What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2026-08-14 compared with 2026-05-15 · 158 added, 66 removed, 285 unchanged (44% of the section changed)

8 unchanged sentences

TOTAL CURRENT ASSETS

Property, plant and equipment – net

Property and equipment – net

LIABILITIES AND STOCKHOLDERS’ EQUITY

4 unchanged sentences

Other accrued liabilities

Convertible debenture net of debt issuance costs

Income taxes payable

4 unchanged sentences

STOCKHOLDERS’ EQUITY

Preferred stock -

Authorized, 5,000,000 shares, including

200,000 shares of Series A Junior Participating

Issued and outstanding, none

Common stock, at stated value -

Authorized, 30,000,000 shares

Issued and outstanding, 9,394,422 shares as of March 31,

2026 and 9,391,922 shares as of December 31, 2025

Preferred stock - Authorized, 5,000,000 shares, including 200,000 shares of Series A Junior Participating Issued and outstanding, none

Preferred stock - Authorized, 8,000 shares of Series B Preferred Stock Issued and outstanding, none

Common stock, at stated value - Authorized, 30,000,000 shares Issued and outstanding, 10,395,627 shares as of June 30, 2026 and 9,391,922 shares as of December 31, 2025

Additional paid in capital

Accumulated deficit

7 unchanged sentences

Three Months Ended

Six Months Ended

Cost of goods sold

6 unchanged sentences

Interest income

Interest expense

Foreign currency transaction gain (loss)

12 unchanged sentences

Three Months Ended

Six Months Ended

Net income (loss)

4 unchanged sentences

DATA I/O CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(in thousands, except share amounts)

9 unchanged sentences

Balance at March 31, 2025

Stock awards issued, net of tax withholding

Issuance of stock through:

Share-based compensation

Net income (loss)

Other comprehensive income (loss)

Balance at June 30, 2025

Balance at December 31, 2025

Stock options exercised

Stock awards issued, net of tax withheld

Stock awards issued, net of tax withholding

Issuance of stock through:

3 unchanged sentences

Balance at March 31, 2026

Stock awards issued, net of tax withholding

Issuance of stock through:

Share-based compensation

Common stock issued in private placement

Net income (loss)

Other comprehensive income (loss)

Balance at June 30, 2026

See notes to consolidated financial statements

DATA I/O CORPORATION

1 unchanged sentence

(in thousands)

For the Three Months Ended

For the Six Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

3 unchanged sentences

Depreciation and amortization

Equipment transferred to cost of goods sold

Equipment transferred to inventory

Interest expense

Share-based compensation

8 unchanged sentences

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property, plant and equipment

Purchases of property and equipment

Net proceeds from sale of assets

Cash provided by (used in) investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Net proceeds from issuance of common stock, less payments for shares withheld to cover tax

Proceeds from issuance of convertible debt

Proceeds from issuance of common stock

Direct costs from issuance of convertible debt

Net proceeds from issuance of common stock, less payments

for shares withheld to cover tax

Cash provided by (used in) financing activities

12 unchanged sentences

Our manufacturing operations are currently located in Redmond, Washington, United States and Shanghai, China.

We prepared the financial statements as of March 31, 2026 and March 31, 2025, according to the rules and regulations of the Securities and Exchange Commission ("SEC").

We prepared the financial statements as of June 30, 2026 and June 30, 2025 according to the rules and regulations of the Securities and Exchange Commission ("SEC").

These statements are unaudited but, in the opinion of management, include all adjustments (consisting of normal recurring adjustments and accruals) necessary to present fairly the results for the periods presented.

1 unchanged sentence

We have condensed or omitted certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America according to such SEC rules and regulations.

Operating results for the three months ended March 31, 2026, are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.

Operating results for the six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.

Significant Accounting Policies

These financial statements should be read in conjunction with the annual audited financial statements and the accompanying notes included in our Form 10-K for the year ended December 31, 2025 (filed with the SEC on April 16, 2026).

These financial statements should be read in conjunction with the annual audited financial statements and the accompanying notes included in our Form 10-K and Form 10-K/A for the year ended December 31, 2025 (filed with the SEC on April 16, 2026 and April 30, 2026, respectively).

There have been no changes to our significant accounting policies described in the Annual Report that have had a material impact on our unaudited condensed consolidated financial statements and related notes.

31 unchanged sentences

Three Months Ended

Six Months Ended

Net sales by type

March 31, 2026

March 31, 2025

(in thousands)

8 unchanged sentences

Share-Based Compensation

All share-based compensation awards are measured based on estimated fair values on the date of grant and recognized as compensation expense on the straight-line method.

All stock-based compensation awards are measured based on estimated fair values on the date of grant and recognized as compensation expense on the straight-line method.

Our share-based compensation is reduced for estimated forfeitures at the time of grant and revised as necessary in subsequent periods if actual forfeitures differ from those estimates.

17 unchanged sentences

Adjustments are made to standard cost, which approximates actual cost on a first-in, first-out basis.

We estimate reductions to inventory for obsolete, slow-moving, excess and non-salable inventory by reviewing current transactions and forecasted product demand.

We estimate reductions to inventory for obsolete, slow-moving, excess and non-saleable inventory by reviewing current transactions and forecasted product demand.

We evaluate our inventories on an item-by-item basis and record inventory adjustments accordingly.

3 unchanged sentences

Finished goods

NOTE 3– PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment consisted of the following components:

NOTE 3– PROPERTY AND EQUIPMENT, NET

Property and equipment consisted of the following components:

(in thousands)

2 unchanged sentences

Less accumulated depreciation

Property, plant and equipment, net

NOTE 4 – OTHER ACCRUED LIABILITIES

Property and equipment, net

NOTE 4 – ACCRUED LIABILITIES

Other accrued liabilities consisted of the following components:

March 31, 2026

(in thousands)

3 unchanged sentences

Severance accrual

Interest payable, net

Other accrued liabilities

During the three months ended March 31, 2026, the Company recorded approximately $ 1.0 million of employee-related costs associated with a workforce reduction in its Germany operations.

These costs consisted primarily of severance and related employee termination benefits, as well as legal and other costs incurred in connection with the workforce reduction.

As of March 31, 2026, accrued liabilities related to these termination benefits were approximately $ 973,000 , which are expected to be paid within the next twelve months.

The changes in our product warranty liability at for the three months ending March 31, 2026 and year ended December 31, 2025 are as follows:

March 31, 2026

During the three months ended June 30, 2026, the Company recorded approximately $ 0.3 million of employee-related costs associated with a workforce reduction in operations.

During the six months ended June 30, 2026, the Company recorded approximately $ 1.3 million of such costs.

As of June 30, 2026, accrued liabilities related to these termination benefits were approximately $ 649,000 , which are expected to be paid within the next twelve months.

The changes in our product warranty liability at June 30, 2026 and year ended December 31, 2025 are as follows:

(in thousands)

4 unchanged sentences

NOTE 5– OPERATING LEASE COMMITMENTS

We have commitments under non-cancellable operating leases and other agreements, primarily for factory and office space, with initial or remaining terms of one year or more as of March 31, 2026, are as follows:

March 31, 2026

We have commitments under non-cancelable operating leases and other agreements, primarily for factory and office space, with initial or remaining terms of one year or more as of June 30, 2026, are as follows:

2026 Operating

Lease Commitments

(in thousands)

5 unchanged sentences

Our two subsidiary facilities in Munich, Germany and Shanghai, China provide extended worldwide sales, service, engineering and operation services.

The components of our lease expense for the three months ended March 31, 2026, include facility related operating lease costs of $ 189,000 , and short-term lease costs of $ 7,800 .

In the prior year, components of our lease expense for the three months ended March 31, 2025, include facility related operating lease costs of $ 182,000 , and short-term lease costs of $ 9,500 .

There were no new operating leases during the three months ended March 31, 2026.

The components of our lease expense for the three months and six months ended June 30, 2026, include facility related operating lease costs of $ 187,000 and $ 375,000 , respectively, and short-term lease costs of $ 6,500 and $ 14,000 , respectively.

In the prior year, components of our lease expense for the three months and six months ended June 30, 2025, include facility related operating lease costs of $ 184,000 and $ 366,000 , respectively, and short-term lease costs of $ 10,000 and $ 19,000 , respectively.

There were no new operating leases during the six months ended June 30, 2026.

The Redmond, Washington headquarters facility lease runs to October 31, 2029, at approximately 20,460 square feet.

1 unchanged sentence

The lease for the facility located near Munich, Germany runs to August 2027, at approximately 4,895 square feet.

The following table presents supplemental balance sheet information related to leases as of March 31, 2026, and December 31, 2025:

The following table presents supplemental balance sheet information related to leases as of June 30, 2026, and December 31, 2025:

Balance at June 30,

Balance at December 31,

(in thousands)

6 unchanged sentences

Most arrangements are cancelable without a significant penalty, and with short notice, typically less than 90 days.

As of March 31, 2026, we had confirmed contracts with a commitment of approximately $ 596,000 to be paid within one year and $ 480,000 to be paid beyond one year.

As of June 30, 2026, we had confirmed contracts with a commitment of approximately $ 660,000 to be paid within one year and $ 480,000 to be paid beyond one year.

NOTE 7 – CONTINGENCIES

As of March 31, 2026, we were not a party to any legal proceedings or aware of any indemnification agreement claims, the adverse outcome of which in management’s opinion, individually or in aggregate, would have a material adverse effect on our results of operations or financial position.

As of June 30, 2026, we were not a party to any legal proceedings or aware of any indemnification agreement claims, the adverse outcome of which in management’s opinion, individually or in aggregate, would have a material adverse effect on our results of operations or financial position.

NOTE 8 – INCOME TAXES

Income tax expense for the first quarter of 2026 and 2025 primarily related to foreign and minor state taxes.

Benefit or provision for income taxes for the three months ended March 31, 2026, and 2025, was a provision of $ 0 and $ 21,000 , respectively, and the effective tax rates for these periods were 0 % and 5.82 %, respectively.

The difference between our effective tax rates for the three months ended March 31, 2026 and 2025, and the U.S.

statutory rate of 21 % was primarily attributable to the impact of a full valuation allowance on our net deferred tax assets, as well as foreign taxes.

Our consolidated effective tax rate decreased for the three months ended March 31, 2026, compared to the same period in the prior year primarily due to operational results in the first quarter of 2026.

Income tax expense for the second quarter of 2026 and 2025 primarily related to foreign and minor state taxes.

The provision for (benefit from) income taxes for the three months ended June 30, 2026 and 2025 was $ 0 and $ 20,000 , respectively, and the provision for (benefit from) income taxes for the six months ended June 30, 2026 and 2025 was $ 0 and ($ 2,000 ), respectively.

The effective tax rates for the three months ended June 30, 2026 and 2025 were 0 % and ( 2.62 %), respectively, and the effective tax rates for the six months ended June 30, 2026 and 2025 were 0 % for each period.

The differences between our effective tax rates for the three and six months ended June 30, 2026 and 2025 and the U.S.

federal statutory income tax rate of 21 % were primarily attributable to the effect of a full valuation allowance against our net deferred tax assets and, to a lesser extent, foreign taxes.

The change in our effective tax rate for the six months ended June 30, 2026 compared with the same period in 2025 was primarily attributable to changes in the mix and amount of pre-tax income and loss across jurisdictions.

NOTE 9 – EARNINGS PER SHARE

4 unchanged sentences

Three Months Ended

Six Months Ended

(in thousands except per share data)

1 unchanged sentence

Net income (loss)

Denominator for basic

earnings (loss) per share:

Denominator for basic earnings (loss) per share:

Weighted-average shares

7 unchanged sentences

Three Months Ended

Six Months Ended

Restricted Stock Units

1 unchanged sentence

Stock Options

Options to purchase 200,000 and 200,000 shares were outstanding as of March 31, 2026 and 2025, respectively, but were excluded from the computation of diluted earnings per share for the periods then ended because the options were anti-dilutive.

Options to purchase 200,625 and 200,000 shares were outstanding as of June 30, 2026 and 2025, respectively, but were excluded from the computation of diluted earnings per share for the periods then ended because the options were anti-dilutive.

In connection with the private placement financing transaction completed on June 17, 2026, the following potential common shares were outstanding as of June 30, 2026 but were excluded from the computation of diluted earnings per share for the three and six months ended June 30, 2026 because their effect would have been anti-dilutive:

2,730,160 shares issuable upon conversion of the convertible notes (representing the shares issuable upon conversion of the notes into Series B convertible preferred stock and the subsequent conversion of such preferred stock into common stock) and 1,080,000 shares issuable upon exercise of the related warrants.

No comparable securities were outstanding as of June 30, 2025.

NOTE 10 – SHARE-BASED COMPENSATION

1 unchanged sentence

For these awards we have recognized compensation expense using a straight-line amortization method and reduced for estimated forfeitures.

The impact on our results of operations of recording share-based compensation, net of forfeitures, for the three and six months ended June 30, 2026 and 2025, were as follows:

Three Months Ended

Six Months Ended

(in thousands)

3 unchanged sentences

Total share-based compensation

Equity awards granted during the three months ended March 31, 2026 and 2025 were as follows:

Equity awards granted during the three and six months ended June 30, 2026 and 2025 were as follows:

Three Months Ended

Six Months Ended

Restricted Stock Units

1 unchanged sentence

Employee Restricted Stock Units (“RSUs”) typically vest annually over three or four years and employee Non-Qualified stock options typically vest quarterly over four years and have a six-year exercise period.

Non-employee director RSUs typically vest over the earlier of one year or the next annual meeting of shareholders and Non-Qualified stock options vest over three years and have a six-year exercise period.

Non-employee director Restricted Stock Units (“RSUs”) typically vest over the earlier of one year or the next annual meeting of shareholders and Non-Qualified stock options vest over three years and have a six-year exercise period.

There have been no Restricted Stock awards granted in 2026.

Performance Stock Units (“PSUs”) typically cliff vest at the end of the performance period and the performance metric for 2023 awards is cumulative revenue growth over the three-year period ending December 31, 2026, with a cumulative revenue threshold, target, and maximum performance measure.

For 2024 awards, the performance metrics included revenue growth, EBITDA and project objective targets over the three-year period ending December 31, 2026.

There were no Performance Stock awards granted in 2025 or 2026.

The remaining unamortized expected future share-based compensation expense and remaining amortization period associated with award grants of RSUs, PSUs and unvested options at March 31, 2026 and 2025 are:

There have been no Performance Stock awards granted in 2025 or 2026.

The remaining unamortized expected future equity compensation expense and remaining amortization period associated with award grants of RSUs, PSUs and unvested options at June 30, 2026 and 2025 are:

Unamortized future equity compensation expense (in thousands)

1 unchanged sentence

NOTE 11 –SEGMENT INFORMATION

Data I/O operates as a single segment entity, to design, manufacture, and sell programming systems and services.

Data I/O operates as a single segment entity, with the sole objective to design, manufacture, and sell programming systems.

We operate in three separate locations — Redmond, Washington;

3 unchanged sentences

The measure of segment assets is reported on the balance sheet as total consolidated assets.

Our Chief Operating Decision Maker (“CODM”) is the President/Chief Executive Officer who reviews the Company’s financial performance on a consolidated basis without distinguishing between different business lines or geographic areas for the purpose of making operating decisions, allocating resources and evaluating financial performance.

Our Chief Operating Decision Maker (CODM) is the President/CEO who reviews the company’s financial performance on a consolidated basis without distinguishing between different business lines or geographic areas for the purpose of making operating decisions, allocating resources and evaluating financial performance.

Financial performance is assessed using operating results, actual net income vs.

plan, balance sheet fluctuations, and other key performance indicators.

Significant single segment expense categories that are provided to the CODM and included in the reported segment operating profits are outlined in the following table:

Significant single segment expense categories that are provided to the chief operating decision maker and included in the reported segment operating profits are outlined in the following table:

Three Months Ended

Six Months Ended

(in thousands)

6 unchanged sentences

Depreciation & amortization

Other expense (income)

Total operating expenses

Total operating expense

Operating income (loss)

1 unchanged sentence

The Company identified an error in the prior‑year disaggregated revenue amounts of net sales by type.

As such, the Company has revised the net sales by type for the quarter ended March 31, 2025.

As such, the Company has revised the net sales by type for the three and six months ended June 30, 2025.

This correction affected only the disaggregation of net sales among Platform, Adapter, and Software and Services sales and did not impact the Company’s previously reported consolidated balance sheets, statements of operations, comprehensive income (loss), or statements of cash flows.

While the total revenue was not affected, the Company has revised the presentation of net sales by type for the quarter ended March 31, 2025 to enhance comparability.

Effect of Revision

While the total revenue was not affected, the Company has revised the presentation of net sales by type for the three and six months ended June 30, 2025 to enhance comparability.

Three Months Ended

Six Months Ended

Net sales by type

March 31, 2025

June 30, 2025

As Previously Reported

Effect of Revision

March 31, 2025

June 30, 2025

As Previously Reported

Effect of Revision

June 30, 2025

(in thousands)

3 unchanged sentences

*includes service and parts sales associated with equipment service contracts

NOTE 13 – PRIVATE PLACEMENT

Issuance of common stock

On June 17, 2026, the Company issued 869,840 shares of its common stock in a private placement financing transaction entered into pursuant to a Securities Purchase Agreement dated May 14, 2026 with the Lytton‑Kambara Foundation and Alice W.

Lytton Family LLC (the "Investors").

The common stock was issued together with convertible debentures and warrants for aggregate gross proceeds to the Company of approximately $9.0 million.

Following the issuance, the Company had 10,264,262 shares of common stock issued and outstanding.

As the common stock, warrants, and convertible debentures were issued together in a single transaction, the Company allocated the $9.0 million of gross proceeds to each freestanding instrument based on its relative fair value.

Of the total proceeds, $1,854,150 was allocated to the common stock.

The shares of common stock issued in the transaction rank equally with the Company's other outstanding shares of common stock and carry no preferential dividend, liquidation, redemption, or conversion rights.

The Company incurred total issuance costs of approximately $800,000 in connection with the private placement financing transaction, of which $164,879 was allocated to the common stock on the same relative fair value basis used to allocate the proceeds.

Issuance costs allocated to the common stock were recorded as a reduction of the proceeds recognized in equity.

Accordingly, the net amount recognized in common stock for the shares issued was $1,689,271.

Convertible Notes (Series B Preferred Stock)

The Convertible Notes were issued under the private placement financing transaction on June 17, 2026, pursuant to the Securities Purchase Agreement dated May 14, 2026.

The Notes were issued in a transaction to the Lytton-Kambara Foundation and to Alice W.

Lytton Family LLC, with principal balances of $4.55 million and $2.28 million, respectively.

The Notes are direct, unsecured debt obligations of the Company and rank equally in right of payment with all other Debentures now or hereafter issued under the series.

These are five-year Notes maturing on June 16, 2031, unless earlier converted, and bear interest at a rate of 4.0% per annum, payable semiannually on November 1 and May 1, beginning on the first such date after the original issue date of the Notes, on each conversion date (as to that principal amount then being converted), and on the maturity date.

The interest is paid in cash, or at the Company’s option and under certain circumstances, in Series B Convertible Preferred Stock of the Company.

The Investors may convert the Notes into shares of Preferred Stock at a conversion price of $1,000 per share, representing 6,825 shares of Series B Preferred Stock into which the Notes are potentially convertible.

Investors may convert all or a portion of the Notes at any time.

Beginning 36 months after the effective date, the Company may redeem outstanding Notes for 130% of principal , accrued interest and other amounts due.

However, following the stockholder approval required under Nasdaq rules to permit issuance of all underlying shares contemplated by the transaction, particularly where issuances would exceed 19.99% of the Company's outstanding Common Stock as of the Closing Date (“Shareholder Approval”), all remaining principal and accrued interest automatically convert into Series B Preferred Stock without further Investor action.

The potentially dilutive shares associated with the Company's convertible notes were excluded from the computation of diluted earnings per share because their inclusion would have been anti-dilutive.

As of June 30, 2026, the unamortized discount on the Notes was $ 617,718 , the net carrying amount was $ 6.2 million, and the fair value of the Notes was approximately $ 10,881,000 .

The fair value of the Notes was determined using a binomial lattice model in a risk-neutral framework using significant unobservable inputs, resulting in a Level 3 fair value classification.

Significant estimates include the Company’s stock price, volatility, risk-free rate, and credit spread.

Conversion of the Notes into Series B Preferred Stock was contingent upon receipt of shareholder approval required under Nasdaq rules.

Prior to such approval, the number of common shares issuable pursuant to conversion was subject to contractual issuance limitations.

Absent Shareholder Approval, the Company could not issue more than 1,877,945 common shares pursuant to the financing transaction.

The Company incurred total issuance costs of approximately $ 800,000 in connection with the private placement financing transaction, of which $ 521,770 was allocated to the Notes on the same relative fair value basis used to allocate the proceeds.

Together with the issuance discount, the issuance costs attributable to the Note are amortized as interest expense using the effective interest method over the expected life of the Notes.

The effective interest rate on the Notes for the period from June 17, 2026 through June 30, 2026 was 452%, due to the shortened discount accretion term relative to the contract term.

For the period ended June 30, 2026, the coupon interest on the Convertible Notes was $ 9,859 and amortization of the debt discount was $ 862,890 .

The Warrants were issued under the private placement financing transaction on June 17, 2026 pursuant to the Securities Purchase Agreement dated May 14, 2026.

These Warrants are exercisable for an aggregate of 1,080,000 shares of Common Stock at an exercise price of $3.00 per share for a period of five years, expiring June 16, 2031 (see table below).

The exercise price and warrant shares are subject to customary antidilution adjustments.

The Holder controls the manner of exercise and may exercise the Warrants in whole or in part at any time during the exercise period, paying the exercise price in cash or, at any time after the six-month anniversary of the Closing Date when no effective registration statement is available for the issuance of Common Stock issuable upon exercise of the Warrants (the “Warrant Shares”), elect a cashless (net share) exercise;

the Company is not required to make any cash payment or net cash settlement in lieu of delivering Warrant Shares.

Any Warrant remaining outstanding on the Termination Date is automatically exercised on a cashless basis.

As of June 30, 2026, the Company had the following warrants issued and outstanding:

Issuance date

Warrant Shares

Exercise price

Expiration date

Lytton-Kambara Foundation

Lytton Family LLC

Under the cashless (net share) alternative, the Holder receives a net number of shares equal to (A − B) × X ÷ A, where "A" is the five-trading-day volume-weighted average price (VWAP) preceding exercise, "B" is the $3.00 exercise price, and "X" is the number of shares issuable on a cash exercise;

accordingly, the number of shares issuable varies with the Company's share price.

As the five-day VWAP of the Common Stock increases above the exercise price, both the number of shares issued on a cashless exercise and the aggregate fair value of those shares increase;

conversely, as the five-day VWAP approaches the exercise price, the number of shares issued and their aggregate fair value decrease, and no shares would be issued if the five-day VWAP were equal to or below the exercise price.

As of June 30, 2026, if the Holders elect to exercise the Warrants for cash, the Company would deliver one share of Common Stock for each Warrant exercised and would receive cash equal to the fixed $3.00 exercise price per share;

the aggregate fair value of the shares issued upon such cash exercise would vary directly with the then-current five-day VWAP of the Common Stock, whereas the per-warrant exercise price and resulting cash proceeds to the Company remain fixed in accordance with the Warrant Agreement.

The Company incurred total issuance costs of approximately $ 800,000 in connection with the private placement financing transaction, of which $ 113,735 was allocated to the Warrants on the same relative fair value basis used to allocate the proceeds.

The Warrants may not be exercised to the extent (i) such conversion or issuance would result in the investor having beneficial ownership of more than 9.99% of the outstanding shares of Common Stock or (ii) absent stockholder approval, the aggregate number of shares issued would exceed 19.9%of the outstanding shares of Common Stock.

All 1,080,000 Warrant Shares were exercisable in full from the issue date, the Warrants contain no vesting conditions, and no Warrants had been exercised as of June 30, 2026.

NOTE 14 –SUBSEQUENT EVENTS

Subsequent to quarter end, the Company entered into a definitive securities purchase agreement with institutional investors for aggregate gross proceeds of approximately $ 9.0 million, consisting of a combination of common stock, convertible debentures, and warrants.

The transaction is subject to customary closing conditions, including regulatory approvals, and is expected to close in the second quarter of 2026.

Nasdaq rules will limit the number of shares that may be issued upon conversion or exercise of the convertible debentures and warrants absent shareholder approval.

On July 8, 2026, at the Company’s Annual Meeting of Shareholders, the Company obtained Shareholder Approval required under the terms of its Notes.

As a result of such approval, the automatic conversion feature was triggered and all outstanding Notes were converted into shares of the Company's Preferred Stock.

The conversion resulted in the issuance of 6,825 .4 shares of Preferred Stock in exchange for aggregate outstanding principal and accrued interest of approximately $ 6,841,325 of the Notes at the conversion price of $1,000 per share.

Following the conversion, the Notes were no longer outstanding.

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-Q

Item 1. Financial Statements