What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-05 compared with 2025-02-20 · 291 added, 184 removed, 660 unchanged (42% of the section changed)

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Report of Independent Registered Public Accounting Firm (PCAOB:

Consolidated Balance Sheets

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Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of Palladyne AI Corp.

and subsidiaries (the Company) as of December 31, 2024, the related consolidated statements of operations, comprehensive loss, stockholders' equity (deficit), and cash flows for the year ended December 31, 2024, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with U.S.

We have audited the accompanying consolidated balance sheets of Palladyne AI Corp.

and subsidiaries (the Company) as of December 31, 2025 and December 31, 2024, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity (deficit), and cash flows for each of the years in the two-year period ended December 31, 2025, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and December 31, 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2025, in conformity with U.S.

generally accepted accounting principles.

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These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

We have served as the Company's auditor since 2024.

Salt Lake City, Utah

February 20, 2025

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Palladyne AI Corp., formerly known as Sarcos Technology and Robotics Corporation:

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Palladyne AI Corp., formerly known as Sarcos Technology and Robotics Corporation (the Company) as of December 31, 2023, the related consolidated statement of operations, comprehensive loss, stockholders' equity and cash flows for the year ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023, and the results of its operations and its cash flows for the year ended December 31, 2023 in conformity with U.S.

generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We served as the Company's auditor from 2020 to 2024.

Salt Lake City, Utah

February 28, 2024,

except for Note 13, as to which the date is

February 20, 2025

March 5, 2026

PALLADYNE AI CORP.

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Property and equipment, net

Intangible assets, net

Operating lease assets

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Total current liabilities

Operating lease liabilities

Warrant liabilities

Operating lease liabilities

Other non-current liabilities

Total liabilities

Commitments and contingencies (Note 13)

Stockholders’ equity:

Stockholders’ equity (deficit):

Common stock, $ 0.0001 par value, 165,000,000 shares authorized as of December 31, 2025 and December 31, 2024;

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Interest income, net

(Loss) gain on warrant liabilities

Gain (loss) on warrant liabilities

Other income, net

Loss before income tax expense

Income tax expense

Net loss per share

Basic and diluted

Weighted-average shares used in computing net loss per share

Basic and diluted

Income (loss) before income tax expense

Income tax benefit (expense)

Net income (loss)

Net income (loss) per share

Weighted-average shares used in computing net income (loss) per share

See accompanying notes to the consolidated financial statements.

PALLADYNE AI CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

( in thousands )

Year Ended December 31,

Net income (loss)

Other comprehensive income:

Change in unrealized gain on available-for-sale investments

Change in unrealized income on available-for-sale investments

Total other comprehensive income

Comprehensive loss

Comprehensive income (loss)

See accompanying notes to the consolidated financial statements.

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Cash flows from operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Stock-based compensation

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Amortization of investment discount

Asset write-down

Changes in operating assets and liabilities:

Deferred income tax benefit

Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable

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Purchases of property and equipment

Acquisition of a business, net of cash acquired

Purchases of marketable securities

Maturities of marketable securities

Net cash provided by investing activities

Net cash (used in) provided by investing activities

Cash flows from financing activities:

Proceeds from exercise of stock options

Proceeds from issuance of common stock under ESPP

Proceeds from the exercise of warrants

Shares repurchased for payment of tax withholdings

Payment of obligations under capital leases

Proceeds from issuance of warrants

Payment of obligations under finance leases

Payment of debt obligations

Proceeds from the issuance of warrants

Proceeds from issuance of common stock

Payment of transaction costs related to issuance of common stock

Net cash provided by (used in) financing activities

Net increase (decrease) in cash, cash equivalents

Net cash provided by financing activities

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

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Cash paid for income taxes

Supplemental disclosure of non-cash activities:

Purchases of property and equipment financed through notes payable

Common stock issued in connection with a business acquisition

Warrant liabilities reclassified to equity upon exercise

See accompanying notes to the consolidated financial statements.

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Stockholders’

Income (Loss)

Equity (Deficit)

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Common stock issued under equity award plans

Shares repurchased for payment of tax withholdings and other

Other comprehensive loss

Shares repurchased for payment of tax withholdings

Exercise of stock options

Issuance of common stock, net of cost

Other comprehensive income

Balance at December 31, 2024

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Common stock issued under equity award plans

Shares repurchased for payment of tax withholdings

Exercise of stock options

Issuance of common stock under ESPP

Issuance of common stock in connection with a business acquisition

Issuance of common stock, net of cost

Other comprehensive loss

Exercise of warrants

Other comprehensive income

Balance at December 31, 2025

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Description of the Business

The Company's full-stack, closed-loop autonomy software ("AI/ML Foundational Technology") has been designed with artificial intelligence ("AI") and machine learning ("ML") technologies to enable robotic systems to perceive their environment and quickly adapt to changing circumstances by generalizing (i.e., learning) from their past experience using dynamic real-time operations "on the edge" (i.e., on the robotic system) without extensive programming and with minimal robot training.

To reflect the Company's transition from a hardware-focused company, in March 2024 the Company changed its name from Sarcos Technology and Robotics Corporation to Palladyne AI Corp.

The Company is a U.S.-based technology company developing and offering embodied artificial intelligence (“AI”) software and collaborative autonomy solutions, advanced avionics, unmanned aerial vehicles (UAVs), advanced UAV engineering services and precision-manufactured components for defense and commercial/industrial markets.

The Company’s core AI software offerings, Palladyne IQ and SwarmOS/Palladyne Pilot, consist of full-stack, closed-loop autonomy software that is intended to enhance the functionality and operational effectiveness of third-party robotic systems across a range of applications.

These products are designed to be hardware agnostic, enabling integration across a wide range of robotic platforms, whether third-party or our own proprietary platforms, including industrial robots, collaborative robots (“cobots”), UAVs, unmanned ground vehicles (“UGVs”), and remotely operated vehicles (“ROVs”) across multiple domains.

Basis of Presentation and Consolidation

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The Company's fiscal year begins on January 1 and ends on December 31.

Reverse Stock Split

On July 5, 2023, the Company effected a 1-for- 6 reverse stock split ("Reverse Stock Split") of the Company's outstanding shares of common stock, as approved by the Company's stockholders at the Company's Annual Meeting of Stockholders held on June 14, 2023.

All share and per share amounts of common stock, options , warrants, restricted stock and restricted stock units in the accompanying condensed consolidated financial statements and notes thereto have been retroactively adjusted for all periods presented to reflect the reverse stock split.

Business Combinations

The Company utilizes the purchase method of accounting for business combinations.

This method requires, among other things, that results of operations of acquired companies are included in the Company’s results of operations beginning on the respective acquisition dates and that assets acquired, and liabilities assumed are recognized at fair value as of the acquisition date.

Any excess of the fair value of consideration transferred over the fair values of the net assets acquired is recognized as goodwill.

Contingent consideration liabilities are recognized at the estimated fair value on the acquisition date and are recorded in other non-current liabilities in the Company's consolidated balance sheets.

Subsequent changes to the fair value of contingent consideration liabilities are recognized in general and administrative expenses in the Consolidated Statements of Operations.

The fair value of assets acquired, and liabilities assumed in certain cases, may be subject to revision based on the final determination of fair value during a period of time not to exceed 12 months from the acquisition date.

Legal costs, due diligence costs, business valuation costs and all other business acquisition costs are expensed when incurred.

Use of Estimates

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These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the balance sheet date, as well as reported amounts of revenue and expenses during the reporting period.

The Company's most significant estimates and judgments involve contract revenue recognized based on estimates of total contract costs and cost to complete uncompleted contracts, estimates of potential losses on uncompleted contracts, impairment evaluation of contract and long lived assets, assumptions used for leases, valuation allowance for net deferred income taxes and valuation of the Company' s stock-based compensation and warrants.

The Company's most significant estimates and judgments involve contract revenue recognized based on estimates of total contract costs and cost to complete uncompleted contracts, estimates of potential losses on uncompleted contracts, impairment evaluation of contract assets, goodwill and other long lived assets, assumptions used for leases, valuation allowance for net deferred income taxes and valuation of the Company' s stock-based compensation, warrants intangible assets and contingent consideration.

Management bases its estimates on historical experience and on various other assumptions believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

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Cash, cash equivalents and marketable securities were $ 47.1 million as of December 31, 2025, compared to $ 40.1 million as of December 31, 2024.

The Company has incurred losses and negative cash flows from operations since inception and is likely to continue to incur losses and negative cash flows from operations in the near term.

The Company has incurred losses from operations and negative cash flows from operations since inception and is likely to continue to incur losses and negative cash flows from operations in the near term.

As of December 31, 2025, the Company also had an accumulated deficit of approximately $ 480.8 million and working capital of $ 46.9 million .

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The Company’s primary use of cash is for operations and administrative activities, including employee-related expenses and general, operating and overhead expenses.

Future capital requirements will depend on many factors, including the Company's timing and extent of development efforts, the expansion and success of sales and marketing activities, customer growth rate, customer retention, the introduction of new and enhanced product offerings and market acceptance of the Company's products.

Future capital requirements will depend on many factors, including the Company’s timing and extent

of development efforts, the expansion and success of sales and marketing activities, revenue growth rate, customer retention, the introduction of new and enhanced product offerings and market acceptance of the Company’s products.

The Company believes it has sufficient financial resources for at least the next 12 months from the date of this Report.

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Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash, cash equivalents, marketable securities, accounts receivable and unbilled receivables.

The Company's cash is placed with high-credit-quality

financial institutions and issuers, and generally exceeds federally insured limits.

The Company's cash is placed with high-credit-quality financial institutions and issuers, and generally exceeds federally insured limits.

The Company's cash equivalents and marketable securities are money market funds or U.S.

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Accounts Receivable

As of December 31, 2024 , three customers accounted for more than 10% of the Company's accounts receivable, which in total represented 100 % of the accounts receivable as of December 31, 2024.

As of December 31, 2025 , five customers accounted for more than 10% of the Company's accounts receivable, which in total represented 78 % of the accounts receivable as of December 31, 2025.

As of December 31, 2024, three customers accounted for more than 10% of the Company's accounts receivable, which in total represented 100 % of the accounts receivable as of December 31, 2024.

Two and five cust omers accounted for more than 10% of the Company's revenue for each of the years ended December 31, 2024 and 2023 , respectively.

One and two cust omers accounted for more than 10% of the Company's revenue for each of the years ended December 31, 2025 and 2024 , respectively.

These concentrations accounted for 73 % and 98 % of revenue for the years ended December 31, 2025 and 2024 , respectively.

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Management determines the need for an allowance for credit losses using a specific identification method after taking into account all of its remedies for collection.

Management recorded $ 0.3 million allowance for credit losses during the twelve months ended December 31, 2024.

Management determined no allowance for credit losses was necessary as of December 31, 2023 .

M anagement determined no allowance for credit losses was necessary during the twelve months ended December 31, 2025.

M anagement recorded $ 0.3 million allowance for credit losses during the twelve of December 31, 2024 .

Receivables are comprised of amounts invoiced for completed contracts and contracts in progress.

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Impairment of Long-Lived Assets

The Company evaluates its long-lived assets, which includes property and equipment, and operating lease assets, for indicators of possible impairment when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.

The Company evaluates its long-lived assets, which includes property and equipment, definite lived intangible assets, and operating lease assets, for indicators of possible impairment when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.

Impairment exists if the carrying amounts of such assets exceed the estimates of future net undiscounted cash flows expected to be generated by such assets.

Goodwill is initially recorded when the purchase price paid for a business acquisition exceeds the estimated fair value of the net identified tangible and intangible assets acquired.

The Company evaluates goodwill at the reporting unit level for impairment annually, or when an indicator of potential impairment exists.

The Company has one reporting unit.

Revenue Recognition

The Company recognizes revenue from the sale of its products and from the delivery of goods and services arising out of its contractual arrangements to provide product development contract services that are funded by the customer.

The Company recognizes revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services by following a five-step process:

recognizes revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services by following a five-step process:

(1) Identify the contract with a customer:

has commercial substance and (c) the Company determines that collection of substantially all consideration for products and services that are transferred is probable based on the customer's intent and ability to pay the promised consideration.

A contract with a customer exists when (a) the Company enters into an enforceable contract with a customer that defines each party's rights and obligations regarding the products and services to be transferred and identifies the payment terms related to these products and services, (b) the contract has commercial substance and (c) the Company determines that collection of substantially all consideration for products and services that are transferred is probable based on the customer's intent and ability to pay the promised consideration.

Contract modifications may include changes in scope of work, and/or the period of completion of the project.

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Revenue from Contracts with Customers

The Company derives its revenue from two sources.

First, the Company enters into research and development agreements primarily relating to the commercialization of the Company's products.

Second, the Company sells its products and related parts and repair services.

Product development contract revenue includes revenue arising from different types of contractual

arrangements, including cost-type contracts and fixed-price contracts.

Historically, product revenue primarily consists of sales of the Company's hardware products.

Product Development Contract Revenue

Cost-type contracts – Research, development and/or testing service contracts, including cost-plus-fixed-fee and time and material contracts, relate primarily to the development of the Company's products and related technology.

The Company derives its revenue from three sources.

First, the Company enters into service contracts to provide research and development, engineering and design services with the government and commercial customers.

The Company's research and development contracts with the government are leveraged to further our product development efforts where possible.

Service revenue consists of revenue arising from different types of contractual arrangements, including cost-type contracts, fixed-price contracts and time and materials contracts.

Second, the Company sells its products.

Product revenue primarily consists of sales of current and legacy hardware products, including the BRAIN family of guidance and navigation computer chips.

Third, the Company generates manufacturing revenue through the sale of precision machined and fabricated components, subassemblies and structures and integrated assembly services for both Defense and Commercial customers in a variety of industries.

Services Revenue

Cost-type contracts are generally entered into with the U.S.

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The Company will recognize losses at the contract level in earnings in the period in which they are incurred.

Time and materials contracts – Time and materials contracts relate primarily to design-to-field advanced engineering design services that take aerospace programs from early concept through flight-ready prototype in compressed timelines, while engineering every stage for manufacturability and scale.

Revenue on time and materials contracts is generally recognized over time as services are provided and materials are purchased and used in the project.

Product Revenue

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At the time product revenue is recognized, an accrual is established for estimated warranty expenses based on historical experience as well as anticipated product performance.

The revenue recognized for Product Development Contract Revenue and Product Revenue were as follows:

For the Year Ended December 31,

Manufacturing Revenue

Through its precision U.S.

manufacturing capabilities, the Company sells precision machined and fabricated components, subassemblies and structures and integrated assembly services to both Defense and Commercial customers.

The Companies operations include machining, fabrication and assembly of aerospace and defense components.

Manufacturing revenue is recognized at the point in time when ownership of the goods is transferred, generally at the time of shipment to the customer.

The revenue recognized for Services, Product and Manufacturing were as follows:

Year Ended December 31,

(In thousands)

Product Development Contract Revenue

Services Revenue

Product Revenue

Manufacturing Revenue

Contract Balances

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Contract Assets

Deferred Revenue

Opening Balance as of December 31, 2022

Ending Balance as of December 31, 2023

(Decrease)/increase, net

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The Company recorded its current contract assets, long-term contract assets and current deferred revenue within prepaid expenses and other current assets, other non-current assets and accrued liabilities, respectively.

During the year ended December 31, 2024, the Company recognized all of the deferred revenue which existed at December 31, 2023.

During the year ended December 31, 2023 , the Company did no t recognize any revenue related to deferred revenue which existed at December 31, 2022.

During the years ended December 31, 2025 and 2024, the Company recognized all of the deferred revenue which existed at December 31, 2024 and 2023, respectively.

Remaining Performance Obligations

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The Company calculates the fair value of all stock-based awards, including stock options, restricted stock units and restricted stock awards on the date of grant.

The Company values stock options using the Black-Scholes option-pricing model, which requires the use of a number of assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends.

The stock-based compensation expense is recognized on a straight-line basis over the requisite service periods of the awards, which is generally four years.

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Recently Adopted Accounting Pronouncements

As an emerging growth company ("EGC"), the Jumpstart Our Business Startups Act ("JOBS Act") allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are

applicable to private companies.

The Company has elected to use this extended transition period under the JOBS Act until such time as the Company is no longer considered to be an EGC.

The adoption dates discussed below reflect this election.

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which requires enhanced disclosure of significant segment e xpenses on an annual and interim basis.

Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis.

The Company adopted ASU 2023-07 during the year ended December 31, 2024 .

See Note 13, Segment Information, in the accompanying notes to the consolidated financial statements for further detail.

Recently Issued Accounting Standard Pronouncements

In December 2023, the FASB issued ASU No.

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In addition, ASU 2023-09 requires companies to disclose additional information about income taxes paid.

ASU 2023-09 will be effective for annual periods beginning January 1, 2026 and will be applied on a prospective basis with the option to apply the standard retrospectively.

The Company does not expect a material impact on its consolidated financial statements related to ASU 2023-09.

The Company adopted ASU 2023-09 during the year ended December 31, 2025 , on a prospective basis.

Adoption of this standard resulted in changes to the effective tax rate reconciliation as reflected in Note 12, Income Taxes .

Recently Issued Accounting Standard Pronouncements

In November 2024, the FASB issued ASU No.

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(In thousands)

Cash equivalents:

Treasury securities

Marketable securities:

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Warrant liabilities

Other non-current liabilities:

Contingent consideration

Total liabilities

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The carrying amounts of accounts receivable, unbilled receivables, accounts payable and accrued expenses approximate their fair values because of the relatively short periods until they are required to be settled.

The contingent consideration relates to the acquisition of GuideTech during 2025, as discussed in Note 5, Acquisitions.

The contingent consideration was initially valued as of November 14, 2025, the acquisition date, and will be remeasured at fair value at each reporting date, or more frequently, if events or changes in circumstances indicate that a remeasurement is warranted.

The valuation of the contingent consideration requires the use of a valuation model and assumptions such as projected cash flows and discount rates.

The following table sets forth a reconciliation from the opening balances to the closing balances for the Company's Level 3 warrant values:

(In thousands)

Balance at December 31, 2024

Decrease in fair value of warrants

Exercise of warrants

Balance at December 31, 2025

Balance Sheet Components

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Raw materials

Work-in-process

Finished goods, net

Total inventories

Prepaid expenses and other current assets

Prepaid expenses and other current assets consist of the following:

(In thousands)

December 31, 2024

December 31, 2023

Prepaid insurance

Other prepaid expenses and assets

Total prepaid expenses and other current assets

Property and equipment, net

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Robotics and manufacturing equipment

Financed lease robotics and manufacturing equipment

Leasehold improvements

Land and building

Computer equipment

Financed leased computer equipment

Furniture and fixtures, and other fixed assets

Construction in progress

Property and equipment, gross

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Depreciation expenses were $ 1.0 million for the year ended December 31, 2025.

Depreciation expenses were $ 2.8 million for the year ended December 31, 2023 , $ 1.2 million of which was accelerated depreciation related to shutting down our facilities in Pittsburgh, Pennsylvania, which is included in asset write-down and restructuring on the consolidated statements of operations.

Depreciation expenses were $ 0.8 million for the year ended December 31, 2024.

Accrued liabilities

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Payroll and related costs

Contract restructuring accrual

Legal services accrual

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Total accrued liabilities

The Company leases real estate for office and lab space under operating leases with varying expiration dates through 2033 .

Other non-current liabilities

Other non-current liabilities consist of the following:

(In thousands)

December 31, 2025

December 31, 2024

Contingent consideration

Equipment financing liabilities

Total other non-current liabilities

The Company has operating and finance leases for office space, lab space, machining and certain equipment with varying expiration dates through 2035 .

Leases are categorized at their commencement date , which is the date the Company takes possession or control of the underlying asset.

Certain of the operating leases include renewal options ranging from three to five years , which are not recognized as part of the right-of-use assets as the Company is not reasonably certain that the options will be exercised.

Lease costs for operating leases are as follows:

Certain of the operating leases include renewal options ranging from three to ten years , which are not recognized as part of the right-of-use assets as the Company is not reasonably certain that the options will be exercised.

Lease costs for operating leases are as follows (finance lease costs were not material for the periods presented):

Year Ended December 31,

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Weighted-average remaining lease term (years)

Finance leases

Operating leases

Weighted-average discount rate:

Finance leases

Operating leases

Supplemental balance sheet information related to leases:

(In thousands)

Balance Sheet Location

Finance lease right-of-use assets

Property and equipment, net

Operating lease right-of-use assets

Operating lease assets

Financing lease liabilities (current)

Accrued liabilities

Operating lease liabilities (current)

Current operating lease liabilities

Financing lease liabilities (non-current)

Other non-current liabilities

Operating lease liabilities (non-current)

Operating lease liabilities

Supplemental cash flow and other information related to leases:

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(In thousands)

Finance Leases

Operating Leases

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Present value of lease liabilities

On November 14, 2025, the Company acquired 100 percent of the equity interests of GuideTech, LLC (“GuideTech”), Warnke Precision Machining, LLC (“Warnke Precision Machining”) and MKR Fabrication, LLC (“MKR Fabricators”).

These transactions (collectively, the “2025 Acquisitions”) were undertaken pursuant to separate purchase agreements entered into on November 14, 2025.

GuideTech is an engineering and aerospace avionics products and services provider.

MKR Fabricators and Warnke Precision Machining are U.S.-based precision manufacturing and fabrication businesses supporting defense and industrial customers.

Through the 2025 Acquisitions, the Company acquired engineering design services, advanced avionics products and manufacturing and machining capabilities to complement its AI/ML Foundational Technology and related products and offer vertically integrated solutions for defense and commercial markets.

The aggregate consideration transferred for the 2025 Acquisitions was $ 22.6 million, consisting of $ 5.4 million of cash, $ 15.9 million comprised of 2,672,013 shares of common stock, and contingent consideration valued at $ 1.4 million.

The contingent consideration arrangement provides for up to $ 25 million in earnout payments payable in cash or stock if certain revenue targets are achieved over a five-year period.

The 2025 Acquisitions have been accounted for as business combinations and the total purchase consideration was allocated to the net tangible and intangible assets and liabilities based on their fair values on the acquisition date and the excess was recorded as goodwill.

The values assigned to the assets acquired and liabilities assumed are based on preliminary estimates of fair value available as of the issuance date of these consolidated financial statements and may be adjusted during the measurement period of up to 12 months from the date of acquisition as further information becomes available.

Any changes in the fair values of the assets acquired and liabilities assumed during the measurement period may result in adjustments to goodwill or identified intangible assets.

As of December 31, 2025, the primary areas that remain preliminary relate to the valuation of certain intangible items and various tax implications resulting from the acquisition.

The following table presents the preliminary purchase consideration allocation recorded in the Company’s consolidated balance sheet as of the acquisition date:

(in thousands)

Cash and cash equivalents

Accounts receivable

Unbilled receivables

Prepaid expenses and other current assets

Property and equipment

Intangible assets

Operating lease assets

Accounts payable

Accrued liabilities

Current operating lease liabilities

Operating lease liabilities

Other non-current liabilities (1)

Deferred tax liabilities

Total acquisition consideration

(1) Other non-current liabilities includes $ 3.7 million of debt obligations which were repaid prior to December 31, 2025.

The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition:

Weighted Average Useful Life

(in thousands)

Customer relationships

Developed technology

Total intangible assets

Goodwill represents the future economic benefits arising from other assets that could not be individually identified and separately recognized, such as the acquired assembled workforce and synergies expected to be achieved from the integration of the 2025 Acquisitions.

Goodwill is not deductible for tax purposes.

The results of operations of the 2025 Acquisitions from the date of acquisition have been included in the Company’s consolidated financial statements.

Pro forma revenue and results of operations have not been presented because the historical results of the 2025 Acquisitions are not material to the Company’s consolidated financial statements in any period presented.

Intangible Assets

Changes in the carrying amount of goodwill were as follows:

(In thousands)

Balance at December 31, 2024

Balance at December 31, 2025

There was no impairment of goodwill recorded during the twelve months ended December 31, 2025 and 2024.

Acquired Intangible Assets

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Weighted Average Remaining Useful Life

Trade name and trademarks

Developed technology

Customer relationships

The Company had no intangible amortization expense during the year ended December 31, 2024.

Developed technology

The Company recorded $ 0.1 million of amortization expense during the year ended December 31, 2025, which was recorded as intangible amortization expense in the consolidated statement of operations.

As a result of the Company's product development reprioritization announced in November 2023, the Company reassessed the remaining useful-lives of its intangible assets.

The Company recorded $ 16.3 million of accelerated amortization expense during the year ended December 31, 2023, which is included in asset write-down and restructuring in the consolidated statements of operations.

The Company had no intangible amortization expense during the year ended December 31, 2024.

As of December 31, 2025, future amortization expense related to acquired intangible assets was as follows:

(In thousands)

Amortization Expense

2031 and thereafter

Earn-Out Shares

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As a result of the Business Combination, each holder of Old Sarcos capital stock is entitled to Contingent Merger Consideration following the closing of the Business Combination in the form of earn-outs, up to an aggregate of 4,687,500 shares of Common Stock (the "Earn-Out Shares").

The Earn-Out Shares will become payable as follows:

• 2,343,750 shares of Common Stock of the Company in the aggregate if the closing share price of a share of Common Stock of the Company is equal to or exceeds $ 90.00 for 20 trading days in any 30 consecutive trading day period at any time during the period beginning on the first anniversary of the Closing Date and ending on the fourth anniversary of the Closing Date.

• 2,343,750 shares of Common Stock of the Company if the closing share price of a share of Common Stock of the Company is equal to or exceeds $ 120.00 for 20 trading days in any 30 consecutive trading day period at any time during the period beginning on the first anniversary of the Closing Date and ending on the fifth anniversary of the Closing Date.

The Earn-Out Shares are treated as equity-linked instruments as opposed to shares outstanding, and as such are not included in shares outstanding on the Company's condensed consolidated balance sheets.

O n September 24, 2025, the four-year anniversary of the Closing Date, 2,343,750 of the Earn-Out Shares expired without having been released as the closing share price of a share of Common Stock of the Company did not equal or exceed $ 90.00 for 20 trading days in any 30 consecutive trading-day period at any time beginning on the first anniversary of the Closing Date and ending on the fourth anniversary of the Closing Date.

The remaining 2,343,750 Earn-Out Shares will become payable if the closing share price of a share of Common Stock of the Company is equal to or exceeds $ 120.00 for 20 trading days in any 30 consecutive trading-day period at any time during the period beginning on the first anniversary of the Closing Date and ending on September 24, 2026, the fifth anniversary of the Closing Date .

The Earn-Out Shares are treated as equity-linked instruments as opposed to shares outstanding, and as such are not included in shares outstanding on the Company's consolidated balance sheets.

As of December 31, 2025 , there remained 2,343,750 Earn-Out Shares potentially issuable .

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The deSPAC Public Warrants are listed and traded under the PDYNW ticker symbol on the Nasdaq Global Market.

Each whole deSPAC Warrant entitles the registered holder to purchase one sixth of a share of the Company's Common Stock at a price of $ 11.50 per warrant, subject to adjustment as discussed below, at any time commencing on Janu ary 20, 2022, provided that the Company has an effective registration statement under the Securities Act of 1933, as amended (the "Securities Act") covering the shares of the Common Stock issuable upon exercise of the deSPAC Warrants and a current prospectus relating to them is available (or the Company permits holders to exercise their deSPAC Warrants on a cashless basis under the circumstances specified in the warrant agreement (the "deSPAC Warrant Agreement") entered into between Continental Stock Transfer & Trust Company and Rotor and such shares are registered, qualified or exempt from registration under the securities laws of the state of residence of the holder.

Each whole deSPAC Warrant entitles the registered holder to purchase one sixth of a share of the Company's Common Stock at a price of $ 11.50 per warrant, subject to adjustment as discussed below, at any time commencing on Janu ary 20, 2022, provided that the Company has an effective registration statement under the Securities Act of 1933, as amended (the "Securities Act") covering the shares of Common Stock issuable upon exercise of the deSPAC Warrants and a current prospectus relating to them is available (or the Company permits holders to exercise their deSPAC Warrants on a cashless basis under the circumstances specified in the warrant agreement (the "deSPAC Warrant Agreement") entered into between Continental Stock Transfer & Trust Company and Rotor and such shares are registered, qualified or exempt from registration under the securities laws of the state of residence of the holder.

Pursuant to the deSPAC Warrant Agreement, a deSPAC Warrant holder may exercise its deSPAC Warrants only for a whole number of shares of the Company's Common Stock.

1 unchanged sentence

As of December 31, 2025 , there were 20,549,453 deSPAC Warrants outstanding.

The Company will not be obligated to deliver any Common Stock pursuant to the exercise of a deSPAC Warrant and will have no obligation to settle such deSPAC Warrant exercise unless a registration statement under the Securities Act with respect to the shares of Common Stock underlying the deSPAC Warrants is then effective and a prospectus relating thereto is current,

subject to the Company satisfying its obligations described below with respect to registration, or a valid exemption from registration is available.

No deSPAC Warrant will be exercisable, and the Company will not be obligated to issue a share of Common Stock upon exercise of a deSPAC Warrant unless the share of the Company's Common Stock issuable upon such deSPAC Warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the deSPAC Warrants.

24 unchanged sentences

The fair value measurement for the deSPAC Public Warrants is considered a level 1 fair value measurement, and the fair value measurement for the deSPAC Private Placement Warrants is considered a level 2 fair value measurement, as the deSPAC Private Placement Warrants are substantially the same, but not identical to, the deSPAC Public Warrants.

The Company recognized losses of $ 15.7 million and gains of $ 0.2 million related to the change in fair value of the deSPAC Warrants during the years ended December 31, 2024 and 2023 , respectively.

The Company recognized gains of $ 14.5 million and losses of $ 15.7 million related to the change in fair value of the deSPAC Warrants during the years ended December 31, 2025 and 2024, respectively.

These amounts are recorded as gain (loss) on warrant liabilities within the consolidated statements of operations.

2024 Warrants

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In a concurrent private placement, the Company agreed to issue to the same investor warrants to purchase up to 2,790,700 shares of common stock (the "2024 Private Placement Warrants").

The 2024 Private Placement Warrants have an exercise price of $ 2.30 per share, will be exercisable commencing six months from the date of issuance, and will expire five and one-half years following the date of issue.

The 2024 Private Placement Warrants have an exercise price of $ 2.30 per share and were exercised in May 2025 , as discussed below.

In a separate concurrent private placement, the Company's Chief Executive Officer and certain other members of the Board of Directors purchased 430,105 shares of common stock at a price of $ 2.20 per share, which represented the consolidated closing bid price of the Company's common stock on the Nasdaq Global Market on October 30, 2024, and warrants to purchase up to 430,105 shares of common stock, at a price of $ 0.125 per warrant (the "2024 Concurrent Private Placement Warrants").

The 2024 Concurrent Private Placement Warrants have an exercise price of $ 2.30 per share, will be exercisable commencing six months from the date of issuance, and will expire five and one-half years following the date of issue.

The Company received gross proceeds of approximately $ 7 million, before deducting placement agency fees and offering expenses, from the registered and private placement offerings.

The 2024 Private Placement Warrants and the 2024 Concurrent Private Placement Warrants (together the "2024 Warrants") are recorded as warrant liabilities on the Company's consolidated balance sheet.

The Company estimated the fair value of the 2024 Warrants using the Monte Carlo valuation model, which is considered a level 3 fair value measurement.

The Monte Carlo valuation model inputs are based on assumptions related to the probability of a fundamental transaction occurring, expected volatility, expected life, risk-free interest rate and expected dividends .

The 2024 Concurrent Private Placement Warrants have an exercise price of $ 2.30 per share and will expire five and one-half years following the date of issue.

The Company received gross proceeds of approximately $ 7 million, before deducting placement agency fees and offering expenses from the registered direct offering, the 2024 Private Placement Warrants and the 2024 Concurrent Private Placement Warrants (together the "2024 Warrants").

On May 9, 2025, 2,790,700 of the 2024 Private Placement Warrants were exercised.

As of December 31, 2025 , all 430,105 of the 2024 Concurrent Private Placement Warrants were outstanding.

The 2024 Warrants are recorded as warrant liabilities on the Company's consolidated balance sheet.

The Company estimated the fair value of the 2024 Warrants using the Black-Scholes valuation model, which is considered a level 3 fair value measurement.

The valuation model inputs are based on assumptions related to expected volatility, expected life, risk-free interest rate and expected dividends .

These estimates, especially the expected volatility, are highly judgmental and could differ materially in the future.

The Company recognized losses of $ 31.2 million related to the change in fair value of the 2024 Warrants during the year ended December 31, 2024 , which are recorded as a loss on warrant liabilities within the consolidated statements of operations.

The following table provides quantitative information regarding assumptions used in the Monte Carlo model to determine the fair value of the 2024 Warrants:

The Company recognized gains of $ 23.2 million and losses of $ 31.2 million related to the change in fair value of the of the 2024 Warrants during the years ended December 31, 2025 and 2024, respectively.

These amounts are recorded as gain (loss) on warrant liabilities within the consolidated statements of operations.

The following table provides quantitative information regarding assumptions used in the valuation model to determine the fair value of the 2024 Warrants:

December 31, 2025

November 1, 2024

December 31, 2024

Term (in years)

2 unchanged sentences

Dividend yield

Stock-Based Compensation

Stock-Based Compensatio n

2021 Stock Plan

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In general, outstanding awards granted under the 2021 Plan vest over one to four years and, in the case of options, are exercisable up to 10 years from the date of grant.

The maximum number of shares of Common Stock that may be issued pursuant to the 2021 Plan is (a) 5.0 million shares of Common Stock of the Company plus (b) any shares of Common Stock subject to stock options and other awards that were assumed in the Business Combination and expire or otherwise terminate without having been exercised in full, are tendered to or withheld by the Company for payment of an exercise price or for tax withholding obligations, or are forfeited to or repurchased by the Company

due to failure to vest, with the maximum number of shares to be added to the 2021 Plan pursuant to clause (b) equal to 2.1 million shares of Common Stock.

As of December 31, 2025, 1.9 million shares were available for grant under the 2021 Plan.

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2024 Inducement Plan

The Company adopted the 2024 Inducement Equity Incentive Plan (the "Inducement Plan") with an effective date of December 15, 2024, to reserve 500,000 shares of Common Stock to be used exclusively for grants of nonstatutory stock options, RSUs, RSAs, SARS and performance awards to individuals who were not previously employees or directors of the Company (or who are returning to employment following a bona fide period of non-employment), as an inducement material to the individual's entry into employment with the Company, pursuant to Nasdaq Listing Rule 5635(c)(4).

The Company adopted the 2024 Inducement Equity Incentive Plan (the "Inducement Plan") with an effective date of December 15, 2024 to be used exclusively for grants of nonstatutory stock options, RSUs, RSAs, SARS and performance awards to individuals who were not previously employees or directors of the Company (or who are returning to employment following a bona fide period of non-employment), as an inducement material to the individual's entry into employment with the Company.

The Inducement Plan was adopted and approved without stockholder approval pursuant to Nasdaq Listing Rule 5635(c)(4).

As of December 15, 2024, 500,000 shares of Common Stock will be available to grant under the Inducement Plan.

As of December 31, 2024 , no stock-based compensation expense has been incurred with respect to the Inducement Plan.

As of December 31, 2025 , 202,792 shares were available to grant under the Inducement Plan.

2021 Employee Stock Purchase Plan

1 unchanged sentence

Offerings under the ESPP commenced in December 2024.

As of December 31, 2024, no shares have been issued under the ESPP.

As of December 31, 2025 , 469,087 shares were available for sale under the ESPP.

During the year ended December 31, 2025 , 30,913 shares of stock were sold under the ESPP for total proceeds of $ 0.1 million.

No shares of stock were sold under ESPP during the year ended December 31, 2024.

Offering periods are generally six months long and begin on June 1 and December 1 of each year.

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The following summarizes the Company's stock option activity for the years ended December 31, 2025 and 2024:

Weighted-Average

Options Outstanding

Aggregate Intrinsic

Weighted-Average

Weighted Average

Aggregate Intrinsic

Exercise Price

Contractual Term

Number of Shares

Exercise Price

(In thousands)

Outstanding – December 31, 2023

Forfeited or expired

Outstanding – December 31, 2024

Forfeited or expired

Outstanding – December 31, 2025

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Outstanding – December 31, 2024

The Company did not have any RSA activity for the year ended December 31, 2023.

Outstanding – December 31, 2025

Stock-Based Compensation Expense

The Company recognized stock-based compensation expense in the consolidated statement of operations and comprehensive loss as follows:

5 unchanged sentences

General and administrative

Asset write-down and restructuring

Total stock-based compensation expense

As of December 31, 2024 , there was approximately $ 3.6 million of unrecognized stock-based compensation cost, which is expected to be recognized over a weighted average period of 2.4 years.

Net Loss Per Share

The following table sets forth the computation of the basic and diluted net loss per share attributable to common stockholders for the twelve months ended December 31, 2024 and 2023, respectively:

As of December 31, 2025 , there was approximately $ 8.6 million of unrecognized stock-based compensation expense, which is expected to be recognized over a weighted average period of 2.6 years.

Net Income (Loss) Per Share

The following table sets forth the computation of the basic and diluted net income (loss) per share attributable to common stockholders for the twelve months ended December 31, 2025 and 2024, respectively:

Year Ended December 31,

(In thousands, except share and per share data)

Weighted average shares outstanding, basic and diluted

Basic and diluted net loss per share

Net income (loss)

Weighted average shares outstanding, basic

Dilutive effect of potential common shares

Weighted average shares outstanding, diluted

Basic net income (loss) per share

Diluted net income (loss) per share

Anti-dilutive securities, excluded

Basic and diluted net loss per share attributable to common stockholders is the same for the twelve months ended December 31, 2024 and 2023 , as the inclusion of potential shares of Common Stock would have been anti‑dilutive for the periods presented.

Loss before provision for income taxes was $ 72.6 million and $ 115.6 million for the years ended December 31, 2024 and 2023 , respectively, all of which was generated in the United States.

Potentially dilutive shares, which are based on the weighted-average shares of common stock, stock options, unvested stock units, unvested stock awards, purchase rights granted under the employee stock purchase plan and warrants using the treasury stock method are included when calculating diluted net income (loss) per share attributable to the Company when their effect is dilutive.

Because the Company incurred a net loss for the twelve months ended December 31, 2024 none of the potentially dilutive common shares were included in the diluted share calculation for that period as they would have been anti-dilutive.

Income (loss) before provision for income taxes was income of $ 7.5 million and loss of $ 72.6 million for the years ended December 31, 2025 and 2024 , respectively, all of which was generated in the United States.

The Company's provision for income taxes consists of the following:

5 unchanged sentences

Total income tax benefit (expense)

The Company's provision for income tax differs from the amount computed by applying the statutory federal income tax rate to income before taxes as follows:

The Company’s provision for income tax differs from the amount computed by applying the statutory federal income tax rate to income before taxes after the adoption of ASU 2023-09 as follows:

Year Ended December 31, 2025

(In thousands)

US federal statutory tax rate

State and local income taxes, net of federal income tax effect (1)

Change in valuation allowance

Nontaxable or nondeductible items

Warrant liability revaluation

Executive compensation

Share-based payment awards

Transaction costs

Changes in unrecognized tax benefits

Deferred adjustments

Total benefit for income taxes

(1) Massachusetts contributed to the majority of the tax effect in the category.

The Company’s provision for income tax differs from the amount computed by applying the statutory federal income tax rate to income before taxes prior to adoption of ASU 2023-09 as follows:

Year Ended December 31, 2024

Statutory federal income tax rate

2 unchanged sentences

Research credits

Change in effective tax rate

Change in tax rate

Warrant liability revaluation

Disallowed executive compensation

Stock compensation

1 unchanged sentence

Total provision for income taxes

As of December 31, 2024 and 2023, the net deferred tax assets consisted of the following:

As of December 31, 2025 and 2024, net deferred tax assets consisted of the following:

(In thousands)

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Pennsylvania net operating losses will expire between 2034 through 2043.

The remaining State net operating loss carryforwards are attributable to various other states with varying expiration periods.

The remaining State net operating loss carryforwards are attributable to various other states with varying

expiration periods.

As of December 31, 2024 , the Company had cumulative State net operating losses of approximately $ 183.7 million.

8 unchanged sentences

This credit has been offset by a liability for unrecognized tax benefits of $ 0.5 million.

Utilization of federal and state net operating losses and tax credit carryforwards may be subject to annual limitations due to the ownership change limitations provided by Section 382 of the Internal Revenue Code and similar state provisions.

Such a limitation could result in the expiration of the net operating loss carryforwards and tax credits before utilization.

ASC Topic 740-10-05 requires that the impact of a tax position be recognized in the financial statements if that position is more likely than not of being sustained on audit, based on the technical merits of the position.

As of December 31, 2025 , the Company had a $ 2.9 million liability for unrecognized tax benefits, all of which is netted against deferred tax assets for related carryforward credits.

As of December 31, 2023, the Company had a $ 2.4 million liability for unrecognized tax benefits, all of which is netted against deferred tax assets for related carryforward credits.

As o f December 31, 2024 , the Company had a $ 2.7 million liability for unrecognized tax benefits, all of which is netted against deferred tax assets for related carryforward credits.

The Company expects no material changes to the liability for unrecognized tax benefits in the next 12 months.

7 unchanged sentences

Gross increases – prior year tax positions

Gross decreases – prior year tax positions

Unrecognized tax benefits at end of year

Interest and penalties in year-end balance

The Company files U.S.

4 unchanged sentences

As of December 31, 2025, there are no income tax returns currently under audit.

The amounts of cash income taxes paid by the Company were as follows:

(In thousands)

Year Ended December 31, 2025

Massachusetts

All other states

Income taxes, net of amounts refunded

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law.

The OBBBA includes a broad range of tax reform provisions affecting businesses, including extending and modifying certain key Tax Cuts & Jobs Act provisions (both domestic and international), expanding certain Inflation Reduction Act incentives while accelerating the phase-out of others.

The Company has accounted for the impact of the applicable OBBBA provisions in its consolidated financial statements for 2025.

On November 14, 2025, the Company acquired GuideTech in a tax-deferred stock purchase.

The acquired deferred tax liabilities of GuideTech were available to offset the reversal of the Company’s preexisting deferred tax assets.

As a result of the acquisition, the Company determined a portion of its preexisting tax assets were more likely than not to be realized by the combined entity, and the valuation allowance was reduced.

The Company recorded a deferred tax benefit of $ 2.5 million related to the reduction of its valuation allowance.

On November 14, 2025, the Company also acquired MKR Fabricators and Warnke Precision Machining .

From a tax perspective, the acquisition was treated as if the LLCs made liquidating distributions of all its assets to the members, and immediately thereafter, the Company purchased all of those assets from the members in a taxable transaction.

Commitments and Contingencies

12 unchanged sentences

The Company has determined that it has a single operating segment.

The Company has historically derived revenues from product development contracts focused on the development of technologies included within the Company's AI/ML Foundational Technology, which the Company expects to commercialize and sell under software license arrangements.

The Company derives revenues from services contracts, existing product lines and manufacturing.

The accounting policies of the segment are the same as those described in Note 1, Basis of Presentation and Summary of Significant Accounting Policies.

2 unchanged sentences

The CODM does not evaluate profitability below the level of the consolidated company.

Net loss is used to monitor results on a budget versus actual basis.

Net loss is adjusted for various non-recurring and non-cash transactions such as stock compensation expenses and impairment expenses.

Net income (loss) is used to monitor results on a budget versus actual basis.

Net income (loss) is adjusted for various non-recurring and non-cash transactions such as stock compensation expenses and impairment expenses.

The following table presents selected financial information with respect to the Company's single operating segment:

8 unchanged sentences

Sales and marketing

Intangible amortization expense

Interest income, net

(Loss) gain on warrant liabilities

(Gain) loss on warrant liabilities

Other income, net

Income tax expense

Income tax benefit (expense)

Net income (loss)

(1) Other revenue includes revenue from legacy product sales.

(2) Other for the year ended December 31, 2024, includes $ 1.1 million of cost of revenue from legacy product sales, $ 2.8 million of stock compensation expenses, $ 0.6 million of other non-recurring or non-cash transactions.

Other for the year ended December 31, 2023, includes $ 7.6 million of stock compensation expenses, $ 38.5 million of asset write-off and restructuring charges and employee separation related expenses, and $ 2.8 million of intangible amortization expense.

(2) Other for the year ended December 31, 2025, includes $ 4.4 million of stock-based compensation expenses, $ 0.2 million of severance charges and $ 0.6 other non-recurring transactions.

Other for the year ended December 31, 2024, includes $ 1.1 million of cost of revenue from legacy product sales, $ 2.8 million of stock-based compensation expenses, $ 0.6 million of other non-recurring or non-cash transactions.

The Company's revenue is derived primarily from U.S.

During the year ended December 31, 2024, the Company ha d no revenue earned from customers located outside the United States.

During the year ended December 31, 2023 , the Company had $ 1.9 million of revenue earned from customers located outside the United States.

During the years ended December 31, 2025 and 2024, the Company ha d no revenue earned from customers located outside the United States.

All long-lived assets are maintained in the United States.

4 unchanged sentences

The Company provides employees with 401(k) matching contributions.

The Company recognized $ 0.6 million and $ 1.5 million of expense for 401(k) matching contributions during the twelve months ended December 31, 2024 and 2023, respectively.

The Company recognized $ 0.6 million of expense for 401(k) matching contributions during each of the twelve months ended December 31, 2025 and 2024.

Subsequent Events

From January 1, 2025 through the date of this filing, the Company sold 1,335,807 shares of Common Stock under the at-the-market equity offering program for gross proceeds of $ 14.4 million, before deducting commission and other expenses.

From January 1, 2026 through the date of this filing, the Company sold 368,326 shares of Common Stock under the at-the-market equity offering program for gross proceeds o f $ 2.5 million, before deducting commission and other expenses.

Changes in and Disagreements w ith Accountants on Accounting and Financial Disclosure.

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 8. Financial Statements and Supplementary Data