announcement and pendency of the proposed sale of 1st Detect present certain risks to our ongoing business and operations.

Our products and operations are subject to extensive governmental regulation, and failure to comply with applicable requirements could cause our business to suffer.

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enforcement agencies determine we have engaged in the off‑label promotion of such products or have disseminated false or misleading labeling or promotional materials.

Even if we obtain FDA clearance or approval for BreathTest-1000 or any other medical device product, our products will remain subject to regulatory scrutiny.

Legislative or regulatory healthcare reforms may make it more difficult and costly for us to obtain reimbursement for our products or regulatory clearance or approval of our future products, if any, and to produce, market and distribute those products after clearance or approval is obtained.

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We have incurred significant losses since inception and anticipate that we will incur continued losses for the foreseeable future.

As of June 30, 2026, the Company had cash of approximately $8.4 million and short-term investments of approximately $2.9 million.

If our available cash resources and anticipated cash flows from operations are insufficient to satisfy our liquidity requirements, we will need to raise additional capital to continue to fund our operations in the future.

As of June 30, 2026, we had an accumulated deficit of approximately $265 million and reported a net loss of $14.4 million for the fiscal year 2026.

We are unable to predict the extent of any future losses or when we will become profitable, if at all.

If we are unable to achieve and then maintain profitability, the market value of our common stock will likely experience significant decline.

If we are unable to achieve and then maintain profitability or raise capital, the market value of our common stock will likely experience significant decline.

We will require additional financing as we continue to execute our business strategy, including the need for additional funds for the development of our products and our Lunar Initiatives.

We may seek to raise additional capital through issuances of equity or debt securities, entrance into a credit facility or another form of third-party funding or seek other debt financing.

Such funding may not be available to us on acceptable terms, or at all, and such funding may become even more difficult to obtain due to macroeconomic conditions, including rising interest rates, tariffs and trade restrictions, global conflicts and other conditions that could result in volatility in the U.S.

capital markets.

We may be unable to raise capital through public offerings of our common stock and may need to turn to alternative financing arrangements.

Such arrangements could involve issuances of one or more types of securities, including common stock, preferred stock, convertible debt, warrants to acquire common stock or other securities.

Even if successful in raising new capital, we could be limited in the amount of capital we raise due to investor demand.

There can be no assurance that funding will be available on acceptable terms, on a timely basis, or at all.

The various ways that we could raise capital carry potential risks.

Any additional financing will likely involve the issuance of our equity securities, which will have a dilutive effect on our stockholders.

Any debt financing, if available, may involve restrictive covenants that may impact our ability to conduct our business.

If we raise funds through partnering, such as collaborations and licensing arrangements, we might be required to relinquish significant rights to our technologies or grant licenses on terms that are not favorable to us.

If we do not succeed in raising additional funds on acceptable terms or at all, we may be unable to develop our products.

If we are unable to raise additional capital when required or on acceptable terms, we may be required to:

significantly scale back, or discontinue the development or commercialization of our products;

dispose of technology assets, or relinquish or license on unfavorable terms, our rights to technologies or any of our products that we otherwise would seek develop or commercialize ourselves;

pursue the sale of our company to a third party at a price that may result in a loss on investment for our stockholders;

file for bankruptcy or cease operations altogether.

Any of these events could have a material adverse effect on our business, operating results and prospects.

Our business units are in the development stage.

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Regulatory approval of any products may not be obtained.

In particular, TSA approval is required to begin selling the TRACER 1000 in the United States and FDA clearance or approval is required to market the BreathTest-1000 in the United States.

Obtaining approval from both TSA and FDA is a complex and lengthy process, and approvals for the TRACER 1000 and BreathTest-1000 may not be granted on a timely basis or at all, which would have a material adverse effect on our results of operations and financial condition.

FDA clearance or approval is required to market the BreathTest-1000 in the United States.

Obtaining approval from the FDA is a complex and lengthy process, and approvals for the BreathTest-1000 may not be granted on a timely basis or at all, which would have a material adverse effect on our results of operations and financial condition.

We may need to raise additional capital to fund the operations of our business units and commercialize our products.

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Under any of the circumstances, we may incur significant expenses.

Around October 2024 we became aware of two third party companies advertising the TRACER 1000 for sale on their respective websites.

For example, around October 2024 we became aware of two third party companies advertising the TRACER 1000 for sale on their respective websites.

Their websites used images of the TRACER 1000 that were copied from the 1st Detect website.

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We have not granted licenses to these companies to distribute 1st Detect's products.

We engaged legal counsel to investigate the companies.

One company subsequently responded to our investigation’s inquiries that they did not have the product in stock but would order it directly from the manufacturer.

However, the second company confirmed to an anonymous inquiry that they have the product in stock, which we believe is misleading to customers.

In February 2025, demand letters were sent to both companies informing them that they were infringing on the EU registered copyrights of 1st Detect and TRACER 1000 and must remove the misleading information from their websites immediately.

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These technologies and business models may not be successful, which could result in the loss of any investment we make in developing them, including the development of the BreathTest-1000.

We believe commercialization of this application with the AMS Technology would require many years and significant investment due to regulatory requirements.

As such, we have determined to deploy capital instead to our other subsidiaries.

Furthermore, we are subject to risks including, but not limited to, the following with respect to the development of the BreathTest-1000:

the governmental approval process could be lengthy, time consuming and is inherently unpredictable, and we cannot guarantee that the required approvals for our products, including FDA approvals, will be granted on a timely basis or at all or that we will ever have a marketable product;

the governmental clearance and approval process could be lengthy, time consuming and is inherently unpredictable, and we cannot guarantee that the required clearance or approvals for our products, including FDA clearance or approvals, will be granted on a timely basis or at all or that we will ever have a marketable product;

customers must be persuaded that using our products are effective alternatives to other existing detection methods available for infections in order for our products to be commercially successful;

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less effective protection and/or lack of enforceability of intellectual property;

stringent foreign regulation, including but not limited to General Data Protection Regulation in the European Union, that are costly to comply with and may vary from country to country;

stringent foreign regulation, including but not limited to General Data Protection Regulation in the EU, that are costly to comply with and may vary from country to country;

changes in local tax and customs duty laws or changes in the enforcement, application or interpretation of such laws;

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Substantial amounts of warranty claims could have a material adverse effect on our business, financial condition and results of operations.

Risks Related to our Strategic Initiatives

We intend to explore expanding our business into the Lunar Initiatives and we may not be able to successfully transition our business and may not realize the anticipated synergies and benefits of such proposed transition.

Recently our Board approved the Lunar Initiatives.

Such Lunar Initiatives are in the explorative planning and design stage and subject to all of the risks inherent in the establishment of a new business venture.

We may formulate new business strategies, offer new products or services or enter into new markets, which may result in additional risks and uncertainties in our business.

Accordingly, our intended business and operations may not prove to be successful in the future, if at all.

We expect to continue to evaluate the acquisition of strategic businesses and technologies with the potential to enhance our Lunar Initiatives.

It may be difficult for us to complete transactions quickly and to integrate acquired operations efficiently into our current business operations.

Acquisitions and investments may involve significant cash expenditures, debt incurrence, operating losses and expenses that could have a material adverse effect on our business, consolidated financial condition, results of operations and cash flows.

Integration activities can be costly, complex and time-consuming.

We may not be able to realize the expected benefits from our Lunar Initiatives because of integration difficulties or other challenges.

Acquisitions involve numerous other risks, including:

(i) diversion of management’s time and attention from daily operations;

(ii) difficulties integrating acquired businesses, technologies and personnel into our business;

(iii) inability to obtain required regulatory approvals;

(iv) inability to obtain required financing on favorable terms or, if so obtained, risks associated with incurrence of substantial amounts of indebtedness to finance the acquisition;

(v) potential loss of key employees, key contractual relationships, or key customers of acquired companies or from our existing businesses;

(vi) assumption of the liabilities and exposure to unforeseen liabilities of acquired companies (including environmental, employee benefits, safety and health and third-party property and casualty liabilities);

(vii) unanticipated changes in applicable laws and regulations;

(viii) unanticipated expenses and liabilities and (ix) other difficulties in the assimilation of our Lunar Initiatives’ business operations, technologies, products and systems.

Any acquisitions or investments may ultimately harm our business or consolidated financial condition, as such acquisitions may not be successful and may ultimately result in impairment charges.

The success of our Lunar Initiatives will depend, in part, on our ability to realize all or some of the anticipated synergies and other benefits from integrating the new Lunar Initiatives with our existing business.

In addition, we may not accomplish the integration smoothly, successfully or within the anticipated costs or timeframe.

If we experience difficulties with the integration process or if the business of our Lunar Initiatives deteriorates, growth opportunities and other synergies may not be realized fully or at all, or may take longer to realize than expected.

If any of the above risks occur, our business, financial condition, results of operations and cash flows may be materially and adversely impacted, we may fail to meet the expectations of investors or analysts, and our stock price may decline as a result.

Our Lunar Initiatives will require substantial capital expenditures to design, develop, expand, and maintain our technologies and infrastructure to support development of such potential operations.

These expenditures include, but are not limited to, costs associated with research and development, construction and expansion of production capabilities, acquisition of property and equipment, and ongoing maintenance and upgrades to ensure reliability and competitiveness.

In particular, lunar resource development, autonomous industrial infrastructure, Moon-based semiconductor, quantum computing manufacturing and lunar power generation opportunities all require the investment of significant additional capital resources.

We may choose to increase or accelerate the pace of any of these investments at any time, which could result in periods of reduced profitability or increased losses as we prioritize long-term growth over near-term financial performance.

Many of the products and services that may be important for the growth of our Lunar Initiatives are novel and untested, and therefore our estimates of capital expenditures may prove to be inaccurate.

In addition, if any adverse findings are discovered at any stage during the course of our Lunar Initiatives that would render the initiative unsuitable, then we may not be able to obtain the financing necessary to proceed with the Lunar Initiatives on favorable terms, or at all.

Our ability to obtain financing that may be needed to provide additional funding will depend, in part, on factors beyond our control, and there can be no assurance that funding will be available to us on commercially reasonable terms or at all.

Even if we are able to obtain financing, we may have to accept terms that are disadvantageous to us or that may have an adverse impact on our business plan and the viability of the relevant Lunar Initiatives.

Any additional debt financing secured by us in the future could involve restrictive covenants relating to our capital-raising activities and other financial and operational matters, which could limit our operational flexibility and make it more difficult for us to obtain additional capital and to pursue business opportunities.

In addition, we may need to raise additional capital through further issuances of equity or convertible debt securities, and if we do, our shareholders would suffer significant dilution and any new equity securities we issue could have rights, preferences, and privileges superior to those of holders of our common stock.

Our ability to access the capital markets or secure other sources of financing may be adversely affected by factors beyond our control, including fluctuations in market conditions, changes in investor sentiment, increases in interest rates, or adverse events affecting the broader industry or economy.

The failure to obtain necessary additional funding could cause any or all of our Lunar Initiatives to be delayed or not completed.

We are substantially dependent on the outcome of government solicitations and awards, including the Appendix A Program and the CLPS2 Program, and there can be no assurance that we will submit a proposal or be selected for any contract, award or funding.

We plan to submit a proposal to NASA’s Next Space Technologies for Exploration Partnerships-3 Appendix A:

Lunar Enabling Infrastructure Accelerator program, and we submitted a proposal to NASA’s Commercial Lunar Payload Services 2 program in June 2026.

Neither the CLPS2 submission nor the planned Appendix A proposal constitutes a NASA selection, award, contract, funding commitment, authorization or endorsement.

Our business strategy and planned operations are substantially dependent on our ability to secure government contracts, awards and funding, including under programs such as the Appendix A Program and CLPS2 Program.

We do not currently have committed funding sufficient to fully execute on any of the Company’s Lunar Initiatives, and we are reliant on government awards and contracts to provide the programmatic support, and potentially the capital necessary to advance our development activities, achieve key technical milestones and sustain our operations.

If we are not selected for awards under these programs, or if any awards we receive are smaller in scope, delayed or subject to conditions that limit their utility, we may lack the financial resources to carry out any of the Lunar Initiatives on the timelines necessary for commercialization.

There can be no assurance that NASA will not modify, delay or cancel the Appendix A Program or the CLPS2 Program, that we will submit a proposal to the Appendix A Program, or that NASA will select or fund us under the Appendix A Program or CLPS2 Program.

The award processes for government programs such as the Appendix A Program and CLPS2 Program are highly competitive, subject to extensive evaluation criteria, and influenced by factors beyond our control, including government budgetary constraints, shifting policy priorities, the number and quality of competing proposals, and the discretion of the awarding agency.

Even if we submit technically sound proposals, there can be no assurance that we will be selected for any award, that any award will be made on terms favorable to us, or that funding under any award will be disbursed in a timely manner or in amounts sufficient to advance the Lunar Initiatives.

Our failure to obtain government contracts, awards or funding could materially impair our ability to advance the Lunar Initiatives, force us to seek alternative sources of capital on potentially unfavorable terms, significantly curtail or delay our planned operations, or otherwise have a material adverse effect on our business, financial condition and results of operations.

Our Lunar Initiatives are in the explorative planning and design stages and have not yet been proven at commercial scale, or at all, and may ultimately be unsuccessful.

In particular, the timeline for these Lunar Initiatives, and the launch cadence required to achieve them may be difficult or impossible to determine.

To date, no formal business plan or capital budget has been approved relating to our Lunar Initiatives.

These efforts require substantial and ongoing investments of financial, technical, and human resources over extended time horizons, including, but not limited to, research and development, testing, infrastructure, regulatory approvals, and mission execution.

The technologies, systems, and operational capabilities required for each of these Lunar Initiatives involve significant technical complexity and are subject to design, engineering, and performance risks, many of which may only become apparent as development and testing progress.

Many of these technologies, systems and operational capabilities are novel and untested, and we expect to incur significant capital expenditures over a period of years before our products and services and other strategic Lunar Initiatives, including in-orbit, lunar, and interplanetary industrialization efforts, become profitable, which may never occur.

We may not be able to develop, commercialize, scale, or successfully implement these or other strategic initiatives on the timelines we currently anticipate, or at all.

The Lunar Initiatives require the transportation of significant equipment, technology and materials to the lunar surface.

The availability and cost of lunar transportation and launch services are determined by third-party providers and are subject to significant uncertainty.

Launch failures, schedule delays, limited payload capacity and escalating costs could delay or prevent the deployment of our planned lunar infrastructure and could render our operations commercially impracticable.

We have not announced any contracts with launch service providers, and there can be no assurance that we will be able to secure reliable and cost-effective transportation to the Moon.

Furthermore, to the extent that breakthrough developments in terrestrial energy access, such as advances in nuclear energy, significantly reduce energy costs or alleviate infrastructure constraints, the viability of our infrastructure may be materially diminished.

Even if our Lunar Initiatives prove to be commercially viable, a material slowdown in the demand of lunar based products could result in existing infrastructure meeting such demand, thereby reducing the need for our lunar infrastructure.

As a result, we may be required to devote financial, technical, human or other resources in excess of our current expectations, and there can be no assurance that these investments will generate adequate revenue, which could adversely affect our business, financial condition, results of operations, and future prospects.

Our Lunar Initiatives are still emerging and evolving or do not currently exist, and such markets may not develop as we expect, or at all.

Any estimate we make regarding the size or timing of our anticipated market opportunities is inherently uncertain and necessarily involves significant assumptions about future customer demand, adoption, technological development, regulatory conditions and the emergence of a broader commercial market that does not currently exist.

While we believe these industries will develop over time, the manner in which they emerge, including the timing of commercialization, the scale and pace of adoption, and the applicable technical, regulatory, geopolitical and economic frameworks may differ materially from our current expectations.

If these industries do not develop, develop on slower timelines, at smaller scales, or under different economic or regulatory conditions than we anticipate, this could require us to modify, delay, or abandon certain of our business plans, or cause such plans not to develop at all, which could materially and adversely affect our business, financial condition, results of operations, and future prospects.

Our future revenue growth and operating results relating to our Lunar Initiatives are dependent on our ability to design, develop and successfully commercialize new and innovative technologies, products, and services on a timely and cost-effective basis.

The commercial lunar and space industries are characterized by rapid and disruptive technological change, evolving industry standards, the emergence of new and well-funded competitors, and frequent new product and service introductions.

In addition, we may expand into new markets, which may lead to similar or additional challenges that we cannot foresee and may require novel innovations to navigate or overcome.

As a result, we may from time to time rapidly adjust, modify or change our strategic priorities, capital allocation, product or service focus or operational Lunar Initiatives across our business in response to these other changes or new markets.

The markets in which we plan to operate are rapidly evolving and intensely competitive, and we face competition from a range of established and emerging companies, including large, well-capitalized technology companies and aerospace firms, including foreign competitors.

Some competitors are investing significant capital to develop related infrastructure that compete directly with our offerings, and companies based in China and other jurisdictions may benefit from government support, favorable regulatory environments, or strategic national prioritization.

If we are unable to anticipate technological trends, respond to technological advancements or changing customer demands, or successfully develop and commercialize new or enhanced offerings, we may be unable to establish or maintain a meaningful market position and our business, financial condition, results of operations, and future prospects could be materially and adversely affected.

The commercial lunar market is undeveloped and uncertain, and there may be insufficient demand for the products and services we intend to develop

Our Lunar Initiatives contemplate the development of infrastructure and services including power generation and energy storage for commercial and government customers on the Moon.

Currently, there is no commercial lunar market, and there can be no assurance that lunar commercialization will occur, or that sufficient customer demand will develop for such products and services.

Uncertainty concerning the existence, concentration, accessibility, extractability, processing, ownership, regulation and commercial value of lunar resources further limits the predictability of this market.

If the commercial lunar market does not develop as anticipated, or develops more slowly than expected, we may be unable to generate meaningful revenue from the Lunar Initiatives.

The markets for which we are conducting explorative planning and design, including lunar power generation, energy storage and resource mining are expected to attract significant competition from commercial entities and government-sponsored programs, many of which have substantially greater financial, technical, manufacturing, marketing and personnel resources than we do.

We believe that our ability to compete will depend upon many factors both within and beyond our control, including:

the timing, reliability and performance of our technology development compared to that of our competitors;

our ability to secure NASA awards, government contracts and other sources of funding;

the pace at which our competitors develop competing lunar infrastructure technologies;

whether our competitors are able to secure NASA awards, government contracts and other sources of funding ahead of, or instead of, us;

our ability to attract and retain qualified engineers, scientists, and operational personnel;

the cost, mass efficiency and scalability of our solutions compared to those of our competitors;

our ability to establish and maintain strategic partnerships, collaborations and customer relationships;

the availability of launch and lunar transportation services on commercially reasonable terms;

brand recognition, reputation and demonstrated mission heritage in space and lunar operations.

Many of our current and potential competitors have significantly greater resources and more advanced operational capabilities than we do.

For example, SpaceX is substantially better capitalized than us and possesses substantial vertical integration across launch, spacecraft manufacturing and mission operations, which provides it with significant cost and schedule advantages that could enable it to offer competing lunar infrastructure services at lower prices or on faster timelines than we are able to achieve.

Other competitors, including Blue Origin, Intuitive Machines and international space agencies, are also pursuing lunar surface operations and may establish infrastructure or secure customer commitments before we are able to deploy our planned systems.

Because our Lunar Initiatives remain in the explorative planning and design stage, we have not yet demonstrated the technical feasibility of our planned offerings, potential customer base or generated any revenue from lunar-related activities, and we may be unable to compete effectively against entities that are further advanced in their lunar programs.

Our failure to compete effectively could have a material adverse effect on our business, financial condition and results of operations.

Our activities to evaluate and pursue strategic alternatives may not be successful, including the announcement and pendency of the proposed sale of 1st Detect, and may present certain risks to our ongoing business and operations.

In November 2025, we initiated a review of strategic alternatives in order to explore ways to maximize shareholder value, including raising equity capital, reverse mergers, combination transactions, and the sale of all or part of our business, and other possible strategic or financial transactions.

The review of such alternatives is ongoing and we have not set a deadline or definitive timetable for the completion of the strategic alternatives review process, and there can be no assurance that this process will result in any transaction or specific outcome.

Additionally, on June 16, 2026, we announced that our Board authorized our management to pursue a potential sale process of our subsidiary, 1st Detect.

We may not be able to accurately estimate the timing of any strategic alternative, including a potential sale of 1 st Detect, or signing of a final agreement, valuation or purchase price, or whether economic or other market conditions will impact the timing, price or market interest.

We cannot estimate whether economic conditions, capital markets, or other factors will allow us to successfully complete a strategic alternative, locate an adequate counterparty, negotiate terms of a strategic alternative acceptable to us or successfully complete such a strategic alternative.

A successful transaction could depend on various factors, including our ability to effectively transfer liabilities, contracts, and employees, revise our legal entity structure, negotiate equity ownership, identify and separate intellectual property, reduce fixed costs associated with the assets or a business, obtain financing, and collect or use the proceeds from any transaction.

Any strategic alternative transaction may result in a dilutive impact to our future earnings, as well as significant write-offs, including those related to long-lived assets, including goodwill and other intangible assets, which could have a material adverse effect on our results of operations and financial condition.

All of these efforts require varying levels of management resources, which may divert our attention from other business operations.

In addition, the announcement and ongoing conduct of a strategic alternative process may disrupt the Company’s business by creating uncertainty among employees, customers, and suppliers, which could result in the loss of key personnel, cancellation or non-renewal of customer contracts, or causing the deterioration of supplier relationships, which in turn could reduce all or a portion of our business’ value and adversely affect our results of operations.

Legal and Regulatory Risks

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Failure to obtain clearance or authorization for the BreathTest-1000, or other delays in the development of the BreathTest-1000, would adversely affect our ability to grow our business.

Commercialization of the BreathTest-1000 may require FDA clearance of a 510(k) premarket notification submission and/or authorization of a de novo submission.

The process for submitting and obtaining FDA clearance of a 510(k) or authorization of a de novo submission, can be expensive and lengthy.

The FDA’s review process can take several months or longer, and we may not be able to obtain FDA clearance or de novo authorization for the BreathTest-1000 on a timely basis, if at all.

The FDA’s refusal of, or any significant delays in receiving, 510(k) clearance or de novo authorization of the BreathTest-1000, would have an adverse effect on our ability to expand our business.

Commercialization of the BreathTest-1000 may require FDA clearance of a 510(k) premarket notification submission, authorization of a de novo submission, or PMA approval.

The process for submitting and obtaining FDA clearance of a 510(k), authorization of a de novo submission, or PMA approval can be expensive and lengthy.

The FDA’s review process can take several months or longer, and we may not be able to obtain FDA clearance, de novo authorization, or approval for the BreathTest-1000 on a timely basis, if at all.

The FDA’s refusal of, or any significant delays in receiving, 510(k) clearance, de novo authorization, or PMA approval of the BreathTest-1000, would have an adverse effect on our ability to expand our business.

Thus far, we have not performed any clinical testing of the BreathTest-1000, which will likely be required before the device can be marketed.

Even if a clinical trial is completed, there can be no assurance that the data generated during a clinical trial will meet the safety and effectiveness endpoints or otherwise produce results that will lead the FDA to grant marketing clearance, approval, or authorization.

We believe commercialization of BreathTest-1000 would require many years and significant investment due to regulatory requirements.

At this time, we have determined to deploy capital instead to our other subsidiaries.

In addition, any other delays in the development of the BreathTest-1000, for example, unforeseen issues during product validation, would have an adverse effect on our ability to commercialize the BreathTest-1000.

We and our suppliers may not meet regulatory quality standards applicable to our device-manufacturing processes, which could have an adverse effect on our business, financial condition, and results of operations.

As a prospective medical device manufacturer, if BreathTest-1000 or any other device(s) we may successfully develop in the future is approved or cleared for commercialization in the United States, we will need to register with the FDA and will be subject to periodic inspection by the FDA for compliance with the QSR, including requirements pertaining to design controls, product validation and verification, in-process testing, quality control and documentation procedures, labeling, among numerous others.

As a prospective medical device manufacturer, if BreathTest-1000 or any other device(s) we may successfully develop in the future is approved or cleared for commercialization in the United States, we will need to register with the FDA and will be subject to periodic inspection by the FDA for compliance with the QMSR, including requirements pertaining to design controls, product validation and verification, in-process testing, quality control and documentation procedures, labeling, among numerous others.

Compliance with applicable regulatory requirements is subject to continual review and is rigorously monitored through routine and unannounced inspections by the FDA.

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We could be subject to the same wide range of enforcement actions described above if we are found in violation of FDA’s prohibition on pre-approval promotion of an investigational device.

Even if we obtain FDA clearance or approval for BreathTest-1000 or any other medical device product, our products will remain subject to regulatory scrutiny.

Even if we successfully develop our BreathTest-1000 and it is cleared or approved for commercialization by FDA, it will be subject to ongoing regulatory requirements for manufacturing, labeling, packaging, storage, distributing, follow-up and data and adverse event reporting, advertising, promotion, sampling, record-keeping, conduct of post-marketing studies, and submission of safety, efficacy, and other post-market information, including both federal and state requirements in the United States.

If FDA discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or disagrees with the promotion, marketing or labeling of BreathTest-1000, FDA may impose restrictions on that product or us, including requiring withdrawal of the product from the market.

If we fail to comply with applicable regulatory requirements, FDA or another enforcement authority may, among other things:

issue warning letters;

impose civil or criminal penalties;

suspend or withdraw regulators clearance and/or approval;

suspend any of our ongoing clinical studies;

refuse to approve pending applications or supplements to approved applications submitted by us;

seize or detain products or require a product recall.

Any government investigation of alleged violations of law would require us to expend significant time and resources in response and could generate negative publicity.

Any failure to comply with ongoing regulatory requirements may significantly and adversely affect our ability to commercialize and generate revenue from our product candidates.

If regulatory sanctions are applied or if regulatory approval is withdrawn, the value of our company and our operating results will be adversely affected.

Legislative or regulatory healthcare reforms may adversely affect our business and our ability to obtain regulatory clearance or approval for, and successfully commercialize, our products.

Recent political, economic and regulatory influences are subjecting the healthcare industry to fundamental changes.

Both the federal and state governments in the United States and foreign governments continue to propose and pass new legislation and regulations designed to contain or reduce the cost of healthcare.

Such legislation and regulations may result in decreased reimbursement for our product, which may further exacerbate industry‑wide pressure to reduce the prices charged for our product.

Such legislation and regulations may result in increased cost pressures on healthcare providers and other potential customers, which could reduce spending, delay purchasing decisions, increase price sensitivity, or otherwise negatively affect demand for our products, if approved and commercialized, which may further exacerbate industry‑wide pressure to reduce the prices charged for our product.

This could harm our ability to market our products and generate sales.

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In addition, government funding of FDA and other government agencies on which our operations may rely, including those that fund research and development activities, is subject to the political process, which is inherently fluid and unpredictable.

For example, the executive branch recently established the Department of Government Efficiency (“DOGE”), which implemented a federal government hiring freeze and large scale layoffs of current federal employees and also announced additional efforts to reduce federal government employee headcount and the size of the federal government.

It is unclear how these executive actions or other potential actions by the executive branch will impact the regulatory authorities that oversee our business.

These budgetary pressures may reduce FDA’s ability to perform its responsibilities.

If a significant reduction in FDA’s workforce occurs, FDA’s budget is significantly reduced, or there are other disruptions at FDA and other agencies, more time may be necessary for biological products, or biologics, or modifications to approved biologics to be reviewed and/or approved by necessary government agencies, which could increase our costs and would adversely affect our business.

Our financial performance may be adversely affected by medical device tax provisions in healthcare reform laws.

The Patient Protection and Affordable Care Act (the “PPACA”) imposed, among other things, an excise tax of 2.3% on any entity that manufactures or imports medical devices offered for sale in the United States.

Under these provisions, the Congressional Research Service predicted that the total cost to the medical device industry may be up to $20 billion over a decade.

The Internal Revenue Service issued final regulations implementing the tax in December 2012, which required, among other things, bi-monthly payments and quarterly reporting.

The Consolidated Appropriations Act, 2016 (Pub.

114-113), signed into law in December 2015, included a two-year moratorium on the medical device excise tax.

A second two-year moratorium on the medical device excise tax was signed into law in January 2018 as part of the Extension of Continuing Appropriations Act, 2018 (Pub.

115-120), extending the moratorium through December 31, 2019.

On December 20, 2019, as part of the Further Consolidated Appropriations Act, 2020 H.R.

116-94), President Trump signed into law a permanent repeal of the medical device tax under the PPACA such that sales of taxable medical devices after December 31, 2015 are not subject to the tax;

however, there is no guarantee that Congress or the President will not reverse course in the future.

If such an excise tax on sales of our products in the United States is enacted, it could have a material adverse effect on our business, results of operations and financial condition.

For example, the executive branch established the Department of Government Efficiency in 2025, which implemented a federal government hiring freeze and large-scale layoffs of current federal employees and also announced additional efforts to reduce federal government employee headcount and the size of the federal government.

Similar budgetary pressures, if implemented by the federal government, may reduce FDA’s ability to perform its responsibilities.

If a significant reduction in FDA’s workforce occurs, FDA’s budget is significantly reduced, or there are other disruptions at FDA and other agencies, more time may be necessary for device products to be reviewed and/or approved by necessary government agencies, which could increase our costs and would adversely affect our business.

Our AgLAB business ’ growth is highly dependent on the U.S.

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Any new laws and regulations limiting the use or cultivation of hemp and cannabis and any enforcement actions by state and federal governments could indirectly reduce demand for our products and may impact our current and planned future operations.

There can be no assurance that changes in regulation of the industry and more rigorous enforcement by federal authorities will have a detrimental effect on us.

Most recently, the Continuing Appropriations and Extensions Act of 2026 (H.R.

5371) (the “2026 Appropriations Act”), enacted on November 12, 2025, includes a provision to amend the definition of hemp in the 2018 Farm Bill to effectively eliminate the currently commercialized hemp-derived THC products although the change does not become effective for 365 days from the date of enactment.

Efforts are underway to repeal, replace, or delay this amendment, but whether any change will occur is uncertain.

The amended definition was set to go into effect on November 12, 2026, but Congress delayed implementation until December 11, 2026.

There can be no assurance that changes in regulation of the industry and/or more rigorous enforcement by federal authorities will not have a detrimental effect on us.

Evolving federal and state laws and regulations pertaining to the use or cultivation of hemp and cannabis, as well active enforcement by federal or state authorities of the laws and regulations governing the use and cultivation of hemp and cannabis may indirectly affect our business, our revenues and our profits.

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Furthermore, on July 28, 2025, the U.S.

announced that they have reached a preliminary trade deal with the European Union, which among other things, sets a 15% percent tariff on most European Union goods.

announced that they have reached a preliminary trade deal with the EU, which among other things, sets a 15% percent tariff on most EU goods.

These developments are ongoing and are subject to change, including the imposition of additional tariffs and retaliatory measures by these and other countries.

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No formal statement or explanation has been issued by BIS or the Commerce Department to the public or industry stakeholders.

Such policies and actions could effect our ability to export our products and could reduce demand for our products and services, increase our costs, reduce our profitability, adversely impact our supply chain or otherwise have a material adverse effect on our business and results of operations.

Such policies and actions could affect our ability to export our products and could reduce demand for our products and services, increase our costs, reduce our profitability, adversely impact our supply chain or otherwise have a material adverse effect on our business and results of operations.

Risks Related to Ownership of Our Common Stock

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Our stock price has fluctuated in the past, has recently been volatile and may be volatile in the future.

On September 9, 2024, the intra-day sales price of our common stock fluctuated between a reported low sale price of $8.01 and a reported high sales price of $10.69.

Throughout the fiscal year 2025, the closing sales price of our common stock has fluctuated between a reported low sales price of $5.50 and a reported high sales price of $11.51.

The closing market price for our common stock has varied between a high of $49.80 on May 29, 2026, and a low of $2.17 on March 26, 2026, in the twelve-month period ended June 30, 2026.

We may incur rapid and substantial decreases in our stock price in the foreseeable future that are unrelated to our operating performance or prospects.

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the success of competitive products or technologies;

our continued compliance with the Nasdaq listing standards;

our continued compliance with The Nasdaq Capital Market (“Nasdaq”) listing standards;

regulatory or legal developments in the United States and other countries, especially changes in laws or regulations applicable to our products;

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Our Certificate of Incorporation provides that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for any disputes between us and our stockholders, which could limit stockholders ’ ability to obtain a favorable judicial forum for disputes with us or our directors or officers.

Our Certificate of Incorporation provides that unless we consent in writing to the selection of an alternative forum, the Court of Chancery for the State of Delaware is the sole and exclusive forum for claims brought by a stockholder, including claims in the right of the corporation, (i) that are based upon a violation of a duty by a current or former director or officer or stockholder in such capacity or (ii) as to which the Delaware General Corporation Law (the “DGCL”) confers jurisdiction upon the Court of Chancery of the State of Delaware.

Our Certificate of Incorporation provides that unless we consent in writing to the selection of an alternative forum, the Court of Chancery for the State of Delaware is the sole and exclusive forum for claims brought by a stockholder, including claims in the right of the corporation, (i) that are based upon a violation of a duty by a current or former director or officer or stockholder in such capacity or (ii) as to which the Delaware General Corporation Law confers jurisdiction upon the Court of Chancery of the State of Delaware.

The provision indicates that if the Court of Chancery does not have jurisdiction, then the Superior Court of the State of Delaware, or, if such other court does not have jurisdiction, the United States District Court for the District of Delaware, shall be the exclusive forum for such action.

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Our failure to maintain compliance with Nasdaq ’ s continued listing requirements could result in the delisting of our Common Stock.

Our common stock is currently listed for trading on the Nasdaq Capital Market.

We must satisfy the Nasdaq Capital Market’s continued listing requirements or risk delisting, which would have a material adverse effect on our business.

A delisting of our common stock from the Nasdaq Capital Market could materially reduce the liquidity of our common stock and result in a corresponding material reduction in the price of our common stock.

Our common stock is currently listed for trading on Nasdaq.

We must satisfy Nasdaq’s continued listing requirements or risk delisting, which would have a material adverse effect on our business.

A delisting of our common stock from Nasdaq could materially reduce the liquidity of our common stock and result in a corresponding material reduction in the price of our common stock.

In addition, delisting could harm our ability to raise capital through alternative financing sources on terms acceptable to us, or at all, and may result in the potential loss of confidence by investors, suppliers, customers and employees and fewer business development opportunities.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors