Item 1A. Risk Factors
ITEM 1A. RISK FACTORS
The disclosure below supplements the risk factors previously disclosed under “Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 filed by the Company with the SEC. The risks described therein are not the only risks facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
If we fail to satisfy the Nasdaq Capital Market continued listing requirements, our common stock could be delisted from the Nasdaq.
The listing of our common stock on the Nasdaq Capital Market is contingent on our compliance with the Nasdaq Capital Market’s conditions for continued listing.
On October 16, 2025, the Company received a 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 minimum $35,000,000 requirement for continued listing on The Nasdaq Capital Market, pursuant to Nasdaq Listing Rule 5550(b)(2). The Company also did not meet the alternative $2,500,000 stockholders' equity requirement under Nasdaq Listing Rule 5550(b)(1) (the "Equity Rule"). Accordingly, the Company timely requested a hearing before the Nasdaq Hearings Panel (the “Panel”), which was held on December 4, 2025. The Panel granted the Company's request for continued listing on Nasdaq, 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 the matter), the Company shall maintain compliance with all Nasdaq listing rules; and (2) the Company shall maintain a shareholder equity value of $3,500,000 for each fiscal quarter until December 19, 2026.
On December 19, 2025, the Company received a letter from Nasdaq indicating that it had demonstrated compliance with the Equity Rule and, as a result, satisfied the continued listing requirements of The Nasdaq Capital Market.
On April 27, 2026, the Company received a letter from the Panel confirming that the Company satisfied the terms of the Panel's December 4, 2025 decision and is in compliance with the Nasdaq Listing Rules. Notwithstanding the foregoing, there can be no assurance that the Company will ultimately regain compliance with all applicable requirements for continued listing. As set forth in the Panel's determination and confirmed in the April 27, 2026 letter, the Company is still subject to a mandatory panel monitor pursuant to Nasdaq Listing Rule 5815(d)(4)(B). During the monitoring period, the Company is required to maintain a minimum stockholder's equity of $3,500,000 for each fiscal quarter until the end of the panel monitor period, December 19, 2026. If the Company fails to satisfy this requirement, the Company's common stock may be delisted.
A delisting of the Company’s common stock could negatively impact the Company and its stockholders by, among other things: reduce the liquidity and market price of its common stock; reduce the number of investors willing to hold or acquire the Company’s common stock, which could negatively impact its ability to raise equity financing; decrease the amount of news and analyst coverage of the Company; and limit the Company’s ability to issue additional securities or obtain additional financing in the future. In addition, delisting from the Nasdaq might negatively impact the Company’s reputation and, as a consequence, its business, operating results, cash flows, financial condition, or securities.
If Nasdaq’s proposed $5 million minimum Market Value of Listed Securities continued listing requirement becomes effective, or if we fail to maintain compliance with other exchange listing standards, our Common Stock may be delisted, which would materially and adversely affect its liquidity, market price, and our access to capital.
Our Common Stock (KITT) is listed on the Nasdaq Capital Market. On July 22, 2026, the Securities and Exchange Commission (“SEC”) approved a new Nasdaq continued listing rule requiring all listed issuers to maintain a minimum Market Value of Listed Securities (“MVLS”) of at least $5.0 million for each listed class, calculated as the consolidated closing bid price multiplied by the total listed securities outstanding of that class. Unlike other Nasdaq continued listing standards, the new $5.0 million MVLS standard carries no compliance or cure period. If a listed class remains below $5.0 million MVLS for 30 consecutive business days, Nasdaq will immediately issue a Staff Delisting Determination, resulting in the immediate suspension of trading without an automatic stay upon appeal.
Although implementation of this rule was automatically stayed on July 29, 2026, pursuant to SEC Rule of Practice 431(e) pending full Commission review, there can be no assurance that the SEC will modify or reverse the approval order, or that
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the rule will not become effective in its current form. The MVLS of our Common Stock has historically fluctuated near the $5.0 million threshold. If the proposed rule becomes enforceable upon the lifting or resolution of the SEC stay, and the market price or share count of our Common Stock does not sustain an MVLS above $5.0 million:
• No Cure Window: We will not be granted a 180-day cure period to regain compliance, and trading in our Common Stock will be immediately suspended by Nasdaq.
• Limited Appeal Standards: The Nasdaq Hearings Panel’s discretion to grant an exception upon appeal is strictly limited to instances of factual calculation errors or our ability to demonstrate compliance with all initial (rather than continued) listing standards across our equity tiers.
• Remedial Structural Actions: To maintain or restore compliance, we may be required to pursue corporate restructurings or executing equity issuances. Such actions may require charter amendments, board or shareholder approvals, or cause dilution or market volatility.
If our Common Stock is delisted from Nasdaq, trading would likely be conducted on an over-the-counter (“OTC”) market. OTC trading generally involves significantly reduced liquidity, wider bid-ask spreads, decreased institutional investor coverage, and heightened price volatility.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.