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Item 1A. Risk Factors

2026-08-19 compared with 2026-05-20 · 340 added, 210 removed, 198 unchanged (74% of the section changed)

As of March 31, 2026, there have been no material changes to the risk factors

previously disclosed in our Registration Statement on Form S-1 filed with the Securities and Exchange Commission on April 16, 2026 (the

“S-1”), which is incorporated by reference herein.

The following risk factors supplement and highlight certain risks from

the S-1 that remain particularly material to the Company in light of events occurring during the quarter ended March 31, 2026.

together with those in the S-1 and our other SEC filings, could materially and adversely affect our business, financial condition, results

of operations, cash flows, and the trading price of our Common Stock.

Investors should carefully consider these risks before making any

investment decision.

As of June 30, 2026, there have been no material changes to the risk factors

previously disclosed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2025, filed with the Securities and Exchange

Commission (the “SEC”) on December 31, 2025, and in our Registration Statement on Form S-1 filed with the SEC on April 16,

2026 (the “S-1”), which is incorporated by reference herein.

The following risk factors supplement and highlight certain risks

from the S-1 that remain particularly material to the Company in light of events occurring during the quarter ended June 30, 2026.

risks, together with those in the S-1 and our other SEC filings, could materially and adversely affect our business, financial condition,

results of operations, cash flows, and the trading price of our Common Stock.

Investors should carefully consider these risks before making

any investment decision.

We have a history of operating losses, limited operating history,

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integration initiatives (including Solar Drone and the SaverOne platform), and commercialization efforts.

As of March 31, 2026, our liquidity

As of June 30, 2026, our liquidity

position and cash runway remain limited.

These factors raise substantial doubt about our ability to continue as a going concern within

one year after the date these financial statements are issued.

Our ability to continue operations depends on our ability to obtain additional

financing, generate revenue from customer orders, and achieve positive cash flow, none of which is assured.

We will require significant additional capital, and future financings

may result in substantial dilution or be unavailable on acceptable terms.

Our business plan requires substantial capital to fund operations, technology

integration, manufacturing scale-up, and milestone payments under existing agreements.

Although we completed the Stage 1 Closing under

the SaverOne Exchange Agreement and received net proceeds from the YA II PN Ltd.

senior loan in February 2026, we will need additional

Failure to obtain financing on commercially reasonable terms (or at all) could force us to delay, scale back, or abandon our

development and commercialization plans, which would materially and adversely affect our business, financial condition, and results of

Absent the mitigating plans and the committed financial support described in Note 2 to the accompanying

unaudited condensed consolidated financial statements, these conditions would raise substantial doubt about our ability to continue as

a going concern within one year after the date these financial statements are issued.

Although management has concluded that such doubt

has been alleviated, there can be no assurance that the committed support will be sufficient or available when needed.

Our ability to

continue operations depends on our ability to obtain additional financing, generate revenue from customer orders, and achieve positive

cash flow, none of which is assured.

Our current business plans require a significant amount of capital.

If we are unable to obtain sufficient funding or do not have access to capital on acceptable terms, we may not be able to execute our

business plans, and our prospects, financial condition, and results of operations could be materially adversely affected.

The extent to which we rely on YA II PN, LTD.

a source of funding depends on multiple factors, including the prevailing market price of our common stock, our ability to satisfy the

conditions necessary to deliver Advance Notices under the Standby Equity Purchase Agreement dated July 25, 2025 (as amended, the “SEPA”),

the impact of the Exchange Cap and Ownership Limitation under the SEPA, and our success in securing funding from other sources.

In addition to the SEPA facility (under which we may sell up to $50 million

of common stock, subject to limitations), we have received substantial capital from YA II.

We received a $5.0 million Pre-Paid Advance

under the SEPA, evidenced by convertible notes issued at 94% of principal, bearing 6% interest (increasing to 18% upon default), with

a 12-month maturity per tranche (the “Convertible Notes”).

On February 26, 2026, we entered into a Letter Agreement with YA

II pursuant to which YA II provided a $20 million senior loan (the “Loan”) evidenced by a Promissory Note (the “Note”)

issued at a 15% original issue discount, resulting in net cash proceeds of approximately $16.975 million after fees.

The Note bears 0%

interest (increasing to 18% upon an Event of Default), matures in 12 months, and requires monthly amortization payments of $2.5 million

of principal plus a 2% premium (commencing on the 60th day after issuance).

Amortization may be satisfied in cash or, subject to a 30-day

repayment waterfall in favor of YA II, by delivering an Advance under the SEPA.

Concurrently, we issued YA II a five-year warrant to purchase

1,333,333 shares of common stock at an exercise price of $9.00 per share.

The obligations under the Note are guaranteed by each of our

subsidiaries.

We have experienced operating losses and expect to continue to incur operating

losses as we implement our business plans in the defense technology, advanced sensing, AI, and related sectors.

We expect our capital

expenditures to remain significant as we expand operations, including through our network of subsidiaries and strategic initiatives.

limited operating history in certain areas means our capital requirements are uncertain and may differ materially from current expectations.

New growth opportunities may also require additional capital.

As of June 30, 2026, our principal source of

liquidity is our cash balance in the amount of approximately $14 million.

While the SEPA provides us with the right, but not the

obligation, to sell shares to YA II, our ability to utilize the facility is subject to conditions that may not be satisfied, including

registration effectiveness, market conditions, and the Exchange Cap (unless stockholder approval is obtained in accordance with Nasdaq

In addition, certain events under the Convertible Notes (including a Floor Price Event or Exchange Cap Event, subject to post-Rule

144 Date provisions) may trigger monthly amortization payments of $750,000 plus a 5.0% premium and accrued interest.

An uncured Event

of Default under the Note could result in acceleration of the full amount, 18% default interest, and conversion rights at a discount to

market (subject to a 4.99% beneficial ownership blocker and floor price).

Any additional debt incurred from YA II or third parties could increase

our vulnerability to downturns in operating results or economic conditions.

If our cash flow from operations is insufficient to meet debt

service obligations—including monthly amortizations under the Note or potential accelerated payments under the Convertible Notes—we

may be required to refinance, dispose of assets, or seek additional financing on unfavorable terms.

As an early-stage growth company, our ability to access capital is critical.

We expect to continue seeking additional capital through the SEPA (when conditions permit), other equity or equity-linked offerings, credit

facilities, or debt securities to finance future expenditures.

Sales of additional equity or equity-linked securities (including under

the SEPA, upon conversion of the Note or Convertible Notes, or exercise of the Warrant) will dilute our existing stockholders.

of additional indebtedness would increase debt service obligations and could impose restrictive operating and financial covenants.

Our ability to raise sufficient funds on favorable terms is subject to

general market conditions, investor acceptance of our business model, and our compliance with the terms of existing arrangements with

If we are unable to obtain adequate financing, we may need to significantly reduce spending, delay or cancel planned activities,

or substantially alter our corporate or operational structure.

We might not obtain any such funding, or we might not have sufficient resources

to conduct our business as projected.

Either outcome could force us to curtail or discontinue operations, materially adversely affecting

our prospects, financial condition, and consolidated results of operations, in which case investors could lose some or all of their investment.

Our recent strategic transactions, including the SaverOne Exchange

Agreement and BladeRanger/Solar Drone acquisition, involve significant integration, milestone, and execution risks.

The SaverOne transaction is structured in three stages, with Stage 1 completed

on March 5, 2026.

Achievement of Stages 2 and 3 is contingent upon operational and commercial milestones, regulatory approvals, and compliance

with Nasdaq listing rules.

The BladeRanger transaction includes potential issuance of Additional Pre-Funded Warrants if the VWAP condition

Failure to achieve milestones, integrate acquired technologies and operations (including Solar Drone), or satisfy regulatory

or shareholder approval requirements could result in loss of strategic benefits, unexpected costs, dilution, or termination of the arrangements,

any of which would materially and adversely affect our business and financial condition.

The SaverOne transaction is structured in three stages,

with Stage 1 – 3 completed by June 30, 2026.

Failure integrate acquired technologies and operations (including Solar Drone), or

satisfy regulatory or shareholder approval requirements could result in loss of strategic benefits, unexpected costs, dilution, or termination

of the arrangements, any of which would materially and adversely affect our business and financial condition.

The senior secured loan from YA II PN Ltd.

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future issuances of Common Stock, Pre-Funded Warrants, and other securities.

As of March 31, 2026, we have outstanding Pre-Funded Warrants (initial

and potential Additional PFWs under the BladeRanger Agreement), the YA II Warrant, and shares issuable under the SaverOne Exchange Agreement

As of June 30, 2026, we have outstanding Pre-Funded Warrants (initial and

potential Additional PFWs under the BladeRanger Agreement), the YA II Warrant, and shares issuable under the SaverOne Exchange Agreement

and management pools.

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We rely on patents, trade secrets, and other intellectual property to protect

our technologies, including the recently acquired xCalibre™ AI video intelligence portfolio and provisional patent filings.

our technologies, including the recently acquired xClibre™ AI video intelligence portfolio and provisional patent filings.

can be no assurance that our patents will issue, be enforceable, or provide meaningful commercial protection.

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acquired assets or fulfill contractual obligations.

We face significant challenges in integrating our recent and contemplated

acquisitions, asset purchases, joint ventures and strategic transactions, and there can be no assurance that we will successfully close

pending stages or future deals or realize the anticipated benefits of our business plan.

Any failure could materially and adversely affect

our business, financial condition, results of operations, liquidity and the market price of our common stock.

Since late 2025, the Company has entered into multiple material transactions,

● the January 5, 2026 QuantumSpeed asset purchase from Adrian Holdings

(with 7 million contingent shares subject to Nasdaq stockholder approval and potential subsidiary equity transfer if approval is

not obtained);

●the January 9, 2026 joint venture with BOCA JOM, LLC, GBT Tokenize

and GBT Technologies, Inc.

(subject to Nasdaq Rule 5635 approvals, CFIUS/export controls and other regulatory clearances);

● the three-stage SaverOne equity exchange dated January 26, 2026

(all three stages have closed);

● the December 2025 Blade Ranger acquisition (with additional pre-funded

warrants potentially issuable based on VWAP);

●the February 2026 51% acquisition (not closed) of C.M.

Materials Ltd.

and related $5 million loan facility (expressly conditioned on JV Condition in India and subject to Giza Side Letter restrictions,

with closing required by June 30, 2026);

● the March 2026 SolarDrone/Junko solar business acquisition;

●the March 2026 Letter of Engagement with the National Oil Company

of Liberia for Blocks LB-4 and LB-5 (requiring a $600,000 signing bonus and future payments - $4,000,000 if Production agreement will

be achieved, subject to regulatory and legislative approvals);

● the April 10, 2026 xClibre asset purchase from Dream America Marketing

Services, Ltda.

(with 3.5 million contingent shares subject to Nasdaq stockholder approval;

● Proposed Data Center Joint Venture.

On June 12, 2026, the Company

entered into a term sheet with Lucky Whale Production Limited to form a joint venture to develop a Tier IV data center in Beth Shemesh,

Israel, in which the Company would hold an effective indirect interest of approximately 51%, with consideration of approximately $40 million

in Common Stock issuable to the land owner;

●T3 Defense Share Exchange.

On May 17, 2026, the Company issued 475,492

shares of Common Stock (valued at approximately $2.658 million) to T3 Defense Inc.

DFNS) in exchange for 6,000,000 shares of

DFNS common stock;

● Adrian Holdings Assignment Agreement.

On June 22, 2026, the Company

assigned to Adrian Holdings S.R.L.

its right to receive a portion of the SaverOne shares issuable at the Stage 2 and Stage 3 closings,

reducing the outstanding principal of the Adrian Note by approximately $1.43 million.

These and any future transactions expose us to substantial risks, including:

●Integration difficulties.

Combining acquired technologies (QuantumSpeed

IP, SaverOne RF platforms, C.M.

Composite materials, Junko operations, Blade Ranger assets, xClibre assets etc.), personnel, operations

and systems across multiple jurisdictions may divert significant management attention, result in higher-than-expected costs, loss of key

personnel, operational disruptions, control weaknesses and failure to achieve expected synergies or revenue growth.

●Failure to close or unwind risks.

Many transactions remain subject

to conditions outside our control, such as Nasdaq stockholder approvals under Rule 5635, regulatory clearances (CFIUS, export controls,

Israeli/Indian/Liberian approvals), milestone achievements and the JV Condition.

Failure to satisfy these conditions could result in loss

of benefits already partially paid for (including cash advances and issued shares), mandatory equity transfers, or forfeiture of consideration

without refund.

●Dilution and valuation uncertainty.

These deals have caused and

will continue to cause substantial dilution through issuance of millions of shares, pre-funded warrants and potential additional securities.

The $1.0 billion internal reference value used in the JV was not supported by an independent valuation or fairness opinion.

●International and regulatory risks.

Operations in or targeting Israel,

India, Costa Rica and Liberia expose us to political, economic, currency, anti-corruption (FCPA), sanctions and national-security risks.

Failure to obtain or maintain required approvals could render acquired assets unusable.

Our growth strategy depends heavily on the successful execution and integration

of these and future transactions.

Failure to manage these risks effectively could have a material adverse effect on our business, financial

condition, results of operations and stock price.

We depend on key personnel, and failure to retain or attract qualified

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The Company has not been affected so far by these conflicts or US tariffs.

Substantial Sales or Issuances of Common Stock Under Our Financing

Arrangements with YA II May Cause Our Stock Price to Decline and Result in Dilution to Our Stockholders.

On July 25, 2025, we entered into the Standby Equity Purchase Agreement

(as amended, the “SEPA”) with YA II PN, LTD.

(“YA II”), pursuant to which we may sell up to $50 million of our

common stock from time to time.

In connection with the SEPA, YA II provided a $5 million Pre-Paid Advance (evidenced by Convertible Notes

issued at 94% of principal, bearing 6% interest, with conversion rights at the lower of $10.00 or 93% of the lowest daily VWAP during

the five preceding trading days, subject to a $1.00 floor price).

Following effectiveness of the registration statement registering shares

issuable under the SEPA, on February 26, 2026, we entered into a Letter Agreement with YA II pursuant to which YA II provided a $20 million

senior secured loan (the “Loan”) evidenced by a Promissory Note (the “Note”) issued at a 15% original issue discount,

resulting in net proceeds of approximately $16.975 million after fees.

The Note bears 0% interest (increasing to 18% upon default), requires

monthly amortization payments of $2.5 million of principal plus a 2% premium (commencing on the 60th day after issuance and continuing

monthly until maturity in 12 months), and may be satisfied in cash or, subject to a 30-day repayment waterfall in favor of YA II, by delivering

an Advance under the SEPA.

Concurrently, we issued YA II a five-year Warrant to purchase 1,333,333 shares of common stock at $9.00 per

The obligations under the Note are guaranteed by each of our subsidiaries.

Any sales of shares under the SEPA, issuances upon conversion of the Convertible

Notes or the Note (upon an uncured Event of Default at 90% of the lowest daily VWAP during the 10 preceding trading days, subject to a

4.99% beneficial ownership blocker and floor price), or exercises of the Warrant, or the perception that such sales or issuances may occur,

could cause the market price of our common stock to decline significantly.

These issuances will dilute the ownership interests of our

existing stockholders and may dilute earnings per share and book value per share.

We have agreed to register the shares issuable upon

exercise of the Warrant and have granted YA II demand registration rights covering shares issuable upon conversion of the Note.

The Number of Shares Issuable and the Proceeds We May Receive Under

the SEPA Are Uncertain and May Be Materially Less Than the Maximum Commitment.

We control the timing and amount of any Advances under the SEPA, subject

to limitations including the Ownership Limitation, the Exchange Cap (unless stockholder approval is obtained in accordance with Nasdaq

rules), and other conditions in the SEPA.

The purchase price for shares sold under an Advance is 97% of the lowest daily VWAP during the

applicable three-trading-day period.

Depending on market conditions and the trading price of our common stock, we may not raise the full

$50 million commitment amount even if all currently registered shares are sold, and additional registration statements would be required

to sell shares beyond those registered.

These factors, together with our obligations under the Note, could limit our access to capital

and require us to seek alternative financing on less favorable terms.

Our Obligations Under the Convertible Notes and the Promissory Note

May Require Significant Cash Payments That Could Adversely Affect Our Liquidity, Financial Condition, and Operations.

Certain events under the Convertible Notes (including a Floor Price Event,

Exchange Cap Event, or Registration Event, subject to post-Rule 144 Date provisions) trigger monthly amortization payments of $750,000

plus a 5% premium and accrued interest.

The Note requires substantial monthly amortization payments and contains customary covenants,

including restrictions on variable rate transactions, additional indebtedness without YA II’s consent, and use of proceeds.

Event of Default under the Note could result in acceleration, 18% default interest, and immediate conversion rights at a discount to market.

These payment obligations, whether satisfied in cash or through SEPA Advances, could materially strain our liquidity and financial resources,

particularly if market conditions limit our ability to utilize the SEPA or if we experience Events of Default.

Investors Who Purchase Shares at Different Times May Pay Different

Prices and Experience Different Levels of Dilution.

Pursuant to the SEPA, we have discretion over the timing, prices, and number

of shares sold to YA II.

YA II may resell such shares, the shares issuable upon conversion of the Note (upon default), or the shares issuable

upon exercise of the Warrant at different times and prices.

As a result, investors purchasing shares in this offering or in the secondary

market may experience different levels of dilution and different investment outcomes.

The resale of these shares, or the perception that

such resales could occur, could also harm the prevailing market price of our common stock.

These risk factors have been prepared on behalf of VisionWave Holdings

VWAV) in connection with its SEC reporting obligations and reflect all material facts regarding the SEPA (including the

Pre-Paid Advance and Convertible Notes) and the February 26, 2026 Loan transaction with YA II.

The disclosures are condensed for clarity

while preserving the substance required for investor protection under the Securities Act of 1933, as amended.

No additional risks have

been identified in the Bylaws or Certificate of Incorporation that require disclosure in this context.

Unregistered sale of equity securities, use of proceeds, and

issuer purchases of equity securities

During the three months ended June 30, 2026, the Company issued the following

securities that were not registered under the Securities Act of 1933, as amended (the “Securities Act”):

● On April 10, 2026, the Company issued 3,500,000 shares of common

stock to Dream America Marketing Services, Ltda.

as partial consideration for the xClibre intellectual property assets acquired pursuant

to the Asset Purchase Agreement dated April 10, 2026 (See Note 10).

● At the Stage 2 and Stage 3 closings under

the Exchange Agreement with SaverOne 2014 Ltd., the Company issued 945,251 shares of common stock to SaverOne, and issued 386,386 shares

of common stock to members of management pursuant to Schedule 1.7 of the Exchange Agreement (See Note 6).

● In May 2026, the Company issued 475,590 shares of common stock

to T3 Defense Inc.

(“DFNS”) pursuant to the Share Exchange and Swap Agreement dated May 17, 2026 (See Note 6).

● On May 7, 2026, the Company issued 55,000 shares of common stock

to a vendor pursuant to a consulting agreement for services to be rendered from May 2026 to October 2026 (See Note 21).

Each of the foregoing issuances was made in reliance upon the exemption

from registration provided by Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving any public offering.

recipient acquired the securities for investment and not with a view to, or for resale in connection with, any distribution thereof, and

appropriate restrictive legends were affixed to the securities.

No underwriters were involved in, and no general solicitation or general

advertising was used in connection with, any of the foregoing issuances, and no commissions were paid in connection therewith.

Securities Purchase Agreements

On July 15, 2025, the Company entered into Securities Purchase Agreements

(the “July 2025 SPAs”) with two unaffiliated accredited investors (“July 2025 Lenders”), pursuant to which the

Company issued promissory notes (the “July 2025 Notes”) to the July 2025 Lenders in the aggregate principal amount of $354,200,

which includes an aggregate original issue discount of $46,200, for a purchase price of $308,000.

The Company incurred an additional $8,000

in fees related to this transaction which is capitalized as part of the debt issuance cost and amortized over the term of the July 2025

The July 2025 Notes bear interest at a one-time charge of 12% applied on the issuance date, mature on May 15, 2026, and is repayable

in five monthly payments commencing January 15, 2026.

The July 2025 Notes are convertible into shares of the Company’s common stock,

par value $0.01 per share (the “Common Stock”), solely upon an event of default, at a conversion price equal to 75% of the

lowest trading price during the ten trading days prior to conversion.

The Company also entered into an irrevocable transfer agent instructions

letter with its transfer agent in connection with the July 2025 Notes.

The proceeds from the issuances of the July 2025 Notes were used

for general working capital purposes.

The July 2025 Lenders have piggyback registration rights and have agreed not to engage in short

sales of the Company’s common stock during the term of the July 2025 Notes.

On July 15, 2025, the Company entered into

Securities Purchase Agreements (the “July 2025 SPAs”) with two unaffiliated accredited investors (“July 2025

Lenders”), pursuant to which the Company issued promissory notes (the “July 2025 Notes”) to the July 2025 Lenders

in the aggregate principal amount of $354,200, which includes an aggregate original issue discount of $46,200, for a purchase price

The Company incurred an additional $8,000 in fees related to this transaction which is capitalized as part of the debt

issuance cost and amortized over the term of the July 2025 Notes.

The July 2025 Notes bear interest at a one-time charge of 12%

applied on the issuance date, mature on May 15, 2026, and is repayable in five monthly payments commencing January 15, 2026.

July 2025 Notes are convertible into shares of the Company’s common stock, par value $0.01 per share (the “Common

Stock”), solely upon an event of default, at a conversion price equal to 75% of the lowest trading price during the ten

trading days prior to conversion.

The Company also entered into an irrevocable transfer agent instructions letter with its transfer

agent in connection with the July 2025 Notes.

The proceeds from the issuances of the July 2025 Notes were used for general working

capital purposes.

The July 2025 Lenders have piggyback registration rights and have agreed not to engage in short sales of the

Company’s common stock during the term of the July 2025 Notes.

The July 2025 Notes include customary representations,

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The Company may prepay the July 2025 Notes within the first 180 days.

The loan pursuant

to the July 2025 Notes closed and funded on July 17, 2025.

The Company repaid $297,528 on the July 2025

For the three and six months ended March 31, 2026 and 2025 total amortized debt issuance cost of $16,293 and $0 was included

in interest expense on the accompanying consolidated statements of operations, respectively, and $32,586 and $0 for the six months

ended March 31, 2026 and 2025, respectively.

For the three and six months ended March 31, 2026 and 2025, total interest expense

$12,751 and $0 was included in interest expense on the accompanying consolidated statements of operations, respectively, and $25,502

and $0 for the six months ended March 31, 2026 and 2025, respectively.

At March 31, 2026 and September 30, 2025, the balance of the

July Notes of $43,795 and $0, respectively, recorded in convertible notes payable on the accompanying balance sheets, includes

$12,877 and $0, respectively, of unamortized debt issuance cost.

pursuant to the July 2025 Notes closed and funded on July 17, 2025.

The Company repaid $396,704 on the July 2025 Notes (inclusive of $42,504 of interest).

For the three months ended June 30, 2026 and 2025 total amortized debt issuance cost of $12,877 and

$0 was included in interest expense on the accompanying consolidated statements of operations, respectively, and $45,463 and $0 for the

nine months ended June 30, 2026 and 2025, respectively.

For the three months ended June 30, 2026 and 2025, total interest expense $6,376

and $0 was included in interest expense on the accompanying consolidated statements of operations, respectively, and $31,878 and $0 for

the nine months ended June 30, 2026 and 2025, respectively.

At June 30, 2026 and September 30, 2025, the balance of the July Notes of

$0 and 308,737, recorded in convertible notes payable on the accompanying balance sheets, includes $0 and $45,463, respectively, of unamortized

debt issuance cost.

On October 6, 2025, the Company entered into a Securities Purchase Agreement

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may prepay the October 2025 Notes within the first 180 days.

For the three and six months ended March 31, 2026 and 2025, total amortized

debt issuance cost of $14,012 and $0, and $28,024 and $0 was included in interest expense on the accompanying consolidated statements

of operations, respectively.

For the three and six months ended March 31, 2026 and 2025, total interest expense $10,681 and $0, and $24,693

For the three and nine months ended June 30, 2026 and 2025, total amortized

debt issuance cost of $14,012 and $0, and $42,035 and$0 was included in interest expense on the accompanying consolidated statements of

operations, respectively.

For the three and nine months ended June 30, 2026 and 2025, total interest expense $10,681 and $0, and $35,374

and $0 was included in interest expense on the accompanying consolidated statements of operations, respectively.

At March 31, 2026 and

At June 30, 2026 and

September 30, 2025, the balance of the October Notes of $1,269 and $0, respectively, recorded in convertible notes payable on the accompanying

balance sheets, includes $4,665 and $0, respectively, of unamortized debt issuance cost.

On November 12, 2025, the Company entered into a Securities Purchase Agreement

(the “November 2025 SPA”) with an unaffiliated accredited investor, pursuant to which the Company issued a promissory note

(the “November 2025 Note”) to the November 2025 investor in the aggregate principal amount of $354,200, which includes an

aggregate original issue discount of $46,200, for a purchase price of $308,000.

The Company incurred an additional $8,000 in fees related

to this transaction which is capitalized as part of the debt issuance cost and amortized over the term of the November 2025 Note.

November 2025 Note bear interest at a one-time charge of 12% applied on the issuance date, mature on September 15, 2026, and is repayable

in five monthly payments commencing May 15, 2026.

The November 2025 Note is convertible into shares of the Company’s common stock,

par value $0.01 per share (the “Common Stock”), solely upon an event of default, at a conversion price equal to 75% of the

lowest trading price during the ten trading days prior to conversion.

The Company also entered into an irrevocable transfer agent instructions

letter with its transfer agent in connection with the November 2025 Notes.

The proceeds from the issuances of the November 2025 Notes

were used for general working capital purposes.

The investor has piggyback registration rights and have agreed not to engage in short

sales of the Company’s common stock during the term of the November 2025 Note.

The November 2025 Note include customary representations,

warranties, covenants, and default provisions.

On November 12, 2025, the Company entered into a

Securities Purchase Agreement (the “November 2025 SPA”) with an unaffiliated accredited investor, pursuant to which the

Company issued a promissory note (the “November 2025 Note”) to the November 2025 investor in the aggregate principal

amount of $354,200, which includes an aggregate original issue discount of $46,200, for a purchase price of $308,000.

incurred an additional $8,000 in fees related to this transaction which is capitalized as part of the debt issuance cost and

amortized over the term of the November 2025 Note.

The November 2025 Note bear interest at a one-time charge of 12% applied on the

issuance date, mature on September 15, 2026, and is repayable in five monthly payments commencing May 15, 2026.

The November 2025

Note is convertible into shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”),

solely upon an event of default, at a conversion price equal to 75% of the lowest trading price during the ten trading days prior to

The Company also entered into an irrevocable transfer agent instructions letter with its transfer agent in connection

with the November 2025 Notes.

The proceeds from the issuances of the November 2025 Notes were used for general working capital

The investor has piggyback registration rights and have agreed not to engage in short sales of the Company’s common

stock during the term of the November 2025 Note.

The November 2025 Note include customary representations, warranties, covenants,

and default provisions.

The Company may prepay the November 2025 Note within the first 180 days.

For the three and six months ended March 31, 2026 and 2025, total amortized

For the three and nine months ended June 30, 2026 and 2025, total amortized

debt issuance cost of $17,533 and $0, and $41,707 and $0 was included in interest expense on the accompanying consolidated statements

of operations, respectively.

For the three and six months ended March 31, 2026 and 2025, total interest expense $12,751 and $0, and $12,751

For the three and nine months ended June 30, 2026 and 2025, total interest expense $12,751 and $0, and $31,878

and $0 was included in interest expense on the accompanying consolidated statements of operations, respectively.

At March 31, 2026 and

At June 30, 2026 and

September 30, 2025, the balance of the November Notes of $93,767 and $0, respectively, recorded in convertible notes payable on the accompanying

balance sheets, includes $12,493 and $0, respectively of unamortized debt issuance cost.

On January 9, 2026, the Company issued promissory notes (the “January

2026 Notes”) to two investors in the aggregate principal amount of $354,200, which includes an aggregate original issue discount

of $46,200, for a purchase price of $293,000.

The Company incurred an additional $8,000 in fees related to this transaction which is capitalized

as part of the debt issuance cost and amortized over the term of the January 2026 Notes.

The January 2026 Notes bear interest at a one-time

charge of 12% applied on the issuance date, mature on November 15, 2026, and is repayable in five monthly payments commencing July 15,

The January 2026 Notes are convertible into shares of the Company’s common stock, par value $0.01 per share, solely upon an

event of default, at a conversion price equal to 75% of the lowest trading price during the ten trading days prior to conversion.

Company also entered into an irrevocable transfer agent instructions letter with its transfer agent in connection with the January 2026

The proceeds from the issuances of the January 2026 Notes were used for general working capital purposes.

The investors have piggyback

registration rights and have agreed not to engage in short sales of the Company’s common stock during the term of the January 2026

The January 2026 Notes include customary representations, warranties, covenants, and default provisions.

The Company may prepay

the January 2026 Notes within the first 180 days.

The Company evaluated the embedded conversion features and other terms

of the January 2026 Notes under applicable accounting guidance, including ASC 815, Derivatives and Hedging.

The conversion feature is

exercisable solely upon an event of default and accordingly, the Company concluded that bifurcation of the embedded conversion feature

was not required as of issuance.

The January 2026 Notes were therefore initially recorded at their principal amount, net of unamortized

original issue discount and debt issuance costs.

As the notes were not elected under the fair value option of ASC 825, the Company accounts

for the January 2026 Notes at amortized cost and no recurring fair value measurement is required.

For the nine months ended June 30, 2026 and 2025, total amortized debt

issuance cost of $31,151 and $0, respectively, was included in interest expense on the accompanying unaudited condensed consolidated statements

of operations.

For the three and nine months ended June 30, 2026 and 2025, total interest expense $12,751 and $0, respectively, and $23,377

and $0, respectively, was included in interest expense on the accompanying unaudited condensed consolidated statements of operations.

At June 30, 2026 and September 30, 2025, the balance of the January Notes of $331,150 and $0, respectively, recorded in convertible notes

payable on the accompanying balance sheets, includes $23,050 and $0, respectively of unamortized debt issuance cost.

Standby Equity Purchase Agreement - Pre-Paid Advance

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Upon the satisfaction of the conditions to the Investor’s purchase

obligation set forth in the SEPA, including having a registration statement registering the resale of the shares of common stock issuable

obligation set forth in the SEPA, including having a registration statement covering the resale of the shares of common stock issuable

under the SEPA declared effective by the SEC, the Company will have the right, but not the obligation, from time to time at its discretion

12 unchanged sentences

trading day on the Nasdaq Stock Market during regular trading hours as reported by Bloomberg L.P.

The January Amendment amended the SEPA to, among other things:

(i) remove the Investor’s ability to deliver investor notices, which

previously allowed the Investor to require the Company to issue and sell shares of Common Stock to the Investor in offset of amounts outstanding

under the Convertible Notes;

(ii) modify the conditions under which an Amortization Event (as defined

in the Convertible Notes) may occur, providing that no Amortization Event shall be deemed to have occurred due to a Registration Event

(as defined in the Convertible Notes) prior to the Rule 144 Date, and after the Rule 144 Date, no such Amortization Event shall occur

so long as the Company remains current on its filings with the SEC and the Investor is able to rely on Rule 144 under the Securities Act

of 1933, as amended, to resell shares of Common Stock issuable under the Promissory Notes;

(iii) cancel the Investor’s obligation to fund an additional $2,000,000

in principal amount to the Company as set forth in a letter agreement dated September 11, 2025, between the Company and the Investor (provided

that subsequent fundings on the same or different terms may be mutually agreed by the parties in the future and documented in writing);

(iv) require the Company to use its best efforts to promptly respond to

comments from the staff of the SEC regarding the Company’s initial Registration Statement on Form S-1 (File No.

333-289952) and

seek effectiveness of such Registration Statement as soon as reasonably practicable.

In connection with the SEPA, and subject to the condition set forth therein,

the Investor has agreed to advance to the Company the Pre-Paid Advance.

The first Pre-Paid Advance was disbursed on July 25, 2025 with

respect to $3.0 million and the balance of $2.0 million was disbursed on September 11, 2025.

The purchase price for the Pre-Paid Advance

is 94% of the principal amount of the Pre-Paid Advance.

Interest shall accrue on the outstanding balance of any Pre-Paid Advance at an

annual rate equal to 6.0%, subject to an increase to 18% upon an event of default as described in the Convertible Notes.

date will be 12-months after the closing of each tranche of the Pre-Paid Advance.

Investor may convert the Convertible Notes into shares

of the Company’s common stock at a conversion price equal to the lower of $10.00 or 93% of the lowest daily VWAP during the five

consecutive trading days immediately preceding the conversion (the “Conversion Price”);

provided, that in no event may the

Conversion Price be lower than $1.00 (the “Floor Price”).

In addition, upon the occurrence and during the continuation of

an event of default, the Convertible Notes may be declared immediately due and payable, in which case the Company shall pay to the Investor

the principal and interest due thereunder.

In no event shall Investor be allowed to effect a conversion if such conversion, along with

all other shares of common stock then beneficially owned by the Investor and its affiliates, would exceed 4.99% of the outstanding shares

of the then common stock of the Company.

If at any time on or after the issuance of the Convertible Notes (i) the Floor Price Event, (ii)

the Exchange Cap Event or (iii) a Registration Event occurs, provided, however, that no Registration Event shall be deemed to have occurred

prior to the Rule 144 Date, and after the Rule 144 Date, no Registration Event shall be deemed to have occurred so long as the Company

remains current on its filings with the SEC and the Investor is able to rely on Rule 144 under the Securities Act of 1933, as amended,

to resell shares of common stock issuable under the Convertible Notes, then the Company shall make monthly payments to Investor beginning

on the seventh trading day after the Amortization Event and continuing monthly in the amount of $750,000 plus a 5.0% premium and all accrued

and unpaid interest.

The Exchange Cap Event will not apply in the event the Company has obtained the approval from its stockholders in

accordance with the rules of Nasdaq Stock Market for the issuance of shares of common stock pursuant to the transactions contemplated

in the Convertible Note and the SEPA in excess of the Exchange Cap.

The Company will control the timing and amount of any sales of shares of

common stock to the Investor.

Actual sales of shares of common stock to Investor as an Advance under the SEPA will depend on a variety

of factors to be determined by the Company from time to time, which may include, among other things, market conditions, the trading price

of the Company’s common stock and determinations by the Company as to the appropriate sources of funding for our business and operations.

The SEPA will automatically terminate on the earliest to occur of (i) the

24-month anniversary of the date of the SEPA or (ii) the date on which Investor shall have made payment of Advances pursuant to the SEPA

for shares of common stock equal to $50,000,000.

We have the right to terminate the SEPA at no cost or penalty upon five (5) trading days’

prior written notice to Investor, provided that there are no outstanding Advance Notices for which shares of common stock need to be issued

and the Company has paid all amounts owed to Investor pursuant to the Convertible Notes and the SEPA.

The Company and the Investor may

also agree to terminate the SEPA by mutual written consent.

Neither the Company nor the Investor may assign or transfer our respective

rights and obligations under the SEPA, and no provision of the SEPA may be modified or waived by us or Investor other than by an instrument

in writing signed by both parties.

As consideration for the Investor’s commitment to purchase the shares

of common stock pursuant the SEPA, the Company paid the Investor, (i) a structuring fee in the amount of $35,000 and (ii) 200,000 shares

of common stock as an equity fee.

Further, the Company is required to pay the Investor a commitment fee of $500,000 of which $250,000

shall be due and payable on the earlier of the effective date of the initial registration statement, or 60 days following the date of

the SEPA, and the remaining $250,000 shall be due and payable on the date that is 90 days following the due date of the initial $250,000

installment, in each case to be paid by the issuance of such number of common shares that is equal to the applicable portion of the commitment

fee divided by the average of the daily VWAPs of the common shares during the three trading days immediately prior to the applicable due

Executives’ Employment Agreements

On August 6, 2025, the Company entered into employment agreements (each,

an “Employment Agreement”) with Douglas Davis, as Executive Chairman, Noam Kenig, our former Chief Executive Officer, and

Danny Rittman, as Chief Technology Officer (collectively, the “Executives”).

Each Employment Agreement has an initial term

of three (3) years, commencing on August 6, 2025, and is subject to automatic one-year renewals thereafter unless terminated by either

party with at least thirty (30) days’ prior written notice.

On December 29, 2025, Mr.

Kenig resigned as Chief Executive Officer

and as a member of the Board of Directors (the “Board”) of the Company, effective immediately for personal reasons.

resignation was not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies

or practices.

As a result of Mr.

Kenig’s resignation Mr.

Kenig’s Employment Agreement was terminated.

Davis was appointed

as Interim Chief Executive Officer.

Under the Employment Agreements:

Davis will receive an initial base salary of $150,000 per year, increasing to $300,000 upon the Company achieving $3,000,000 in

revenue during any ninety (90)-day period, and further increasing to $600,000 upon achieving $6,000,000 in revenue during any ninety (90)-day

period, with subsequent adjustments to fair market rates.

Rittman will receive an initial base salary of $120,000 per year, increasing to $240,000 upon the Company achieving $3,000,000

in revenue during any ninety (90)-day period, and further increasing to $360,000 upon achieving $6,000,000 in revenue during any ninety

(90)-day period, with subsequent adjustments to fair market rates.

Davis is eligible for an annual performance bonus targeted at 2% of the Company’s net income as reflected in its financial

statements filed with the Securities and Exchange Commission (the “SEC”).

● Each Executive is eligible for four (4) weeks of paid vacation per year, participation in the Company’s benefit plans (including

medical, dental, vision, disability, life insurance, and 401(k) plans), and reimbursement of reasonable business expenses.

● In the event of termination without cause or resignation for good reason, each Executive is entitled to severance equal to the greater

of $600,000 or two (2) times their then-current base salary, payable within six (6) months of termination, subject to execution of a general

● Upon a change in control followed by termination within three (3) months, all outstanding equity awards vest immediately, and severance

becomes payable.

● Each Employment Agreement includes standard provisions for termination for cause, death, disability, or without good reason, with

limited payments in such cases.

Additionally, as a condition to entering into the Employment Agreements,

each Executive entered into a Proprietary & Confidential Information, Inventions Assignment, Non-Solicitation and Non-Competition

Agreement and a Mutual Agreement to Arbitrate with the Company.

Additionally, pursuant to the Employment Agreements and under the Plan

(subject to shareholder approval thereof), the Company granted no statutory stock options (each, an “Option”) to the Executives

Davis was each granted Options to purchase 2,000,000 shares of Common Stock.

Rittman was granted an Option to purchase 500,000 shares of Common Stock.

(subject to shareholder approval thereof), the Company granted nonstatutory stock options (each, an “Option”) to the Executives

Davis was granted Options to purchase 2,000,000 shares of Common

Rittman was granted an Option to purchase 500,000 shares of

Common Stock.

Each Option has an exercise price of $7.20 per share (to be determined

18 unchanged sentences

On January 2, 2026, in connection with the Klinger Agreement, the Company

Klinger a no statutory stock option (the “Option”) to purchase 500,000 shares of the Company’s common stock

Klinger a nonstatutory stock option (the “Option”) to purchase 500,000 shares of the Company’s common stock

at an exercise price equal to the closing price of the Company’s common stock on December 31, 2025, pursuant to the Company’s

26 unchanged sentences

If Shareholder

Approval is not obtained within nine (9) months after the Closing Date, then (i)

the Company shall promptly cause sixty percent (60%) of the equity interests in QuantumSpeed Inc., a wholly-owned subsidiary of the Company

to which the acquired intellectual property assets will have been assigned, to be transferred to Adrian (or its designee) free and clear

of all encumbrances (other than restrictions under applicable securities laws), (ii) Adrian’s security interest in such equity interests

shall be automatically released, and (iii) Adrian shall retain full ownership of the 3,000,000 shares of common stock previously issued

at Closing and the Adrian Note, without any obligation to return, cancel, or forfeit the same.

For the avoidance of doubt, in such event,

no alternative consideration will be provided in lieu of the Contingent Shares.

Approval is not obtained within nine (9) months after the Closing Date,

then (i) the Company shall promptly cause sixty percent (60%) of the equity interests in QuantumSpeed Inc., a wholly-owned subsidiary

of the Company to which the acquired intellectual property assets will have been assigned, to be transferred to Adrian (or its designee)

free and clear of all encumbrances (other than restrictions under applicable securities laws), (ii) Adrian’s security interest in

such equity interests shall be automatically released, and (iii) Adrian shall retain full ownership of the 3,000,000 shares of common

stock previously issued at Closing and the Adrian Note, without any obligation to return, cancel, or forfeit the same.

For the avoidance

of doubt, in such event, no alternative consideration will be provided in lieu of the Contingent Shares.

All such issuances were exempt from the registration requirements of the

10 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-Q

Item 1A. Risk Factors