What changed in this filing

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Item 1A. Risk Factors

2026-04-15 compared with 2025-04-15 · 226 added, 108 removed, 827 unchanged (29% of the section changed)

Our business, financial condition, results of operations, cashflows, reputation and prospects are affected by a number of factors, whether currently known or unknown, including risks specific to us or the robotics industry, as well as risks that affect businesses in general.

Our business, financial condition, results of operations, cash flows, reputation and prospects are affected by a number of factors, whether currently known or unknown, including risks specific to us or the robotics industry, as well as risks that affect businesses in general.

The risks disclosed in this Annual Report on Form 10-K, including but not limited to those described below, could materially adversely affect our business, financial condition, results of operations, cash flows, reputation and prospects and thus our stock price.

These risk factors may be important to understanding other statements in this Annual Report on Form 10-K and should be read in conjunction with the consolidated financial statements and related notes in Part I, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part I, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.

These risk factors may be important to understanding other statements in this Annual Report on Form 10-K and should be read in conjunction with the consolidated financial statements and related notes in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.

Because of such risk factors, as well as other factors affecting the Company’s financial condition and operating results, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods.

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The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

• We identified material weaknesses in our internal control over financial reporting which we are working to remediate.

These material weaknesses could continue to adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.

• We identified a material weakness in our internal control over financial reporting which we are working to remediate.

This material weakness could continue to adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.

• If we fail to maintain an effective system of internal controls, our ability to produce timely and accurate financial statements or comply with applicable regulations could be adversely affected.

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• If we are successful in commercializing our products and services, our revenue will be concentrated in a limited number of models and a limited number of operating units for the foreseeable future.

• We may not be able to enforce or protect our intellectual property rights, or third parties may claim we infringe their intellectual property rights.

• Defects, glitches, or malfunctions in our products or the software that operates them, failure of our products to perform as expected, connectivity issues or operator errors could result in product recalls, lower than expected return on investment for customers, and could cause harm to operators and significant safety concerns, each of which could adversely affect our results of operations, financial condition and our reputation.

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• We are highly dependent on the services of our senior management and other key employees and if we are unable to attract and retain a sufficient number of qualified employees, our ability to design, manufacture and launch our products, provide services, operate our business and compete could be harmed.

• We incur significant expenses and administrative burdens as a public company, which could have a material adverse effect on our business, financial condition, result of operations, cash flows, reputation and prospects.

• We incur significant expenses and administrative burdens as a public company, which could have a material adverse effect on our business, financial condition, results of operations, cash flows, reputation and prospects.

• We may be subject to various new or changing product regulations and environmental laws and regulations, which could cause significant fines and liability, or otherwise adversely affect our business, financial condition, results of operations, cash flows, reputation and prospects.

• We are subject to cybersecurity risks to our operational systems, security systems, infrastructure, integrated software in our products and data processed by us or third-party vendors.

• Issues in the development and use of artificial intelligence ("AI") may result in reputational harm or liability, and failure to introduce new and innovative products that have AI capabilities could put us at a competitive disadvantage.

• We are subject to anti-corruption laws and anti-money laundering laws in countries in which we conduct activities, and any violations of such regimes may result in investigations, criminal liability and could adversely affect our business, financial condition, results of operations and prospects.

• We are dependent on our suppliers, some of which are currently single or limited source suppliers, and the inability or other failure of these suppliers to deliver necessary components of our products at prices and volume and with specifications and performance characteristics acceptable to us, could have a material adverse effect on our business, financial condition, results of operations, cash flows, reputation and prospects.

We have not yet identified all of the suppliers that we are likely to rely on to support future commercialization of our core products.

• We may be unable to adequately control the costs associated with our operations.

• We operate in a competitive industry that is subject to rapid technological change, and we expect competition to increase.

• Our financial results may vary significantly from period to period due to fluctuations in our operating costs, demand for our products and services, seasonal variation and other factors.

• We have yet to achieve positive operating cash flow and, given our projected funding needs, our ability to generate positive cash flow is uncertain.

• As part of growing our business, we may undertake acquisitions, from time to time.

If we fail to successfully select, execute, or integrate our acquisitions, our business, results of operations and financial condition could be materially adversely affected, and our stock price could decline.

• If we are unable to adapt to and satisfy customer demands in a timely and cost-effective manner, our ability to grow our business may suffer.

• We are subject to risks associated with conducting business internationally, including legal, regulatory, and compliance risks that differ significantly from those applicable to our domestic operations.

• Changes in U.S.

and international trade laws and policies, including the imposition of new or increased tariffs and duties, could adversely affect our business, financial condition, results of operations, and cash flows.

Risks Related to Government Contracts

• We pursue U.S government contracts, which often are only partially funded, subject to immediate termination and heavily regulated and audited.

The termination or failure to fund, or negative audit findings for one or more of these contracts have an adverse impact on business, financial conditions, results of operation and cash flows.

• We have government customers which subjects us to risks including early termination, audits, investigations, sanctions and penalties.

Risks Related to Our Securities

• We may issue a significant number of shares or equity-linked securities in the future in connection with investments or acquisitions or other efforts to raise capital.

• We may issue a significant number of shares or equity-linked securities in the future in connection with investments or acquisitions or other efforts to raise capital, which may cause dilution to, or otherwise adversely affect, our stockholders

• Future offering of debt or equity securities may rank senior to our Common Stock.

• If certain holders of Common Stock sell a significant portion of their securities, it may negatively impact the market price of the shares of our Common Stock and such holders still may receive significant proceeds.

• The market price of our Common Stock is volatile, and you may lose some or all of your investment.

• If we are unable to maintain compliance with Nasdaq’s listing criteria, including their minimum bid price rule and minimum market value and stockholder equity requirement, Nasdaq may delist the Company’s stock.

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• We may redeem unexpired warrants prior to their exercise at a time that is disadvantageous to investors, thereby making Public Warrants worthl ess.

We may redeem outstanding Series A Preferred Stock and the November 2024 Debentures.

We may redeem outstanding Series A, B and C Preferred Stock and the November 2024 Debentures.

• Currently outstanding Public Warrants, Private Warrants, SPA Warrants and New SPA Warrants are exercisable for shares of Common Stock.

Additionally, the Series A Preferred Shares and the November 2024 Debentures are convertible.

Any future exercise of such warrants or conversion of the Series A Preferred Shares or the November 2024 Debentures would increase the number of shares of Common Stock eligible for future resale in the public market and result in dilution to our stockholders.

Additionally, our Series A, Series B and Series C Preferred Stock and the November 2024 Debentures are convertible.

Any future exercise of such warrants or conversion of the Series A, Series B and Series C Preferred Stock or the November 2024 Debentures would increase the number of shares of Common Stock eligible for future resale in the public market and result in dilution to our stockholders.

Risks Relating to our Business and Industry

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We incurred a net loss of $40.8 million and $134.9 million for the years ended December 31, 2025 and 2024, respectively.

We believe that we will continue to incur operating and net losses each quarter until at least the first quarter of 2026.

Even though we have commercial traction for platform sales, we may not attract customers for our offering, and our potential profitability is dependent upon the successful adoption on a larger scale of our robotics systems, which may not occur.

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The consolidated financial statements included in this Annual Report have been prepared in accordance with accounting principles generally accepted in the United States (“U.S.

GAAP”) assuming the Company will continue as a

going concern.

GAAP”) assuming the Company will continue as a going concern.

The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

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The Company has a history of losses and negative cash flows from operations.

We believe that the Company’s cash and other current assets and forecasted operating cash flows currently expected to be generated from the ongoing activity will provide the Company with sufficient financial resources to fund operations and meet our capital and operating requirements and anticipated obligations as they become due in the next twelve month s.

We believe that the Company’s cash and other current assets, forecasted operating cash flows currently expected to be generated from the ongoing activity, borrowings from lenders and funds from At the Market offerings will provide the Company with sufficient financial resources to fund operations and meet our capital and operating requirements and anticipated obligations as they become due in the next twelve month s.

We have restated our unaudited condensed consolidated financial statements for certain prior periods, which may lead to additional risks and uncertainties, including loss of investor confidence and negative impacts on our stock price.

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Previously, we have restated our unaudited condensed consolidated financial statements as of and for the quarterly period ended March 30, 2023 (the “2023 Restated Period”).

In consultation with the Audit Committee and our auditors, we made the determination to restate such financial statements following the identification of an error associated with a failure to timely recognize an accrued liability and expense arising out of the RRA.

Due to such error, the Company’s management and the Audit Committee concluded that our previously issued financial statements for the 2023 Restated Period should no longer be relied upon.

In addition, our management, with the participation and under the supervision of our former Chief Executive Officer and former Chief Financial Officer, performed a re-evaluation of the effectiveness of our disclosure controls and procedures as of the end of the 2023 Restated Period.

In addition, our management, with the participation and under the supervision of our former Chief Executive Officer and former Chief Financial Officer, performed a re-evaluation of the

effectiveness of our disclosure controls and procedures as of the end of the 2023 Restated Period.

Based on such re-evaluation, our former Chief Executive Officer and former Chief Financial Officer concluded that, as a result of the continued material weakness, our disclosure controls and procedures were ineffective as of the end of the 2023 Restated Period.

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Each of these occurrences could have a material adverse effect on our business, results of operations and financial condition.

We identified material weaknesses in our internal control over financial reporting which we are working to remediate.

This material weaknesses could continue to adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.

We previously identified material weaknesses in our internal control over financial reporting, which we are working to remediate.

These material weaknesses could continue to adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with GAAP.

Our management is likewise required, on a quarterly basis, to evaluate the effectiveness of our internal controls.

The Company identified deficiencies in its internal control over financial reporting that represented material weaknesses.

Specifically, the Company’s management determined that the Company did not, as of December 31, 2024, design and maintain effective internal controls over financial reporting related to:

(1) ineffective design and operation of controls over significant complex transactions, which resulted in restatements of all interim periods of 2024, (2) failure to remediate previously reported material weakness over ineffective design and operation of user access controls.

The Company continues to implement certain remediation actions and continues to test and evaluate the elements of the remediation plan.

These elements include:

• Design and implementation of a Significant Complex Transaction policy which identifies transactions that should be evaluated for additional 3 rd party expert evaluation for proper accounting treatment;

• Design and implementation user access controls and proper segregation of duties for all critical accounting systems, supported by formal policies and training for all Information Technology personnel.

The Company believes that the actions listed above will provide appropriate remediation of the material weaknesses;

however, the testing of the effectiveness of the controls has not been completed by the Company.

The Company previously identified deficiencies in its internal control over financial reporting that represented material weaknesses.

Specifically, the Company’s management determined that the Company did not, as of December 31, 2024, design and maintain effective internal controls over financial reporting related to ineffective design and operation of controls over significant complex transactions, which resulted in restatements of all interim periods of 2024.

As of December 31, 2025, the material weakness related to the design and operation of controls over significant complex transactions had not yet been remediated.

The Company is implementing and testing remediation actions including these specific elements:

• Designing and implementing a Significant Complex Transaction policy which identifies transactions that should be evaluated for additional 3 rd party expert evaluation to ensure proper accounting treatment;

The Company believes that the actions listed above will provide appropriate remediation of the material weakness however, the testing of the effectiveness of the controls has not been completed by the Company.

Due to the nature of the remediation process and the need for sufficient time after implementation to evaluate and test the effectiveness of the controls, no assurance can be given as to the timing for completion of remediation.

The material weaknesses will be fully remediated when the Company concludes that the controls have been operating for sufficient time and independently validated by management.

In addition, the Company’s management determined that the Company did not, as of December 31, 2024, design and maintain effective internal controls over financial reporting related to the failure to remediate previously reported material weakness over ineffective design and operation of user access controls.

The Company implemented and tested remediation actions including these specific elements::

• Designed and implemented user access controls and proper segregation of duties for all critical accounting systems, supported by formal policies and training for all Information Technology personnel.

The Company concludes that the controls have been operating for sufficient time and independently validated by management and the material weakness related to the design and operation of user access controls is fully remediated.

We can offer no assurances that these initiatives will ultimately have all or some of the intended effects.

Any failure to maintain such internal control could adversely impact our ability to report our financial position and results of operations on a timely and accurate basis.

If our financial statements are not accurate, investors may not have a complete understanding of our operations.

If our financial statements are not accurate, investors may not have a complete

understanding of our operations.

Likewise, if our financial statements are not filed on a timely basis, we could be subject to sanctions or investigations by the stock exchange on which our Common Stock is listed, the SEC or other regulatory authorities.

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We have a limited number of customers.

During the year ended December 31, 2025, sales to five customers accounted for 69% of total revenue.

Sales to Customer A and Customer B each accounted for 19% of total revenue, respectively;

sales to Customer C accounted for 11% of total revenue;

and sales to Customer D and E each accounted for 10% of total revenue, respectively.

Total accounts receivable as of December 31, 2025 was made up by three customers.

During the year ended December 31, 2024, sales to three customers accounted for 82% of total revenue.

Sales to Customer A accounted for 39% of total revenue;

sales to Customer B accounted for 27% of total revenue;

and sales to Customer C accounted for 16% of total revenue.

Total accounts receivable for the year ended December 31, 2024 was made up by three customers.

During the year ended December 31, 2023, sales to two customers accounted for almost 100% of total revenue.

Sales to Customer D accounted for 61% of total revenue;

and sales to Customer C accounted for 39% of total revenue.

The total balance due from these customers as of December 31, 2023 comprised 68% of accounts receivable with the remaining due from one other customer.

No other customer represented more than 10% of our revenue.

Sales to Customer F accounted for 39% of total revenue;

sales to Customer G accounted for 27% of total revenue;

and sales to Customer H accounted for 16% of total revenue.

Total accounts receivable as of December 31, 2024 was made up by three customers.

Due to our limited number of customers, the breach, cancellation, or amendment of any sales agreement with our current or future customers may have an outsized effect on our revenue, cash on hand, and profitability.

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the utilization of the ocean robot fleet;

the useable life of the ocean robotic systems;

the usable life of the ocean robotic systems;

the cost of manufacturing;

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This reliance on third parties increases the risk that we will not have sufficient quantities of our products or such quantities at an acceptable cost, which could delay, prevent or impair our development or commercialization efforts.

We rely on third-party manufacturers/suppliers.

We rely on third-party manufacturers/suppliers to manufacture our products, and we have outsourced the manufacturing and distribution of our Olympic Arm manipulator system to a third party.

This reliance on third-party manufacturers/suppliers increases the risk that we will not have sufficient quantities of our products or such quantities at an acceptable cost, which could delay, prevent or impair our development or commercialization efforts.

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We will require significant capital to operate our business and fund our capital expenditures for the next several ye ars.

While we expect that we will have sufficient capital to fund our currently planned operations, it is p ossible that we will need to raise additional capital to fund our business, including to finance ongoing research and development costs, manufacturing, any significant unplanned or accelerated expenses, and new strategic alliances or acquisitions.

It is likely that we will need to raise additional capital to fund our business, including to finance ongoing research and development costs, manufacturing, any significant unplanned or accelerated expenses, and new strategic alliances or acquisitions.

The fact that we have limited experience commercializing our ocean robotic systems on a large scale, coupled with the fact that our products represent a new product category in the commercial and industrial ocean robotic market, means we have limited historical data on the demand for our robotic systems.

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In addition, our future capital needs and other business reasons could require us to sell additional equity or debt securities or obtain a credit facility.

The sale of additional equity or equity-linked securities could dilute our stockholders.

The sale of additional equity or equity-linked securities could dilute our stockholders and the terms of any such financing may be materially adverse to the interests of our common stockholders.

The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations and/or our ability to pay dividends.

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Given the evolving nature of the markets in which we operate, it is difficult to predict customer demand or adoption rates for our products or the future growth of the markets we expect to target.

If one or more of the targeted markets experience a shift in customer or prospective customer demand, our

products may not compete as effectively, if at all, and they may not be fully developed into commercial products.

If one or more of the targeted markets experience a shift in customer or prospective customer demand, our products may not compete as effectively, if at all, and they may not be fully developed into commercial products.

As a result, the financial projections in this Annual Report on Form 10-K necessarily reflect various estimates and assumptions that may not prove accurate and these projections could differ materially from actual results because of the risks included in this “ Risk Factors ” section, among others.

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Further, we have only a very limited number of robotic systems in operation, and significant time and capital resources will be required to manufacture additional systems.

We launched commercial services utilizing the Aquanaut robotic system in 2024, and expect to launch a commercial version of ToolKITT software in 2025.

Such timeline may be delayed, including due to challenges in recruiting skilled employees, difficulties in securing components and materials, development delays, difficulties relating to manufacturing of the units, and other factors.

We launched commercial services utilizing the Aquanaut robotic system in 2024, and launched a commercial version of ToolKITT software in 2025.

Future plans for commercialization may be delayed, including due to challenges in recruiting skilled employees, difficulties in securing components and materials, development delays, difficulties relating to manufacturing of the units, and other factors.

Such challenges may result in the delay of the anticipated commercial launch or continued growth of one or more of the products and services, which would adversely affect our financial and operating results.

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We will need to continue to advance and evolve our products in response to the evolving demands of our customers in the various industries we expect to serve.

We expect to continue to develop our robotic systems, which will require significant

additional expenses, and we may not be successful in commercializing or marketing the associated products and services at all or within the currently expected timeline.

We expect to continue to develop our robotic systems, which will require significant additional expenses, and we may not be successful in commercializing or marketing the associated products and services at all or within the currently expected timeline.

In addition, notwithstanding our market research efforts, our future products and services may not be accepted by customers or their employees.

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Even if we can successfully develop proposed products when anticipated, these products and their related services may not produce revenue in excess of the costs of development and service, and they may be quickly rendered obsolete by changing customer preferences or the introduction by competitors of products and services embodying new technologies or features.

We may not be able to enforce or protect our intellectual property rights, or third parties may claim we infringe their intellectual property rights.

Our ability to compete effectively depends in part on our proprietary technology, including patents, copyrights, software licenses, trade secrets, know-how, and other intellectual property rights relating to our robotic systems, navigation and control software, and related technologies.

Our ability to enforce and protect our patents, copyrights, software licenses, trade secrets, know-how, and other intellectual property rights is subject to general litigation risks, as well as uncertainty as to the enforceability of our intellectual property rights in various countries.

The laws of certain countries may not protect our intellectual property rights to the same extent as U.S.

laws, and enforcement mechanisms may be inadequate or unavailable.

We may be the target of aggressive and opportunistic enforcement of patents by third parties, including non-practicing entities.

We may also face claims that our products or technologies infringe the intellectual property rights of others.

If we attempt to enforce our intellectual property rights, we may face counterclaims that our intellectual property right is invalid, is otherwise not enforceable, or is licensed to the party against whom we are asserting our rights.

An adverse outcome in litigation or settlement could prevent us from manufacturing and selling certain products or require us to pay damages or ongoing royalties, either of which could have a material adverse effect on our business, financial condition, and results of operations.

We also rely on trade secrets and confidential information to protect certain aspects of our autonomous systems and proprietary software.

The loss of trade secret protection through employee departure, inadequate confidentiality agreements, or cyber incidents could enable competitors to replicate our technology or erode our competitive advantages.

Enforcement of trade secret rights can be difficult, costly, and uncertain.

Defects, glitches, or malfunctions in our products or the software that operates them, failure of our products to perform as expected, connectivity issues or operator errors, could result in product recalls, lower than expected return on investment for customers, and could cause harm to operators and significant safety concerns, each of which could adversely affect our results of operations, financial condition and our reputation.

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However, there can be no assurance that we will be able to identify all such issues or that, if identified, efforts to address them will be effective in all cases.

In addition, if the manufacturing of our products is outsourced, we may not be aware of manufacturing defects that could occur.

In addition, in cases where the manufacturing of our products is outsourced, we may not be aware of manufacturing defects that could occur.

Such adverse events could lead to unexpected failures in our products and could result, in certain cases, in the removal of our products from the market.

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To the extent any manufacturing defect occurs, our agreement with the third-party manufacturer may contain a limitation on the third-party manufacturer’s liability, and therefore we could be required to incur the majority of related costs.

Product defects or recalls could also result in negative publicity, damage to our reputation or, in the event of regulatory developments, delays in new product acceptance.

Product defects or recalls

could also result in negative publicity, damage to our reputation or, in the event of regulatory developments, delays in new product acceptance.

Our products incorporate sophisticated computer software.

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Experienced and highly skilled employees are in high demand and competition for these employees can be intense, and our ability to hire, attract and retain them depends on our ability to provide competitive compensation.

We may not be able to attract, assimilate, develop or retain qualified personnel in the future, and our failure to do so could adversely affect our business, including the execution of our business strategy.

Any failure by our management team and

our employees to perform as expected may have a material adverse effect on our business, financial condition, results of operations, cash flows, reputation and prospects.

We may not be able to attract, assimilate, develop or retain qualified personnel in the future, and our failure to do so could

adversely affect our business, including the execution of our business strategy.

Any failure by our management team and our employees to perform as expected may have a material adverse effect on our business, financial condition, results of operations, cash flows, reputation and prospects.

We incur significant expenses and administrative burdens as a public company which could have a material adverse effect on our business, financial condition, results of operations, cash flows, reputation and prospects.

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Such increased expenses and administrative burdens involved in operating as a public company could have a material adverse effect on our business, financial condition, results of operations, cash flows, reputation and prospects.

We may become subject to new or changing governmental regulations relating to the design, manufacturing, marketing, distribution, servicing, or use of our products, including as a result of climate change, and a failure to comply with such regulations could lead to withdrawal or recall of our products from the market, delay our projected revenues, increase costs, or make our business unviable if we are unable to modify our products to comply.

We may become subject to new or changing international, federal, state and local regulations, including laws relating to the design, manufacturing, marketing, distribution, servicing or use of our products.

Such laws and regulations may require us to pause sales and modify our products, which could result in a material adverse effect on our revenues and financial condition.

Such laws and regulations can also give rise to liability, such as fines and penalties, property damage, bodily injury and cleanup costs.

Capital and operating expenses needed to comply with laws and regulations can be significant, and violations may result in substantial fines and penalties, third-party damages, suspension of production or a cessation of our operations.

Any failure to comply with such laws or regulations could lead to withdrawal or recall of our products from the market.

Climate change laws and environmental regulations could result in increased operating costs and reduced demand for our products and services.

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In addition, any new regulations or laws in the environmental area might increase the cost of raw materials or key components we use in our products.

Environmental regulations may require us to reduce product energy usage, monitor and exclude an expanding list of restricted substances and participate in recovery and recycling of our products or components.

Environmental regulations may require us to reduce product energy

usage, monitor and exclude an expanding list of restricted substances and participate in recovery and recycling of our products or components.

We are unable to predict how any future changes will impact us and if such impacts will be material to our business.

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Moreover, despite our efforts, we may not be successful in achieving compliance, including if our employees, contractors, service providers or vendors fail to comply with our policies and other requirements.

Such failures can subject us to potential action by governmental or regulatory authorities if they are found to be deceptive, unfair, or misrepresentation of our actual practices.

Any actual or perceived

inability of the Company to adequately address privacy and security concerns or comply with applicable laws, rules and regulations relating to privacy, data protection or data security, or applicable privacy notices, could lead to investigations, claims, and proceedings by governmental entities and private parties, damages for contract breach, and other significant costs, penalties, and other liabilities.

Such failures can subject us to potential action by governmental or regulatory authorities if they are found to be deceptive, unfair, or a misrepresentation of our actual practices.

Any actual or perceived inability of the Company to adequately address privacy and security concerns or comply with applicable laws, rules and regulations relating to privacy, data protection or data security, or applicable privacy notices, could lead to investigations, claims, and proceedings by governmental entities and private parties, damages for contract breach, and other significant costs, penalties, and other liabilities.

Any such claims or other proceedings could be expensive and time-consuming to defend and could result in adverse publicity.

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Additionally, we maintain sensitive and proprietary information relating to our business, such as our own proprietary information and personal data relating to our employees.

An increasing number of organizations have disclosed breaches of their information security systems and other information security incidents, some of which have involved sophisticated and highly targeted attacks.

An increasing number of organizations have disclosed breaches of their information security systems and other information

security incidents, some of which have involved sophisticated and highly targeted attacks.

We may be a target for attacks by state-sponsored actors and others designed to disrupt our operations or to attempt to gain access to our systems or data that is processed or maintained in our business.

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If these systems do not operate as we expect them to, we may be required to expend significant resources to make corrections or find alternative sources for performing these functions.

loss of intellectual property protection, harm our reputation and competitive position, reduce demand for our products, damage our relationships with customers, partners, collaborators, or others, or result in claims, regulatory investigations, and proceedings and significant legal, regulatory, and financial exposure, and any such incidents or any perception that our security measures are inadequate could lead to loss of confidence in us and harm to our reputation, any of which could adversely affect our business, financial condition, and results of operations.

Any actual or perceived security breach or security incident, or any systems outages or other disruption to systems used in our business, could interrupt our operations, result in loss or improper access to, or acquisition or disclosure of, data or a loss of intellectual property protection, harm our reputation and competitive position, reduce demand for our products, damage our relationships with customers, partners, collaborators, or others, or result in claims, regulatory investigations, and proceedings and significant legal, regulatory, and financial exposure, and any such incidents or any perception that our security measures are inadequate could lead to loss of confidence in us and harm to our reputation, any of which could adversely affect our business, financial condition, and results of operations.

Any actual or perceived breach of privacy or security, or other security incident, impacting any entities with which we share or disclose data (including, for example, our third-party technology providers) could have similar effects.

We expect to incur significant costs in connection with our efforts to detect and prevent privacy and security breaches and other privacy- and security-related incidents, and may face increased costs and be required to expend substantial resources in the event of an actual or perceived privacy or security breach or other security incident.

Issues in the development and use of artificial intelligence (“AI”) may result in reputational harm or liability, and failure to introduce new and innovative products that have AI capabilities could put us at a competitive disadvantage

Although our autonomy software does not incorporate AI functionality, we do currently incorporate machine learning and AI capabilities into our software development process and may seek to expand the use of AI in our offerings in the future.

As with many innovations, AI presents risks, challenges, and unintended consequences that could affect our business.

AI algorithms and training methodologies may be flawed.

These deficiencies and other failures of AI systems could subject us to competitive harm, regulatory action, legal liability, and brand or reputational harm.

Further, incorporating AI could give rise to litigation risk and risk of noncompliance and unknown cost of compliance, as AI is an emerging technology for which the legal and regulatory landscape is not fully developed (including potential liability for breaching intellectual property or privacy rights or laws).

While new AI initiatives, laws, and regulations are emerging and evolving, what they ultimately will look like remains uncertain, and our obligation to comply with them could entail significant costs, negatively affect our business, or entirely limit our ability to incorporate certain AI capabilities into our offerings.

Additionally, leveraging AI capabilities to potentially improve internal functions and operations presents further risks and challenges.

The use of AI to support business operations carries inherent risks related to data privacy and security, such as intended, unintended, or inadvertent transmission of proprietary, sensitive, or export-controlled information, as well as challenges related to implementing and maintaining AI tools.

Additionally, our competitors might move faster than us to gain efficiencies by incorporating AI into their design and development processes, and our products and/or cost structure could become less competitive as a result.

The rapid evolution of AI will require the application of resources by us to develop, test, and maintain our products, services and operations to help ensure that AI is implemented ethically in order to minimize unintended, harmful impact.

Our competitors may be faster or more successful than we are in incorporating AI into their offerings, which could impair our ability to compete successfully.

We are subject to the anti-corruption laws and anti-money laundering laws in countries in which we conduct activities, and any violations of such regimes may result in investigations, criminal liability and could adversely affect our business, financial condition, results of operations and prospects.

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Moreover, international sales of certain of our products are subject to U.S.

laws, regulations and policies like the International Traffic in Arms Regulations (“ITAR”) and other export laws and regulations and may be subject to first

obtaining licenses, clearances or authorizations from various regulatory entities.

laws, regulations and policies like the International Traffic in Arms Regulations (“ITAR”) and other export laws and regulations and may be subject to first obtaining licenses, clearances or authorizations from various regulatory entities.

If we are not allowed to export our products or if the clearance process is burdensome and costly, our ability to generate revenue would be adversely affected.

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We have not yet identified all of the suppliers that we are likely to rely on to support future commercialization of our core products.

We are dependent on our suppliers, some of which are currently single or limited source suppliers, and the inability or other failure of these suppliers to deliver necessary components of our products at prices and volume and with specifications and performance characteristics acceptable to us, could have a material adverse effect on our business, financial condition, results of operations, cash flows, reputation and prospects.

financial condition, results of operations, cash flows, reputation and prospects.

We have not yet identified all of the suppliers that we are likely to rely on to support future commercialization of our core products.

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We and our suppliers use various materials in our respective businesses and products, including, for example, semiconductor chips, energy storage materials, commodity materials and specialty metal alloys, and the prices for these materials fluctuate.

The available supply of some of these materials and components is currently and may continue to be unstable, depending on market conditions and global demand, and could adversely affect our business and operating results.

The available supply of some of these materials and components

is currently and may continue to be unstable, depending on market conditions and global demand, and could adversely affect our business and operating results.

Risks relating to our supply chain include:

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This may require us to attempt to raise or borrow additional money, which may not be successful.

Also, it may require us to change the anticipated pricing of our offerings, which would adversely affect our margins and cash flows.

Also, it may require us to change

the anticipated pricing of our offerings, which would adversely affect our margins and cash flows.

Any of the foregoing could adversely affect our business, financial condition, results of operations, cash flows, reputation and prospects.

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We have incurred and expect to continue incurring significant expenses which will impact our profitability, including research and development expenses, procurement costs, sales, marketing and distribution expenses as we build our brand and market our robotic systems, and general and administrative expenses as we scale our operations, identify and commit resources to investigate new areas of demand and incur costs as a public company.

In addition, we may incur significant costs servicing, maintaining and refurbishing our robotic ocean

vehicles, and we expect that the cost to repair and service our robotic systems will increase over time as our vehicles age.

In addition, we may incur significant costs servicing, maintaining and refurbishing our robotic ocean vehicles, and we expect that the cost to repair and service our robotic systems will increase over time as our vehicles age.

Our ability to become profitable in the future will not only depend on our ability to complete the design and development of our robotic vehicles to meet projected performance metrics, identify and investigate new areas of demand and successfully market our robotic systems and ToolKITT software, but also to sell, whether outright or through subscriptions, our ocean systems at prices needed to achieve our expected margins and control our costs, including the risks and costs associated with operating, maintaining and financing our robotic systems.

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• Our untethered electric ocean robots and software platform compete with other tethered hydraulic and electric ROVs and AUVs for performing inspection, maintenance, repair, and physical interventions of ocean assets for sectors including offshore wind, oil & gas, aquaculture, port management, and defense and intel markets.

• Our underlining autonomy software platform includes modern robotics and automation technologies for autonomous navigation, manipulation, data orchestration and compression, behavior and mission execution and could face additional competition from the automotive and aerospace sectors working to solve similar challenges in different markets.

in different markets.

At the most basic level, these software platforms are similar in nature and our software could also be applied in additional markets outside of the blue technologies and ocean services space.

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Our target markets are largely international and require skills, knowledge and competencies in foreign exchange, taxation, legal, export controls, anti-bribery and other fields.

We have only recently added personnel with the necessary skills to oversee these risks and the ability is concentrated in few individuals.

We have added personnel with the necessary skills to oversee these risks and the ability is concentrated in few individuals.

Our financial results may vary significantly from period to period due to fluctuations in our operating costs, demand for our products and services, seasonal variation and other factors.

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As a result of these factors, we believe that quarter-to-quarter comparisons of our financial results, especially in the short term, are not necessarily meaningful and that these comparisons cannot be relied upon as indicators of future performance.

Moreover, our financial results may not meet expectations of equity research analysts, ratings agencies or investors, who may be focused only on quarterly financial results.

Moreover, our financial results may not meet expectations of equity research analysts, ratings agencies or

investors, who may be focused only on quarterly financial results.

If any of this occurs, the trading price of our securities could fall substantially, either suddenly or over time.

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Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP.

This assessment includes disclosure of any material weaknesses identified by our management in its assessment of

and report on our internal control over financial reporting.

This assessment includes disclosure of any material weaknesses identified by our management in its assessment of and report on our internal control over financial reporting.

The rules governing the standards that must be met for our management to assess our internal control over financial reporting are complex and require significant documentation, evaluation, re-evaluation and/or testing, and possible remediation.

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Under current law, federal NOLs generated in taxable years ending after December 31, 2017, may be carried forward indefinitely, but the deductibility of such federal NOLs may be limited to 80% of our taxable income annually for tax years beginning after December 31, 2020.

NOLs generated prior to December 31, 2017, however, have a 20-year carryforward period, but are not subject to the 80% limitation.

generated prior to December 31, 2017, however, have a 20-year carryforward period, but are not subject to the 80% limitation.

In addition, the NOLs are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities.

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If we are unable to adapt to and satisfy customer demands in a timely and cost-effective manner, our ability to grow our business may suffer.

The success of our business depends in part on effectively engineering and implementing technologies related to subsea and surface vessels, (including ROVs), subsea robotic manipulators, and AI-based, full-stack vehicle control and manipulation software.

The success of our business depends in part on effectively engineering and implementing technologies related to subsea and surface vessels, (including ROVs), subsea electric robotic manipulators, and AI-based, full-stack vehicle control and manipulation software.

These technologies are packaged for commercial and defense customers in products that provide innovative solutions to challenges in a large majority of maritime markets including subsea energy, offshore wind, and defense applications.

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While we intend to design our systems and products to have a certain lifespan corresponding to a number of cycles, there can be no assurance as to the actual operational life of a system, product or related equipment, or that the operational life of individual components thereof, will be consistent with its design life.

A number of factors will impact the useful lives of our products and systems, including, among other things, the quality of their design and construction, the durability of their component parts and availability of any replacement components, and the occurrence of any anomaly or series of anomalies or other risks associated with their planned use.

A number of factors will impact the useful lives of our products and systems, including, among other things, the quality of their design and

construction, the durability of their component parts and availability of any replacement components, and the occurrence of any anomaly or series of anomalies or other risks associated with their planned use.

In addition, any improvements in technology may make our existing systems, products, designs, or any component of our systems and products obsolete prior to the end of their intended useful lives.

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Our quarterly and annual sales are affected by a variety of factors that may lead to significant variability in our operating results.

We evaluate the contract value and cost estimates for performance obligations at least quarterly, and more

frequently when circumstances change significantly.

We evaluate the contract value and cost estimates for performance obligations at least quarterly, and more frequently when circumstances change significantly.

Changes in estimates and assumptions related to the status of certain long-term contracts could have a material adverse effect on our operating results, financial condition, and/or cash flows.

We are subject to risks associated with conducting business internationally, including legal, regulatory, and compliance risks that differ significantly from those applicable to our domestic operations.

We are actively pursuing opportunities in international markets, including Brazil and the UAE, where market conditions, regulatory requirements, and business practices differ materially from those in the United States.

In addition, we may rotate our assets to international locations to address the seasonality of the U.S.

offshore market, which could increase the operational significance of our international activities over time.

International operations expose us to a range of risks that could adversely affect our business, including the following:

• Differing Legal and Regulatory Regimes.

Operating in foreign jurisdictions requires compliance with local laws and regulations governing, among other matters, employment, environmental protection, health and safety, taxation, intellectual property, data privacy, and corporate governance, which may be less predictable, less transparent, and more burdensome than U.S.

requirements.

• Export Controls, ITAR, EAR, and Sanctions.

We operate in a heavily regulated environment, including under the Federal Acquisition Regulation ("FAR"), the Defense Federal Acquisition Regulation Supplement ("DFARS"), ITAR, and EAR.

Noncompliance with applicable export control or sanctions laws and regulations could result in substantial civil or criminal penalties, including the loss of export or import privileges, which would significantly impair our ability to conduct international business.

Certain international sales may require licenses or other authorizations from U.S.

government agencies, and there can be no assurance that such licenses or authorizations will be granted in a timely manner, or at all.

• Anti-Corruption, Anti-Bribery, and Anti-Money Laundering Compliance.

We are subject to the FCPA and other anti-corruption, anti-bribery, and anti-money laundering laws and regulations applicable in the countries where we conduct our activities, including in connection with our planned UAE operations.

These laws generally prohibit us and our intermediaries from making improper payments to foreign officials for the purpose of obtaining or retaining business, and we may be held liable for the actions of our employees, agents, or other third-party intermediaries, even if we were not aware of such actions.

Any violation could result in whistleblower complaints, adverse media coverage, investigations, loss of export privileges, suspension, or debarment from U.S.

government contracting, significant civil or criminal fines and penalties, and reputational harm, any of which could have a material adverse effect on our business, financial condition, and results of operations.

• Foreign Currency Risk.

International operations expose us to foreign currency exchange rate fluctuations, which could increase the cost of procuring components from international suppliers and could affect the competitiveness of our pricing in foreign markets.

• Tariffs, Trade Restrictions, and "Buy American" Requirements.

Our international activities may subject us to additional duties, tariffs, import/export quotas, and trade restrictions, as well as "Buy American" and similar

domestic content requirements applicable to our government contracts, which could increase our costs and limit our sourcing flexibility.

• Limited Internal Expertise.

Managing international operations requires specialized expertise in foreign exchange, taxation, legal, export controls, and anti-bribery matters, and our capability in these areas is currently concentrated in a limited number of individuals.

The loss of any of these individuals could significantly impair our ability to manage our international operations and compliance obligations.

Conditions in the Middle East, including current uncertainty and instability resulting from conflict between the United States, Israel, and Iran, as well as other regional hostilities could adversely affect our business.

We are actively pursuing international expansion, including plans to establish a dedicated manufacturing, sales, and offshore services business unit in the UAE, funded by a strategic investor whose proceeds are contractually restricted to UAE-related working capital.

A major military conflict involving the United States, Israel, and Iran commenced on or about February 28, 2026, and has resulted in regional airspace closures, retaliatory strikes impacting multiple nations, disruption to energy infrastructure and supply chains, increased shipping and insurance costs, and heightened security risks for personnel and facilities across the broader region, including the UAE.

The duration, scope, and ultimate severity of this conflict are inherently uncertain.

If the conflict escalates or broadens, we may experience one or more of the following adverse consequences:

• Armed conflict and associated instability could damage energy infrastructure and logistics networks in the UAE or cause counterparties, contractors, and suppliers to withdraw from or delay commitments in the region.

• Escalating conflict could impair our ability to recruit, deploy, or retain qualified personnel in the UAE, subject personnel to heightened security risks, and result in evacuation or suspension of operations.

• Ongoing shipping and cargo disruptions, increased insurance costs, and rerouting of cargo could delay delivery of critical long-lead-time components — such as batteries sourced from Europe — and increase our costs.

• Our UAE expansion is financed by Master Investment Group under a Securities Purchase Agreement providing for an initial $3 million tranche and potential additional issuances of up to $47 million over up to three years, with proceeds restricted to UAE-related working capital.

Regional instability could impair our investor's ability or willingness to fund subsequent tranches, trigger force majeure provisions, or delay milestone satisfaction upon which subsequent financings are conditioned.

• Our products and services are subject to U.S.

export control and sanctions laws, including EAR, ITAR, and OFAC-administered programs.

Escalation of the conflict involving the United States and Iran could result in new or expanded sanctions or export control restrictions that impair our ability to operate in the region, obtain necessary licenses, or transact with counterparties in the UAE or neighboring countries.

• While higher oil prices may increase demand for offshore robotics and subsea services in some markets, sustained conflict-driven instability could discourage capital investment in offshore exploration and production in the region, reducing near-term demand for our systems and services.

• Escalation of the regional conflict could affect the UAE's commercial and regulatory environment, including its relationships with the United States, and could result in new restrictions or adverse governmental actions affecting our planned operations.

As of the date of this filing, we are not aware of any specific adverse impact on our operations, assets, or customers directly resulting from the ongoing conflict;

however, we are actively monitoring developments.

We can provide no assurance that the conflict will not escalate, that its effects will not materially and adversely affect our ability to establish or operate our UAE business unit, or that our business, financial condition, and results of operations will not be materially harmed as a result.

Changes in U.S.

trade policy is fluid and subject to significant uncertainty, including the potential imposition of new tariffs, border taxes, increased customs duties, and renegotiation of existing trade agreements.

Retaliatory measures by U.S.

trading partners in response to such actions could further disrupt international trade and adversely affect our customers' plans and operations.

Our business involves, and as we expand operations will increasingly involve, the importation of equipment, components, and spare parts into the United States and other countries.

Specifically, the following activities expose us to tariff and trade policy risk:

• UAE Manufacturing Center.

We are establishing a new manufacturing center in the UAE.

Goods manufactured or assembled at that facility and subsequently imported into the United States or other markets will be subject to applicable customs duties and import tariffs, and changes in U.S.

trade policy affecting Gulf Cooperation Council ("GCC") countries could adversely affect the economics of our planned UAE manufacturing operations.

• Olympic Arm Manufacturing — Forum Energy Technologies.

In the fourth quarter of 2025, we entered into an agreement with Forum Energy Technologies for the manufacture of the Olympic Arm.

The manufacture and importation of the Olympic Arm and its components will involve cross-border movement of equipment and parts that may be subject to tariffs, duties, and trade restrictions, which could increase our cost of goods and adversely affect the economics of that arrangement.

• Aquanaut Operations — Spare Parts and Maintenance Inventory.

As we ramp up Aquanaut operations, we will need to accumulate spare parts and maintenance and repair inventory.

Some of these components are sourced internationally, including lithium-ion batteries from SubCTech, a German company, which are long-lead-time items that must be ordered well in advance of integration.

The imposition of tariffs or duties on imported spare parts and maintenance components could increase our operating costs and, if spare parts are delayed or become unavailable due to trade restrictions, could impair our ability to maintain and operate the Aquanaut fleet.

Our operations are subject to FAR and DFARS, and "Buy American" requirements could limit our ability to source from international suppliers and require us to qualify domestic alternatives at higher cost or on longer timelines.

More broadly, U.S.

tariff policies have contributed to market uncertainty and volatility in the oil and gas sector, which could reduce capital spending by offshore energy customers and thereby reduce demand for our systems and services.

We cannot predict the scope, timing, or duration of future changes in U.S.

or foreign trade policy or retaliatory measures by U.S.

trading partners.

If tariffs or other trade restrictions are imposed or increased on equipment or components material to our operations and we are unable to mitigate the resulting cost increases through supplier diversification, product redesign, or price adjustments, our business, financial condition, results of operations, cash flows, reputation, and prospects could be materially and adversely affected.

Risks Related to Government Contracts

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The termination of funding for a U.S.

government program would result in a loss of anticipated future revenue attributable to that program, which could have an adverse impact on our operations.

government program would result in a loss of anticipated future revenue attributable to that program, which could have an adverse

impact on our operations.

In addition, the termination of a program or the failure to commit additional funds to a program that already has been started could result in lost revenue and increase our overall costs of doing business.

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Failure to comply with applicable regulations and requirements could lead to fines, penalties, repayments, or compensatory or treble damages, or suspension or debarment from U.S.

government contracting or subcontracting for a period of time or

indefinitely.

government contracting or subcontracting for a period of time or indefinitely.

Among the causes for debarment are violations of various laws and regulations, including those related to procurement integrity, export control (including ITAR), U.S.

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Any future material contracts that are of national security concern will be disclosed in redacted form (redacting only the information that is both not material and is of the type that we treat as private or confidential), and unredacted versions made available to the SEC’s staff for confidential, non-disclosable review, in accordance with SEC regulations.

We have government customers, which subjects us to risks including early termination, audits, investigations, sanctions and penalties.

We expect to derive a substantial portion of our revenue from contracts with U.S.

In the future we may have government contracts, which subjects us to risks including early termination, audits, investigations, sanctions and penalties.

We expect to derive a portion of our revenue from contracts with U.S.

Department of Defense agencies and may enter into additional contracts with the U.S.

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As a government contractor or subcontractor, we must comply with laws, regulations, and contractual provisions relating to the formation, administration, and performance of government contracts and inclusion on government contract vehicles, which affect how we and our partners do business with government agencies.

As a result of actual or perceived noncompliance with government contracting laws, regulations, or contractual provisions, we may be subject to non-ordinary course audits and internal investigations which may prove costly to our business financially, divert management time, or limit our ability to continue selling our products to our government customers.

time, or limit our ability to continue selling our products to our government customers.

These laws and regulations may impose other added costs on our business, and failure to comply with these or other applicable regulations and requirements, including non-compliance in the past, could lead to claims for damages, downward contract price adjustments or refund obligations, civil or criminal penalties, and termination of contracts and suspension or debarment from government contracting or subcontracting for a period of time or indefinitely.

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federal, state, and local governments.

Furthermore, we believe continued budget pressures could have serious negative consequences for the security of the United States, the defense industrial base and the customers, employees, suppliers, investors and communities that rely on

companies in the defense industrial base.

Budget and program decisions made in this environment would have long-term implications for us and the entire defense industry.

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Risks Related to Our Securities

We may issue a significant number of shares or equity-linked securities in the future in connection with investments or acquisitions.

We may issue a significant number of shares or equity-linked securities in the future in connection with investments or acquisitions, which may cause dilution to, or otherwise adversely affect, our stockholders.

Our certificate of incorporation authorizes us to issue shares of our Common Stock and options, rights, warrants and appreciation rights relating to our Common Stock for the consideration and on the terms and conditions established by our Board in its sole discretion.

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For example, investors in the Common Stock may not wish to purchase Common Stock at a price above the conversion price of our convertible preferred stock because the holders of the preferred stock would effectively be entitled to purchase Common Stock at the lower conversion price, causing economic dilution to the holders of Common Stock.

Future offerings of debt or equity securities may rank senior to our Common Stock.

If we decide to issue debt or equity securities in the future ranking senior to our Common Stock or otherwise incur additional indebtedness, it is possible that these securities or indebtedness will be governed by an indenture or other instrument containing covenants restricting our operating flexibility and limiting our ability to pay dividends to shareholders.

Additionally, any convertible or exchangeable securities that we issue in the future may have rights, preferences, and privileges more favorable than those of Common Stock and may result in dilution to shareholders.

Because our decision to issue debt or equity securities in any future offering or otherwise incur indebtedness will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings or financings, any of which could reduce the market price of our Common Stock and dilute their value.

Because we became a public reporting company by means other than a traditional underwritten initial public offering, our stockholders may face additional risks and uncertainties.

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These fluctuations have often been unrelated or disproportionate to the operating performance of those companies.

Wide-ranging market and industry factors, as well as

general economic, political, regulatory and market conditions, may negatively affect the market price of our Common Stock, regardless of our actual operating performance.

Wide-ranging market and industry factors, as well as general economic, political, regulatory and market conditions, may negatively affect the market price of our Common Stock, regardless of our actual operating performance.

In addition, price volatility may be greater if the public float and trading volume of our Common Stock is low.

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The Company’s Common Stock is currently listed on the Nasdaq.

On August 14, 2024, the Company received a determination letter from Nasdaq notifying the Company that it had not regained compliance with the minimum $35 million market value of listed securities requirement for continued listing on The Nasdaq Capital Market as set forth in Listing Rule 5550(b)(2) (the “MVLS Requirement”) or any of the alternative requirements in Listing Rule 5550(b), and that the additional delinquency may serve as a separate basis for the delisting of the Company’s securities from Nasdaq.

Listing Rule 5550(b)(2) (the “MVLS Requirement”) or any of the alternative requirements in Listing Rule 5550(b), and that the additional delinquency may serve as a separate basis for the delisting of the Company’s securities from Nasdaq.

The Company timely requested a hearing before the Nasdaq hearings panel.

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On February 18, 2025, the Company received a letter from Nasdaq confirming that the Company has demonstrated compliance with the Nasdaq Capital Market’s continued listing requirements as confirmed by the staff on February 10, 2025.

The Company remains subject to a discretionary panel monitor through February 18, 2026.

On October 16, 2025, the Company received a deficiency letter from Nasdaq notifying the Company that, for the preceding 30 consecutive trading days, the market value of the Company’s listed securities had been below the MVLS Requirement.

The Company also did not meet the alternative equity requirement under Nasdaq Listing Rule 5550(b)(1) (the “Equity Rule”) or the alternative net income requirement under Nasdaq Listing Rule 5550(b)(3).

The Company timely requested a hearing before a Hearings Panel.

On December 4, 2025 the Company attended a hearing before the Hearings Panel.

On December 19, 2025, the Company received a letter from Nasdaq confirming that the Company has demonstrated compliance with the Equity Rule as the alternative requirement for the MVLS Requirement, and that the Company is therefore in compliance with the Nasdaq Capital Market’s continued listing requirements as confirmed by the staff on December 19, 2025.

The Hearings Panel granted the Company’s request for continued listing on the Exchange, subject to the following conditions:

(1) From the date of the Panel decision until April 14, 2026 (the end of the Panel’s jurisdiction in this matter), the Company shall maintain compliance with all Exchange Listing Rules;

and (2) the Company shall maintain a shareholder equity value of $3.5 million for each fiscal quarter until December 19, 2026 based on a Mandatory Panel Monitor under Listing Rule 5815(d)(4)(A).

The Company also remains subject to a discretionary panel monitor through December 19, 2026.

In the future, if the Company is not able to meet the continued listing requirements of the Nasdaq, which require, among other things, that the minimum bid price of the Company’s Common Stock must be $1.00 or more for ten consecutive business days in the 180 day cure period from the date of a deficiency notice and either minimum stockholders' equity of at least $2.5 million, market value of listed securities of at least $35 million, or net income from continuing operations of $500,000 in the most recent fiscal year or in two of the last three fiscal years, the Company’s Common Stock may be delisted.

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We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future.

As a result, capital appreciation, if any, of shares of Common Stock owned by you would be your sole source of gain on an investment in such shares for the foreseeable future.

As a result, capital appreciation, if

any, of shares of Common Stock owned by you would be your sole source of gain on an investment in such shares for the foreseeable future.

We are an emerging growth company, and smaller reporting company and as such are subject to various risks unique only to emerging growth companies, including, but not limited to, risks associated with taking advantage of certain exemptions from disclosure requirements available to emerging growth companies or smaller reporting companies, which could, among other things, make our securities less attractive to investors and may make it more difficult to compare our performance with certain public companies.

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We may redeem unexpired warrants prior to their exercise at a time that is disadvantageous to investors, thereby making Public Warrants worthless.

We may redeem outstanding Series A Preferred Stock and the November 2024 Debentures.

We have the ability to redeem outstanding Public Warrants at any time after they become exercisable and prior to their expiration, at $0.01 per warrant, provided that the last reported sales price (or the closing bid price of our Common Stock in the event the shares of our Common Stock are not traded on any specific trading day) of the Common Stock equals or exceeds $16.50 per share (as adjusted for stock splits, stock dividends, reorganizations and the like) on each of 20 trading days within the 30 trading-day period ending on the third business day prior to the date on which we send proper notice of such redemption, provided that on the date we give notice of redemption and during the entire period thereafter until the time we redeem the warrants, we have an effective registration statement under the Securities Act covering Common Stock issuable upon exercise of the warrants and a current prospectus relating to them is available.

If and when the Public Warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the

underlying securities for sale under all applicable state securities laws.

We may redeem outstanding Series A, Series B and Series C Preferred Stock and the November 2024 Debentures.

such redemption, provided that on the date we give notice of redemption and during the entire period thereafter until the time we redeem the warrants, we have an effective registration statement under the Securities Act covering Common Stock issuable upon exercise of the warrants and a current prospectus relating to them is available.

If and when the Public Warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws.

Redemption of the outstanding Public Warrants could force a warrant holder:

(i) to exercise its warrants and pay the exercise price therefor at a time when it may be disadvantageous for it to do so, (ii) to sell its warrants at the then-current market price when it might otherwise wish to hold its Public Warrants or (iii) to accept the nominal redemption price which, at the time the outstanding Public Warrants are called for redemption, will be substantially less than the market value of its Public Warrants.

At any time the Company has the right to redeem in cash all, but not less than all, the shares of Series A Preferred Stock then outstanding at a 25% redemption premium to the greater of (i) the Conversion Amount being redeemed, and (ii) the product of (1) the Conversion Rate with respect to the Conversion Amount being redeemed, multiplied by (2) the equity value of the Common Stock underlying the Series A Preferred Stock.

At any time the Company has the right to redeem in cash all, but not less than all, the shares of Series A Preferred Stock then outstanding at a 25% redemption premium to the greater of (i) the Conversion Amount (as defined in the applicable Certificate of Designation) being redeemed, and (ii) the product of (1) the Conversion Rate (as defined in the applicable Certificate of Designation) with respect to the Conversion Amount being redeemed, multiplied by (2) the equity value of the Common Stock underlying the Series A Preferred Stock.

The equity value of the Common Stock underlying the Series A Preferred Stock is calculated using the greatest closing sale price of the Common Stock on any trading day during the period commencing on the trading day immediately preceding the date the Company notifies the holders of the Company’s election to redeem and ending on the trading day immediately prior to the date the Company makes the entire payment required.

At any time the Company has the right to redeem in cash all, but not less than all, the shares of Series B Preferred Stock then outstanding at a 25% redemption premium to the greater of (i) the Conversion Amount (as defined in the applicable Certificate of Designation) being redeemed, and (ii) the product of (1) the Conversion Rate (as defined in the applicable Certificate of Designation) with respect to the Conversion Amount being redeemed, multiplied by (2) the equity value of the Common Stock underlying the Series B Preferred Stock.

The equity value of the Common Stock underlying the Series B Preferred Stock is calculated using the greatest closing sale price of the Common Stock on any trading day during the period commencing on the trading day immediately preceding the date the Company notifies the holders of the Company’s election to redeem and ending on the trading day immediately prior to the date the Company makes the entire payment required.

At any time the Company has the right to redeem in cash all, but not less than all, the shares of Series C Preferred Stock then outstanding at a 25% redemption premium to the greater of (i) the Conversion Amount (as defined in the applicable Certificate of Designation) being redeemed, and (ii) the product of (1) the Conversion Rate (as defined in the applicable Certificate of Designation) with respect to the Conversion Amount being redeemed, multiplied by (2) the equity value of the Common Stock underlying the Series C Preferred Stock.

The equity value of the Common Stock underlying the Series C Preferred Stock is calculated using the greatest closing sale price of the Common Stock on any trading day during the period commencing on the trading day immediately preceding the date the Company notifies the holders of the Company’s election to redeem and ending on the trading day immediately prior to the date the Company makes the entire payment required.

The November 2024 Debentures may be redeemed at the option of the Company, subject to the provisions set out in the SPA.

Our warrants may never be in the money, and they may expire worthless.

The exercise price of the Public Warrants and Private Warrants is $11.50 per share, subject to adjustment.

Pursuant to the Letter Agreements, the exercise price of the SPA Warrants was lowered to a weighted average of $3.28 per share, with multiple tranches priced between $2.04 and $4.64 per share, subject to adjustment.

For every 324 Public and Private Warrant, the holder is entitled to purchase one share of Common Stock at a price of $11.50 per share, subject to adjustment.

Pursuant to warrant exercise inducement offer letters, (the "Letter Agreements"), the exercise price of the SPA Warrants was lowered to a weighted average of $1,062.72 per share, with multiple tranches priced between $660.96 and $1,503.36 per share, subject to adjustment.

In addition, the exercise price of the New SPA Warrants is $6,480.00 per-share, subject to adjustment.

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Currently outstanding Public Warrants, Private Warrants, SPA Warrants and New SPA Warrants are exercisable for shares of Common Stock.

Additionally, the Debentures and our Series A Preferred Stock are currently convertible into shares of Common Stock.

Any future exercise of such warrants or conversion of the Debentures and the Series A Preferred Stock would increase the number of shares of Common Stock eligible for future resale in the public market and result in dilution to our stockholders.

Outstanding Public Warrants and Private Warrants to purchase an aggregate 438,889 shares of Common Stock (269,449 Public Warrant Shares and 169,440 Private Warrant Shares) are currently exercisable.

Additionally, our Series A, Series B and Series C , and the November 2024 Debentures convertible .

Any future exercise of such warrants or conversion of the Series A, the Series B and the Series C Preferred Stock or the November 2024 Debentures would increase the number of shares of Common Stock eligible for future resale in the public market and result in dilution to our stockholders.

Outstanding Public Warrants and Private Warrants to purchase an aggregate 48,765 shares of Common Stock (36,355 Public Warrant Shares and 12,410 Private Warrant Shares) and New SPA Warrants to purchase 11,838 shares of Common Stock are currently exercisable.

For every 324 Public Warrants and Private Warrants the holder thereof is entitled to purchase one share of Common Stock at a price of $11.50 per share, subject to adjustment.

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The Series A Preferred Stock is convertible, at the election of the holders, into 11,626,189 shares of Common Stock, assuming a conversion price of $0.59.

The Series B Preferred Stock is convertible, at the election of the holders, into 5,768,040 shares of Common Stock, assuming conversion price of $0.59.

The Series C Preferred Stock is convertible, at the election of the holders, into 2,720,842 shares of Common Stock assuming a conversion price of $0.95.

The Public Warrants, Private Warrants, and SPA Warrants may be exercised for, and the Debentures and debentures under the term loans may be converted into, only a whole number of shares of Common Stock.

5 unchanged sentences

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