Item 4. Controls and Procedures
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information
required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified
in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal
executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding
required disclosure.
As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief
Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures as of March 31, 2026. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective.
Limitations on the Effectiveness of Controls
Management of the Company, including its Chief Executive Officer and its
Chief Financial Officer, does not expect that the Company’s disclosure controls and procedures or its internal control over financial
reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only
reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect
the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Furthermore, because
of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to
error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. These inherent limitations
include the realities that judgments in decision-making
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can be faulty and that breakdowns can occur because of simple error or mistake.
Controls can also be circumvented by the individual acts of some persons or by the collusion of two or more persons. The design of any
system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any
design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness
of controls to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration
in the degree of compliance with policies or procedures.
Changes in Internal Control over Financial Reporting
During the fiscal quarter ended March 31, 2026, there has been no change
in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting. Our process for evaluating controls and procedures is continuous and encompasses constant improvement
of the design and effectiveness of established controls and procedures.
PART II - OTHER INFORMATION
Item 1. Legal Proceeding
Better Works LLC
On September 5, 2025, Better Works LLC filed an action in the Supreme Court
of the State of New York, New York County, captioned Better Works LLC v. VisionWave Holdings, Inc. and Douglas E. Davis, Index No. 655268/2025.
The Summons with Notice asserts claims for breach of contract and seeks (i) a declaratory judgment regarding affiliate status and the
applicability or expiration of certain lock-up provisions relating to private-placement units exchanged in connection with the Company’s
business combination, (ii) injunctive relief permitting the plaintiff to sell such units, and (iii) monetary damages in an amount to be
determined. Service of process addressed to VisionWave’s Delaware registered agent was recorded as received on September 9, 2025.
On September 30, 2025, counsel for the Company and Mr. Davis served a demand for the complaint pursuant to CPLR 3012(b), expressly reserving
all defenses, including objections to service and personal jurisdiction. As of the date of this Report, no complaint has been served on
the defendants. The Company believes the asserted claims are without merit and intends to defend the matter vigorously.
Maxim Group LLC
On April 17, 2026, Maxim Group LLC filed a complaint against VisionWave
Holdings, Inc. in the Supreme Court of the State of New York, County of New York, alleging breach of contract and seeking damages related
to certain financing transactions completed by the Company in July 2025 and February 2026 pursuant to an engagement agreement dated April
9, 2025. Maxim alleges entitlement to placement fees and declaratory relief in connection with financings involving YA II PN, Ltd., a
fund managed by Yorkville Advisors Global, LP. The action includes claims for alleged unpaid fees of approximately $1.33 million, declaratory
relief concerning alleged tail rights and rights of first refusal, attorneys’ fees, interest, and other relief. The action was filed
under an unassigned New York County index number as of the filing date. The Company believes the asserted claims are without merit and
intends to defend the matter vigorously.
Also on April 17, 2026, the Company filed a separate action against Maxim
Group LLC in the Supreme Court of the State of New York, County of New York, asserting claims for breach of contract, declaratory judgment,
and unjust enrichment. The Company alleges, among other things, that Maxim did not identify or place the relevant financing transactions,
was not entitled to compensation under the parties’ agreement, and wrongfully invoiced the Company for fees related to the July
2025 and February 2026 financings. The Company seeks, among other relief, repayment of approximately $210,000 previously paid to Maxim,
rescission of an additional
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invoice of approximately $1.4 million, declaratory relief regarding the parties’ rights under the agreement,
damages, restitution, interest, and costs. The Company believes Maxim’s claims are without merit and intends to vigorously defend
against them while aggressively pursuing its own claims. This action was also filed under an unassigned New York County index number as
of the filing date. At this early stage of the proceedings, the Company is unable to reasonably estimate the ultimate outcome or potential
loss, if any, associated with these matters.
Except as described above, the Company is not a party to any other pending
legal proceedings that management believes, individually or in the aggregate, would have a material adverse effect on the Company’s
business, financial condition, or results of operations.
Pre-litigation disputes with
former employees
The Company is involved in certain
pre-litigation disputes with former employees, former executives, and other individuals associated with the Company arising primarily
from organizational changes implemented following the departure of the Company’s former Chief Executive Officer in late December
2025. Such matters include allegations relating to severance, unpaid compensation, notice-period pay, equity awards, and related contractual
and employment matters. Certain individuals have asserted claims through counsel, and the parties have engaged in correspondence and preliminary
settlement discussions.
The Company disputes the allegations
and claims asserted in these matters and intends to vigorously defend its positions. As of the date of this Quarterly Report, no formal
lawsuits, arbitrations, or other legal proceedings have been filed with respect to these matters. Due to the early stage of these disputes,
the absence of formal proceedings, and the inherent uncertainty surrounding such matters, the Company is unable to reasonably estimate
the possible loss or range of loss, if any, that may result from these matters. Accordingly, no liability has been accrued in the accompanying
condensed consolidated financial statements.
Potential Listing In Germany
During May 2026, the Company commenced the process of seeking registration
of its common stock for trading on the Frankfurt Stock Exchange in Germany and, in connection therewith, obtained a Legal Entity Identifier
(“LEI”) from WM Datenservice for international securities settlement and regulatory purposes.
In connection with the contemplated Frankfurt listing and expansion of
investor awareness activities in Europe, particularly within Germany, Switzerland, and Austria, the Company entered into (i) an Investor
Awareness Advisory Agreement and (ii) an Investor Awareness Services Agreement with CapitaLink Ltd, an Israeli-based investor awareness
and communications advisory firm.
Under the advisory agreement, the Company agreed to issue 55,000 restricted
shares of common stock pursuant to the Company’s 2024 Omnibus Equity Incentive Plan in consideration for advisory and investor awareness
services related to the European market and Frankfurt listing process. The shares are subject to a 180-day lock-up and Rule 144 resale
restrictions.
Under the services agreement, CapitaLink agreed to assist the Company with
investor awareness outreach, European media distribution, informational campaign management, and administrative support relating to the
Frankfurt Stock Exchange listing process, including support associated with exchange-related requirements and fees.
The Company’s Board of Directors approved the engagements and determined
that the agreements were intended solely for investor awareness, educational outreach, and public communications purposes and did not
constitute broker-dealer, placement agent, or investment advisory activities.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.