Nuburu (BURU) shifts to defense platform amid losses and NYSE delisting risk
Nuburu, Inc. is repositioning as a dual‑use defense and security platform, consolidating new businesses while still operating at a loss and facing liquidity pressure. For the quarter ended June 30, 2026, it generated $524,927 of revenue (first half $932,571) and recorded a net loss of $6.5 million (first half $6.9 million). Operating expenses were $5.4 million in the quarter as the company invests in R&D, selling and marketing, and public‑company overhead.
Total assets rose to $68.4 million, reflecting the consolidation of Orbit and Lyocon and investments in Tekne and related parties. Stockholders’ equity improved from a deficit of $(15.2 million) at December 31, 2025 to positive equity of $9.4 million, helped by equity issuances, warrant exercises, debt extinguishments and non‑cash consideration in acquisitions.
Liquidity remains strained: cash and cash equivalents were only $726,934 (plus $875,141 restricted) at June 30, 2026, and operating activities used $15.1 million of cash in the first half. The company discloses substantial doubt about its ability to continue as a going concern and relies on external financing, including a standby equity purchase agreement. Nuburu is also working under an NYSE American compliance plan, and its common stock was delisted from NYSE American in July 2026 and now trades on the OTC market while it pursues an appeal and plans a reverse stock split.
Positive
- Stockholders’ equity improved from $(15.2 million) at December 31, 2025 to positive $9.4 million at June 30, 2026, reflecting balance sheet repair through equity issuance, non‑cash consideration and debt restructurings.
- Total assets increased to $68.4 million from $49.8 million, driven by acquisitions and investments (including Orbit, Lyocon and Tekne arrangements), building a broader defense and security platform.
Negative
- The company reports a going‑concern warning, citing an accumulated deficit of $207.4 million, historical losses, negative operating cash flows and dependence on external financing.
- Cash and cash equivalents were only $726,934 (plus $875,141 restricted) at June 30, 2026, versus first‑half operating cash outflows of $15.1 million, indicating tight near‑term liquidity.
- Current debt, including fair‑value debt, totals $30.8 million, creating significant near‑term debt service obligations relative to available cash.
- Nuburu’s stock was delisted from NYSE American in July 2026 under Section 1003(f)(v) due to low trading price and now trades on the OTC market while the company appeals and seeks to regain listing.
Filing Explained
As of June 30, current debt was $30.8 million against $726,934 cash; $875,141 more was restricted as Tekne letter-of-credit collateral.
Nuburu’s Form 10-Q is an unaudited quarterly report updating its interim finances and liquidity. At
The restricted amount supports letters of credit tied to the contemplated acquisition of a controlling interest in Tekne. The filing says those letters expire in
The company also reports that substantially all cash is held with one foreign-regulated digital banking platform, so loss of access to that institution could affect funding capacity even apart from the reported cash balance.
The filing continues to identify conditions raising substantial doubt about the company’s ability to fund operations for the next 12 months, including operating losses, negative operating cash flow, debt-service obligations, and reliance on external financing.
Key Figures
Key Terms
standby equity purchase agreement financial
going concern financial
variable interest entity financial
reverse stock split financial
contingent consideration financial
Orbit Preferred Obligation financial
FAQ
How did Nuburu (BURU) perform financially in the quarter ended June 30, 2026?
What is Nuburu’s (BURU) cash and liquidity position as of June 30, 2026?
What major acquisitions and investments has Nuburu (BURU) completed or consolidated in 2026?
Why does Nuburu (BURU) have a going-concern warning?
What is the status of Nuburu’s (BURU) stock exchange listing?
How has Nuburu’s (BURU) balance sheet changed since December 31, 2025?
AI-generated analysis. How Rhea-AI works. Not financial advice.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO |
Commission File Number
(Exact name of Registrant as specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices) |
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Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of August 12, 2026, the registrant had
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TABLE OF CONTENTS
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PART I – FINANCIAL INFORMATION |
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Cautionary Note Regarding Forward-Looking Statements |
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Item 1. |
Unaudited Condensed Consolidated Financial Statements |
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Condensed Consolidated Balance Sheets |
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Condensed Consolidated Statements of Operations and Comprehensive Loss |
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Condensed Consolidated Statements of Convertible Preferred Stock, Tekne Subordinated Convertible Note and Stockholders’ Equity (Deficit) |
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Condensed Consolidated Statements of Cash Flows |
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Notes to Condensed Consolidated Financial Statements |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
Quantitative and Qualitative Disclosures about Market Risk |
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Item 4. |
Controls and Procedures |
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PART II – OTHER INFORMATION |
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Legal Proceedings |
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Risk Factors |
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Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
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Item 3. |
Defaults Upon Senior Securities |
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Item 4. |
Mine Safety Disclosures |
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Other Information |
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Item 6. |
Exhibits |
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SIGNATURES |
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Table of Contents
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this "Quarterly Report") contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which statements involve substantial risk and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. Forward-looking statements contained in this Quarterly Report include, but are not limited to, statements about:
Forward-looking statements are not guarantees of performance. You should not put undue reliance on these statements, which speak only as of the date hereof. The forward-looking statements contained in this Quarterly Report are based on our current expectations and beliefs concerning future developments and their potential effects on our business. There can be no assurance that future developments affecting our business will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control), or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors under the heading "Risk Factors" in this Quarterly Report and in our Annual Report on Form 10-K for the year ended December 31, 2025, as amended on Form 10-K/A (our "Annual Report"), as well as the following important factors:
1
Table of Contents
Should one or more of these risks or uncertainties materialize, or should any of the assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
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NUBURU, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
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June 30, |
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December 31, |
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(Unaudited) |
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ASSETS |
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Current assets |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash |
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Accounts receivable, net |
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— |
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Inventories, net |
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— |
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SYME Convertible Note Receivable (related party) |
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— |
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Tekne Convertible Note Receivable |
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— |
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Subscription for Orbit shares (related party) |
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— |
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SYME inventory advance (related party) |
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— |
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Advance on Tekne Convertible Note Receivable |
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— |
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Prepaid expenses and other current assets (including $ |
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Total current assets |
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Goodwill |
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— |
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Intangible assets subject to amortization, net |
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— |
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Investments at fair value |
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— |
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SYME Bonds (related party) |
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— |
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SYME Convertible Note Receivable (related party) |
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— |
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Property and equipment, net |
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— |
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Equity method investment (related party) |
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— |
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Deposit on acquisition (related party) |
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— |
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Other assets |
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— |
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TOTAL ASSETS |
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$ |
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$ |
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LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT |
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Current liabilities |
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Accounts payable (including $ |
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$ |
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$ |
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Accrued expenses (including $ |
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Current portion of debt (including $ |
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Preferred obligation related to Orbit Transaction (related party) |
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— |
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Shareholder advances |
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Preferred stock liability, $ |
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Total current liabilities |
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SEPA liability |
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Warrant liabilities |
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Contingent consideration (including $ |
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Deferred tax liability |
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Other liabilities |
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TOTAL LIABILITIES |
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Commitments and Contingencies (Note 8) |
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Tekne Subordinated Convertible Note |
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— |
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Stockholders’ Equity (Deficit) |
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Common Stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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( |
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( |
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Accumulated other comprehensive income |
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— |
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Total Stockholders’ Equity (Deficit) |
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$ |
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$ |
( |
) |
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TOTAL LIABILITIES, TEKNE SUBORDINATED CONVERTIBLE NOTE AND STOCKHOLDERS’ EQUITY (DEFICIT) |
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$ |
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$ |
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The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
3
Table of Contents
NUBURU, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
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Three Months Ended |
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Six Months Ended |
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2026 |
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2025 |
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2026 |
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2025 |
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Revenue (including $ |
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$ |
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$ |
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$ |
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$ |
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Cost of revenue |
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Gross loss |
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( |
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( |
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( |
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Operating expenses: |
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Research and development |
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Selling and marketing |
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General and administrative |
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Total operating expenses |
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Loss from operations |
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( |
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( |
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( |
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( |
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Non-operating income (loss): |
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Interest income |
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Interest expense (including |
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( |
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( |
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Change in fair value of warrant liabilities |
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( |
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Loss on issuance of warrants and related costs |
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Change in fair value of debt |
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( |
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( |
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Loss on issuance of debt |
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( |
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( |
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( |
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Gain on initial recognition of Tekne Investment |
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Change in fair value of investments |
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( |
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Gain on issuance of SYME Bonds (related party) |
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Change in fair value of SYME Bonds (related party) |
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Change in fair value of contingent consideration (including $ |
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Change in fair value of derivative liability (including |
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Change in fair value of convertible notes receivable (including $ |
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( |
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Remeasurement of subscription for Orbit shares (related party) |
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Remeasurement of Orbit equity method investment (related party) |
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Change in fair value of SEPA liability |
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( |
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Loss on issuance of SEPA |
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( |
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SEPA fees and issuance costs |
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( |
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( |
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Loss on extinguishment of debt (including |
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( |
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Gain on sale of intellectual property intangible assets |
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Loss on impairment of inventories, property and equipment and operating lease right-of-use asset |
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Interest expense recognized on remeasurement of preferred stock liability |
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Other income (loss), net |
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( |
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Loss before provision for income taxes |
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( |
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( |
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Income tax provision |
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Net loss |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
4
Table of Contents
NUBURU, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (CONTINUED)
(UNAUDITED)
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Six Months Ended |
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2026 |
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2025 |
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2026 |
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2025 |
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Net loss |
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$ |
( |
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$ |
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$ |
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Other comprehensive income (loss): |
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Foreign currency translation adjustments |
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Defined benefit pension plan adjustments |
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Comprehensive loss |
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$ |
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$ |
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$ |
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$ |
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Net loss |
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$ |
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$ |
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$ |
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$ |
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Deemed dividend in connection with extinguishment of preferred stock through issuance of warrants |
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Reclassification of convertible preferred stock from mezzanine equity to liability |
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Deemed dividend in connection with modification of pre-funded warrants |
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Net loss available to common stockholders |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
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Net loss per common share, basic and diluted (1) |
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$ |
( |
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$ |
( |
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$ |
( |
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Weighted-average common shares used to compute net loss per common share, basic and diluted (1) |
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The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
5
Table of Contents
NUBURU, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK, TEKNE SUBORDINATED CONVERTIBLE NOTE AND STOCKHOLDERS' EQUITY (DEFICIT) (UNAUDITED)
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Convertible |
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Common Stock |
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Shares |
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Amount |
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Tekne Subordinated Convertible Note |
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Shares (1) |
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Amount (1) |
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Additional |
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Accumulated |
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Accumulated Other Comprehensive Income |
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Total |
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Balance as of December 31, 2024 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
— |
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( |
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Reclassification of convertible preferred stock from mezzanine equity to current liabilities |
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( |
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— |
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— |
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— |
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— |
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|
— |
|
|
|
|
||
Contributions from related party |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Deemed dividend in connection with modification of pre-funded warrants |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Issuance of Common Stock to extinguish debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Shares issued in connection with exercise of warrants |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Balance as of March 31, 2025 |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|||||
Issuance of Common Stock to extinguish debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Issuance of Common Stock in connection with the SEPA commitment fee |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Common Stock issued for services |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Issuance of Common Stock from releases of restricted stock units |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Restricted stock units withheld for tax withholdings |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Balance as of June 30, 2025 |
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
( |
) |
|||
6
Table of Contents
NUBURU, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK, TEKNE SUBORDINATED CONVERTIBLE NOTE AND STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED) (UNAUDITED)
|
|
Convertible |
|
|
|
|
|
|
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
Shares |
|
|
Amount |
|
|
Tekne Subordinated Convertible Note |
|
|
|
Shares (1) |
|
|
Amount (1) |
|
|
Additional |
|
|
Accumulated |
|
|
Accumulated Other Comprehensive Income |
|
|
Total |
|
|||||||||
Balance as of December 31, 2025 |
|
|
|
|
$ |
|
|
$ |
— |
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||||||
Shares issued in connection with exercise of warrants |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Issuance of Common Stock in connection with the SEPA |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Unsold Common Stock issued under the SEPA |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
||
Issuance of Common Stock to extinguish debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Issuance of Common Stock in connection with the February 2026 Offering, net of offering costs including fair value of the February 2026 Offering Placement Agent Warrants |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Extinguishment of preferred stock through issuance of warrants |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||||
Deemed dividend in connection with extinguishment of preferred stock through issuance of warrants |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Issuance of Tekne Subordinated Convertible Note |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Premium on issuance of Lyocon Convertible Notes |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||||
Gain on extinguishment of Orbit Preferred Obligation in excess of derivative liability fair value, recognized as a capital contribution (related party) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Reclassification of derivative liability in connection with amendment to Orbit Preferred Obligation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Foreign currency translation adjustments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Defined benefit pension plan adjustments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Common Stock issued for services |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Balance as of March 31, 2026 |
|
|
|
|
$ |
|
|
$ |
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||||||
Issuance of Common Stock to extinguish debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Shares issued in connection with exercise of warrants |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Issuance of Common Stock in connection with the SEPA |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Unsold Common Stock issued under the SEPA |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
||
Extinguishment of preferred stock through issuance of warrants |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Deemed dividend in connection with the extinguishment of preferred stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Cancellation of shares of Common Stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Foreign currency translation adjustments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Defined benefit pension plan adjustments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Balance as of June 30, 2026 |
|
|
|
|
$ |
|
|
$ |
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
7
Table of Contents
NUBURU, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
Six Months Ended |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Cash Flows from Operating Activities: |
|
|
|
|
|
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Stock-based compensation |
|
|
|
|
|
|
||
Provision for credit losses |
|
|
|
|
|
— |
|
|
Net change in employee benefit liability |
|
|
|
|
|
— |
|
|
Amortization of deferred financing costs |
|
|
— |
|
|
|
|
|
Debt issuance costs expensed under fair value option |
|
|
— |
|
|
|
|
|
Interest expense recognized on preferred obligation related to Orbit Transaction (related party) |
|
|
|
|
|
— |
|
|
Change in fair value of warrant liabilities |
|
|
( |
) |
|
|
( |
) |
Loss on issuance of warrants and related costs |
|
|
|
|
|
— |
|
|
Change in fair value of debt |
|
|
( |
) |
|
|
|
|
Loss on issuance of debt |
|
|
|
|
|
|
||
Loss on issuance of SEPA |
|
|
— |
|
|
|
|
|
Gain on initial recognition of Tekne Investment |
|
|
( |
) |
|
|
— |
|
Change in fair value of investments |
|
|
|
|
|
— |
|
|
Gain on issuance of SYME Bonds (related party) |
|
|
( |
) |
|
|
— |
|
Change in fair value of SYME Bonds (related party) |
|
|
( |
) |
|
|
— |
|
Change in fair value of contingent consideration (including $ |
|
|
|
|
|
— |
|
|
Change in fair value of derivative liability (including |
|
|
( |
) |
|
|
( |
) |
Change in fair value of convertible notes receivable (including $ |
|
|
( |
) |
|
|
|
|
Remeasurement of subscription for Orbit shares (related party) |
|
|
( |
) |
|
|
— |
|
Remeasurement of Orbit equity method investment (related party) |
|
|
|
|
|
— |
|
|
Change in fair value of SEPA liability |
|
|
( |
) |
|
|
|
|
Loss on extinguishment of debt (including |
|
|
— |
|
|
|
|
|
SEPA fees and issuance costs |
|
|
— |
|
|
|
|
|
Gain on sale of intellectual property intangible assets |
|
|
— |
|
|
|
( |
) |
Loss on impairment of inventories, property and equipment and operating lease right-of-use asset |
|
|
— |
|
|
|
|
|
Interest expense recognized on remeasurement of preferred stock liability |
|
|
— |
|
|
|
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable |
|
|
|
|
|
— |
|
|
Inventories |
|
|
|
|
|
— |
|
|
Prepaid expenses and other current assets |
|
|
( |
) |
|
|
( |
) |
Accounts payable |
|
|
( |
) |
|
|
|
|
Accrued expenses |
|
|
( |
) |
|
|
|
|
Operating lease liability |
|
|
— |
|
|
|
( |
) |
Other liabilities |
|
|
|
|
|
— |
|
|
Net cash used in operating activities |
|
$ |
( |
) |
|
$ |
( |
) |
8
Table of Contents
NUBURU, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
|
|
Six Months Ended |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Cash Flows from Investing Activities: |
|
|
|
|
|
|
||
Cash paid for purchases of property and equipment |
|
$ |
( |
) |
|
$ |
— |
|
Cash paid for acquisition of controlling financial interest in Orbit, net of cash acquired |
|
|
( |
) |
|
|
— |
|
Cash paid for Lyocon Acquisition, net of cash acquired |
|
|
( |
) |
|
|
— |
|
Payments for acquisitions and investments (related party) |
|
|
— |
|
|
|
( |
) |
Payments under convertible notes receivable ( |
|
|
( |
) |
|
|
( |
) |
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
Cash Flows from Financing Activities: |
|
|
|
|
|
|
||
Proceeds from debt borrowings |
|
|
— |
|
|
|
|
|
Repayments of debt |
|
|
( |
) |
|
|
( |
) |
Proceeds received from the February 2026 Offering |
|
|
|
|
|
— |
|
|
Proceeds received from the SEPA |
|
|
|
|
|
— |
|
|
Payments of debt and equity issuance costs |
|
|
( |
) |
|
|
( |
) |
Proceeds received from settlement |
|
|
— |
|
|
|
|
|
Restricted stock units withheld for tax withholdings |
|
|
— |
|
|
|
( |
) |
Proceeds from exercise of warrants |
|
|
|
|
|
— |
|
|
Net cash provided by financing activities |
|
|
|
|
|
|
||
Effect of exchange rate changes on cash |
|
|
( |
) |
|
|
— |
|
NET CHANGE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH DURING THE PERIOD |
|
|
( |
) |
|
|
( |
) |
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH ― BEGINNING OF PERIOD |
|
|
|
|
|
|
||
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH ― END OF PERIOD |
|
$ |
|
|
$ |
|
||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
|
|
|
|
|
|
||
Cash paid for interest |
|
$ |
|
|
$ |
|
||
Cash paid for income taxes |
|
$ |
|
|
$ |
— |
|
|
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES: |
|
|
|
|
|
|
||
Reclassification of warrant liability to equity upon exercise of warrants |
|
$ |
|
|
$ |
|
||
Extinguishment of Preferred Stock through issuance of warrants |
|
$ |
|
|
$ |
— |
|
|
Deemed dividend in connection with extinguishment of preferred stock through issuance of warrants |
|
$ |
|
|
$ |
|
||
Fair value of warrants issued as equity issuance costs |
|
$ |
|
|
$ |
— |
|
|
Issuance of Common Stock in connection with the SEPA |
|
$ |
|
|
$ |
|
||
Issuance of Common Stock upon extinguishment or conversion of debt |
|
$ |
|
|
$ |
|
||
SYME Inventory Advance applied to SYME Bonds |
|
$ |
|
|
$ |
— |
|
|
Investment in H&K through issuance of convertible note |
|
$ |
|
|
$ |
— |
|
|
Advance to Tekne applied to Tekne Convertible Note Receivable |
|
$ |
|
|
$ |
— |
|
|
Non-cash consideration transferred in Orbit Change of Control (related party) |
|
$ |
|
|
$ |
— |
|
|
Gain on extinguishment of Orbit Preferred Obligation in excess of derivative liability fair value, recognized as a capital contribution (related party) |
|
$ |
|
|
$ |
— |
|
|
Non-cash consideration transferred in Lyocon Acquisition |
|
$ |
|
|
$ |
— |
|
|
Issuance of Tekne Subordinated Convertible Note |
|
$ |
|
|
$ |
— |
|
|
Premium on issuance of Lyocon Convertible Notes |
|
$ |
|
|
$ |
— |
|
|
Stock-based compensation expense included in accrued expenses |
|
$ |
|
|
$ |
|
||
Reclassification of stock-based compensation liability to equity upon issuance of shares of Common Stock |
|
$ |
|
|
$ |
— |
|
|
Shares issued for services included in prepaid expenses |
|
$ |
|
|
$ |
|
||
Issuance of promissory note for replacement of shareholder advance |
|
$ |
— |
|
|
$ |
|
|
Transaction costs related to the reverse recapitalization not yet paid |
|
$ |
|
|
$ |
|
||
Initial fair value of convertible notes receivable over proceeds paid |
|
$ |
— |
|
|
$ |
|
|
Extinguishment of existing unsecured promissory note and accrued interest through issuance of convertible note |
|
$ |
— |
|
|
$ |
|
|
Debt issuance costs included in accounts payable and accrued expenses |
|
$ |
— |
|
|
$ |
|
|
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
9
Table of Contents
NUBURU, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. BACKGROUND AND ORGANIZATION
Nuburu, Inc. (“Nuburu” or the “Company”) was originally incorporated in Delaware on July 21, 2020 under the name Tailwind Acquisition Corp. (“Tailwind”) as a special purpose acquisition company, formed for the purpose of effecting an initial business combination with one or more target businesses. On September 9, 2020 (the “IPO Closing Date”), the Company consummated its initial public offering (the “IPO”). On January 31, 2023 (the "Closing Date"), the Company consummated a business combination with Nuburu Subsidiary, Inc. f/k/a Nuburu, Inc. (“Legacy Nuburu”), a privately held operating company which merged into the Company's subsidiary Compass Merger Sub, Inc. (the “Business Combination”) and changed its name to “Nuburu, Inc.,” and the Company became the owner, directly or indirectly, of all of the equity interests of Nuburu Subsidiary, Inc. and its subsidiaries.
In January 2025, the Company adopted a new business plan, as further described below. The Company is now a dual-use defense and security platform company focused on non-kinetic effects, directed-energy technologies, electronic warfare and software-orchestrated defense systems.
In October 2025, the Company made an investment, accounted for under the equity method, in Orbit S.r.l. (“Orbit”), as further described in Note 4, and in January 2026, the Company increased its ownership in Orbit to approximately
Throughout the notes to the condensed consolidated financial statements, unless otherwise noted, the “Company,” “we,” “us” or “our” and similar terms refer to Legacy Nuburu prior to the consummation of the Business Combination, and Nuburu and its subsidiaries after the consummation of the Business Combination.
Going Concern and Liquidity
The Company has not yet achieved full commercialization and is expected to incur losses until it does.
From inception through June 30, 2026, the Company has incurred operating losses and negative cash flows from operating activities. For the three months ended June 30, 2026 and 2025 and six months ended June 30, 2026 and 2025, the Company has incurred net losses of $
Until the Company can generate sufficient revenue, it plans to finance its business with the proceeds from the issuance and sale of debt or equity securities and borrowings under credit facilities, including sales pursuant to its standby equity purchase agreement (“SEPA”) with the SEPA Investor, each defined and further described in Note 13. There is no assurance that management's plans to obtain additional debt or equity financing or credit facilities will be successfully implemented or implemented on terms favorable to the Company.
The Company has identified conditions that raise substantial doubt about its ability to continue as a going concern within 12 months from the issuance of these condensed consolidated financial statements, including historical operating losses, negative cash flows from operations, significant debt service obligations, and reliance on external financing.
Management's plans to address these conditions involve a combination of available liquidity resources and financing strategies, including existing cash, potential monetization of financial assets, and access to financing arrangements. Execution of these plans depends on various assumptions and external factors, including market conditions and the Company’s ability to access capital on acceptable terms.
In January 2025, the Company adopted a new business plan focused on building a stable foundation for the future business, including addressing outstanding payables, entering into joint development agreements, and investing and acquiring controlling interests in strategic targets (the “Transformation Plan”). Management has implemented and continues to execute its Transformation Plan and has taken actions during 2025 and early 2026 to strengthen the Company’s financial position and liquidity profile. These actions include balance sheet improvements, enhanced access to the capital markets, and the establishment of a platform-based operating model through strategic investments and acquisitions.
The Company is also subject to execution risks related to the timing and realization of its strategic initiatives, as well as capital markets risks, including share price performance, trading volumes, and broader macroeconomic and geopolitical conditions, which may affect access to financing.
Notwithstanding these uncertainties, management believes that the actions taken to date represent a material improvement compared to prior periods and provide a credible path towards an improved liquidity position and operating performance over time.
Management further believes that the successful execution of its Transformation Plan—particularly the acquisition of a controlling interest in Tekne, the full integration of Orbit, the acquisition of Lyocon and the expansion of the Company's laser business and the development and commercialization of capabilities with Maddox under the Maddox Agreement (as defined in Note 4)—would establish a scaled, integrated operating platform capable of generating sustainable revenues and improved liquidity, aligned with market demand.
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Management believes that the actions described above could significantly reduce the conditions that raise substantial doubt about the Company’s ability to continue as a going concern. However, substantial doubt about the Company's ability to continue as a going concern remains.
NYSE Regulation Notice of Noncompliance
On April 29, 2025, the Company received a Notice of Noncompliance from NYSE Regulation indicating that the Company was not in compliance with Section 1003(a)(i) of the NYSE American LLC Company Guide (the “Company Guide”), which requires a company to maintain stockholders’ equity of $
As required by the Company Guide, the Company submitted a detailed plan on May 29, 2025. The detailed plan advised NYSE Regulation of actions the Company has taken or will take to regain compliance with the continued listing standards by the compliance deadline of October 29, 2026. On July 22, 2025, the NYSE notified the Company that it had accepted the Company’s plan outlining definitive actions that the Company has taken or will take to regain compliance with NYSE’s continued listing standards (the “Compliance Plan”) and granted a plan period through October 29, 2026 (the “Plan Period”).
On May 12, 2026, the Company received a Notice of Noncompliance with NYSE American continued listing standards (the “2026 Notice”) indicating that the Company was not in compliance with Section 1003(a)(ii) of the Company Guide, which requires a company to maintain stockholders’ equity of $
The NYSE will review the Company periodically for compliance with the Compliance Plan. If the Company is not in compliance with the continued listing standards by October 29, 2026, or if the Company does not make progress consistent with the Compliance Plan during the Plan Period, the NYSE American may initiate delisting proceedings as appropriate. However, the Company may appeal a staff delisting determination in accordance with the Company Guide.
Notice of Delisting
On July 17, 2026, the Company’s Common Stock traded below $
Under NYSE American delisting procedures, the Company has the right to a review of NYSE American’s determination by the Listings Qualifications Panel of the NYSE American. The Company appealed the decision and requested a review hearing, which is scheduled to take place in September 2026. The Company intends to implement a reverse stock split, for which it has already obtained stockholder approval, on the OTC market to regain compliance with NYSE American.
Inventory, Property and Equipment and Right-of-Use Asset Impairment
The Company leased approximately
Certain Significant Risks and Uncertainties
The Company’s future operating results are subject to various risks and uncertainties, including its ability to obtain additional financing, achieve full commercialization, execute its Transformation Plan and strategic transactions, comply with applicable regulatory requirements, manage indebtedness and liquidity, and respond to competitive, geopolitical, and economic conditions, which could cause actual results to differ materially from expectations.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements are presented in U.S. dollars and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the accounting and disclosure rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). These unaudited condensed consolidated financial statements
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should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025.
Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, including Lyocon beginning January 15, 2026 (see Note 4), as well as entities in which the Company has a controlling financial interest, including Orbit, which was consolidated beginning January 15, 2026 (see Note 4). All significant intercompany balances and transactions have been eliminated.
February 2026 Reverse Stock Split
On February 27, 2026, the Company effected a 1-for-4.99 reverse stock split of its Common Stock (the “February 2026 Reverse Stock Split”) in order to return to compliance with NYSE American’s Minimum Trading Price requirement. Trading of the Company’s Common Stock was halted by NYSE American on February 13, 2026, because the trading price dropped below NYSE American’s Minimum Trading Price of $
Proportional adjustments were made to the number of shares of Common Stock issuable upon exercise, vesting, or conversion of the Company's outstanding stock options, restricted stock units, warrants, convertible notes, preferred stock, and other instruments convertible into or exercisable for Common Stock, as well as the applicable exercise prices, conversion prices, and per share grant date fair values. All share and per share amounts presented in these condensed consolidated financial statements and accompanying notes — including but not limited to earnings per share, weighted-average shares outstanding, shares reserved under equity incentive plans and the employee stock purchase plan, and shares issuable under outstanding derivative and convertible instruments — have been retroactively adjusted to reflect the February 2026 Reverse Stock Split for all periods presented.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.
The preparation of making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the condensed consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Estimates and assumptions made by management include, but are not limited to, fair value measurements, the valuation of assets acquired and liabilities assumed in business combinations, income taxes and related valuation allowances, and the allowance for credit losses. Such estimates may be subject to change as more current information becomes available and, accordingly, the actual results could differ significantly from those estimates.
Variable Interest Entities
The Company evaluates its interests in other entities to determine whether such entities are variable interest entities ("VIEs") and, if so, whether the Company is the primary beneficiary. An entity is a VIE if its total equity investment at risk is not sufficient to permit it to finance its activities without additional subordinated financial support or have equity investors that do not have the ability to make significant decisions relating to the entity’s operations through voting rights. The Company consolidates a VIE when it has both (i) the power to direct the activities that most significantly impact the VIE's economic performance and (ii) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The Company reassesses its VIE determinations on an ongoing basis.
Management must make judgments regarding the Company’s level of influence or control over an entity and whether or not the Company is the primary beneficiary of a variable interest entity. Consideration of various factors includes, but is not limited to, the Company’s ability to direct the activities that most significantly impact the entity’s economic performance, the Company’s form of ownership interest, the Company’s representation on the entity’s governing body, the size and seniority of the Company’s investment, the Company’s ability and the rights of other investors to participate in policy making decisions, and the Company’s ability to replace the manager. Management’s ability to correctly assess its influence or control over an entity when determining the primary beneficiary of a VIE affects the presentation of these entities in the Company’s Consolidated Financial Statements.
If it is determined that the Company is the primary beneficiary of a non-consolidated VIE, the Company’s Consolidated Financial Statements would be updated to include the operating results of the VIE rather than the results of the variable interest in the VIE. The operating results of the VIE would be presented differently on the Company’s Consolidated Financial Statements and could have an impact on the Company’s operating results and financial position. Refer to Note 4 for description of the Company’s maximum exposure related to non-consolidated VIEs.
Foreign Currency Translation and Transactions
The reporting currency of the Company is the U.S. dollar. The functional currency of its foreign operations generally is the applicable local currency for each foreign subsidiary and equity method investee. Assets and liabilities of foreign subsidiaries are translated at the spot rate in effect at the applicable reporting date. Generally, the amounts reported in the Company’s condensed consolidated statements of operations and comprehensive loss are translated at the average exchange rates in effect during the applicable period. The resulting unrealized cumulative translation adjustment, net of applicable income taxes, is recorded as a component of accumulated other comprehensive earnings or loss.
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Generally, the cash flows from the Company’s operations in foreign countries are translated at the average rate for the applicable period in our condensed consolidated statements of cash flows.
Transactions denominated in currencies other than the Company’s or its subsidiaries’ functional currencies are recorded based on exchange rates at the time such transactions arise. Changes in exchange rates with respect to amounts recorded in the condensed consolidated balance sheets related to these non-functional currency transactions result in transaction gains and losses that are reflected in the condensed consolidated statements of operations and comprehensive loss as unrealized (based on the applicable period end exchange rates) or realized upon settlement of the transactions. Such transactions were not material during the three and six months ended June 30, 2026.
Cash and Cash Equivalents
Cash equivalents are defined as short term, highly liquid investments, which are readily convertible to cash and have remaining maturities of three months or less at the date of acquisition. As of June 30, 2026 and December 31, 2025, cash was primarily held in accounts with a single financial institution that is a licensed and regulated digital banking platform operating under applicable foreign regulatory authorities. The Company has not experienced any losses in such accounts, nor does the Company believe it is exposed to any significant credit risk on cash and cash equivalents. However, any loss incurred or lack of access to such funds could have a significant adverse impact on the Company's financial condition, results of operations, and cash flows. As of each of June 30, 2026 and December 31, 2025, none of the Company's cash on hand was considered cash equivalents. Bank overdrafts at the Company's foreign consolidated subsidiaries and affiliates, if any, are classified as current borrowings within current financial liabilities on the condensed consolidated balance sheets.
Restricted Cash
Restricted cash represents funds held in U.S.-based banking collateral accounts maintained in connection with outstanding letters of credit related to the Company’s contemplated acquisition of a controlling interest in Tekne, as further described in Note 4, which exceeded Federal Deposit Insurance Corporation insurance limits of $
Concentrations of Credit Risk, Other Risks and Uncertainties
The Company's financial instruments that are subject to credit risk consist primarily of (i) cash and cash equivalents, (ii) the SYME Convertible Note Receivable and the Tekne Convertible Note Receivable (each as defined and described in Note 6), for which the fair value option has been elected and credit risk is reflected in the fair value measurement, and (iii) the SYME Bonds (as defined and described in Note 7). At June 30, 2026, substantially all of the Company's cash and cash equivalents were held in accounts with a single financial institution that is a licensed and regulated digital banking platform operating under applicable foreign regulatory authorities. In the event of a failure of the financial institution or restrictions on access to these funds, the Company’s liquidity and ability to fund operations could be materially adversely affected. Management believes the financial risk associated with these balances is minimal and has not experienced any losses to date.
During the three and six months ended June 30, 2026,
Accounts Receivable and Allowance for Credit Losses
The Company evaluates financial assets measured at amortized cost for expected credit losses in accordance with ASC 326-20, Financial Instruments — Credit Losses ("CECL"). Financial assets within the scope of CECL include trade receivables. Financial assets for which the fair value option has been elected are excluded from the scope of CECL and are instead measured at fair value through net loss.
The Company estimates the allowance for credit losses on its financial assets within the scope of CECL based on historical loss experience, current conditions and reasonable and supportable forecasts affecting the collectability of the reported amounts. The estimate of expected credit losses considers, among other factors, the financial condition and creditworthiness of the borrower, the underlying collateral, macroeconomic conditions, and the expected duration of the asset. The Company may also incorporate probability-of-default and loss-given-default assumptions or other valuation techniques when appropriate. Adjustments to the allowance for credit losses are recognized in general and administrative expenses in the condensed consolidated statements of operations and comprehensive loss. Recoveries of amounts previously written off are recorded when received.
As of June 30, 2026, allowance for credit losses was $
The Company writes off accounts receivable against the allowance when it determines the receivable is uncollectible.
Inventories, Net
Cost of inventories is determined (i) for raw materials, using the first-in, first-out (“FIFO”) method and includes purchase price and other costs directly attributable to acquisition and (ii) for work in progress and finished goods, using the standard cost method, which approximates actual cost which includes direct materials, direct labor and a proportionate share of manufacturing overhead costs based on normal capacity. Standard costs are reviewed periodically and adjusted, as necessary, to approximate actual costs. The Company reviews inventories for excess, obsolete or slow-moving items and records write-downs to net realizable value when net realizable value is less than carrying value. The Company records provisions for excess and obsolete inventories based on factors such as forecasted demand, product life cycles, slow‑moving
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items and market conditions; such provisions are included in cost of revenue and are recorded as a reduction of the carrying value of inventories.
In addition, the Company may recognize separate impairment charges when events or changes in circumstances indicate that the carrying value of inventory is not recoverable. During the six months ended June 30, 2025, the Company incurred a loss on impairment of inventory in the amount of $
Property and Equipment, Net
Property and equipment are stated at cost less accumulated depreciation and amortization. The Company provides for depreciation and amortization of property and equipment on a straight-line basis for financial accounting purposes, and on an accelerated basis for tax purposes, over the estimated useful life of the respective asset.
Maintenance and repairs are charged to expense as incurred and major renewals or betterments which extend the life of such assets are capitalized based on the shorter of the life of the lease or the estimated useful life. The net gain or loss on property retired or otherwise disposed of is credited or charged to operating expenses and the costs and accumulated depreciation and amortization are removed from the accounts.
The estimated useful lives for each major depreciable classification of property and equipment are as follows:
Description of property and equipment |
|
Years |
Computer equipment |
|
|
Machinery and equipment |
|
During the six months ended June 30, 2025, the Company recorded a loss on impairment of property and equipment in the amount of $
Investments in Equity Securities
The Company's investments in equity securities are measured at fair value on a recurring basis, with changes in fair value recognized in change in fair value of investments in the condensed consolidated statements of operations and comprehensive loss and carrying values included within investments at fair value on the condensed consolidated balance sheet. For investments that would otherwise be accounted for under the equity method of accounting, the Company has elected the fair value option in accordance with ASC 825-10. The Company applies appropriate valuation techniques to determine fair value, maximizing the use of observable inputs to the extent available. Refer to Notes 4 and 7 for additional information regarding specific investments and the related fair value measurements.
Tekne Subordinated Convertible Note
Equity-classified instruments that are redeemable for cash or other assets upon the occurrence of events not solely within the Company's control are classified as temporary equity and presented between liabilities and stockholders' equity in accordance with ASC 480-10-S99-3A. Such instruments are initially recorded at fair value. Subsequent measurement depends on whether the instrument is currently redeemable or whether redemption is probable; if neither condition is met, the carrying amount is not remeasured. Refer to Note 4 for additional information regarding the Tekne Subordinated Convertible Note recorded within temporary equity.
Business Combinations
The results of a business acquired in a business combination are included in the Company’s financial statements from the date of acquisition with the associated purchase price allocated to the identifiable assets and liabilities of the acquired business at their acquisition date fair values in accordance with ASC Topic 805, Business Combinations (“ASC 805”). The excess of the purchase price over the amount allocated to the identifiable assets and liabilities, if any, is recorded as goodwill. Based on the nature of the businesses that the Company acquires, goodwill arising from acquisitions typically consists of synergies with previously acquired businesses and economies of scale resulting from centralizing shared service functions.
During the measurement period, which is up to one year from acquisition date, the Company may adjust provisional amounts that were recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date.
Determining the fair value of assets acquired and liabilities assumed requires management to make significant judgments and estimates, including the selection of valuation methodologies, estimates of future revenue and cash flows, discount rates and selection of comparable companies.
Contingent consideration arrangements arising from business combinations are recognized at fair value as of the acquisition date as a component of the total consideration transferred. The Company classifies contingent consideration as a liability or equity based on the terms of the arrangement. Contingent consideration classified as a liability is remeasured each reporting period, with changes in the fair value included in the condensed consolidated statements of operations and comprehensive loss. Changes in fair value resulting from both the passage of time (i.e., accretion) and revisions to the amount or timing of estimated payments are classified in the same line item in the consolidated statements of operations and comprehensive loss. The classification of contingent consideration is reassessed at each reporting period. Contingent consideration classified as equity is not subsequently remeasured and its settlement is accounted for within equity.
Acquisition-related transaction costs are expensed in the period in which the costs are incurred.
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For additional information regarding the Company's business combinations, see Note 4.
Goodwill and Intangible Assets
The Company’s primary intangible assets relate to (i) goodwill, (ii) developed technology, (iii) customer relationships and (iv) trademarks. Intangible assets acquired in connection with business combinations are initially recorded at their respective fair values. Goodwill represents the excess of the consideration transferred over the fair value of the identifiable net assets acquired in a business combination and is allocated to reporting units. The Company has the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount before performing a quantitative impairment test.
Goodwill and other intangible assets with indefinite useful lives are not amortized, but instead are tested for impairment at least annually, or more frequently when events or changes in circumstances indicate that the carrying amount may not be recoverable. Intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives to their estimated residual values and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Recoverability is assessed by comparing the carrying amount of the asset (or asset group) to the undiscounted future cash flows expected to be generated by the asset, and any impairment loss is measured as the amount by which the carrying amount exceeds the asset’s fair value.
The Company evaluated goodwill and long-lived intangible assets for impairment as of June 30, 2026 and determined that no triggering events or indicators of impairment existed; accordingly,
For additional information regarding the Company's goodwill and intangible assets, see Notes 4 and 5.
Post-Employment Benefits
The Company’s foreign consolidated subsidiaries and affiliates provide post-employment benefits to employees under the Trattamento di Fine Rapporto (“TFR”) as required by Italian law. TFR represents a statutory employee leaving indemnity obligation that is accrued on an individual employee basis and is generally payable upon termination of employment.
The TFR obligation is accounted for as a defined benefit plan. The related liability is measured based on the present value of the estimated future obligation. Remeasurements of the net defined benefit liability are recognized in accumulated other comprehensive income.
Revenue Recognition
Beginning in 2026, the Company’s primary business activity involves the sale of directed-energy systems, high-powered laser solutions, and integrated defense and security technologies, as well as related installation, support, and service offerings. The Company operates a dual-use business model, serving both defense and commercial markets across Europe and the United States.
Revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services by following a five-step process: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price, and (5) recognize revenue when or as the Company satisfies a performance obligation. At contract inception, the Company determines whether the goods or services to be provided are distinct and distinct within the context of the contract to determine whether the contract has a single performance obligation or multiple performance obligations. A performance obligation is distinct when it is separately identifiable from other items in a bundled package and if a customer can benefit from it on its own or with other resources that are readily available to the customer.
Standalone selling prices are primarily determined based on the prices contractually stated for each performance obligation, which the Company considers observable. When a standalone selling price is not directly observable — for example, in contracts containing multiple performance obligations without separately stated prices — the Company estimates the standalone selling price using the expected cost plus a margin approach, taking into consideration market conditions, customer-specific factors, and the Company’s pricing practices for similar offerings.
Payment terms vary by contract but generally range from
Orbit
The Company’s contracts with customers may include multiple performance obligations, which primarily consist of (i) software-as-a-service (“SaaS”) and hosted software subscriptions, (ii) application maintenance services (“AMS”), and (iii) professional services. The transaction price is allocated to each performance obligation based on its relative standalone selling price.
SaaS and Hosted Software Subscriptions. The Company provides customers with hosted access to its or third party's software solutions under subscription arrangements, typically through customer-dedicated virtual machine environments based on a largely standardized product configuration. Revenue from SaaS and hosted software subscriptions is recognized ratably over the contractual subscription term.
Application Maintenance Services. AMS includes technical support, updates, and unspecified upgrades associated with legacy perpetual license arrangements. Revenue from AMS is recognized ratably over the service period.
Professional Services. Professional services consist primarily of implementation, integration, customization, data migration, and training services. Revenue from professional services is generally recognized as the services are performed. In certain cases, professional services are
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combined with SaaS subscriptions and recognized over the subscription term.
Upfront and Onboarding Activities. Upfront and onboarding activities generally do not transfer a distinct good or service and are deferred and recognized over the term of the associated SaaS arrangement.
For arrangements that involve third‑party software, cloud services or maintenance, the Company evaluates whether it acts as principal or agent in the transaction in accordance with ASC 606’s control‑based model. The Company is a principal when it controls the specified goods or services before they are transferred to the customer and therefore recognizes revenue on a gross basis for its proprietary SaaS and hosted software subscriptions, related support and maintenance, and for third‑party solutions when it is primarily responsible for fulfillment, has discretion in establishing pricing and is exposed to inventory or similar risks. The Company is an agent when its performance obligation is to arrange for a third party to provide the specified goods or services, in which case revenue is recognized on a net basis in the amount of any fee or commission retained.
Lyocon
Product Sales. The Company’s revenue is primarily derived from the sale of products. Revenue from product sales is recognized at a point in time when control of the product transfers to the customer, which occurs upon shipment or delivery, depending on the contractual shipping terms.
Professional Services. A small portion of the Company’s revenue is derived from services, which are generally limited in scope and duration. Revenue from services is generally recognized at a point in time when the services are performed.
The Company provides customers with a standard warranty, generally for a period of
Cost of Revenue
Cost of revenue primarily consists of the direct costs of providing services to customers, including employee compensation and related benefits, and materials, labor and manufacturing overhead related to products sold, including lower of cost or net realizable value adjustments and write-downs for excess or obsolete inventory, as applicable.
Research and Development Expenses
Research and development expenses ("R&D") consist primarily of compensation and related costs for personnel, including stock-based compensation, employee benefits, training, travel, third-party consulting services, laboratory supplies, and research and development equipment depreciation incurred to further our commercialization development efforts. We anticipate research and development expenses will increase significantly as we expand our product portfolio. R&D costs are charged to the statements of operations and comprehensive loss as incurred and are included in operating expenses.
Selling and Marketing Expenses
Selling and marketing expenses consist primarily of compensation and related costs for the Company’s direct sales force, sales management, and marketing and include stock-based compensation, employee benefits, and travel for selling and marketing employees as well as costs related to trade shows, marketing programs, third-party consulting expenses, branding and public relations activities, and application lab depreciation expenses. The Company expects selling and marketing expenses to increase in future periods as it expands its sales force, marketing, and customer support organizations and increases its participation in trade shows and marketing programs. Selling and marketing costs are charged to the statements of operations and comprehensive loss as incurred and are included in operating expenses.
General and Administrative Expenses
The Company’s general and administrative expenses consist primarily of compensation and related costs for its finance, human resources and other administrative personnel, and include stock-based compensation, employee benefits and travel expenses. In addition, general and administrative expenses include the Company’s third-party consulting and advisory services, legal, audit, accounting services and facilities costs, as well as transaction expenses. The Company expects its general and administrative expenses to increase for the foreseeable future as it scales headcount with the growth of its business through acquisitions and investments, and as a result of operating as a public company, including compliance with the rules and regulations of the SEC, legal, audit, additional insurance expenses, investor relations activities, and other administrative and professional services. General and administrative costs are charged to the statements of operations and comprehensive loss as incurred and are included in operating expenses.
Recently Adopted Accounting Pronouncements
ASU 2024-04
In December 2024, the Financial Accounting Standards Board (“FASB") issued ASU 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments, which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as induced conversions. The amendments expand the application of the induced conversion guidance to instruments with cash conversion features and establish three criteria that must be met for a settlement to qualify as an induced conversion: (1) the conversion privileges must be changed and exercisable only for a limited period of time, (2) the
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form and amount of consideration offered must be preserved from the original terms, and (3) the conversion feature must be substantive at both the issuance date and the date the offer is accepted. The Company
New Accounting Pronouncements Not Yet Adopted
ASU 2024-03
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which is intended to provide more detailed information about specified categories of expenses (purchases of inventory, employee compensation, depreciation and amortization) included in certain expense captions presented on the condensed consolidated statements of operations and comprehensive loss. This new standard is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either (1) prospectively to financial statements issued for periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the condensed consolidated financial statements. The Company is in the process of finalizing the disclosures that will be required by the adoption of the provisions of ASU 2024-03, and will adopt these amendments for annual disclosures in the Annual Report on Form 10-K for the year ending December 31, 2027.
ASU 2025-03
In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity. The amendments require an acquirer to apply the factors in ASC 805-10-55-11 through 55-15 to identify the accounting acquirer in a business combination in which the legal acquiree is a variable interest entity that meets the definition of a business and the transaction is effected primarily by exchanging equity interests, consistent with the framework used when the legal acquiree is a voting interest entity. The ASU is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years, and is applied prospectively. Early adoption is permitted. The Company will continue to evaluate the impact of this guidance, which will depend on the nature of future business combinations.
ASU 2025-11
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270) Narrow-Scope Improvements, which is intended to improve the navigability of the guidance in ASC 270, Interim Reporting, and clarify when it applies. Under the amendments, an entity is subject to ASC 270 if it provides interim financial statements and notes in accordance with GAAP. ASU 2025-11 also addresses the form and content of such financial statements, interim disclosures requirements, and establishes a principle under which an entity must disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, and early adoption is permitted. The Company is currently evaluating the impact of these amendments on its consolidated financial statement disclosures.
NOTE 3. BALANCE SHEET COMPONENTS
Inventories, Net
Inventories, net as of June 30, 2026 consisted of the following:
|
|
|
June 30, |
|
|
Raw materials and supplies |
|
|
$ |
|
|
Work-in-process |
|
|
|
|
|
Finished goods |
|
|
|
|
|
Inventories, gross |
|
|
|
|
|
Less: inventory reserve |
|
|
|
|
|
Inventories, net |
|
|
$ |
|
|
During the three and six months ended June 30, 2026 and 2025, the Company recorded
Property and Equipment, Net
Property and equipment, net as of June 30, 2026 consisted of the following:
|
|
June 30, |
|
|
Machinery and equipment |
|
$ |
|
|
Computer equipment and software |
|
|
|
|
Property and equipment, gross |
|
|
|
|
Less: accumulated depreciation and amortization |
|
|
( |
) |
Property and equipment, net |
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$ |
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|
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As of March 31, 2025, in connection with the lease default described below, property and equipment was written down through a $
Depreciation and amortization expense related to property and equipment was immaterial and
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets as of June 30, 2026 and December 31, 2025 consisted of the following:
|
|
June 30, |
|
|
December 31, |
|
||
Receivables from related parties (1) |
|
$ |
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|
$ |
— |
|
|
Interest receivable (2) |
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|
|
|
|
|
||
Prepaid services |
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|
|
|
|
|
||
Prepaid insurance |
|
|
|
|
|
|
||
Value-added tax receivable |
|
|
|
|
|
— |
|
|
Deferred financing costs |
|
|
|
|
|
— |
|
|
Prepaid professional fees |
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|
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|
|
|
||
Prepaid subscriptions |
|
|
|
|
|
— |
|
|
Prepaid regulatory and listing fees |
|
|
|
|
|
— |
|
|
Security deposits |
|
|
|
|
|
— |
|
|
Contract assets (3) |
|
|
|
|
|
— |
|
|
Other prepaid expenses and other current assets |
|
|
|
|
|
|
||
Total prepaid expenses and other current assets |
|
$ |
|
|
$ |
|
||
(1)
(2)
(3)
Accrued Expenses
Accrued expenses as of June 30, 2026 and December 31, 2025 consisted of the following:
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|
June 30, |
|
|
December 31, |
|
||
Related party payables (1) |
|
$ |
|
|
$ |
— |
|
|
Accrued legal, accounting and professional fees |
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|
|
|
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|
||
Accrued payroll and benefits |
|
|
|
|
|
|
||
Accrued taxes payable |
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|
||
Accrued transaction costs related to the reverse recapitalization |
|
|
|
|
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|
||
Contract liabilities |
|
|
|
|
|
— |
|
|
Accrued interest |
|
|
|
|
|
|
||
Accrued purchases |
|
|
|
|
|
— |
|
|
Current portion of lease liabilities |
|
|
|
|
|
— |
|
|
Warranty provision |
|
|
|
|
|
— |
|
|
Other |
|
|
|
|
|
|
||
Total accrued expenses |
|
$ |
|
|
$ |
|
||
(1)
Lease Default, Settlement, and Related Asset Impairments
The Company leased approximately
The Landlord exercised its rights under the lease agreement and applicable law with respect to a lessee in default and such lessee’s assets located on the premises, including the removal and disposal of inventories and property and equipment remaining on the property.
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Consistent with the Company’s previously disclosed business plan for its future business, the Company does not believe that assets or equipment that remained on this leased property were critical to its new business strategy, given that it will not be conducting full-scale manufacturing or laser design or development that would involve the prior patent portfolio, which was transferred to its former secured lenders.
Accounts Payable - 3(a)(10) Claims Settlement
In July 2025, the Company entered into a court-approved claims settlement (the “Silverback Claims Settlement”) with Silverback Capital Corporation (“Silverback”) pursuant to Section 3(a)(10) of the Securities Act, under which certain outstanding vendor liabilities were exchanged for shares of Common Stock. The arrangement concluded in October 2025, at which time the parties agreed to settle all remaining obligations through the issuance of shares of Common Stock.
NOTE 4. ACQUISITIONS AND INVESTMENTS
Orbit Investment (Related-Party)
Orbit Equity Method Investment
On October 31, 2025, the Company, Nuburu Defense, Alessandro Zamboni (the Company's Executive Chairman and Co-Chief Executive Officer), and Vanguard Holdings S.r.l. (“Vanguard”), a newly-formed Italian limited liability company wholly owned by Alessandro Zamboni, entered into a Sale, Purchase and Investment Agreement (the “Orbit Agreement”) for the sale of all of the ownership interests in Orbit to Nuburu Defense (the “Orbit Transaction”).
Under the Orbit Agreement, the Company has the exclusive right to market, sell, promote and distribute the Orbit platform to the security sector globally for
We accounted for our
As of December 31, 2025, the Company's investment in Orbit had a carrying value of $
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the fair value hierarchy due to the significant unobservable inputs. During the three months ended June 30, 2026 and 2025, the Company recognized $
In connection with the Orbit Change of Control discussed below, the Company remeasured its previously held
Orbit Change of Control
Effective as of January 15, 2026, the Company closed on a second tranche of such acquisition, resulting in the Company owning approximately
Orbit's assets are not contractually restricted to settling only Orbit's obligations, and Orbit's creditors have no recourse to the general credit of the Company. The Company's maximum exposure to loss is limited to its investment in Orbit (including goodwill) and the remaining unfunded portion of the Equity Infusion.
The preliminary purchase price was allocated to the acquired identifiable net assets of Orbit based on assessments of their respective fair values, and the excess of the purchase price over the fair values of these identifiable net assets was allocated to goodwill. Goodwill is not deductible for income tax purposes.
The following table summarizes the preliminary purchase price allocation of the Orbit Change of Control at the January 15, 2026 acquisition date:
Consideration transferred: |
|
|
|
|
Cash consideration |
|
$ |
|
|
Deposit on acquisition |
|
|
|
|
Subscription for Orbit shares at fair value (1) |
|
|
|
|
Previously held equity interest (2) |
|
|
|
|
Total consideration transferred |
|
$ |
|
|
Assets acquired: |
|
|
|
|
Cash and cash equivalents |
|
$ |
|
|
Accounts receivable |
|
|
|
|
Prepaid expenses and other current assets |
|
|
|
|
Property and equipment |
|
|
|
|
Developed technology |
|
|
|
|
Customer relationships |
|
|
|
|
Other assets |
|
|
|
|
Total assets acquired |
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|
|
|
Liabilities assumed: |
|
|
|
|
Accounts payable |
|
|
|
|
Accrued expenses |
|
|
|
|
Other liabilities |
|
|
|
|
Contingent consideration (related party) (3) |
|
|
|
|
Total liabilities assumed |
|
|
|
|
Net identifiable assets acquired |
|
|
( |
) |
Goodwill |
|
|
|
|
Total consideration transferred |
|
$ |
|
|
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The amounts above represent the Company’s provisional fair value estimates related to the acquisition as of January 15, 2026, and are subject to subsequent adjustments as additional information is obtained during the applicable measurement period. The primary areas of estimation that are not yet finalized include the identifiable intangible assets. The identifiable intangible assets consist of developed technology and customer relationships, which were assigned fair values of $
The developed technology intangible assets were valued using the relief from royalty method. The customer relationships intangible asset was valued using the multi-period excess earning method. These methods require several judgments and assumptions to determine the fair value of intangible assets, including revenue growth rates, discount rates, royalty rates, earnings before interest, taxes, and depreciation, and amortization margins, and tax rates, among others. These nonrecurring fair value measurements are Level 3 measurements within the fair value hierarchy.
The Company recognized $
The Company's condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2026 include revenue of $
Amendment to Orbit Preferred Obligation
On February 9, 2026, the parties to the Orbit Agreement entered into an amendment to issue
Lyocon Acquisition
On
Under the Lyocon Purchase Agreement, the sellers may receive an earn out payment of up to an aggregate of $
The Company may provide $
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election (the “Lyocon Funding”), of which $
The Lyocon sellers are employed as managers of Lyocon and entitled to participate in the Company's equity incentive plan under which they may receive equity awards of Common Stock to be issued by the Company. Under the Company's equity incentive plan, (i) if the share price of Common Stock reaches $
The Lyocon Acquisition was accounted for as a business combination using the acquisition method of accounting. The preliminary purchase price was allocated to the acquired identifiable net assets of Lyocon based on assessments of their respective fair values, and the excess of the purchase price over the fair values of these identifiable net assets was allocated to goodwill. Goodwill is primarily attributable to Lyocon's assembled workforce and expected synergies from integrating Lyocon's high-power laser design and manufacturing capabilities with the Company's existing blue laser technology platform. Goodwill is not deductible for income tax purposes.
The following table summarizes the preliminary purchase price allocation at the January 15, 2026 acquisition date:
Consideration transferred: |
|
|
|
|
Cash consideration |
|
$ |
|
|
Lyocon Convertible Notes (1) |
|
|
|
|
Contingent consideration (2) |
|
|
|
|
Total consideration transferred |
|
$ |
|
|
Assets acquired: |
|
|
|
|
Cash and cash equivalents |
|
$ |
|
|
Accounts receivable |
|
|
|
|
Inventories, net of reserve |
|
|
|
|
Prepaid expenses and other current assets |
|
|
|
|
Property and equipment |
|
|
|
|
Developed technology |
|
|
|
|
Customer relationships |
|
|
|
|
Other assets |
|
|
|
|
Trade names and trademarks |
|
|
|
|
Total assets acquired |
|
|
|
|
Liabilities assumed: |
|
|
|
|
Accounts payable |
|
|
|
|
Accrued expenses |
|
|
|
|
Deferred tax liability |
|
|
|
|
Other liabilities |
|
|
|
|
Total liabilities assumed |
|
|
|
|
Net identifiable assets acquired |
|
|
|
|
Goodwill |
|
|
|
|
Total consideration transferred |
|
$ |
|
|
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The amounts above represent the Company’s provisional fair value estimates related to the acquisition as of January 15, 2026, and are subject to subsequent adjustments as additional information is obtained during the applicable measurement period. The primary areas of estimation that are not yet finalized include the identifiable intangible assets. The identifiable intangible assets consist of developed technology, customer relationships, and trademarks and trade names, which were assigned fair values of $
Both the trademarks and trade names and the developed technology intangible assets were valued using the relief from royalty method. The customer relationships intangible asset was valued using the multi-period excess earning method. These methods require several judgments and assumptions to determine the fair value of intangible assets, including revenue growth rates, discount rates, royalty rates, earnings before interest, taxes, and depreciation, and amortization margins, and tax rates, among others. These nonrecurring fair value measurements are Level 3 measurements within the fair value hierarchy.
Under the Lyocon Purchase Agreement, the sellers may receive contingent consideration in the form of an earn-out of up to $
The Company recognized $
The Company's condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2026 include revenue of $
Pro Forma Information for Orbit Change of Control and Lyocon Acquisition
The following unaudited pro forma consolidated operating results give effect to (i) the Orbit Change of Control and (ii) the Lyocon Acquisition as if they had been completed as of January 1, 2025. These pro forma amounts are not necessarily indicative of the operating results that would have occurred if these transactions had occurred on such date.
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, 2026 |
|
|
June 30, 2025 |
|
|
June 30, 2026 |
|
|
June 30, 2025 |
|
||||
Revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Tekne Transaction
On January 13, 2026, the Company executed agreements regarding (i) the establishment of a Network Contract, a form of joint-venture agreement under Italian law, further described in Note 6, (ii) the Company's acquisition of an initial
On January 13, 2026, the Company entered into the Share Transfer and Shareholder Convertible Loan Agreement (the “Tekne Purchase Agreement”) with Mr. D’Arrezzo, Carlo Ulacco, and Andrea Lodi, the shareholders of Tekne. Under the Tekne Purchase Agreement, Mr. D’Arrezzo agreed to sell a
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Tekne will evaluate the adoption of Orbit’s “operational resilience” platform, and Tekne’s financial reporting processes will be adjusted to comply with U.S. GAAP.
During the fourth quarter of 2025, in connection with a letter contemplating the execution of such agreements, the Company paid $
In a letter, dated March 19, 2026 (the “March Tekne Letter”), among the Company, Nuburu Defense and the Tekne shareholders, the Company agreed to increase the amount of the Tekne Convertible Note Receivable from €
Under the March Tekne Letter, the parties also agreed to (i) as part of a restructuring plan for Tekne under Italian law, a possible purchase or financial lease of an industrial complex located in the Municipality of Ortona (CH) in Contrada Villa Caldari and the development of further business lines between the Company, Nuburu Defense and Tekne, including the manufacture of mobile units for the dual-use production of drones and related components, and (ii) a spin-off from Tekne of its equity interest in Turismo Italia S.r.l. and certain vehicles.
On May 26, 2026, the Company, through Nuburu Defense, entered into a definitive Investment Agreement (the “Investment Agreement”) with Tekne and the Tekne shareholders providing for the Company to acquire a
The Company elected the fair value option to account for the Tekne Investment, whereby the Tekne Investment is measured at fair value on a recurring basis, with the carrying value reflected in investments at fair value on the condensed consolidated balance sheet and changes in fair value reflected in change in fair value of investments on the condensed consolidated statement of operations and comprehensive loss. For additional information, see Note 7.
The Tekne Subordinated Convertible Note qualified for equity classification under ASC 815 because it is settleable only in shares of Common Stock. Because the note could be cancelled in exchange for re-transfer of the
Determination Regarding Influence Over Tekne
The Company holds a
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The Company concluded that it does not exercise significant influence over Tekne based on the following: (i) its
Under the Investment Agreement, the Company has the right to consent to specified corporate and operating actions by Tekne, and to decisions relating to Tekne's restructuring plan, during the period before closing. The Company determined that these are protective rights intended to preserve the agreed value of the transaction and to protect the Company's interests as a shareholder and lender; they do not give the Company the ability to direct Tekne's operating or financial policies and do not change the Company's conclusion regarding significant influence.
The Company will reassess significant influence in future periods, including upon receipt of Golden Power regulatory approval, exercise of the Capital Increase, or conversion of the Tekne Convertible Note Receivable.
Variable Interest Entity Considerations
Tekne is a variable interest entity because its equity at risk is insufficient to finance its activities without additional subordinated financial support, including the Company's shareholder loan. The Company has determined that it is not the primary beneficiary and does not consolidate Tekne, as the activities that most significantly impact Tekne's economic performance are directed by its board and majority shareholders, who held approximately
Cooperation Agreement with Beryl
On March 3, 2026, Nuburu Defense entered into an International Cooperation Agreement (“Beryl Agreement”) with Tekne and Engineering Bureau Beryl LLC (“Beryl”), pursuant to which the parties will collaborate to support the deployment in Ukraine of a high-performance vehicle developed and manufactured by Tekne based on the Graelion platform, known as the “Tekne Graelion” (the “Graelion Product”). The Beryl Agreement provides a framework for the qualification, deployment, and coordinated industrial scaling of the Graelion Product in Ukraine. Tekne and Nuburu Defense are parties to the Network Contract, which is a specific form of joint-venture contractual agreement under Italian law, and this program is being entered into by Tekne and Nuburu Defense in connection with the Network Contract.
Beryl, a Ukrainian industrial company currently producing and supplying vehicles to Ukrainian military forces, is expected to verify compliance of the Graelion Product with the characteristics stated by the manufacturer, carry out mission-specific kit integration to bring the Graelion Product into conformity with the technical requirements of state customers in Ukraine, and demonstrate the Graelion Product to potential customers. Tekne will be the sole provider of the Graelion Product chassis and core technology required to operate the Graelion Product.
The Beryl Agreement provides a two-year exclusivity period during which (i) Beryl is prohibited from representing any product that competes with the Graelion Product, except for contracts entered into by Beryl prior to the effective date of the Beryl Agreement, and (ii) Tekne will not enter into negotiations with any other third party with respect to the deployment of the Graelion Product in Ukraine or development of the mission-specific kit integration of the Graelion Product. Under the Beryl Agreement, and as part of the Network Contract, Nuburu Defense and Tekne established a joint representative office in Kyiv to serve as the program’s operational, industrial and compliance coordination center. Under the Beryl Agreement, Nuburu Defense may provide capital, advance payments, and procurement support, enabling Tekne to acquire materials and components for the Graelion Product. Nuburu Defense and Tekne will jointly assess and determine the economic feasibility of any transaction involving the Graelion Product, including pricing, margin structure and overall program profitability thresholds.
Heckler & Koch AG Investment
As part of ongoing efforts to invest the Company's assets to build out its Defense and Security Platform, on February 6, 2026, the Company entered into a Securities Purchase Agreement (the “H&K Investment Agreement”) with Brick Lane Capital Management Limited (“Brick Lane”) (the "H&K Transaction") pursuant to which the Company acquired from Brick Lane
The H&K Investment is classified as an equity security under ASC 321 and is measured at fair value based on quoted market prices, with changes in fair value, including those related to foreign currency exchange, recognized in change in fair value of investments on the condensed consolidated statement of operations and comprehensive loss and the carrying value included within investments at fair value on the condensed consolidated balance sheet. For additional information, see Note 7.
Transaction expenses of
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Maddox Joint Venture
On February 26, 2026, the Company and Nuburu Defense entered into a Contractual Joint Venture Agreement (the “Maddox Agreement”), with Maddox Defense Incorporated (“Maddox”), pursuant to which the Company and Maddox have established a contractual joint venture for the development of a modular, containerized, mobile additive manufacturing platform capable of producing drone components, pods, mission-critical structural parts and related components for defense and security applications (the “Maddox Program” or the “Maddox Product”).
Under the Maddox Agreement, the Maddox Program is structured in two phases:
The Maddox Agreement has an initial
As Maddox is compensated for development services and does not share in the Maddox Program’s commercial risks and rewards, the arrangement is not a collaborative arrangement, therefore the Company accounts for its Phase I activities under the Maddox Agreement in accordance with ASC Topic 730, Research and Development. Accordingly, such amounts are expensed as research and development costs as incurred. No Phase I costs are capitalized, as such costs relate to project-specific activities with no alternative future use. Nonrefundable advance or milestone payments are recorded as prepaid assets and recognized as research and development expense as the related services are performed. For the three and six months ended June 30, 2026, the Company recognized
SYME
Strategic Investment (Related Party)
Supply@ME Capital Plc (“SYME") and its operating subsidiaries provide its platform for use by manufacturing and trading companies to access inventory trade solutions, enabling their businesses to generate cashflow, through a non-credit arrangement and without incurring debt. This is achieved by their existing eligible inventory being added to the platform and then monetized through purchases by third-party inventory funders. The inventory to be monetized can include warehoused goods waiting to be sold to end-customers or goods that are part of a typical import/export transaction.
During the year ended December 31, 2025, in connection with the inventory monetization program discussed above, the Company advanced $
SYME 3 Bond Subscription Agreement (Related Party)
On March 12, 2026, the Company entered into a Bond Subscription Agreement (the “SYME 3 Agreement”), with Supply@ME Stock Company 3 S.r.l. (“SYME 3"), pursuant to which SYME 3 may issue up to €
The SYME Bonds are held in dematerialized form with Euronext Securities Milan. The SYME Bonds are obligations solely of SYME 3 and are secured by security interests in a Pegno Non Possessorio (a non-possessory pledge) under Italian law over the inventory of Tekne acquired with such funds and future receivables linked to such inventory; a pledge agreement over a bank account opened by SYME 3 entered into by
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SYME 3, as pledgor, and the Company, as secured creditor; and a pledge agreement over receivables and assignment of VAT receivables entered into by SYME 3, as pledgor, and the Company, as secured creditor. The SYME Bonds accrue interest daily at a rate of 3-month Euro Interbank Offered Rate plus
The SYME Bonds constitute a related party transaction as certain members of the Company's management and Board of Directors, Mr. Zamboni and Mr. Ricchebuono, also serve in administrative positions and/or hold ownership interests in SYME 3, SFE Société Financière Européenne SA (“SFE SA”) and SYME, as the case may be.
The Company elected the fair value option for the SYME Bonds at issuance, primarily for simplification and cost-benefit considerations of accounting for the SYME Bonds at fair value in their entirety, as well as consistency with the Company's election of the fair value option for other financial instruments. Under this election, the SYME Bonds were initially recognized at the fair value of $
As of June 30, 2026, principal under the SYME Bonds was $
Variable Interest Entity
SYME 3 is an Italian special purpose vehicle that funds and operates an inventory securitization program for Tekne. SYME 3 is a VIE because its equity at risk is insufficient to finance its activities without additional subordinated financial support.
The Company holds the SYME Bonds as its sole variable interest in SYME 3 and has determined it is not the primary beneficiary. The most significant activities of SYME 3, including selecting inventory transactions and pricing, contracting with counterparties, and executing remarketing, are directed by SYME 3’s sole administrator, Mr. Matteo Ricchebuono, who is appointed and removable at will by SFE SA, SYME 3’s
The Company has standard protective rights as a bondholder that do not provide governance authority over SYME 3’s significant activities.
The Company considered whether any related parties hold the requisite power. Mr. Ricchebuono serves on the Company’s Board of Directors and holds directly and/ or indirectly only a minority, non-controlling investment in SFE SA; that investment does not confer power over SFE SA’s decision-making or SYME 3’s significant activities, and he was not appointed to his administrator role by the Company. Mr. Zamboni, the Company’s Executive Chairman and Co-CEO, holds directly and/ or indirectly a minority, non-controlling investment in SFE SA; that investment does not confer power over SFE SA’s decision-making or SYME 3’s significant activities, and he holds no role at SYME 3. SFE EI, a subsidiary of SFE SA, has provided funding to the Company and placed $
The Company’s maximum exposure to loss is limited to the carrying amount of the SYME Bonds and accrued interest. No additional financial support has been provided or is contractually required.
NOTE 5. GOODWILL AND INTANGIBLE ASSETS
Goodwill
Changes in the carrying amount of the Company's goodwill are set forth below:
|
|
Orbit Change of Control |
|
|
Lyocon |
|
|
Total |
|
|||
Balance as of December 31, 2025 |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Acquisitions |
|
|
|
|
|
|
|
|
|
|||
Balance as of June 30, 2026 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
27
Table of Contents
Intangible Assets Subject to Amortization, Net
The details of the Company's intangible assets subject to amortization are set forth below:
|
|
|
|
June 30, |
|
|||||||||
|
|
Weighted-average amortization period |
|
Gross carrying |
|
|
Accumulated |
|
|
Net carrying |
|
|||
Developed technology |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Customer relationships |
|
|
|
|
|
|
( |
) |
|
|
|
|||
Trade names / trademarks |
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total |
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Amortization expense related to intangible assets with finite useful lives was $
|
|
Amount |
|
|
Remainder of 2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
Thereafter |
|
|
|
|
Total |
|
$ |
|
|
NOTE 6. CONVERTIBLE NOTES RECEIVABLE
SYME Convertible Note Receivable (Related-Party)
On March 14, 2025, the Company entered into a convertible note receivable with SYME to invest up to $
Certain conversion features of the SYME Convertible Note Receivable would typically be considered derivatives that would require bifurcation. In lieu of bifurcating various features in the agreement, the Company elected the fair value option for the SYME Convertible Note Receivable. During March 2025, the excess of the issuance date fair value of $
Tekne Convertible Note Receivable and Network Contract
Under the Tekne Purchase Agreement, the Company funded the Tekne Convertible Note Receivable in the amount of €
28
Table of Contents
in Tekne and would receive governance rights in Tekne consistent with its ownership percentage in Tekne under new by-laws adopted by Tekne. As the Company accounted for the Tekne Investment at fair value, the Company elected the fair value option for the Tekne Convertible Note Receivable, with changes in fair value reflected within change in fair value of convertible notes receivable on the condensed consolidated statements of operations and comprehensive loss.
The Network Contract entered into between Tekne and Nuburu Defense has an initial term ending
As of June 30, 2026, the principal amount outstanding under the Tekne Convertible Note Receivable was $
NOTE 7. FAIR VALUE MEASUREMENTS
The Company’s financial instruments that are carried at fair value consist of Level 1 and Level 3 assets and liabilities:
Level 1. Level 1 assets include (i) the H&K Investment and (ii) highly liquid bank deposits and money market funds, which were not material in any period presented herein. The fair value of the H&K Investment is determined using Level 1 quoted market prices on Euronext Paris, which was determined to be Level 1 as it uses unadjusted quoted prices in active markets.
Level 3. Level 3 assets and liabilities are included in the table below, and are classified as Level 3 due to the use of unobservable inputs in the valuation of the asset or liability.
|
|
Defined and Described in Note(s) |
|
Gains or Losses from the Remeasurement included in: |
Assets: |
|
|
|
|
SYME Convertible Note Receivable (related party) |
|
6 |
|
Change in fair value of convertible notes receivable |
Tekne Convertible Note Receivable |
|
4 |
|
Change in fair value of convertible notes receivable |
Tekne Investment |
|
4 |
|
Change in fair value of investments |
SYME Bonds (related party) |
|
4 |
|
Change in fair value of SYME Bonds (related party) |
|
|
|
|
|
Liabilities: |
|
|
|
|
Fair value debt |
|
10 |
|
Change in fair value of debt |
SEPA liability |
|
13 |
|
Change in fair value of SEPA liability |
February 2026 Offering Common Warrants |
|
11 & 12 |
|
Change in fair value of warrant liabilities |
February 2026 Offering Pre-Funded Warrants |
|
11 & 12 |
|
Change in fair value of warrant liabilities |
2025 Offering Common Stock Warrants |
|
11 & 12 |
|
Change in fair value of warrant liabilities |
Junior Note Warrants |
|
10 & 11 |
|
Change in fair value of warrant liabilities |
Contingent consideration |
|
4 |
|
Change in fair value of contingent consideration |
There were no transfers between Level 1, Level 2, and Level 3 in any period presented.
29
Table of Contents
The following tables set forth the fair value of the Company’s financial assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy as of June 30, 2026 and December 31, 2025:
|
|
As of June 30, 2026 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
SYME Convertible Note Receivable (related party) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||
Tekne Convertible Note Receivable |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
H&K Investment |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Tekne Investment |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
SYME Bonds (related party) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Current portion of debt: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fair value debt |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||
SEPA liability |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Warrant liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
February 2026 Offering Common Warrants |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Junior Note Warrants |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Contingent Consideration |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Total liabilities |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||
|
|
As of December 31, 2025 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
SYME Convertible Note Receivable (related party) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||
Total assets |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Current portion of debt: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Debt - fair value option |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||
SEPA liability |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Warrant liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
2025 Offering Common Stock Warrants |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Junior Note Warrants |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Claims settlement liability |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Total liabilities |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||
Level 3 Financial Assets
Convertible Notes Receivable
The following table sets forth a summary of the changes in fair value of the Company's related-party SYME Convertible Note Receivable and Tekne Convertible Note Receivable, each of which is accounted for under the fair value option:
|
|
Three months ended June 30, |
|
|||||||||||||
|
|
2026 |
|
|
2025 |
|
||||||||||
|
|
SYME Convertible Note Receivable (related party) |
|
|
Tekne Convertible Note Receivable |
|
|
Total |
|
|
SYME Convertible Note Receivable (related party) |
|
||||
Fair value, beginning balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Reclassification of Advance on Tekne Convertible Note Receivable |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Principal additions |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Change in fair value |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Fair value, ending balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
30
Table of Contents
|
|
Six months ended June 30, |
|
|||||||||||||
|
|
2026 |
|
|
2025 |
|
||||||||||
|
|
SYME Convertible Note Receivable (related party) |
|
|
Tekne Convertible Note Receivable |
|
|
Total |
|
|
SYME Convertible Note Receivable (related party) |
|
||||
Fair value, beginning balance |
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
||
Initial fair value over proceeds paid |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Reclassification of Advance on Tekne Convertible Note Receivable |
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
||
Principal additions |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Change in fair value |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Fair value, ending balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The fair values of the SYME Convertible Note Receivable and the Tekne Convertible Note Receivable were estimated using Level 3 valuation techniques, a Monte Carlo simulation and a Black-Scholes model, respectively.
|
|
Six months ended June 30, |
||||
|
|
2026 |
|
2025 |
||
|
|
SYME Convertible Note Receivable (related party) |
|
Tekne Convertible Note Receivable |
|
SYME Convertible Note Receivable (related party) |
Stock price |
$ |
$ |
N/A |
$ |
||
Expected term (in years) |
|
|
|
|||
Expected volatility |
|
|
|
|||
Risk-free interest rate |
|
|
|
|||
Expected dividend yield |
|
|
|
|||
Tekne Investment
The following table sets forth a summary of the changes in fair value of the Company's Tekne Investment:
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||
|
|
2026 |
|
|||||
Fair value, beginning balance |
|
$ |
|
|
$ |
— |
|
|
Fair value at issuance |
|
|
— |
|
|
|
|
|
Change in fair value |
|
|
( |
) |
|
|
( |
) |
Fair value, ending balance |
|
$ |
|
|
$ |
|
||
As discussed in Note 4, the fair value of the Tekne Investment at issuance and through June 30, 2026 was estimated using a discounted cash flow method approach, a Level 3 valuation, with the range of significant inputs to the calculation of the fair value as follows:
|
|
Six months ended June 30, |
|
|
2026 |
Stock price |
$ |
N/A |
Expected term (in years) |
|
|
Expected volatility |
|
N/A |
Risk-free interest rate |
|
|
Risk-adjusted discount rate |
|
N/A |
Expected dividend yield |
|
N/A |
SYME Bonds
The following table sets forth a summary of the changes in fair value of the SYME Bonds:
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||
|
|
2026 |
|
|||||
Fair value, beginning balance |
|
$ |
|
|
$ |
— |
|
|
Fair value at issuance |
|
|
— |
|
|
|
|
|
Change in fair value |
|
|
|
|
|
|
||
Fair value, ending balance |
|
$ |
|
|
$ |
|
||
31
Table of Contents
The fair value of the SYME Bonds at issuance and through June 30, 2026 was estimated using an income based approach, a Level 3 valuation, with the range of significant inputs to the calculation of the fair value as follows:
|
|
Six months ended June 30, |
|
|
2026 |
Expected term (in years) |
|
|
Credit spread |
|
Level 3 Financial Liabilities
Debt - Fair Value Option
The following tables set forth a summary of the changes in fair value of the Company's debt recorded under the fair value option. For information regarding debt not recorded under the fair value option, see Note 10.
|
|
Three months ended June 30, |
|
|||||||||||||||||||||
|
|
2026 |
|
|||||||||||||||||||||
|
|
Beginning Balance |
|
|
Issuance |
|
|
Additions & (Payments) |
|
|
Conversion |
|
|
Change in Fair Value |
|
|
Ending Balance |
|
||||||
December 2025 YA Debenture |
|
$ |
|
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
|
||
2026 Brick Lane H&K Investment Note |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
2025 Indigo Capital Convertible Notes |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
2025 Diagonal Convertible Notes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Agile Note |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
2025 Brick Lane Convertible Notes |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
2025 Bomore Convertible Notes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
2025 Torcross Convertible Note |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total |
|
$ |
|
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||
|
|
Three months ended June 30, |
|
|||||||||||||||||||||
|
|
2025 |
|
|||||||||||||||||||||
|
|
Beginning Balance |
|
|
Issuance |
|
|
Additions & (Payments) |
|
|
Conversion |
|
|
Change in Fair Value |
|
|
Ending Balance |
|
||||||
2025 Indigo Capital Convertible Notes |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||
Agile Note |
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
||||
2025 Diagonal Convertible Notes |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
2025 Boot Convertible Note |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
2025 Brick Lane Convertible Notes |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||
2025 Bomore Convertible Notes |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
2025 Torcross Convertible Note |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||
|
|
Six months ended June 30, |
|
|||||||||||||||||||||
|
|
2026 |
|
|||||||||||||||||||||
|
|
Beginning Balance |
|
|
Issuance |
|
|
Additions & (Payments) |
|
|
Conversion |
|
|
Change in Fair Value |
|
|
Ending Balance |
|
||||||
December 2025 YA Debenture |
|
$ |
|
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|||
2026 Brick Lane H&K Investment Note |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
2025 Indigo Capital Convertible Notes |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
— |
|
||
2025 Diagonal Convertible Notes |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
Agile Note |
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
— |
|
||
2025 Brick Lane Convertible Notes |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
— |
|
||
2025 Bomore Convertible Notes |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
— |
|
||
2025 Torcross Convertible Note |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
— |
|
||
Total |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||
32
Table of Contents
|
|
Six months ended June 30, |
|
|||||||||||||||||||||
|
|
2025 |
|
|||||||||||||||||||||
|
|
Beginning Balance |
|
|
Issuance |
|
|
Additions & (Payments) |
|
|
Conversion |
|
|
Change in Fair Value |
|
|
Ending Balance |
|
||||||
2025 Indigo Capital Convertible Notes |
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
Agile Note |
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
||||
2025 Diagonal Convertible Notes |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
2025 Boot Convertible Note |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
2025 Brick Lane Convertible Notes |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||
2025 Bomore Convertible Notes |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
2025 Torcross Convertible Note |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|||
Total |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||
The fair value of the Company's debt recorded under the fair value option was estimated using Level 3 fair value measurements. The range of significant inputs to the calculation of the fair value of the debt recorded under the fair value option at issuance through June 30, 2026 were as follows:
|
|
Six months ended June 30, 2026 |
||||||
Valuation Inputs: |
|
December 2025 YA Debenture (1) |
|
Brick Lane H&K Investment Note(2) |
|
2025 Indigo Capital Convertible Notes(1) |
|
2025 Brick Lane |
Stock price |
$ |
$ |
$ |
$ |
||||
Expected term (in years) |
|
|
|
|
||||
Expected volatility |
|
|
|
N/A |
|
N/A |
||
Risk-free interest rate |
|
|
|
N/A |
|
N/A |
||
Risk-adjusted discount rate |
|
|
N/A |
|
N/A |
|
N/A |
|
Expected dividend yield |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
|
Six months ended June 30, 2025 |
||||||||||||
Valuation Inputs: |
|
2025 Indigo Capital Convertible Notes(1) |
|
Agile Note (4) |
|
2025 Diagonal Convertible Notes (1) |
|
2025 Boot Convertible Note (1) |
|
2025 Brick Lane Convertible Notes (1)(3) |
|
2025 Bomore Convertible Notes (3) |
|
2025 Torcross Convertible Note (3) |
Stock price (5) |
$ |
|
N/A |
$ |
$ |
$ |
$ |
$ |
||||||
Expected term (in years) |
|
|
|
|
|
|
|
|||||||
Expected volatility |
|
|
N/A |
|
|
|
N/A |
|
|
N/A |
||||
Risk-free interest rate |
|
|
N/A |
|
|
|
N/A |
|
|
N/A |
||||
Risk-adjusted discount rate |
|
|
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
||
Expected dividend yield |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
33
Table of Contents
SEPA Liability
The following table sets forth a summary of the changes in fair value of the Company's SEPA liability:
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Fair value, beginning balance |
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
||
Fair value at issuance |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Common Stock issued |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Settlement of December 2025 YA Debenture |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Cash proceeds |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Change in fair value |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Fair value, ending balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The fair value of the Company's SEPA liability at issuance and through June 30, 2026 was estimated using (i) related to the put option, a Monte Carlo valuation model utilizing various inputs including the Company’s stock price, volatility, risk-free interest rate, expected term of the agreement and expected share draw amount and (ii) for the June 30, 2025 valuation, related to the shares issuable in connection with the SEPA commitment fee, the fair value of the underlying shares, each of which is a Level 3 valuation.
|
|
Six months ended June 30, |
||
|
|
2026 |
|
2025 (1) |
Stock price |
$ |
$ |
||
Expected term (in years) |
|
|
||
Expected volatility |
|
|
||
Risk-free interest rate |
|
|
||
Expected dividend yield |
|
N/A |
|
|
Warrant Liabilities
The following table sets forth a summary of the changes in fair values of the February 2026 Offering Common Warrants, February 2026 Offering Pre-Funded Warrants, 2025 Offering Common Stock Warrants and Junior Note Warrants (the warrants issued in connection with the Junior Notes, as further described in Note 12):
|
|
Three months ended June 30, |
|
|||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
||||||||||||||||||
|
|
February 2026 Offering Common Warrants |
|
|
February 2026 Offering Pre-Funded Warrants |
|
|
2025 Offering Common Stock Warrants |
|
|
Junior Note Warrants |
|
|
Total Warrant Liabilities |
|
|
Junior Note Warrants |
|
||||||
Fair value, beginning balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Fair value allocation at issuance |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Exercises |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
Change in fair value |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|||
Fair value, ending balance |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
Six months ended June 30, |
|
|||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
||||||||||||||||||
|
|
February 2026 Offering Common Warrants |
|
|
February 2026 Offering Pre-Funded Warrants |
|
|
2025 Offering Common Stock Warrants |
|
|
Junior Note Warrants |
|
|
Total Warrant Liabilities |
|
|
Junior Note Warrants |
|
||||||
Fair value, beginning balance |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Fair value allocation at issuance |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|||
Exercises |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
Change in fair value |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Fair value, ending balance |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
34
Table of Contents
The aggregate fair values of the February 2026 Offering Common Warrants, February 2026 Offering Pre-Funded Warrants, 2025 Offering Common Stock Warrants and Junior Note Warrants were estimated using a Monte Carlo simulation based approach, a Level 3 valuation.
|
|
Six months ended June 30, |
||||||||
|
|
2026 |
|
2025 |
||||||
|
|
February 2026 Offering Common Warrants |
|
February 2026 Offering Pre-Funded Warrants |
|
2025 Offering Common Stock Warrants |
|
Junior Note Warrants |
|
Junior Note Warrants (1) |
Stock price |
$ |
$ |
$ |
$ |
$ |
|||||
Expected term (in years) |
|
|
N/A |
|
N/A |
|
|
|||
Expected volatility |
|
|
N/A |
|
N/A |
|
|
|||
Risk-free interest rate |
|
|
N/A |
|
N/A |
|
|
|||
Expected dividend yield |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
|
Contingent Consideration
The following table sets forth a summary of the changes in fair values of the contingent consideration, which is comprised of the RegTech Contingent Consideration and the Lyocon Contingent Consideration, each as defined and described in Note 4:
|
|
Three months ended June 30, |
|
|||||||||
|
|
2026 |
|
|||||||||
|
|
RegTech Contingent Consideration |
|
|
Lyocon Contingent Consideration |
|
|
Total |
|
|||
Fair value, beginning balance |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Fair value at issuance |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Change in fair value |
|
|
|
|
|
|
|
|
|
|||
Foreign currency translation adjustment |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Fair value, ending balance |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
Six months ended June 30, |
|
|||||||||
|
|
2026 |
|
|||||||||
|
|
RegTech Contingent Consideration |
|
|
Lyocon Contingent Consideration |
|
|
Total |
|
|||
Fair value, beginning balance |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Fair value at issuance |
|
|
|
|
|
|
|
|
|
|||
Change in fair value |
|
|
|
|
|
|
|
|
|
|||
Foreign currency translation adjustment |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Fair value, ending balance |
|
$ |
|
|
$ |
|
|
$ |
|
|||
The fair value of the RegTech Contingent Consideration and the Lyocon Contingent Consideration at issuance and through June 30, 2026 were each estimated using a Monte Carlo simulation based approach, a Level 3 valuation, with the range of significant inputs to the calculation of the fair value as follows:
|
|
Six months ended June 30, |
||
|
|
2026 |
||
|
|
RegTech Contingent Consideration |
|
Lyocon Contingent Consideration |
Stock price |
$ |
N/A |
$ |
N/A |
Expected term (in years) |
|
|
||
Expected volatility |
|
|
||
Risk-free interest rate |
|
|
||
Risk-adjusted discount rate |
|
|
||
Expected dividend yield |
|
N/A |
|
N/A |
35
Table of Contents
August 2024 Convertible Note Derivative Liability
In March 2025, the remaining August 2024 Convertible Notes (the convertible notes issued by the Company in August 2024) were purchased by Indigo Capital and subsequently extinguished. For additional information, see Note 10.
The following table sets forth a summary of the changes in fair value of the Company's August 2024 Convertible Note Derivative Liability:
|
|
Six months ended June 30, |
|
|
|
|
2025 |
|
|
Fair value, beginning balance |
|
$ |
|
|
Extinguishment of August 2024 Convertible Notes |
|
|
( |
) |
Fair value, ending balance |
|
$ |
|
|
NOTE 8. COMMITMENTS AND CONTINGENCIES
Liqueous Settlement Agreement
In January 2025 and April 2025, in connection with a settlement and mutual release agreement entered into between the Company and Liqueous LP (“Liqueous”) (the "Liqueous Settlement Agreement"), as amended, the parties provided an immediate mutual release of claims and obligations through payments from Liqueous to the Company in an aggregate $
Legal Proceedings
In the normal course of business, the Company may become involved in legal proceedings. The Company will accrue a liability for legal proceedings when it is probable that a liability has been incurred and the amount can be reasonably estimated. Significant judgment is required to determine both probability and the estimated amount. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued.
On September 19, 2025, J.H. Darbie & Co., Inc. (“Darbie”) filed a claim in the U.S. District Court of the Southern District of Florida, West Palm Beach Division, alleging breach of contract under a Finder’s Fee Agreement entered into between the Company and Darbie in May 2024 and under a Financial Advisory Agreement, dated June 10, 2024, between the parties. Darbie was seeking, among other things, damages in the amount of the fee payments allegedly owed to Darbie, specific performance requiring the Company to issue warrants to Darbie, attorney’s fees and costs. Darbie voluntarily dismissed the lawsuit due to lack of jurisdiction in Florida on January 7, 2026. On March 10, 2026, Darbie initiated an arbitration in FINRA’s dispute resolution forum.
Purchase Commitments
As of June 30, 2026 and 2025, the Company had $
Related Party Transactions
Debt
In January 2025, the Company issued the TAG Promissory Note to TAG, which is founded and owned by the Company's Executive Chairman and Co-Chief Executive Officer, Mr. Zamboni, as a replacement of a previously recorded shareholder advance. Mr. Zamboni transferred the TAG Promissory Note to Vanguard and subsequently converted the TAG Promissory Note into shares of Common Stock during 2025. For additional information, see Note 10.
In April 2025, in connection with a previous unsuccessful acquisition, the Company issued the AZ Promissory Note to Mr. Zamboni, which Mr. Zamboni subsequently transferred to Vanguard and converted into shares of Common Stock during 2025. For additional information, see Note 10.
Acquisitions and Investments
For certain acquisition and investment-related transactions involving related parties, see Notes 4 and 6.
36
Table of Contents
NOTE 9. REVENUE
The Company’s primary revenue-generating activity involves the sale of directed-energy systems, high-powered laser solutions, and integrated defense and security technologies, as well as related installation, support, and service offerings. The Company operates a dual-use business model, serving both defense and commercial markets across Europe and the United States. The Company disaggregates revenue by product and service type, client industry/market, and geographic region, as presented in the tables below.
The following table presents revenue from contracts with customers disaggregated by geography:
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Europe |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
United States |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The following table presents revenue from contracts with customers disaggregated by product and service type:
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Orbit: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
SaaS and hosted software subscriptions |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Application maintenance services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Lyocon: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Product sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Professional services revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The following table presents revenue from contracts with customers disaggregated by the timing of revenue recognition:
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Revenue recognized at a point in time |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Revenue recognized over time |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Contract assets represent revenue recognized in excess of billings for which the right to payment is conditional on performance rather than solely on the passage of time, and are reclassified to accounts receivable when the right to consideration becomes unconditional. Contract liabilities consist of customer deposits and amounts billed or collected in advance of revenue recognition, which are recognized as revenue when the related performance obligations are satisfied.
|
|
Accounts Receivable |
|
|
Contract Assets |
|
|
Contract Liabilities |
|
|||
December 31, 2025 |
|
|
|
|
|
|
|
|
|
|||
June 30, 2026 |
|
|
|
|
|
|
|
|
|
|||
The increases in accounts receivable, contract assets, and contract liabilities from December 31, 2025 to June 30, 2026 are attributable to the Orbit Change of Control and Lyocon Acquisition, further described in Note 4. The opening balances of accounts receivable, contract assets, and contract liabilities acquired in these business combinations are reflected in the Company’s condensed consolidated balance sheet beginning on the acquisition date.
The contract liability as of December 31, 2025 was
Remaining Performance Obligations
Remaining performance obligations represent the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied, or partially unsatisfied, as of the end of the reporting period. As of June 30, 2026, the aggregate transaction price allocated to unsatisfied performance obligations related to Lyocon revenue was $
37
Table of Contents
following
NOTE 10. DEBT
As of June 30, 2026 and December 31, 2025, the Company's outstanding debt consisted of the following:
|
|
June 30, |
|
|
December 31, |
|
||
Current portion of debt: |
|
|
|
|
|
|
||
December 2025 YA Debenture |
|
$ |
|
|
$ |
|
||
2026 Brick Lane H&K Investment Note |
|
|
|
|
|
— |
|
|
Lyocon Convertible Notes |
|
|
|
|
|
— |
|
|
2025 Brick Lane Convertible Notes |
|
|
— |
|
|
|
|
|
2025 Indigo Capital Convertible Notes |
|
|
— |
|
|
|
|
|
2025 Diagonal Convertible Notes |
|
|
— |
|
|
|
|
|
Agile Note |
|
|
— |
|
|
|
|
|
2025 Bomore Convertible Notes |
|
|
— |
|
|
|
|
|
2025 Torcross Convertible Note |
|
|
— |
|
|
|
|
|
Liqueous Obligation |
|
|
|
|
|
|
||
Current portion of debt |
|
$ |
|
|
$ |
|
||
Extinguishment of Junior and Senior Notes Issued in 2023 and 2024
During the three and six months ended June 30, 2025, the Company issued
Foreclosure Collateral Sale
On March 5, 2025, as part of the foreclosure process initiated by the lead investor (the “Foreclosure”), the lenders holding the outstanding Senior Convertible Notes (the senior secured convertible notes issued by the Company in 2023 and 2024) held an auction for the sale of collateral securing the Company’s repayment obligations, which resulted in such lenders taking possession of such collateral in exchange for a full discharge and extinguishment of the Company’s $
Liqueous Obligation
In October 2024, the Company and Liqueous agreed to terms where the Company borrowed $
In February 2025, in connection with the Liqueous Settlement Agreement, as amended, the Company agreed to issue
TAG Promissory Note (Related Party)
In January 2025, the Company issued a promissory note in a principal amount of $
In July 2025, following stockholder approval, the TAG Promissory Note was amended to permit TAG to convert any outstanding principal and unpaid accrued interest due under the TAG Promissory Note into shares of Common Stock at a conversion price equal to a
38
Table of Contents
In December 2025, TAG transferred its interest in the TAG Promissory Note to Vanguard, a newly-formed Italian limited liability company wholly owned by the Company’s Executive Chairman and Co-Chief Executive Officer and Vanguard then converted the TAG Promissory Note into shares of Common Stock.
AZ Promissory Note (Related Party)
In connection with a previous unsuccessful acquisition, the Company retained $
In July 2025, following stockholder approval, the AZ Promissory Note was amended to permit Mr. Zamboni to convert any outstanding principal and unpaid accrued interest due under the AZ Promissory Note into shares of Common Stock at a conversion price equal to a
In October 2025, Mr. Zamboni transferred his interest in the AZ Promissory Note to Vanguard. In December 2025, Vanguard converted the AZ Promissory Note into shares of Common Stock.
2025 Indigo Capital Convertible Notes
In March, April, July and August 2025, the Company issued multiple unsecured convertible notes to Indigo Capital LP ("Indigo Capital"), including the “2025 March Indigo Capital Convertible Notes”, the “2025 April Indigo Capital Convertible Notes”, the "2025 July Indigo Capital Convertible Note" and the “2025 August Indigo Capital Convertible Note” collectively the “2025 Indigo Capital Convertible Notes”, in connection with both new capital infusions and the exchange of previously outstanding indebtedness.
The 2025 Indigo Capital Convertible Notes generally bear no interest unless an event of default has occurred, at which time interest accrues at
Issuances of shares upon conversion were initially subject to a
Certain conversion features of the 2025 Indigo Capital Convertible Notes would typically be considered derivatives that would require bifurcation. As such, the Company elected to account for the 2025 Indigo Capital Convertible Notes at fair value, and the changes in the fair value are recorded within the condensed consolidated statement of operations and comprehensive loss.
During the three and six months ended June 30, 2025, the Company recorded a loss on issuance of debt of $
Conversions
During the three months ended June 30, 2026 and 2025, Indigo Capital converted $
During the six months ended June 30, 2026 and 2025, Indigo Capital converted $
Principal
At June 30, 2026, the 2025 Indigo Capital Convertible Notes were
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Agile Note
In May 2025, the Company entered into a Business Loan and Security Agreement with Agile Capital Funding, LLC and its affiliates (“Agile”), pursuant to which the Company issued to Agile a $
Certain features of the Agile Note would typically be considered derivatives that would require bifurcation. As such, the Company elected to account for the Agile Note at fair value, and the changes in the fair value are recorded within the condensed consolidated statements of operations and comprehensive loss.
The Company received net proceeds of $
On May 30, 2025, the Company executed an amendment to the Business Loan and Security Agreement with Agile, which amended (i) the principal amount of the Agile Note to $
Principal
At June 30, 2026, the Agile Note was
2025 Diagonal Convertible Notes
In May and July 2025, the Company issued unsecured convertible promissory notes to 1800 Diagonal Lending LLC (“Diagonal”), including the “2025 Diagonal Convertible Note” issued in May and the “2025 July Diagonal Convertible Note”, collectively the “2025 Diagonal Convertible Notes”, in connection with capital infusions.
The 2025 Diagonal Convertible Notes bear interest at
Certain conversion features of the 2025 Diagonal Convertible Notes would typically be considered derivatives that would require bifurcation. As such, the Company elected to account for the 2025 Diagonal Convertible Notes at fair value, and the changes in the fair value are recorded within the consolidated statement of operations. The excess of the initial fair value of $
The Company received net proceeds of $
Conversions
During the six months ended June 30, 2026, Diagonal converted the entire remaining $
Principal
At June 30, 2026, the 2025 Diagonal Convertible Notes were
2025 Boot Convertible Note
In May 2025, the Company entered into a Securities Purchase Agreement with Boot Capital LLC (“Boot”), pursuant to which the Company issued to Boot a $
Certain conversion features of the 2025 Boot Convertible Note would typically be considered derivatives that would require bifurcation. As such, the Company elected to account for the 2025 Boot Convertible Note at fair value, and the changes in the fair value are recorded within the consolidated statement of operations. The excess of the initial fair value of $
The Company received net proceeds of $
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Principal
At June 30, 2026, the 2025 Boot Convertible Note was
2025 Brick Lane Convertible Notes
In June and September 2025, the Company issued unsecured convertible notes to Brick Lane Capital Management Limited ("Brick Lane"), including the “2025 June Brick Lane Convertible Notes” and the “2025 September Brick Lane Convertible Note”, collectively the “2025 Brick Lane Convertible Notes”, in connection with both capital infusions and the exchange of previously outstanding Preferred Stock.
The 2025 Brick Lane Convertible Notes generally bear no interest unless an event of default has occurred, at which time interest accrues at
Certain conversion features of the 2025 Brick Lane Convertible Notes would typically be considered derivatives that would require bifurcation. As such, the Company elected to account for the 2025 Brick Lane Convertible Notes at fair value, and the changes in the fair value are recorded within the condensed consolidated statements of operations and comprehensive loss.
Issuances of shares upon conversion were initially subject to a
During the three and six months ended June 30, 2025, the Company recorded a loss on debt extinguishment of $
Conversions
During the three months ended June 30, 2026 and 2025, Brick Lane converted $
During the six months ended June 30, 2026 and 2025, Brick Lane converted $
Principal
At June 30, 2026, the 2025 Brick Lane Convertible Notes were
2025 Bomore Convertible Notes
In June 2025, the Company issued unsecured convertible notes to Bomore Opportunity Group Ltd ("Bomore"), the “2025 Bomore Convertible Notes”, in connection with both capital infusions and the exchange of previously outstanding Preferred Stock.
The 2025 Bomore Convertible Notes generally bore no interest, had contractual maturity dates in June 2026, and were convertible into shares of Common Stock at variable conversion prices, generally based on a percentage of the lowest VWAP over a specified period prior to conversion, with such percentages equal to
Certain conversion features of the 2025 Bomore Convertible Notes would typically be considered derivatives that would require bifurcation. As such, the Company elected to account for the 2025 Bomore Convertible Notes at fair value, and the changes in the fair value are recorded within the condensed consolidated statements of operations and comprehensive loss.
During the three and six months ended June 30, 2025, the Company recorded a loss on debt extinguishment of $
Conversions
During the three months ended June 30, 2026 and 2025, Bomore converted
During the six months ended June 30, 2026 and 2025, Bomore converted $
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Principal
At June 30, 2026, the 2025 Bomore Convertible Notes were
2025 Torcross Convertible Note
In June 2025, the Company entered into transactions with Torcross Capital LLC ("Torcross"), including the “2025 Torcross Convertible Note”. In connection with such transactions, the Company also initially entered into an exchange arrangement involving Series A Preferred Stock; however, this arrangement was rescinded in November 2025, and as a result, the related exchange convertible note was deemed not to have been issued.
The 2025 Torcross Convertible Note generally bore no interest, had a contractual maturity date in June 2026, and was convertible into shares of Common Stock at a variable conversion price generally based on a percentage of the lowest VWAP over a specified period prior to conversion, with such percentage equal to approximately
Certain conversion features of the 2025 Torcross Convertible Note would typically be considered derivatives that would require bifurcation. As such, the Company elected to account for the 2025 Torcross Convertible Note at fair value, and the changes in the fair value are recorded within the consolidated statement of operations. The excess of the initial fair value of $
Conversions
During the six months ended June 30, 2026, Torcross converted the entire remaining $
Principal
At June 30, 2026, the 2025 Torcross Convertible Note was
2025 YA Debentures
In June and December 2025, the Company entered into financing arrangements with YA II PN, Ltd. (“YA”), including a debenture in the amount of $
Beginning on
The Company could, at its option, redeem all or a portion of the outstanding principal at any time for cash at an amount equal to the principal being redeemed plus accrued and unpaid interest through the redemption date. No prepayment penalty or make-whole premium applied. Upon acceleration following an event of default, all unpaid principal, accrued interest, and other amounts due under the December 2025 YA Debenture would become immediately due and payable. The December 2025 YA Debenture contained customary terms and conditions, including representations, warranties, and covenants. Subject to certain exceptions, while the December 2025 YA Debenture remained outstanding, the Company was restricted from entering into variable rate financing transactions without YA's prior written consent.
Certain features of the YA Debentures would typically be considered derivatives that would require bifurcation. As such, the Company elected to account for the December 2025 YA Debenture at fair value, and the changes in the fair value are recorded within the consolidated statement of operations. The excess of the initial fair value of $
The Company incurred debt issuance costs of $
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were incurred in connection with the December 2025 YA Debenture and December 2025 YA Warrants, which were allocated entirely to the December 2025 YA Debenture in the same manner as the proceeds, and are included in other income (loss), net on the condensed consolidated statements of operations and comprehensive loss during the fourth quarter of 2025.
During the three and six months ended June 30, 2026, the Company used proceeds under the SEPA, as well as existing cash, to repay $
Principal
As of June 30, 2026, principal outstanding under the December 2025 YA Debenture was $
2026 Brick Lane H&K Investment Note
As further described in Note 4, in connection with the H&K Investment, the Company issued the 2026 Brick Lane H&K Investment Note in a principal amount of $
The Company elected the fair value option for the 2026 Brick Lane H&K Investment Note, whereby the 2026 Brick Lane H&K Investment Note was recorded at fair value at issuance of $
Principal
As of June 30, 2026, the outstanding principal amount under the 2026 Brick Lane H&K Investment Note was $
Lyocon Convertible Notes
On January 15, 2026, the Company consummated the Lyocon Acquisition, as further described in Note 4. Consideration transferred included two subordinated convertible notes (the “Lyocon Convertible Notes”) in the principal amount of $
In connection with the Lyocon Acquisition, the aggregate acquisition-date fair value of the Lyocon Convertible Notes was determined to be $
Principal
As of June 30, 2026, the aggregate principal amount outstanding under the Lyocon Convertible Notes was $
Maturities of Debt
Maturities of our debt principal as of June 30, 2026 are presented below:
|
|
June 30, |
|
|
Year ended December 31: |
|
|
|
|
2026 |
|
$ |
|
|
2027 |
|
|
|
|
Total debt maturities |
|
$ |
|
|
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NOTE 11. EQUITY
Common Stock
2026 Reverse Stock Split
On February 27, 2026, the Company effected a 1-for-4.99 reverse stock split of its Common Stock (the “2026 Reverse Stock Split”) in order to regain compliance with the NYSE American Minimum Trading Price requirement, following a trading halt on February 13, 2026. All share and per share amounts of Common Stock and Common Stock equivalents included in these condensed consolidated financial statements have been retroactively adjusted to reflect the 2026 Reverse Stock Split for all periods presented. Fractional shares resulting from the 2026 Reverse Stock Split were rounded up to one whole share. The 2026 Reverse Stock Split did not change the number of authorized shares of Common Stock or the par value per share. For additional information, see Note 2.
February 2026 Offering
On February 17, 2026, the Company consummated a best efforts public offering (the "February 2026 Offering") of an aggregate of (i)
The Company received gross proceeds of $
In connection with the February 2026 Offering, on February 12, 2026, the Company entered into a Securities Purchase Agreement (the "February 2026 Purchase Agreement") with institutional investors. Pursuant to the February 2026 Purchase Agreement, the Company agreed not to issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of Common Stock or any securities convertible into or exercisable or exchangeable for shares of Common Stock or file any registration statement or prospectus, or any amendment or supplement thereto for 60 days after the closing date of the February 2026 Offering, subject to certain exceptions. The Company agreed not to effect or enter into an agreement to effect any issuance of Common Stock or any securities convertible into or exercisable or exchangeable for shares of Common Stock involving a Variable Rate Transaction (as defined in the February 2026 Purchase Agreement) until the earlier of six months from the date of the February 2026 Purchase Agreement or the date as of which the purchasers no longer hold at least
The February 2026 Purchase Agreement contains customary representations, warranties, agreements, and indemnification obligations of the Company. The representations, warranties and covenants contained in the February 2026 Purchase Agreement were made only for the purposes of such agreement and as of specific dates, were solely for the benefit of the parties to such agreement and may be subject to limitations agreed upon by the contracting parties. A holder will not have the right to exercise any portion of the February 2026 Offering Common Warrants or February 2026 Offering Pre-Funded Warrants if the holder (together with its affiliates) would beneficially own in excess of
Pursuant to a Placement Agency Agreement (the "February 2026 Placement Agency Agreement") with Joseph Gunnar and Co., LLC (the "February 2026 Placement Agent"), the Company agreed to (i) pay a total cash fee equal to up to seven and a half percent (
The shares of Common Stock, the February 2026 Offering Pre-Funded Warrants, the February 2026 Offering Pre-Funded Warrant Shares, the February 2026 Offering Common Warrants and a portion of the February 2026 Offering Common Warrant Shares were offered by the Company pursuant to a Registration Statement on Form S-1 filed with the SEC on February 10, 2026, under the Securities Act (File No. 333-293338), and declared effective by the SEC on February 12, 2026. The Company has agreed to maintain an effective registration statement for the resale of the initial February 2026 Offering Common Warrant Shares by investors and intends to file a registration statement in the future to register the remaining February 2026 Offering Common Warrant Shares not registered on this registration statement and the February
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2026 Offering Placement Agent Warrant Shares. If at any time after the February 2026 Offering the February 2026 Offering Common Warrant Shares are not registered, a holder may exercise its February 2026 Offering Common Warrants on a cashless basis, subject to beneficial ownership limitations in the February 2026 Offering Common Warrants.
2025 Offering
On September 16, 2025, the Company consummated a best efforts public offering (the “2025 Offering”) of an aggregate of (i)
The Company received gross proceeds of $
In connection with the 2025 Offering, the Company entered into a Securities Purchase Agreement (the “2025 Offering Purchase Agreement”) with certain institutional and retail investors. Pursuant to the 2025 Offering Purchase Agreement, the Company agreed not to issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of Common Stock or any securities convertible into or exercisable or exchangeable for shares of Common Stock or file any registration statement or prospectus, or any amendment or supplement thereto for 60 days after the closing date of the 2025 Offering (i.e. November 15, 2025), subject to certain exceptions. The Company agreed not to effect or enter into an agreement to effect any issuance of Common Stock or any securities convertible into or exercisable or exchangeable for shares of Common Stock involving a Variable Rate Transaction (as defined in the 2025 Offering Purchase Agreement) until six months after the closing date of the 2025 Offering (i.e. March 16, 2026), subject to certain exceptions. Additionally, in connection with the 2025 Offering, each of the officers and directors of the Company and holders of
The 2025 Offering Purchase Agreement contains customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification obligations of the Company and the purchasers, including for liabilities arising under the Securities Act, other obligations of the parties and termination provisions. The representations, warranties and covenants contained in the 2025 Offering Purchase Agreement were made only for the purposes of such agreement and as of specific dates, were solely for the benefit of the parties to such agreement and may be subject to limitations agreed upon by the contracting parties. A holder will not have the right to exercise any portion of the 2025 Offering Common Stock Warrants or 2025 Offering Pre-Funded Warrants if the holder (together with its affiliates) would beneficially own in excess of
Pursuant to a Placement Agency Agreement (the “Placement Agency Agreement”) with Joseph Gunnar and Co., LLC (the “Placement Agent”), the Company agreed to pay the Placement Agent in connection with the 2025 Offering (i) a total cash fee equal to up to seven and a half percent (
Also pursuant to the Placement Agency Agreement, the Company, in connection with the 2025 Offering, agreed to issue to the Placement Agent or its designees warrants (the “2025 Offering Placement Agent Warrants”) to purchase up to an aggregate of
The shares of Common Stock sold pursuant to the 2025 Offering Purchase Agreement, the 2025 Offering Pre-Funded Warrants, the 2025 Offering Common Stock Warrants and the 2025 Offering Placement Agent Warrants were offered by the Company pursuant to a registration statement filed with the SEC on September 10, 2025, and declared effective by the SEC on September 12, 2025, and a registration statement filed with the SEC on September 16, 2025.
Series A Preferred Stock
The Company is authorized to issue
During June 2025, the Company purchased (i)
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In February 2026, the Company entered into an exchange agreement with Indigo Capital, pursuant to which it agreed to issue a pre-funded warrant (the “Indigo Pre-Funded Warrants”) in exchange for the extinguishment of
During May 2026, the Company entered into additional exchange agreements with Indigo Capital, pursuant to which it agreed to issue the Q2 2026 Indigo Pre-Funded Warrants, as defined and described in Note 12, in exchange for the extinguishment of an aggregate of 337,849 shares of Series A Preferred Stock. For additional information, see Note 12.
In July 2026, the Company entered into an exchange agreement with Indigo Capital, pursuant to which it agreed to issue a pre-funded warrant to purchase
Ranking
The Company’s Preferred Stock ranks senior to the Common Stock with respect to rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company.
Dividends
Holders of the Company’s Preferred Stock participate, on an as-converted basis (without regard to any conversion limitations) in all dividends paid to the holders of the Common Stock.
Conversion Rights
Prior to January 31, 2025, as further described under Redemption below, the Preferred Stock was convertible at any time into Common Stock at a conversion price equal to $
Mandatory Conversion
If the VWAP is greater than
Voting Rights
The holders of Preferred Stock are not entitled to vote at or receive notice of any meeting of stockholders, except the holders of Preferred Stock are entitled to certain consent rights on matters related to (i) the creation or authorization of the creation of any equity or debt securities of the Company that rank senior or equal to certain rights of the Preferred Stock and (ii) the authorization of any adverse change to the powers, preferences, or special rights of the Preferred Stock set forth in the Company’s Certificate of Incorporation or Bylaws, and shall have voting rights as required by law.
Redemption
On the second anniversary of the Closing Date, or January 31, 2025 (the “Test Date”), the Company is obligated to redeem the maximum portion of the Preferred Stock permitted by law in cash at an amount equal to the Original Issuance Price as of such date if the Conversion Price exceeds the VWAP. If, on the Test Date, the Conversion Price is equal to or less than the VWAP, the Company must convert all shares of Preferred Stock then outstanding into shares of Common Stock at the then applicable Conversion Price. Notwithstanding the foregoing, the Company shall not be required to redeem any shares of Preferred Stock to the extent the Company does not have legally available funds to effect such redemption. The mandatory redemption and conversion provisions described herein are further subject to certain limitations detailed in the Certificate of Designations. As a result of such redemption feature, the Company recorded the Preferred Stock at its redemption value and classified the Preferred Stock as mezzanine equity on the consolidated balance sheet through January 31, 2025. As the Conversion Price of the Preferred Stock exceeded the VWAP on the Test Date, the Company was obligated to redeem the Preferred Stock beginning at that time and, as such, reclassified such Preferred Stock from mezzanine equity to a current liability on January 31, 2025. The preferred stock current liability was initially recorded at its fair value on January 31, 2025 of $
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NOTE 12. WARRANTS
The following table provides a summary of the number of the Company's outstanding warrants:
|
Exercise price |
|
|
Expiration date |
|
June 30, |
|
|
December 31, |
|
|||
Liability-classified warrants: |
|
|
|
|
|
|
|
|
|
|
|||
February 2026 Offering Common Warrants |
|
|
|
|
|
|
|
— |
|
||||
2025 Offering Common Stock Warrants |
$ |
|
|
|
|
— |
|
|
|
|
|||
Junior Note Warrants |
$ |
|
|
|
|
|
|
|
|
||||
Public Warrants |
$ |
|
|
|
|
|
|
|
|
||||
Total |
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
Equity-classified warrants: |
|
|
|
|
|
|
|
|
|
|
|||
December 2025 $0.05 YA Warrants |
$ |
|
|
|
|
— |
|
|
|
|
|||
December 2025 $1.25 YA Warrants |
$ |
|
|
|
|
|
|
|
|
||||
December 2025 $1.871 YA Warrants |
$ |
|
|
|
|
|
|
|
|
||||
December 2025 $2.35 YA Warrants |
$ |
|
|
|
|
|
|
|
|
||||
2025 Offering Placement Agent Warrants |
$ |
|
|
|
|
|
|
|
|
||||
February 2026 Offering Placement Agent Warrants |
$ |
|
|
|
|
|
|
|
— |
|
|||
June 2023 Senior Note Warrants |
$ |
|
|
|
|
|
|
|
|
||||
August 2024 Warrants Issued with Junior Notes |
$ |
|
|
|
|
|
|
|
|
||||
Total |
|
|
|
|
|
|
|
|
|
|
|||
The following table provides a summary of the activity related to the number of the Company's outstanding warrants during the six months ended June 30, 2026:
|
Warrants Outstanding at |
|
|
Issuances |
|
|
Exercises |
|
|
Warrants Outstanding at |
|
|
Shares of Common Stock Issued Upon Exercise |
|
|||||
Liability-classified warrants: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
February 2026 Offering Common Warrants |
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
February 2026 Offering Pre-Funded Warrants |
|
— |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
|
||
2025 Offering Common Stock Warrants |
|
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
|
||
Junior Note Warrants |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Public Warrants |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Total |
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Equity-classified warrants: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
December 2025 $0.05 YA Warrants |
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
|
|||
December 2025 $1.25 YA Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
||||
December 2025 $1.871 YA Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
||||
December 2025 $2.35 YA Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
||||
2025 Offering Placement Agent Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
||||
Indigo Pre-Funded Warrants |
|
— |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
|
||
February 2026 Offering Placement Agent Warrants |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|||
Q2 2026 Indigo Pre-Funded Warrants |
|
— |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
|
||
June 2023 Senior Note Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
||||
August 2024 Warrants Issued with Junior Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
||||
Total |
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Liability-Classified Warrants
February 2026 Offering Pre-Funded Warrants and February 2026 Offering Common Warrants
On February 17, 2026, in connection with the February 2026 Offering as described in Note 11, the Company issued
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Table of Contents
Offering Common Warrants to purchase shares of Common Stock. The warrants may be exercised in whole or in part for cash or, in certain circumstances, on a cashless basis, subject to certain beneficial ownership limitations. Net proceeds from the February 2026 Offering were first allocated to the liability-classified February 2026 Offering Pre-Funded Warrants and February 2026 Offering Common Warrants at their aggregate issuance date fair value of $
2025 Offering Common Stock Warrants
On September 16, 2025, in connection with the 2025 Offering as described in Note 11, the Company issued
Junior Note Warrants
In connection with the issuance of certain Junior Notes during 2023, which were extinguished in early 2025 as discussed in Note 10, the Company issued the Junior Note Warrants to purchase up to
Public Warrants
In connection with the closing of the Business Combination, Nuburu assumed the
Equity-Classified Common Stock Warrants
Q2 2026 Indigo Pre-Funded Warrants
During the three months ended June 30, 2026, the Company issued pre-funded warrants to purchase an aggregate of
In July 2026, the Company issued a pre-funded warrant to purchase
February 2026 Offering Placement Agent Warrants
On February 17, 2026, in connection with the February 2026 Offering as described in Note 11, the Company issued to the February 2026 Placement Agent or its designees
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fair value of the February 2026 Offering Placement Agent
|
|
|
|
|
Upon Issuance |
February 2026 Offering Placement Agent Warrants: |
|
|
|
|
|
Stock price |
|
|
|
$ |
|
Expected term (in years) |
|
|
|
|
|
Expected volatility |
|
|
|
|
|
Risk-free interest rate |
|
|
|
|
|
Expected dividend yield |
|
|
|
|
|
Indigo Pre-Funded Warrants
On February 6, 2026, we entered into an exchange agreement with Indigo Capital, pursuant to which we agreed to issue
December 2025 YA Warrants
In connection with the issuance of the December 2025 YA Debenture, as further described in Note 10, the Company issued warrants to purchase an aggregate of
Issuance of warrant shares in excess of
The Company entered into a registration rights agreement requiring the Company to file a registration statement covering the resale of the warrant shares and, subject to certain exceptions, restricting the Company from filing other registration statements until such shares are registered. The December 2025 YA Warrants were registered by the Company pursuant to a Registration Statement on Form S-1 filed with the SEC on December 23, 2025, under the Securities Act (File No. 333-292426), and declared effective by the SEC on January 7, 2026.
As further described in Note 10, as the issuance of the December 2025 YA Debenture and the December 2025 YA Warrants involved the issuance of both debt and equity instruments, and the fair value of the December 2025 YA Debenture at inception was greater than the net proceeds received for the issuance of the December 2025 YA Debenture and the December 2025 YA Warrants, no value was ascribed to the December 2025 YA Warrants.
2025 Offering Pre-Funded Warrants and 2025 Offering Placement Agent Warrants
On September 16, 2025, in connection with the 2025 Offering, as described in Note 11, the Company issued (i)
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$
|
|
|
|
|
Upon Issuance |
2025 Offering Placement Agent Warrants: |
|
|
|
|
|
Stock price |
|
|
|
$ |
|
Expected term (in years) |
|
|
|
|
|
Expected volatility |
|
|
|
|
|
Risk-free interest rate |
|
|
|
|
|
Expected dividend yield |
|
|
|
|
June 2023 Senior Note Warrants
In connection with the issuance of Senior Notes, which were extinguished in early 2025 as discussed in Note 10, the Company issued the Senior Note Warrants to purchase up to
Pre-Funded Warrants
On May 1, 2024, the Company entered into a Pre-Funded Warrant Purchase Program (the “Program”) with strategic investors, pursuant to which from time-to-time the Company could sell and the investors could acquire pre-funded warrants, up to a total purchase price to the Company equal to $
Pre-Funded Warrants Modification — In February 2025, in connection with the Liqueous Settlement Agreement, as amended, the Company agreed to (i) modify
The Company accounted for the Pre-Funded Warrants Modification in accordance with ASC 815, Derivatives and Hedging, where the effect of a modification shall be measured as the difference between the fair value of the modified warrant and the fair value of the original warrant immediately before its terms are modified, with each measured on the modification date. As a result of the Pre-Funded Warrants Modification, which was not contemplated as a result of an equity or debt financing, but rather, as a settlement of any claims between the parties related to non-performance of obligations under certain previous agreements executed between the Company and Liqueous, the Company recorded (i) an increase to equity of $
August 2024 Warrants Issued with Junior Notes
In connection with the issuance of certain Junior Notes during 2024 which were subsequently extinguished in 2025, the Company issued an aggregate
NOTE 13. STANDBY EQUITY PURCHASE AGREEMENT
On
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The SEPA became effective in July 2025 following the effectiveness of a registration statement covering the resale of shares issuable under the SEPA. The Company’s stockholders approved the issuance of shares in excess of applicable exchange limitations at the Company’s 2025 annual meeting. The SEPA contains customary conditions and limitations, including a restriction that the SEPA Investor may not beneficially own more than
The net proceeds payable to the Company under the SEPA will depend on the frequency and prices at which Common Stock is sold. Unless otherwise agreed by the parties, the Company is required to use any proceeds received under the SEPA to pay outstanding principal and interest under the 2025 YA Debentures issued by the SEPA Investor during 2025. After the December 2025 YA Debenture is paid in full, the Company expects that proceeds received from such sales will be used primarily for working capital and general corporate purposes and for purposes of implementing its business plan focused on building a stable foundation for the future business.
The SEPA is accounted for as a liability at fair value under ASC 815, Derivatives and Hedging, as it includes an embedded put option and an embedded forward contract that do not meet the indexed to equity and the equity classification scope exception. The put option is recognized at inception, and the forward option is recognized upon issuance of notice for the sale of Common Stock. The fair value of the derivative liability related to the embedded put option is included within SEPA liability on the condensed consolidated balance sheet, and was estimated at $
As consideration for the SEPA Investor’s commitment to purchase the shares of Common Stock pursuant to the SEPA, the Company incurred (i) a structuring fee payable to the SEPA Investor in the amount of $
During the three and six months ended June 30, 2026, the Company sold
As of June 30, 2026, the Company had issued
NOTE 14. STOCK-BASED COMPENSATION
As of June 30, 2026, the Company had an active stock-based incentive compensation plan and an employee stock purchase plan: the 2022 Equity Incentive Plan (the “2022 Plan”) and the 2022 Employee Stock Purchase Plan (the “ESPP”). All new equity compensation grants were issued under these two plans; however, outstanding awards previously issued under inactive plans will continue to vest and remain exercisable in accordance with the terms of the respective plans.
The 2022 Plan provides for the grant of stock and stock-based awards including stock options, restricted stock, restricted stock units, performance awards, and stock appreciation rights. As of June 30, 2026, there were approximately
Stock-Based Compensation Expense
Total stock-based compensation expense recognized in the Company’s condensed consolidated statements of operations and comprehensive loss is classified as follows:
|
|
Three Months Ended |
|
|
Six months ended June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Cost of revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Research and development |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling and marketing |
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total stock-based compensation expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The Company’s stock-based compensation expense is based on the value of the portion of stock-based payment awards that are ultimately expected to vest. During the three months ended June 30, 2026 and 2025 and six months ended June 30, 2026 and 2025, stock-based
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compensation relating to stock-based awards granted to consultants was $
Restricted Stock Units
The Company had
As of June 30, 2026, there was no unrecognized stock-based compensation cost related to RSUs.
Stock Options
The Company's outstanding stock options generally vest on a monthly basis over a one-year period, subject to continued employment or service as a director, as the case may be, with the first installment beginning on the grant date, and generally expire
The following table shows a summary of the Company's stock option activity for the six months ended June 30, 2026:
|
|
Number of Stock Options Outstanding |
|
|
Weighted-Average Exercise Price |
|
|
Weighted-Average Remaining Contractual Life (Years) |
|
|
Aggregate Intrinsic Value |
|
||||
Options outstanding at December 31, 2025 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Options cancelled or forfeited |
|
|
( |
) |
|
$ |
|
|
|
|
|
|
|
|||
Options outstanding at June 30, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Options exercisable at June 30, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Options vested and expected to vest at June 30, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
As of June 30, 2026, total unrecognized stock-based compensation cost related to stock options was $
The Company estimates the fair value of the options utilizing the Black-Scholes option pricing model, which is subjective and dependent upon several variables, including expected option term, expected volatility of the Company’s share price over the expected term, expected risk-free interest rate over the expected option term and expected dividend yield rate over the expected option term. The Company uses the simplified method to estimate expected term of its stock options, which represents an estimate of the period of time utilizing the mid period of the vesting dates and the expiration date, because it does not have sufficient historical exercise data due to the recency of its IPO. The risk-free interest rate is based on the term structure of interest rates at the time of the option grant based on the determined term utilized. Expected volatility is based on the weighted average of the historical returns on our stock and a group of comparable companies. There were
Common Stock Issued for Services
During 2025, the Company entered into arrangements with non-employee consultants for services to be provided in exchange for (i) the issuance of
As of June 30, 2026, the Company was required to issue
Equity-classified awards
Stock-based compensation expense for the equity-classified awards was recognized based on the fair value of the Common Stock on the date of grant over the requisite service period. For the three months ended June 30, 2026 and 2025 and six months ended June 30, 2026 and 2025, the total stock-based compensation expense recognized for the equity-classified awards was $
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Liability-classified awards
Liability-classified awards represent compensation for services to be provided over the term of the agreements, and are measured based on a fixed monetary value to be paid to the non-employee consultants settled through the issuance of a variable number of shares of Common Stock.
For the three months ended June 30, 2026 and 2025 and six months ended June 30, 2026 and 2025, the total stock-based compensation expense recognized for the liability-classified awards was $
Market-Based Awards
During the six months ended June 30, 2026, the Company entered into arrangements with certain employees and a non-employee consultant that provide for the potential issuance of equity awards pursuant to the 2022 Plan subject to market conditions.
Consultant Awards
On February 1, 2026, the Company entered into a consulting agreement with a non-employee strategic advisor that includes equity awards to be settled in Common Stock to be issued by the Company. The awards are non-cumulative and are determined using a volume-weighted average price test (the "VWAP Test") over twenty consecutive trading days during the year ended December 31, 2026. The number of shares issuable is determined by the single highest award tier achieved during the year ended December 31, 2026, as follows:
The awards are subject to continuous service and vest on January 20, 2027. The arrangement includes change of control protections and good-leaver protections. Additionally, the awards include a mandatory fallback cash settlement mechanism that if the equity award cannot be settled within 90 days after January 20, 2027 (or by March 31, 2027, if earlier), it must first attempt to reserve shares at its next evergreen share pool renewal, and if the award has still not been settled in equity within 183 days after that outside date, the Company is required to pay the consultant in cash based on the earned success fee value, with any partial equity settlement reducing the cash obligation dollar-for-dollar. Additionally, in the event of a change of control, the consultant may elect settlement in cash or in the same form of consideration received by common stockholders. As of and for the three and six months ended June 30, 2026, the stock-based compensation expense and associated liability were each immaterial.
The Company determined the fair value using a Monte Carlo simulation based approach, a Level 3 valuation, with the following assumptions:
|
|
Six months ended June 30, |
|
|
2026 |
Stock Price |
$ |
$ |
Expected term (in years) |
|
|
Expected volatility |
|
|
Risk-free interest rate |
|
|
Expected dividend yield |
|
Lyocon Acquisition Awards
On January 15, 2026, in connection with the Company's incentive plan related to the Lyocon Acquisition discussed in Note 4, the Company issued equity awards to each of the Lyocon sellers pursuant to the 2022 Plan to be settled in Common Stock based on performance targets tied to the Company's stock price. Under the equity awards, (i) if the share price of Common Stock reaches $
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and for the three and six months ended June 30, 2026, the stock-based compensation expense and associated liability were each immaterial.
The Company determined the fair value using a Monte Carlo simulation based approach, a Level 3 valuation, with the following assumptions:
|
|
Six months ended June 30, |
|
|
2026 |
Stock Price |
$ |
$ |
Expected term (in years) |
|
|
Expected volatility |
|
|
Risk-free interest rate |
|
|
Expected dividend yield |
|
NOTE 15. INCOME TAXES
Due to its current operating losses, the Company recorded
Following the January 2026 Orbit Change of Control and Lyocon Acquisition, the Company has Italian operations; however, the related pre-tax income and loss were not significant for the three and six months ended June 30, 2026, and the Company’s tax activity remained limited to U.S. federal and state jurisdictions.
In connection with the Lyocon Acquisition, the Company recognized a deferred tax liability of approximately $
Due to the Company’s history of cumulative losses and after considering all the available objective evidence, management concluded that it is not more likely than not that all of the Company’s net deferred tax assets will be realized in the future. Accordingly, the Company’s deferred tax assets, which include net operating loss (“NOL”) carryforwards and tax credits related primarily to research and development, continue to be subject to a valuation allowance as of June 30, 2026. The Company expects to continue to maintain a full valuation allowance until there is sufficient evidence to support recoverability of its deferred tax assets.
Utilization of the NOL carryforwards and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by Section 382 and Section 383 of the Internal Revenue Code of 1986, as amended, and similar state provisions. Generally, in addition to certain entity reorganizations, the limitation applies when one or more "5-percent stockholders" increase their ownership, in the aggregate, by more than
NOTE 16. NET LOSS PER SHARE
The details of our net loss attributable to common stockholders, basic and diluted EPS are set forth below:
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Deemed dividend in connection with extinguishment of preferred stock through issuance of warrants |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
Reclassification of convertible preferred stock from mezzanine equity to liability |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Deemed dividend in connection with modification of pre-funded warrants |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Net loss attributable to common stockholders |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average shares outstanding — basic and diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss per share — basic and diluted |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
54
Table of Contents
For additional information regarding the adjustments to arrive at net loss attributable to common stockholders, see Notes 11 and 12.
Pre-funded warrants are included in basic and diluted weighted-average shares outstanding as they are exercisable for nominal consideration and are considered outstanding Common Stock equivalents. Contingently issuable shares are included in basic and diluted EPS only when all specified contingencies other than time have been satisfied. Shares issuable in connection with the SEPA are excluded from basic EPS because issuances are contingent on meeting price thresholds, volume limitations, and regulatory caps. As those contingencies were not satisfied as of June 30, 2026,
Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue Common Stock were exercised, vested, or converted into Common Stock, and is computed by dividing net income (loss) available to common stockholders by the weighted-average number of shares of Common Stock outstanding during the period, adjusted for the effect of potentially dilutive shares of Common Stock using the treasury stock or if-converted methods, as applicable. Diluted EPS for the three months ended June 30, 2026 and 2025 excludes potentially dilutive securities from the computation because the effect of their inclusion would have been anti-dilutive or would have decreased the reported loss per share.
Basic and diluted EPS presented for the six months ended June 30, 2026 includes
The following securities were outstanding during the period but were not included in the computation of diluted EPS because their effect would have been anti-dilutive:
|
|
Three and Six Months Ended |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
December 2025 YA Warrants |
|
|
|
|
|
— |
|
|
February 2026 Offering Common Warrants |
|
|
|
|
|
— |
|
|
February 2026 Offering Placement Agent Warrants |
|
|
|
|
|
— |
|
|
2025 Offering Placement Agent Warrants |
|
|
|
|
|
— |
|
|
Junior Note Warrants |
|
|
|
|
|
|
||
Public Warrants |
|
|
|
|
|
|
||
June 2023 Senior Note Warrants |
|
|
|
|
|
|
||
August 2024 Warrants Issued with Junior Notes |
|
|
|
|
|
|
||
If-converted Common Stock from convertible notes |
|
|
|
|
|
|
||
Stock options outstanding |
|
|
|
|
|
|
||
Orbit Settlement Shares |
|
|
|
|
|
— |
|
|
If-converted Common Stock from Series A Preferred Stock(1) |
|
|
|
|
|
|
||
Unvested restricted stock units |
|
|
— |
|
|
|
|
|
Total |
|
|
|
|
|
|
||
NOTE 17. SEGMENT REPORTING
Operating segments are defined as components of an entity about which discrete financial information is evaluated regularly by the Chief Operating Decision Maker ("CODM") in deciding how to allocate resources and assess performance. The Company currently operates and manages its business as
55
Table of Contents
The following table shows a reconciliation of the Company’s net loss, including the significant expense categories regularly provided to and reviewed by the CODM, as computed under U.S. GAAP, to the Company’s total net loss in the condensed consolidated statements of operations and comprehensive loss:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Materials |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Direct labor |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Direct job costs |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Overhead |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total cost of revenue |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Gross loss |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling and marketing |
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other segment income (expenses), net (1) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Segment net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
NOTE 18. SUBSEQUENT EVENTS
July 2026 Offering
On July 17, 2026, the Company consummated a best efforts public offering (the “July 2026 Offering”) of an aggregate of (i)
The net proceeds of the July 2026 Offering, after deducting (i) the fees and expenses of the July 2026 Offering Placement Agent (as defined below), (ii) the repayment in full of all outstanding principal and accrued interest under the December 2025 YA Debenture and (iii) the repayment in full of the Lyocon Convertible Notes, were approximately $
The Purchase Agreement
In connection with the July 2026 Offering, the Company entered into a Securities Purchase Agreement (the “July 2026 Offering Purchase Agreement”) with certain institutional and retail investors (the “July 2026 Offering Purchasers”). Pursuant to the July 2026 Offering Purchase Agreement, the Company agreed not to issue, offer, sell, grant or dispose of (or announce any issuance, offer, sale, grant or other disposition
56
Table of Contents
of) any shares of Common Stock or file any new registration statement, subject to certain exceptions, until the 90th day after the later of (i) the date on which an amendment to the Company’s Certificate of Incorporation is filed with the Secretary of State of the State of Delaware and becomes effective that increases the number of authorized shares of Common Stock following receipt of stockholder approval thereof and a registration statement filed pursuant to the Securities Act, covering all shares issuable pursuant to the July 2026 Offering Pre-Funded Warrants and Series B Preferred Stock, has been declared effective by the SEC, and is effective and available for the issuance or resale of all such shares and (ii) such date that the Series B Preferred Stock may be converted by the purchasers pursuant to Section 4(a)(i) of the Series B Certification of Designations. The Company agreed not to enter into or agree to enter into a Variable Rate Transaction (as defined in the July 2026 Offering Purchase Agreement) until up to six months from the date of the July 2026 Offering Purchase Agreement, subject to certain exceptions. Additionally, in connection with the July 2026 Offering, each of the officers and directors of the Company and holders of
July 2026 Offering Pre-Funded Warrants
The July 2026 Offering Pre-Funded Warrants have an exercise price of $
The Series B Certificate of Designations and Terms of the Series B Preferred Stock
Ranking — The Series B Preferred Stock, with respect to the payment of dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company, ranks junior to the Company’s Series A Preferred Stock and any other senior preferred stock, on parity with any parity stock and senior to junior stock of the Company, unless at least a majority of the outstanding shares of Series B Preferred Stock consent to the creation of other capital stock of the Company hereafter that is senior or equal in rank to the Series B Preferred Stock.
Voluntary or Mandatory Conversion; Mandatory Conversion Payment — Pursuant to the Series B Certificate of Designations, beginning on the 45th day after the date of issuance of shares of Series B Preferred Stock, each share of Series B Preferred Stock will be convertible into shares of Common Stock determined by dividing the stated value of $
Voting Rights — Except as provided by law, the holders of Series B Preferred Stock have no voting rights except that approval from a majority of the outstanding shares of Series B Preferred Stock, voting as a single class, is required to (i) alter or change the powers, preferences, or rights of the Series B Preferred Stock so as to affect them adversely, (ii) amend the Company’s Certificate of Incorporation or Bylaws in a manner adverse to the holders of Series B Preferred Stock, (iii) increase or decrease (other than by conversion) the authorized number of Series B Preferred Stock, (iv) during such time as greater than
No Liquidation Rights — Holders of Series B Preferred Stock do not have any right to receive any distribution of assets upon a Liquidation Event (as defined in the Series B Certificate of Designations).
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Table of Contents
The July 2026 Offering Placement Agency Agreement and July 2026 Offering Placement Agent Warrants
Pursuant to a Placement Agency Agreement (the “July 2026 Offering Placement Agency Agreement”) with Joseph Gunnar & Co., LLC (the “July 2026 Offering Placement Agent”), the Company agreed to pay the July 2026 Offering Placement Agent in connection with the July 2026 Offering a total cash fee equal to six and one-fourth percent (
Also pursuant to the July 2026 Offering Placement Agency Agreement, the Company, in connection with the July 2026 Offering, agreed to issue to the July 2026 Offering Placement Agent or its designees warrants (the “July 2026 Offering Placement Agent Warrants”) to purchase up to an aggregate of
The Registration Rights Agreement
The July 2026 Offering Shares, the July 2026 Offering Pre-Funded Warrants, the July 2026 Offering Pre-Funded Warrant Shares, the Series B Preferred Stock, and the Registered Conversion Shares were offered by the Company pursuant to a Registration Statement on Form S-1 (File No. 333-297408) (the “Registration Statement”) filed with the SEC on July 13, 2026, under the Securities Act, and declared effective by the SEC on July 15, 2026. The Company entered into a registration rights agreement (the “Registration Rights Agreement”) with the purchasers pursuant to which it agreed to file one or more registration statements with the SEC covering the resale of the remaining Conversion Shares by the filing deadline specified therein. The July 2026 Offering Placement Agent Warrant Shares will also be registered by the Company with the SEC pursuant to a new registration statement.
Notice of Delisting
On July 17, 2026, the Common Stock traded below $
Under NYSE American delisting procedures, the Company has the right to a review of NYSE American’s determination by the Listings Qualifications Panel of the NYSE American. The Company appealed the decision and requested a review hearing, which is scheduled to take place in September 2026. The Company intends to implement a reverse stock split, for which it has already obtained stockholder approval, on the OTC market to regain compliance under NYSE American.
Golden Power Approval of Tekne Transaction
On August 5, 2026, the Company received Golden Power regulatory approval from the Italian government, which was required in order for the Company to close its proposed acquisition of a
58
Table of Contents
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The interim financial statements included in this Quarterly Report and this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the financial statements and notes thereto for the year ended December 31, 2025, and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, contained in the Annual Report filed with the SEC on March 31, 2026 (as amended, the "Annual Report"). In addition to historical information, this discussion and analysis contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are subject to risks and uncertainties, including those under “Risk Factors” in this Quarterly Report and our Annual Report that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements.
Unless otherwise indicated, references in this section to "Nuburu," "we," "us," "our" and "the Company" refer to Nuburu, Inc. and its consolidated subsidiaries. Defined terms used herein and not otherwise defined are as defined in Part I, Item 1 of this Quarterly Report.
The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
On February 27, 2026, we effected a 1-for-4.99 reverse stock split of our Common Stock (the “2026 Reverse Stock Split”). The 2026 Reverse Stock Split has been reflected retroactively in all Common Stock and per share amounts for all periods presented. Proportional adjustments were made to the number of shares of Common Stock issuable upon exercise, vesting, or conversion of our outstanding stock options, restricted stock units, warrants, convertible notes, preferred stock, and other instruments convertible into or exercisable for Common Stock, as well as the applicable exercise prices, conversion prices, and per share grant date fair values. All share and per share amounts presented in this Quarterly Report, including but not limited to earnings per share, weighted-average shares outstanding, shares reserved under equity incentive plans and the employee stock purchase plan, and shares issuable under outstanding derivative and convertible instruments, have been retroactively adjusted to reflect the 2026 Reverse Stock Split for all periods presented.
LIQUIDITY CONSTRAINTS
We have not yet achieved full commercialization and expect continued losses until we can do so. We must rely on capital from investors to support operations. From inception, we have continued to incur operating losses and negative cash flows from operating activities. For the three months ended June 30, 2026 and 2025 and six months ended June 30, 2026 and 2025, the Company has incurred net losses of $6,475,862 and $12,224,975, respectively, and $6,935,760 and $28,836,400, respectively, and the Company has an accumulated deficit of $207,415,591 as of June 30, 2026. We generated total revenue of $524,927, nil, $932,571 and nil during the three months ended June 30, 2026 and 2025 and six months ended June 30, 2026 and 2025, respectively.
In January 2025, the Company adopted a new business plan focused on building a stable foundation for the future business, including addressing outstanding payables, entering into joint development agreements, and acquiring controlling interests in strategic targets (the “Transformation Plan”). Management has implemented and continues to execute its Transformation Plan and has taken actions during 2025 and early 2026 to strengthen the Company’s financial position and liquidity profile. These actions include balance sheet improvements, enhanced access to the capital markets, and the establishment of a platform-based operating model through strategic investments and acquisitions. In connection with the Transformation Plan, we agreed to certain governance changes, including the appointment of Alessandro Zamboni as our Executive Chairman and changes to our Board of Directors.
We expect to incur significant expenses and operating losses for the foreseeable future, as we devote substantial resources to implement our Transformation Plan, and operate as a public company. Until we can generate sufficient revenue, we plan to finance our business with the proceeds from the issuance and sale of debt or equity securities, including sales pursuant to the SEPA, as defined and discussed below, and borrowings under credit facilities. There is no assurance that management's plans to obtain additional debt or equity financing or credit facilities will be successfully implemented or implemented on terms favorable to us. Even if we generate revenue, there is no guarantee that we will ever become profitable. While we are pursuing a Transformation Plan intended to address aspects of our financial condition and operations, there can be no assurance that these efforts will be successful or that they will alleviate the substantial doubt regarding our ability to continue as a going concern. If we are unable to obtain additional financing, or otherwise implement our Transformation Plan, we will not be able to sustain operations and will need to consider alternatives, which could include a sale, liquidation, or dissolution of the business. For additional information, refer to Note 1 to the condensed consolidated financial statements included herein, for the Company’s evaluation of the events and conditions and its plans regarding the going concern matter.
ACQUISITION, INVESTMENT AND JOINT VENTURE PLANS
Golden Power Approval of Tekne Transaction
On August 5, 2026, the Company received Golden Power regulatory approval from the Italian government, which was required in order for the Company to close its proposed acquisition of a 70% controlling interest in Tekne. As a result, the Company expects to close the Tekne transaction and obtain a 70% controlling interest in Tekne on or about 30 days following receipt of the Golden Power regulatory approval or on such later date as may be mutually agreed upon in writing by the parties to the Investment Agreement. For additional information, see Note 4 to the condensed consolidated financial statements included herein.
Orbit (Related Party), Tekne, Lyocon, SYME (Related Party), Heckler & Koch and Maddox
For information related to certain acquisition, investment-related and joint venture transactions, including the January 2026 Orbit Change of Control, the Lyocon Acquisition, the Tekne Investment, the Tekne Letter, the H&K Investment, the Maddox JV and the Beryl Agreement, see Notes 4, 6 and 7 to the condensed consolidated financial statements included herein.
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For information regarding the SYME Convertible Note Receivable, the Tekne Convertible Note Receivable and the SYME Bonds, see Notes 4 and 6 to the condensed consolidated financial statements included herein.
RECENT FINANCING TRANSACTIONS AND DEBT EXTINGUISHMENTS
Transfer of Outstanding Preferred Stock
As part of our ongoing efforts to eliminate liabilities and return to compliance with NYSE American stockholder equity requirements, during the first half of 2026, we entered into certain exchange agreements with Indigo Capital LP ("Indigo"), pursuant to which we agreed to issue pre-funded warrants to purchase shares of Common Stock to Indigo in exchange for the extinguishment and cancellation of an aggregate 1,182,787 shares of our Series A Preferred Stock held by Indigo.
For additional information, see Notes 11 and 12 to the condensed consolidated financial statements included herein.
July 2026 Offering, February 2026 Offering and 2025 Offerings
In July 2026, February 2026 and September 2025, we consummated best efforts public offerings of Common Stock, certain warrants to purchase Common Stock, and Series B preferred stock. For additional information, see Notes 11, 12 and 18 to the condensed consolidated financial statements included herein.
Debt Instruments
During the six months ended June 30, 2026, we entered into certain debt instruments with various third parties. For additional information, see Note 10 to the condensed consolidated financial statements included herein.
ADDITIONAL RECENT DEVELOPMENTS
Notice of Delisting
On July 17, 2026, the Company’s Common Stock traded below $0.10 during the trading day. As a result, on July 17, 2026, the Company received a letter from the NYSE American stating that it had commenced proceedings to delist the Company’s Common Stock from the NYSE American because the Company was not in compliance with Section 1003(f)(v) of the NYSE American Company Guide due to the low selling price of the Company’s Common Stock. The Company’s Common Stock ceased to trade on the NYSE American on July 17, 2026 and began trading on the OTC market on July 20, 2026.
Under NYSE American delisting procedures, the Company has the right to a review of NYSE American’s determination by the Listings Qualifications Panel of the NYSE American. The Company appealed the decision and requested a review hearing, which is scheduled to take place in September 2026. The Company intends to implement a reverse stock split, for which it has already obtained stockholder approval, on the OTC market to regain compliance under NYSE American.
Halting of Trading on NYSE American and February 2026 Reverse Stock Split
Trading of our Common Stock was halted by NYSE American on February 13, 2026, because the trading price dropped below NYSE American’s Minimum Trading Price of $0.10.
On February 27, 2026, we effected the 2026 Reverse Stock Split in order to return to compliance with the Minimum Trading Price requirement. Our Common Stock resumed trading on March 2, 2026.
For additional information, see Note 2 to the condensed consolidated financial statements included herein.
NYSE Regulation Notice of Noncompliance
On April 29, 2025, we received a Notice of Noncompliance (the “Notice”) from NYSE Regulation indicating that we were not in compliance with Section 1003(a)(i) of the NYSE American LLC Company Guide (the “Company Guide”), which requires a company to maintain stockholders’ equity of $2,000,000 or more if it has reported losses from continuing operations or net losses in two of its three most recent fiscal years. As of June 30, 2026 and December 31, 2025, total stockholders’ equity (deficit) was $9,369,319 and $(15,182,173), respectively.
As required by the Company Guide, we submitted a detailed plan on May 29, 2025. The detailed plan advised NYSE Regulation of actions we have taken or will take to regain compliance with the continued listing standards by the compliance deadline of October 29, 2026. On July 22, 2025, the NYSE American notified us that it had accepted our plan outlining definitive actions that we have taken or will take to regain compliance with NYSE American’s continued listing standards (the “Compliance Plan”) and granted a plan period through October 29, 2026 (the “Plan Period”).
On May 12, 2026, we received a Notice of Noncompliance (the “2026 Notice”) from NYSE Regulation indicating that we were not in compliance with Section 1003(a)(ii) of the Company Guide, which requires a company to maintain stockholders’ equity of $4,000,000 or more if it has reported losses from continuing operations or net losses in three of its four most recent fiscal years. In connection with the 2026 Notice, the NYSE American did not require that a new compliance plan be provided by us and we will continue to operate in accordance with the Compliance Plan previously accepted by NYSE American.
Components of Statements of Operations and Comprehensive Loss
Revenue
Following the Lyocon Acquisition and the Orbit Transaction, our revenue consists of (i) product sales and related professional services from Lyocon and (ii) software-as-a-service and hosted software subscriptions, application maintenance services and professional services from
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Orbit. We had no revenue during the three and six months ended June 30, 2025. For additional information, refer to Notes 2 and 9 to the condensed consolidated financial statements included herein.
Cost of Revenue
Cost of revenue primarily consists of materials, direct labor, direct job costs and manufacturing overhead associated with the products and services sold by Lyocon and Orbit, as well as, historically, the cost of materials, overhead and employee compensation associated with the manufacturing of our high-powered lasers. Product cost also includes lower of cost or net realizable value inventory (“LCNRV”) adjustments if the carrying value of the inventory is greater than its net realizable value as well as adjustments for excess or obsolete inventory.
Research and Development
Research and development expenses ("R&D") consist primarily of compensation and related costs for personnel, including stock-based compensation, employee benefits, training, travel, third-party consulting services, laboratory supplies, and research and development equipment depreciation incurred to further our commercialization development efforts. We anticipate R&D to increase significantly as we expand our product portfolio. R&D is charged to the statement of operations as incurred and is included in operating expenses.
Selling and Marketing
Selling and marketing expenses consist primarily of compensation and related costs for our direct sales force, sales management, and marketing and include stock-based compensation, employee benefits, and travel for selling and marketing employees as well as costs related to trade shows, marketing programs, third-party consulting expenses, branding and public relations activities, and application lab depreciation expenses. We expect selling and marketing expenses to increase in future periods as we expand our sales force, marketing, and customer support organizations and increase our participation in trade shows and marketing programs. Selling and marketing costs are charged to the statement of operations as incurred and are included in operating expenses.
General and Administrative
Our general and administrative expenses consist primarily of compensation and related costs for our finance, human resources and other administrative personnel, and include stock-based compensation, employee benefits and travel expenses. In addition, general and administrative expenses include our third-party consulting and advisory services, legal, audit, accounting services and facilities costs, as well as transaction expenses. We expect our general and administrative expenses to increase for the foreseeable future as we scale headcount with the growth of our business through acquisitions and investments, and as a result of operating as a public company, including compliance with the rules and regulations of the SEC, legal, audit, additional insurance expenses, investor relations activities, and other administrative and professional services. General and administrative costs are charged to the statement of operations as incurred and are included in operating expenses.
Interest Income
Interest income consists primarily of interest income received on our cash and cash equivalents.
Interest Expense
Interest expense consists primarily of (i) interest owed on our outstanding debt, (ii) interest accrued on the Orbit Preferred Obligation, (iii) through the first quarter of 2025, amortization of deferred financing costs and (iv) during 2025, interest expense incurred in connection with the amounts payable to the landlord as part of the lease settlement for our expired lease in Centennial, Colorado. For additional information related to our lease settlement and debt obligations, see Notes 3 and 10, respectively, to the condensed consolidated financial statements included herein.
Change in Fair Value of Warrant Liabilities
Change in fair value of warrant liabilities consists of non-cash gains or losses recognized based on the change in the fair value of our liability-classified warrants, which are re-measured to fair value at each balance sheet date with the corresponding gain or loss from the adjustment. For additional information, refer to Notes 7 and 12 to the condensed consolidated financial statements included herein.
Loss on Issuance of Warrants and Related Costs
Loss on issuance of warrants represents (i) the excess of the initial fair value of the liability-classified February 2026 Offering Warrants over the allocated net proceeds and (ii) allocated transaction costs incurred in connection with the issuance of liability-classified warrants, which are expensed as incurred rather than capitalized. For additional information, refer to Notes 7 and 12 to the condensed consolidated financial statements included herein.
Change in Fair Value of Debt
Change in fair value of debt relates to the unrealized gain or loss resulting from the change in fair value of debt instruments for which the fair value option was elected. This amount reflects the remeasurement of such liabilities to their current fair value as of the reporting date. For additional information, refer to Notes 7 and 10 to the condensed consolidated financial statements included herein.
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Loss on Issuance of Debt
Loss on issuance of debt relates to the excess of the initial fair value of certain debt instruments accounted for under the fair value option over the proceeds received. For additional information, refer to Note 10 to the condensed consolidated financial statements included herein.
Gain on Initial Recognition of Tekne Investment
Gain on initial recognition of Tekne Investment represents the difference between the initial fair value of the Tekne Investment acquired and the initial fair value of the Tekne Subordinated Convertible Note issued as consideration in connection with the Tekne Purchase Agreement. For additional information, see Notes 4 and 7 to the condensed consolidated financial statements included herein.
Change in Fair Value of Investments
Change in fair value of investments relates to the unrealized gain or loss resulting from the change in fair value of investments for which the fair value option was elected. This amount reflects the remeasurement of such investments to their current fair value as of the reporting date. For additional information, refer to Note 7 to the condensed consolidated financial statements included herein.
Gain on Issuance of SYME Bonds (Related Party)
Gain on issuance of SYME Bonds relates to the excess of the initial fair value of the SYME Bonds at issuance, for which the fair value option was elected, over the carrying value of the SYME Inventory Advance applied as consideration for the subscription. For additional information, refer to Notes 4 and 7 to the condensed consolidated financial statements included herein.
Change in Fair Value of SYME Bonds (Related Party)
Change in fair value of SYME Bonds relates to the unrealized gain or loss resulting from the change in fair value of the SYME Bonds for which the fair value option was elected. This amount reflects the remeasurement of the SYME Bonds to their current fair value as of the reporting date. For additional information, refer to Notes 4 and 7 to the condensed consolidated financial statements included herein.
Change in Fair Value of Contingent Consideration
Change in fair value of contingent consideration represents the period change in the fair value of contingent consideration obligations recognized in connection with our acquisitions, which are remeasured to fair value at each reporting date with the corresponding gain or loss recorded in the condensed consolidated statements of operations and comprehensive loss. For additional information, refer to Notes 4 and 7 to the condensed consolidated financial statements included herein.
Change in Fair Value of Derivative Liability
Change in fair value of derivative liability consists of non-cash gains or losses recognized on the remeasurement of liability-classified derivatives, including, (i) during the three months ended March 31, 2026, the amended Orbit Preferred Obligation, which was accounted for as a derivative liability under ASC 815 between the February 9, 2026 amendment and stockholder approval of the share issuance in March 2026, and (ii) historically the embedded derivatives bifurcated from the August 2024 Convertible Notes. The instruments are remeasured to fair value at each reporting date with the corresponding gain or loss recorded on the condensed consolidated statements of operations and comprehensive loss. For additional information, refer to Notes 7 and 12 to the condensed consolidated financial statements included herein.
Change in Fair Value of Convertible Notes Receivable
Change in fair value of convertible notes receivable relates to the unrealized gain or loss resulting from the change in fair value of the SYME Convertible Note Receivable, which is a related-party instrument, and the Tekne Convertible Note Receivable, in each case for which the fair value option was elected. This amount reflects the remeasurement of the assets to their current fair value as of the reporting date. For additional information, see Note 6 to the condensed consolidated financial statements included herein.
Remeasurement of Subscription for Orbit Shares (Related Party)
Remeasurement of subscription for Orbit shares represents the gain recognized on the remeasurement of our subscription right for additional shares of Orbit to its acquisition-date fair value in connection with the Orbit Change of Control. For additional information, refer to Note 4 to the condensed consolidated financial statements included herein.
Remeasurement of Orbit Equity Method Investment (Related Party)
Remeasurement of Orbit equity method investment represents the loss recognized on the remeasurement of our previously held 10.7% equity interest in Orbit to its acquisition-date fair value in connection with the Orbit Change of Control. For additional information, refer to Note 4 to the condensed consolidated financial statements included herein.
Change in Fair Value of SEPA Liability
Change in fair value of SEPA liability relates to the unrealized gain or loss resulting from the change in the fair value of the SEPA liability, which includes (i) the fair value of the put option and (ii) related to the June 30, 2025 valuation, the fair value related to the unissued shares for the commitment fee. For additional information, refer to Notes 7 and 13 to the condensed consolidated financial statements included herein.
Loss on Issuance of SEPA
Loss on issuance of SEPA relates to the initial fair value of the SEPA put right at inception of the SEPA on May 30, 2025. For additional information, refer to Notes 7 and 13 to the condensed consolidated financial statements included herein.
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SEPA Fees and Issuance Costs
SEPA fees and issuance costs relates to fees and issuance costs incurred in connection with the SEPA. For additional information, refer to Notes 7 and 13 to the condensed consolidated financial statements included herein.
Loss on Extinguishment of Debt
Loss on extinguishment of debt consists of losses incurred to extinguish debt. For additional information, refer to Note 10 to the condensed consolidated financial statements included herein.
Gain on Sale of Intellectual Property Intangible Assets
Gain on sale of intellectual property intangible assets primarily relates to the sale of collateral to the lenders holding both the outstanding Senior Convertible Notes and Junior Notes in exchange for a full discharge and extinguishment of our Junior Notes and Senior Convertible Notes, as further described in Note 10 to the condensed consolidated financial statements included herein.
Loss on Impairment of Inventories, Property and Equipment and Operating Lease Right-of-Use Asset
Loss on impairment of inventories, property and equipment and operating lease right-of-use asset relates to write-downs and impairments recorded on our inventories, property and equipment and right-of-use-asset in connection with our default under our lease in Centennial, Colorado, and ultimate judgment obtained by the landlord in April 2025. For additional information, see Notes 1 and 3 to the condensed consolidated financial statements included herein.
Interest Expense Recognized on Remeasurement of Preferred Stock Liability
Interest expense recognized on remeasurement of preferred stock liability relates to the subsequent remeasurement of the preferred stock liability after issuance through March 31, 2025 in connection with the reclassification of the preferred stock from mezzanine equity to a current liability on January 31, 2025. For additional information, see Note 11 to the condensed consolidated financial statements included herein.
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Results of Operations
The following table sets forth our results of operations for the three months ended June 30, 2026 and 2025:
|
|
Three Months Ended |
|
|
|
|
||||||
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|||
Revenue (including $43,310 and nil for the three months ended June 30, 2026 and 2025, respectively, and $73,322 and nil for the six months ended June 30, 2026 and 2025, respectively, with related parties) |
|
$ |
524,927 |
|
|
$ |
— |
|
|
$ |
524,927 |
|
Cost of revenue |
|
|
903,496 |
|
|
|
(4,538 |
) |
|
|
908,034 |
|
Gross loss |
|
|
(378,569 |
) |
|
|
4,538 |
|
|
|
(383,107 |
) |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|||
Research and development |
|
|
227,480 |
|
|
|
— |
|
|
|
227,480 |
|
Selling and marketing |
|
|
1,582,358 |
|
|
|
526,996 |
|
|
|
1,055,362 |
|
General and administrative |
|
|
3,632,893 |
|
|
|
4,095,229 |
|
|
|
(462,336 |
) |
Total operating expenses |
|
|
5,442,731 |
|
|
|
4,622,225 |
|
|
|
820,506 |
|
Loss from operations |
|
|
(5,821,300 |
) |
|
|
(4,617,687 |
) |
|
|
(1,203,613 |
) |
Non-operating income (loss): |
|
|
|
|
|
|
|
|
|
|||
Interest income |
|
|
5,979 |
|
|
|
19,194 |
|
|
|
(13,215 |
) |
Interest expense (including nil and nil for the three months ended June 30, 2026 and 2025, respectively, and $67,737 and nil for the six months ended June 30, 2026 and 2025, respectively, with related parties) |
|
|
(3,093 |
) |
|
|
(160,952 |
) |
|
|
157,859 |
|
Change in fair value of warrant liabilities |
|
|
829,415 |
|
|
|
(16,986 |
) |
|
|
846,401 |
|
Loss on issuance of warrants and related costs |
|
|
(18,498 |
) |
|
|
— |
|
|
|
(18,498 |
) |
Change in fair value of debt |
|
|
393,246 |
|
|
|
(1,422,895 |
) |
|
|
1,816,141 |
|
Loss on issuance of debt |
|
|
— |
|
|
|
(766,296 |
) |
|
|
766,296 |
|
Change in fair value of investments |
|
|
(3,087,260 |
) |
|
|
— |
|
|
|
(3,087,260 |
) |
Change in fair value of SYME Bonds (related party) |
|
|
95,206 |
|
|
|
— |
|
|
|
95,206 |
|
Change in fair value of contingent consideration (including $351,042 and nil for the three months ended June 30, 2026 and 2025, respectively, and $46,661 and nil for the six months ended June 30, 2026 and 2025, respectively, with related parties) |
|
|
(368,523 |
) |
|
|
— |
|
|
|
(368,523 |
) |
Change in fair value of convertible notes receivable (including $174,100 and nil for the three months ended June 30, 2026 and 2025, respectively, and $393,100 and nil for the six months ended June 30, 2026 and 2025, respectively, with related parties) |
|
|
288,535 |
|
|
|
(11,400 |
) |
|
|
299,935 |
|
Change in fair value of SEPA liability |
|
|
1,244,414 |
|
|
|
(260,507 |
) |
|
|
1,504,921 |
|
Loss on issuance of SEPA |
|
|
— |
|
|
|
(2,582,724 |
) |
|
|
2,582,724 |
|
SEPA fees and issuance costs |
|
|
(45,515 |
) |
|
|
(1,075,000 |
) |
|
|
1,029,485 |
|
Loss on extinguishment of debt (including nil and nil for the three months ended June 30, 2026 and 2025, respectively, and nil and $27,139 for the six months ended June 30, 2026 and 2025, respectively, with related parties) |
|
|
— |
|
|
|
(1,375,819 |
) |
|
|
1,375,819 |
|
Other income (loss), net |
|
|
11,532 |
|
|
|
46,097 |
|
|
|
(34,565 |
) |
Loss before provision for income taxes |
|
|
(6,475,862 |
) |
|
|
(12,224,975 |
) |
|
|
5,749,113 |
|
Income tax provision |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Net loss |
|
$ |
(6,475,862 |
) |
|
$ |
(12,224,975 |
) |
|
$ |
5,749,113 |
|
Revenue. Revenue increased $524,927 during the three months ended June 30, 2026 compared to the same period in 2025, which is due entirely to an increase in revenue resulting from the Orbit Change of Control and Lyocon Acquisition.
Cost of Revenue. Cost of revenue increased $908,034 during the three months ended June 30, 2026 compared to the same period in 2025, which is primarily due to an approximate $903,000 increase due to the Orbit Change of Control and Lyocon Acquisition.
Research and Development. Research and development expenses increased $227,480 during the three months ended June 30, 2026 compared to the same period in 2025, which is primarily due to an increase of approximately $221,000 in research and development spending related to the Maddox Program, which commenced in the first quarter of 2026. For additional information regarding the Maddox Program, see Note 4 to the condensed consolidated financial statements included herein.
Selling and Marketing. Selling and marketing expenses increased $1,055,362 during the three months ended June 30, 2026 compared to the same period in 2025, which includes an insignificant increase due to the Orbit Change of Control and Lyocon Acquisition. Excluding the effects of these transactions, selling and marketing increased $1,051,440. This increase is primarily due to an increase in (i) professional and consulting related expenses of approximately $470,000, primarily related to an increase in branding and public relations consulting expenses as part of our Transformation Plan, (ii) marketing expenses of approximately $360,000, and (iii) stock-based compensation expenses of approximately $185,000, primarily related to an increase in stock-based compensation expense in connection with the Common Stock issued for services provided by non-employee consultants, as discussed further in Note 14 to the condensed consolidated financial statements included herein.
General and Administrative. General and administrative expenses decreased $462,336 during the three months ended June 30, 2026 compared to the same period in 2025, which includes an approximate $72,000 increase due to the Orbit Change of Control and Lyocon Acquisition. Excluding the effects of these transactions, general and administrative decreased $534,574. This decrease is primarily driven by (i) a decrease in professional and consulting services of approximately $423,000 due largely to certain one-time expenses incurred during the second quarter
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of 2025 related to the Transformation Plan, (ii) a decrease in acquisition-related expenses of approximately $417,000 due primarily to one-time acquisition related expenses incurred in the second quarter of 2025, (iii) a decrease in stock-based compensation expenses of approximately $281,000, due primarily to a reduction in employee headcount during 2025, partially offset by increases in (iv) personnel costs of approximately $390,000 primarily related to an increase in bonus expense paid to executives, (v) legal expenses of approximately $148,000, and (vi) accounting and audit services of approximately $41,000 related to our Transformation Plan.
Change in Fair Value of Warrant Liabilities. We recorded a gain of $829,415 during the three months ended June 30, 2026, which is primarily related to a decrease of approximately $1,279,000 in the fair value of the February 2026 Offering Common Warrants, largely due to a decrease in our share price during the period. We recorded a loss of $16,986 during the three months ended June 30, 2025, which largely resulted from an increase in the Company's share price between March 31, 2025 and June 30, 2025.
Change in Fair Value of Debt. We recorded a gain of $393,246 during the three months ended June 30, 2026, which primarily resulted from (i) a gain of approximately $316,000 due to the decrease in the fair value of the December 2025 YA Debenture, largely due to the passage of time and expected near-term settlement during the three months ended June 30, 2026 and (ii) a gain of approximately $76,000 due to the decrease in fair value of the 2026 Brick Lane H&K Investment Note driven by a decline in our share price from issuance through June 30, 2026. We recorded a loss of $1,422,895 during the three months ended June 30, 2025, which primarily relates to an increase in fair value of $1,160,158 of the Indigo Capital Convertible Notes upon conversion of contractual principal of $725,000, largely due to an increase in the Company's share price from March 31, 2025 through the conversion date in May 2025. For additional information, see Notes 7 and 10 to the condensed consolidated financial statements included herein.
Loss on Issuance of Debt. We recorded a loss of $766,296 during the three months ended June 30, 2025, primarily related to an aggregate excess of $617,693 in the initial fair value of certain of the Indigo Capital Convertible Notes, Diagonal Convertible Notes, and Brick Lane Convertible Notes over the proceeds received. For additional information, see Note 10 to the condensed consolidated financial statements included herein.
Change in Fair Value of Investments. We recorded a loss of $3,087,260 during the three months ended June 30, 2026, which primarily resulted from a decrease of approximately (i) $2,913,000 in the fair value of the H&K Investment due to the decrease in H&K's share price over the period and (ii) $170,000 in the fair value of the Tekne Investment primarily due to an increase in the discount rate.
Change in Fair Value of Contingent Consideration. We recorded a loss of $368,523 during the three months ended June 30, 2026, which primarily resulted from a loss of approximately $351,000 driven by an increase in the fair value of the RegTech Contingent Consideration, largely due to an upward revision of expected future collections used in the earnout calculation. For additional information, refer to Notes 4 and 7 to the condensed consolidated financial statements included herein.
Change in Fair Value of Convertible Notes Receivable. We recorded a gain of $288,535 during the three months ended June 30, 2026, which primarily relates to the net effect of (i) an increase of approximately $463,000 in the fair value of the Tekne Convertible Note Receivable, primarily due to (a) an increase in our pro-rata equity entitlement upon the Capital Increase resulting from additional fundings under the Tekne Convertible Note Receivable during the period and (b) interest accrued on the Tekne Convertible Note Receivable during the period of approximately $200,000, which includes interest related to the Network Contract, partially offset by (ii) a decrease of approximately $174,000 in the fair value of the SYME Convertible Note Receivable, primarily due to the net impact of (a) potential dilutive impact on SYME's market value of the expected future conversion of the SYME Convertible Note Receivable into SYME ordinary shares and warrants and (b) interest accrued on the SYME Convertible Note Receivable during the period of approximately $184,000. We recorded a loss of $11,400 during the three months ended June 30, 2025, which relates to the increase in fair value of the SYME Convertible Note Receivable, primarily due to a decrease in the Company's stock price and remaining term to maturity. For additional information, see Note 6 to the condensed consolidated financial statements included herein.
Change in Fair Value of SEPA Liability. We recorded a gain of $1,244,414 during the three months ended June 30, 2026 related to the decrease in the fair value of the SEPA liability, primarily due to changes in the expected timing and amount of remaining dollar draws under the SEPA. We recorded a loss of $260,507 during the three months ended June 30, 2025 related to the increase in the fair value of the SEPA liability, primarily due to the increase in the fair value of the put option. For additional information, refer to Notes 7 and 13 to the condensed consolidated financial statements included herein.
Loss on Issuance of SEPA. We recorded a loss of $2,582,724 during the three months ended June 30, 2025 related to the initial fair value of the SEPA put option at inception of the SEPA on May 30, 2025. For additional information, refer to Notes 7 and 13 to the condensed consolidated financial statements included herein.
SEPA Fees and Issuance Costs. We recorded $45,515 and $1,075,000 of SEPA fees and issuance costs during the three months ended June 30, 2026 and 2025, respectively, which relates to (i) a structuring fee payable to the SEPA Investor in the amount of $25,000, (ii) a commitment fee payable to the SEPA Investor in Common Stock in an amount equal to 1% of the Commitment Amount, or $1,000,000, paid 50% on execution of the SEPA, which resulted in the issuance of 1,332,623 shares of Common Stock to the SEPA Investor during the second quarter of 2025, and 50% 90 days following the date of the SEPA and (iii) legal expenses of $50,000 related to the issuance of the SEPA. For additional information, refer to Notes 7 and 13 to the condensed consolidated financial statements included herein.
Loss on Extinguishment of Debt. We recorded a loss on the extinguishment of debt of $1,375,819 during the three months ended June 30, 2025, which primarily comprises (i) $1,071,997 related to the excess of the fair value of the 2025 June Brick Lane Convertible Notes at issuance and the carrying value of the 100,000 shares of the Company's outstanding Series A Preferred Stock that was extinguished, (ii) $163,500 related to the issuance of the 2025 April Indigo Capital Convertible Notes in exchange for the extinguishment of an existing unsecured promissory note of the Company with a carrying value of $2,108,523, and (iii) $140,323 related to the excess of the fair value of the 2025 Bomore Convertible Notes at issuance and the carrying value of the 100,000 shares of the Company's outstanding Series A Preferred Stock that was extinguished. For further information, see Note 10 to the condensed consolidated financial statements included herein.
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The following table sets forth our results of operations for the six months ended June 30, 2026 and 2025:
|
|
Six Months Ended |
|
|
|
|
||||||
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|||
Revenue (including $43,310 and nil for the three months ended June 30, 2026 and 2025, respectively, and $73,322 and nil for the six months ended June 30, 2026 and 2025, respectively, with related parties) |
|
$ |
932,571 |
|
|
$ |
— |
|
|
$ |
932,571 |
|
Cost of revenue |
|
|
1,556,256 |
|
|
|
231,179 |
|
|
|
1,325,077 |
|
Gross loss |
|
|
(623,685 |
) |
|
|
(231,179 |
) |
|
|
(392,506 |
) |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|||
Research and development |
|
|
294,980 |
|
|
|
184,563 |
|
|
|
110,417 |
|
Selling and marketing |
|
|
3,559,883 |
|
|
|
1,070,333 |
|
|
|
2,489,550 |
|
General and administrative |
|
|
9,247,579 |
|
|
|
6,174,034 |
|
|
|
3,073,545 |
|
Total operating expenses |
|
|
13,102,442 |
|
|
|
7,428,930 |
|
|
|
5,673,512 |
|
Loss from operations |
|
|
(13,726,127 |
) |
|
|
(7,660,109 |
) |
|
|
(6,066,018 |
) |
Non-operating income (loss): |
|
|
|
|
|
|
|
|
|
|||
Interest income |
|
|
43,579 |
|
|
|
26,579 |
|
|
|
17,000 |
|
Interest expense (including nil and nil for the three months ended June 30, 2026 and 2025, respectively, and $67,737 and nil for the six months ended June 30, 2026 and 2025, respectively, with related parties) |
|
|
(74,305 |
) |
|
|
(354,432 |
) |
|
|
280,127 |
|
Change in fair value of warrant liabilities |
|
|
12,225,675 |
|
|
|
110,314 |
|
|
|
12,115,361 |
|
Loss on issuance of warrants and related costs |
|
|
(8,224,691 |
) |
|
|
— |
|
|
|
(8,224,691 |
) |
Change in fair value of debt |
|
|
8,672,492 |
|
|
|
(1,166,373 |
) |
|
|
9,838,865 |
|
Loss on issuance of debt |
|
|
(11,661,274 |
) |
|
|
(1,474,096 |
) |
|
|
(10,187,178 |
) |
Gain on initial recognition of Tekne Investment |
|
|
84,000 |
|
|
|
— |
|
|
|
84,000 |
|
Change in fair value of investments |
|
|
(3,123,545 |
) |
|
|
— |
|
|
|
(3,123,545 |
) |
Gain on issuance of SYME Bonds (related party) |
|
|
49,514 |
|
|
|
— |
|
|
|
49,514 |
|
Change in fair value of SYME Bonds (related party) |
|
|
62,168 |
|
|
|
— |
|
|
|
62,168 |
|
Change in fair value of contingent consideration (including $351,042 and nil for the three months ended June 30, 2026 and 2025, respectively, and $46,661 and nil for the six months ended June 30, 2026 and 2025, respectively, with related parties) |
|
|
(68,159 |
) |
|
|
— |
|
|
|
(68,159 |
) |
Change in fair value of derivative liability (including nil and nil for the three months ended June 30, 2026 and 2025, respectively, and $4,909,820 and nil for the six months ended June 30, 2026 and 2025, respectively, with related parties) |
|
|
4,909,820 |
|
|
|
37,900 |
|
|
|
4,871,920 |
|
Change in fair value of convertible notes receivable (including $174,100 and nil for the three months ended June 30, 2026 and 2025, respectively, and $393,100 and nil for the six months ended June 30, 2026 and 2025, respectively, with related parties) |
|
|
1,362,338 |
|
|
|
(11,400 |
) |
|
|
1,373,738 |
|
Remeasurement of subscription for Orbit shares (related party) |
|
|
1,189,837 |
|
|
|
— |
|
|
|
1,189,837 |
|
Remeasurement of Orbit equity method investment (related party) |
|
|
(59,408 |
) |
|
|
— |
|
|
|
(59,408 |
) |
Change in fair value of SEPA liability |
|
|
1,473,349 |
|
|
|
(260,507 |
) |
|
|
1,733,856 |
|
Loss on issuance of SEPA |
|
|
— |
|
|
|
(2,582,724 |
) |
|
|
2,582,724 |
|
SEPA fees and issuance costs |
|
|
(45,515 |
) |
|
|
(1,075,000 |
) |
|
|
1,029,485 |
|
Loss on extinguishment of debt (including nil and nil for the three months ended June 30, 2026 and 2025, respectively, and nil and $27,139 for the six months ended June 30, 2026 and 2025, respectively, with related parties) |
|
|
— |
|
|
|
(6,873,335 |
) |
|
|
6,873,335 |
|
Gain on sale of intellectual property intangible assets |
|
|
— |
|
|
|
8,961,872 |
|
|
|
(8,961,872 |
) |
Loss on impairment of inventories, property and equipment and operating lease right-of-use asset |
|
|
— |
|
|
|
(6,064,823 |
) |
|
|
6,064,823 |
|
Interest expense recognized on remeasurement of preferred stock liability |
|
|
— |
|
|
|
(10,398,050 |
) |
|
|
10,398,050 |
|
Other income (loss), net |
|
|
(25,508 |
) |
|
|
(52,216 |
) |
|
|
26,708 |
|
Loss before provision for income taxes |
|
|
(6,935,760 |
) |
|
|
(28,836,400 |
) |
|
|
21,900,640 |
|
Income tax provision |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Net loss |
|
$ |
(6,935,760 |
) |
|
$ |
(28,836,400 |
) |
|
$ |
21,900,640 |
|
Revenue. Revenue increased $932,571 during the six months ended June 30, 2026 compared to the same period in 2025, which is due entirely to an increase in revenue resulting from the Orbit Change of Control and Lyocon Acquisition.
Cost of Revenue. Cost of revenue increased $1,325,077 during the six months ended June 30, 2026 compared to the same period in 2025, which includes an approximate $1,556,000 increase due to the Orbit Change of Control and Lyocon Acquisition. Excluding the effects of these transactions, cost of revenue decreased $231,179. This decrease is primarily due to a period-over-period decrease of approximately (i) $111,000 in overhead, due to continued reduced production volumes following the suspension of laser-system manufacturing operations in 2024, together with further reductions in production-related headcount and overhead during late 2025 and the first half of 2026 and (ii) $103,000 of direct labor and job costs.
Research and Development. Research and development expenses increased $110,417 during the six months ended June 30, 2026 compared to the same period in 2025, which is primarily due to the net effect of (i) an increase of approximately $265,000 in research and development spending related to the Maddox Program, which commenced in the first quarter of 2026, partially offset by decreases in (ii) stock-based compensation expenses of approximately $93,000, due primarily to research and development workforce reductions, (ii) depreciation expenses of approximately $41,000 due to the write-down of property and equipment to a net book value of zero during the first quarter of 2025, and
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(iii) personnel costs of approximately $27,000 due primarily to lower research and development headcount. For additional information regarding the Maddox Program, see Note 4 to the condensed consolidated financial statements included herein. For additional information on the write-down of property and equipment, see Notes 1 and 3 to the condensed consolidated financial statements included herein.
Selling and Marketing. Selling and marketing expenses increased $2,489,550 during the six months ended June 30, 2026 compared to the same period in 2025, which includes an insignificant increase due to the Orbit Change of Control and Lyocon Acquisition. Excluding the effects of these transactions, selling and marketing increased $2,485,464. This increase is primarily due to an increase in (i) professional and consulting related expenses of approximately $1,566,000, primarily related to an increase in branding and public relations consulting expenses as part of our Transformation Plan, (ii) marketing expenses of approximately $745,000, and (iii) stock-based compensation expenses of approximately $180,000 primarily related to an increase in stock-based compensation expense in connection with the Common Stock issued for services provided by non-employee consultants, as discussed further in Note 14 to the condensed consolidated financial statements included herein.
General and Administrative. General and administrative expenses increased $3,073,545 during the six months ended June 30, 2026 compared to the same period in 2025, which includes an approximate $163,000 increase due to the Orbit Change of Control and Lyocon Acquisition. Excluding the effects of these transactions, general and administrative increased $2,910,684. This increase is primarily driven by the net effect of (i) an increase in personnel costs of approximately $1,392,000 primarily related to an increase in bonus expense paid to executives, (ii) an increase in accounting and audit services of approximately $929,000 related to our Transformation Plan, (iii) an increase in acquisition-related expenses of approximately $638,000, and (iv) an increase in legal expenses of approximately $457,000, partially offset by (v) a decrease in stock-based compensation expenses of approximately $372,000 due primarily to a reduction in employee headcount during 2025.
Change in Fair Value of Warrant Liabilities. We recorded a gain of $12,225,675 during the six months ended June 30, 2026, which is primarily related to (i) a decrease of approximately $10,254,000 in the fair value of the February 2026 Offering Common Warrants and (ii) a decrease of approximately $1,963,000 in the fair value of the February 2026 Offering Pre-Funded Warrants, each largely due to a decrease in our share price from the time of issuance through June 30, 2026. We recorded a gain of $110,314 during the six months ended June 30, 2025, which largely resulted from a decrease in the Company's share price between December 31, 2024 and June 30, 2025.
Loss on Issuance of Warrants and Related Costs. We recorded a loss of $8,224,691 during the six months ended June 30, 2026, primarily representing (i) the excess of the initial fair value of the liability-classified February 2026 Offering Warrants over the allocated net proceeds and (ii) the portion of issuance costs allocated to the liability-classified February 2026 Offering Warrants and expensed as incurred, compared to no comparable loss during the six months ended June 30, 2025. For additional information, refer to Note 12 to the condensed consolidated financial statements included herein.
Change in Fair Value of Debt. We recorded a gain of $8,672,492 during the six months ended June 30, 2026, which primarily resulted from (i) a gain of approximately $9,325,000 due to the decrease in fair value of the 2026 Brick Lane H&K Investment Note driven by a decline in our share price from issuance through June 30, 2026, partially offset by a (ii) a loss of approximately $635,000 due to the net increase in the fair value of the December 2025 YA Debenture, as the expected repayment shifted to the near term, shortening the expected term and partially reducing the fair value later in the period. We recorded a loss of $1,166,373 during the six months ended June 30, 2025, which resulted from (i) a loss due to the increase in fair value of $1,160,158 of the Indigo Capital Convertible Notes upon conversion of contractual principal of $725,000, largely due to an increase in the Company's share price from March 31, 2025 through the conversion date in May 2025, (ii) a gain of $132,508 related to the decrease in the fair value of the Indigo Capital Convertible Notes, largely due to a decrease in the Company's share price from the time of the issuance in early March 2025 through March 31, 2025, and (ii) a gain of $124,014 related to the conversion of $307,320 of contractual principal under the 2025 Indigo Capital Convertible Notes. For additional information, see Notes 7 and 10 to the condensed consolidated financial statements included herein.
Loss on Issuance of Debt. We recorded a loss of $11,661,274 during the six months ended June 30, 2026, representing the excess of the issuance date fair value of the 2026 Brick Lane H&K Investment Note over the fair value of the H&K Investment received in exchange. We recorded a loss of $1,474,096 during the six months ended June 30, 2025, primarily related to (i) an aggregate excess of $707,800 in the initial fair value of the 2025 Indigo Capital Convertible Notes over the proceeds received during the first quarter of 2025 and (ii) an aggregate excess of $617,693 in the initial fair value of certain of the 2025 Indigo Capital Convertible Notes, 2025 Diagonal Convertible Notes and 2025 Brick Lane Convertible Notes over the proceeds received during the second quarter of 2025. For additional information, see Note 10 to the condensed consolidated financial statements included herein.
Change in Fair Value of Investments. We recorded a loss of $3,123,545 during the six months ended June 30, 2026, which primarily resulted from a decrease of approximately (i) $2,954,000 in the fair value of the H&K Investment due to the decrease in H&K's share price over the period and (ii) $170,000 in the fair value of the Tekne Investment primarily due to an increase in the discount rate.
Change in Fair Value of Contingent Consideration. We recorded a loss of $68,159 during the six months ended June 30, 2026, which primarily resulted from (i) a loss of approximately $47,000 driven by an increase in the fair value of the RegTech Contingent Consideration, primarily due to a downward revision of expected volatility of future collections used in the earnout calculation, partially compounded by a decrease in the discount rate applied to the future collections and (ii) a loss of approximately $21,000 driven by an increase in the fair value of the Lyocon Contingent Consideration, primarily due to the passage of time to settlement, partially offset by an increase in the discount rate applied to the expected payments. For additional information, refer to Notes 4 and 7 to the condensed consolidated financial statements included herein.
Change in Fair Value of Derivative Liability. We recorded a gain of $4,909,820 during the six months ended June 30, 2026, related to the remeasurement of the amended Orbit Preferred Obligation upon stockholder approval of the share issuance in March 2026, compared to a gain of $37,900 during the six months ended June 30, 2025 related to the extinguishment of the August 2024 Convertible Notes. For additional information, refer to Note 4 to the condensed consolidated financial statements included herein.
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Table of Contents
Change in Fair Value of Convertible Notes Receivable. We recorded a gain of $1,362,338 during the six months ended June 30, 2026, which primarily relates to the net effect of (i) an increase of approximately $1,755,000 in the fair value of the Tekne Convertible Note Receivable, primarily due to (a) an increase in our pro-rata equity entitlement upon the Capital Increase resulting from additional fundings under the Tekne Convertible Note Receivable during the period and (b) interest accrued on the Tekne Convertible Note Receivable during the period of approximately $331,000, which includes interest related to the Network Contract, partially offset by (ii) a decrease of approximately $393,000 in the fair value of the SYME Convertible Note Receivable, primarily due to the net impact of (a) the potential dilutive impact on SYME's market value of the expected future conversion of the SYME Convertible Note Receivable into SYME ordinary shares and warrants and (b) interest accrued on the SYME Convertible Note Receivable during the period of approximately $366,000. We recorded a loss of $11,400 during the six months ended June 30, 2025, which relates to the increase in fair value of the SYME Convertible Note Receivable, primarily due to a decrease in the Company's stock price and remaining term to maturity. For additional information, see Note 6 to the condensed consolidated financial statements included herein.
Remeasurement of Subscription for Orbit Shares. We recorded a gain of $1,189,837 during the six months ended June 30, 2026 related to the remeasurement of our subscription right for additional shares of Orbit to its acquisition-date fair value in connection with the Orbit Change of Control, primarily due to the increase in our share price between the inception of the Orbit Preferred Obligation and the Orbit Change of Control date. For additional information, refer to Note 4 to the condensed consolidated financial statements included herein.
Change in Fair Value of SEPA Liability. We recorded a gain of $1,473,349 during the six months ended June 30, 2026 related to the decrease in the fair value of the SEPA liability, primarily due to changes in the expected timing and amount of remaining dollar draws under the SEPA. We recorded a loss of $260,507 during the six months ended June 30, 2025 related to the increase in the fair value of the SEPA liability, primarily due to the increase in the fair value of the put option.
Loss on Issuance of SEPA. We recorded a loss of $2,582,724 during the six months ended June 30, 2025 related to the initial fair value of the SEPA put option at inception of the SEPA on May 30, 2025. For additional information, refer to Notes 7 and 13 to the condensed consolidated financial statements included herein.
SEPA Fees and Issuance Costs. We recorded $45,515 and $1,075,000 of SEPA fees and issuance costs during the six months ended June 30, 2026 and 2025, respectively. The amount recorded during the six months ended June 30, 2025, which relates to (i) a structuring fee payable to the SEPA Investor in the amount of $25,000, (ii) a commitment fee payable to the SEPA Investor in Common Stock in an amount equal to 1% of the Commitment Amount, or $1,000,000, paid 50% on execution of the SEPA, which resulted in the issuance of 1,332,623 shares of Common Stock to the SEPA Investor during the second quarter of 2025, and 50% 90 days following the date of the SEPA and (iii) legal expenses of $50,000 related to the issuance of the SEPA. For additional information, refer to Notes 7 and 13 to the condensed consolidated financial statements included herein.
Loss on Extinguishment of Debt. During the six months ended June 30, 2025, we recorded a loss on the extinguishment of debt of $6,873,335, which primarily is comprised of (i) $2,123,403 related to excess of the initial fair value of $3,003,300 of the 2025 March Indigo Capital Convertible Notes over the carrying amount of the August 2024 Convertible Notes, (ii) $1,682,641 related to the sale of collateral, further described in Note 8 to the condensed consolidated financial statements, (iii) $1,174,519 related to the issuance of 9,186,581 shares to holders of Junior Notes to extinguish an aggregate $411,865 of principal and accrued interest under the Junior Notes, (iv) $1,071,997 related to the excess of the fair value of the 2025 June Brick Lane Convertible Notes at issuance and the carrying value of the 100,000 shares of the Company's outstanding Series A Preferred Stock that was extinguished, (v) $480,399 related to the issuance of 1,878,620 shares to Esousa Group Holdings LLC to extinguish an aggregate $389,375 of principal and accrued interest under the August 2024 Convertible Notes, (vi) $163,500 related to the issuance of the 2025 April Indigo Capital Convertible Notes in exchange for the extinguishment of an existing unsecured promissory note of the Company with a carrying value of $2,108,523, and (vii) $140,323 related to the excess of the fair value of the 2025 Bomore Convertible Notes at issuance and the carrying value of the 100,000 shares of the Company's outstanding Series A Preferred Stock that was extinguished. For further information, see Note 10 to the condensed consolidated financial statements included herein.
Gain on Sale of Intellectual Property Intangible Assets. We recorded a gain on the sale of intellectual property of $8,961,872 during the six months ended June 30, 2025, which primarily related to the sale of collateral to extinguish the remaining outstanding Junior Notes and Senior Convertible Notes, as further described in Note 10 to the condensed consolidated financial statements included herein.
Loss on Impairment of Inventories, Property and Equipment and Operating Lease Right-of-Use Asset. We recorded a loss on impairment of inventories, property and equipment and operating lease right-of-use asset of $6,064,823 during the six months ended June 30, 2025 related to write-downs and impairments recorded on our inventories, property and equipment and right-of-use asset in connection with our default under our lease in Centennial, Colorado, and ultimate judgment obtained by the landlord, in April 2025. For additional information, see Notes 1, 3, and 8 to the condensed consolidated financial statements included herein.
Interest Expense Recognized on Remeasurement of Preferred Stock Liability. We recorded non-cash interest expense of $10,398,050 during the six months ended June 30, 2025 related to the subsequent remeasurement of the preferred stock liability after issuance through March 31, 2025 in connection with the reclassification of the preferred stock from mezzanine equity to a current liability on January 31, 2025. For additional information, see Note 11 to the condensed consolidated financial statements included herein.
Liquidity and Capital Resources
Overview
Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business operations, including working capital needs, debt service, acquisitions, contractual obligations, and other commitments. As of the date of this Quarterly Report, we
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Table of Contents
have yet to generate meaningful revenue from our business operations and have funded capital expenditure and working capital requirements through debt and equity financing.
As of June 30, 2026, we had cash and cash equivalents of $726,934 as compared to $24,661,284 as of December 31, 2025. During the six months ended June 30, 2026, our principal sources of liquidity were gross cash proceeds of (i) $11,994,929 related to the February 2026 Offering, as further described in Note 11 to the condensed consolidated financial statements, (ii) $10,996,535 under the SEPA, as further described in Note 13 to the condensed consolidated financial statements, and (iii) $765,061 of proceeds from warrant exercises. Additionally, in July 2026, we received net proceeds from the July 2026 Offering of approximately $18,738,864 after the repayment in full of all outstanding principal and accrued interest under the December 2025 YA Debenture and the Lyocon Convertible Notes. Our cash flows from operations are not sufficient to fund our current operating model and expansion plans. As of January 31, 2025, we were also required to redeem the Series A Preferred Stock as permitted by law in cash at an amount equal to $10.00 per share. Notwithstanding the foregoing, we are not required to redeem any shares of Series A Preferred Stock to the extent we do not have legally available funds to effect such redemption.
From inception through June 30, 2026, we have incurred operating losses and negative cash flows from operating activities. For the three months ended June 30, 2026 and 2025 and six months ended June 30, 2026 and 2025, the Company has incurred net losses of $6,475,862 and $12,224,975, respectively, and $6,935,760 and $28,836,400, respectively, and the Company has an accumulated deficit of $207,415,591 as of June 30, 2026. The net loss for the six months ended June 30, 2025 included $10,398,050 of non-cash interest expense recognized on remeasurement of the preferred stock liability. For additional information on this interest expense, see Note 11 to the condensed consolidated financial statements included herein.
We anticipate that we will incur net losses for the foreseeable future and, even if we generate revenue, there is no guarantee that we will ever become profitable. While we are pursuing a Transformation Plan intended to address aspects of our financial condition and operations, there can be no assurance that these efforts will be successful or that they will alleviate the substantial doubt regarding our ability to continue as a going concern. For additional information, refer to Note 1 to the condensed consolidated financial statements included herein, for the Company’s evaluation of the events and conditions and its plans regarding the going concern matter.
Until we can generate sufficient revenue, we plan to finance our business with the proceeds from the issuance and sale of debt or equity securities, including sales pursuant to the SEPA (which are not currently permitted due to the suspension of trading of the Common Stock on NYSE American), or borrowings under credit facilities. There is no assurance our management's plans to obtain additional debt or equity financing or credit facilities will be successfully implemented or implemented on terms favorable to us.
The further development of our products, commencement of commercial operations and expansion of our business will require a significant amount of cash for expenditures. Our ability to successfully manage this growth will depend on many factors, including our working capital needs, the availability of equity or debt financing and, over time, our ability to generate cash flows from operations.
Given our current liquidity position, we will need to raise additional capital. If we raise additional funds by issuing equity securities, this would result in dilution to our stockholders. If we raise additional funds by issuing any additional preferred stock, such securities may also provide for rights, preferences, or privileges senior to those of holders of Common Stock. If we raise additional funds by issuing debt securities, such debt securities would have rights, preferences and privileges senior to those of holders of Common Stock. The terms of debt securities or borrowings could impose significant restrictions on our operations. The credit market and financial services industry have in the past, and may in the future, experience periods of uncertainty that could impact the availability and cost of equity and debt financing.
Cash Flows
The following table summarizes our cash flows from operating, investing and financing activities for the periods presented.
|
|
Six Months Ended |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Net cash used in operating activities |
|
$ |
(15,098,163 |
) |
|
$ |
(3,986,504 |
) |
Net cash used in investing activities |
|
|
(21,807,937 |
) |
|
|
(1,250,000 |
) |
Net cash provided by financing activities |
|
|
12,976,178 |
|
|
|
5,138,257 |
|
Cash flows from operating activities
Net cash used in operating activities was $15,098,163 and $3,986,504 for the six months ended June 30, 2026 and 2025, respectively. The increase in cash used from operating activities is primarily the result of the net effect of (i) a net increase in cash used from non-cash expenses of $28,372,496 including (a) an increase in cash used from an increase in the gain on change in fair value of warrant liabilities of $12,115,361, (b) an increase in cash used from the interest expense recognized on remeasurement of preferred stock liability of $10,398,050 that was recognized during the six months ended June 30, 2025, (c) a decrease in cash used related to the increase in the loss on issuance of debt of $10,187,178, (d) an increase in cash used due to the change in fair value of debt of $9,838,865, (e) a decrease in cash used due to the decrease in the gain on sale of intellectual property intangible assets of $8,961,872 that was recognized during the six months ended June 30, 2025, (f) a decrease in cash used due to the loss on issuance of warrants and related costs of $8,224,691 recorded during the six months ended June 30, 2026, (g) an increase in cash used due to the loss on extinguishment of debt of $6,873,335 recognized during the six months ended June 30, 2025, (h) an increase in cash used due to the loss on impairment of inventories, property and equipment and operating lease right-of-use asset of $6,064,823 recognized during the six months ended June 30, 2025, and (i) an increase in cash used due to the increase in the gain related to the change in fair value of derivative liability of $4,871,920, (ii) a decrease in cash used from a decrease in net loss of $21,900,640 and (iii) an increase in cash used from a change in working capital of $4,639,803.
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Cash flows from investing activities
Net cash used in investing activities was $21,807,937 and $1,250,000 for the six months ended June 30, 2026 and 2025, respectively. The amount used in investing activities for the six months ended June 30, 2026 relates to (i) $20,511,875 of payments under the SYME Convertible Note Receivable and Tekne Convertible Note Receivable, (ii) $749,905 of cash paid for the Lyocon Acquisition, net of cash acquired, and (iii) $540,915 of cash paid for the acquisition of a controlling financial interest in Orbit, net of cash acquired. The amount used in investing activities for the six months ended June 30, 2025 relates to (i) $650,000 of payments under the SYME Convertible Note Receivable and (ii) $600,000 of cash paid for the deposit on the anticipated acquisition of Trumar Capital LLC.
Cash flows from financing activities
Net cash provided by financing activities was $12,976,178 and $5,138,257 for the six months ended June 30, 2026 and 2025, respectively.
Net cash provided by financing activities during the six months ended June 30, 2026 is comprised primarily of an increase in cash provided related to (i) $11,994,929 of proceeds from the February 2026 Offering, as further described in Note 11 to the condensed consolidated financial statements included herein and (ii) $10,996,535 of proceeds from the SEPA, partially offset by a decrease in cash provided of (iii) $9,624,733 from repayments of debt and (iv) $1,155,614 from payments of debt and equity issuance costs.
Net cash provided by financing activities during the six months ended June 30, 2025 is comprised primarily of (i) $5,399,708 of proceeds from certain debt instruments issued, as further described in Note 8 to the condensed consolidated financial statements, (ii) payments on debt borrowings of $1,024,898, (iii) $1,000,000 in proceeds from the Liqueous Settlement Agreement, as further described in Note 8 to the condensed consolidated financial statements, and (iv) payments of notes issuance and SEPA issuance costs of $236,380.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities that would be considered off-balance sheet arrangements as of June 30, 2026. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements, other than our variable interest in SYME 3, an unconsolidated variable interest entity described in Note 4 to the condensed consolidated financial statements included herein. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.
Contractual Obligations
For our contractual obligations that are expected to have an effect on our liquidity and cash flow, refer to Notes 8, 10, 11 and 13 to the condensed consolidated financial statements.
Critical Accounting Estimates
Our condensed consolidated financial statements are prepared in conformity with U.S. GAAP, which requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. We evaluate our estimates and assumptions on an ongoing basis. Our estimates and assumptions are based on historical experience and on various other factors that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates.
In connection with the business combinations, fair value option elections, and other significant transactions completed during the six months ended June 30, 2026 described within the condensed consolidated financial statements, we have identified additional critical accounting estimates relating to (i) business combinations, including the determination of fair value of identifiable assets acquired, liabilities assumed and contingent consideration as of the acquisition date, (ii) the assessment of impairment of goodwill and intangible assets and (iii) the subsequent remeasurement of contingent consideration liabilities. We expect to provide a full discussion of these matters as critical accounting estimates in our Annual Report on Form 10-K for the year ending December 31, 2026. Other than the foregoing, there have been no significant changes to our accounting policies during the six months ended June 30, 2026, as compared to the critical accounting policies described in our audited financial statements included in the Annual Report.
Recently Issued and Adopted Accounting Pronouncements
We review new accounting standards to determine the expected financial impact, if any, that the adoption of each new standard will have. For the recently issued and adopted accounting standards that we believe may have an impact on our condensed consolidated financial statements, refer to Note 2 to the condensed consolidated financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
Item 4. Controls and Procedures
Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our
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management, including the Executive Chairman and Co-Chief Executive Officers, as appropriate, to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our Co-Chief Executive Officers, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended June 30, 2026, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officers and principal financial and accounting officer have concluded that during the period covered by this report, our disclosure controls and procedures were not effective as of that date because of a material weakness in our control environment around the accounting and presentation of complex financial instrument transactions that was not effectively designed or maintained and a material weakness related to wire-transfer authorization that resulted in a fraudulent disbursement during the fourth quarter of 2025. These material weaknesses could result in material misstatements in the financial statements that would not be prevented or detected on a timely basis.
Management continues to implement remediation efforts related to the previously identified material weaknesses, and no additional material weaknesses were identified during the quarter ended June 30, 2026. To remediate such weaknesses, we intend to implement the following changes during our fiscal year ending December 31, 2026: (i) hire additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out in (i) and (ii) are, in part, dependent upon our receiving additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly 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.
Changes in Internal Control over Financial Reporting
During the first half of 2026, we completed the Lyocon Acquisition and the Orbit Change of Control. Under the guidelines established by the SEC, companies are permitted to exclude acquisitions from their assessment of internal control over financial reporting during the first year of an acquisition while integrating the acquired company. We are in the process of assessing the internal controls over financial reporting of the acquired companies and integrating them with our existing internal controls over financial reporting.
Except as noted above, there were no changes in our internal control over financial reporting identified in management's evaluation pursuant to Rules 13a-15(f) or 15d-15(f) of the Exchange Act during the period covered by this Quarterly Report that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The information under the caption “Legal Proceedings” in Note 8 of the unaudited condensed consolidated financial statements of this Quarterly Report is incorporated herein by reference.
Item 1A. Risk Factors.
There have been no material changes from the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, as amended (the “Annual Report”). If any of the risks discussed in our Annual Report are realized, our business, financial condition, results of operations and prospects could be materially and adversely affected.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Descriptions of the financing transactions described in Notes 10, 11 and 12 to the condensed consolidated financial statements, as well as share-based compensation arrangements described in Note 14 to the condensed consolidated financial statements are incorporated herein by reference. The shares issued were made pursuant to exemptions from registration under (i) Section 4(a)(2) of the Securities Act as transactions not involving a public offering, and (ii) Section 3(a)(9) of the Securities Act as exchanges with existing security holders.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
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Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
|
|
|
Incorporated by Reference |
|||
No. |
|
Description of Exhibit |
Form |
File No. |
Exhibit No. |
Filing Date |
2.1† |
|
Business Combination Agreement, dated as of August 5, 2022, by and among Tailwind Acquisition Corp., Compass Merger Sub, Inc. and Nuburu, Inc. |
8-K |
001-39489 |
2.1 |
August 8, 2022 |
3.1 |
|
Amended and Restated Bylaws of the Company. |
8-K |
001-39489 |
3.2 |
September 9, 2020 |
3.2 |
|
Amendment to the Amended and Restated Bylaws of the Company |
8-K |
001-39489 |
3.1 |
November 12, 2024 |
3.3 |
|
Amended and Restated Certificate of Incorporation of the Company. |
8-K |
001-39489 |
3.1 |
February 6, 2023 |
3.4 |
|
Amendment to the Amended and Restated Certificate of Incorporation of the Company. |
8-K |
001-39489 |
3.1 |
June 13, 2024 |
3.5 |
|
Amendment to the Amended and Restated Certificate of Incorporation of the Company, dated July 22, 2025. |
10-Q |
001-39489 |
3.5 |
August 14, 2025 |
3.6 |
|
Amendment to the Amended and Restated Certificate of Incorporation of the Company, dated February 25, 2026 |
8-K |
001-39489 |
3.1 |
February 27, 2026 |
3.7 |
|
Certificate of Designations of Series A Preferred Stock of the Company. |
8-K |
001-39489 |
3.3 |
February 6, 2023 |
3.8 |
|
Certificate of Designations of Series B Preferred Stock of the Company |
8-K |
001-39489 |
3.1 |
July 21, 2026 |
4.1 |
|
Pre-Funded Common Stock Purchase Warrant, dated May 11, 2026, by the Company to Indigo Capital LP |
S-1 |
333-297408 |
4.23 |
July 13, 2026 |
4.2 |
|
Form of Pre-Funded Common Stock Purchase Warrant |
S-1 |
333-297408 |
4.24 |
July 13, 2026 |
4.3 |
|
Form of Placement Agent’s Purchase Warrant |
S-1 |
333-297408 |
4.25 |
July 13, 2026 |
10.1 |
|
Exchange Agreement, dated May 11, 2026, between the Company and Indigo Capital LP |
S-1 |
333-297408 |
10.44 |
July 13, 2026 |
10.2 |
|
Investment Agreement, dated May 26, 2026, among Carlo Ulacco, Ambrogio D'Arrezzo, Andrea Lodi, the Company, Nuburu Defense, LLC and Tekne S.p.A. |
S-1 |
333-297408 |
10.45 |
July 13, 2026 |
10.3 |
|
Head of Terms, dated June 4, 2026, among the Company, SunCubes S.r.l., the individual founders of SunCubes S.r.l., Infratech Accelerator S.r.l., RoboIT S.r.l. and Pariter Partners S.r.l. |
S-1 |
333-297408 |
10.46 |
July 13, 2026 |
10.4 |
|
On Demand Facility Agreement, dated March 18, 2025, between the Company and Supply@ME Capital plc., as amended |
S-1 |
333-297408 |
10.15 |
July 13, 2026 |
10.5 |
|
Form of Securities Purchase Agreement, by and between the Registrant and the purchasers party thereto |
S-1 |
333-297408 |
10.47 |
July 13, 2026 |
10.6 |
|
Form of Registration Rights Agreement, by and between the Registrant and the buyers party thereto |
S-1 |
333-297408 |
10.48 |
July 13, 2026 |
31.1* |
|
Certification of Principal Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
31.2* |
|
Certification of Principal Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
31.3* |
|
Certification of Principal Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
32.1** |
|
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
32.2** |
|
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
32.3** |
|
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
101.INS |
|
Inline XBRL Instance Document – The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document. |
|
|
|
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
|
|
|
|
104 |
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
|
|
|
|
* Filed herewith
** Furnished herewith.
† Certain of the exhibits and schedules to these exhibits have been omitted in accordance with Regulation S-K Item 601(a)(5). The registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: August 14, 2026
|
|
|
|
NUBURU, INC. |
|
|
|
|
By: /s/ Alessandro Zamboni |
|
|
|
|
Name: Alessandro Zamboni |
|
|
|
|
Title: Executive Chairman and Co-Chief Executive Officer |
73