VisionWave Holdings, Inc. 10-Q

Item 1A. Risk Factors 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. These 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, and substantial doubt about our ability to continue as a going concern. We are an early-stage company with limited operating history. We have incurred significant net losses since inception, and we expect to continue to incur substantial operating losses as we advance our technology development, integration initiatives (including Solar Drone and the SaverOne platform), and commercialization efforts. As of March 31, 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. 79 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 funding. 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 operations. 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 is not met. 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 senior secured loan from YA II PN Ltd. and associated Warrant expose us to repayment obligations, restrictive covenants, and dilution risks. In February 2026, we entered into a $20 million senior loan (with 15% OID) evidenced by a Promissory Note and issued a Warrant to purchase 1,333,333 shares of Common Stock. The Note carries default interest at 18% and is secured by a global guaranty. Events of default or failure to satisfy payment obligations could accelerate repayment and materially impair our liquidity. Exercise of the Warrant and any future equity issuances will cause dilution to existing stockholders. We face significant dilution risk from outstanding and potential 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 and management pools. The S-1 registers resale of approximately 6,148,943 shares (including Warrant Shares). Additional issuances pursuant to these instruments, the 2024 and 2025 Incentive Plans, or future financings will dilute existing stockholders and may depress our stock price. Commercialization of our technologies is subject to technical, regulatory, and market acceptance risks. Our products are in various stages of development, prototype testing, and early commercialization (including Solar Drone solar-panel cleaning and defense applications). There can be no assurance that we will successfully complete development, obtain necessary certifications, secure large-scale purchase orders, or achieve market acceptance. Delays or failure in any of these areas would materially and adversely affect our revenue, results of operations, and financial condition. 80 Our intellectual property may not provide adequate protection, and we may infringe third-party rights. 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. There can be no assurance that our patents will issue, be enforceable, or provide meaningful commercial protection. We may face claims of infringement or challenges to our IP rights, any of which could result in costly litigation, licensing obligations, or loss of competitive advantage. We are subject to stringent regulatory, export-control, and Nasdaq continued-listing requirements. Our defense and homeland-security technologies are subject to U.S. and Israeli export controls, ITAR/EAR requirements, and other governmental approvals. Failure to obtain or maintain necessary clearances could delay or prevent commercialization. In addition, issuances of Common Stock under our agreements require Nasdaq shareholder approval under Listing Rule 5635 in certain circumstances. Any failure to comply with listing standards could result in delisting, which would materially and adversely affect the liquidity and market price of our Common Stock. Our international operations, particularly in Israel, expose us to geopolitical, currency, and regulatory risks. A significant portion of our technology development, manufacturing, and strategic partnerships (SaverOne, BladeRanger, Solar Drone) is located in Israel. Geopolitical instability, armed conflict, currency fluctuations (NIS/USD), and changes in Israeli or U.S. regulatory policy could disrupt operations, increase costs, or impair our ability to integrate acquired assets or fulfill contractual obligations. We depend on key personnel, and failure to retain or attract qualified management and technical talent could impair our business. Our success depends heavily on our executive officers (including Douglas Davis, our Executive Chairman and CEO) and key technical personnel. The loss of any of these individuals, or our inability to attract and retain other qualified personnel, could delay technology development, integration efforts, and commercialization, materially and adversely affecting our business, financial condition, and results of operations. These risk factors are not exhaustive. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations and the value of our securities. Investors are urged to review the full discussion of risk factors in our S-1 and subsequent SEC filings. All forward-looking statements in this Quarterly Report are qualified in their entirety by reference to these risk factors. Bannix’ failure to redeem all remaining public offering shares may expose the Company to legal, regulatory, and reputational risks Bannix was required to redeem all remaining public offering shares no later than June 27, 2025. Bannix Acquisition Corp. did not redeem the remaining public offering shares as required, and the Business Combination was subsequently consummated on July 14, 2025. The failure to redeem was inconsistent with disclosures in the Bannix IPO prospectus and the Business Combination proxy statement. This failure may expose the Company to legal, regulatory, and reputational risks. Any of the above mentioned factors, or any other negative impact on the global economy, capital markets or other geopolitical conditions resulting from the Russian invasion of Ukraine, the Israel-Hamas conflict, the Iran conflict and subsequent sanctions or related actions, could adversely affect the Company’s operations in the future or with future capital raising activities. The Company has not been affected so far by these conflicts or US tariffs. 81 Item 2. Unregistered sale of equity securities, use of proceeds, and issuer purchases of equity securities 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 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. 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. The July 2025 Notes include customary representations, warranties, covenants, and default provisions. 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 Notes. 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. On October 6, 2025, the Company entered into a Securities Purchase Agreement (the “October 2025 SPA”) with an unaffiliated accredited investor, pursuant to which the Company issued a promissory note (the “October 2025 Note”) to the investor in the aggregate principal amount of $296,700, which includes an aggregate original issue discount of $38,700, for a purchase price of $258,000. 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 October 2025 Note. The October 2025 Note bear interest at a one-time charge of 12% applied on the issuance date, mature on July 30, 2026, and is repayable in five monthly payments commencing March 30, 2026. The October 2025 Note is 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. The Company also entered into an irrevocable transfer agent instructions letter with its transfer agent in connection with the October 2025 Note. The proceeds from the issuances of the October 2025 Note were used for general working capital purposes. The October 2025 investor have piggyback registration rights and have agreed not to engage in short sales of the Company’s common stock during the term of the October 2025 Note. The October 2025 Note include customary representations, warranties, covenants, and default provisions. The Company 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 and $0 was included in interest expense on the accompanying consolidated statements of operations, respectively. At March 31, 2026 and September 30, 2025, the balance of the October Notes of $111,871 and $0, respectively, recorded in convertible notes payable on the accompanying balance sheets, includes $18,677 and $0, respectively, of unamortized debt issuance cost. 82 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. 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 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. 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 debt issuance cost of $17,533 and $0, and $24,174 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 and $0 was included in interest expense on the accompanying consolidated statements of operations, respectively. At March 31, 2026 and September 30, 2025, the balance of the November Notes of $324,174 and $0, respectively, recorded in convertible notes payable on the accompanying balance sheets, includes $30,026 and $0, respectively of unamortized debt issuance cost. Standby Equity Purchase Agreement - Pre-Paid Advance On July 25, 2025, we entered into the SEPA with the Investor. Under the SEPA, the Company has the right to sell to the Investor up to $50 million of its shares of common stock, subject to certain limitations and conditions set forth in the SEPA, from time to time during the term of the SEPA. On January 19, 2026, we entered into Amendment No. 1 to the SEPA. 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 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 until the SEPA is terminated to direct Investor to purchase a specified number of shares of common stock (“Advance”) by delivering written notice to the Investor (“Advance Notice”). While there is no mandatory minimum amount for any Advance, it may not exceed an amount equal to 100% of the average of the daily traded amount during the five consecutive trading days immediately preceding an Advance Notice. The shares of common stock purchased pursuant to an Advance delivered by the Company will be purchased at a price equal to 97% of the lowest daily VWAP of the shares of common stock during the three consecutive trading days commencing on the date of the delivery of the Advance Notice, other than the daily VWAP on a day in which the daily VWAP is less than a minimum acceptable price as stated by the Company in the Advance Notice or there is no VWAP on the subject trading day. The Company may establish a minimum acceptable price in each Advance Notice below which the Company will not be obligated to make any sales to THE INVESTOR. “VWAP” is defined as the daily volume weighted average price of the shares of common stock for such trading day on the Nasdaq Stock Market during regular trading hours as reported by Bloomberg L.P. 83 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); and (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. The maturity 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. 84 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 date. 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. Mr. Kenig’s 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. Mr. Davis was appointed as Interim Chief Executive Officer. Under the Employment Agreements: ● Mr. 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. ● Mr. 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. ● Mr. 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 release. ● 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. 85 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 as follows: ● Mr. Davis was each granted Options to purchase 2,000,000 shares of Common Stock. ● Mr. 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 as the fair market value on the grant date) and vests in twelve (12) equal quarterly instalments over four (4) years, commencing on the date of shareholder approval of the Plan (the “Approval Date”). The Options are exercisable for five (5) years from the grant date and allow for cashless exercise. The grants are contingent upon shareholder approval of the Plan; if not approved, the Options will be null and void. On January 2, 2026, the Company entered into an employment agreement (the “Klinger Agreement”) with Erik Klinger, pursuant to which Mr. Klinger will continue to serve as the Company’s Chief Financial Officer, effective as of January 2, 2026. The Klinger Agreement provides for an initial three-year term, automatically renewing for successive one-year periods unless either party provides timely notice of non-renewal. Mr. Klinger’s annual base salary is $120,000, payable in accordance with the Company’s standard payroll practices. Mr. Klinger is eligible to participate in the Company’s employee benefit plans available to similarly situated executives, including medical, dental, and vision insurance, and is entitled to four weeks of paid vacation per year (pro-rated for partial years). On January 2, 2026, in connection with the Klinger Agreement, the Company granted Mr. Klinger a no statutory 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 proposed 2025 Omnibus Equity Incentive Plan (the “Plan”). The Option is subject to twelve equal quarterly vesting instalments over four years, commencing on the date of shareholder approval of the Plan (the “Approval Date”), and is otherwise subject to the terms and conditions of the Plan and the Employee Nonstatutory Stock Option Agreement entered into between the Company and Mr. Klinger. The grant of the Option is expressly contingent upon shareholder approval of the Plan; if the Plan is not approved by shareholders, the Option will be null and void. QuantumSpeed IP Asset Acquisition On January 5, 2026, the Company entered into an Asset Purchase Agreement (the “Adrian Asset Purchase Agreement”) with Adrian Holdings S.R.L., a Costa Rican company (“Adrian”). Pursuant to the Adrian Asset Purchase Agreement, the Company agreed to acquire from Adrian, and Adrian agreed to sell, transfer, convey and assign to the Company, all right, title and interest in and to certain intellectual property assets related to the technology known as QuantumSpeed (the “Assigned IP”), as more fully described in the Adrian Asset Purchase Agreement. In consideration for the Assigned IP, the Company agreed to pay Adrian aggregate consideration consisting of (i) 10,000,000 shares of the Company’s Common Stock (the “Purchase Shares”), and (ii) a promissory note in the principal amount of $10,000,000 (the “Adrian Note”). At closing which occurred on January 5, 2026, the Company issued and delivered to Adrian 3,000,000 Purchase Shares (the “Closing Shares”) and executed and delivered the Adrian Note. The issuance of the remaining 7,000,000 shares of the Company’s Common Stock (the “Contingent Shares”) is subject to approval by the Company’s shareholders as required under applicable Nasdaq listing rules. The Company has agreed to use its commercially reasonable efforts to obtain such shareholder approval (the “Shareholder Approval”) as soon as practicable following the Closing, including by including a proposal for such approval in its next annual or special meeting of shareholders (but excluding any special meeting to be held on or about February 2026), and in no event later than nine (9) months after the Closing Date. If Shareholder 86 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 Securities Act of 1933, as amended (the “Securities Act”). The securities were offered and sold in reliance on the exemption provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder. Each purchaser represented that it was an “accredited investor” (as defined in Rule 501(a) of Regulation D) or otherwise qualified under applicable exemptions, and the Company did not engage in any general solicitation or advertising in connection with the offers or sales. No underwriters were involved in the transactions. Item 3. Defaults Upon Senior Securities None. Item 4. Mine Safety Disclosures None.