T3 Defense (NASDAQ: DFNS) investors register 30M shares of stock for resale
Rhea-AI Filing Summary
T3 Defense Inc. has filed a resale registration covering up to 30,000,000 shares of common stock, including 26,666,667 shares issuable upon conversion of Series B Convertible Preferred Stock and 3,333,333 shares issuable upon exercise of Common Warrants. All registered shares may be sold from time to time by the selling stockholders, and the company will not receive proceeds from these resales.
The company would receive cash only if the Common Warrants are exercised for cash, with potential proceeds of about $15 million earmarked for working capital and general corporate purposes. Shares outstanding were 68,270,525 as of May 29, 2026, and would be 98,270,525 assuming full conversion and exercise. Extensive risk disclosures highlight substantial potential dilution, complex anti-dilution and blocker provisions, going concern pressures, a high‑risk pivot from fintech to defense, dependence on Israeli operations amid active conflict, and challenges around export controls, security clearances, and intense defense‑industry competition.
Positive
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Negative
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Key Figures
Key Terms
Series B Convertible Preferred Stock financial
Common Warrants financial
price-based anti-dilution adjustments financial
Registration Rights Agreement financial
going concern financial
International Traffic in Arms Regulations (ITAR) regulatory
Offering Details
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
| (Exact name of registrant as specified in its charter) |
| 6770 | 38-3912845 | |||
| (State or jurisdiction of | (Primary Standard Industrial | (I.R.S. Employer | ||
| incorporation or organization) | Classification Code Number) | Identification Number) |
575 Fifth Ave., 14th Floor
New York, New York 10017
(646) 257-4214
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)
Menachem Shalom
T3 Defense Inc.
Chief Executive Officer
575 Fifth Ave., 14th Floor
New York, New York 10017
(646) 257-4214
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
Robert Cohen
McDermott Will & Schulte LLP
333 SE 2nd Avenue, Suite 4500
Miami, Florida 33131
(561) 287-7096
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date hereof.
If any securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☒
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
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.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company | |||
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 7(a)(2)(B) of the Securities Act.
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission acting pursuant to said section 8(a), may determine.
The information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state or jurisdiction where the offer or sale is not permitted.
PRELIMINARY PROSPECTUS
SUBJECT TO COMPLETION, DATED ________, 2026
T3 Defense Inc.
30,000,000 Shares of Common Stock
This prospectus relates to the resale from time to time by the selling stockholders named in this prospectus, including its transferees, pledgees, donees or successors (the “Selling Stockholders”), of up to 30,000,000 shares (the “Shares”) of the common stock, par value $0.0001 per share (the “Common Stock”), of T3 Defense Inc., a Delaware corporation (the “Company” or “T3 Defense”), which consists of (i) up to 26,666,667 Shares (the “Conversion Shares”) issuable upon the conversion of shares of our Series B Convertible Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock”), and (ii) up to 3,333,333 Shares (the “Warrant Shares”) issuable upon the exercise of common warrants (the “Common Warrants”). The shares of Series B Preferred Stock and the Common Warrants were purchased by the Selling Stockholders in a private placement (the “February 2026 Private Placement”) pursuant to the Securities Purchase Agreement, dated February 24, 2026, by and between the Company and such accredited investor (the “Securities Purchase Agreement”). As of the date of this prospectus, we have issued 200 shares of Series B Preferred Stock and Common Warrants initially exercisable on a cash-basis for up to 7,042,252 shares of Common Stock.
Each share of Series B Preferred Stock has a stated value of $50,000 (the “Stated Value”) and is initially convertible into 23,474 Conversion Shares (or pre-funded warrants in lieu thereof (the “Pre-Funded Warrants”)), calculated by dividing the Stated Value by the initial conversion price equal to $2.13 per share of Series B Preferred Stock (the “Initial Conversion Price”). The Initial Conversion Price is subject to adjustment upon stock splits, distributions, reorganizations, reclassifications, change of control and the like, and is also subject to price-based anti-dilution adjustments for subsequent offerings made by the Company while the Series B Preferred Stock remains outstanding (subject to certain exempt issuances). The Initial Conversion Price will also be adjusted upon receipt of Stockholder Approval (as hereinafter defined) as described herein. The shares of Series B Preferred Stock are subject to a blocker provision (the “Preferred Blocker”), which restricts the conversion of the Series B Preferred Stock if, as a result of such conversion, the holder, together with its affiliates and any other person whose beneficial ownership of Common Stock would be aggregated with the holder’s for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), would beneficially own in excess of 9.9% of our then issued and outstanding shares of Common Stock (including the shares of Common Stock issuable upon such exercise).
Each Common Warrant is exercisable for one and one half Warrant Shares at an initial exercise price of $2.13 per share, subject to adjustment for stock splits, distributions and the like (the “Initial Exercise Price”). The Initial Exercise Price is subject to price-based anti-dilution adjustments for subsequent offerings made by the Company while the Common Warrants remain outstanding (subject to certain exempt issuances). The holder of the Common Warrants may exchange the Common Warrants on a cashless basis for a number of shares of Common Stock determined by multiplying the total number of Warrant Shares with respect to which the Common Warrant is then being exercised by the Black Scholes Value (as defined in the Common Warrant) divided by the lower of the two closing bid prices of the Common Stock in the two days prior the time of such exercise, but in any event not less than $0.01 (as may be adjusted for stock dividends, subdivisions, or combinations and the like). The Common Warrants are subject to a blocker provision (the “Warrant Blocker” and, together with the Preferred Blocker, the “Blockers”), which restricts the exercise of a Common Warrant if, as a result of such exercise, the holder, together with its affiliates and any other person whose beneficial ownership of Common Stock would be aggregated with the holder’s for purposes of Section 13(d) of the Exchange Act, would beneficially own in excess of 9.99% of our then issued and outstanding shares of Common Stock (including the shares of Common Stock issuable upon such exercise).
The Shares being registered for resale represent a considerable percentage of our public float, and the sales of such Shares, or the perception that these sales could occur, could cause the market price of the Common Stock to decline significantly. In addition, we are not selling any shares of Common Stock under this prospectus and will not receive any of the proceeds from the sale of Shares by the Selling Stockholders. We are paying the cost of registering the Shares as well as various related expenses. The Selling Stockholders are responsible for all selling commissions, transfer taxes and other costs related to the offer and sale of its Shares. We will, however, receive the net proceeds of any Common Warrants exercised for cash. For a description of the transaction pursuant to which this resale registration statement relates, please see “Prospectus Summary – February 2026 Private Placement.”
The Selling Stockholders may sell the Shares at fixed prices, at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices. The Selling Stockholders may sell the Shares to or through underwriters, broker-dealers or agents, who may receive compensation in the form of discounts, concessions or commissions from the Selling Stockholders, the purchaser of the Shares, or both.
Our Common Stock is presently listed on the Nasdaq Global Market (“Nasdaq”) under the symbol “DFNS.” The closing price for our Common Stock on June 1, 2026, as reported by Nasdaq, was $0.3756 per share.
Investing in our securities involves a high degree of risk. You should carefully consider the risks and uncertainties described under the heading “Risk Factors” beginning on page 9 of this prospectus before making a decision to purchase our securities.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is , 2026
TABLE OF CONTENTS
| ABOUT THIS PROSPECTUS | ii | |
| SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS | iii | |
| INDUSTRY, MARKET AND OTHER DATA | iii | |
| PROSPECTUS SUMMARY | 1 | |
| RISK FACTORS | 9 | |
| USE OF PROCEEDS | 31 | |
| DIVIDEND POLICY | 31 | |
| MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 32 | |
| BUSINESS | 43 | |
| MANAGEMENT | 63 | |
| EXECUTIVE COMPENSATION | 67 | |
| SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 70 | |
| SELLING STOCKHOLDERS | 71 | |
| PLAN OF DISTRIBUTION | 72 | |
| DESCRIPTION OF SECURITIES | 74 | |
| CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS | 78 | |
| CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS | 79 | |
| LEGAL MATTERS | 83 | |
| EXPERTS | 83 | |
| WHERE YOU CAN FIND MORE INFORMATION | 83 | |
| INCORPORATION OF CERTAIN INFORMATION BY REFERENCE | 84 | |
| INDEX TO CONSOLIDATED FINANCIAL STATEMENTS | F-1 |
i
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement on Form S-1 that we filed with the Securities and Exchange Commission (the “SEC”). Under this registration statement, the Selling Stockholders may sell from time to time in one or more offerings the Shares described in this prospectus or otherwise as described under “Plan of Distribution.”
We have not, and the Selling Stockholders have not, authorized anyone to provide you with information other than the information that we have provided or incorporated by reference in this prospectus. You should rely only on the information contained in this prospectus or in any amended prospectus that we may authorize to be delivered or made available to you and your reliance on any unauthorized information or representation is at your own risk. This prospectus may be used only in jurisdictions where offers and sales of these securities are permitted. The information appearing in this prospectus is accurate only as of the date of this prospectus and that any information we have incorporated by reference is accurate only as of the date of the document incorporated by reference, regardless of the time of delivery of this prospectus, or any sale of our securities. Our business, financial condition and results of operations may have changed since those dates.
In this prospectus, unless otherwise noted, references to the “Company,” “T3 Defense,” “we,” “us,” and “our” refer to T3 Defense Inc. and its subsidiaries.
Neither we, nor any of our officers, directors, agents or representatives or underwriters, make any representation to you about the legality of an investment in our securities. You should not interpret the contents of this prospectus or any free writing prospectus to be legal, business, investment or tax advice. You should consult with your own advisors for that type of advice and consult with them about the legal, tax, business, financial and other issues that you should consider before investing in our securities.
This prospectus contains summaries of certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have been filed, will be filed or will be incorporated by reference as exhibits to the registration statement of which this prospectus is a part, and you may obtain copies of those documents as described below under “Where You Can Find More Information.”
This prospectus contains references to trademarks, trade names and service marks belonging to other entities. Solely for convenience, trademarks, trade names and service marks referred to in this prospectus may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its rights to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.
ii
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and any applicable prospectus supplement or free writing prospectus, including the documents that we incorporate by reference herein and therein, contain “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These statements relate to future events or to our future operating or financial performance and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements.
In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “potential” and similar expressions (including their use in the negative) intended to identify forward-looking statements. These statements reflect our current views with respect to future events and are based on assumptions and are subject to risks and uncertainties. As such, our actual results may differ significantly from those expressed in any forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements.
We discuss many of these risks in greater detail under the “Risk Factors,” “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections in this prospectus and/or incorporated by reference into this prospectus from our most recent Annual Report on Form 10-K, and in our Quarterly Reports on Form 10-Q for the quarterly periods ended subsequent to our filing of such Annual Report on Form 10-K, as well as any amendments thereto reflected in subsequent filings with the SEC.
These forward-looking statements represent our estimates and assumptions only as of the date of the document containing the applicable statement. Unless required by law, we undertake no obligation to update or revise any forward-looking statements to reflect new information or future events or developments. Thus, you should not assume that our silence over time means that actual events are bearing out as expressed or implied in such forward-looking statements. You should read this prospectus, any applicable prospectus supplement, together with the documents that we have filed with the SEC that are incorporated by reference and any free writing prospectus we have authorized for use in connection with this offering, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of the forward-looking statements in the foregoing documents by these cautionary statements.
INDUSTRY, MARKET AND OTHER DATA
Certain industry, market and competitive position data contained in this prospectus supplement and the information incorporated by reference herein relate to or are based on industry studies, research, publications, surveys and other data obtained from third-party sources and our own internal estimates and research. While we believe these third-party studies, research, publications, surveys and other data to be reliable as of the date of this prospectus supplement and based on reasonable assumptions, we have not independently verified, and make no representations as to the adequacy, fairness, accuracy or completeness of, any information obtained from third-party sources, and all such data involve risks and uncertainties and are subject to change based on various factors. Internal estimates are derived from publicly available information released by industry analysts and third-party sources, our internal research and our industry experience, and are based on assumptions made by us based on such data and our knowledge of the industry and market, which we believe to be reasonable.
iii
PROSPECTUS SUMMARY
The following summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should read this entire prospectus carefully, including the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Company’s historical financial statements and related notes included elsewhere in this prospectus.
Company Overview
Currently, the Company, through its subsidiaries, is a strategic acquirer and operator of aerospace and defense (A&D) businesses. We are building a portfolio of mission-critical suppliers and advanced technology companies and strategic infrastructure opportunities across the defense, aerospace, and advanced manufacturing sectors across the United States, Israel and Europe. Following the appointment in September 2024 of Menachem Shalom, our current chief executive officer and a director, we are positioning the Company as a strategic platform company focused on acquiring, integrating, and scaling high-impact businesses in the aerospace and defense industries. Our strategy targets Tier 2 and Tier 3 suppliers that form the industrial backbone of national security infrastructure, with particular emphasis on companies offering dual-use technologies, advanced AI applications, and critical manufacturing capabilities.
The chart below shows the current ownership and names of our portfolio companies:
1
Our Current Portfolio:
Defense and Aerospace Technology Acquisitions:
| ● | Star 26 Capital Inc. - Defense technology holding company that owns B. Rimon Agencies Ltd., an Israeli supplier of generators for “iron dome” launchers and defense systems. [closed January 12, 2026] |
| ● | Tiltan Software Engineering Ltd. - Israeli AI software company specializing in defense and aerospace applications including GPS-denied navigation, 3D mapping, simulation systems, and AI training platforms. [closed December 30, 2025] | |||
| ● | Nimbus Drones Technologies and Marketing Ltd. – Israeli company specializing in unmanned arial systems and services. [closed January 15, 2026] | |||
| ● | I.T.S. Industrial Tecno-logic Solutions Ltd.– Israeli company providing design, development, production and manufacturing of serial, fully integrated electro-mechanical machines and sophisticated assembly lines. [closed February 16, 2026] | |||
| ● | Positech Ltd., wholly owned subsidiary of I.T.S. – designs and manufactures top-of-the line, high performance motion control systems for military and civilian use. |
Technology Distribution and Licensing:
| ● | Blade Ranger Ltd. (Exclusive U.S. Distribution rights) - Distribution agreement for advanced drone payload systems for defense and homeland security markets, with minimum commitments of 30 payloads over three years. [August 25, 2026] |
| ● | Mandragola Aviation Joint Venture (51% ownership) - Strategic joint venture to establish aviation and defense infrastructure in the Baltics and Israel, including NATO-compliant logistics hubs, MRO (maintenance, repair and operations) facilities, and aircraft modernization capabilities. [August 29, 2026] |
Background
The Company was formed on May 24, 2019 under the name Brilliant Acquisition Corporation for the purpose of engaging in a business combination. On June 23, 2023, Brilliant Acquisition Corporation, a British Virgin Islands company (prior to the Merger (as defined below) “Brilliant”, and following the Merger, a Delaware corporation “Nukkleus”), entered into an Amended and Restated Agreement and Plan of Merger (as amended by the First Amendment to the Amended and Restated Agreement and Plan of Merger on November 1, 2023, the “Merger Agreement”), by and among Brilliant BRIL Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Brilliant (“Merger Sub”), and Nukkleus Inc., a Delaware corporation (“Old Nukk”). Old Nukk (f/k/a Compliance & Risk Management Solutions Inc.) was formed on July 29, 2013 in the State of Delaware as a for-profit Company and established a fiscal year end of September 30. The Merger Agreement provided that, among other things, at the closing of the transactions contemplated by the Merger Agreement, Merger Sub merged with and into Old Nukk (the “Merger”), with Old Nukk surviving as a wholly-owned subsidiary of Brilliant. In connection with the Merger, Brilliant changed its name to “Nukkleus Inc.” (“Nukkleus” or “Combined Company”). The Merger and other transactions contemplated by the Merger Agreement are hereinafter referred to as the “Business Combination.” In connection with the Business Combination, Brilliant changed its name to “Nukkleus Inc.” The Business Combination was completed on December 22, 2023.
2
As a result of Business Combination, we became a financial technology company with the aim of providing blockchain-enabled technology solutions. From the consummation of the Business Combination until the change of management in September 2024, we operated in the technology business as a full-service transactions technology and advisory business providing end-to-end transactions technology solutions. We offered an advanced transactions platform for dealing and risk management with global liquidity and customizable leverage, where users have control over quote and liquidity strategies.
Effective February 9, 2026, the Company changed its name to “T3 Defense Inc.”
Historically, the Company, through its wholly owned subsidiary, provided software and technology solutions for the worldwide retail foreign exchange trading industry. The Company’s primary customer was Triton Capital Markets Ltd. (“TCM”) (formerly known as FXDD Malta Limited). Emil Assentato, the former CEO and a former director of the Company, is also the majority member of Max Q Investments LLC (“Max Q”), which is managed by Derivative Marketing Associates Inc. (“DMA”). Mr. Assentato is the sole owner and manager of DMA. Max Q owns 79% of Currency Mountain Malta LLC, which in turn is the sole shareholder of TCM. In order to define the services rendered to TCM, Nukkleus Limited, a wholly-owned subsidiary of the Company, entered into a General Services Agreement (“GSA”) with TCM in May 2016. The GSA provided that TCM would pay Nukkleus Limited a minimum of $1,600,000 per month. On September 30, 2024, the Company, TCM and FXDirectDealer LLC (“FXDD”) entered into a Release Agreement pursuant to which the parties confirmed that the GSA between the Company and TCM and the General Services Agreement dated May 24, 2016, as amended (“FXDD GSA”), between the Company and FDDD were terminated effective January 1, 2024. The parties further confirmed that there were no obligations or liabilities outstanding or owed between the parties as of September 30, 2024 and each party released and forever discharged the other party from any and all claims, demands, damages, actions, causes of action, or suits of any kind or nature whatsoever, both known and unknown, which have arisen or may arise from the GSA or the FXDD GSA.
The Company historically operated its blockchain payment solutions through Digital RFQ Limited (“DRFQ”), a wholly owned subsidiary of the Match Financial Ltd (“Match”), a wholly owned subsidiary of the Company. On November 8, 2024, the Company entered into a Settlement Agreement and Release with Jamal Khurshid and Match providing that Match agreed to sell DRFQ to Mr. Khurshid or his nominee subject to the Company obtaining shareholder approval (the “Settlement Agreement”). As required by the Settlement Agreement, the Company, Match and Mr. Khurshid entered into a Share Purchase Agreement dated December 27, 2024 providing that the Company, subject to it obtaining shareholder approval, will sell DRFQ to Mr. Khurshid in consideration of £1,000. The Company believed the sale of DRFQ was in the best interest of the Company due to continuing net loss generated by DRFQ.
As of August 2025, the Company determined that it no longer had a controlling financial interest in Digital RFQ due to loss of access to financial records. Accordingly, the Company deconsolidated DRFQ during the third quarter of fiscal year 2025. The Company was notified that on July 29, 2025, Match was placed into administration in the United Kingdom pursuant to the Insolvency Act 1986 resulting in the appointment of two administrators (the “Administrators”). The Administrators completed a pre-packaged sale of Match’s entire shareholding in DRFQ to Match Financial Holdings Limited, a newly formed entity owned by Mr. Khurshid, for nominal consideration of £102,000.
February 2026 Private Placement
On February 24, 2026, we entered into the Securities Purchase Agreement with a certain accredited investor, pursuant to which the investor agreed to purchase from the Company 400 units for an aggregate purchase price of $20,000,000, or a per unit price of $50,000, with each unit consisting of (i) one restricted share of Series B Preferred Stock and (ii) one and a half restricted Common Warrants to initially purchase up to 35,211 shares of Common Stock, subject to adjustment and exchange as described herein. Each share of Series B Preferred Stock has a Stated Value of $50,000 and is convertible into a number of shares of Common Stock (or pre-funded warrants in lieu thereof) equal to the Stated Value divided by the Initial Conversion Price. Upon the Company obtaining stockholder approval of the transactions contemplated by the Securities Purchase Agreement and the related agreements (“Stockholder Approval”), the Initial Conversion Price will be adjusted from $2.13 per share to the lower of (i) $2.13 per share and (ii) the price per share upon the effectiveness of the registration statement of which this prospectus is a part, (iii) the price per share upon the Company obtaining Stockholder Approval and (iv) the price per share upon applicability of Rule 144 as it relates to the sale of the Conversion Shares. The Initial Conversion Price is subject to further adjustment upon stock splits, distributions, reorganizations, reclassifications, change of control and the like, and is also subject to price-based anti-dilution adjustments for subsequent offerings made by the Company while the Series B Preferred Stock remains outstanding (subject to certain exempt issuances). Assuming an Initial Conversion Price of $2.13 per share, each share of Series B Preferred Stock is convertible into 23,474 shares of Common Stock (or pre-funded warrants in lieu thereof). The holder of the Series B Preferred Stock is entitled to 10,000 votes per each share of Series B Preferred Stock.
3
The Common Warrants are immediately exercisable on a cash basis or exchangeable on a cashless basis and will expire five (5) years from the date of issuance. Each Common Warrant will be initially exercisable for one share of Common Stock at an Initial Exercise Price of $2.13 per share. The Initial Exercise Price is subject to price-based anti-dilution adjustments for subsequent offerings made by the Company while the Common Warrants remain outstanding (subject to certain exempt issuances). The holder of the Common Warrants may exchange the Common Warrants on a cashless basis for a number of shares of Common Stock determined by multiplying the total number of Warrant Shares with respect to which the Common Warrant is then being exercised by the Black Scholes Value (as defined in the Common Warrant) divided by the lower of the two closing bid prices of the Common Stock in the two days prior the time of such exercise, but in any event not less than $0.01 (as may be adjusted for stock dividends, subdivisions, or combinations and the like).
The February 2026 Private Placement is structured as a two-stage investment. At the initial closing, which occurred on February 26, 2026, the Company sold 200 units for gross proceeds of $10 million. The Purchaser agreed to purchase an additional 200 units for an additional investment of $10 million following (i) the effectiveness of the registration statement described below, (ii) stockholder approval of the issuance of the transactions contemplated by the Securities Purchase Agreement as required pursuant to Nasdaq rules, (iii) the stock price is at least $1.00 and (iv) subject to the condition that the value of the trading in the Company’s stock on Nasdaq for the 10 consecutive days preceding the second closing is at or above $900,000 (the “Second Closing Market Trading Value”), provided that if the Second Closing Market Trading Value is less than $900,000, then there will be a proportionate reduction in the number of units to be sold at the second closing.
Pursuant to the Securities Purchase Agreement, the Company is required to seek stockholder approval as required by applicable Nasdaq rules. The Company has also granted the investor a right of participation in subsequent financings of the Company for a period of time following closing, subject to certain exempt issuances, and the Company has agreed not to issue securities for a period of time following the closing of the February 2026 Private Placement, subject to certain exempt issuances, including issuances pursuant to strategic transactions.
In connection with the February 2026 Private Placement, the Company and the Selling Stockholder entered into a Registration Rights Agreement, dated February 24, 2026 (the “Registration Rights Agreement”). Pursuant to the terms of the Registration Rights Agreement, the Company is required to register the resale of the Conversion Shares (and any shares underlying the Pre-Funded Warrants, if any) and the Warrant Shares. The Registration Rights Agreement requires the Company to register 250% of the Conversion Shares as of the date of the Securities Purchase Agreement based on the Initial Conversion Price and 250% of the Warrant Shares as of the date of the Securities Purchase Agreement based on the Initial Exercise Price. The Company is required to prepare and file an initial registration statement (the “Initial Registration Statement”) with the Securities and Exchange Commission within 45 days of the date of the Securities Purchase Agreement (the “Filing Deadline”) and to use its best reasonable efforts to have the Initial Registration Statement declared effective within 75 days of the date of the Securities Purchase Agreement (the “Effectiveness Deadline”). In certain circumstances including, but not limited to, if the Company misses the Filing Deadline or the Effectiveness Deadline, then the Company will be required to pay to the Purchaser an amount in shares of Common Stock or cash, at the Company’s discretion, as partial liquidated damages and not as a penalty, equal to the product of 1.5% multiplied by the aggregate purchase price paid by the Selling Stockholders. Liquidated damages, if any, will accrue and be paid on the earlier of the effective date of a resale registration statement registering the sale of the shares of Common Stock that may be issued in lieu of cash or the date on which such shares can be sold pursuant to Rule 144 (the “Registration Date”). If the Company elects to pay liquidated damages in shares of Common Stock, the number of shares of Common Stock issuable to the Selling Stockholders will be determined by dividing the aggregate amount of accrued liquidated damages by the closing price of the Common Stock on the trading market of the Common Stock on the day immediately prior to the Registration Date (the “LD Share Formula”).
In connection with the February 2026 Private Placement, the Company entered into a Placement Agency Agreement, dated February 24, 2026, with Dawson James Securities Inc. (“DJS”), pursuant to which DJS acted as the sole placement agent for the February 2026 Private Placement. In consideration for the foregoing, the Company has agreed to pay customary placement fees to DJS, including a cash fee equal to 3.5% of the gross proceeds raised in the February 2026 Private Placement and warrants equal to 7.5% of the securities purchased in the February 2026 Private Placement, and has also agreed to reimburse certain expenses of DJS incurred in connection with the February 2026 Private Placement.
Implications of Being a Smaller Reporting Company
We are a “smaller reporting company” as defined in the Exchange Act. We continue to be a smaller reporting company even though we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as the market value of our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year, and the market value of our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.
Risk Factors Summary
Investing in our common stock involves significant risks. You should carefully consider the risks described in the section titled “Risk Factors” immediately following this prospectus summary and elsewhere in this prospectus before making a decision to invest in our common stock. If we are unable to successfully address these risks and challenges, our business, financial condition, results of operations, or prospects could be materially and adversely affected. In such case, the trading price of our common stock would likely decline, and you may lose all or part of your investment. Below is a summary of some of the risks we face.
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Risks Related to the Series B Preferred Stock and this Offering by the Selling Stockholders
| ● | The conversion of Series B Preferred Stock and exercise of Common Warrants would substantially dilute existing stockholders and depress our stock price. We may not receive any proceeds from the exercise of the Common Warrants and future sales of Shares by the Selling Stockholders could also depress our stock price. | |
| ● | The terms of the Series B Preferred Stock could prevent or delay transactions that stockholders may favor and the holder of our Series B Preferred Stock has additional voting power as compared to the holders of our Common Stock. | |
| The conversion price adjustments and anti-dilution provisions of the Series B Preferred Stock and Common Warrants may require a significant amount of additional shares of common stock to be issued and registered. |
Risks Related to Our Business and the Defense Industry
| ● | The audited consolidated financial statements included in this prospectus have been prepared assuming the Company will continue as a going concern. | |
| ● | We are attempting to integrate multiple defense companies simultaneously without any aerospace and defense experience. Our unprecedented transformation from financial technology to aerospace and defense lacks any operational track record and may completely fail and our recent pivot from fintech to the defense sector exposes us to new operational, regulatory, and market risks for which we have limited prior experience. |
| ● | Our Chief Executive Officer’s commitments to other companies may limit his ability to devote full-time attention to our business and could result in competition or conflicts of interest, which could adversely affect our operations and financial performance. | |
| ● | Our defense technology distribution agreements expose us to rapid technological obsolescence and intense competition from larger defense contractors with greater resources and established government relationships. We have an exclusive distribution agreement with an Israeli supplier, and any termination, non-renewal, or disruption in these relationships could severely impact our operations. | |
| ● | Any significant disruption in our technology could adversely impact our brand and reputation and our business, operating results, and financial condition. | |
| ● | We rely on third parties in critical aspects of our business, which creates additional risk. | |
| ● | We lack the facility security clearances and cleared personnel required for 90% of U.S. defense contracts. | |
| ● | We face overwhelming competition from established prime contractors and we must comply with complex defense regulations without any infrastructure. | |
| ● | Our defense distribution business is subject to complex export control laws and regulations, including ITAR and EAR, and failure to comply could result in significant fines, loss of export privileges, and reputational damage. Export control violations could result in criminal prosecution and permanent debarment. The defense procurement process is lengthy, complex, and highly competitive, which may prevent us from achieving the revenue targets required under our distribution agreements. | |
| ● | We face potential liability and indemnification obligations related to the defense products we distribute, which could expose us to significant financial losses. |
5
Risks Related to Geopolitical and Macroeconomic Conditions
| ● | The ongoing “Swords of Iron” war and the broader military conflict in the Middle East have had, and may continue to have, a material adverse effect on our Israeli operations, supply chains, personnel, and ability to execute our business strategy. The conflict has resulted in limitations on exports to Israel, attacks on defense companies by anti-Israeli organizations, and reputational risks that may impair our ability to conduct international business. | |
| ● | Mandatory military reserve duty obligations have resulted in, and may continue to result in, significant personnel shortages that disrupt our operations, production schedules, and ability to fulfill contractual obligations. | |
| ● | We do not carry war risk insurance for our Israeli operations, and losses arising from military conflict would be entirely unrecovered. | |
| ● | Our business partners, customers, and suppliers may invoke force majeure or otherwise fail to perform their contractual obligations as a result of the conflict, which could disrupt our operations and revenue. | |
| ● | Rising global defense spending may not translate into revenue for our company, and shifts in government budget priorities could adversely affect demand for our products and services. | |
| ● | U.S. trade policy, including tariffs and export restrictions, may increase our costs, disrupt our supply chains, and limit our market access. | |
| ● | Intensifying great-power competition and the fragmentation of international trade and security frameworks create systemic risks to our business model. | |
| ● | Our foreign ownership structure may permanently preclude classified U.S. defense programs. |
Risks Related to Our Financial Condition and Existing Capital Structure
| ● | We lack the financial infrastructure required for defense contracting. | |
| ● | The price-based anti-dilution provisions in our convertible preferred stock may create a self-reinforcing cycle of dilution if our stock price declines. | |
| ● | The substantial overhang of shares issuable upon conversion of preferred stock and exercise of outstanding warrants may depress our stock price regardless of our operating performance. | |
| ● | We expect to issue additional shares of Common Stock or other securities in the future to fund acquisitions and operations, which would further dilute existing stockholders. | |
| ● | Our stock price has been and may continue to be highly volatile, and investors may not be able to resell their shares at or above the price at which they purchased them. |
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| ● | We are currently at risk of failing to maintain the minimum bid price required by Nasdaq Listing Rules. | |
| ● | We might not be able to consummate the second tranche of our recent financing. | |
| ● | Star has the right to require the Company to exchange the Investment Note for all the shares of Star then held by the Company if the Common Stock is delisted. | |
| ● | There is no assurance that we will achieve and maintain profitability or that our revenue and business models will be successful. If our estimates or judgment relating to our critical accounting policies prove to be incorrect, our operating results could be adversely affected. |
| ● | The nature of our business requires the application of complex financial accounting rules, and there is limited guidance from accounting standard setting bodies. If financial accounting standards undergo significant changes, our operating results could be adversely affected. |
| ● | As a public company, we are required to develop and maintain proper and effective internal controls over financial reporting, and any failure to maintain the adequacy of these internal controls may adversely affect investor confidence in our company and, as a result, the value of our stock. |
Risks Related to Our Employees and Other Service Providers
| ● | In the event of employee or service provider misconduct or error, our business may be adversely impacted. The loss of one or more of our key personnel, or our failure to attract and retain other highly qualified personnel in the future, could adversely impact our business, operating results, and financial condition. |
Corporate Information
We were incorporated under the name “Brilliant Acquisition Corporation”, a British Virgin company. The Company was formed for the purpose of acquiring, engaging in a share exchange, share reconstruction and amalgamation with, purchasing all or substantially all of the assets of, entering into contractual arrangements with, or engaging in any other similar business combination with one or more businesses or entities. on June 23, 2023, Brilliant entered into the Merger Agreement by and among Merger Sub and Old Nukk. Old Nukk (f/k/a Compliance & Risk Management Solutions Inc.) was formed on July 29, 2013 in the State of Delaware as a for-profit Company. The Merger Agreement provided that, among other things, at the closing of the transactions contemplated by the Merger Agreement, Merger Sub merged with and into Old Nukk, with Old Nukk surviving as a wholly-owned subsidiary of Brilliant. The Merger closed on December 22, 2023. In connection with the Merger, Brilliant changed its name to “Nukkleus Inc.” Effective February 9, 2026, the Company changed its name to “T3 Defense Inc.”
Our
principal executive offices are located at 575 Fifth Avenue, 14th Floor, New York, New York 10017. Our main telephone number
is (646) 257-4214. The Company also has an office at 5 Hagvish, Netanya, Israel. maintain a website at www.t3dfns.com. Information
contained on or accessible through our website is not, and should not be considered, part of, or incorporated by reference into, this
prospectus and you should not consider any information contained on, or that can be accessed through, our website as part of this prospectus
in deciding whether to purchase our securities.
7
THE OFFERING
This prospectus relates to the resale from time to time by the Selling Stockholders of up to 30,000,000 Shares, which consists of (i) up to 26,666,667 Conversion Shares issuable upon the conversion of the Series B Preferred Stock, and (ii) up to 3,333,333 Warrant Shares issuable upon the exercise of the Common Warrants. The Selling Stockholders agreed to purchase the shares of Series B Preferred Stock and the Common Warrants pursuant to the Securities Purchase Agreement.
| Common Stock offered by the Selling Stockholders | Up to 30,000,000 Shares, which consists of (i) up to 26,666,667 Conversion Shares issuable upon the conversion of the Series B Preferred Stock, and (ii) up to 3,333,333 Warrant Shares issuable upon the exercise of the Common Warrants. | |
| Common Stock outstanding before Offering: | 68,270,525 | |
| Shares of Common Stock to be outstanding after this offering | 98,270,525 | |
| Use of Proceeds | All of the Shares sold pursuant to this prospectus will be offered and sold by the Selling Stockholders. We will not receive any proceeds from such sales. We would, however, receive proceeds upon the exercise of the Common Warrants held by the Selling Stockholders which, if such Common Warrants are exercised for cash in full, would be approximately $15 million. Proceeds, if any, received from the exercise of the Common Warrants will be used for working capital and general corporate purposes. No assurances can be given that any of the Common Warrants will be exercised. See “Use of Proceeds.” | |
| Restrictions on securities | Under the terms of the Series B Preferred Stock and the Common Warrants, a holder may not convert the shares of Series B Preferred Stock or exercise the Common Warrants to the extent (but only to the extent) such holder or any of its affiliates would beneficially own in excess of 9.9% or 9.99%, respectively, of the number of shares of Common Stock outstanding after giving effect to the issuance of Conversion Shares or Warrant Shares upon such conversion or exercise, as applicable, and as calculated in accordance with Section 13(d) of the Securities Exchange Act. | |
| Terms of Offering | The Selling Stockholders will determine when and how it will sell the Shares offered in this prospectus, as described in “Plan of Distribution.” | |
| Risk Factors | An investment in our securities involves a high degree of risk and could result in a loss of your entire investment. Prior to making an investment decision, you should carefully consider all of the information in this prospectus and, in particular, you should evaluate the risk factors set forth under the caption “Risk Factors.” | |
| Nasdaq Trading Symbol | “DFNS.” |
The number of shares of Common Stock outstanding after this offering is based on 68,270,525 shares of Common Stock issued and outstanding as of May 29, 2026 and excludes the following:
| ● | Shares of Common Stock issuable upon the conversion of outstanding Series B Preferred Stock in excess of the number of shares of Common Stock registered pursuant to this registration statement; |
| ● | Shares of Common Stock issuable upon the exercise of outstanding Common Warrants in excess of the number of shares of Common Stock registered pursuant to this registration statement; |
| ● | 4,823 shares of Common Stock issuable upon the exercise of outstanding stock options having a weighted average exercise price of $550.60 per share; and |
| ● | 13,840,994 shares of Common Stock issuable upon the exercise of outstanding warrants having a weighted exercise price of $7.24 per share. |
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RISK FACTORS
An investment in our securities involves a high degree of risk. This prospectus contains the risks applicable to an investment in our securities. Prior to making a decision about investing in our securities, you should carefully consider the specific factors discussed under the heading “Risk Factors” in this prospectus and/or incorporated by reference into this prospectus from our most recent Annual Report on Form 10-K, as well as any subsequent filings with the SEC. The risks and uncertainties we have described are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our operations. The occurrence of any of these known or unknown risks might cause you to lose all or part of your investment in the offered securities.
Risks Related to the Series B Preferred Stock and this Offering by the Selling Stockholders
The conversion of Series B Preferred Stock and exercise of Common Warrants would substantially dilute existing stockholders and depress our stock price.
This offering will likely result in a substantial increase in outstanding shares of Common Stock that will significantly dilute the ownership interests and voting power of existing stockholders. The conversion of the 400 shares of Series B Preferred Stock issued or issuable pursuant to the Securities Purchase Agreement would result in the issuance of a substantial number of shares of Common Stock. Assuming an Initial Conversion Price of $2.13 per share, the conversion of the 400 shares of Series B Preferred Stock would result in the issuance of 9,389,670 shares of Common Stock. Additionally, assuming a cash exercise at an Initial Exercise Price of $2.13 per share, the exercise of the Common Warrants issued or issuable pursuant to the Securities Purchase Agreement would result in the issuance of up to 14,084,506 additional shares of Common Stock. This would result in the issuance of 23,474,176 shares of Common Stock, representing approximately 34% of our current outstanding shares.
Furthermore, the Initial Conversion Price of the Series B Preferred Stock will be adjusted upon receipt of Stockholder Approval, if obtained, to the lower of (i) $2.13 per share, (ii) the price per share upon effectiveness of the Initial Registration Statement required to be filed pursuant to the Registration Rights Agreement, (iii) the price per share upon the Corporation obtaining Stockholder Approval and (iv) the price per share upon applicability of Rule 144 as it relates to the sale of the Conversion Shares.
In addition, the Initial Conversion Price of the Series B Preferred Stock and the Initial Exercise Price are both subject to adjustments upon stock splits, distributions, reorganizations, reclassifications, change of control and the like, and are also subject to price-based anti-dilution adjustments for subsequent offerings made by the Company while the securities remain outstanding.
These adjustments could result in a number of factors which could adversely affect the other stockholders of the Company. Due to our obligations under the Registration Rights Agreement, we will have to file another registration statement to register these shares, as we are contractually obligated to registeradditional shares of our Common Stock that may be issuable upon the conversion of the Series B Preferred Stock and the exercise of the Common Warrants issued or issuable pursuant to the Securities Purchase Agreement. If we do not have sufficient authorized share capital, we will have to undergo the time and expense of filing another proxy statement and calling for a special shareholders meeting to increase the number of authorized shares of common stock. These delays might cause the Company to incur additional liquidated damages of 1.5% multiplied by the aggregate purchase price paid by the Selling Stockholders.
We may not receive any proceeds from the exercise of the Common Warrants.
The Common Warrants have an Initial Exercise Price of $2.13 per share, which is above our recent trading prices. Unless our stock price increases substantially above the exercise price, holders of Common Warrants are unlikely to exercise the Common Warrants for cash. Additionally, the Common Warrants contain provisions allowing for cashless exercise based on a Black-Scholes formula, in which case we would not receive any cash proceeds upon exercise. If our stock price does not appreciate significantly or if holders choose cashless exercise, we will not receive the potential proceeds from exercises of Common Warrants that we may need to fund our operations and acquisitions.
Future sales of Shares by the Selling Stockholders could depress our stock price.
Once this registration statement is declared effective, the Selling Stockholders will be able to sell up to 30,000,000 Shares in the public market. Sales of substantial amounts of our Common Stock, or the perception that such sales could occur, could adversely affect market prices of our Common Stock and could impair our ability to raise capital through future stock offerings. We cannot predict the effect, if any, that future sales of shares of our Common Stock or the availability of shares of our Common Stock for future sale will have on the market price of our Common Stock.
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The terms of the Series B Preferred Stock could prevent or delay transactions that stockholders may favor.
The Series B Preferred Stock has certain protective provisions that require holder consent for fundamental transactions. These provisions could prevent or delay transactions such as a merger, acquisition, or sale of assets that other stockholders may view as beneficial. Additionally, the liquidation preference of $50,000 per share means that in any liquidation event, the holders of Series B Preferred Stock would receive their preference amount before holders of Common Stock receive any distribution, potentially leaving nothing for holders of Common Stock.
Certain existing securityholders purchased our securities at a price below the current trading price of such securities, and may experience a positive rate of return based on the current trading price. Future investors in us may not experience a similar rate of return.
Certain of our securityholders, including the Selling Stockholders, acquired our securities at prices below the current trading prices of our Common Stock and may experience a positive rate of return. The Selling Stockholders may realize a positive rate of return on the sale of their Shares covered by this prospectus even if the market price per share of our Common Stock is below the Initial Exercise Price of the Common Warrants of $2.13 or below the Initial Conversion Price of the Series B Preferred Stock. Public securityholders may not experience a similar rate of return on the securities they purchased due to differences in the purchase prices they paid and the trading price at the time of sale and may instead experience a negative rate of return on their investment.
Risks Related to Our Business
The audited consolidated financial statements included in this prospectus have been prepared assuming the Company will continue as a going concern.
The Company recorded negative working capital of approximately $69 million (which includes $56 million of stock purchase warrant liabilities which will not require any cash to extinguish) and stockholders’ equity of $42.5 million as of March 31, 2026; a net operating loss of $3.8 million and net cash used in operations of $4.9 million for the quarter ended March 31, 2026. Absent any other action, the Company will require additional liquidity to continue its operations for the next 12 months.
After evaluating these conditions, management concluded that its plans, when considered in aggregate, alleviate substantial doubt about the Company’s ability to continue as a going concern. Those plans include: (i) cancellation of a previously contemplated $16 million intercompany note obligation arising from the acquisition of Star 26, which has been mutually agreed to be of no force or effect; (ii) the Company’s existing unrestricted cash balance of approximately $7.0 million, sufficient to fund projected operating expenses of its portfolio companies through the look-forward period; (iii) an active Equity Line of Credit (“ELOC”) with Esousa Holdings, LLC — legally binding, SEC-registered, and shareholder-approved — providing estimated monthly drawdown capacity of approximately $6.6 million, which exceeds the Company’s projected annual operating cash needs; (iv) the Company’s majority-owned subsidiaries, including Rimon Ltd. and Nimbus Robotics, which are cash-positive and require no capital support from the Company; (v) management’s ongoing efforts to assist subsidiaries in securing or expanding bank credit facilities; (vi) the option to satisfy certain obligations through issuance of equity in lieu of cash; and (vii) the Company’s demonstrated track record of capital markets execution, including the completion of PIPE transactions raising approximately $20 million in the prior twelve months.
In addition, management believes that the completion of the sale by Water IO Ltd., a majority-owned indirect subsidiary of the Company, of Zorro Net Ltd. to BiomX Inc., pursuant to which Water IO received 1,300,000 shares of BiomX common stock and a $1.25 million promissory note due within three months, may provide additional liquidity and financial flexibility to the Company and its subsidiaries. The sale occurred on April 10, 2026.
Management has determined that its plans are probable of being effectively implemented and probable of mitigating the conditions described above, enabling continuation of the Company’s operations for the foreseeable future.
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Our unprecedented transformation from financial technology to aerospace and defense lacks any operational track record and may completely fail.
We have recently completed our business model transformation. This transformation required or requires us to: divest our existing operations; acquire and integrate multiple defense companies; establish new regulatory compliance systems for ITAR, DFARS, and other regulations; obtain facility security clearances that typically take 12-18 months; recruit cleared personnel in a competitive market; and develop prime contractor relationships from scratch, all within a short timeframe.
We have never managed a defense program, never held a government contract, never obtained security clearances, and have no established relationships with prime defense contractors. The defense industry operates under fundamentally different business models, regulations, and customer requirements than financial services. There is no assurance that we will successfully execute this transformation or generate any returns from the substantial capital being deployed. Our complete lack of defense industry track record means investors are funding an entirely unproven strategy that may result in total loss of invested capital.
We are attempting to integrate multiple defense companies simultaneously without any aerospace and defense experience.
We have recently acquired Star 26, Tiltan, Nimbus and ITS, and are constantly pursuing other targets, all within a compressed timeframe and without any defense industry acquisition or integration experience. Each acquisition involves different countries (U.S., Israel, Europe), currencies, regulatory regimes, and business models. Managing simultaneous integrations of this magnitude typically requires extensive expertise, dedicated integration teams, and proven playbooks—none of which we possess.
Historical data shows that 70-90% of acquisitions fail to achieve projected synergies, and our complete lack of industry experience significantly increases this failure risk. We may discover post-closing that acquired technologies are obsolete, customer relationships are not transferable, key employees depart, or compliance violations trigger penalties. The complexity of simultaneous multi-jurisdictional defense acquisitions without relevant experience creates extreme execution risk.
Our Chief Executive Officer’s commitments to other companies may limit his ability to devote full-time attention to our business and could result in competition or conflicts of interest, which could adversely affect our operations and financial performance.
Menachem Shalom, our Chief Executive Officer, also serves as the Chief Executive Officer of Star 26, Motomova Inc., and Hold Me Ltd. These roles require Mr. Shalom to devote significant time and resources to the management and strategic direction of these other companies, which may reduce the time and attention he can dedicate to the Company. This divided focus could impair our ability to execute our business strategy, particularly as we transition to a defense-focused company following the acquisition of Star 26. The competing demands on Mr. Shalom’s time may delay critical decision-making, hinder our ability to respond to market opportunities, or weaken our operational oversight, all of which could materially adversely affect our business, financial condition, and results of operations.
Furthermore, the businesses of Star 26, Motomova Inc., and Hold Me Ltd. may operate in sectors or pursue opportunities that compete with our current or future operations. While Star 26 is now our wholly-owned subsidiary, Motomova Inc. and Hold Me Ltd. are separate entities with potentially divergent interests. Mr. Shalom’s involvement in these companies could lead to conflicts of interest, including the allocation of business opportunities, resources, or strategic priorities that may favor these other entities over the Company. Any such competition or conflicts could harm our competitive position, limit our growth prospects, and negatively impact the value of our securities.
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If we do not effectively manage our growth and the associated demands on our operational, risk management, sales and marketing, technology, compliance and finance and accounting resources, our business may be adversely impacted.
In our recent acquisitions, including our acquisitions of Star 26, Tiltan and Nimbus, our business has become increasingly complex by expanding the services we offer to include financial services and payment processing services. To effectively manage and capitalize on our growth, we must continue to expand our information technology and financial, operating, and administrative systems and controls, and continue to manage headcount, capital, and processes efficiently. Our continued growth could strain our existing resources, and we could experience ongoing operating difficulties in managing our business as it expands across numerous jurisdictions, including difficulties in hiring, training, and managing an employee base. Failure to scale and preserve our company culture with growth could harm our future success, including our ability to retain and recruit personnel and to effectively focus on and pursue our corporate objectives. If we do not adapt to meet these evolving challenges, or if our management team does not effectively scale with our growth, we may experience erosion to our brand, the quality of our products and services may suffer, and our company culture may be harmed. Moreover, the failure of our systems and processes could undermine our ability to provide accurate, timely, and reliable reports on our financial and operating results, including the financial statements provided herein, and could impact the effectiveness of our internal controls over financial reporting. In addition, our systems and processes may not prevent or detect all errors, omissions, or fraud, though we have experienced no such material errors, omissions or fraud in the past. For example, our employees may fail to identify transaction errors or fraudulent information provided by our customers. Any of the foregoing operational failures could lead to noncompliance with laws, loss of operating licenses or other authorizations, or loss of bank relationships that could substantially impair or even suspend company operations.
We intend to continue to develop our technology, in particular our blockchain-enabled payment processing offering. Successful implementation of this strategy may require significant expenditures before any substantial associated revenue is generated and we cannot guarantee that these increased investments will result in corresponding and offsetting revenue growth. Our growth may not be sustainable and depends on our ability to retain existing customers, attract new customers, expand product offerings, and increase processed volumes and revenue from both new and existing customers.
The future growth of our business depends on its ability to retain existing customers, attract new customers as well as getting existing customers and new customers to increase the volumes processed through our payments platform and therefore grow revenue. Our customers are not subject to any minimum volume commitments and they have no obligation to continue to use our services, and we cannot be sure that customers will continue to use our services or that we will be able to continue to attract new volumes at the same rate as we have in the past.
A customer’s use of our services may decrease for a variety of reasons, including the customer’s level of satisfaction with our products and services, the expansion of business to offer new products and services, the effectiveness of our support services, the pricing of our products and services, the pricing, range and quality of competing products or services, the effects of global economic conditions, regulatory or financial institution limitations, trust, perception and interest in foreign exchange and payment processing services and in our products and services, or reductions in the customer’s payment and transfer activity. Furthermore, the complexity and costs associated with switching to a competitor may not be significant enough to prevent a customer from switching service providers, especially for larger customers who commonly engage more than one payment service provider at any one time.
Any failure by us to retain existing customers, attract new customers, and increase revenue from both new and existing customers could materially and adversely affect our business, financial condition, results of operations and prospects. These efforts may require substantial financial expenditures, commitments of resources, developments of our processes, and other investments and innovations.
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We have divested our financial technology business and are now building a defense business, creating operational complexity and execution risk.
We are now focused on acquiring and integrating defense companies. This dual-track strategy has required and may continue to require management attention and resources across divergent activities, including: negotiating divestiture terms while managing acquisition integrations; maintaining legacy compliance obligations while implementing new defense regulations; supporting existing financial services customers during transition while pursuing defense customers; and managing employee uncertainty across both divesting and acquiring operations. The complexity of completing divestitures and acquisitions within a short timeframe significantly increases execution risk and the potential for value destruction in both transactions.
We are subject to heightened operational and cybersecurity risks.
We are subject to heightened operational and cybersecurity risks. Many of our employees work from their homes or other non-company dwellings. Technologies in our employees’ and service providers’ homes and shared office spaces may not be as robust and could cause the networks, information systems, applications, and other tools available to employees and service providers to be more limited or less reliable. Further, the security systems in place at our employees’ and service providers’ homes and shared office spaces may be less secure than those used in corporate offices, and while we have implemented technical and administrative safeguards to help protect our systems when our employees and service providers work from home, we may be subject to increased cybersecurity risk which could expose us to risks of data or financial loss, and could disrupt our business operations. There is no guarantee that the data security and privacy safeguards we have put in place will be completely effective or that we will not encounter risks associated with employees and service providers accessing company data and systems remotely.
Our defense technology distribution agreements expose us to rapid technological obsolescence and intense competition from larger defense contractors with greater resources and established government relationships.
The defense drone payload market is characterized by rapid technological advancement and intense competition from established defense contractors such as Lockheed Martin, Raytheon, and Northrop Grumman, as well as specialized drone companies like AeroVironment and Kratos Defense. These competitors possess significantly greater financial resources, established relationships with government procurement officials, and proven track records in defense contracting. BladeRanger’s patent-pending autonomous drone navigation technology, while promising, faces competition from well-funded competitors who may develop superior technologies or secure key government contracts that could limit our market access. Additionally, the defense technology sector is subject to rapid obsolescence, and any failure by BladeRanger to continue innovating or maintain technological superiority could render our distribution rights less valuable or unmarketable.
Our recent pivot from fintech to the defense sector exposes us to new operational, regulatory, and market risks for which we have limited prior experience.
We have recently transitioned our business focus from financial technology services to the distribution of advanced defense technologies, primarily through exclusive distribution agreements with Israeli-based companies. This pivot represents a significant shift in our operations, requiring us to develop new expertise in the defense and homeland security markets, including sales, marketing, compliance, and supply chain management tailored to highly regulated industries. Our management team and employees have limited experience in the defense sector, which may result in challenges adapting to industry-specific practices, customer requirements, and competitive dynamics. Failure to effectively manage this transition could lead to operational inefficiencies, delays in fulfilling distribution obligations, or inability to capitalize on market opportunities, adversely affecting our business, financial condition, and results of operations.
13
We have an exclusive distribution agreement with an Israeli supplier, and any termination, non-renewal, or disruption in this relationship could severely impact our operations.
Our current business model relies almost entirely on an exclusive U.S. distribution agreement executed in August 2025 with BladeRanger Ltd. for drone payload systems. This agreement grants us rights limited to the U.S. defense and homeland security markets and imposes minimum purchase or revenue commitments (e.g., 5, 10, and 15 payloads in Years 1-3). Failure to meet these commitments could result in termination of the agreement, loss of exclusivity, or penalties, forcing us to seek alternative suppliers on less favorable terms or cease operations in these product lines. Any disputes with our suppliers, changes in their business strategies, or external factors affecting their ability to supply products (such as production delays or quality issues) could disrupt our inventory, delay deliveries to customers, and lead to lost revenue or reputational damage.
Any significant disruption in our technology could adversely impact our brand and reputation and our business, operating results, and financial condition.
During our transformation period, we are building new technology infrastructure to support defense operations and have divested our legacy financial technology systems. Our reputation and ability to grow our defense business depends on our ability to develop and maintain systems that meet defense industry standards for reliability, scalability, and performance, including compliance with DFARS cybersecurity requirements and maintaining systems capable of handling classified information processing once we obtain necessary clearances. The proper functioning of our future defense products and services will depend on secure networks, encrypted communications, and systems that meet government security standards.
Our systems, the systems of our third-party service providers and partners, and defense networks we will interact with, have experienced from time to time and may experience in the future service interruptions or degradation because of hardware and software defects or malfunctions, distributed denial-of-service and other cyberattacks, insider threats, break-ins, sabotage, human error, vandalism, earthquakes, hurricanes, floods, fires, and other natural disasters, power losses, disruptions in telecommunications services, fraud, military or political conflicts, terrorist attacks, computer viruses or other malware, or other events. In addition, extraordinary site usage could cause our computer systems to operate at an unacceptably slow speed or even fail. Some of our systems, particularly those we have acquired from Star 26 and Tiltan, or the systems of our third-party service providers and partners are not fully redundant, and our or their disaster recovery planning may not be sufficient for all possible outcomes or events.
If any of our systems, or those of our third-party service providers, are disrupted for any reason, our defense products and services may fail, resulting in unanticipated disruptions, slower response times and delays in our services. For defense contracts, system failures could result in program delays, cost overruns, performance penalties, or contract terminations. This could lead to missed contract milestones, incomplete or inaccurate program reporting, loss of sensitive government information, increased demand on limited program management resources, government claims, and complaints with regulatory organizations, lawsuits, or enforcement actions. A prolonged interruption in the availability or reduction in the availability, speed, or functionality of our products and services could harm our business. Frequent or persistent interruptions in our services could cause current or potential defense customers or partners to believe that our systems are unreliable, leading them to select other contractors or to avoid or reduce the use of our products and services, and could permanently harm our reputation and brands in the defense community. Moreover, to the extent that any system failure or similar event results in damages to our customers or their programs, these customers or the government could seek significant compensation or contractual penalties from us for their losses, and those claims, even if unsuccessful, are likely to be time-consuming and costly for us to address. Problems with the reliability or security of our systems would harm our reputation, and damage to our reputation and the cost of remedying these problems could negatively affect our business, operating results, and financial condition. In addition, we are continually developing our information systems and technologies to meet defense industry requirements. Implementation of new systems and technologies is complex, expensive, time-consuming, and may not be successful. If we fail to timely and successfully implement new information systems and technologies, or improvements or upgrades to existing information systems and technologies, or if such systems and technologies do not operate as intended, it could have an adverse impact on our business, internal controls (including internal controls over financial reporting), operating results, and financial condition. Because we will be subject to defense regulation in multiple jurisdictions, frequent or persistent interruptions could also lead to regulatory scrutiny, significant fines and penalties, potential debarment, and mandatory and costly changes to our business practices, and ultimately could cause us to lose facility security clearances or government contracts that we need to operate, or prevent or delay us from obtaining additional clearances and contracts that may be required for our business.
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We rely on third parties in critical aspects of our business, which creates additional risk. Our ability to offer our services depends on relationships with other financial services institutions and entities, and our inability to maintain existing relationships or to enter into new such relationships could impact our ability to offer services to customers.
As we build our defense business, we will depend on relationships with prime defense contractors, specialized subcontractors, and government-approved suppliers. We will depend on various third-party partners including prime contractors who control access to major defense programs, cleared facilities for classified work, and specialized defense supply chains.
To participate in defense programs, we must establish relationships with prime contractors and other defense companies for teaming agreements, joint ventures, and subcontracting opportunities. Major primes like Lockheed Martin, Boeing, and Raytheon control the majority of defense spending and often prefer working with established partners. Our ability to win defense contracts depends on our ability to establish these critical relationships despite our lack of track record.
Also, critical aspects of our defense technology will rely on third-party technologies, including specialized defense components, ITAR-controlled technologies, and government-furnished equipment. Our lack of established relationships in the defense industry and foreign ownership structure may be an impediment to our ability to establish partnerships with major defense contractors. Should potential partners refuse to work with us, we would be at risk of being unable to participate in major defense programs.
Third parties upon which we rely for defense programs may refuse to partner with us, may breach their agreements with us, refuse to enter into agreements on commercially reasonable terms, take actions that degrade the functionality of our services, impose additional costs or requirements on us, or give preferential treatment to established defense contractors, any of which could prevent us from competing effectively and materially and adversely affect our business, financial condition, results of operations and prospects.
Some third parties that provide services to the defense industry may have significant market power and be able to impose unfavorable terms on new entrants like us. In addition, there can be no assurance that third parties will be willing to work with us on acceptable terms, or at all. If we cannot establish necessary partnerships, we may be unable to compete for defense contracts, which may materially and adversely affect our business, financial condition, results of operations and prospects.
Risks Related to the Defense Industry
We lack the facility security clearances and cleared personnel required for 90% of U.S. defense contracts.
Approximately 90% of U.S. defense contracts require facility security clearances that we completely lack. Obtaining clearances involves: 12-18 month investigation periods; extensive ownership documentation complicated by our foreign ties; sophisticated security system implementation; designation of cleared U.S. citizen executives; and ongoing compliance costs exceeding $500,000 annually. Our foreign ownership through Israeli subsidiaries may preclude certain clearance levels entirely or require restrictive FOCI mitigation agreements. Without clearances, we are excluded from classified programs, sole-source contracts, prime contractor opportunities, and the majority of defense spending.
Fixed-price defense contracts expose us to unlimited losses without cost estimation experience.
The majority of defense contracts are fixed-price, meaning we bear all risk of cost overruns. We have zero experience estimating defense program costs, which require sophisticated models accounting for technical complexity, regulatory compliance, supply chain volatility, labor escalation, and schedule delays. Industry data shows 65% of major defense programs experience cost overruns exceeding 25%. Our lack of historical data, experienced estimators, and program management expertise virtually guarantees significant losses. A single major fixed-price contract loss could exceed our entire equity base.
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Export control violations could result in criminal prosecution and permanent debarment.
Operating in defense requires strict ITAR and EAR compliance, where violations carry criminal penalties, fines up to $1 million per violation, and permanent debarment. We lack export compliance programs, technology control plans, licensing expertise, deemed export procedures, and supply chain compliance systems. Our Israeli operations create immediate deemed export risks. Recent enforcement actions include: Raytheon paying $100 million, multiple executive criminal convictions, and permanent debarments. Our lack of compliance infrastructure creates extreme risk of violations that could destroy our business.
We face overwhelming competition from established prime contractors.
The aerospace and defense industry is dominated by companies like Lockheed Martin, Boeing, and Raytheon with 100+ year histories, billions in R&D budgets, thousands of cleared personnel, established customer relationships, and political influence. These contractors win 80% of defense dollars through evaluation criteria favoring past performance we don’t have. As a new entrant with zero track record, we face insurmountable disadvantages in competing for contracts. Small defense companies have failure rates exceeding 60% within five years.
We must comply with complex defense regulations without any infrastructure.
Defense operations require compliance with ITAR, DFARS, CMMC, FAR, CAS, and other regulations for which we have zero infrastructure or expertise. Implementation costs typically exceed $3-5 million in year one. Common violations include inadvertent technical discussions, missing flow-down clauses, and inadequate cybersecurity. Recent enforcement: Raytheon paid $950 million, Boeing suspended from contracts. Our lack of compliance infrastructure virtually guarantees violations resulting in suspension or debarment.
Our defense distribution business is subject to complex export control laws and regulations, including ITAR and EAR, and failure to comply could result in significant fines, loss of export privileges, and reputational damage.
The distribution of drone payloads and advanced defense software is subject to strict U.S. export control regulations, including the International Traffic in Arms Regulations (ITAR) and Export Administration Regulations (EAR). We must obtain and maintain appropriate licenses and ensure compliance with all export restrictions. Any violations, even inadvertent ones, could result in criminal and civil penalties, loss of export privileges, debarment from government contracts, and severe reputational harm.
Dependence on government and homeland security customers exposes us to risks associated with budget constraints, procurement processes, and policy changes.
A significant portion of our target market consists of U.S. government agencies, military branches, and homeland security entities, whose purchases are subject to federal budgeting cycles, sequestration, or shifts in defense priorities. Reductions in defense spending, delays in appropriations, or changes in administration policies could decrease demand for our distributed products, impacting our revenue projections. Government procurement processes are often lengthy, competitive, and unpredictable, requiring us to navigate complex bidding requirements without guaranteed success. Moreover, as a distributor rather than a manufacturer, we may face challenges in qualifying for certain contracts that favor direct suppliers or U.S.-based entities. Failure to secure key contracts or adapt to policy shifts could result in underutilization of our distribution rights, inability to meet minimum commitments under our agreements, and substantial financial harm.
The defense procurement process is lengthy, complex, and highly competitive, which may prevent us from achieving the revenue targets required under our distribution agreements.
Sales to defense and homeland security customers typically involve long procurement cycles, extensive testing and certification requirements, competitive bidding processes, and budget constraints. These factors could make it difficult to achieve the aggressive revenue targets we have committed to, particularly the $3 million first-year revenue requirement under the Tiltan agreement and the escalating purchase requirements under the BladeRanger agreement.
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We face potential liability and indemnification obligations related to the defense products we distribute, which could expose us to significant financial losses.
As the exclusive U.S. distributor of drone payloads and defense software, we may face product liability claims, indemnification obligations, or lawsuits related to product performance, defects, or misuse. While our agreements include certain protections, we could still face substantial legal costs, damages, and reputational harm from claims related to these defense technologies, particularly given their use in critical security applications.
Risks Related to Geopolitical and Macroeconomic Conditions
Risks Related to the Ongoing Conflict in Israel and Regional Instability
The ongoing “Swords of Iron” war and the broader military conflict in the Middle East have had, and may continue to have, a material adverse effect on our Israeli operations, supply chains, personnel, and ability to execute our business strategy.
Since October 7, 2023, Israel has been engaged in an ongoing multi-front military conflict, initially triggered by the Hamas attack on southern Israel and subsequently expanding to military operations against Hezbollah in Lebanon, Houthi forces in Yemen, Iranian-backed militias in Syria and Iraq, and direct hostilities with Iran, including a 12-day conflict in June 2025 that resulted in over a billion dollars in claimed property damage in Israel. The majority of our operations, employees, and subsidiaries are located in Israel. Our Israeli subsidiaries — including B. Rimon Agencies Ltd., Tiltan Software Engineering Ltd., Nimbus Drones Technologies Ltd. and I.T.S. Industrial Tecno-logic Solutions Ltd., Positech Ltd. — are directly exposed to the consequences of this conflict, including missile and drone attacks on Israeli territory, temporary evacuation of employees from facilities subject to attack, disruptions to supply chains and shipping routes (exacerbated by attacks by the Houthi movement on shipping in the Red Sea, which have materially increased transportation costs and delivery times), material and component shortages resulting from limitations imposed by certain countries on exports to Israel, and general economic instability. The security situation has created additional challenges, including reluctance by certain foreign counterparties to perform contractual obligations with Israeli entities during hostilities, various bans and limitations on trade and cooperation with Israel-related entities, and fluctuations in the value of the New Israeli Shekel. While ceasefire agreements have been reached on certain fronts, the security situation remains volatile, and the scope, duration, and ultimate consequences of the conflict remain highly uncertain.
Mandatory military reserve duty obligations have resulted in, and may continue to result in, significant personnel shortages that disrupt our operations, production schedules, and ability to fulfill contractual obligations.
Under Israeli law, Israeli citizens and permanent residents are subject to mandatory military reserve service obligations. Since the commencement of the “Swords of Iron” war, our need for employees, particularly in the fields of production and development, has increased in light of higher demand for defense products, while at the same time a significant number of our employees have been called up for military reserve duty, creating recurring personnel shortages. As a smaller reporting company with few employees, the impact of reserve duty call-ups on our operations may be disproportionately severe. Many of our key technical personnel, engineers, and production workers are of military reserve age and are subject to call-up with little or no advance notice, for unpredictable durations. During the initial phase of the conflict, Israeli companies in our sector experienced workforce reductions of up to 40% and operational suspensions lasting 60 days or more. If a material number of our employees are called for reserve duty simultaneously, or if key personnel are called during critical project delivery or acquisition integration periods, we may be unable to meet contractual deadlines, maintain production schedules, fulfill customer orders, or operate our businesses at required levels, any of which could result in breach of contract, loss of customer relationships, financial penalties, and material harm to our business, financial condition, and results of operations.
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Escalating global conflicts, particularly the ongoing wars in the Middle East and Ukraine, create both heightened demand and severe operational risks for our business.
The global security environment has deteriorated significantly, with active military conflicts in the Middle East (including the ongoing conflict in Israel and the broader regional tensions involving Iran, Hezbollah, and other actors) and the continuing war in Ukraine now entering its fourth year. While these conflicts may drive increased defense spending globally, they create severe and direct operational risks for our company. Our Israeli subsidiaries, including B. Rimon Agencies Ltd., Tiltan Software Engineering Ltd., Nimbus Drones Technologies Ltd., and I.T.S. Industrial Tecno-logic Solutions Ltd., operate in an active conflict zone where missile attacks, drone incursions, and ground operations pose immediate threats to our facilities, personnel, and supply chains. Mandatory military reserve duty requirements have at times removed significant portions of the Israeli workforce from civilian employment, directly affecting our subsidiaries’ ability to maintain production schedules and fulfill contractual obligations. Flight suspensions and port disruptions in Israel can impede logistics and delay delivery of critical defense products. The continuation or escalation of these conflicts could result in physical damage to our facilities, loss of key personnel, disruption of production, inability to fulfill contractual obligations, and substantial uninsured losses.
We do not carry war risk insurance for our Israeli operations, and losses arising from military conflict would be entirely unrecovered.
Standard commercial insurance policies maintained by our Israeli subsidiaries exclude losses arising from war, military action, terrorism, and related events. Specialized war risk insurance coverage for our Israeli operations is either unavailable or available only at costs that are prohibitively expensive relative to our current financial resources. Accordingly, we carry no insurance coverage for physical damage to our facilities, destruction of inventory or equipment, business interruption, or loss of key personnel resulting from missile strikes, drone attacks, or other military action. To date, none of our facilities have sustained physical damage from the conflict, but we cannot predict whether this will remain the case, particularly in the event of an escalation of hostilities with Iran or an expansion of the conflict to additional fronts. Any war-related losses would be borne entirely by us with no prospect of insurance recovery, which could materially impair our financial condition and ability to continue operations.
The conflict has resulted in limitations on exports to Israel, attacks on defense companies by anti-Israeli organizations, and reputational risks that may impair our ability to conduct international business.
The ongoing conflict has resulted in limitations imposed by certain countries on exports to Israel, restrictions on defense cooperation with Israeli entities, and expanding boycott, divestment, and sanctions (BDS) campaigns targeting Israeli companies and companies doing business with Israel. As a smaller company without the resources or global infrastructure of an established prime contractor, we are vulnerable to such disruptions. International customers, partners, and distributors may decline to do business with us or our Israeli subsidiaries due to political pressure, reputational concerns, or changes in their governments’ policies toward Israel. Our employees at Israeli subsidiaries may face increased pressure due to geopolitical considerations, potentially affecting our ability to attract and retain talent. Any of these developments could limit our addressable market, disrupt our supply chains, impair our revenue growth, and adversely affect our business, financial condition, and results of operations.
Our business partners, customers, and suppliers may invoke force majeure or otherwise fail to perform their contractual obligations as a result of the conflict, which could disrupt our operations and revenue.
The SEC has noted that companies with operations or business relationships in conflict-affected areas should evaluate the potential impacts of counterparties failing to perform obligations, including by invoking force majeure provisions. Several of our contracts with Israeli and international counterparties contain force majeure clauses that may be triggered by the ongoing military conflict or by future escalations. If our customers delay or cancel orders, if our suppliers are unable to deliver materials or components due to export restrictions, shipping disruptions, or damage to their own facilities, or if our business partners invoke force majeure to suspend or terminate contractual obligations, our revenue, supply chain continuity, and business operations could be materially adversely affected. Additionally, we may be unable to invoke force majeure in our own favor if we are unable to perform under our contracts due to the conflict, exposing us to potential claims for breach of contract and damages.
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Rising global defense spending may not translate into revenue for our company, and shifts in government budget priorities could adversely affect demand for our products and services.
Global defense spending has reached levels not seen since the Cold War, with NATO members moving toward a 3.5% of GDP defense spending target and the United States proposing its first-ever trillion-dollar defense budget for fiscal year 2026. While these macro trends may appear favorable, there is no assurance that increased defense budgets will result in contracts or revenue for our company. Government defense budgets are subject to annual appropriations, continuing resolutions, sequestration, and political priorities that can shift rapidly. Changes in administration, shifting threat assessments, and fiscal constraints may redirect defense spending away from the categories of products and services we offer. Moreover, as a relatively small and newly formed defense platform, we lack the established relationships and past performance record that government procurement officers and prime contractors rely upon when awarding contracts. Even in a period of rising defense budgets, we may be unable to capture meaningful contract awards, which would adversely affect our ability to achieve profitability and fund ongoing operations.
U.S. trade policy, including tariffs and export restrictions, may increase our costs, disrupt our supply chains, and limit our market access.
The current U.S. trade policy environment is characterized by elevated tariffs, evolving export control regimes, and increasingly restrictive foreign investment regulations. Tariffs on imported materials, components, and finished defense products from allied countries, including Israel, may increase our procurement costs and reduce our margins. Our Israeli-manufactured products, including generators, drone payloads, motion control systems, and AI software, may become subject to new or increased tariffs that we cannot pass on to customers. Additionally, U.S. export control regulations, including the International Traffic in Arms Regulations (ITAR) and Export Administration Regulations (EAR), are becoming more stringent, and any violations, even inadvertent, could result in criminal and civil penalties, loss of export privileges, or debarment from government contracts. Changes in the U.S.-Israel trade relationship, including renegotiation of free trade agreements or changes in defense cooperation frameworks, could materially and adversely affect our business.
Intensifying great-power competition and the fragmentation of international trade and security frameworks create systemic risks to our business model.
The international security and trade architecture is undergoing fundamental restructuring. U.S.-China strategic competition has resulted in export restrictions on critical technologies, restrictions on Chinese rare earth exports (which are essential for defense manufacturing), and the formation of competing technology and security blocs. Russia’s invasion of Ukraine has triggered comprehensive sanctions regimes, disrupted energy markets, and accelerated European rearmament. The potential expiration of the New START nuclear arms control treaty in 2026, combined with expanding nuclear arsenals and proliferation risks, increases the likelihood of a new arms race with attendant risks to global stability. China’s demonstrated willingness to weaponize its dominance in rare earth minerals, critical semiconductor components, and drone components as instruments of geopolitical coercion threatens supply chains throughout the defense industry, including our own. These systemic risks may result in higher input costs, disrupted supply chains, restricted market access, and an operating environment of sustained uncertainty that depresses investment and growth.
Our Israeli operations face active military conflict without war risk insurance.
Our Israeli subsidiaries operate in an active conflict zone with ongoing military operations. Risks include: missile attacks that could destroy facilities; mandatory reserve duty removing 30% of workforce; flight suspensions preventing logistics; supply chain disruptions; cyber attacks on defense companies; and economic impacts from mobilization. Standard insurance excludes war risks, and specialized coverage is unavailable or prohibitively expensive. During the October 2023 conflict, Israeli companies experienced 40% workforce reductions and 60-day operational suspensions. War-related losses would be entirely unrecovered.
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Operating across multiple jurisdictions creates irreconcilable legal conflicts.
Our U.S., Israeli, and European operations create conflicts between national security laws, technology transfer restrictions, and foreign investment regulations. Critical conflicts include: U.S. ITAR restrictions versus Israeli technology requirements; CFIUS powers versus Israeli defense controls; EU privacy laws versus U.S. surveillance requirements; and conflicting sanctions regimes. Compliance with one jurisdiction’s laws may violate another’s, creating permanent risk regardless of our compliance efforts.
Our foreign ownership structure may permanently preclude classified U.S. defense programs.
Our foreign ties may exclude us from classified programs representing 40% of defense spending. The National Industrial Security Program requires FOCI mitigation that severely restricts operations. Even with mitigation, we would be excluded from Special Access Programs and the highest-value contracts. Major primes increasingly refuse to work with FOCI-mitigated companies. Our structure may create an insurmountable barrier to 40% of the U.S. defense market.
Geopolitical tensions, international conflicts, or changes in U.S.-Israel relations could disrupt our supply chain and restrict our ability to distribute defense technologies.
As our suppliers are based in Israel, our operations are vulnerable to geopolitical risks in the Middle East, including ongoing conflicts, political instability, or escalations involving Israel. Such events could lead to supply disruptions, increased costs for shipping or insurance, or export restrictions imposed by Israeli authorities. Furthermore, shifts in U.S. foreign policy, trade relations with Israel, or sanctions could limit our access to these technologies. For instance, heightened tensions might result in delays at ports, damage to supplier facilities, or workforce disruptions in Israel, directly impacting our ability to fulfill customer orders. If we cannot secure alternative sources quickly, these risks could cause significant interruptions in our business, leading to breaches of customer contracts, financial losses, and potential legal liabilities.
We are subject to stringent U.S. and international regulations governing defense technologies, and non-compliance could result in fines, loss of licenses, or restrictions on our operations.
The distribution of defense-related products, including drone payloads and software for GPS-denied navigation, AI simulations, 3D mapping, and multi-sensor management, is heavily regulated under U.S. laws such as the International Traffic in Arms Regulations (ITAR), Export Administration Regulations (EAR), and the Arms Export Control Act. These regulations require us to obtain export licenses, register as a defense exporter, and comply with end-user restrictions, particularly since our products originate from Israel and are intended for U.S. defense and homeland security applications. Violations, even unintentional, could lead to civil or criminal penalties, revocation of licenses, or debarment from government contracts. Additionally, changes in regulatory interpretations or heightened scrutiny of foreign-sourced defense tech could impose new compliance burdens, increasing our costs and delaying product distribution. Our limited experience in this regulatory environment heightens the risk of oversight failures, which could materially adversely affect our business and reputation.
Risks Related to Our Financial Condition and Existing Capital Structure
We lack the financial infrastructure required for defense contracting.
Defense contractors require: performance bonds equaling 100% of contract value; payment bonds; letters of credit; working capital lines for 60-90 day payment cycles; and DCAA-compliant accounting systems. Surety companies require 3 years of profitable operations we don’t have. Banks won’t provide credit without contract history and positive cash flow. Without bonding, we cannot bid on contracts exceeding $150,000. These gaps exclude us from meaningful defense contracts.
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The outstanding warrants, convertible preferred stock, and our equity line of credit facility may result in substantial dilution to existing stockholders and depress our stock price.
Our capital structure includes a significant number of securities that are currently convertible into or exercisable for shares of our Common Stock. As of the date of this prospectus, these include: (i) shares of Series A Convertible Preferred Stock convertible to an aggregate of 2,044,800 shares of Common Stock; (ii) shares of Series B Convertible Preferred Stock issued in the February 2026 Private Placement, initially convertible into 4,6944835 shares of Common Stock at a conversion price of $2.13 per share, with the conversion price subject to further downward adjustment upon stockholder approval or the effectiveness of a registration statement; (iii) 2,357,303 warrants issued in the February 2026 Private Placement, exercisable at $2.13 per share with a cashless exercise option based on Black-Scholes value; (iv) an aggregate of 9,460,345 warrants to purchase Common Stock; and (v) the Company’s equity line of credit agreement under which the Company may sell shares of Common Stock from time to time. The conversion or exercise of all or a significant portion of these securities would result in the issuance of a substantial number of additional shares of Common Stock, which would significantly dilute the ownership interest of existing stockholders and could materially depress the market price of our Common Stock.
The price-based anti-dilution provisions in our convertible preferred stock may create a self-reinforcing cycle of dilution if our stock price declines.
The Series B Convertible Preferred Stock and the associated warrants issued to the purchaser contain price-based anti-dilution adjustment provisions that automatically reduce the conversion or exercise price — and correspondingly increase the number of shares of Common Stock issuable upon conversion or exercise — if we issue additional shares or convertible securities at prices below the then-applicable conversion or exercise price (subject to certain exempt issuances). The conversion price of the Series B Preferred Stock is also subject to further downward adjustment upon receipt of stockholder approval to the lower of the then-applicable conversion price and the market price of the Common Stock at the time of the triggering event. These provisions mean that if our stock price declines, the holders will be entitled to convert into or exercise for a greater number of shares than initially contemplated, resulting in additional dilution beyond what was anticipated at the time of the original issuance. This downward price adjustment mechanism may create a self-reinforcing cycle: declining stock prices trigger increased conversion shares, the prospect of which further depresses the stock price, leading to further adjustments and additional dilution. Such “death spiral” dynamics have been observed in other public companies with similar convertible security structures and can result in severe erosion of value for existing common stockholders.
The substantial overhang of shares issuable upon conversion of preferred stock and exercise of outstanding warrants may depress our stock price regardless of our operating performance.
Even if the holders of our convertible preferred stock and warrants do not immediately convert or exercise their securities, the existence of a large number of shares of Common Stock that may be issued in the future creates a significant “overhang” that may depress the trading price of our Common Stock. Market participants may sell existing shares in anticipation of future dilutive issuances, or may be unwilling to purchase shares knowing that a substantial number of additional shares may enter the market at any time. The Star Warrant alone, if fully exercised, would result in the issuance of over 12 million additional shares at $1.50 per share. The Series A and Series B Preferred Stock, if fully converted at their respective current conversion prices, would result in the issuance of additional shares representing a significant percentage of our currently outstanding Common Stock. The aggregate potential dilution from all outstanding convertible securities and warrants is substantial relative to our current public float, and this overhang may discourage new investment, impair our ability to raise capital on favorable terms, and limit the potential appreciation of our stock price, regardless of our operating performance.
We expect to issue additional shares of Common Stock or other securities in the future to fund acquisitions and operations, which would further dilute existing stockholders.
Our business strategy depends on acquiring and integrating defense companies, which we have historically financed in significant part through the issuance of equity securities. We expect to continue to use our Common Stock as acquisition currency, to fund operations, and to attract and retain employees and consultants. We are also obligated to issue additional shares under existing contractual commitments, including shares issuable to the Tiltan seller based on earn-out provisions, additional shares that may be issuable in connection with the ITS acquisition upon exercise of our option to acquire the remaining 49%, and shares that may be issued under future equity incentive plans that will require stockholder approval under Nasdaq listing rules. Each additional issuance of Common Stock or convertible securities will further dilute the ownership interest and economic value of existing stockholders’ shares, may reduce earnings per share, and may adversely affect the market price of our Common Stock. There can be no assurance that we will be able to issue additional equity securities on terms favorable to us, and any future issuances may be on terms significantly dilutive to existing stockholders.
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Our stock price has been and may continue to be highly volatile, and investors may not be able to resell their shares at or above the price at which they purchased them.
The market price of our Common Stock has been subject to significant volatility since our transition from a financial technology company to a defense holding company. The trading price may continue to fluctuate widely in response to factors including: our ability to successfully execute our defense acquisition strategy and integrate acquired companies; quarterly variations in our results of operations or those of our competitors; changes in defense spending priorities or government budget sequestration; negative publicity regarding the conflict in Israel, changes in U.S.-Israel relations, or BDS campaigns targeting Israeli companies; changes in financial estimates or recommendations by securities analysts; sales of Common Stock by insiders, large stockholders, or holders of convertible securities; the exercise of warrants or conversion of preferred stock; draws under the ELOC; announcements of new acquisitions, contracts, or products by us or our competitors; and general market conditions and macroeconomic factors. Our Common Stock has a relatively limited public float and trading volume, which amplifies price movements in response to trading activity. There can be no assurance that the market price of our Common Stock will not decline significantly from current levels.
We are currently at risk of failing to maintain the minimum bid price required by Nasdaq Listing Rules.
Pursuant to Nasdaq Listing Rule 5550(a)(2), if we fail to maintain a minimum bid price of $1.00 for thirty consecutive trading days (the “Minimum Bid Price”) and do not rectify the situation, our Common Stock could be delisted from Nasdaq, in which case trading of our Common Stock would most likely take place on an over-the-counter market established for unlisted securities. Our Common Stock has traded under $1.00 since March 20, 2026. An investor would likely find it less convenient to sell, or to obtain accurate quotations in seeking to buy, our Common Stock on an over-the-counter market, and many investors would likely not buy or sell our Common Stock due to difficulty in accessing over-the-counter markets, policies preventing them from trading in securities not listed on a national exchange or other reasons. In addition, as a delisted security, our Common Stock would be subject to SEC rules as a “penny stock,” which impose additional disclosure requirements on broker-dealers. The regulations relating to penny stocks, coupled with the typically higher cost per trade to the investor of penny stocks due to factors such as broker commissions generally representing a higher percentage of the price of a penny stock than of a higher-priced stock, would further limit the ability of investors to trade in our Common Stock.
On May 5, 2026, we received a notice from Nasdaq that we are not in compliance with the minimum bid requirements for continued listing. Under Nasdaq Rule 5810(c)(3)(A)(iv), if the price of our Common Stock fails to satisfy the Minimum Bid Price Requirement (A) within one year after effectiveness of a reverse stock split or (B) if the Company has effected one or more reverse stock splits over the prior two-year period with a cumulative ratio of 250 shares or more to one, then the Company shall not be eligible for any compliance period specified in Rule 5810(c)(3)(A) and the Listing Qualifications Department will issue a Staff Delisting Determination under Rule 5810 with respect to that security, and the Common Stock would be subject to delisting by Nasdaq without any opportunity for a cure period. On October 11, 2024, the Company effected a one-for-eight reverse stock split of the Common Stock. Accordingly, if the Company implements a reverse stock split after the price of our Common Stock fails to satisfy the Minimum Bid Price Requirement with a cumulative ratio combined with the prior reverse split of 250 shares or more to one, the Company will not be eligible for any compliance period specified in Rule 5810(c)(3)(A) and the Listing Qualifications Department will issue a Staff Delisting Determination under Rule 5810 with respect to our Common Stock, which would then be subject to delisting by Nasdaq.
For these reasons and others, delisting would adversely affect the liquidity, trading volume, investor interest and price of our Common Stock, causing the value of an investment in us to decrease and having an adverse effect on our business, financial condition and results of operations, including our ability to attract and retain qualified employees and to raise capital.
Although we have until November 2, 2026 to regain compliance with the Minimum Bid Price Requirement, there can be no guarantee that we will continue to meet the requirements for listing on Nasdaq. Our failure to maintain compliance, and our failure to regain compliance thereafter, could result in delisting, which would trigger debt acceleration, acquisition agreement breaches, loss of blue sky law exemptions, elimination of trading liquidity, inability to use stock as currency, and severe capital raising constraints. Based on historical precedent, companies receiving deficiency notices face significant challenges in maintaining regaining compliance. Delisting would effectively end our transformation strategy.
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We might not be able to consummate the second tranche of our recent financing.
Pursuant to the terms of the Securities Purchase Agreement executed in February 2026, the Purchaser agreed to purchase an additional 200 units for an additional investment of $10 million following (i) the effectiveness of a registration statement and (ii) stockholder approval of the issuance of the transactions contemplated by the Securities Purchase Agreement as required pursuant to Nasdaq rules. In addition, the stock price must be at least $1.00 and the value of the trading in the Company’s stock on Nasdaq for the 10 consecutive days preceding the second closing is at or above $900,000 (the “Second Closing Market Trading Value”), provided that if the Second Closing Market Trading Value is less than $900,000, then there will be a proportionate reduction in the number of units to be sold at the second closing. As a result of all the foregoing conditions, there is a possibility that the Purchaser will not have to consummate the additional investment of $10 million in which case the Company will utilize its current ELOC facility.
Star has the right to require the Company to exchange the Investment Note for all the shares of Star then held by the Company if the Common Stock is delisted.
Pursuant to the terms of the Purchase Agreement, the aggregate consideration paid by the Company for all the shares of Star consisted of: (i) $16,000,000, which was paid to Star 26 by the issuance by the Company of the Investment Note; (ii) $500,000 in cash, representing $5,000,000 less $4,500,000 previously borrowed by Star 26 from the Company; (iii) 4,770,340 Common Shares; (iv) the Warrant to purchase 12,017,648 Warrant Shares at an exercise price of $1.50 per share, exercisable for a period of five years from the Closing Date; (v) the Six-Month Note in the principal amount of $3,000,000, which accrues interest at the rate of 8% per annum and matures on July 12, 2026; and (vi) the Three-Month Note in the principal amount of $3,000,000 (the “Three-Month Note”), which matures on April 12, 2026. The Common Shares, the Warrant, the Six-Month Note and the Three-Month Note were subsequently assigned by Star 26 to the Star shareholders, pro ratably based on their equity ownership in Star 26. The Purchase Agreement provides that if, for a period of 12 months after the closing, the Common Stock is delisted from Nasdaq, Star 26 shall have the right, at its own discretion, to require the Company to exchange the Investment Note for all the shares of Star 26 then held by the Company. In such instance, Star 26 shall retain any cash payments made by the Company to Star 26 and the Company shall retain an equity interest in Star 26 equivalent to all cash payments. Given the current stock price of our Common Stock and the previous reverse stock splits effectuated by the Company, there is a possibility that our Common Stock could be delisted and Star would exercise its right to exchange the Investment Note for the shares of Star owned by the Company.
There is no assurance that we will achieve and maintain profitability or that our revenue and business models will be successful.
Our ability to achieve and maintain profitability is based on numerous factors, many of which are beyond our control. We may not be able to generate sufficient revenue to maintain profitability in the short or long-term. Our revenue growth may slow, or our revenue may decline for a number of other reasons, including reduced demand for our offerings, increased competition, a decrease in the usage of blockchain technologies generally, or any failure to capitalize on growth opportunities.
We are continually refining our revenue and business model and have shifted our focus to the development and commercialization of our Platforms. There is no assurance that these efforts will be successful or that we will generate revenues commensurate with our efforts and expectations or become or stay profitable. We may be forced to make significant changes to our revenue and business model to compete with our competitors’ offerings, and even if such changes are undertaken, there is no guarantee that they will be successful or profitable. Additionally, we will need to hire, train, and integrate qualified personnel to meet and further such changes to our business objectives at potentially significant additional expense. Failure to successfully implement revenue and business models or manage related expenses could cause us to be unprofitable and have an adverse effect on our business, operating results and financial condition.
Changes in U.S. and foreign tax laws, as well as the application of such laws, could adversely impact our financial position and operating results.
We are subject to complex income and non-income tax laws and regulations in the United States and a variety of foreign jurisdictions. Our Israeli subsidiaries and cross-border defense operations create particular complexity. Both the United States and foreign jurisdictions may revise corporate income tax and other non-income tax laws which could impact the amount of tax due in such jurisdiction.
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Our determination of our corporate income tax liability is subject to review and may be challenged by applicable U.S. and foreign tax authorities. Any adverse outcome of such challenge could harm our operating results and financial condition. The determination of our worldwide provision for income taxes and other tax liabilities requires significant judgment and, in the ordinary course of business, there are many transactions and calculations where the ultimate tax determination is complex and uncertain. Defense contracts often involve complex cost accounting standards and allowable cost determinations that affect tax treatment. Our existing corporate structure and intercompany arrangements have been implemented in a manner we believe is in compliance with current prevailing tax laws. Furthermore, as we operate in multiple taxing jurisdictions, the application of tax laws can be subject to diverging and sometimes conflicting interpretations by tax authorities of these jurisdictions. It is not uncommon for taxing authorities in different countries to have conflicting views with respect to, among other things, the characterization and source of income or other tax items, the manner in which the arm’s-length standard is applied for transfer pricing purposes, or with respect to the valuation of intellectual property. The transfer of defense technology between our U.S. and Israeli operations raises particular transfer pricing complexities. The taxing authorities of the jurisdictions in which we operate may challenge our tax treatment of certain items or the methodologies we use for valuing developed technology or intercompany arrangements, which could impact our worldwide effective tax rate and harm our financial position and operating results.
We are also subject to non-income taxes, such as payroll, sales, use, value-added, net worth, property, and goods and services taxes in the United States and various foreign jurisdictions. A change in the tax law could impact tax positions which could result in an increased exposure related to such tax liabilities. Such changes could have an adverse effect on our operating results and financial condition.
In addition, under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), a corporation that undergoes an “ownership change” (as defined under Sections 382 and 383 of the Code and applicable Treasury Regulations) is subject to limitations on its ability to utilize its pre-change NOLs and certain other tax attributes to offset post-change taxable income or taxes.
We have not performed a study to determine whether our NOLs are currently subject to Section 382 limitations. We may also experience a future ownership change under Section 382 of the Code that could affect our ability to utilize our NOLs to offset our income.
If our estimates or judgment relating to our critical accounting policies prove to be incorrect, our operating results could be adversely affected.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Estimates”. The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities, and equity, and the amount of revenue and expenses that are not readily apparent from other sources. Significant estimates and judgments involve the identification of performance obligations in revenue recognition, particularly for defense contracts with multiple deliverables and milestone payments, evaluation of tax positions, inter-company transactions, and the valuation of stock-based awards, among others. Defense contracts require particular judgment in percentage-of-completion accounting and estimating costs to complete. Our operating results may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our operating results to fall below the expectations of analysts and investors, resulting in a decline in the trading price of our Common Stock.
The nature of our business requires the application of complex financial accounting rules, and there is limited guidance from accounting standard setting bodies. If financial accounting standards undergo significant changes, our operating results could be adversely affected.
The accounting rules and regulations that we must comply with are complex and subject to interpretation by the Financial Accounting Standards Board, the SEC, and various bodies formed to promulgate and interpret appropriate accounting principles. As we transition to defense contracting, we must adopt government cost accounting standards and comply with DCAA requirements, which are significantly different from our previous financial services accounting. A change in these principles or interpretations could have a significant effect on our reported financial results and may even affect the reporting of transactions completed before the announcement or effectiveness of a change. Recent actions and public comments from the FASB and the SEC have focused on the integrity of financial reporting and internal controls. In addition, many companies’ accounting policies are being subject to heightened scrutiny by regulators and the public.
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Defense contracting involves unique accounting requirements including Cost Accounting Standards (CAS), progress payment billing, and complex revenue recognition for long-term contracts. We lack experience with these specialized accounting requirements, and establishing DCAA-compliant accounting systems typically costs $500,000 to $1 million.
There remains uncertainty on how companies transitioning between industries should account for discontinued operations, acquisition-related costs, and transformation expenses. Uncertainties in or changes to regulatory or financial accounting standards could result in the need to change our accounting methods, restate our financial statements or impair our ability to provide timely and accurate financial information, which could adversely affect our financial statements, result in a loss of investor confidence, and more generally impact our business, operating results, and financial condition.
Business metrics and other estimates are subject to inherent challenges in measurement, and our business, operating results, and financial condition could be adversely affected by real or perceived inaccuracies in those metrics.
As we transition from financial technology to defense, our traditional business metrics are no longer applicable, and we have not yet established meaningful defense industry metrics. We will need to develop new metrics relevant to defense contracting, such as contract backlog, book-to-bill ratios, win rates, and program performance indices. These metrics will be calculated using internal company data and initially will not be validated against industry standards. While these numbers will be based on what we believe to be reasonable estimates for the applicable period of measurement, there are inherent challenges in such measurements. During our transformation period, we have minimal operational metrics to report, making it difficult for investors to evaluate our progress or compare us to established defense contractors.
Our future defense business metrics may also be impacted by program delays, contract modifications, stop-work orders, or classification restrictions that limit disclosure. Government contracting involves unique reporting requirements and restrictions that differ significantly from commercial business metrics. If our metrics provide us with incorrect or incomplete information about program performance and contract profitability, we may make inaccurate conclusions about our business.
We are subject to changes in financial reporting standards or policies, including as a result of choices made by us, which could materially adversely affect our reported results of operations and financial condition and may have a corresponding material adverse impact on capital ratios.
Our consolidated financial statements are prepared in accordance with GAAP, which are periodically revised or expanded. Accordingly, from time to time we are required to adopt new or revised accounting standards issued by recognized bodies. It is possible that future accounting standards and financial reporting standards or policies, including as a result of choices made by us, which we are required to adopt, could change the current accounting treatment that applies to our consolidated financial statements and that such changes could have a material adverse effect on our reported results of operations and financial condition, and may have a corresponding material adverse effect on capital ratios.
As a public company, we are required to develop and maintain proper and effective internal controls over financial reporting, and any failure to maintain the adequacy of these internal controls may adversely affect investor confidence in our company and, as a result, the value of our stock.
We are required to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting. This assessment includes disclosure of any material weaknesses identified by our management in our internal control over financial reporting. During the evaluation and testing process of our internal controls, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to certify that our internal control over financial reporting is effective. We cannot assure that there will not be material weaknesses or significant deficiencies in our internal control over financial reporting in the future. Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition or results of operations. If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness or significant deficiency in our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our stock could decline, and we could be subject to sanctions or investigations by the exchange on which shares of our stock are listed, the SEC or other regulatory authorities. Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.
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We might require additional capital to support business growth, and this capital might not be available or may require stockholder approval to obtain.
We have funded our operations since inception primarily through equity financings, convertible notes, and revenue generated by our products and services. We intend to continue to make investments in our business to respond to business challenges, including developing new products and services, enhancing our operating infrastructure, expanding our international operations, and acquiring complementary businesses and technologies, all of which may require us to secure additional funds.
Additional financing may not be available on terms favorable to us, if at all. If we incur additional debt, the debt holders would have rights senior to holders of our Common Stock to make claims on our assets, and the terms of any debt could restrict our operations.
Risks Related to Our Employees and Other Service Providers
In the event of employee or service provider misconduct or error, our business may be adversely impacted.
Employee or service provider misconduct or error could subject us to legal liability, financial losses, and regulatory sanctions, and could seriously harm our reputation and negatively affect our business. Such misconduct could include engaging in improper or unauthorized transactions or activities, misappropriation of customer funds, and misappropriation of information, failing to supervise other employees or service providers, or improperly using confidential information.
Employee or service provider errors, including mistakes in executing, recording, or processing transactions for customers, could expose us to the risk of material losses even if the errors are detected. Although we have implemented processes and procedures and provide trainings to our employees and service providers to reduce the likelihood of misconduct and error, these efforts may not be successful. Moreover, the risk of employee or service provider error or misconduct may be even greater for novel products and services, and is compounded by the fact that many of our employees and service providers are accustomed to working at tech companies which generally do not maintain the same compliance customs and rules as financial services firms.
This can lead to high risk of confusion among employees and service providers, particularly in a fast growth company like ours, with respect to compliance obligations particularly including confidentiality, data access, trading, and conflicts. It is not always possible to deter misconduct and the precautions we take to prevent and detect this activity may not be effective in all cases. If we were found not to have met our regulatory oversight and compliance and other obligations, we could be subject to regulatory sanctions, financial penalties and restrictions on our activities for failure to properly identify, monitor and respond to potentially problematic activity, which could seriously damage our reputation. Our employees, contractors, and agents could also commit errors that subject us to financial claims for negligence, as well as regulatory actions, or result in financial liability. Further, allegations by regulatory or criminal authorities of improper transactions could affect our brand and reputation.
The loss of one or more of our key personnel, or our failure to attract and retain other highly qualified personnel in the future, could adversely impact our business, operating results, and financial condition.
We operate in a relatively new industry that is not widely understood and requires highly skilled and technical personnel. We believe that our future success is highly dependent on the talents and contributions of our senior management team, including Menachem Shalom, our Chief Executive Officer and a director and other key service providers across finance, compliance, legal, talent and marketing.
Our future success depends on our ability to attract, develop, motivate, and retain highly qualified and skilled employees and service providers. The pool of qualified talent is extremely limited, particularly with respect to executive talent, engineering, risk management, and financial regulatory expertise. We face intense competition for qualified individuals from numerous software and other technology companies. To attract and retain key personnel, we incur significant costs, including salaries and benefits and equity incentives. Even so, these measures may not be enough to attract and retain the personnel we require to operate our business effectively. The loss of even a few qualified employees, or an inability to attract, retain and motivate additional highly skilled employees required for the planned expansion of our business, could adversely impact our operating results and impair our ability to grow.
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Our culture emphasizes innovation, and if we cannot maintain this culture as we grow, our business and operating results could be adversely impacted.
We believe that our entrepreneurial and innovative corporate culture has been a key contributor to our success. We encourage and empower our employees and service providers to develop and launch new and innovative products and services, which we believe is essential to attracting high quality talent, partners, and developers, as well as serving the best, long-term interests of our company. If we cannot maintain this culture as we grow, we could lose the innovation, creativity and teamwork that has been integral to our business, in which case our products and services may suffer and our business, operating results, and financial condition could be adversely impacted.
Additional Risk Factors
Cybersecurity requirements exceed our current capabilities.
Defense contractors face sophisticated nation-state cyber threats and strict requirements we cannot meet. The Cybersecurity Maturity Model Certification requires 110 security controls, third-party assessment, and ongoing monitoring. Our inadequate cybersecurity virtually guarantees a breach that could result in contract loss and massive liability.
Environmental liabilities could exceed our resources.
Aerospace operations create environmental liabilities including hazardous materials, groundwater contamination, and air emissions with unlimited remediation costs. Recent examples: Raytheon allocated $1.2 billion for cleanup. Environmental insurance excludes pre-existing conditions. Discovery of contamination could trigger costs exceeding our market capitalization.
Menachem Shalom, our Chief Executive Officer and a director, beneficially owns a substantial percentage of our outstanding Common Stock and, if he exercises his warrants, would control a majority of the voting power of our Common Stock. This will allow him to exert significant control over corporate decisions and may discourage transactions that other stockholders may favor.
As of May 27, 2026, Menachem Shalom, our Chief Executive Officer and a director, beneficially owned 14,859,080 shares of our Common Stock, representing approximately 20% of our issued and outstanding shares of Common Stock. This beneficial ownership includes a five-year warrant to purchase an aggregate of 7,175,662 shares of our Common Stock at an exercise price of $1.50 per share. As a result of his current ownership position and his potential to acquire voting control of a majority of our outstanding Common Stock through the exercise of his warrant, Mr. Shalom has, and upon exercise of the warrant would have, the ability to exert significant influence over, or control, substantially all matters requiring stockholder approval, including the election and removal of directors, amendments to our certificate of incorporation and bylaws, approval of mergers, acquisitions, and other business combinations, and the outcome of any other matter submitted to a vote of stockholders. This concentration of voting power could have the effect of delaying, deterring, or preventing a change of control of the Company, even if such a transaction would be beneficial to other stockholders, and could deprive other stockholders of the opportunity to receive a premium for their shares. Mr. Shalom’s interests may not always be aligned with the interests of other stockholders, and he may exercise his voting power in a manner that advances his own interests to the detriment of other stockholders.
In addition, Mr. Shalom involvement in other companies could give rise to conflicts of interest, including with respect to the allocation of business opportunities, corporate resources, and management attention.
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The holders of our Series B Convertible Preferred Stock has additional voting power as compared to the holders of our Common Stock.
The holders of our Series B Convertible Preferred Stock is entitled to 10,000 votes per share on matters submitted to a vote of stockholders. If we consummate the second tranche of the investment and receive an additional $10,000,000, the holders of our Series B Convertible Preferred stock will hold 400 shares. This will entitle the holders to no less than 4,000,000 votes, which further concentrates voting power among a limited number of security holders and may limit the ability of holders of Common Stock to influence corporate governance and strategic decisions. The concentration of ownership and voting power may also discourage potential acquirers from attempting to obtain control of the Company and may make it more difficult for other stockholders to effect changes in the composition of our Board of Directors or management, which could adversely affect the market price of our Common Stock.
We may never achieve profitability.
We have a history of losses, minimal current revenue, massive transformation costs, and highly uncertain future revenue. Even if our transformation succeeds, the defense industry’s long sales cycles, competitive pressures, and contract risks may prevent profitability. We may exhaust our resources before generating sustainable revenue, resulting in total loss of investment.
Cyberattacks and security breaches of our systems, or those impacting our customers or third parties, could adversely impact our brand and reputation and our business, operating results and financial condition.
As we transition to the defense industry, we will handle highly sensitive defense-related data, technical specifications, and potentially classified information once we obtain necessary clearances. Our business will involve the collection, storage, processing and transmission of confidential information, defense contractor data, employee, service provider and other personal data, as well as information required to support defense programs. For our defense operations, we must build our reputation on the premise that our systems meet stringent defense industry security requirements including CMMC, DFARS, and NIST standards. As a result, any actual or perceived security breach of us or our third-party partners may:
| ● | harm our reputation and brand and potentially result in loss of facility security clearances; |
| ● | result in our systems or services being unavailable and interrupt our operations; |
| ● | result in improper disclosure of data and violations of applicable privacy laws, ITAR, EAR, and defense regulations; |
| ● | result in significant regulatory scrutiny, investigations, fines, penalties, potential debarment from defense contracts, and other legal, regulatory and financial exposure; |
| ● | cause us to incur significant remediation costs;
| |
| ● | compromise classified or controlled technical information critical to defense programs; |
| ● | reduce defense contractors’ confidence in, or decrease use of, our products and services; |
| ● | divert the attention of management from the operation of our business;
| |
| ● | result in significant compensation or contractual penalties from us to our customers including the U.S. government or third parties as a result of losses to them or claims by them; and |
| ● | adversely affect our business and operating results. |
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Further, any actual or perceived breach or cybersecurity attack directed at other defense contractors or government systems, whether or not we are directly impacted, could lead to a general loss of customer confidence in our ability to protect sensitive defense information, which could negatively impact us including the market perception of the effectiveness of our security measures and technology infrastructure.
An increasing number of organizations, including defense contractors, government agencies, and critical infrastructure providers, have disclosed breaches of their information security systems, some of which have involved sophisticated and highly targeted attacks, including on their websites, classified networks, and infrastructure. Attacks upon systems across the defense industry are increasing in their frequency, persistence, and sophistication, and, in many cases, are being conducted by sophisticated, well-funded, and organized groups and individuals, including nation-state actors specifically targeting defense contractors. The techniques used to obtain unauthorized, improper, or illegal access to systems and information (including customers’ personal data and digital assets), disable or degrade services, or sabotage systems are constantly evolving, may be difficult to detect quickly, and often are not recognized or detected until after they have been launched against a target. These attacks may occur on our systems or those of our third-party service providers or partners. Certain types of cyberattacks could harm us even if our systems are left undisturbed. For example, attacks may be designed to deceive employees and service providers into releasing control of our systems to a hacker, while others may aim to introduce computer viruses or malware into our systems with a view to stealing confidential or proprietary data. Additionally, certain threats are designed to remain dormant or undetectable until launched against a target and we may not be able to implement adequate preventative measures.
Although we do not have a past history of material security breaches or cyberattacks, as we enter the defense industry we will become a more attractive target for state-sponsored attacks. We are developing systems and processes designed to protect the data we manage, prevent data loss and other security breaches, and meet defense industry cybersecurity requirements. We expect to continue to expend significant resources to bolster these protections, but there can be no assurance that these security measures will provide absolute security or prevent breaches or attacks. Threats can come from a variety of sources, including criminal hackers, hacktivists, state-sponsored intrusions, industrial espionage, and insiders. In the defense industry, certain threat actors are supported by significant financial and technological resources, making them even more sophisticated and difficult to detect. As a result, our costs and the resources we devote to protecting against these advanced threats and their consequences will increase over time.
Although we maintain insurance coverage that we believe is adequate for our business, it may be insufficient to protect us against all losses and costs stemming from security breaches, cyberattacks, and other types of unlawful activity, or any resulting disruptions from such events. Defense-specific cyber insurance is particularly expensive and may exclude nation-state attacks. Outages and disruptions of our systems, including any caused by cyberattacks, may harm our reputation and our business, operating results, and financial condition.
Adverse economic conditions may adversely affect our business.
Our future performance in the defense industry is subject to general economic conditions, defense budget appropriations, continuing resolutions, sequestration risks, and geopolitical tensions that drive defense spending. The United States and other key defense markets experience cyclical changes in defense budgets from time to time based on political priorities, threat assessments, and fiscal constraints. Defense spending is subject to annual appropriations and can be affected by government shutdowns, budget caps, and changing national security priorities. The impact of defense budget cycles on our business is highly uncertain and dependent on a variety of factors, including congressional appropriations, international conflicts, emerging threats, and other events beyond our control. Geopolitical developments, such as regional conflicts, arms races, and alliance dynamics can directly impact defense spending priorities. To the extent that defense budgets are reduced or reallocated away from our focus areas, our ability to win contracts and generate revenue may suffer.
We may be adversely affected by natural disasters, pandemics, and other catastrophic events, and by man-made problems such as war or terrorism, that could disrupt our business operations, and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster.
Natural disasters or other catastrophic events may cause damage or disruption to our operations, international commerce, and the global economy, and could have an adverse effect on our business, operating results, and financial condition. Our business operations are subject to interruption by natural disasters, fire, power shortages, and other events beyond our control. Our Israeli subsidiaries face particular risks from regional conflicts, including potential facility damage, workforce mobilization for military service, and operational disruptions.
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In addition, our global operations expose us to risks associated with public health crises, such as pandemics and epidemics, which could harm our business and cause our operating results to suffer. Defense programs may be delayed or suspended during national emergencies, affecting our revenue and operations.
Further, war, acts of terrorism, labor activism and other geopolitical unrest could cause disruptions in our business or the businesses of our partners or the economy as a whole. While increased global tensions may drive defense spending, they also create operational risks for our international operations, particularly in Israel. In the event of a natural disaster, including a major earthquake, blizzard, or hurricane, or a catastrophic event such as a fire, power loss, or telecommunications failure, we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in program execution, lengthy interruptions in service, breaches of data security, and loss of critical data, all of which could have an adverse effect on our future operating results.
Acquisitions, joint ventures or other strategic transactions create certain risks and may adversely affect our business, financial condition or results of operations.
Acquisitions, partnerships and joint ventures are central to our transformation strategy. We recently completed our acquisitions of Star 26, Tiltan and Nimbus, each of which is an Israeli defense company, and divested our Digital RFQ business. We may not be successful in finding additional defense acquisition targets. In addition, we may not be able to successfully finance or integrate any defense businesses given our complete lack of defense industry experience.
We may not be able to identify suitable defense acquisition candidates or complete acquisitions in the future, which could adversely affect our future growth; or businesses that we acquire may not perform as well as expected or may be more difficult or expensive to integrate and manage than expected, particularly given the specialized nature of defense operations and our lack of industry knowledge, which could adversely affect our business and results of operations. In addition, the process of integrating these acquisitions may disrupt our business and divert our resources.
In addition, acquisitions of defense companies, particularly those outside our current operating jurisdictions often involve additional or increased risks including, for example:
| ● | managing geographically separated organizations, systems and facilities with different security requirements; |
| ● | integrating personnel with security clearances and diverse business backgrounds and organizational cultures; |
| ● | complying with defense export controls and foreign regulatory requirements; |
| ● | fluctuations in exchange rates; |
| ● | enforcement and protection of intellectual property and controlled technical data in some foreign countries; |
| ● | difficulty entering new foreign markets due to, among other things, national security restrictions, customer acceptance and business knowledge of these new markets; and |
| ● | general economic and political conditions affecting defense relationships between countries. |
These risks may arise for a number of reasons: we may not be able to find suitable defense businesses to acquire at affordable valuations or on other acceptable terms; we may face competition for acquisitions from other established defense companies; we may need to borrow money or sell equity or debt securities to the public to finance acquisitions and the terms of these financings may be adverse to us; changes in accounting, tax, securities or other regulations could increase the difficulty or cost for us to complete acquisitions; we may incur unforeseen obligations or liabilities in connection with acquisitions including environmental remediation costs common in aerospace facilities; we may need to devote unanticipated financial and management resources to an acquired business; we may not realize expected operating efficiencies or product integration benefits from an acquisition; we are entering the defense market where we have no prior experience; and we may experience decreases in earnings as a result of non-cash impairment charges.
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We cannot ensure that any acquisition, partnership or joint venture we make will not have a material adverse effect on our business, financial condition and results of operations.
Delaware law and our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws contain certain provisions, including anti-takeover provisions that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable.
The Company’s Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws contain provisions that could have the effect of rendering more difficult, delaying, or preventing an acquisition deemed undesirable by the Board and therefore depress the trading price of our Common Stock. Additionally, our foreign ownership structure and defense operations may trigger CFIUS review of certain transactions, potentially limiting strategic alternatives. In addition, as a Delaware corporation, the Company will generally be subject to provisions of Delaware law, including the DGCL. These provisions could also make it difficult for stockholders to take certain actions, including electing directors who are not nominated by the current members of the Board or taking other corporate actions, including effecting changes in management.
Such provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in the Board or management.
Any provision of the Company’s Amended and Restated Certificate of Incorporation or Amended and Restated Bylaws or Delaware law that has the effect of delaying or preventing a change in control could limit the opportunity for stockholders to receive a premium for their shares of the Company’s capital stock and could also affect the price that some investors are willing to pay for our Common Stock.
USE OF PROCEEDS
The Selling Stockholders will receive all of the proceeds from the sale of the Shares offered by it pursuant to this prospectus. We will not receive any proceeds from the sale of the Shares by the Selling Stockholders, however, we would receive proceeds upon such Selling Stockholder’s cash exercise of the Common Warrants. If the Selling Stockholders fully exercise the Common Warrants for cash, proceeds would be approximately $30 million. We can give no assurances that any of the Common Warrants will be exercised, nor can we give any assurances that we will receive any proceeds from the Selling Stockholders’ sale pursuant to this prospectus.
We intend to use any proceeds from the Selling Stockholders’ exercise of the Common Warrants for working capital and other general corporate purposes. We may use a portion of any proceeds we might receive for acquisitions of complementary businesses, technologies, or other assets. However, we have no commitments to use any proceeds we might receive from this offering for any such acquisitions or investments at this time.
We will bear the out-of-pocket costs, expenses and fees incurred in connection with the registration of the Shares to be sold by the Selling Stockholders pursuant to this prospectus. Other than registration expenses, the Selling Stockholders will bear underwriting discounts, commissions, placement agent fees or other similar expenses payable with respect to sales of the Shares.
DIVIDEND POLICY
To
date, we have not paid dividends on shares of our Common Stock and we do not expect to declare or pay dividends on shares of our Common
Stock in the foreseeable future. The payment of any dividends will depend upon our future earnings, if any, our financial condition,
and other factors deemed relevant by our Board.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis summarizes the significant factors affecting our financial condition, operating results, liquidity and cash flows as of and for the periods presented below. The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes thereto included elsewhere in this report. The discussion contains forward-looking statements that are based on the beliefs of management, as well as assumptions made by, and information currently available to, management. Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere in this report, particularly in the sections titled “Risk Factors” and “Special Note Regarding Forward-Looking Statements.”
Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “T3 Defense”, “we”, “us”, “our”, and the “Company” are intended to refer to (i) following the Business Combination (as defined below), the business and operations of T3 Defense Inc and its consolidated subsidiaries, and (ii) prior to the Business Combination, Old Nukk (the predecessor entity in existence prior to the consummation of the Business Combination) and its consolidated subsidiaries.
Company Overview
Following the appointment in September 2024 of Menachem Shalom, our current chief executive officer and a director, we have transformed from a financial technology services provider into a strategic acquirer and operator of aerospace and defense (A&D) businesses. We are building a portfolio of mission-critical suppliers and advanced technology companies and strategic infrastructure opportunities across the defense, aerospace, and advanced manufacturing sectors across the United States, Israel and Europe.
The Company is positioned as a strategic platform company focused on acquiring, integrating, and scaling high-impact businesses in the aerospace and defense industries. Our strategy targets Tier 2 and Tier 3 suppliers that form the industrial backbone of national security infrastructure, with particular emphasis on companies offering dual-use technologies, advanced AI applications, and critical manufacturing capabilities.
The financial results for the quarter ended March 31, 2026 represent the first quarter that the Company consolidated the financial performance of the companies acquired during the three months then ended. Previously management determined that as of fiscal year 2026, there was $4.2 million in revenue, a backlog of $12.1 million, and a $26 million full-year revenue projection in connection with our first quarter operating as a defense company. The backlog of $12.1 million represents signed orders by customers that are still in the process of being delivered, while the annual revenue projection included the projected revenues for the quarter, estimate of the amount of backlog for the full year and management estimates of the probabilities of the leads and inquiries from customers and potential customers which would translate into actual revenues during this fiscal year.
Recent Developments
Nasdaq Notice of Failure to Satisfy Minimum Bid Price Requirement
On May 5, 2026, T3 Defense received a written notice (the “Notification Letter”) from The Nasdaq Stock Market, LLC ("Nasdaq") that it is not in compliance with the minimum bid requirements set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing on The Nasdaq Global Market. Nasdaq Listing Rule 5550(a)(2) requires listed securities to maintain a minimum bid price of $1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days. Based on the closing bid price of the Company’s common stock between March 23, 2026 to May 4, 2026, the Company no longer meets the minimum bid price requirement.
The Notification Letter provides that the Company has 180 calendar days, or until November 2, 2026, to regain compliance with Nasdaq Listing Rule 5550(a)(2). To regain compliance, the bid price of the Company's common stock must have a closing bid price of at least $1.00 per share for a minimum of 10 consecutive business days. If the Company does not regain compliance by November 2, 2026, the Company may be eligible for additional time to regain compliance. In such instance, the Company must submit an application and a non-refundable $5,000 application fee, so long as the Company meets The Nasdaq Global Market continued listing requirements (except for the bid price requirement) and notifies Nasdaq in writing of its intention to cure the deficiency during the second compliance period. If the Company does not qualify or fails to regain compliance, then Nasdaq will notify the Company of its determination to delist the Company's common stock.
The Company intends to monitor the closing bid price of its common stock and may, if appropriate, consider implementing available options, including, but not limited to, implementing a reverse stock split of its outstanding securities, to regain compliance with the minimum bid price requirement under the Nasdaq Listing Rules.
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Conversion of Debt for Shares
On April 27, 2026, the Company and Menachem Shalom, the Company’s Chief Executive Officer and a member of the Company’s Board of Directors, executed and delivered the Note Exchange Agreement, pursuant to which the original principal amount of the notes issued to Mr. Shalom and accrued interest thereon in the amount of $2,138,962 was cancelled in its entirety in exchange for the issuance of 4,174,399 shares of common stock (the “Exchange Shares”). The exchange price of $0.5124 was the last consolidated bid price of a share of common stock as reported by The Nasdaq Stock Market LLC. The Exchange Shares are restricted shares and may not be sold without registration or an applicable exemption therefrom. The notes were assigned to Mr. Shalom from Star 26 pursuant to the terms of the Amended and Restated Securities Purchase Agreement and Call Option dated September 15, 2025 (the “Star Purchase Agreement”) among the Company, Star 26 and the other parties signatory thereto and pursuant to the exercise by Mr. Shalom of his right to obtain shares, notes and warrants from Esousa Group Holdings LLC (“Esousa”) in accordance with the terms of the Call Option Agreement dated January 13, 2026.
On April 27, 2026, the Board resolved that Menachem Shalom, the Company CEO and the holder of the notes assigned to him by Star 26 (currently aggregating $2,138,962 in outstanding principal) pursuant to the terms of the Star Purchase Agreement has the right to convert his notes based on the last consolidated bid price as reported by The Nasdaq Stock Market LLC., or $0.5124 per share. On said date, the Board also resolved to reduce the exercise price of the Star Warrant held by Menachem Shalom from $1.50 per share to $0.5124 per share. In connection with the consummation of the transactions contemplated by the Star Purchase Agreement on January 12, 2026, the Company had issued to Star 26 a warrant to purchase a total of 12,017,648 shares of Common Stock at an exercise price of $1.50 per share, which was then distributed to the equity holders of Star 26 on a pro rata basis. Mr. Shalom’s share is a warrant to purchase 7,175,662 shares of Common Stock.
Sale of Zorro Net
On April 10, 2026, Water IO Ltd. (“Water IO”), an Israeli public company traded on the Tel Aviv Stock Exchange in which Star 26 Capital Inc. (“Star 26”), a wholly-owned subsidiary of T3 Defense Inc. (the “Company”), holds an approximately 67% equity interest, completed the sale of 100% of the issued and outstanding share capital of Zorro Net Ltd. (“Zorronet”), a wholly-owned subsidiary of Water IO, to BiomX Inc. (“BiomX”) (NYSE American: PHGE), pursuant to a Stock Purchase Agreement dated April 10, 2026 (the “SPA”). As consideration for the Zorronet shares, BiomX issued to Water IO: (i) 1,300,000 shares of BiomX common stock; and (ii) a non-convertible promissory note in the principal amount of $1,250,000, bearing interest at the short-term applicable federal rate, maturing three months from the date of issuance. Additionally, BiomX assumed certain obligations of Water IO with respect to the founders and former shareholders of Zorronet, including a performance-based earnout payable no later than March 31, 2027 equal to the greater of 125% of Zorronet’s consolidated revenue or eight times Zorronet’s consolidated EBITDA for fiscal year 2026, and a commitment to retain certain key Zorronet personnel for three years on no less favorable terms.
As a result of the transaction, Water IO holds 1,300,000 shares of BiomX common stock, representing approximately 16.57% of BiomX’s issued and outstanding common stock following the issuance. The Company, through Star 26, beneficially owns approximately 67% of Water IO’s equity, and accordingly may be deemed to beneficially own such BiomX shares indirectly.
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Proposed Business Combination
On March 31, 2026, SC II Acquisition Corp., a Cayman Islands exempted company (the “SPAC”), entered into a non-binding letter of intent (the “LOI”) with a payments technology company (the “Target”), which outlines the general terms and conditions of a potential business combination (the “Proposed Transaction”) pursuant to which the Company would acquire 100% of the outstanding equity and equity equivalents of the Target. The SPAC’s sponsor, SC Capital II Sponsor LLC, is controlled and majority owned by Nukkleus Defense Technologies Inc., a wholly-owned subsidiary of T3.
The LOI is a preliminary, non-binding expression of mutual interest and does not constitute a binding commitment, obligation or agreement of the SPAC or the Target to consummate the Proposed Transaction or any other transaction. Except for certain limited binding provisions, including, among other things, exclusivity, confidentiality, the waiver of claims against the SPAC’s trust account, and governing law, neither the SPAC nor the Target has any legal obligation to the other party with respect to the Proposed Transaction by virtue of the LOI.
Cancellation of $16,000,000 Indebtedness
On March 31, 2026, T3 memorialized the termination of its obligation to pay $16,000,000 to its wholly-owned subsidiary Star 26 Capital, Inc., a Nevada corporation (“Star 26”). Pursuant to the Cancellation Agreement, (the “Cancellation Agreement”), while all terms and provisions of the Amended and Restated Securities Purchase Agreement, dated September 15, 2025 (the “Acquisition Agreement”) remain in full force and effect, and the Company’s ownership of Star 26, including all assets, operations, and subsidiaries, is unaffected, the Company eliminated $16,000,000 of indebtedness, effective immediately, at no cost, no dilution, and with no offsetting obligation to the Company or its shareholders.
Pursuant to the terms of the Cancellation Agreement, the entire $16,000,000 obligation to Star 26, including principal, accrued interest and any other amounts owing with respect thereto, were cancelled, terminated and rendered of no further force or effect, effective immediately, at no cost, no dilution, and with no offsetting obligation to the Company or its shareholders and while maintaining full ownership of Star 26 and all of its assets.
February 2026 Private Placement
On February 26, 2026, T3 closed a private placement pursuant to the terms of a Securities Purchase Agreement with an accredited investor (the “Securities Purchase Agreement”) for a private placement (the “Private Placement”) pursuant to which the investor (the “Purchaser”) agreed to purchase from the Company 400 units for an aggregate purchase price of $20,000,000, or a per unit price of $50,000. Each unit consists of (i) one share (each a “Share” and collectively, the “Shares”) of Series B Convertible Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock”), and (ii) one and a half common stock purchase warrants to initially purchase up to one and a half shares of common stock, par value $0.0001 per share (the “Common Stock”), of the Company, subject to adjustment as described herein (the “Common Warrants” and the shares of Common Stock issuable upon exercise or exchange of the Common Warrants, the “Warrant Shares”). The Private Placement is structured as a two stage investment. At the initial closing, which occurred on February 26, 2026, the Company sold 200 units for gross proceeds of $10 million. The Purchaser agreed to purchase an additional 200 units for an additional investment of $10 million following (i) the effectiveness of the registration statement described below, (ii) stockholder approval of the issuance of the transactions contemplated by the Securities Purchase Agreement as required pursuant to Nasdaq rules, (iii) the stock price is at least $1.00 and (iv) subject to the condition that the value of the trading in the Company’s stock on Nasdaq for the 10 consecutive days preceding the second closing is at or above $900,000 (the “Second Closing Market Trading Value”), provided that if the Second Closing Market Trading Value is less than $900,000, then there will be a proportionate reduction in the number of units to be sold at the second closing.
Pursuant to the Securities Purchase Agreement, the Company is required to seek stockholder approval (the “Stockholder Approval”) related to the issuance of the units to be issued in the Private Placement. The Company is required to file a preliminary proxy statement for a special meeting of the Company’s stockholders within 75 days of the initial closing of the Private Placement. The Company’s directors and officers have agreed to execute voting agreements to vote in favor of the applicable proposals. If the Company does not obtain Stockholder Approval at the first such meeting, the Company is required to call a meeting every 4 months thereafter to seek Stockholder Approval until the earlier of the date on which Stockholder Approval is obtained or the securities are no longer outstanding.
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The Company also granted the Purchaser a right of participation in subsequent financings of the Company for a period of time following closing, subject to certain exempt issuances, and has agreed not to issue securities for a period of time following the closing of the Private Placement, subject to certain exempt issuances, including issuances pursuant to strategic transactions.
Under the terms of the Securities Purchase Agreement, the Company agreed not deliver any purchase notices under Company’s equity line of credit with the Purchaser until after the later of the date on which (i) the registration statement is declared effective and (ii) the Company obtains Stockholder Approval and even after such date, certain market conditions must be satisfied.
Series B Preferred Stock
Pursuant to the Certificate of Designations of Rights, Preferences and Limitations which was filed with the Secretary of State of the State of Delaware prior to closing of the Private Placement, each share of Series B Preferred Stock has a stated value of $50,000 (the “Stated Value”) and will initially be convertible into 23,474 shares of Common Stock (the “Conversion Shares”) (or pre-funded warrants in lieu thereof (the “Pre-Funded Warrants”)), calculated by dividing the Stated Value by the initial conversion price equal to $2.13 per Share (the “Initial Conversion Price”). The Initial Conversion Price is subject to adjustment upon stock splits, distributions, reorganizations, reclassifications, change of control and the like, and is also subject to price-based anti-dilution adjustments for subsequent offerings made by the Company while the Series B Preferred Stock remains outstanding (subject to certain exempt issuances). The Initial Conversion Price will also be adjusted upon receipt of Stockholder Approval (as hereinafter defined), if obtained, to the lower of (i) $2.13 per share, (ii) the price per share upon effectiveness of the Initial Registration Statement required to be filed pursuant to the Registration Rights Agreement, (iii) the price per share upon the Corporation obtaining Stockholder Approval and (iv) the price per share upon applicability of Rule 144 as it relates to the sale of the Conversion Shares.
The Series B Preferred Stock is convertible at the option of the holder at any time and will be automatically converted into Common Stock or Pre-Funded Warrants in lieu thereof on the effective date of the registration statement, whether or not the Stockholder Approval has been obtained. If at any time after the one-year anniversary of the closing of the Private Placement, the Series B Preferred Stock is then outstanding and the Company has not received Stockholder Approval, the Series B Preferred Stock is redeemable at the option of the holder at a price per Share equal to 105% of the Stated Value. The conversion of the Series B Preferred Stock is subject to a 9.9% beneficial ownership limitation blocker. The Series B Preferred Stock are not entitled to receive dividends, other than on an as-converted basis if dividends are paid to holders of Common Stock.
The holders of Series B Preferred Stock are entitled to 10,000 votes per each share of Series B Preferred Stock. The holders of Series B Preferred Stock have voting rights with respect to certain corporate actions that affect the rights of the Series B Preferred Stockholders and also have certain consent rights in connection with certain proposed Fundamental Transactions (as defined in the Certificate of Designations). The Series B Preferred Stock is (i) senior to the Common Stock of the Company and any other equity securities that the Company may issue in the future, the terms of which specifically provide that such equity securities rank junior to the Series B Preferred Stock, (ii) equal with any class or series of capital stock established after the closing date of the Private Placement, the terms of which specifically provide that such equity securities rank on par with such Series B Preferred Stock, in each case with respect to payment of amounts upon liquidation, dissolution or winding up and (iii) junior to all of the Company’s existing and future indebtedness. The Company has agreed not to issue any parity stock or senior securities without the written consent of a majority in interest of the Series B Preferred Stock. Upon a change of control, liquidation or winding up of the Company the holders of the Series B Preferred Stock are entitled to a liquidation preference of $50,000 per Share.
Common Warrants
The Common Warrants are exercisable on a cash or cashless basis at the earlier of (i) 180 days following their issuance and (ii) the date the stockholder approval is obtained, and expire 5 years from the date of issuance. Each Common Warrant will be initially exercisable for one share of Common Stock at an initial exercise price of $2.13 per share, subject to adjustment for stock splits, distributions and the like (the “Initial Exercise Price”). The Initial Exercise Price is also subject to price-based anti-dilution adjustments for subsequent offerings made by the Company while the Common Warrants remain outstanding (subject to certain exempt issuances). At any time after the closing of the Private Placement, the holder of the Common Warrants may exchange the Common Warrants on a cashless basis for a number of shares of Common Stock determined by multiplying the total number of Warrant Shares with respect to which the Common Warrant is then being exercised by the Black Scholes Value (as defined in the Common Warrant) divided by the lower of the two closing bid prices of the Common Stock in the two days prior the time of such exercise, but in any event not less than $0.01 (as may be adjusted for stock dividends, subdivisions, or combinations and the like). The exercise of the Common Warrants is subject to a 9.99% beneficial ownership limitation blocker.
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In the event of a Fundamental Transaction (as defined in the Common Warrants), the holders of the Common Warrants will be entitled to receive upon exercise of the Common Warrants the kind and amount of securities, cash or other property that the holders would have received had they exercised the Common Warrants immediately prior to such Fundamental Transaction. Additionally, as more fully described in the Common Warrants, the holders of the Common Warrants will be entitled to receive consideration in an amount equal to the Black Scholes value of the Common Warrant in connection with a Fundamental Transaction.
If the Company fails to timely deliver the Warrant Shares issuable upon exercise of the Common Warrants, the Company will be subject to liquidated damages, payable in the Company’s discretion in cash or shares on the Registration Date (as defined therein) or buy-in. If the Company elects to pay in shares, the number of shares due will be based on the LD Share Formula (as defined below).
Registration Rights Agreement
In connection with the Private Placement, on February 24, 2026, the Company and the Purchaser entered into a Registration Rights Agreement (the “Registration Rights Agreement”). Pursuant to the terms of the Registration Rights Agreement, the Company is required to register the resale of the Conversion Shares (and any shares underlying the Pre-Funded Warrants, if any) and the Warrant Shares. The Company is required to prepare and file an initial registration statement (the “Initial Registration Statement”) with the Securities and Exchange Commission within 45 days of the date of the Securities Purchase Agreement (the “Filing Deadline”) and to use commercially reasonable efforts to have the Initial Registration Statement declared effective within 75 days of the date of the Securities Purchase Agreement (the “Effectiveness Deadline”). In certain circumstances including, but not limited to, if the Company misses the Filing Deadline or the Effectiveness Deadline, then the Company will be required to pay to the Purchasers an amount in shares or cash, at the Company’s discretion, as partial liquidated damages and not as a penalty, equal to the product of 1.5% multiplied by the aggregate purchase price paid by such Purchaser. Liquidated damages, if any, will accrue and be paid on the earlier of the effective date of a resale registration statement registering the sale of the shares that may be issued in lieu of cash or the date on which such shares can be sold pursuant to Rule 144 (the “Registration Date”). If the Company elects to pay liquidated damages in shares of Common Stock, the number of shares of Common Stock issuable to the Purchaser will be determined by dividing the aggregate amount of accrued liquidated damages by the closing price of the Company’s Common Stock on the trading market of the Common Stock on the day immediately prior to the Registration Date (the “LD Share Formula”).
In connection with the Private Placement, the Company entered into a Placement Agency Agreement, dated February 24, 2026, with Dawson James Securities Inc. (the “Placement Agent”), pursuant to which the Placement Agent acted as the sole placement agent for the Private Placement. In consideration for the foregoing, the Company has agreed to pay customary placement fees to the Placement Agent, including a cash fee equal to 3.5% of the gross proceeds raised in the Private Placement and issue warrants equal to 7.5% of the securities placed in the Offering. Pursuant to the Placement Agency Agreement, the Company has also agreed to reimburse certain expenses of the Placement Agent incurred in connection with the Private Placement.
Director Resignation
On February 23, 2026, the Company received a letter of resignation from Ms. Aviya Volodarsky pursuant to which Ms. Volodarsky resigned from her position as a member of the board of directors of the Company and from all the committees on which she served for personal reasons. The resignation was effective immediately.
Employment Agreement
On February 17, 2026, the Board of Directors, based on the recommendations and approval of the Compensation Committee, approved the terms of the terms and provisions of a Consulting Agreement between the Company and Billio Ltd., a company in Israel, to provide the services of Menachem Shalom as the principal executive officer of the Company. The consulting agreement terminates and supersedes the (i) Consulting Agreement dated December 16, 2024 between the Company and Billio Ltd., pursuant to which the Company obtained consulting services from the Consultant through Menachem Shalom; (ii) Management Services Agreement dated June 28, 2024, as amended by Amendment No. 1 dated August 8, 2024, between Star 26 Capital, Inc. (“Star Capital”) and Zero One Capital LLC, a Nevada limited liability company (“Zero One”) in which Mr. Shalom is the chief executive officer and controlling member and shareholder of Zero One; and (iii) Offsetting Management Services Agreement dated August 12, 2024 between Zero One and B. Rimon Agencies Ltd., an Israeli company which is currently wholly-owned by Star Capital.
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Given the performance of the Company within the last 15 months, the Compensation Committee and the Board of Directors determined that it was in the best interest of the Company to provide Mr. Shalom with the amended consulting agreement and increased compensation. The Committee and the Board also authorized a cash bonus to Mr. Shalom in the amount of $250,000 for his past services to the Company. The Company, under the supervision and guidance of Mr. Shalom, has completed several acquisitions within the last 15 months, including without limitation, Star 26, Tiltan Software Engineering, Nimbus Drones and ITS.
Pursuant to the terms of the Consulting Agreement, which is effective as of January 1, 2026, Mr. Shalom will continue to act as the chief executive officer of the Company while maintaining other executive roles in non-completing companies. For his services, Mr. Shalom will receive a base salary of $60,000 per month and target cash bonuses equal to 50% of base salary, subject to achievement of performance goals to be set by the Compensation Committee He could also be entitled to additional milestone-based bonuses as determined by the Board. Mr. Shalom will receive 250,000 shares of common stock quarterly, subject to availability under approved incentive plans; if there is no plan or no availability, the quarterly amount of shares shall accrue until there is availability under an approved incentive plan. Such plan will also require shareholder approval pursuant to applicable Nasdaq rules. He will also be entitled to a relocation grant of $175,000 if Mr. Shalom relocates to the United States with his family. Mr. Shalom will also be entitled to all executive benefit plans including health and 401(k) plans and 30 business days per year vacation.
In the event Mr. Shalom is terminated for cause or is no longer employed by the Company for reason of death or disability, he shall only be entitled to his compensation at such time. If he is terminated by the Company without cause, he shall be entitled to 6 months of his base compensation, and if Mr. Shalom resigns, he shall be entitled to compensation for 12 months. If he is terminated for cause, Mr. Shalom shall not be entitled to any compensation. The Consulting Agreement contains customary non-competition, non-solicitation and confidentiality provisions.
Name Change
Effective February 9, 2026, the Company changed its name by the filing of a certificate of correction to the Amendment to its Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to change the name of the Company to “T3 Defense Inc.”. The change in the name of the Company was effectuated pursuant to Section 242(d)(1) of the Delaware General Corporation Law. As a result of the name change, the new ticker of the Company became “DFNS”.
Nimbus Acquisition
On January 15, 2026, the Company consummated its acquisition (the “Nimbus Acquisition”) of 100% of Nimbus Drones Technologies and Marketing Ltd., an Israeli private company (“Nimbus”) specializing in unmanned aerial systems and services, pursuant to the terms of that certain Stock Purchase Agreement, dated January 15, 2026 (the “Nimbus Purchase Agreement”), by and among the Company, Nimbus and Elad Defense LLC (“Elad”). In connection with the closing of the Nimbus Acquisition, the Company issued to Elad as consideration (i) 1,850,000 shares of Common Stock and (ii) a $3,250,000 convertible 24-month note (the “Nimbus Note”) bearing 6% interest, which is convertible at the option of the holder at a fixed price of $2.00 per share. The Nimbus Note also prohibits the Company from issuing the holder shares that would result in the holder beneficially owning more than 4.99% of the outstanding shares of Common Stock. Elad and Nimbus each represented to the Company typical representations and warrants as common in transactions of this nature, and the parties indemnified each other for 24 months until January 15, 2028. The Nimbus Purchase Agreement is governed by the laws of Israel, and any dispute is to be resolved first by mediation in Tel Aviv, Israel. As of February 17, 2026, Elad converted the Nimbus Note to an aggregate of 1,625,000 shares of Common Stock.
Change in Independent Registered Public Accounting Firm
Effective as of January 14, 2026, the Company dismissed GreenGrowth CPAs (“GreenGrowth”) as the independent registered public accounting firm engaged to audit the Company’s financial statements and engaged Somekh Chaikin, a member firm of KPMG International (“Somekh Chaikin”), as the Company’s independent external auditors for the year ending December 31, 2025. See “Changes in and Disagreements with Accountants.”
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Litigation
On March 3, 2026, we obtained a copy of a summons and complaint filed in the Supreme Court of the State of New York dated February 24, 2026 by Kingswood Capital Partners, LLC against Star 26 Capital, Inc., Nukkleus, Inc. and the Company. The complaint alleges that a success fee is due for an earned investment banking success fee arising from a transaction. The Company denies all the allegations and intends to vigorously defend such action, which it believes is without merit.
Results of Operations
Comparison of the Three Months Ended March 31, 2026 to the Three Months Ended March 31, 2025
Revenues
For the three months ended March 31, 2026 we had revenues of $3,653,000, as compared to revenues of $0 for the three months ended March 31, 2025.
Operating Expenses
For the three months ended March 31, 2026 we had operating expenses of $4,182,000, as compared to operating expenses of $1,507,107 for the three months ended March 31, 2025. Operating expenses consisted of research and development expenses ($274,000), selling and marketing expenses ($157,000), and other general and administrative expenses ($3,528,000), as well as general and administrative expenses of consolidated variable entities of $223,000. The $3,528,000 of general and administrative expenses was comprised of professional services ($995,000), salaries and related compensation ($1,263,000) and other general and administrative expenses ($1,270,000), For the three months ended March 31, 2025, professional fees were $1,187,000, compensation and benefits was $33,000 and other general and administrative expenses was $287,000.
Other Income (Expenses)
For the three months ended March 31, 2026, other income (expenses) decreased from $104,648,000 for the three months ended March 31, 2025, as compared to an expense of $22,398,000 the three months ended March 31, 2026. The decrease was mainly attributable to the change in fair value of stock purchase warrant liabilities from $104,278,000 as of March 31, 2025 to a loss of $26,635,000 as of March 31, 2026.
Net Income (Loss)
For the three months ended March 31, 2026, we had a net loss of $26,351,000, as compared to net income of $102,958,000 for the three months ended March 31, 2025.
Liquidity and Capital Resources
As of March 31, 2026, we had $22,811,000 of current assets, including $7,362,000 of cash and cash equivalents. Based on management’s current expectations, we anticipate that we will need approximately $6,000,000 for the next 12 months of operations.
At March 31, 2026, the Company had negative working capital of approximately $69 million (of which $56 million consists of stock purchase warrant liabilities that do not require cash settlement) and stockholders’ equity of $42.5 million as of March 31, 2026; For the three month ended March 31, 2026, the Company reported a net operating loss of $3.8 million and net cash used in operations of $4.9 million. Absent any other action, the Company will require additional liquidity to continue its operations for the next 12 months.
After evaluating these conditions, management concluded that its plans, when considered in aggregate, alleviate substantial doubt about the Company’s ability to continue as a going concern. Those plans include: (i) the Company’s existing unrestricted cash balance of approximately $7.4 million, sufficient to fund projected operating expenses through the look-forward period; (ii) an active Equity Line of Credit (“ELOC”) with Esousa Holdings, LLC — legally binding, SEC-registered, and shareholder-approved — providing drawdown capacity, which exceeds the Company’s projected annual operating cash needs; (iii) the Company’s majority-owned subsidiaries, including Rimon Ltd. and Nimbus Drones, which are cash-positive and require no capital support from the Company; (iv) management’s ongoing efforts to assist subsidiaries in securing or expanding bank credit facilities; and (v) the option to satisfy certain obligations through issuance of equity in lieu of cash.
In addition, management believes that the completion of the sale by Water IO Ltd., a majority-owned indirect subsidiary of the Company, of Zorro Net Ltd. to BiomX Inc., pursuant to which Water IO received 1,300,000 shares of BiomX common stock and a $1.25 million promissory note due within three months, may provide additional liquidity and financial flexibility to the Company and its subsidiaries. The sale occurred on April 10, 2026.
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Management has determined that its plans are probable of being effectively implemented and probable of mitigating the conditions described above, enabling continuation of the Company’s operations for the foreseeable future. In the event management is incorrect in its determination and current and anticipated future sources of liquidity are insufficient to fund our future business activities, we may be required to seek additional equity or debt financing. The sale of additional equity would result in additional dilution to our stockholders.
Cash Flows
Investing Activities
Net cash used in investing activities for the three months ended March 31, 2026 was $3,823,000, as compared to $810,000 for the three months ended March 31, 2025.
Financing Activities
Net cash provided by financing activities for the three months ended March 31, 2026 was $12,476,000, as compared to having no net cash from financing activities in the three months ended March 31, 2025.
Off-Balance Sheet Arrangements
We had no outstanding derivative financial instruments, off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts.
Critical Accounting Estimates
Our consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q are prepared in accordance with GAAP. The preparation of consolidated financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs, and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from our estimates. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, operating results, and cash flows will be affected.
See Note 2 Summary of Significant Accounting Policies of the Notes for a summary of significant accounting policies and significant estimates and assumptions and their effects on our financial statements. Below are the significant estimates and assumptions that we consider critical because they involve a significant amount of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations.
Recently Issued Accounting Pronouncements
For information about recently issued accounting standards, refer to Note 2 to our Consolidated Financial Statements appearing elsewhere in this report.
The following discussion and analysis is based upon, and should be read in conjunction with, our audited consolidated financial statements and related notes and other financial information appearing elsewhere in this prospectus. All references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are referring to the twelve-month period ended December 31, 2025 and to the twelve-month period ended December 31, 2024. This section generally discusses year-to-year comparisons between such periods. On February 14, 2025, the Board of Directors of the Company approved a change in the Company’s fiscal year end from September 30 to December 31, effective for the fiscal year beginning January 1, 2024. This change resulted in a transition period from October 1, 2024 to December 31, 2024, for which the Company filed a transition report on Form 10-K with the Securities and Exchange Commission covering these three months. As a result, (a) the Form 10-K for the year ended September 30, 2024 filed with the SEC on February 10, 2025 (as amended on Form 10-K/A filed March 31, 2025) contains the audited financial statements for the year ended September 30, 2024 and (b) the Form 10-KT/ filed May 8, 2025(as amended on Form 10-KT/A filed July 9, 2025) contains the audited financial statements as of December 31, 2024 and the year ended September 30, 2024.
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Accordingly, the discussion below regarding the financial information of the twelve-month period ended December 31, 2024 is based on unaudited financial statements and is being provided for comparative purposes only.
All numbers below are in the thousands except share and per share data.
Year Ended December 31, 2025 compared to the Year Ended December 31, 2024
Revenue
We had no revenues from operations during the twelve months ended December 31, 2025 and 2024, due to the transformation of the Company to a strategic acquirer and operator of aerospace and defense businesses. During the third quarter of 2025, we discontinued operations of our former subsidiary DRFQ.
Operating Expenses
Total operating expenses for the year ended December 31, 2025 was $32,600 as compared to $8,827 for the year ended December 31, 2024, an increase of approximately 269%. Operating expenses are comprised of professional fees, compensation and related benefits, other general and administrative expenses and impairment loss. Professional fees increased from $6,373 for the year ended December 31, 2024 to $7,803 for the year ended December 31, 2025. Compensation and related benefits increased from $1,279 for the year ended December 31, 2024 to $19,145 for the year ended December 31, 2025, primarily as a result of $18,825 of share-based compensation for the year ended December 31, 2025. Other general and administrative expenses increased from $785 for the year ended December 31, 2024 to $1,308 for the year ended December 31, 2025. The increase in the other general and administrative expenses was primarily a result of increases in rent and office maintenance as well as travel expenses of our CEO and other critical members of our team in efforts to grow our business. The impairment loss for the year ended December 31, 2024 was $391 as compared to $4,344 for the year ended December 31, 2025, which was solely attributable to the impairment recognized on the digital assets we acquired during the year ended December 31, 2025.
Net Income
Total net income was $78,631 for the year ended December 31, 2025 as compared to the total net loss of $160,378 for the year ended December 31, 2024. The net income from continuing operations for the year ended December 31, 2025 was $76,601 as compared to a net loss of $165,200 for the year ended December 31, 2024. The net gain from discontinued operations was $2,030 for the year ended December 31, 2025 as compared to a net gain of $4,821 for the year ended December 31, 2024.
Net cash
Net cash used in operating activities for the year ended December 31, 2025 was $6,147 as compared to $3,421 for the year ended December 31, 2024. Net cash used in operating activities for discontinued activities was $51 for the year ended December 31, 2025 as compared to 4,822 for the year ended December 31, 2024.
Net cash used in investing activities was $933 for the year ended December 31, 2024 as compared to $178,867 for the year ended December 31, 2025.
Net cash provided by financing activities was $11,307 for the year ended December 31, 2024 as compared to $181,985 for the year ended December 31, 2025.
Liquidity and Capital Resources
As of December 31, 2025, we had $13,555 of current assets, including $3,897 of cash and cash equivalents. Based on management’s current expectations, we anticipate that we will need approximately $6,000,000 for the next 12 months of operations. We believe that we will have sufficient capital to fund our ongoing operations given our ability to deliver purchase notices under our current ELOC facility after the registration statement is declared effective and we obtain stockholder approval of the issuances thereunder.
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The Company recorded negative working capital of approximately $30 million (which includes $24.5 million of stock purchase warrant liabilities which will not require cash to extinquish) and stockholders’ deficit of $15.6 million as of December 31, 2025; a net operating loss of $32.6 million and net cash used in operations of $6.2 million for the year ended December 31, 2025. Absent any other action, the Company will require additional liquidity to continue its operations for the next 12 months.
After evaluating these conditions, management concluded that its plans, taken in aggregate, alleviate substantial doubt. Those plans include: (i) cancellation of a previously contemplated $16 million intercompany note obligation arising from the acquisition of Star 26, which has been mutually agreed to be of no force or effect; (ii) the Company’s existing unrestricted cash balance of approximately $6.0 million, sufficient to fund projected operating expenses of its portfolio companies through the look-forward period; (iii) an active Equity Line of Credit (“ELOC”) with Esousa Holdings, LLC — legally binding, SEC-registered, and shareholder-approved — providing drawdown capacity, which exceeds the Company’s projected annual operating cash needs; (iv) the Company’s majority-owned subsidiaries, including Rimon Ltd. and Nimbus Robotics, which are cash-positive and require no capital support from the Company; (v) management’s ongoing efforts to assist subsidiaries in securing or expanding bank credit facilities; and (vi) the option to satisfy certain obligations through issuance of equity in lieu of cash.
Management has determined that its plans are probable of being effectively implemented and probable of mitigating the conditions described above, enabling continuation of the Company’s operations for the foreseeable future. In the event management is incorrect in its determination and current and anticipated future sources of liquidity are insufficient to fund our future business activities, we may be required to seek additional equity or debt financing. The sale of additional equity would result in additional dilution to our stockholders.
Off-Balance Sheet Arrangements
We had no outstanding derivative financial instruments, off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts.
Critical Accounting Estimates
Our consolidated financial statements and the related notes included elsewhere in this prospectus are prepared in accordance with GAAP. The preparation of consolidated financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs, and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from our estimates. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, operating results, and cash flows will be affected.
See Note 2. Summary of Significant Accounting Policies of the Notes to our consolidated financial statements included in this prospectus for a summary of significant accounting policies and significant estimates and assumptions and their effects on our financial statements. Below are the significant estimates and assumptions that we consider critical because they involve a significant amount of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations.
Derivative financial instruments
The Company accounts for derivative instruments in accordance with ASC 815, Derivatives and Hedging (“ASC 815”). Changes in the fair value of derivative instruments are recognized in the consolidated statement of operations. The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risk.
The Company evaluates all of its financial instruments, including notes payable, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. The Company applies significant judgment to identify and evaluate complex terms and conditions in its contracts and agreements to determine whether embedded derivatives exist. Embedded derivatives must be separately measured from the host contract if all the requirements for bifurcation are met. The assessment of the conditions surrounding the bifurcation of embedded derivatives depends on the nature of the host contract. Bifurcated embedded derivatives are recognized at fair value, with changes in fair value recognized in the statement of operations each period. Bifurcated embedded derivatives are classified with the related host contract on the Company’s balance sheet. The Company identified embedded derivatives primarily related to conversion features included in certain financial instruments. These features were evaluated in accordance with ASC 815 and, where required, were bifurcated from the host contract and accounted for as derivative liabilities at fair value.
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An evaluation of specifically identified conditions is made to determine whether the fair value of the derivative issued is required to be classified as equity or as a derivative liability. Changes in the estimated fair value of the liability-classified derivative financial instruments are recognized as a non-cash gain or loss on the accompanying consolidated statements of operations and comprehensive loss.
Stock purchase warrants
The Company accounts for stock purchase warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing liabilities from equity (“ASC 480”), and ASC 815. The assessment considers whether the stock purchase warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the stock purchase warrants meet all of the requirements for equity classification under ASC 815, including whether the stock purchase warrants are indexed to the Company’s own common shares and whether the holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of issuance, modification, and as of each subsequent quarterly period end date while the stock purchase warrants are outstanding.
For issued or modified stock purchase warrants that meet all of the criteria for equity classification, the stock purchase warrants are required to be recorded as a component of additional paid-in capital at the time of issuance.
For issued or modified stock purchase warrants that do not meet all the criteria for equity classification, the stock purchase warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the liability classified stock purchase warrants are recognized as a non-cash gain or loss on the accompanying consolidated statements of operations and comprehensive loss.
The Company assesses the classification of its common stock purchase warrants at each reporting date to determine whether a change in classification between equity and liability is required. For modified stock purchase warrants that result in a change of classification from equity to liability, a liability is recognized equal to the fair value on the date of modification, additional paid-in capital is adjusted by the fair value of the warrant on the date of issuance.
Extinguishment and Modification of Debt and Related Instruments
The Company accounts for the extinguishment of debt in accordance with ASC 470, Debt. An extinguishment of debt occurs when the Company is legally released from being the primary obligor under the liability, including through repayment, settlement, or a modification of terms that is considered substantial.
Upon extinguishment, the Company derecognizes the carrying amount of the debt and recognizes a gain or loss in the consolidated statement of operations for the difference between the reacquisition price and the net carrying amount of the extinguished debt.
The Company evaluates modifications of debt instruments to determine whether such modifications should be accounted for as a modification or an extinguishment. If the terms of the modified debt are substantially different from the original terms, including based on a quantitative assessment, the transaction is accounted for as an extinguishment of the original debt and the issuance of new debt.
In transactions where debt is settled through the issuance of equity instruments, warrants, or other derivative instruments, the Company evaluates whether such transactions represent an extinguishment of debt. The fair value of the instruments issued is used to determine the reacquisition price, and any resulting gain or loss is recognized in the consolidated statement of operations.
Stock-based compensation
The Company measures and recognizes the compensation expense for all equity-based payments to employees and nonemployees based on their estimated fair values in accordance with ASC 718, “Compensation- Stock Compensation”. Share-based payments including grants of stock options are recognized in the statement of comprehensive loss as a compensation expense based on the fair value of the award at the date of grant. The fair value of stock options granted is estimated using the Black-Scholes option-pricing model. The Company has expensed compensation costs, net of forfeitures as they occur, applying the accelerated vesting method, over the requisite service period or over the implicit service period when a performance condition affects the vesting, and it is considered probable that the performance condition will be achieved.
Recently Issued Accounting Pronouncements
For information about recently issued accounting standards, refer to Note 2 to our Consolidated Financial Statements appearing elsewhere in this prospectus.
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BUSINESS
History
T3 Defense Inc. (formerly known as Nukkleus Inc.) (the “Company” or “T3”) was formed on May 24, 2019 under the name Brilliant Acquisition Corporation for the purpose of engaging in a business combination. On June 23, 2023, Brilliant Acquisition Corporation, a British Virgin Islands company (prior to the Merger “Brilliant”, and following the Merger, a Delaware corporation “Nukkleus”), entered into an Amended and Restated Agreement and Plan of Merger (as amended by the First Amendment to the Amended and Restated Agreement and Plan of Merger on November 1, 2023, the “Merger Agreement”), by and among Brilliant BRIL Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Brilliant (“Merger Sub”), and Nukkleus Inc., a Delaware corporation (“Old Nukk”). Old Nukk (f/k/a Compliance & Risk Management Solutions Inc.) was formed on July 29, 2013 in the State of Delaware as a for-profit company and established a fiscal year end of September 30. The Merger Agreement provided that, among other things, at the closing (the “Closing”) of the transactions contemplated by the Merger Agreement, Merger Sub merged with and into Old Nukk (the “Merger”), with Old Nukk surviving as a wholly-owned subsidiary of Brilliant. In connection with the Merger, Brilliant changed its name to “Nukkleus Inc.” (“Nukkleus” or “Combined Company”). The Merger and other transactions contemplated by the Merger Agreement are hereinafter referred to as the “Business Combination.” In connection with the Business Combination, Brilliant changed its name to “Nukkleus Inc.” The Business Combination was completed on December 22, 2023.
As a result of Business Combination, we became a financial technology company with the aim of providing blockchain-enabled technology solutions. From the consummation of the Business Combination until the change of management in September 2024, we operated in the technology business as a full-service transactions technology and advisory business providing end-to-end transactions technology solutions. We offered an advanced transactions platform for dealing and risk management with global liquidity and customizable leverage, where users have control over quote and liquidity strategies.
Historically, the Company, through its wholly owned subsidiary, provided software and technology solutions for the worldwide retail foreign exchange trading industry. The Company’s primary customer was Triton Capital Markets Ltd. (“TCM”) (formerly known as FXDD Malta Limited). Emil Assentato, the former CEO and a former director of the Company, is also the majority member of Max Q Investments LLC (“Max Q”), which is managed by Derivative Marketing Associates Inc. (“DMA”). Mr. Assentato is the sole owner and manager of DMA. Max Q owns 79% of Currency Mountain Malta LLC, which in turn is the sole shareholder of TCM. In order to define the services rendered to TCM, Nukkleus Limited, a wholly-owned subsidiary of the Company, entered into a General Services Agreement (“GSA”) with TCM in May 2016. The GSA provides that TCM will pay Nukkleus Limited a minimum of $1,600,000 per month. Due to non-payment by TCM under the GSA, the Company advised TCM that the GSA has been terminated. The Company has historically generated substantially most of its revenue through the services rendered under the GSA. On September 30, 2024, the Company, TCM and FXDirectDealer LLC (“FXDD”) entered into a Release Agreement pursuant to which the parties confirmed that the GSA between the Company and TCM and the General Services Agreement dated May 24, 2016, as amended (“FXDD GSA”) between the Company and FXDD were terminated effective January 1, 2024. The parties further confirmed that there are no obligations or liabilities outstanding or owed between the parties as of September 30, 2024, and each party released and forever discharged the other party from any and all claims, demands, damages, actions, causes of action, or suits of any kind or nature whatsoever, both known and unknown, which have arisen or may arise from the GSA or the FXDD GSA.
The Company historically operated its blockchain payment solutions through Digital RFQ Limited (“DRFQ”), a wholly owned subsidiary of Match Financial Ltd. (“Match”), a wholly owned subsidiary of the Company. On November 8, 2024, the Company entered into a Settlement Agreement and Release with Jamal Khurshid and Match providing that Match agreed to sell DRFQ, to Mr. Khurshid or his nominee subject to the Company obtaining shareholder approval (the “Settlement Agreement”). As required by the Settlement Agreement, the Company, Match and Mr. Khurshid entered into a Share Purchase Agreement dated December 27, 2024 providing that the Company, subject to it obtaining shareholder approval, will sell DRFQ to Mr. Khurshid in consideration of £1,000. The Company believed the sale of DRFQ was in the best interest of the Company due to continuing net loss generated by DRFQ.
As of August 2025, the Company determined that it no longer had a controlling financial interest in Digital RFQ due to loss of access to financial records. Accordingly, the Company deconsolidated DRFQ during the third quarter of fiscal year 2025. The Company was notified that on July 29, 2025, Match was placed into administration in the United Kingdom pursuant to the Insolvency Act 1986 resulting in the appointment of two administrators (the “Administrators”). The Administrators completed a pre-packaged sale of Match’s entire shareholding in DRFQ to Match Financial Holdings Limited, a newly formed entity owned by Mr. Khurshid, for nominal consideration of £102,000.
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T3 Defense Overview
Following the appointment in September 2024 of Menachem Shalom, our current chief executive officer and a director, we have transformed from a financial technology services provider into a strategic acquirer and operator of aerospace and defense (A&D) businesses. We are building a portfolio of mission-critical suppliers and advanced technology companies and strategic infrastructure opportunities across the defense, aerospace, and advanced manufacturing sectors across the United States, Israel and Europe.
The Company is positioned as a strategic platform company focused on acquiring, integrating, and scaling high-impact businesses in the aerospace and defense industries. Our strategy targets Tier 2 and Tier 3 suppliers that form the industrial backbone of national security infrastructure, with particular emphasis on companies offering dual-use technologies, advanced AI applications, and critical manufacturing capabilities.
The chart below shows the current ownership and names of our portfolio companies:
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Our Current Portfolio:
Defense and Aerospace Technology Acquisitions:
| ● | Star 26 Capital Inc. - Defense technology holding company that owns B. Rimon Agencies Ltd., an Israeli supplier of generators for “iron dome” launchers and defense systems. [closed January 12, 2026] |
| ● | Tiltan Software Engineering Ltd. - Israeli AI software company specializing in defense and aerospace applications including GPS-denied navigation, 3D mapping, simulation systems, and AI training platforms. [closed December 30, 2025] | |||
| ● | Nimbus Drones Technologies and Marketing Ltd. – Israeli company specializing in unmanned arial systems and services. [closed January 15, 2026] | |||
| ● | I.T.S. Industrial Tecno-logic Solutions Ltd.– Israeli company providing design, development, production and manufacturing of serial, fully integrated electro-mechanical machines and sophisticated assembly lines. [closed February 16, 2026] | |||
| ● | Positech Ltd., wholly owned subsidiary of I.T.S. – designs and manufactures top-of-the line, high performance motion control systems for military and civilian use. |
Technology Distribution and Licensing:
| ● | Blade Ranger Ltd. (Exclusive U.S. Distribution rights) - Distribution agreement for advanced drone payload systems for defense and homeland security markets, with minimum commitments of 30 payloads over three years. [August 25, 2026] |
| ● | Mandragola Aviation Joint Venture (51% ownership) - Strategic joint venture to establish aviation and defense infrastructure in the Baltics and Israel, including NATO-compliant logistics hubs, MRO (maintenance, repair and operations) facilities, and aircraft modernization capabilities. [August 29, 2026] |
Star 26 Capital Inc.
Acquisition of 100% of Star 26
On December 15, 2024, the Company entered into the Securities Purchase Agreement and Call Option with Star 26 Capital, Inc., a Nevada corporation (“Star”), the shareholders of Star and Menachem Shalom, as representative of the shareholders, which was subsequently amended on each of February 11, 2025, May 13, 2025, June 15, 2025 and July 25, 2025. Said agreement, as amended, provided that we would acquire 51% of Star and the Star shareholders would grant the Company an option to purchase the balance of the equity. Mr. Shalom, who is the Chief Executive Officer and a director of the Company, is a controlling shareholder, Chief Executive Officer and a director of Star.
On September 15, 2025, the parties executed and delivered the Amended and Restated Securities Purchase Agreement (the “Star Agreement”) with Star, the Star shareholders and Menachem Shalom, the representative of such shareholders, to provide that at closing the Company will acquire 100% of the issued and outstanding capital of Star in consideration of (i) $21,000,000, to be paid by a 12-month $16,000,000 promissory note (the “Investment Note”) and the balance in $5,000,000 cash, less any amounts lent to Star from the Company since December 15, 2024, the date of the original purchase agreement, (ii) 4,770,340 shares of common stock of the Company (the “Shares”), (iii) a five-year warrant (the “Star Warrant”) to purchase an aggregate of 12,017,648 shares of the Company’s common stock for an exercise price of $1.50 per share, (iv) $3,000,000 in cash and (v) a 6-month promissory note in the principal amount of $3,000,000, which shall accrue interest at the rate of 8%. The Shares, Star Warrant, cash and the 6-month note will be assigned by Star to the Star shareholders pro ratably. If, for a period of 12 months after the closing, the Common Stock is delisted from Nasdaq, Star shall have the right, at its own discretion, to require the Company to exchange the Investment Note for all the shares of Star then held by the Company, provided, however, Star shall retain any cash payments made by the Company to Star and the Company shall retain an equity interest in Star equivalent to all cash payments made.
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The closing of the transaction was subject to customary closing conditions, including approval by the Company’s shareholders as required under applicable Nasdaq listing rules. As a result of the above transaction, the Shares issued to Star and assigned to the Star shareholders represented 16.4% of the issued and outstanding shares of Common Stock, and assuming the Star shareholders exercise the Star Warrant, the Star shareholders would hold an aggregate of 16,787,988 shares of Common Stock representing 57.6% of the issued and outstanding shares of Common Stock of the Company as of the date of the closing.
On January 12, 2026, the Company completed the acquisition of Star. As a result of the acquisition, Star 26 became a wholly owned subsidiary of the Company. The transaction was approved by the Company’s shareholders on December 16, 2025 and confirmed by the Nasdaq Stock Market on January 9, 2026.
The financial statements of Star, including its wholly-owned subsidiary B. Rimon Agencies Ltd., and the requisite pro forma financial statements were included in the proxy statement regarding the special stockholders’ meeting with respect to the acquisition of Star by T3 which was filed with the SEC on September 30, 2025 and the registration statement on Form S-1 which was filed with the SEC on February 11, 2025 (registration no. 333-293384).
Star Business Description
Star is an acquisition holding company focused on locating undervalued and undercapitalized companies, primarily in the defense, industrial machinery and application, manufacturing, transportation, information technology, and aerospace industries, and providing them capitalization and leadership to maximize their value and the potential of their private enterprises while also promoting diversification and risk mitigation for our stockholders. Our acquisition strategy focuses on small and medium businesses, which we characterize as those that have an enterprise value of less than $200 million, in a variety of different industries, with a preference for multinational businesses. To date, we have completed a single acquisition of a defense technology company. Star has not identified any specific business as a target for its next acquisition, and it has not entered into any letters of intent, nor has anyone on its behalf, initiated any substantive acquisition discussions, directly or indirectly, with any such target.
Star completed its first acquisition on February 15, 2024, in connection with our operating subsidiary in the Israeli defense industry, B. Rimon Agencies Ltd. Rimon is a defense technology company and has been in business since 1992 serving the country of Israel and acting as an exclusive distributor in Israel of tier-1 generators, masts, and lighting solutions, as well as a wide range of defense, homeland security and commercial systems.
The Company seeks to acquire controlling interests in small and medium businesses that it believes operate in industries with long-term growth opportunities, which continue to have positive and stable earnings and cash flows, face minimal threats from technological or competitive obsolescence, and have strong management teams largely in place. Star’s mission is to make these businesses its majority-owned subsidiaries and actively manage and grow such businesses. Star expects to improve its business over the long term through organic growth opportunities, add-on acquisitions, and operational improvements.
Star currently holds (1) 100% of Rimon, an Israeli corporation engaged as distributor of military-grade generators, masts and lighting systems and that is, among other clients, a supplier of generators for “Iron Dome” launchers, (2) 67% of Water.IO Ltd., an Israeli corporation listed on the Tel Aviv Stock Exchange engaged in smart hydration technology, and (3) 51% interest in I.T.S. Industrial Techno-logic Solutions Ltd., an Israeli corporation which designs, develops and manufactures fully integrated electro-mechanical machines, assembly lines and custom motion systems. Until April 10, 2026, Water.IO owned 100% of ZorroNet Ltd., an Israeli corporation specializing in the development and deployment of artificial intelligence systems for perimeter security, defense, monitoring and command and control applications.
Star’s Corporate History and Structure
Star was incorporated by its founder, Menachem Shalom, on January 17, 2024, as Star 26 Capital Inc., a Nevada corporation. Billio Inc., Star’s wholly owned subsidiary, is a Delaware corporation formed by Mr. Shalom on February 12, 2021, to act as an intermediate holding company for Rimon.
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Star’s Acquisition of Rimon
On February 15, 2024, Star executed an assignment and assumption agreement with Mr. Shalom, pursuant to which Star, through its wholly owned subsidiary, Billio, acquired all of the issued and outstanding capital stock of Rimon. Under the terms of that agreement, Star agreed to assume all of Mr. Shalom’s rights and obligations toward the sellers of Rimon, as outlined in earlier agreements by and between the same, dated December 22, 2023, and February 15, 2024. Additionally, Star agreed to reimburse Mr. Shalom for his out-of-pocket costs related to the acquisition of Rimon, and for operating loans which he made to Rimon thereafter. To do so, Star issued him a demand grid promissory note with an initial principal of $155,405, which increased to $280,857 by August 28, 2024, with the initial principal being advanced to cover Mr. Shalom’s out-of-pocket costs, and the increase therein related to the advance for operations. The grid note bears interest at 8% per annum and matures 60 days after the earlier of one year from the issuance date or upon the closing of a private placement or public offering of at least $5,000,000.
Rimon is an Israeli corporation engaged as a supplier of generators for “iron dome” launchers and other defense products which business includes the purchase and sale of generators, masts, and lightning products and solutions, which it acquires through exclusive distributorship agreements with key third-party suppliers and the engineering, design, production, integration, and maintenance of special tactical vehicles and trailers, including reconnaissance vehicles, mobile command and control vehicles, firefighting trailers, energy and lighting trailers, and satellite broadcast mobility platforms which are primarily sold to special defense forces, intelligence agencies and the Israeli Defense Forces.
Star’s Market Opportunity and Growth Strategy
We believe there is a significant opportunity for organic growth via the acquisition of small and medium size businesses with an enterprise value of less than $200 million (based on the opinion of our management team and advisors), that may be operating in highly fragmented markets throughout the world, including the U.S. and Israel, which are owned and operated by persons within isolated networks of family offices, entrepreneurs, and intermediaries, each of which with the potential to generate attractive returns for our stockholders and investors. Our core operational principles focus on managing our acquired enterprises to ensure recurring cash flow and lasting terminal value, while fostering long-term sustainability in our investments. To do so, the Company aims to invest in and/or buy controlling stakes in operating, revenue-generating businesses. Controlling stakes would allow us to lead the companies into operational efficiencies, growth in revenues, improved financial reporting and operational procedures, hire talented employees and managers and increase the overall enterprise value of these companies. Star’s search for future acquisition targets focuses on companies located in the U.S. or Israel, or both, that provide products and or services to large defense and aerospace companies and or governments. Notwithstanding the forgoing, we may target and acquire companies for acquisition that are located outside the U.S. and Israel if such acquisitions fit within our overall acquisition philosophy and strategy.
We also believe that the economic and market dislocations resulting from the conflict in Israel, as well as other conflicts worldwide, provide an opportunity for companies in the defense industry to see higher-than-average demand for their products and services. Such market conditions, if they persist, would allow us to focus on acquiring profitable businesses in the defense sector, with the opportunity to take advantage of their potential future growth. Within the Israeli defense market in particular, management expects to see a significant number of businesses struggling to satisfy growing demand for their products and services due to a lack of access to capital and experienced executive level leadership among other factors. We believe we will be able to provide these needed resources to any Israeli target company that it acquires. It is confident that the expertise of our management team and the relationships that they can bring to an acquisition represent a compelling value proposition for any potential acquisition target looking to add working capital, a pathway to exit, and a solid leadership base, to assist such a company to grow and expand and to be able to take advantage of market opportunities as they arise.
Star’s Acquisition Process and Strategy
T3’s current acquisition strategy involves the acquisition of small and medium size businesses in various industries, with an initial focus on industries associated with the defense sector, including but not limited to industrial machinery and application, manufacturing, transportation, information technology, and aerospace, that we expect will produce positive, stable earnings, and provide attractive returns on our invested capital. As part of its evaluation of whether it will acquire a particular business, it will perform a comprehensive due diligence review to determine the quality and intrinsic value of the targeted company. we will also seek to identify operational inefficiencies which it would expect to resolve, post-closing, by implementing streamlined processes, optimizing resource allocation, and leveraging innovative solutions with the objective of enhancing overall productivity and effectiveness of such companies. Its due diligence typically includes an analysis of the target Company’s financial statements, detailed document reviews, meetings with current management, consultations with relevant industry experts, competitors, suppliers, and customers, and any other information gathering that we deem appropriate in conducting a comprehensive analysis.
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Management believes that the defense sector is poised to experience significant growth in the next few years due to the increasing number of violent conflicts in the world, which may cause an increase in direct demand for defense solutions from conflict participants and their allies. We also anticipate seeing indirect, additional defense industry growth for, as we have observed, countries not involved in or participating in conflicts tend to increase their defense budgets and spending in anticipation of additional future conflicts in which they may become involved. It is our belief that acquiring companies in the defense sector will help us establish a unique marketing network and build expertise in the greater defense sector, thus enabling us to cross-sell products to our large customers and facilitate higher success rates in our sales efforts.
According to the Company’s industry specific market research and analysis, and the network and knowledge of its management team, it is our expectation that attractive opportunities are likely to emerge as private sector owners aim to grow their businesses through scaling or by forming outside partnerships to add value. Our value-add proposition involves partnering with exceptional entrepreneurs, acquiring their companies, and guiding them by providing the funding and resources they will need to become global enterprises. We believe that through this approach we will be more likely to identify and attract potential and appropriate targets for acquisition. Management also believe that the greatest opportunities for consistent annual returns and residual returns on capital from its acquisitions lie in targeting businesses in niche geographical markets with a competitive edge in the defense, government, and military sectors, especially in the U.S. and Israel. While we expect our management team will be most effective working with the types of businesses described above, we will also consider acquiring businesses outside of these industries and sectors as long as any such businesses are congruent with our acquisition strategy.
Pursuant to the acquisition strategy, the Company will seek to structure its transactions such that each of the businesses it acquires will become its wholly owned or controlled subsidiary. However, we may also close acquisitions that result in its ownership of an entity being less than 100%, to meet certain objectives of the target management team or their then-existing stockholders, or for other strategic reasons; provided that we will always acquire more than 50% of the outstanding voting control of any target, or otherwise obtain a controlling interest in such target.
T3 intends to finance acquisitions primarily through the public or private sale of our equity and debt securities. While the success of this financing strategy cannot be guaranteed, the ability to finance future acquisitions through its general capital resources, rather than through acquisition-specific financing, will allow us to minimize delays and closing conditions, thereby enhancing its ability to acquire attractive businesses. Because the timing and size of future acquisitions cannot be readily predicted, we may need access to funding on short notice to be able to benefit fully from attractive acquisition opportunities.
As part of the acquisition strategy, we will seek to evaluate each potential target’s management team and operational and financial strengths and weaknesses. It will review and compare identified targets to comparable businesses and conduct in-depth research on each potential target’s industry to enhance our assessment of their financial and operational performance and their growth and success potential. We will thoroughly negotiate appropriate terms and conditions of any acquisition of a target company that satisfies its acquisition criteria. Some of the future acquisition targets may be financially unstable or in the early stages of development or growth. Even if pre-existing conditions do not negatively impact its decision to acquire a target company, such target may also be subject to numerous other risks inherent in its business and industry, as well as the risks faced by generally by capital markets participants. Although its management team will endeavor to comprehensively evaluate the risks associated with any particular acquisition target, Star cannot assure you that it will properly ascertain, assess, or protect against all significant risk factors.
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Valuation and Due Diligence
We intend to perform rigorous business operations and financial evaluations of any target businesses (or assets) that it may acquire. During such due diligence, we intend to evaluate the financial aspects of its acquisition targets using the following metrics:
| ● | discounted cash flow analysis; |
| ● | evaluation of trading values of comparable public companies; |
| ● | expected value matrices; |
| ● | assessment of competitor, supplier, and customer environments; and |
| ● | review and examination of recent/precedent transactions. |
We expect our target review process will yield two outcomes, (1) an accurate projection of expected cash flows, and (2) an understanding of the types and levels of risk associated with those projections. While future performance and projections are always uncertain, we believe that our detailed target company review process will enable us to effectively evaluate the prospects and upside of any given acquisition opportunity. Additionally, to assist management in identifying material risks and validating key assumptions in our financial and operational analysis, we will engage third-party experts to review key risk areas, including legal, tax, regulatory, accounting, insurance and environmental. We may also engage technical, operational or industry consultants, as necessary.
We also engage in an extensive evaluation of each target’s existing management team, including a focus on recent performance, expertise, experience, culture, and performance incentives. Where necessary, and consistent with our management strategy, following the acquisition of a target company, we will actively seek to augment, supplement, or replace existing members of target company management who we believe are not likely to properly execute our business plan for the target. Star also analyzes and evaluates the operational and financial systems of each target business and, when necessary, post-acquisition, we will actively seek to enhance and improve those existing systems that are deemed to be inadequate or insufficient to support our business plan for the target business.
Financing
T3 expects to finance acquisitions primarily through additional equity and debt offerings. Although we cannot guarantee that we will be successful with this strategy, management believes that having the ability to finance particular future acquisitions with the general capital resources raised by the company will provide us with an advantage in acquiring attractive businesses by minimizing delay and closing conditions that are often related to acquisition-specific financings. In this respect, we believe that, in the future, we will need to pursue access to additional capital via debt or equity offerings to successfully fund and execute our business and acquisition strategy.
Competition
In identifying, evaluating, and selecting potential target businesses for our acquisition strategy, we may encounter intense competition from other entities that have business objectives similar to ours, including blank check companies such as SPACs, leveraged buyout funds, operating businesses seeking strategic acquisitions, and private equity groups. Many of these entities are well-established and well-financed and may have greater experience identifying and effecting acquisitions directly or indirectly. These competitors may possess greater financial, technical, human, and other resources than we do. Our ability to acquire larger target businesses in our target sectors will be limited by its available financial resources. Our inherent financial limitations may provide others with an advantage to pursue the acquisition of one or more of its identified target businesses. Any of these factors may place us at a competitive disadvantage in successfully negotiating acquisitions.
Competitive Advantages
We believe that the collective investment experience of our management and approach to executing its investment strategy will enable it to have several competitive advantages. Our competitive strengths that differentiate us from other acquisition holding companies include:
| ● | Specialization in the Military and Defense sector. We believe that our focus on the military and defense sectors will enable us to be competitive. This industry may be undergoing a significant transformation as government acquisition processes and new policy incentives align to prioritize national security objectives and promote the adoption of new commercial technologies for military use. In addition, the combination of governments of multiple countries having a need for new, advanced technologies to combat modern threats, along with changing warfare tactics, is driving this specific demand. We believe we are uniquely positioned to enter and succeed as an acquisition holding company in this industry. |
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| ● | International and Sector-Specific Expertise. Mr. Shalom, the founder and Chief Executive Officer of T3, has operated businesses internationally, including in Israel. His extensive international experience and knowledge of Israeli business operations, along with a broad network of contacts, provide us with a competitive advantage. This network can assist us in identifying new acquisition targets, finding suitable managers, and securing international capital. Additionally, our directors and executive officers bring executive, investment, and operational experience in managing and growing small and middle-market companies in the defense sector. We believe this combined expertise gives us a significant edge in evaluating future business and acquisition opportunities. |
| ● | Value Proposition for Business Owners. We employ a creative, flexible approach by tailoring each acquisition structure to meet the specific liquidity needs and certain qualitative objectives of a target’s owners and management team. We are open to providing a complete exit strategy to its sellers or providing opportunities to retain incumbent management. In this effort, we believe that T3 is an appealing buyer for small business owners and managers. As a result, we believe business owners and managers will find it to be a dynamic, value-added buyer that brings resources to achieve their strategic, capital and operating needs, resulting in value creation for the operating subsidiary. |
Human Capital
As indicated below, Star’s operating subsidiary Rimon employs 18 people: three technicians, two engineers, three assembly workers, three sales employees, one customer support employee, one financial bookkeeper, and five management employees. None of our employees or any of our subsidiary’s employees are represented by labor unions, and we believe that we have an excellent relationship with such employees.
Sales and Marketing
Star markets its generators, masts, lightning and utility vehicles through our websites and by working with our internal sales team that offers relevant off-the-shelf or tailor-made solutions based on specific client needs and requests. In the future, Star intends to utilize numerous avenues to promote its business, including digital marketing across social media channels, Web3 reservation systems, and various modes of advertisements.
Legal Proceedings
On March 3, 2026, the Company obtained a copy of a summons and complaint filed in the Supreme Court of the State of New York dated February 24, 2026 by Kingswood Capital Partners, LLC against Star 26 Capital, Inc., Nukkleus, Inc. and the Company. The complaint alleges that a success fee is due for an earned investment banking success fee arising from a transaction. The Company denies all the allegations and intends to vigorously defend such action, which it believes is without merit.
Government Regulation
The following is a list of government regulations which may apply to Star now or in the future as it continues to carry out its business:
| ● | Approval of U.S. and Other Defense Acquisitions. Many countries, including Israel, require governmental approval of acquisitions of local defense companies or assets by foreign entities. Mergers and acquisitions of defense-related and other potentially sensitive businesses in the U.S. are subject to the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA). Under FIRRMA, its future acquisitions of defense-related and other potentially sensitive businesses in the U.S., if any, may require review, and in some cases approval, by the Committee on Foreign Investment in the U.S. (CFIUS). CFIUS has the authority to impose additional restrictions through National Security Agreements (NSA) as part of its review and approval of the acquisitions. |
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| ● | Procurement Regulations. Solicitations for procurement by governmental purchasing agencies in Israel, the U.S. and other countries are governed by laws, regulations and procedures such as those relating to procurement integrity, including due diligence, avoiding conflicts of interest and corruption, and meeting information assurance and cyber-security requirements. Such regulations also include provisions relating to the avoidance of human trafficking and counterfeit parts in the supply chain. In view of the ongoing conflict between Russia and Ukraine, various countries and organizations have adopted specific sanctions and regulations to restrict, among other things, the use of certain goods and technologies originating from Russia. Similarly, the United Stated has adopted specific regulations to restrict, among other things, the procurement of goods or services from specific Chinese entities. Such regulations may apply to us as well as to our supply chain. |
| ● | Anti-Bribery/Corruption Regulations. Star may conduct operations in a number of markets that are considered high risk from an anti-bribery/anti-corruption compliance perspective. Laws and regulations such as the Israel Penal Code, the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and corresponding legislation in other countries, prohibit providing personal benefits or bribes to government officials in connection with the governmental procurement process. Israeli defense exporters are required to maintain and follow an anti-bribery/corruption compliance program. |
| ● | Cybersecurity and Data Privacy Regulations. Certain data relating to employees, customers and supply chain that we may receive and maintain, now or in the future, directly or indirectly, is subject to data privacy regulations, including those of the European General Data Privacy Regulation and corresponding Israeli legislation. There has also been an increased focus on cybersecurity, as global privacy, cybersecurity and data protection-related laws and regulations are evolving, extensive, and complex. Star may also be required to comply with expanding and increasingly complex cybersecurity regulations and guidelines in the United States, Israel and elsewhere with respect to reporting adverse events and additional requirements for avoiding or responding to an adverse event. |
| ● | Audit Regulations. In the future, the Israeli Ministry of Defense may audit the books and records of our Israeli defense contractor subsidiaries. Such books and records and other aspects of projects related to U.S. defense contracts, if any, will also be subject to audit by U.S. government audit agencies. Such audits review compliance with government contracting cost accounting and other applicable standards. If discrepancies are found this could result in a downward adjustment of the applicable contract’s price as well as potential penalties. Some other customers have similar rights under specific regulations or contract provisions. |
| ● | Competition Laws. Competition laws and regulations in Israel, the U.S. and other countries often require governmental approvals for transactions that are considered to limit competition. Such transactions may include the formation of joint venture entities, cooperative agreements for specific programs or areas, as well as mergers and acquisitions. |
| ● | Environmental, Health and Safety Regulations. Star may become subject to a variety of environmental, health and safety laws and regulations in the jurisdictions in which we have operations. This potentially includes regulations relating to air, water and ground contamination, hazardous waste disposal and other areas with a potential environmental, health or safety impact. Increased public concern may result in more international, U.S. federal, and/or regional requirements to reduce or mitigate the effects of climate change, such as regulating greenhouse gas emissions, policies mandating or promoting the use of renewable or zero-carbon energy and sustainability initiatives, and additional taxes on fuel and energy. Legislation or regulations may be enacted or promulgated in any jurisdiction in which we do business that impose more stringent restrictions and requirements than our current legal or regulatory obligations. In January 2023, the European Corporate Sustainability Reporting Directive (CSRD) came into force, which requires in-scope companies, among other things, to make sustainability reports including certain mandatory disclosures and other voluntary disclosures on impacts, risks, and opportunities in relation to sustainability matters identified as material by the relevant entity. On March 6, 2024, new SEC rules on climate-related disclosure were adopted which may subject us to burdensome and potentially costly emissions and other data gathering and reporting requirements. We will continue to assess the potential impact of the CSRD and SEC rules on our business and subsidiaries, if any. |
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B. Rimon Agencies Ltd., Star’s Israeli Defense Business
Star’s defense military technology business is operated by B. Rimon Agencies Ltd., our indirect, wholly owned operating subsidiary that Star acquired on February 15, 2024.
Rimon is an Israeli corporation engaged as a supplier of generators for “iron dome” launchers and other defense products which business includes the purchase and sale of generators, masts, and lightning products and solutions, which it acquires through exclusive distributorship agreements with key third-party suppliers and the engineering, design, production, integration, and maintenance of special tactical vehicles and trailers, including reconnaissance vehicles, mobile command and control vehicles, firefighting trailers, energy and lighting trailers, and satellite broadcast mobility platforms which are primarily sold to special defense forces, intelligence agencies and the Israeli Defense Forces.
The Defense Industry
The primary geographic market focus as of the date hereof is Israel where the majority of its customers are located and operate. Israel accounted for 4.4% of global arms exports between 2021 and 2025, up from 3.1% in the prior five-year period, making Israel the seventh-largest arms exporter in the world and surpassing the United Kingdom for the first time. Israel’s defense exports reached a record $14.8 billion in 2024, the fourth consecutive year of record exports, driven by strong global demand for Israeli air defense, unmanned aerial vehicle, and counter-UAS technologies. Three Israeli companies—Elbit Systems Ltd., Israel Aerospace Industries Ltd. (IAI), and Rafael Advanced Defense Systems Ltd.—rank among SIPRI’s Top 100 global arms-producing companies, with combined arms revenues of approximately $16.2 billion in 2024, representing a 16% year-over-year increase. Israel’s military spending increased by 65% in 2024 to $46.5 billion, or 8.8% of GDP—the second-highest military burden in the world—reflecting the intensity of ongoing multi-front military operations. Israel remains one of few countries with successful experience operating a multi-tiered missile defense system, and its defense technologies continue to be adopted by major global militaries. Notable recent transactions include the sale of the Arrow 3 missile defense system to Germany—the largest arms sale in Israel’s history—and defense agreements with India totaling approximately $10 billion encompassing air defense systems and drones. Israel exports arms to customers in 23 European countries, 10 Asian countries, and multiple countries in the Americas and Africa, with Europe (41%) and Asia (40%) representing the largest regional shares of Israeli defense exports.
Global military expenditure reached a record $2.7 trillion in 2024, representing a 9.4% increase over the prior year, driven by the Russia-Ukraine conflict, regional tensions in the Middle East and Asia-Pacific, and broader geopolitical realignment. The United States remained the world’s largest military spender at $997 billion in 2024, and the proposed fiscal year 2026 defense budget represents the first-ever trillion-dollar U.S. defense budget request. The U.S. defense market was valued at approximately $314 billion in 2024 and is projected to reach approximately $447 billion by 2033, growing at a CAGR of approximately 4.0%. The broader global defense technology market is estimated at approximately $750 billion in 2026 and is projected to reach approximately $965 billion by 2030, reflecting a CAGR of approximately 6.5%, with the United States accounting for approximately 40% of global defense technology revenue. In Europe, 17 of the 30 European NATO members reached or surpassed the alliance’s 2% of GDP spending guideline in 2024, with notable increases in Romania (+43%), the Netherlands (+35%), Sweden (+34%), Poland (+31%), and Germany (+28%), and NATO allies agreed at the June 2025 Hague Summit to increase the alliance spending target to 5% of GDP by 2035, comprising at least 3.5% for core defense expenditures and up to 1.5% for broader defense- and security-related investments. These trends reflect a structural increase in global defense spending that we believe creates significant market opportunities for defense technology companies operating in Israel and internationally. While the Company is in the early stages of entering the United States defense market through its subsidiaries, the Company intends to pursue opportunities in the U.S. and other international markets over time.
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Tiltan Software Engineering Ltd.
Acquisition of 100% of Tiltan
On December 30, 2025, the Company consummated its acquisition (the “Tiltan Acquisition”) of all of the issued and outstanding shares of Tiltan Software Engineering Ltd. (“Tiltan”) pursuant to a Stock Purchase Agreement, as amended (the “Tiltan Purchase Agreement”), among the Company, its wholly owned subsidiary Nukk Picolo Ltd. (“Nukk Picolo”), Tiltan and Arie Shafir (the “Tiltan Seller”), in consideration of NIS 47,600,000 (approximately $14,000,000). Pursuant to the Tiltan Purchase Agreement, the purchase price is payable in a combination of (i) cash equal to 75% of the purchase price (the “Cash Portion”), or NIS 35,700,000 (approximately $10,500,000), a portion of which (NIS 5,283,333, less NIS 666,667 retained by the Company as working capital for Tiltan) will be paid by the Company to the Tiltan Seller and the remainder of which is evidenced by a secured promissory note (the “Tiltan Note”) in the principal amount of NIS 29,750,000 (approximately $8,750,000), and (ii) shares of Common Stock equal to 25% of the purchase price (the “Stock Portion”), or NIS 11,900,000 (approximately $3,500,000). The remaining Cash Portion of NIS 29,750,000 (approximately $8,750,000) is payable by the Company in five installments at 36-day intervals until the final payment on June 29, 2026, with the first two installments each being reduced by NIS 666,667 for working capital to be retained by Tiltan. The cash payments are evidenced by the Note and secured by the pledge described below. As a result of the acquisition, Tiltan became an indirect wholly owned subsidiary of the Company.
In connection with the closing of the Tiltan Acquisition, the Company deposited 2,000,000 shares of Common Stock (the “Escrowed Shares”) into escrow with an escrow agent. On June 29, 2026, the escrow agent shall release to the Tiltan Seller shares of Common Stock having an aggregate value equal to 25% of the purchase price (NIS 11,900,000), calculated based on the market price of the Common Stock on said date. Any Escrowed Shares in excess of this amount shall be cancelled and returned to the Company. If the value of the Escrowed Shares on said date is less than 25% of the purchase price, the Company is required to either (i) issue additional shares of Common Stock to the Tiltan Seller or (ii) pay the Tiltan Seller the difference in cash, so that the Seller receives shares and/or cash having an aggregate value equal to 25% of the purchase price. as consideration that may be released to the Tiltan Seller in accordance with the Tiltan Purchase Agreement.
Also in connection with the closing of the Tiltan Acquisition, the Company issued the Tiltan Note to the Tiltan Seller. The Tiltan Note matures in five equal installments (other than the first two installments which have been reduced by NIS 666,667 for working capital to be retained by Tiltan) at 36-day intervals beginning on the 36th day following the closing date until the final payment which is due on June 29, 2026. The Tiltan Note does not bear interest unless an Event of Default (as defined in the Tiltan Note) occurs, in which case the outstanding principal amount shall bear interest at the rate of 10% per annum from the date of default until payment. Events of Default include failure to timely make a monthly installment payment within ten (10) business days after written notice is received from the Tiltan Seller, bankruptcy of the Company or Nukk Picolo, material breach of the Tiltan Purchase Agreement, and cessation of business operations for a continuous period of twenty (20) days. Upon an Event of Default, the Tiltan Seller may declare all amounts due and payable and exercise remedies under the Tiltan Note and the Pledge Agreement (as defined below).
As security for the Company’s payment obligations under the Tiltan Note and the Tiltan Purchase Agreement, Nukk Picolo entered into a pledge agreement (the “Pledge Agreement”) with the Tiltan Seller, pursuant to which Nukk Picolo granted the Tiltan Seller a first-priority security interest in all 100 shares of Tiltan acquired in the Tiltan Acquisition. The security interest shall be registered with the Israeli Registrar of Companies. Upon full payment of all amounts due under the Tiltan Note and the Tiltan Purchase Agreement, the pledge shall be released.
The acquisition of Tiltan did not require pro forma financial statements given the impact of the acquisition on the financial condition of acquisition was not material.
Business of Tiltan
Tiltan develops simulation, geospatial, and operational software solutions that enable its defense and homeland security customers to train personnel, test systems, navigate, and operate in complex environments using realistic three-dimensional mapping and sensor-based data. Tiltan’s core capabilities—mapping, simulation, and machine vision—can be offered as distinct products but are designed to work together as an integrated solution for situational awareness and decision support. In plain terms, Tiltan makes software that turns complex real-world environments into clear digital tools: it helps customers create a detailed digital version of a physical area (a “terrain model”), build a digital copy of a real location that mirrors real-world conditions (a “digital twin”), and construct computer-generated virtual worlds for training or testing purposes (a “synthetic environment”).
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Tiltan offers five principal products and platforms: (1) T-AWARE, an exploitation system for processing, analyzing, and visualizing multi-sensor intelligence data; (2) TOPS, a physics-based simulation platform that generates high-fidelity imagery across visible light (standard camera imagery similar to what the human eye sees), infrared (heat-based imagery useful for seeing in darkness), and synthetic aperture radar or SAR (radar imaging that can detect objects through clouds, darkness, and adverse weather conditions); (3) Majestic.ai, a generative AI platform for creating realistic synthetic datasets used to train AI systems more quickly and cost-effectively than using real-world imagery; (4) T-BAT, a software-only navigation solution for drones and aircraft that enables autonomous operation when GPS signals are unavailable, jammed, or unreliable; and (5) AGM, a rapid automatic geo-mapping tool that converts spatial data into actionable geospatial intelligence.
History and Structure
Tiltan was founded over 30 years ago and is headquartered in Petach Tikva, Israel. The company has long served as both a direct supplier and subcontractor to all major Israeli defense companies, both governmental and non-governmental, building a track record in AI-driven simulation, synthetic data generation, geospatial intelligence, and GPS-denied navigation for defense applications.
Tiltan reported revenues of approximately $2,964,000 and $2,185,000 for the fiscal years ended December 31, 2024 and December 31, 2025, respectively, but has not been included in the Company’s 2025 Financial Statements.
Market Opportunity and Growth
Tiltan’s products address several large and growing markets driven by rising global defense spending, heightened geopolitical tensions, and the proliferation of autonomous systems that require advanced simulation, synthetic training data, and GPS-denied navigation capabilities.
In the synthetic data market, the global AI training dataset market was valued at approximately $1.73 billion in 2022 and is forecast to reach approximately $8.61 billion by 2030, representing a compound annual growth rate of approximately 22%. According to Gartner, synthetic data is expected to overshadow more than 85% of real data in AI model training by 2030, reflecting a fundamental shift in how AI systems are developed and trained. Tiltan’s Majestic.ai platform is positioned to address this growing demand by providing physically accurate, validated outdoor visual sensor synthetic datasets for defense and, increasingly, commercial AI applications.
In the GPS-denied navigation market, the broader UAV navigation systems market was valued at approximately $9.73 billion in 2024 and is projected to reach approximately $20.41 billion by 2029, with a CAGR of approximately 15.97%. The U.S. drone software market is projected to grow at a CAGR of 15.4% through 2030. Tiltan’s T-BAT product addresses the software-only segment of this market, which is in its early stage with only five known competitors globally offering pure software solutions without requiring dedicated hardware.
Tiltan is actively pursuing international expansion beyond its Israeli base. In Asia, Tiltan has secured a purchase order from a governmental technology institute and is in advanced stages of formalizing representative arrangements with additional opportunities under proposal. In Europe, Tiltan has signed representative consultancy agreements in two major European countries, submitted a price proposal to a major European integrator, and is in advanced negotiations with another. In the United States, Tiltan is exploring various resellers, value-added resellers, and representatives, with an opportunity involving a large governmental entity under evaluation.
Competition and Competitive Advantage
Tiltan competes with a range of Israeli and international defense simulation, geospatial intelligence, and AI training companies across its product lines. Competition varies by product:
In GPS-denied navigation (T-BAT), Tiltan competes with five global companies offering software-only solutions: Sightec (Israel), Protrack (Israel), Spleenlab (Germany, product under development), Daedalean (Switzerland), and SSCI (United States). Most other GPS-denied solution providers offer complete hardware-software packages that are more complex and expensive, whereas T-BAT is a software-only, customer-agnostic solution that complements existing UAV OEM platforms and components without requiring dedicated hardware.
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In synthetic data for AI training (Majestic.ai), direct competitors include Sky Engine AI, Parallel Domain, Cognata, Bifrost, Anyverse, and Simerse. Most of these competitors rely on third-party 3D engines such as Unity or Unreal, which are primarily designed for gaming and 3D display rather than physics-based sensor simulation. Indirect competitors include large technology companies such as NVIDIA, Microsoft, and Google, which invest in AI training infrastructure and maintain programs to partner with synthetic dataset providers, representing both competition and potential collaboration opportunities. Data labeling companies such as Alegion, CloudFactory, and SuperAnnotate are also considered indirect competitors, as synthetic data represents a threat to their manual labeling business models.
The Company believes that Tiltan’s key competitive advantages include over 30 years of proven delivery to all major Israeli defense companies; a proprietary physics-based 3D engine that provides full control over development, special features, and no third-party royalty obligations; the ability to generate synthetic data across visible light, infrared, and SAR sensor types, addressing the most demanding defense use cases; a working alpha version of its Majestic.ai platform with early adoption by defense customers; and recognition from the Israeli Ministry of Defense, including an award in an advanced computer vision competition and validation of its infrared simulation capabilities against competitors, in which Tiltan’s results outperformed other participants.
Human Capital
Tiltan currently employs approximately 14 people in Israel, with expertise in AI, computer vision, geospatial engineering, 3D modeling, simulation, and software development. The team draws from Israel’s defense-technology talent pool and emphasizes innovation and quality in its product development.
Sales and Marketing
Tiltan’s sales efforts are led by its CEO, who dedicates approximately one-third of his time to business development activities, supported by a part-time business development consultant. Sales activities target defense prime contractors and government agencies, historically through direct contracts and subcontracting arrangements with major Israeli defense companies. Tiltan’s marketing efforts include technical demonstrations, participation in defense industry events, and digital channels showcasing the company’s physics-based simulation realism and AI capabilities. Since the acquisition,
Government Regulations
Tiltan is subject to Israeli Ministry of Defense export controls applicable to defense items and technologies. The company maintains compliance controls through DECA (Defense Export Controls Agency) oversight. As an indirect subsidiary of a U.S. public company, Tiltan’s activities involving technology transfers or international sales are subject to U.S. International Traffic in Arms Regulations (ITAR), Export Administration Regulations (EAR), cybersecurity standards applicable to defense systems, and anti-corruption laws including the U.S. Foreign Corrupt Practices Act (FCPA). Tiltan does not currently receive any governmental funding, grants, or R&D support from the Israel Innovation Authority or other government sources. There are no royalties owed to any third parties. No material regulatory violations have been reported.
Intellectual Property
Tiltan does not currently hold any registered patents, pending patent applications, registered trademarks, or pending trademark applications. Tiltan’s principal intellectual property consists of its proprietary software platforms and 3D engine, which are developed in-house and over which Tiltan maintains full control without third-party royalty obligations. The company’s competitive position is based primarily on its accumulated know-how developed over more than 30 years of defense software engineering, its proprietary physics-based simulation engine, and the specialized expertise of its team. Tiltan has not granted, and has not been granted, any material intellectual property licenses.
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Nimbus Acquisition
Acquisition of 100% of Nimbus
On January 15, 2026, the Company consummated its acquisition (the “Nimbus Acquisition”) of 100% of Nimbus Drones Technologies and Marketing Ltd., an Israeli private company (“Nimbus”) specializing in unmanned aerial systems and services, pursuant to the terms of that certain Stock Purchase Agreement, dated January 15, 2026 (the “Nimbus Purchase Agreement”), by and among the Company, Nimbus and Elad Defense LLC (“Elad”). In connection with the closing of the Nimbus Acquisition, the Company issued to Elad as consideration (i) 1,850,000 shares of Common Stock and (ii) a $3,250,000 convertible 24-month note (the “Nimbus Note”) bearing 6% interest, which is convertible at the option of the holder at a fixed price of $2.00 per share. The Nimbus Note also prohibits the Company from issuing the holder shares that would result in the holder beneficially owning more than 4.99% of the outstanding shares of Common Stock. The Nimbus Note was converted to an aggregate of 1,625,000 shares of Common Stock as of February 17, 2026.
Business Description
Nimbus is an Israeli unmanned aerial vehicle (UAV) company engaged in the sale of various drone models primarily for the defense, homeland security, and civilian industries. Nimbus provides end-to-end UAV solutions, including drone hardware sales and maintenance, aerial photography, mapping and imaging services, and professional UAV pilot training and knowledge transfer. Nimbus serves defense and security organizations, municipalities, local authorities, and surveying and engineering firms with customized unmanned aerial systems and related services.
History and Structure
Nimbus was founded in 2024 and is headquartered in Jerusalem, Israel.
Nimbus reported approximately $940,000 in revenue for the fiscal year ended December 31, 2025, but has not been included in the Company’s 2025 Financial Statements. As a company founded in 2024, Nimbus had limited operations and revenue prior to fiscal year 2025.
Market Opportunity and Growth
Nimbus operates in the growing global UAV and counter-UAS markets, which are driven by increasing adoption in defense, homeland security, public safety, agriculture, and commercial sectors. Demand for drone-based intelligence, surveillance, and reconnaissance capabilities continues to expand amid heightened geopolitical tensions, border security requirements, and the proliferation of unmanned systems. In Israel specifically, the Ministry of Defense has issued tenders for UAV-related contracts valued at approximately NIS 50 million, reflecting the domestic market opportunity. The ongoing security situation in Israel and globally has further increased demand for UAV operations and counter-drone capabilities. Nimbus has secured new customers since its acquisition by T3, though these engagements have not yet reached material revenue levels.
Competition and Competitive Advantage
Nimbus competes primarily with Israeli UAV service providers and drone companies, including Lol TV and Profilor Drones, as well as international UAV service providers and manufacturers. The UAV market is characterized by a growing number of participants, rapid technological development, and increasing demand from both defense and civilian sectors. Nimbus’s competitive advantages include its comprehensive end-to-end UAV lifecycle support encompassing hardware sales, maintenance, aerial operations, certified pilot training, and operational knowledge transfer; its expertise in customized professional systems for defense and critical applications; its ability to serve diverse sectors including security, public, commercial, and agriculture with integrated services; and its presence in Israel’s defense and technology ecosystem, which provides access to operational experience in high-stakes environments.
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Human Capital
Nimbus currently employs 2 persons who are involved in both operations and sales activities. None of our employees or any of our subsidiary’s employees are represented by labor unions, and we believe that we have an excellent relationship with such employees.
Sales and Marketing
Nimbus’s sales activities are conducted by its 2 employees, who focus on direct engagements with defense and security entities, public sector agencies including municipalities and local authorities, and commercial clients such as surveying and engineering firms. Historical sales focus has been on the Israeli market, emphasizing operational reliability and professional-grade UAV applications. Marketing efforts leverage industry demonstrations, digital channels, and participation in defense and technology events.
Government Regulations
Nimbus holds UAV pilot licenses issued by the Civil Aviation Authority of Israel (CAAI) and complies with Israeli civil aviation regulations governing drone operations, including flight restrictions and airspace management requirements. As an Israeli UAV company within a U.S. public entity, Nimbus is subject to Israeli Ministry of Defense and civil aviation export regulations for drones and dual-use technologies. U.S. activities are subject to ITAR, EAR, and applicable FAA or equivalent standards for drones, as well as cybersecurity requirements for defense systems and anti-corruption laws including the FCPA. Nimbus does not currently receive any governmental funding or grants, and there are no royalties owed to third parties. No material regulatory violations have been reported.
Intellectual Property
Nimbus does not currently own any patents, patent applications, registered trademarks, or other material intellectual property. The company has not been granted, and has not granted to others, any intellectual property licenses.
Blade Ranger Ltd.
On August 20, 2025, the Company entered into an Exclusive Distribution Agreement (the “Distribution Agreement”) with Blade Ranger Ltd. (“Blade Ranger”), an Israeli public company specializing in development of drones payloads. Blade Ranger develops and commercializes drone technologies for the solar energy market. In addition, it has developed a payload that is used by defense and homeland security forces.
Pursuant to the Distribution Agreement, Blade Ranger granted the Company exclusive distribution rights for defense and homeland security sector in the United States for its proprietary product - a unique drone payload that can be used by military forces and homeland security organizations. We agreed to pay Blade Ranger $100,000 for the exclusive U.S. rights, with the first payment is to be made by the end of November 2025, and equal payments are due at the end of the next three consecutive quarters. The Company committed to purchase 5 units in Year 1, 10 units in Year 2, and 15 units in Year 3. Upon meeting these targets, the Distribution Agreement extends for an additional five years with a 20 unit annual commitment. If we achieve 125% of revenue targets in any year, the Company will receive an 8% credit on annual purchases.
As part of this strategic shift, Nukkleusl incorporated a new subsidiary in Delaware, Nukkleus Defense Technologies, Inc., to focus on the commercialization of third-party defense-related products, technologies and solutions (including the Blade Ranger products) and to explore the development and commercialization of proprietary solutions targeting defense and aerospace markets.
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Mandragola Aviation Joint Venture
On August 28, 2025, the Company, Nukk Picolo Ltd., a wholly-owned Israeli subsidiary of ours, and Mandragola Ltd., an Israeli company (“Mandragola”) entered into a Joint Venture Agreement (the “JV Agreement”). Pursuant to the terms of the JV Agreement, the parties will establish a joint venture company in Israel (the “JV Company”) which is intended to establish advanced manufacturing zones in both the Baltics and Israel, designed to support civil and defense aviation needs. Plans also include the development of a NATO-compliant logistics hub in Riga in cooperation with additional regional partners, as well as facilities dedicated to licensed maintenance and repair (MRO) services, aircraft modernization, resale, and leasing, including the deployment of the de-icing technology for commercial aircrafts which the Company recently licensed (on an exclusive basis) from Blade Ranger Ltd. Pursuant to the JV Agreement, Nukk Picolo will hold 51% equity interest in the JV Company. The JV Agreement provides that, under certain specified conditions, we can require Mandragola sell to us its participating interest in the JV Company in consideration for the issuance of Nukkleus’ common stock based on the then specified valuation of JV Company as set forth in the JV Agreement.
Mandragola is a Israeli business development and investment company specializing in advanced technologies and strategic partnerships. Under the JV Agreement, Mandragola has undertaken to provide to the JV Company a 24 month committed credit line of up to $2 million on an as needed basis.
Nukk Picolo has the right to designate three of the five member board of the JV Company with Mandragola designating the remaining two directors.
Under the JV Agreement, we issued to Mandragola 310,000 restricted shares of common stock, five year warrants to purchase 250,000 shares of Nukkleus’ common stock at a per share exercise price of $4.40 and five year warrants for an additional 350,000 shares at a per share exercise price of $6.00 (the “Performance Warrants”). The Performance Warrants only vest upon the JV Company achieving $25 million cumulative revenue. If the revenues targets are not achieved by the JV Company within the five-year period, the Performance Warrants expire.
ITS and Positech
On February 16, 2026, T3 Defense acquired 51% of the outstanding equity capital of I.T.S. Industrial Tecno-logic Solutions Ltd. (“ITS”) on a fully diluted basis. We have a 3- year option to acquire the remainder 49% from the other shareholder of ITS.
ITS is an Israeli company providing design, development, production, and manufacturing of serial, fully integrated electro-mechanical machines and sophisticated assembly lines. Positech Ltd., its wholly-owned subsidiary, designs and manufactures top-of-the-line, high-performance motion control systems for military and civilian use. ITS and Positech provide small to middle-series one-stop shop “Build to Spec” & “Build to print” custom-made prototypes and OEM systems in the mechanical, electrical, hardware, firmware and software engineering fields.
The acquisition was consummated pursuant to the terms of the Agreement dated June 8, 2025 (the “Agreement”) among Star 26, ITS and its controlling shareholder Gera Eron. As of February 15, 2026, the Company has lent ITS an aggregate of NIS 10,000,000 (approximately $3,235,500), with interest accruing at the annual rate of the Israeli Consumer Price Index plus 4%. Pursuant to the Agreement, the loans shall only be repaid after January 1, 2027 if (i) the aggregate amount of the assets of ITS will be at least 150% higher than the liabilities for at least 6 continuous months and (ii) the total aggregate amount of bank credit provided to ITS and Positech shall be lower than an aggregate of 3 months of income generated by ITS and Positech for 6 continuous months.
In consideration for the loan, Star received 51% of the share capital of ITS on a fully diluted basis. Neither Star nor the Company is required to provide any additional consideration for the ITS shares.
Pursuant to the terms of the Agreement, Star was also granted an exclusive option to purchase the remainder 49% of ITS for three years from the controlling shareholder. Depending on whether the option is exercised in the first, second or third year hereafter, the agreed purchase price for the 49% is 25 million NIS, 30 million NIS or 35 million NIS, respectively. The Agreement also provides for additional loans to be made, and all such loans were made. The loans we made are only to be repaid from cash flow surpluses after ITS has provided for its working capital required and growth financing requirements and also after reducing its liabilities to banking institutions. Strategic decisions require the consent of Gera Eron, including any amendments to the articles of association, the capital structure of ITS or Positech, raising capital and acquisitions.
The audited financial statements of ITS, including its wholly-owned subsidiary Positech, as well as pro forma financial statements, were filed with the SEC under a Form 8-K/A on April 1, 2026.
Business Description
ITS is an Israeli engineering and manufacturing company specializing in the serial production of complex electro-mechanical machines and integrated production systems on a build-to-spec and build-to-print basis. ITS provides end-to-end engineering and manufacturing solutions—from initial concept and prototyping through full-scale assembly line deployment—using a Design for Manufacturing (“DFM”) methodology that enables advanced products to be manufactured reliably and at scale. In plain terms, ITS designs and builds the specialized production lines and machines that its customers need to manufacture their own complex products in volume. The company’s services encompass mechanical and electrical engineering design, precision machining, firmware and software development, supply chain management, and factory deployment.
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ITS serves customers across multiple sectors, including defense and security technologies, digital three-dimensional printing, agricultural technology and smart farming systems, advanced industrial automation, and specialized research and development and innovation systems. ITS’s named customers include Netafim Ltd. (a global leader in smart irrigation and agricultural technology), Tritone Technologies Ltd. (a metal additive manufacturing company), and several other Israeli technology and defense companies.
History and Structure
For over 30 years, ITS has specialized in engineering and manufacturing integrated electro-mechanical machines, advanced production systems, and assembly lines for defense and industrial applications. In 2016, ITS acquired a 51% controlling stake in Positech Ltd. (“Positech”) and acquired full ownership in 2021, making Positech a wholly-owned subsidiary of ITS.
ITS reported revenues of approximately $6,395,000 and $4,549,000 for the fiscal years ended December 31, 2024 and December 31, 2025, respectively, but has not been included in the Company’s 2025 Financial Statements.
Market Opportunity and Growth
ITS operates in the defense and advanced manufacturing sectors, serving customers that require precision-engineered production systems for complex electro-mechanical products. The company’s market opportunity is driven by growing demand for reliable, scalable manufacturing solutions in Israel’s defense industrial base, as well as in commercial sectors including agricultural technology, additive manufacturing (3D printing), and industrial automation. Israel’s defense industry, which supports three companies in SIPRI’s Top 100 global arms producers with combined revenues of approximately $16.2 billion in 2024, relies on a domestic ecosystem of specialized manufacturers and subcontractors such as ITS to deliver the production infrastructure required for defense programs. Increased global defense spending and the expansion of Israel’s defense export market—which reached a record $14.8 billion in 2024—create additional demand for manufacturing capacity within the Israeli defense supply chain. ITS has not secured new customers or contracts since the Company’s acquisition; however, management believes the company’s integration into the T3 Defense group may create opportunities for expanded business development over time.
Competition and Competitive Advantage
ITS competes with a number of Israeli and international engineering and contract manufacturing companies, including Flex Ltd. (a global electronics manufacturing services provider), Dagesh, Ziv-Av Engineering Ltd., I. Sherman, and ZUK Systems. The defense and industrial contract manufacturing market is characterized by a significant number of specialized participants, long-standing customer relationships, and high barriers to entry driven by the need for precision engineering capabilities, defense-grade quality standards, and specialized know-how. ITS’s competitive advantages include over 30 years of experience in bridging design-to-production with DFM expertise for cost-effective serial manufacturing; end-to-end capabilities from concept and prototyping through full assembly line deployment; the ability to serve diverse sectors including defense, agricultural technology, additive manufacturing, and industrial automation with customized build-to-spec and build-to-print solutions; and a proven track record with established Israeli defense and technology companies.
Human Capital
ITS currently employs approximately 39 people in Israel, including mechanical and electrical engineers, machining specialists, firmware and software developers, and production technicians.
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Sales and Marketing
ITS employs one to two persons dedicated to sales and business development activities. Sales efforts are focused on defense prime contractors, technology companies, and industrial clients through direct engagements and customized build-to-spec and build-to-print proposals. ITS has established long-standing relationships with customers in the Israeli defense ecosystem and in commercial sectors including agricultural technology and additive manufacturing. Marketing efforts include participation in defense and technology industry events and direct technical demonstrations of the company’s engineering and manufacturing capabilities.
Government Regulations
ITS is subject to Israeli Ministry of Defense regulations applicable to defense-related manufacturing, including export controls on defense items and technologies. As a subsidiary of a U.S. public company, ITS’s activities involving technology transfers or international sales are subject to U.S. International Traffic in Arms Regulations (ITAR), Export Administration Regulations (EAR), cybersecurity standards applicable to defense systems, and anti-corruption laws including the U.S. Foreign Corrupt Practices Act (FCPA). ITS does not currently receive any governmental funding, grants, or R&D support. There are no royalties owed to any third parties. No material regulatory violations have been reported.
Intellectual Property
ITS does not currently hold any registered patents, pending patent applications, registered trademarks, or pending trademark applications. ITS’s principal intellectual property consists of unregistered manufacturing know-how developed over more than 30 years of engineering and production experience, including proprietary DFM methodologies, process expertise, and technical knowledge related to the design and construction of complex electro-mechanical production systems. ITS has not granted, and has not been granted, any material intellectual property licenses.
Positech Ltd.
Business Description
Positech, a wholly-owned subsidiary of ITS, is an Israeli defense engineering company specializing in the multi-disciplinary mechanical design, engineering, assembly, and production of customized servo motion control systems for mission-critical defense platforms. The company develops high-precision direct-drive, gearless motion technologies that provide accurate stabilization, tracking, and pointing capabilities for sensors, radar systems, communications platforms, electro-optical and infrared payloads, and remote weapon stations. In plain terms, Positech builds the motorized pedestals and turrets that allow defense systems—such as radar dishes, cameras, and weapon stations—to rotate, aim, and stabilize with extreme precision, even on moving vehicles, ships, or aircraft. Positech’s direct-drive technology eliminates mechanical gears, which reduces maintenance requirements and eliminates backlash (the small amount of play or looseness that occurs in geared systems), resulting in smoother, more accurate, and more reliable motion. Positech’s systems are deployed across land, sea, and air defense environments where reliability, accuracy, and durability are essential for operational performance. Positech was funded in 2001.
Positech reported revenues of approximately $3,053,000 and $1,600,000 for the fiscal years ended December 31, 2024 and December 31, 2025, respectively, but has not been included in the Company’s 2025 Financial Statements.
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Market Opportunity and Growth
Positech operates in the defense motion control and stabilization systems market, serving customers that require high-precision pointing, tracking, and stabilization capabilities for mission-critical platforms. The market for precision motion control in defense applications is driven by increasing demand for advanced radar, electro-optical, and communication systems across land, sea, and air platforms; the proliferation of remote weapon stations requiring high-accuracy stabilization; and the broader growth in global defense spending and Israel’s record defense export market. As a direct supplier to Israel’s largest defense companies, Positech benefits from the continued investment by these companies in new platforms and systems. Positech has recently secured three new contracts from Israel Aerospace Industries (IAI) and a new contract with Kappasense, demonstrating continued demand for its capabilities.
Competition and Competitive Advantage
Positech competes with a number of Israeli and international providers of precision motion control and stabilization systems for defense applications, including Novatec Ltd., Orbit Communication Systems Ltd. (specifically its Orbit CS division), Capture Ltd., and BL. The defense motion control market is specialized and characterized by high barriers to entry, including the need for deep expertise in direct-drive motor technology, stringent defense-grade quality and reliability requirements, and long qualification cycles with defense prime contractors. Positech’s competitive advantages include its proprietary direct-drive, gearless motor technologies that deliver zero-backlash, high-dynamics stabilization and pointing performance; its ability to provide fully customized servo motion systems tailored to specific platform requirements; its established relationships with Israel’s largest defense companies, including IAI/Elta and Rafael Advanced Defense Systems; and over 20 years of accumulated know-how in designing and manufacturing motion control systems for demanding defense environments.
Human Capital
Positech currently employs approximately 14 people in Israel, including mechanical and electrical engineers, motion control specialists, and production technicians. The team specializes in the design, engineering, and production of high-precision servo motion systems. Positech does not have dedicated sales personnel; business development activities are conducted through its parent company ITS and by Positech’s management directly.
Legal Proceedings
As of the date of this report, Positech is involved in a legal proceeding with a former employee. Management does not believe that the outcome of this matter will have a material adverse effect on the company’s business, financial condition, or results of operations of Positech.
Government Regulations
Positech is subject to Israeli Ministry of Defense regulations applicable to defense-related manufacturing and the production of defense subsystems. As an indirect subsidiary of a U.S. public company, Positech’s activities involving defense items, technology transfers, or international sales are subject to U.S. International Traffic in Arms Regulations (ITAR), Export Administration Regulations (EAR), cybersecurity standards applicable to defense systems, and anti-corruption laws including the U.S. Foreign Corrupt Practices Act (FCPA). Positech does not currently receive any governmental funding, grants, or R&D support. There are no royalties owed to any third parties. No material regulatory violations have been reported.
Intellectual Property
Positech does not currently hold any registered patents, pending patent applications, registered trademarks, or pending trademark applications. Positech’s principal intellectual property consists of unregistered know-how developed over more than 20 years of engineering and production experience, including proprietary expertise in direct-drive motor design, gearless motion control systems, and customized servo stabilization technologies for defense applications. Positech has not granted, and has not been granted, any material intellectual property licenses.
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Darwin Tokens
On July 30, 2025, the Company entered into a Warrant to Purchase Tokens agreement with Synthetic Darwin LLC (“Darwin”), pursuant to which the Company paid a purchase price of $500 in exchange for the right to purchase up to 200,000,000 tokens (the “Warrant Tokens”) at escalating exercise prices ranging from $0.02 to $0.50 per token. The warrant is exercisable in four tranches of 50,000,000 tokens each over a twelve-month period and expires one year from the issue date. The warrant may be exercised for cash, by issuance of the Company’s common stock, by net exercise, or through other agreed forms of payment.
Tokens issued upon exercise are subject to a six-month transfer restriction, subject to certain parity protections. The agreement also provides anti-dilution style protections, including entitlement to a pro rata portion of future token issuances, forks, or increases in total token supply.
At the time of initial acquisition in July 2025, the Company exercised a warrant to acquire 50 million tokens in exchange for the issuance of 147,710 shares of common stock of the Company at a total exercise price of $1,000 thousands. In addition, on October 8, 2025, the Company exercised the second tranche and issued 375,000 shares of common stock of the Company to acquire another 50 million tokens at a total exercise price of $3,360 thousands.
Darwin is a blockchain-based digital token issued and recorded on a distributed ledger. The token may be transferable and trades at market-determined prices on digital asset platforms. The token does not represent an equity interest or contractual claim to assets or cash flows of Darwin.
Corporate Office
T3 Defense’s principal executive office is 575 Fifth Ave, 14th Floor, New York, New York 10017. The Company also has an office at 5 Hagvish, Netanya, Israel. Our main telephone number is 212-791-4663. We maintain a website at www.t3dfns.com through which we make available free of charge our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements on Schedule 14A, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such materials with, or furnish them to, the Securities and Exchange Commission (the “SEC”). Alternatively, you may also access our reports at the SEC’s website at www.sec.gov. Information contained on or accessible through our website is not, and should not be considered, part of, or incorporated by reference into, this annual report.
Employees
T3 and its subsidiaries employ 105 employees, of which 2 work directly for T3, 39 employees work for ITS, 11 for Positech, 14 for Tiltan, 17 for Nukk Picolo Ltd., 18 for Rimon, 2 for Water IO and 2 for Nimbus.
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MANAGEMENT
Directors and Executive Officers
The following table sets forth certain information with respect to our directors and executive officers as of May 29, 2026.
| Name | Age | Position | ||
| Menachem Shalom | 50 | Chief Executive Officer and Director | ||
| Morel Levi | 33 | Chief Financial Officer | ||
| Shiran Fridman | 39 | Director | ||
| Tomer Nagar | 38 | Director | ||
| Asaf Nachum | 49 | Director |
Set forth below is a brief description of the background and business experience of our current executive officers and directors.
Menachem Shalom has been our Chief Executive Officer and member of our Board of Directors since September 2024. Mr. Shalom also serves as the Chief Executive Officer, President and Chairman of the Board of Directors of Star 26 Capital, Inc. since January 2024, as well as the Chairman of B. Rimon Agencies Ltd., a wholly owned operating subsidiary of Star 26 and operator of Israeli defense business. Mr. Shalom has served as a director and the Chief Executive Officer of Motomova Inc (OTC Markets: MTMV) since December 1, 2022 and its Secretary since May 24, 2023. Mr. Shalom was the Co-Chief Executive Officer, and a member of the board of directors of MEA since January 2022. Since 2017, Mr. Shalom has also served as CEO of Hold Me Ltd., a digital platform for mobile wallet and payments founded by Mr. Shalom. Mr. Shalom is the principal executive and financial officer and sole director of Hold Me Ltd., a company registered with the Securities and Exchange Commission. Prior to his tenure with the Company, Mr. Shalom founded and served as CEO of Wayerz Solutions, Ltd., a digital platform for correspondent banking and wires’ routing optimization, between 2014 and 2017 and as Vice President of Business Development, Sales and Marketing at Dsnr Media Group Ltd., an international cross-platform digital advertising company. Mr. Shalom also founded and served as CEO of Mipso Ltd., a software-as-a-service provider in the fashion and retail industry, between 2010 and 2013; ooga studio Ltd., an industrial design incubator, between 2007 and 2010; and Medifreeze Ltd., a startup in the area of stem cell cryopreservation, between 2004 and 2009. Mr. Shalom received his MBA at the Hebrew University of Jerusalem in 2003 after receiving an LLM in corporate law at Columbia University School of Law in 2000.
Morel Levi has been our Chief Financial Officer since December 8, 2025. Mr. Levi also serves as the Chief Financial Officer of Nukk Picolo and has entered into an employment agreement with Nukk Picolo. Mr. Levi has also been the Financial Controller of Nukk Picolo since August 1, 2025. Prior to his employment with Nukk Picolo, Mr. Levi was the Controller at Blender Financial Technologies Ltd. from December 2022 through July 2025. Prior to his employment at Blender Financial Technologies Ltd., Mr. Levi worked at Kost Forer Gabbay & Kasierer (EY Israel) from October 2020 through November 2022. Mr. Levi holds a B.A. in Economics and Accounting from the Ruppin Academic Center and is also a Certified Public Accountant.
Tomer Nagar has been a member of our Board of Directors since November 2024. Mr. Nagar has been employed in the sales department for Sogolowek Food Group since 2019. Prior to joining Sogolowek, Mr. Nagar served in the Israeli Air Force from 2006 through 2018 as a First Sergeant and Master Sergeant. Mr. Nagar graduated from the Israeli Air Force College in 2005 with a degree in Aviation Machinery.
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Shiran Fridman has been a member of our Board of Directors since May 19, 2026. Since 2025, Ms. Fridman has been an independent business and financial consultant. From 2007 through 2025 she was an investment manager at Four Seasons Real Estate in Israel.
Asaf Nachum has been a member of our Board of Directors since May 19, 2026. Mr. Nachum is an independent investment advisor and portfolio manager.
Board of Directors
Directors on our Board of Directors are elected for one-year terms and serve until the next annual security holders’ meeting or until their death, resignation, retirement, removal, disqualification, or until a successor has been elected and qualified. All officers are appointed annually by the Board of Directors and serve at the discretion of the Board. Currently, each director receives annual compensation of $20,000 for their services on our Board.
We reimburse our directors for expenses incurred in connection with attending directors’ meetings. We will consider applying for officers and directors’ liability insurance at such time when we have the resources to do so.
Director Independence
Nasdaq listing rules require that a majority of the board of directors of a company listed on Nasdaq be composed of “independent directors,” which is defined generally as a person other than an officer or employee of the Company or its subsidiaries or any other individual having a relationship, which, in the opinion of the Company’s board of directors, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director. Our board of directors has determined that each of Shiran Fridman, Asaf Nachum and Tomer Nagar is an independent director under the Nasdaq listing rules and Rule 10A-3 of the Exchange Act. In making these determinations, the board of directors considered the current and prior relationships that each non-employee director has with the Company and will have with the combined company and all other facts and circumstances our board of directors deemed relevant in determining independence, including the beneficial ownership of our Common Stock by each non-employee director, and the transactions involving them described in the section entitled “Certain Relationships and Related Transactions.”
Committees of the Board of Directors
The standing committees of our board of directors consist of an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee. Below are our current committee members.
| Audit Committee | Compensation
Committee |
Nominating
and Corporate Governance Committee | ||
| Shiran Fridman± | Shiran Fridman * | Shiran Fridman * | ||
| Asaf Nachum * | Asaf Nachum | Asaf Nachum | ||
| Tomer Nagar | Tomer Nagar | Tomer Nagar |
| * | Denotes Chairperson. |
| ± | Denotes audit committee financial expert. |
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Audit Committee
The Company’s Audit Committee consists of Asaf Nachum, Shiran Fridman and Tomer Nagar, each of whom are independent directors and are “financially literate” as defined under the Nasdaq listing standards. The Board has determined that Shiran Fridman, who serves as the Chairperson of the Audit Committee, qualifies as an “audit committee financial expert,” as defined under rules and regulations of the SEC.
The Audit Committee is responsible for overseeing management’s implementation of effective internal accounting and financial controls, supervising matters relating to audit functions, reviewing and setting internal policies and procedures regarding audits, accounting and other financial controls, reviewing the results of our audit performed by the independent public accountants, and evaluating and selecting the independent public accountants. The Audit Committee has adopted an Audit Committee Charter, which is available on our website at http://www.t3dfns.com.
Compensation Committee
The Company’s Compensation Committee consists of Asaf Nachum, Shiran Fridman and Tomer Nagar. Shiran Fridman serves as Chairperson of the Compensation Committee.
The Compensation Committee determines matters pertaining to the compensation of our named executive officers and administers our stock option and incentive compensation plans. The Compensation Committee has adopted a Compensation Committee Charter, which is available on our website at http://www. t3dfns.com.
Nominating and Corporate Governance Committee
The Company’s Nominating and Corporate Governance Committee consists of Asaf Nachum, Shiran Fridman and Tomer Nagar. Shiran Fridman serves as Chairperson of the Compensation Committee.
The Nominating and Corporate Governance Committee is responsible for overseeing the selection of persons to be nominated to serve on the Board and implementing the Company’s corporate governance policies. The Nominating and Corporate Governance Committee considers persons identified by its members, management, shareholders, investment bankers and others.
The Nominating and Corporate Governance Committee has adopted a Nominating and Corporate Governance Committee Charter, which is available on our website at http://www. t3dfns.com.
Family Relationships
No family relationship exists between any director, executive officer, or any person contemplated to become such.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our directors, executive officers and persons who own more than 10% of our common stock to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other of our equity securities. During the year ended December 31, 2025, we believe all of our officers, directors and 10% stockholders made the required filings pursuant to Section 16(a), except Morel Levi failed to file a Form 3 upon becoming an insider on December 8, 2025.
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Involvement in Certain Legal Proceedings
None of our directors or executive officers has, during the past ten years:
| ● | had any bankruptcy petition filed by or against any business of which he was a general partner or executive officer, either at the time of the bankruptcy or within two years prior to that time; |
| ● | been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences); |
| ● | been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities, futures, commodities or banking activities; |
| ● | been found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; |
| ● | been subject or a party to or any other disclosable event required by Item 401(f) of Regulation S-K. |
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics Policy (the “Code of Ethics”) that applies to all directors and officers, which is available on our website at https://www. t3dfns.com. The Code of Ethics describes the legal, ethical and regulatory standards that must be followed by the directors and officers of the Company and sets forth high standards of business conduct applicable to each director and officer. As adopted, the Code of Ethics sets forth written standards that are designed to deter wrongdoing and to promote, among other things:
| ● | honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; |
| ● | compliance with applicable governmental laws, rules and regulations; |
| ● | the prompt internal reporting of violations of the Code of Ethics to the appropriate person or persons identified in the code; and |
| ● | accountability for adherence to the Code of Ethics. |
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EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to our named executive officers (including director compensation) during the fiscal years ended December 31, 2025 and 2024.
| Name
and principal position | Year | Salary ($) | Bonus ($) | Stock awards ($) | Option awards ($) | Nonequity incentive plan compensation ($) | Nonqualified deferred compensation earnings ($) | All
other compensation ($) | Total ($) | |||||||||||||||||||||||||||
| Menachem Shalom | 2025 | 310,000 | - | 3,637,500 | - | - | - | 20,000 | 3,967,500 | |||||||||||||||||||||||||||
| CEO | 2024 | 80,000 | - | 695,000 | - | - | - | 8,333 | 783,333 | |||||||||||||||||||||||||||
| Morel Levi | 2025 | 5,750 | - | 24,250 | - | - | - | - | 30,000 | |||||||||||||||||||||||||||
| CFO | 2024 | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
Employment Agreements
Menachem Shalom was appointed as a director on July 24, 2024. On December 16, 2024, the Company entered into a Consultancy Agreement with Menachem Shalom, the Company’s CEO, effective September 1, 2024. Pursuant to the agreement, Mr. Shalom is employed as Chief Executive Officer of the Company unless terminated pursuant to the terms of the agreement. During the initial term of the agreement (September 2024 through February 2025), Mr. Shalom is entitled to receive $20,000 monthly, with subsequent semi-annual $5,000 monthly increases effective March 2025 & September 2025.
On February 17, 2026, the Board of Directors, based on the recommendations and approval of the Compensation Committee, approved the terms of the terms and provisions of a Consulting Agreement between the Company and Billio Ltd., a company in Israel, to provide the services of Menachem Shalom as the principal executive officer of the Company. The consulting agreement terminates and supersedes the previous consulting agreements between the Company and affiliates of Mr. Shalom.
Given the performance of the Company within the last 15 months, the Compensation Committee and the Board of Directors determined that it was in the best interest of the Company to provide Mr. Shalom with the amended consulting agreement and increased compensation. The Committee and the Board also authorized a cash bonus to Mr. Shalom in the amount of $250,000 for his past services to the Company. The Company, under the supervision and guidance of Mr. Shalom, has completed several acquisitions within the last 15 months, including without limitation, Star 26, Tiltan Software Engineering, Nimbus Drones and ITS.
Pursuant to the terms of the Consulting Agreement, which is effective as of January 1, 2026, Mr. Shalom will continue to act as the chief executive officer of the Company while maintaining other executive roles in non-completing companies. For his services, Mr. Shalom will receive a base salary of $60,000 per month and target cash bonuses equal to 50% of base salary, subject to achievement of performance goals to be set by the Compensation Committee. He could also be entitled to additional milestone-based bonuses as determined by the Board. Mr. Shalom will receive 250,000 shares of common stock quarterly, subject to availability under approved incentive plans; if there is no plan or no availability, the quarterly amount of shares shall accrue until there is availability under an approved incentive plan. Such plan will also require shareholder approval pursuant to applicable Nasdaq rules. He will also be entitled to a relocation grant of $175,000 if Mr. Shalom relocates to the United States with his family. Mr. Shalom will also be entitled to all executive benefit plans including health and 401(k) plans and 30 business days per year vacation.
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In the event Mr. Shalom is terminated for cause or is no longer employed by the Company for reason of death or disability, he shall only be entitled to his compensation at such time. If he is terminated by the Company without cause, he shall be entitled to 6 months of his base compensation, and if Mr. Shalom resigns, he shall be entitled to compensation for 12 months. If he is terminated for cause, Mr. Shalom shall not be entitled to any compensation.
The Consulting Agreement contains customary non-competition, non-solicitation and confidentiality provisions.
On April 8, 2025, the Board adopted the Company’s Policy for the Recovery of Erroneously Awarded Compensation, in accordance with Nasdaq Rule 5608 (“Clawback Policy”). The Clawback Policy provides for the reasonably prompt recovery by the Company of Incentive Based Compensation paid to a Covered Person (an executive officer and certain other specified senior employees), to the extent erroneously awarded, following an Accounting Restatement by the Company. The Clawback Policy applies to all Incentive Based Compensation paid after the date of adoption of the Clawback Policy.
On December 8, 2025, the Board appointed Morel Levi as the Chief Financial Officer of the Company, effective as of December 8, 2025. Mr. Levi receives a salary of $7,500 per month for serving as the Company’s Chief Financial Officer. Mr. Levi did not receive any compensation from the Company during the fiscal year ended December 31, 2024.
Option Exercises and Stock Vested
There were no options exercised by our executive officers or stock vested to our executive officers during the fiscal year ended December 31, 2025.
Outstanding Equity Awards
The following table sets forth information with respect to the outstanding equity awards of our named executive officers as of December 31, 2025:
| Outstanding Equity Awards | ||||||||||||||||||||||||||||||||||||
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
| Number of
securities underlying unexercised options exercisable |
Number of securities underlying unexercised options unexercisable |
Equity incentive plan awards: Number of securities underlying unexercised options |
Options exercise price | Option expiration | Number of shares or units of stock that have not vested | Market value of shares or units of stock that have not vested | Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested | Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested | ||||||||||||||||||||||||||||
| Name | (#) | (#) | (#) | ($) | date | (#) | ($) | (#) | ($) | |||||||||||||||||||||||||||
| Menachem Shalom | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
| Morel Levi | ||||||||||||||||||||||||||||||||||||
| - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||
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No Pension Benefits
The Company does not maintain any plan that provides for payments or other benefits to its executive officers at, following or in connection with retirement and including, without limitation, any tax-qualified defined benefit plans or supplemental executive retirement plans.
No Nonqualified Deferred Compensation
The Company does not maintain any defined contribution or other plan that provides for the deferral of compensation on a basis that is not tax-qualified.
Non-Employee Director Compensation
The following table sets forth all information concerning all cash and non-cash compensation awarded to, earned by or paid to our non-employee directors during the fiscal year ended December 31, 2025.
| Non-Employee Director Compensation | ||||||||||||||||||||||||||||
| Fees Earned or Paid in Cash | Stock Awards | Option Awards | Non-equity Incentive Plan Compensation | Change in Pension Value and Non-Qualified Deferred Compensation | All Other Compensation | Total | ||||||||||||||||||||||
| Name | ($) | ($) | ($) | ($) | Earnings ($) | ($) | ($) | |||||||||||||||||||||
| Reuven Yeganeh (1) | 20,000 | 48,500 | - | - | - | - | 68,500 | |||||||||||||||||||||
| Anastasiia Kotaieva (1) | 16,667 | - | - | - | - | - | 16,667 | |||||||||||||||||||||
| David Rokach (2) | 20,000 | 24,250 | - | - | - | - | 44,250 | |||||||||||||||||||||
| Tomer Nagar (3) | 20,000 | 24,250 | - | - | - | - | 44,250 | |||||||||||||||||||||
| Aviya Volodarsky (3) | 20,000 | 24,250 | - | - | - | - | 44,250 | |||||||||||||||||||||
| (1) | Mr. Yeganeh and Ms. Kotaieva were appointed as directors on June 13, 2024. Ms. Kotaieva’s term as a director ended on November 6, 2025. Mr. Yaganeh resigned on May 19, 2026. |
| (2) | Mr. Rokach was appointed as director on July 24, 2024, and served until his resignation on May 19, 2026. |
| (3) | Mr. Nagar & Ms. Volodarsky were appointed as directors on November 8, 2024. Ms. Volodarsky’s term as a director ended on February 23, 2026. |
Each of Ms. Fridman and Mr. Nachum, who were appointed on May 19, 2026, are entitled to $5,000 per quarter they serve as directors of the Company and 5,000 shares of common stock of the Company.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of May 29, 2026 with respect to the beneficial ownership of our Common Stock, the sole outstanding class of our voting securities, by (i) any person or group owning more than 5% of each class of voting securities, (ii) each director, (iii) each named executive officer, and (iv) all executive officers and directors as a group. Except as otherwise indicated, each of the stockholders listed below has sole voting and investment power over the shares beneficially owned, based on 68,270,525 shares of Common Stock issued and outstanding as of such date.
Beneficial ownership is determined under the rules of the Securities and Exchange Commission and generally includes voting or investment power over securities. Except in cases where community property laws apply or as indicated in the footnotes to this table, we believe that each stockholder identified in the table possesses sole voting and investment power over all shares of common stock shown as beneficially owned by the stockholder.
Shares of common stock subject to options or warrants that are currently exercisable or exercisable within 60 days of the date of this report are considered outstanding and beneficially owned by the person holding the options for the purpose of computing the percentage ownership of that person but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.
| Named Executive Officers and Directors | Position | Number
of Shares of Common Stock | Percentage of Common Stock | |||||||
| Menachem Shalom(1) | CEO and Director | 14,859,080 | 19.7 | % | ||||||
| Morel Levi | CFO | 5,000 | * | |||||||
| Shiran Fridman | Director | 0 | * | |||||||
| Tomer Nagar | Director | 15,000 | * | |||||||
| Asaf Nachum | Director | 0 | * | |||||||
| Total Officers and Directors (5 people) | 14,879,080 | 19.7 | % | |||||||
| 5% Stockholders | ||||||||||
| VisionWave Holdings Inc.(2) | 6,000,000 | 8.79 | % | |||||||
| Esousa Group Holdings LLC(3) | 7,577,186 | 9.99 | % | |||||||
| (1) | Consists of 7,683,418 shares of Common Stock and 7,175,662 shares of Common Stock issuable upon exercise of warrants held by Menachem Shalom. |
| (2) | Represents shares of common stock held as of record by VisionWave Holdings Inc. (NASDAQ: VWAV). The address of the principal business office of VisionWave Holdings Inc. is 1063 N. Spaulding Ave., West Hollywood, CA 90046. |
| (3) | Consists of 719 shares of Common Stock, 4,460,095 shares of Common Stock issuable upon the conversion of units of Series B Preferred Stock, and 3,116,372 shares of Common Stock issuable upon exercise of warrants held by Esousa Group Holdings LLC (“Esousa”). Excludes 4,037,912 additional shares of Common Stock issuable upon exercise of warrants held by Esousa as the terms of such warrants limit the exercise such that beneficial ownership does not exceed 9.99%. Esousa holds 190 shares of Series B Preferred Stock which are currently convertible into 4,460,095 shares of Common Stock (assuming an Initial Conversion Price of $2.13) and Common Warrants to purchase an aggregate of 6,690,142 shares of Common Stock at an exercise price of $2.13 per share, and additional Common Warrants to purchase an aggregate of 464,142 shares of Common Stock at an exercise price of $5.405 per share. The Series B Preferred Stock and the Common Warrants limit the conversion or exercise such that beneficial ownership does not exceed 9.9% or 9.99%, respectively. In accordance with Rule 13d-3(d) under the Exchange Act, also excludes the number of shares of Common Stock that Esousa may be required to purchase under the Equity Line of Credit (the “ELOC Purchase Agreement”) we entered into with Esousa in September 2025 because the issuance of such shares is solely at our discretion and is subject to conditions contained in the ELOC Purchase Agreement, the satisfaction of which are entirely outside of Esousa’s control. The purchases made by Esousa pursuant to the ELOC Purchase Agreement are also subject to a 9.99% beneficial ownership limitation. Michael Wachs, the owner of Esousa, has voting and dispositive control over the securities held by Esousa. The address of the reporting person is 211 East 43rd Street, Suite 402, New York, NY 10017. |
| * | Less than 1%. |
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SELLING STOCKHOLDERS
The Shares being offered by the Selling Stockholders are those issuable to the Selling Stockholders upon conversion of the Series B Preferred Stock and those issuable to the Selling Stockholders upon exercise of the Common Warrants. For additional information regarding the issuances of those securities, see “Prospectus Summary – February 2026 Private Placement” above. We are registering the Shares in order to permit the Selling Stockholders to offer the Shares for resale from time to time.
The table below lists the Selling Stockholders and other information regarding the beneficial ownership (as determined under Section 13(d) of the Exchange Act and the rules and regulations thereunder) of the shares of Common Stock by the Selling Stockholders. The second column lists the number of shares of Common Stock beneficially owned by the Selling Stockholders, based on their ownership as of May 29, 2026, assuming conversion of the Series B Preferred Stock and exercise of the Common Warrants held by the Selling Stockholders on that date.
The third column lists the Shares being offered by this prospectus by the Selling Stockholders and does not give effect to any limitations on conversion of the Series B Preferred Stock or any limitations on the exercise of the Common Warrants set forth therein.
In accordance with the terms of the Registration Rights Agreement with the Selling Stockholders, we are obligated to generally cover the resale of (i) 250% of the maximum number of Shares issuable upon conversion of the Series B Preferred Stock as of the date of the Securities Purchase Agreement based on the Initial Conversion Price and (ii) 250% of the maximum number of Shares issuable upon exercise of the Common Warrants as of the date of the Securities Purchase Agreement based upon the Initial Exercise Price, determined as if the outstanding shares of Series B Preferred Stock were converted in full and the outstanding Common Warrants were exercised in full, without giving effect to the cashless exchange of the Common Warrants, any limitations on the exercise of the Common Warrants or any limitations on the conversion of the Series B Preferred Stock. We have agreed with the Selling Stockholders to register in the registration statement of which this prospectus is a part less than the maximum number of Warrant Shares that may be issuable pursuant to the terms of the Common Warrants. The fourth column assumes the sale of all of the Shares offered by the Selling Stockholders pursuant to this prospectus.
Under the terms of the shares of Series B Preferred Stock and the Common Warrants, the Selling Stockholders may not convert the shares of Series B Preferred Stock or exercise the Common Warrants to the extent (but only to the extent) such Selling Stockholders, together with its affiliates and any other person whose beneficial ownership of Common Stock would be aggregated with the Selling Stockholder’s for purposes of Section 13(d) of the Exchange Act, would beneficially own in excess of 9.9% or 9.99%, respectively, of our then issued and outstanding shares of Common Stock following such conversion or exercise. The number of shares of Common Stock in the second, third and fourth columns do not reflect these limitations. The Selling Stockholders may sell all, some or none of its Shares in this offering. See “Plan of Distribution.”
| Name of Selling Stockholder | Common Stock Owned Prior to this Offering | Common Stock to be Sold in this Offering | Common Stock Owned After this Offering | Percent | ||||||||||||
| Esousa Group Holdings LLC (1) | 11,615,098 | 28,500,000 | 3,988,338 | 4.97 | % | |||||||||||
| Sixth Borough Capital Fund LP (2) | 298,356 | 750,000 | 97,653 | * | ||||||||||||
| Robert D. Keyser, Jr. (3) | 487,088 | 750,000 | 286,385 | * | ||||||||||||
| (1) | Includes (i) 4,460,095 shares of our Common Stock issuable upon the conversion of Series B Preferred Stock based upon an assumed conversion price of $2.13 per share, (ii) 6,690,142 shares of our Common Stock issuable upon the exercise of Common Warrants based upon the exercise price as of the date of the Securities Purchase Agreement, (iii) 719 held shares of our Common Stock, and (iv) 464,142 shares of our Common Stock issuable upon the exercise of additional Common Warrants at an exercise price of $5.405 per share. Excludes the number of ELOC Common Shares that Esousa may be required to purchase under the ELOC Purchase Agreement, because the issuance of such shares is solely at our discretion and is subject to conditions contained in the ELOC Purchase Agreement, the satisfaction of which are entirely outside of Esousa’s control. The purchases made by Esousa pursuant to the ELOC Purchase Agreement are also subject to a 9.99% beneficial ownership limitation. Michael Wachs serves as the sole Managing Member of Esousa Group Holdings LLC and has voting and dispositive control over the securities held by Esousa Group Holdings LLC. The address for Esousa Group Holdings LLC and Michael Wachs is 211 E 43rd St, Suite 402, New York, NY 10017. |
| (2) | Includes (i) 117,370 shares of our Common Stock issuable upon the conversion of Series B Preferred Stock based upon an assumed conversion price of $2.13 per share, (ii) 176,055 shares of our Common Stock issuable upon the exercise of Common Warrants based upon the exercise price as of the date of the Securities Purchase Agreement, and (iii) 4,931 shares of our Common Stock issuable upon the exercise of additional Common Warrants at an exercise price of $5.405 per share. Robert D. Keyser Jr. serves as the Managing Member of Sixth Borough Capital Fund, LP and has voting and dispositive control over the securities held by Sixth Borough Capital Fund, LP. The address for Sixth Borough Capital Fund LP is 1515 N. Federal Highway, #300, Boca Raton, FL 33432. |
| (3) | Includes (i) 117,370 shares of our Common Stock issuable upon the conversion of Series B Preferred Stock based upon an assumed conversion price of $2.13 per share, (ii) 176,055 shares of our Common Stock issuable upon the exercise of Common Warrants based upon the exercise price as of the date of the Securities Purchase Agreement, and (iii) 193,663 shares of our Common Stock issuable upon the exercise of additional Common Warrants at an exercise price of $2.13 per share. |
| * | Less than 1% |
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PLAN OF DISTRIBUTION
Each Selling Stockholders of the securities and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their securities covered hereby on Nasdaq or any other stock exchange, market or trading facility on which the securities are traded or in private transactions. These sales may be at fixed or negotiated prices. A Selling Stockholder may use any one or more of the following methods when selling securities:
| ● | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
| ● | block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction; |
| ● | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
| ● | an exchange distribution in accordance with the rules of the applicable exchange; |
| ● | privately negotiated transactions; |
| ● | settlement of short sales; |
| ● | in transactions through broker-dealers that agree with the Selling Stockholder to sell a specified number of such securities at a stipulated price per security; |
| ● | through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; |
| ● | a combination of any such methods of sale; or |
| ● | any other method permitted pursuant to applicable law. |
The Selling Stockholders may also sell securities under Rule 144 or any other exemption from registration under the Securities Act, if available, rather than under this prospectus.
Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholder (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2121; and in the case of a principal transaction a markup or markdown in compliance with FINRA Rule 2121.
In connection with the sale of the securities or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they assume. The Selling Stockholders may also sell securities short and deliver these securities to close out their short positions, or loan or pledge the securities to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
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The Selling Stockholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each Selling Stockholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the securities.
The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the securities. The Company has agreed to indemnify the Selling Stockholder against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
We agreed to keep this prospectus effective until the earlier of (i) the date on which the securities may be resold by the Selling Stockholders without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for the Company to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of similar effect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect.
The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the Selling Stockholder will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of the common stock by the Selling Stockholder or any other person. We will make copies of this prospectus available to the Selling Stockholder and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).
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DESCRIPTION OF SECURITIES
General
The Company is authorized to issue 150,000,000 shares of Common Stock, par value $0.0001, and 15,000,000 shares of preferred stock, par value $0.0001.
The following description of our capital stock and certain provisions of our certificate of incorporation and bylaws are summaries and are qualified by reference to our certificate of incorporation and our bylaws as currently in effect. Copies of the currently effective certificate of incorporation and bylaws were filed with the SEC as exhibits to our Annual Report on Form 10-K for the year ended December 31, 2025, filed on April 9, 2026.
As of May 29, 2026, the Company had 68,270,525 outstanding shares of Common Stock and 200 outstanding shares of preferred stock.
Common Stock
Holders of Common Stock are entitled to one vote per share on matters on which our stockholders vote. There are no cumulative voting rights. Subject to any preferential dividend rights of any outstanding shares of preferred stock, holders of Common Stock are entitled to receive dividends, if declared by the Board, out of funds that the Company may legally use to pay dividends. In the event of a liquidation or dissolution, holders of Common Stock are entitled to share ratably in our assets once our debts and any liquidation preference owed to any then-outstanding preferred stockholders are paid. The Company’s current certificate of incorporation does not provide the Common Stock with any redemption, conversion or preemptive rights. All shares of Common Stock that are outstanding as of the date of this joint proxy statement/prospectus will be fully-paid and non-assessable.
Preferred Stock
Our Board of Directors has the authority, without action by our stockholders, to designate and issue up to 15,000,000 shares, $0.0001 par value per share, of preferred stock in one or more series or classes and to designate the rights, preferences and privileges of each series or class, which may be greater than the rights of our Common Stock. The Board’s authority to issue preferred stock without stockholder approval could make it more difficult for a third party to acquire control of our company, and could discourage such attempt.
Series A Preferred Stock
Each share of Series A Preferred Stock has a stated value of $50,000 (the “Series A Stated Value”) and was initially convertible into 10,224 shares of Common Stock (the “Series A Conversion Shares”) (or pre-funded warrants in lieu thereof), calculated by dividing the Series A Stated Value by the initial conversion price equal to $4.89 per share of Series A Preferred Stock (the “Series A Initial Conversion Price”). Upon the Company obtaining stockholder approval of the transactions contemplated by the Securities Purchase Agreement, dated September 4, 2025 (the “Series A Securities Purchase Agreement”) and the related agreements at the special meeting of stockholders held on December 16, 2025 (the “December 2025 Special Meeting”), the Series A Initial Conversion Price was adjusted to the lower of (i) $4.72 per share and (ii) the price per share upon the earlier of (A) effectiveness of the registration statement registering the Series A Conversion Shares for resale or (B) upon applicability of Rule 144 under the Securities Act, as it relates to the sale of the Series A Conversion Shares. The Series A Initial Conversion Price is subject to further adjustment upon stock splits, distributions, reorganizations, reclassifications, change of control and the like, and is also subject to price-based anti-dilution adjustments for subsequent offerings made by the Company while the Series A Preferred Stock remains outstanding (subject to certain exempt issuances). Assuming a Series A Initial Conversion Price of $4.72 per share, each share of Series A Preferred Stock is convertible into 10,593 shares of Common Stock (or pre-funded warrants in lieu thereof). The shares of Series A Preferred Stock are subject to a blocker provision (the “Series A Preferred Blocker”), which restricts the conversion of the Series A Preferred Stock if, as a result of such conversion, the holder, together with its affiliates and any other person whose beneficial ownership of Common Stock would be aggregated with the holder’s for purposes of Section 13(d) of the Exchange Act, would beneficially own in excess of 9.9% of our then issued and outstanding shares of Common Stock (including the shares of Common Stock issuable upon such exercise).
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The Series A Preferred Stock are not entitled to receive dividends, other than on an as-converted basis if dividends are paid to holders of Common Stock.
The holders of Series A Preferred Stock do not have any voting rights, other than in connection with certain corporate actions that affect the rights of the Series A Preferred Stock. The holders of Series A Preferred Stock also have certain consent rights in connection with certain proposed fundamental transactions of the Company.
Series B Preferred Stock
Each share of Series B Preferred Stock has a stated value of $50,000 and is initially convertible into 23,474 Conversion Shares (or Pre-Funded Warrants in lieu thereof), calculated by dividing the Stated Value by the Initial Conversion Price equal to $2.13 per share of Series B Preferred Stock. The Initial Conversion Price is subject to adjustment upon stock splits, distributions, reorganizations, reclassifications, change of control and the like, and is also subject to price-based anti-dilution adjustments for subsequent offerings made by the Company while the Series B Preferred Stock remains outstanding (subject to certain exempt issuances). The Initial Conversion Price will also be adjusted upon receipt of Stockholder Approval as described herein. The shares of Series B Preferred Stock are subject to a blocker provision, which restricts the conversion of the Series B Preferred Stock if, as a result of such conversion, the holder, together with its affiliates and any other person whose beneficial ownership of Common Stock would be aggregated with the holder’s for purposes of Section 13(d) of the Exchange Act would beneficially own in excess of 9.9% of our then issued and outstanding shares of Common Stock (including the shares of Common Stock issuable upon such exercise).
The Series B Preferred Stock is convertible at the option of the holder at any time and will be automatically converted into Common Stock or Pre-Funded Warrants in lieu thereof on the effective date of this registration statement, whether or not the Stockholder Approval has been obtained. If at any time after the one-year anniversary of the closing of the February 2026 Private Placement, the Series B Preferred Stock is then outstanding and the Company has not received Stockholder Approval, the Series B Preferred Stock is redeemable at the option of the holder at a price per Share equal to 105% of the Stated Value.
The Series B Preferred Stock are not entitled to receive dividends, other than on an as-converted basis if dividends are paid to holders of Common Stock.
The holders of Series B Preferred Stock are entitled to 10,000 votes per each share of Series B Preferred Stock. The holders of Series B Preferred Stock have voting rights with respect to certain corporate actions that affect the rights of the Series B Preferred Stockholders and also have certain consent rights in connection with certain proposed fundamental transactions.
Dividends
The Company has not paid any cash dividends on shares of its Common Stock to date. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition and will be within the discretion of the Board. It is the present intention of the Board to retain all earnings, if any, for use in the Company’s business operations and, accordingly, the Board does not anticipate declaring any dividends in the foreseeable future.
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Anti-takeover provisions
Certificate of Incorporation and Bylaws
Provisions in our corporate charter and our bylaws may discourage, delay or prevent a merger, acquisition or other change in control of us that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of our Common Stock, thereby depressing the market price of our Common Stock. In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our Board of Directors. Because our Board of Directors is responsible for appointing the members of our management team, these provisions could in turn affect any attempt by our stockholders to replace current members of our management team. Among others, these provisions include the following.
| ● | The Board has the right to elect directors to fill a vacancy created by the expansion of the Board or the resignation, death or removal of a director, which will prevent stockholders from being able to fill vacancies on the Board; |
| ● | The Company’s certificate of incorporation prohibits cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; and |
| ● | The Board is able to issue, without stockholder approval, shares of undesignated preferred stock, which makes it possible for the Board to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire the Company. |
Section 203 of the Delaware General Corporation Law
The Company is subject to Section 203 of the Delaware General Corporation Law, or Section 203, which prohibits a Delaware corporation from engaging in any business combination with any interested stockholder for a period of three years after the date that such stockholder became an interested stockholder, with the following exceptions:
| ● | before such date, the Board approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; |
| ● | upon closing of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least eighty-five percent (85%) of the voting stock of the corporation outstanding at the time the transaction began, excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) those shares owned by: (i) persons who are directors and also officers; and (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or |
| ● | on or after such date, the business combination is approved by the Board and authorized at an annual or special meeting of the stockholders, and not by written consent, by the affirmative vote of at least 662⁄3% of the outstanding voting stock that is not owned by the interested stockholder. |
In general, Section 203 defines business combination to include the following:
| ● | any merger or consolidation involving the corporation and the interested stockholder; |
| ● | any sale, transfer, pledge or other disposition of ten percent (10%) or more of the assets of the corporation involving the interested stockholder; |
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| ● | subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder; |
| ● | any transaction involving the corporation that has the effect of increasing the proportionate share of the stock or any class or series of the corporation beneficially owned by the interested stockholder; or |
| ● | the receipt by the interested stockholder of the benefit of any loss, advances, guarantees, pledges or other financial benefits by or through the corporation. |
In general, Section 203 defines an “interested stockholder” as an entity or person who, together with the person’s affiliates and associates, beneficially owns, or within three years prior to the time of determination of interested stockholder status did own, fifteen percent (15%) or more of the outstanding voting stock of the corporation.
Public Warrants
Each whole warrant entitles the registered holder to purchase one whole share of our common stock at a price of $92.00 per share. Pursuant to the warrant agreement, a warrant holder may exercise its warrants only for a whole number of shares of common stock. This means that only a whole warrant may be exercised at any given time by a warrant holder.
We will not be obligated to deliver any shares of common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the shares of common stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to our satisfying our obligations described below with respect to registration. No warrant will be exercisable and we will not be obligated to issue shares of common stock upon exercise of a warrant unless common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants. In the event that the conditions in the two immediately preceding sentences are not satisfied with respect to a warrant, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In no event will we be required to net cash settle any warrant.
Listing
Our Common Stock and Public Warrants are listed on the Nasdaq Global Market under the symbols “DFNS” and “DFNSW”, respectively.
Transfer Agent and Registrar
The transfer agent for the Company is Continental Stock Transfer & Trust Company, 1 State St., 30th floor, New York, NY 10004, telephone: (212) 509-4000.
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CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Effective as of January 14, 2026, the Company dismissed GreenGrowth CPAs as the independent registered public accounting firm engaged to audit the Company’s financial statements. GreenGrowth’s dismissal was approved by the Board as of such date.
Effective as of January 14, 2026, the Company engaged Somekh Chaikin, a member firm of KPMG International, as the Company’s independent external auditors for the year ending December 31, 2025. The appointment of Somekh Chaikin, which was approved by the stockholders of the Company at the Company’s annual meeting held on November 6, 2025, is subject to completion of Somekh Chaikin’s client acceptance procedures.
GreenGrowth had served as the Company’s independent auditors since November 2023. GreenGrowth’s reports on the Company’s financial statements for the fiscal years ended December 31, 2024, September 30, 2024 and 2023, did not contain any adverse opinions or disclaimers of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles, except that such reports included explanatory paragraphs with respect to the Company’s ability, in light of its recurring losses from operations and a working capital deficit, to continue as a going concern.
During the fiscal years ended December 31, 2025 and 2024, and through January 14, 2026, there were no (a) disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K) with GreenGrowth on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to GreenGrowth’s satisfaction, would have caused GreenGrowth to make reference to the subject matter thereof in connection with its reports for such years; or (b) reportable events, as described under Item 304(a)(1)(v) of Regulation S-K.
During the fiscal years ended December 31, 2025 and 2024, and through January 14, 2026, neither the Company nor anyone on its behalf consulted with Somekh Chaikin regarding either (a) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report was provided nor oral advice was provided to the Company that Somekh Chaikin concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or (b) any matter that was either the subject of a disagreement (as defined in paragraph 304(a)(1)(iv) of Regulation S-K and the related instructions thereto) or a reportable event (as described in paragraph 304(a)(1)(v)) of Regulation S-K).
78
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Other than as disclosed below, since the beginning of our last fiscal year, there have been no transactions, or proposed transactions, in which our company was or is to be a participant where the amount involved exceeds the lesser of $120,000 or one percent of the average of our company’s total assets at year-end and in which any director, executive officer or beneficial holder of more than 5% of the outstanding common, or any of their respective relatives, spouses, associates or affiliates, has had or will have any direct or material indirect interest. We have no policy regarding entering into transactions with affiliated parties.
Star Agreement
As described above, on January 12, 2026, we closed our acquisition of 100% of the issued and outstanding capital stock of Star 26 pursuant to the terms of the Purchase Agreement, by and among the Company, Star 26, the shareholders of Star 26, and Menachem Shalom, as representative of the shareholders of Star 26. As a result of the Acquisition, Star 26 became a wholly-owned subsidiary of the Company. The transaction was approved by the stockholders of the Company on December 16, 2025 and confirmed by Nasdaq on January 9, 2026. Pursuant to the terms of the Purchase Agreement, the aggregate consideration paid by the Company consisted of: (i) $16,000,000, which was paid to Star 26 by the issuance by the Company of the Investment Note; (ii) $500,000 in cash, representing $5,000,000 less $4,500,000 previously borrowed by Star 26 from the Company; (iii) 4,770,340 Common Shares; (iv) the Warrant to purchase 12,017,648 Warrant Shares at an exercise price of $1.50 per share, exercisable for a period of five years from the Closing Date; (v) the Six-Month Note in the principal amount of $3,000,000, which accrues interest at the rate of 8% per annum and matures on July 12, 2026; and (vi) the Three-Month Note in the principal amount of $3,000,000 (the “Three-Month Note”), which matures on April 12, 2026. The Common Shares, the Warrant, the Six-Month Note and the Three-Month Note were subsequently assigned by Star 26 to the Selling Stockholders, pro ratably based on their equity ownership in Star 26. In connection with the Acquisition, the Company cancelled certain promissory notes previously issued by Star 26 to the Company in the aggregate principal amount of $4,500,000. The cancellation of said indebtedness was applied as a credit against the cash consideration otherwise payable to Star 26 at the closing of the Acquisition. The cash portion of the purchase price payable at closing was funded from the Company’s available cash on hand.
Star currently holds (1) 100% of Rimon, an Israeli corporation engaged as distributor of military-grade generators, masts and lighting systems and that is, among other clients, a supplier of generators for “Iron Dome” launchers, (2) 67% of Water.IO Ltd., an Israeli corporation engaged in smart hydration technology, and (3) a convertible loan issued by I.T.S. Industrial Techno-logic Solutions Ltd., an Israeli corporation which designs, develops and manufactures fully integrated electro-mechanical machines, assembly lines and custom motion systems.
If, for a period of 12 months after the closing, the Common Stock is delisted from Nasdaq, Star 26 shall have the right, at its own discretion, to require the Company to exchange the Investment Note for all the shares of Star 26 then held by the Company, provided, however, Star 26 shall retain any cash payments made by the Company to Star 26 and the Company shall retain an equity interest in Star 26 equivalent to all cash payments.
X Group Conversion
On June 11, 2024 the Company issued the X Group Fund of Funds a Note in consideration of cash proceeds in the amount of $250,000. As an additional inducement to provide the X Group Note 1, the Company issued X Group the X Group Warrant 1. The Company and X Group also entered into a Restructuring Agreement providing that, among other items, X Group, in its sole discretion, will have the right for a period for six months from the effective date to lend the Company an additional $500,000.
On September 10, 2024, the Company issued the X Group Note 2 in the principal amount of $125,000 to X Group in consideration of cash proceeds in the amount of $100,000, which was funded on September 4, 2024.
79
On November 8, 2024, the Company entered the Conversion Agreement with X Group to convert outstanding principal and interest totaling of $771,085 payable under the X Group Note 1 and the X Group Note 2 (the “X Group Debt”) into shares of common stock of the Company. Pursuant to the Conversion Agreement, the Company issued 385,542 shares of its common stock and an additional warrant to purchase 351,424 shares of common stock exercisable for a period of five years at an exercise price of $2.00 per share (“X Group Warrant 2”) in exchange for the cancellation of the X Group Debt. Further, the Company and X Group entered into a letter agreement providing that X Group may not exercise the X Group Warrant 1 in the event such exercise would result in X Group holding in excess of 19.9% of the Company’s outstanding shares of common stock as of November 8, 2024. On November 14, 2024, the Company and X Group entered into a letter agreement pursuant to which it amended the terms of the Conversion Agreement and the X Group Warrant 2 issued in connection with the Conversion Agreement. Pursuant to the letter agreement, the shares of common stock to be issued under the Conversion Agreement were amended to be 319,952 shares of common stock of the Company and the exercise price of the X Group Warrant 2 was amended to be $2.41.
On October 9, 2025, 117,568 and 259,864 shares of common stock were issued to X Group upon the cashless exercise of the X Group Warrant 1 and the X Group Warrant 2, respectively.
Services provided by related parties
The following description is required pursuant to applicable SEC rules and regulations, but the parties described below are not currently related parties to the Company or management.
From time to time, Oliver Worsley, a former shareholder of the Company, provided consulting services to the Company. As compensation for professional services provided, the Company recognized consulting expenses of $0 and $54,499 for the three months ended December 31, 2024 and the year ended September 30, 2024, which have been included in professional fees on the reconciliation summary of discontinued operations.
From time to time, Craig Vallis, a former shareholder of the Company, provided consulting services to the Company. As compensation for professional services provided, the Company recognized consulting expenses of $321,110 and $105,834 for the three months ended December 31, 2024 and the year ended September 30, 2024, respectively, which have been included in professional fees on the reconciliation summary of discontinued operations.
From time to time, Jamal Khurshid, the Company’s former chief executive officer and director, provided consulting services to the Company. As compensation for professional services provided, the Company recognized consulting expenses of $2,593 and $61,327 for the three months ended December 31, 2024 and the year ended September 30, 2024, respectively, which have been included in professional fees on the reconciliation summary of discontinued operations.
Revenue from related party and cost of revenue from related party
During the three months ended December 31, 2024 and the year ended September 30, 2024, Digital RFQ earned revenue from related parties in the amount of $4,601 and $69,619, respectively, which was included in revenue – financial services on the reconciliation summary of discontinued operations (see Note 5).
Due from affiliates
At December 31, 2025 and 2024, due from affiliates consisted of the following:
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Jamal Khurshid | $ | — | $ | 50,768 | ||||
| Total | $ | — | $ | 50,768 | ||||
| (1) | The balance due from Jamal Khurshid represents monies the Company paid on behalf of Jamal Khurshid. |
Management believes that the affiliates’ receivables are fully collectable. Therefore, no allowance for doubtful account is deemed to be required on its due from affiliates at December 31, 2025 and 2024.
80
Due to affiliates
At December 31, 2025 and December 31, 2024, due to affiliates, which is included partially on the reconciliation summary of discontinued operations as well as the accompanying consolidated balance sheets, consisted of the following:
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Currency Mountain Holdings Bermuda, Limited (“CMH”) (1) | 42,000 | 42,000 | ||||||
| FXDD Trading (1) | - | 441,402 | ||||||
| Markets Direct Payments (1) | - | 2,384 | ||||||
| Match Fintech Limited (2) | - | 36,293 | ||||||
| Total | $ | $ | 522,079 | |||||
| (1) | CMH, FXDD Trading, and Markets Direct Payments are controlled by Emil Assentato, the Company’s former chief executive officer and chairman. |
| (2) | Match Fintech Limited is controlled by affiliates of the Company. |
The balances due to affiliates represent expenses paid by FXDD Trading, Markets Direct Payments, and Match Fintech Limited on behalf of the Company and advances from CMH.
Amounts due to affiliates are short-term in nature, non-interest bearing, unsecured and repayable on demand.
Customer digital currency assets and liabilities – related parties
At December 31, 2025 and 2024, related parties’ digital currency, which was controlled by Digital RFQ, amounted to $0 and $1,028, respectively, which was included in customer digital currency assets and liabilities on the reconciliation summary of discontinued operations.
Note receivable – related parties
At December 31, 2025 and 2024, notes receivable – related parties amounted to $4,500,000 and $1,000,000, respectively, and was entirely represented by the advances made to Star 26 pursuant to the Star Agreement.
Loan payable – related parties and interest payable – related parties
On August 15, 2023, Digital RFQ issued a promissory note (the “August 2023 Loan”) in the principal amount of $75,000 to Emil Assentato, the Company’s former chief executive officer and chairman, in consideration of cash proceeds in the amount of $75,000. The August 2023 Loan bears interest of 5.0% per annum and is due and payable on August 15, 2026. A partial repayment of the August 2023 Loan of $50,000 was paid to Emil Assentato in January 2024.
81
Between October 1, 2023 and September 30, 2024, the Company issued promissory notes in the aggregate principal of $1,105,639 and $248,000 to a shareholder and to an entity managed by that shareholder, respectively, (collectively, the “Shareholder 2024 Loans”), in consideration of cash proceeds in the same amount in the following tranches:
| October 2023 | $ | 199,000 | ||
| December 2023 | 424,000 | |||
| January 2024 | 25,000 | |||
| February 2024 | 188,000 | |||
| March 2024 | 80,000 | |||
| April 2024 | 31,000 | |||
| May 2024 | 100,000 | |||
| June 2024 | 120,500 | |||
| July 2024 | 59,000 | |||
| August 2024 | 58,000 | |||
| September 2024 | 69,139 | |||
| Total | $ | 1,353,639 |
The 2024 Shareholder Loans bear interest of 5.0% per annum and each individual loan will be due and payable three years from the date of issuance.
In March 2024, the Company entered into a facility agreement with a shareholder (the “March 2024 Facility”), whereby a Company’s former subsidiary can request loans up to an aggregate $500,000 from the former shareholder. The proceeds from advances under the March 2024 Facility are restricted to fund working capital and operating expense. Advances drawn under the March 2024 Facility bear interest of 4.0% per month. This loan will be repaid in installments in accordance with the terms of the March 2024 Facility, with the last installment due on July 31, 2024. In April 2024, $11,820, a portion of the March 2024 Facility’s outstanding principal was exchanged for due from affiliates.
In March 2024, the Company entered into a loan agreement with a Company’s former shareholder (the “March 2024 Loan”), providing the Company with a loan up to GBP 395,000. The proceeds from advances under the March 2024 Loan are restricted to fund working capital and operating expenses of a former subsidiary. Advances drawn under the March 2024 Loan bear interest at a rate of 10.0% per annum. This March 2024 Loan is unsecured and is due and payable on March 31, 2025. In April 2024, GBP 32,337 ($37,198 at the exchange date), a portion of the March 2024 Loan’s outstanding principal, was exchanged for note receivable – related party.
Director Independence
Our board of directors currently consists of five members. Our board of directors has determined that Shiran Fridman, Asaf Nachum and Tomer Nagar qualify as independent directors in accordance with the Nasdaq listing requirements. Mr. Menachem Shalom is not considered independent. Nasdaq’s independence definition includes a series of objective tests, such as that the director is not, and has not been for at least three (3) years, one of our employees and that neither the director nor any of his or her family members has engaged in various types of business dealings with us. In addition, as required by Nasdaq rules, our board of directors has made a subjective determination as to each independent director that no relationships exist that, in the opinion of our board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In making these determinations, our board of directors reviewed and discussed information provided by the directors and us with regard to each director’s business and personal activities and relationships as they may relate to us and our management. There are no family relationships among any of our directors or executive officers.
82
LEGAL MATTERS
The validity of the shares of common stock offered by this prospectus will be passed upon for us by McDermott Will & Schulte LLP, Miami, Florida.
EXPERTS
The consolidated financial statements of T3 Defense Inc. as of December 31, 2025, and for the year ended December 31, 2025, have been included herein in reliance upon the report of Somekh Chaikin, a member firm of KPMG International, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a Registration Statement on Form S-1 we have filed with the SEC. We have not included in this prospectus all of the information contained in the Registration Statement and you should refer to our Registration Statement and its exhibits for further information. You can obtain a copy of the Registration Statement, including the exhibits filed with it, from the SEC as indicated below.
We will file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any materials we file with the SEC at their Public Reference Room at 100 F Street, NE, Washington, DC 20549, on official business days during the hours of 10 a.m. to 3 p.m. You may obtain information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Our filings are also available to the public from commercial document retrieval services and at the website maintained by the SEC at www.sec.gov.
You should rely only on the information provided in this prospectus. We have not authorized anyone else to provide you with different information. You should not assume that the information in this prospectus is accurate as of any date other than the date on the front of this prospectus or those documents.
83
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
This prospectus is part of the registration statement but the registration statement includes and incorporates by reference additional information and exhibits. The SEC permits us to “incorporate by reference” the information contained in documents we file with the SEC, which means that we can disclose important information to you by referring you to those documents rather than by including them in this prospectus. Information that is incorporated by reference is considered to be part of this prospectus and you should read it with the same care that you read this prospectus. Information that we file later with the SEC will automatically update and supersede the information that is either contained, or incorporated by reference, in this prospectus, and will be considered to be a part of this prospectus from the date those documents are filed. We have filed with the SEC, and incorporate by reference in this prospectus:
| ● |
Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 filed with the SEC on May 20, 2026;
| |
| ● | Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on April 9, 2026; |
| ● | Current Reports on Form 8-K filed with the SEC on May 8, 2026, April 28, 2026, April 16, 2026, April 15, 2026 and April 10, 2026; and |
| ● | The description of the Common Stock contained in our Form 10-KT for the transition period from September 30, 2024 to December 31, 2024, filed with the SEC on May 8, 2025 and any amendment or other report filed for the purpose of updating such description. |
In addition, all documents subsequently filed by us pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, prior to the termination of the offering (excluding any information furnished rather than filed) shall be deemed to be incorporated by reference into this prospectus.
Notwithstanding the statements in the preceding paragraphs, no document, report or exhibit (or portion of any of the foregoing) or any other information that we have “furnished” to the SEC pursuant to the Exchange Act shall be incorporated by reference into this prospectus.
You may request, and we will provide you with, a copy of these filings, at no cost, by calling us at (646) 257-4214 or by writing to us at the following address:
T3 Defense Inc.
575 Fifth Ave., 14th Floor
New York, New York 10017
You also may access these filings on our website at www.t3dfns.com. We do not incorporate the information on our website into this prospectus or any supplement to this prospectus and you should not consider any information on, or that can be accessed through, our website as part of this prospectus or any supplement to this prospectus (other than those filings with the SEC that we specifically incorporate by reference into this prospectus or any supplement to this prospectus).
Any statement contained in
a document incorporated or deemed to be incorporated by reference in this prospectus will be deemed modified, superseded or replaced
for purposes of this prospectus to the extent that a statement contained in this prospectus modifies, supersedes or replaces such statement.
Any statement contained herein or in any document incorporated or deemed to be incorporated by reference shall be deemed to be modified
or superseded for purposes of the registration statement of which this prospectus forms a part to the extent that a statement contained
in any other subsequently filed document which also is or is deemed to be incorporated by reference modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed to constitute a part of the registration statement of which this prospectus
forms a part, except as so modified or superseded.
84
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
T3 Defense Inc. (formerly known as Nukkleus Inc.)
T3 DEFENSE INC.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
AS OF MARCH 31, 2026
TABLE OF CONTENTS
| Page | |
| CONDENSED CONSOLIDATED FINANCIAL STATEMENTS: | |
| Unaudited Condensed Consolidated Interim Balance sheets as of March 31, 2026, and December 31, 2025 | F-2 |
| Unaudited Condensed Consolidated Interim Statements of Comprehensive (income) loss for three months ended March 31, 2026 and 2025 | F-5 |
| Unaudited Condensed Consolidated Interim Statements of Stockholders’ Equity (Deficit) for the period of three months ended March 31, 2026 and 2025 | F-6 |
| Unaudited Condensed Consolidated Interim Statements of Cash Flows for the three months ended March 31, 2026 and 2025 | F-8 |
| Notes to Unaudited Condensed Consolidated Interim Financial Statements | F-11 – F-34 |
_______________________
_______________________________
_______________________
F-1
T3 DEFENSE INC.
UNAUDITED CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS
(USD in thousands except share and per share data)
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | ||||||||
| Current assets of consolidated variable interest entities | ||||||||
| Cash and cash equivalents | ||||||||
| Other current assets | ||||||||
| Short term deposits and restricted cash | ||||||||
| Marketable Securities | ||||||||
| Inventories | ||||||||
| Note receivable - related party | ||||||||
| Due from related parties | ||||||||
| Accounts receivable, less allowance for credit losses of $ | ||||||||
| Other current assets | ||||||||
| Loan granted | ||||||||
| Current assets held for sale | ||||||||
| Total Current assets | ||||||||
| Non-Current Assets | ||||||||
| Operating right of use assets | ||||||||
| Non-Current assets of consolidated variable interest entities | ||||||||
| Cash and securities held in trust account | ||||||||
| Other non-current assets | ||||||||
| Property and equipment, net | ||||||||
| Goodwill | ||||||||
| Other intangible asset | ||||||||
| Intangible asset | ||||||||
| Deferred taxes | ||||||||
| Funds in respect of employee rights upon termination | ||||||||
| Total Non-Current assets | ||||||||
| Total Assets | ||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
F-2
T3 DEFENSE INC.
UNAUDITED CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS
(USD in thousands except share and per share data)
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Liabilities and Stockholders’ Equity (Deficit) | ||||||||
| Current Liabilities | ||||||||
| Short term loan | ||||||||
| Accounts payable | ||||||||
| Operating lease liability, current portion | ||||||||
| Promissory note – related party | ||||||||
| Due to related parties | ||||||||
| Other current liabilities | ||||||||
| Other current liabilities of consolidated variable interest entities | ||||||||
| Loans payable - former related parties, current | ||||||||
| Stock purchase warrant liabilities | ||||||||
| Deferred considerations | ||||||||
| Derivative liability | ||||||||
| Current liabilities held for sale | ||||||||
| Total current liabilities | ||||||||
| Non-Current liabilities | ||||||||
| Non-current operating lease liabilities | ||||||||
| Long term loan | ||||||||
| Loan payable - former related parties, net of current portion | ||||||||
| Liability in respect of employee rights upon termination | ||||||||
| Deferred tax liability | ||||||||
| Total Non-Current liabilities | ||||||||
| Total Liabilities | ||||||||
| Noncontrolling interests Subject to Possible Redemption | ||||||||
| Stockholders’ Equity (Deficit) | ||||||||
| Preferred stock ($ | ||||||||
| Common stock ($ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive loss | ( | ) | ||||||
| Accumulated deficit | ) | ( | ) | |||||
| Total Company’s stockholders’ equity (deficit) | ( | ) | ||||||
| Non-controlling interest | ||||||||
| Total stockholders’ equity (deficit) | ( | ) | ||||||
| Total liabilities and stockholders’ equity (deficit) | ||||||||
| (*) |
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
F-3
T3 DEFENSE INC.
UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS
(USD in thousands except share and per share data)
| Three months ended | ||||||||
| March 31 | ||||||||
| 2026 | 2025 | |||||||
| Revenues | ||||||||
| Cost of revenues | ( | ) | ||||||
| Gross profit | ||||||||
| Operating expenses | ||||||||
| Research and development expenses | ( | ) | ||||||
| Selling and marketing expenses | ( | ) | ||||||
| General and administrative expenses | ( | ) | ( | ) | ||||
| General and administrative expenses of consolidated variable interest entities | ( | ) | ||||||
| Total operating expenses | ( | ) | ( | ) | ||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expenses) | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Interest income of consolidated variable interest entities | ||||||||
| Interest on related parties promissory note | ( | ) | ||||||
| Change in fair value - convertible note | ||||||||
| Change in fair value - stock purchase warrant liabilities | ( | ) | ||||||
| Total other income (expense), net | ( | ) | ||||||
| Net income (loss) before income taxes | ( | ) | ||||||
| Income taxes | ( | ) | ||||||
| Net income (loss) from continuing operations | ( | ) | ||||||
| Net loss from discontinued operations | ( | ) | ( | ) | ||||
| Net income (loss) | ( | ) | ||||||
| Net income (loss) attributable to non-controlling interests | ||||||||
| Net income (loss) attributable to the Company’s stockholders | ( | ) | ||||||
| Net income (loss) | ( | ) | ||||||
| Earnings (loss) per share from continuing operations (basic) | ( | ) | ||||||
| Earnings (loss) per share from discontinued operations (basic) | ( | ) | ||||||
| Total loss per share (basic) | ( | ) | ||||||
| Weighted average number of shares of Common Stock outstanding - basic | ||||||||
| - | ||||||||
| Earnings (loss) per share from continuing operations (diluted) | ( | ) | ||||||
| Earnings (loss) per share from discontinued operations (diluted) | ( | ) | ||||||
| Total loss per share (diluted) | ( | ) | ||||||
| Weighted average number of shares of Common Stock outstanding – diluted | ||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
F-4
T3 DEFENSE INC.
UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(USD in thousands except share and per share data)
| Three months ended | ||||||||
| March 31 | ||||||||
| 2026 | 2025 | |||||||
| Comprehensive income (loss): | ||||||||
| Net income (loss) | ( | ) | ||||||
| Unrealized foreign currency translation (loss) gain | ( | ) | ||||||
| Comprehensive income (loss) | ( | ) | ||||||
| Comprehensive income (loss) attributable to non-controlling interests | ||||||||
| Comprehensive income (loss) attributable to the Company’s stockholders | ( | ) | ||||||
| Comprehensive income (loss) | ( | ) | ||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
F-5
T3 DEFENSE INC.
UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
(USD in thousands, except share and per share data)
| Preferred Stock | Common Stock | Additional | Accumulated Other Comprehensive | Non- | Total stockholders’ | |||||||||||||||||||||||||||||||
| Number of Shares | Amount | Number of Shares | Amount | paid-in capital | Accumulated deficit | Income (Loss) | controlling interest | equity (deficit) | ||||||||||||||||||||||||||||
| BALANCE AT DECEMBER 31, 2025 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Issuance of common stock from exercise of warrants | - | |||||||||||||||||||||||||||||||||||
| Stock based compensation | - | |||||||||||||||||||||||||||||||||||
| Issuance of common stock in relation to private placement | - | |||||||||||||||||||||||||||||||||||
| Issuance of common stock for purchase of subsidiaries | - | |||||||||||||||||||||||||||||||||||
| Conversion of note into equity | ||||||||||||||||||||||||||||||||||||
| Equity classified warrants issued at part of purchase of subsidiaries | - | - | ||||||||||||||||||||||||||||||||||
| Issuance of preferred stock in relation to private placement | - | |||||||||||||||||||||||||||||||||||
| Shares issue as penalty | - | |||||||||||||||||||||||||||||||||||
| Shares issued to settle commitment under ELOC agreement | - | |||||||||||||||||||||||||||||||||||
| Issuance of shares from ELOC exercises | - | |||||||||||||||||||||||||||||||||||
| Issuance of shares for settlement of debt on related party | - | |||||||||||||||||||||||||||||||||||
| Subsidiary consolidation for the first time | - | - | ( | ) | ||||||||||||||||||||||||||||||||
| Accretion of Noncontrolling interests Subject to Possible Redemption | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | ||||||||||||||||||||||||||||||||||
| Comprehensive loss for the periord | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| BALANCE AT MARCH 31, 2026 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| (*) |
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
F-6
T3 DEFENSE INC.
UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
(USD in thousands, except share and per share data)
| Preferred Stock | Common Stock | Additional | Accumulated Other Comprehensive | Total stockholders’ | ||||||||||||||||||||||||||||||||
| Number of Shares | Amount | Number of
Shares | Amount | paid-in capital | Accumulated deficit | Income (Loss) | Non-controlling interest | equity (deficit) | ||||||||||||||||||||||||||||
| BALANCE AT DECEMBER 31, 2024 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Issuance of common stock from exercise of pre-funded warrants | - | |||||||||||||||||||||||||||||||||||
| Stock based compensation | - | - | ||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net loss for the period | - | - | ||||||||||||||||||||||||||||||||||
| BALANCE AT MARCH 31, 2025 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| (*) | Less than $1 thousand. |
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
F-7
T3 DEFENSE INC.
UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(USD in thousands, except share and per share data)
| Three months ended | ||||||||
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income (loss) for the period from continuing | ( | ) | ||||||
| Net loss from discontinued operations | ( | ) | ( | ) | ||||
| Net income (loss) for the year from continuing operations | ( | ) | ||||||
| Adjustments required to reconcile net loss for the year to net cash used in operating activities: | ||||||||
| Amortization of debt discount | ||||||||
| Depreciation | ||||||||
| Stock-based compensation | ||||||||
| Interest earned on marketable securities held in trust account | ( | ) | ||||||
| Employee termination benefits | ( | ) | ||||||
| Change in deferred taxes | ( | ) | ||||||
| Interest on loans | ||||||||
| Gain on marketable securities | ||||||||
| Day one loss on stock purchase warrants issued in connection with private placement | ||||||||
| Change in fair value - stock purchase warrant liabilities | ( | ) | ||||||
| Change in fair value of liability-classified stock purchase warrants | ( | ) | ||||||
| Changes in lease assets and lease liabilities | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Trade receivables | ( | ) | ||||||
| Other current assets | ||||||||
| Inventory | ||||||||
| Accounts payable | ( | ) | ( | ) | ||||
| Due to affiliates | ||||||||
| Interest payable - related parties | ||||||||
| Accrued expenses and other current liabilities | ( | ) | ||||||
| Net cash used in operating activities – continuing operations | ( | ) | ( | ) | ||||
| Net cash used in operating activities – discontinuing operations | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
F-8
T3 DEFENSE INC.
UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(USD in thousands except share and per share data)
| Three months ended | ||||||||
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Cash used in purchase of subsidiaries | ( | ) | ||||||
| Investment in short term securities | ||||||||
| Due to affiliates | ( | ) | ||||||
| Cash provided by purchase of subsidiary | ||||||||
| Payment on property and equipment | ( | ) | ( | ) | ||||
| Advance to target of planned acquisition | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Repayment of short term bank credit | ( | ) | ||||||
| Proceeds from issuance of loans payable - related parties | ||||||||
| Dividend payment | ( | ) | ||||||
| Proceeds from issuance of private placement | ||||||||
| Repayments on loans payable - related parties | ( | ) | ||||||
| Proceeds from issuance of ELOC shares | ||||||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate changes on cash and cash equivalents– continuing operations | ( | ) | ||||||
| Effect of exchange rate changes on cash and cash equivalents– discontinuing operations | ||||||||
| INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | ( | ) | ||||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD, INCLUDING DISCONTINUED OPERATIONS | ||||||||
| CASH, CASH EQUIVALENTS, RESTRICTED CASH CASH FROM HELD FOR SALE COMPANY AT END OF PERIOD, INCLUDING DISCONTINUED OPERATIONS | ||||||||
| LESS CASH FROM DISCONTINUED OPERATIONS | ||||||||
| CASH, CASH EQUIVALENTS, RESTRICTED CASH CASH FROM DISCONTINUED OPERATIONS AT END OF PERIOD FROM CONTINUING OPERATIONS | ||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
F-9
T3 DEFENSE INC.
UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(USD in thousands except share and per share data)
| Supplemental disclosure of cash flow information: | ||||||||
| Non cash transactions: | ||||||||
| Purchase of subsidiaries against issuance of common stock and warrants | ||||||||
| Issuance of common stock to settle loans payable – related parties | ||||||||
| Fair value of pre-funded warrants exercised | ||||||||
| Initial recognition of operating lease liability and a corresponding right-of- use asset | ||||||||
| Fair value of warrants exercised | ||||||||
| Fair value of common stock issued in connection with conversion of convertible note | ||||||||
| Cash provided by purchase of subsidiaries consolidated for the first time: | ||||||||
| Working capital (excluding cash and cash equivalents) | ( | ) | ||||||
| Long terms assets | ||||||||
| Intangible assets | ||||||||
| Goodwill | ||||||||
| Intangible assets held for sale | ||||||||
| Long terms liabilities | ( | ) | ||||||
| Other comprehensive income | ||||||||
| Non-controlling interest | ( | ) | ||||||
| Issuance of common stock and warrants | ( | ) | ||||||
| Net cash provided by from the purchase of subsidiary consolidated for the first time | ( | ) |
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
F-10
T3 DEFENSE INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 1 – GENERAL
| A. | T3 Defense Inc. (formerly known as Nukkleus Inc.) (the “Company” or “T3”) was formed on |
The Business Combination was completed on December 22, 2023. On the Closing Date, and in connection with the closing of the Business Combination, Brilliant changed its name to Nukkleus Inc. and the Company’s common stock began trading on the NASDAQ under the ticker symbol NUKK.
Effective February 9, 2026, the Company changed its name to “T3 Defense Inc.” As a result of the name change, the new ticker symbol for the Company’s common stock is “DFNS” and trading continued under the new ticker symbol on The Nasdaq Global Market.
While Brilliant was the legal acquirer, Old Nukk was the accounting acquirer; therefore, the historical financial statements of Old Nukk became those of the Company. Accordingly, the consolidated financial statements reflect: (i) Old Nukk’s historical results prior to the Business Combination; (ii) the combined results thereafter; (iii) Old Nukk’s assets and liabilities at their historical cost; and (iv) the Company’s equity structure for all periods presented.
Due to non-payment by TCM under the GSA, the Company notified TCM of termination of the agreement. On September 30, 2024, the Company entered into a Release Agreement with TCM and FXDirectDealer LLC confirming that the GSA (and a related services agreement with FXDirectDealer LLC) had been terminated effective January 1, 2024, and that no obligations or liabilities remained outstanding between the parties as of the agreement date. The parties mutually released one another from all claims arising under the agreements.
F-11
T3 DEFENSE INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 1 – GENERAL (continued)
The Company historically operated its
blockchain payment solutions through Digital RFQ Limited (“DRFQ”), an indirect wholly owned subsidiary of the Company. In
January 2024, the Company ceased its general support service operations, terminating the existing customer and supplier contracts with
a related party, and shifted its focus to the payment services operations. On December 27, 2024, the Company entered into a Share Purchase
Agreement to sell DRFQ for nominal consideration of £
On December 30, 2025, the Company consummated the acquisition of all of the issued and outstanding shares of Tiltan Software Engineering Ltd. (“Tiltan”) pursuant to a Stock Purchase Agreement, as amended, among the Company, its wholly owned subsidiary Nukk Picolo Ltd. (“Nukk Picolo”), Tiltan and Arie Shafir (the “Tiltan Seller”).
| B. | SC II Acquisition Corp. |
On October 16, 2025, a registration statement was filed with the Securities and Exchange Commission (the “SEC”) regarding a proposed initial public offering (“IPO”) of units of SC II Acquisition Corp. (“SC II” or the “SPAC”), a newly formed special purpose acquisition company and indirect subsidiary of the Company. The SPAC’s sponsor, SC Capital II Sponsor LLC (the “Sponsor”), a Delaware limited liability company, is controlled and majority owned by Nukkleus Defense Technologies Inc., a wholly-owned subsidiary of the Company.
On November 28, 2025, SC II consummated
its initial public offering (“IPO”) of
Simultaneously with the closing of
the IPO, the Sponsor purchased
The proceeds of the IPO were placed in a trust account to be used for the purpose of completing a business combination in accordance with SC II’s amended and restated memorandum and articles of association.
As of March 31, 2026, the Class A ordinary shares subject to possible redemption reflected in the balance sheet are reconciled in the following table:
| Class A ordinary shares subject to redemption as of December 31, 2025 | ||||
| Plus: | ||||
| Remeasurement of carrying value to redemption value | ||||
| Class A ordinary shares subject to redemption as of March 31, 2026 |
On March 31, 2026, the SPAC entered
into a non-binding letter of intent (the “LOI”) with a payments technology company (the “Target”), which outlines
the general terms and conditions of a potential business combination (the “Proposed Transaction”) pursuant to which the SPAC
would acquire
The LOI is a preliminary, non-binding expression of mutual interest and does not constitute a binding commitment, obligation or agreement of the SPAC or the Target to consummate the Proposed Transaction or any other transaction. Except for certain limited binding provisions, including, among other things, exclusivity, confidentiality, the waiver of claims against the SPAC’s trust account, and governing law, neither the SPAC nor the Target has any legal obligation to the other party with respect to the Proposed Transaction by virtue of the LOI.
F-12
T3 DEFENSE INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 1 – GENERAL (continued)
| C. | Star 26 Capital Inc. Acquisition |
On January 12, 2026, the Company consummated the acquisition of
| D. | Nimbus Drones Technologies and Marketing Ltd Acquisition |
On January 15, 2026, the Company consummated its acquisition
(the “Nimbus Acquisition”) of
| E. | I.T.S. Industrial Techno-Logic Solutions Ltd. Acquisition |
On February
16, 2026, the Company consummated its acquisition (the “ITS Acquisition”) of
ITS’s operations are conducted by ITS and its wholly-owned subsidiary, Positech Ltd., which specializes in the design and manufacture of high-performance motion control systems for both defense and commercial applications. See Note 5.
| F. | Israel –war |
In October 2023, a large-scale terrorist attack in southern Israel led to the outbreak of armed conflict between Israel and Hamas. The conflict subsequently expanded to additional regional fronts and contributed to a period of heightened geopolitical and security instability in the region.
During 2024 and 2025, hostilities included military operations in Lebanon and direct confrontations involving Iran. These developments increased regional uncertainty and, at times, resulted in temporary disruptions to the Company’s operations in Israel, including limited interruptions to routine business activities.
In September 2025, a ceasefire agreement was reached between Israel and Hamas, and all remaining living Israeli hostages were released and returned to Israel. While the ceasefire has generally held as of the date of these financial statements, the security situation remains sensitive, and the potential for renewed hostilities or broader regional escalation cannot be ruled out. More recently, on February 28, 2026, hostilities between Israel and Iran escalated again. Israel, together with the United States, conducted a major joint military campaign of air and missile strikes against targets in Iran, which triggered a broad Iranian response and contributed to significant regional instability. The situation remains highly fluid, and management is unable to predict when, or on what terms, this escalation will be resolved. Accordingly, the extent of the continued impact on the Company’s operations and financial results, if any, cannot be reasonably estimated at this time.
Given that the majority of the Company’s operations are conducted in Israel, and that all members of the Company’s board of directors and management, as well as most employees, consultants, and service providers, are located in Israel, the Company is directly affected by the economic, political, geopolitical, and military conditions impacting the region. As of March 31, 2026, while ceasefire arrangements with Hamas, Lebanon and Iran were generally in effect and large-scale military operations had subsided, the overall security environment in Israel and the surrounding region remained unstable and unpredictable. Any further escalation or expansion of the conflict could negatively affect both regional and global conditions, and may adversely impact the Company’s business, financial condition, and results of operations.
In April 2026, a ceasefire agreement was reached; however, the ceasefire remains fragile and the overall security situation in Israel and the region continues to be uncertain.
F-13
T3 DEFENSE INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 1 – GENERAL (continued)
| G. | Going concern |
These consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) assuming the Company will continue as a going concern.
At March 31, 2026, the Company had negative working capital of approximately
$
After evaluating these conditions, management
concluded that its plans, when considered in aggregate, alleviate substantial doubt about the Company’s ability to continue as a
going concern. Those plans include: (i) the Company’s existing unrestricted cash balance of approximately $
In addition, management believes that the completion of the sale by Water IO Ltd., a majority-owned indirect subsidiary of the Company,
of Zorro Net Ltd. to BiomX Inc., pursuant to which Water IO received
Management has determined that its plans are probable of being effectively implemented and probable of mitigating the conditions described above, enabling continuation of the Company’s operations for the foreseeable future.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION
Basis of presentation
The condensed interim consolidated financial statements included in this Quarterly Report are unaudited. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting and reflect, in the opinion of management, all adjustments of a normal and recurring nature that are necessary for a fair statement of the Company’s financial position as of March 31, 2026, and its results of operations changes in stockholders’ equity, and cash flows for the three months ended March 31, 2026 and 2025. The results of operations for the three months ended March 31, 2026 are not necessarily indicative of the results to be expected for the year ending December 31, 2026 or for any other future annual or interim period. These financial statements should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 as filed with the SEC on March 31, 2026. The Company’s significant accounting policies are disclosed in the audited financial statements for the year ended December 31, 2025 included in such Form 10-K except as mentioned below.
Use of Estimates
The preparation of unaudited condensed consolidated interim financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, certain revenues and expenses, and disclosure of contingent assets and liabilities as of the date of the financial statements. Actual results could differ from those estimates. As applicable to these financial statements, the most significant estimates and assumptions relate to calculation of fair value of the financial instruments.
F-14
T3 DEFENSE INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (continued)
Revenue recognition:
Significant management judgments and estimates must be made and used in connection with the recognition of revenue in any accounting period. Material differences in the amount of revenue in any given period may result if these judgments or estimates prove to be incorrect or if management’s estimates change on the basis of development of business or market conditions.
The Company follows the provisions of Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). The guidance provides a unified model to determine how revenue is recognized.
Revenues are recognized when control of the promised goods or services are transferred to the customers in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services.
The Company determines revenue recognition through the following steps: (1) identification of the contract with a customer; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and (5) recognition of revenue when, or as, the Company satisfies a performance obligation.
The Company has two main types of revenues –
Revenues from selling goods imported by the Company – like generators, masts and lightning
Revenues from integration projects where the Company designs, engineers, sources raw materials, assembles and completes tactical vehicles and trailers.
The Company provides services to customers and has related performance obligations and recognizes revenue in accordance with ASC 606. Revenues are recognized when the Company satisfies performance obligations under the terms of its contracts, and control of its services or products is transferred to its customers in an amount that reflects the consideration the Company expects to receive from its customers in exchange for those products. Control is transferred upon delivery of its services or products.
A typical contract with a customer specifies that the Company would receive an advance payment once the contract is signed, an additional payment would be made to the Company once the ordered product is manufactured and ready to be shipped to the customer and the remainder of the contract’s consideration would be made once the system is installed in the customer’s factory and its accepted by the customer.
According to ASC-606-10-50, and given the mentioned-above, once signed, the Company’s contracts are considered Contract Liability – as the Company has received the amount prior to delivering the goods to the customer. Those amounts would not be considered as revenues. Once the goods are shipped to the customer – the contract becomes Contract Asset – as the Company transferred the goods to the client prior to receiving the full consideration for it. At the time the receipt of the consideration is conditional upon a successful installation of the product by the Company at the customer’s location and the full acceptance of the product by the customer. Only after such installation and acceptance the consideration owed to the Company is categorized as receivable. In all cases the time interval between the delivery of the product and its installation and acceptance by the customer happens within days.
F-15
T3 DEFENSE INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (continued)
This process involves identifying the customer contract, determining the performance obligations in the contract, determining the transaction price, allocating the transaction price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. A performance obligation is considered distinct from other obligations in a contract when it (a) provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and (b) is separately identified in the contract. The Company considers a performance obligation satisfied once it has transferred control of a good or product to a customer, meaning the customer has the ability to direct the use and obtain the benefit of the product.
Assets held for sale
The Company accounts for assets held for sale in accordance with ASC 360 at the lower of carrying value or fair value less costs to sell. Fair value is the amount obtainable from the sale of the asset in an arm’s length transaction. The reclassification occurs when the assets are available for immediate sale and the sale is highly probable. These conditions are usually met from the date on which a letter of intent or agreement to sell is ready for signing. Assets and liabilities of a component classified as held for sale are presented separately in the consolidated balance sheets as “Assets held for sale” and “Liabilities held for sale”. If such component also qualifies as a discontinued operation under ASC 205-20, its results of operations are presented separately from continuing operations in the consolidated statements of operations.
Cost of Goods Sold:
The Cost of Goods Revenues represents the costs incurred in the production of goods sold by the Company. These costs include, but are not limited to:
| - | Raw Materials– Costs related to the procurement of raw materials and other direct inputs used in the production process. |
| - | Direct Labor – Wages and related expenses for employees directly involved in the manufacturing or production process. |
| - | Manufacturing Overhead – Indirect production costs, including factory utilities, depreciation of production equipment, and maintenance expenses. |
| - | Other Direct Costs – Any additional costs directly attributable to the production of goods, including packaging and quality control. |
Research and Development Costs
Research and development (“R&D”) costs are accounted for in accordance with ASC 730, Research and Development. R&D costs are expensed as incurred and include, among other things, payroll and related costs for employees engaged in research and development activities, external consulting services, materials, prototype development, testing activities, and other directly attributable costs.
Software development costs incurred prior to the establishment of technological feasibility of a software, as well as costs incurred after general release of software products (including routine maintenance, bug fixes, and minor enhancements), are expensed as incurred.
F-16
T3 DEFENSE INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (continued)
Technological feasibility is generally determined based on the completion and approval of detail program design documentation together with the successful validation of an internal working model demonstrating that the software product can be produced to meet its design specifications. Accordingly, technological feasibility is generally achieved prior to a working model ready for customer testing.
In accordance with ASC 985-20-25-1 through 25-6, all software development costs incurred prior to the establishment of technological feasibility are expensed as research and development costs.
Severance pay:
All the Company’s employees, besides one, have been signed
on Section 14 of Israel’s Severance Compensation Law, 1963 (“Section 14”). Pursuant to Section 14, the Company’s employees,
covered by this section, are entitled only to monthly deposits, at a rate of
As to the employee that has not signed the Section 14 clause, the Company contributes the on-going contributions on monthly basis
F-17
T3 DEFENSE INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (continued)
Fair value
Fair value of certain of the Company’s financial instruments including cash, accounts payable, accrued expenses, and other accrued liabilities approximate cost because of their short maturities. The Company measures and reports fair value in accordance with Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements” which defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements.
Fair value, as defined by ASC 820, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of an asset should reflect its highest and best use by market participants, principal (or most advantageous) markets, and an in-use or an in-exchange valuation premise.
Valuation techniques are generally classified into three categories: (i) the market approach; (ii) the income approach; and (iii) the cost approach. The selection and application of one or more of the techniques may require significant judgment and are primarily dependent upon the characteristics of the asset or liability, and the quality and availability of inputs. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. ASC 820 also provides fair value hierarchy for inputs and resulting measurement as follows:
Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities.
Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities; and
Level 3: Unobservable inputs for the asset or liability that are supported by little or no market activity, and that are significant to the fair values.
Fair value measurements are required to be disclosed by the level within the fair value hierarchy in which the fair value measurements in their entirety fall. Fair value measurements using significant unobservable inputs (in level 3 measurements) are subject to expanded disclosure requirements including a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (i) total gains or losses for the period (realized and unrealized), (ii) segregating those gains or losses included in earnings, and (iii) a description of where those gains or losses included in earning are reported in the statement of operations.
F-18
T3 DEFENSE INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (continued)
The Company’s financial assets that are measured at fair value on a recurring basis by level within the fair value hierarchy are as follows:
| As of March 31, 2026 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| US$ | ||||||||||||||||
| Assets: | ||||||||||||||||
| Marketable Securities | ||||||||||||||||
| Total assets | ||||||||||||||||
| As of December 31, 2025 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| US$ | ||||||||||||||||
| Assets: | ||||||||||||||||
| Marketable Securities | ||||||||||||||||
| Total assets | ||||||||||||||||
The Company’s financial liabilities that are measured at fair value on a recurring basis by level within the fair value hierarchy are as follows:
| As of March 31, 2026 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| US$ | ||||||||||||||||
| Liabilities: | ||||||||||||||||
| Derivative liability | ||||||||||||||||
| September 2025 Private Placement Warrant | ||||||||||||||||
| February 2026 Warrants | ||||||||||||||||
| Total liabilities | ||||||||||||||||
| As of December 31, 2025 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| US$ | ||||||||||||||||
| Liabilities: | ||||||||||||||||
| September 2025 Private Placement Warrant | ||||||||||||||||
| Total liabilities | ||||||||||||||||
F-19
T3 DEFENSE INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (continued)
The following table presents the changes in fair value of the level 3 liabilities for the period from December 31, 2025 through March 31, 2026.
Changes in fair value are recognized
in the consolidated statement of operations within finance expenses.
| Private Placement Warrant | February 2026 Warrants | Derivative liabilities | Total | |||||||||||||
| Liabilities: | ||||||||||||||||
| Outstanding at December 31, 2025 | ||||||||||||||||
| Additions | ||||||||||||||||
| Liabilities assumed in part of subsidiary consolidated for the first time | ||||||||||||||||
| Exercised | ( | ) | ( | ) | ( | ) | ||||||||||
| Changes in fair value | ( | ) | ( | ) | ||||||||||||
| Outstanding at March 31, 2026 | ||||||||||||||||
Goodwill:
Goodwill represents the excess of the purchase price over the fair value of the identifiable net assets acquired in business combinations accounted for in accordance with the “purchase method” and is allocated to reporting units at acquisition. Goodwill is not amortized but rather tested for impairment at least annually in accordance with the provisions of ASC Topic 350, “Intangibles - Goodwill and Other”. The Company performs its goodwill annual impairment test for the reporting units at December 31 of each year, or more often if indicators of impairment are present.
Intangible assets with finite lives are amortized using the straight-line basis over their useful lives, to reflect the pattern in which the economic benefits of the intangible assets are consumed or otherwise used up.
As of March 31, 2026 the Company did not identify any triggers requiring impairment test of its reporting units. Due to the equity of the Company being above the market capitalization of the Company as of March 31, 2026, a further sustained decline in the Company’s share price and market capitalization may require further testing, which may result in an impairment.
NOTE 3 – ACQUISITION OF STAR 26
On
December 15, 2024, the Company entered into a Securities Purchase Agreement and Call Option, as amended by Amendment No. 1 dated February
11, 2025, Amendment No. 2 dated May 13, 2025, and Amendment No. 3 dated June 15, 2025 with Star 26 Capital Inc. (“Star”),
the shareholders of Star (“Star Equity Holders”) and Menachem Shalom, the representative of the Star
Equity Holders, to acquire a controlling
On September 15, 2025, the Company entered
into an Amended and Restated Securities Purchase Agreement (the “Star Agreement”) with Star, Star Equity Holders, and Menachem
Shalom, pursuant to which the Company agreed to acquire
F-20
T3 DEFENSE INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 3 – ACQUISITION OF STAR 26 (continued)
On January 12, 2026, T3 acquired
In addition, Star received:
| ● |
| ● | a five-year warrant to purchase an aggregate of |
| ● | A promissory note in the principal amount of $ |
| ● | A promissory note in the principal amount of $ |
The shares, warrants, the Six-Month Note and the Three-Month Note were assigned by Star to the Star Equity Holders pro-ratably.
The transaction was approved by the Company’s shareholders on December 16, 2025 and was completed on January 12, 2026, at which time Star became a wholly owned subsidiary of the Company.
On March 31, 2026, the Company agreed
on the termination of its obligation to pay $
The acquisition has been accounted for as a business combination under ASC 805, Business Combinations. The Company determined that Star constitutes a business as defined under ASC 805 as the acquired set includes inputs, processes, and the ability to generate outputs.
The Company, with the assistance of
a third-party specialist, calculated the total consideration at $
The fair value of the Common Warrant was calculated using the Black Scholes option pricing model. The assumptions used to perform the calculations are detailed below:
| January 12, 2026 | ||||
| Expected volatility (%) | % | |||
| Risk-free interest rate (%) | % | |||
| Expected dividend yield | % | |||
| Expected term (years) | ||||
| Conversion price (U.S. dollars) | ||||
| Underlying share price (U.S. dollars) | ||||
| Fair value (U.S. dollars in thousands) | ||||
F-21
T3 DEFENSE INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 3 – ACQUISITION OF STAR 26 (continued)
The table below summarizes the fair value of assets acquired and liabilities assumed following the adjustments mentioned above as of the acquisition date:
| January 12, 2026 | ||||
| U.S. Dollars (in thousands) | ||||
| Working capital | ( | ) | ||
| Long terms assets | ||||
| Intangible assets | ||||
| Intangible assets of available for sale, net | ||||
| Goodwill | ||||
| Other comprehensive income | ||||
| Non-controlling interest | ( | ) | ||
| Long term liabilities | ( | ) | ||
| Net assets acquired | ||||
As of March 31, 2026, the Company, with the assistance
of a third-party valuation specialist, completed the initial allocation of the purchase price to the identifiable assets acquired and
liabilities assumed based on their estimated fair values as of the acquisition date. The aggregate fair value of consideration transferred
was approximately $
The allocation of the purchase price was as follows (in thousands):
| January 12, 2026 | ||||
| January 1, 2026 | ||||
| Net tangible assets acquired | ( | ) | ||
| Customer relationships ( | ||||
| Distributor relations ( | ||||
| Order backlog ( | ||||
| Intangible assets of available for sale | ||||
| Deferred tax liabilities | ( | ) | ||
| Deferred tax liabilities of available for sale | ( | ) | ||
| Goodwill | ||||
Customer relationships, distributor relations and order backlog were valued using the multi-period excess earnings method. Developed technology was valued using the relief-from-royalty method. The identified intangible assets are being amortized on a straight-line basis over their estimated useful lives.
Deferred tax liabilities were recognized primarily in respect of the fair value adjustments to identifiable intangible assets.
Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired and is primarily attributable to expected synergies, future growth opportunities, assembled workforce and other intangible benefits that do not qualify for separate recognition. The goodwill recognized is not expected to be deductible for income tax purposes.
F-22
T3 DEFENSE INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 4 – ACQUISITION OF NIMBUS
On January 15, 2026, the Company consummated its acquisition
(the “Nimbus Acquisition”) of
The acquisition has been accounted for as a business combination under ASC 805, Business Combinations. The Company determined that Nimbus constitutes a business as defined under ASC 805 as the acquired set includes inputs, processes, and the ability to generate outputs.
The total consideration of the acquisition
was calculated using a third-party appraiser at approximately $
| 1. | Share consideration consisting of |
| 2. | The Nimbus Note, with an estimated fair value of approximately $ |
The Company completed the initial allocation of the purchase
price to the identifiable assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date.
| January 15, 2026 | ||||
| U.S. Dollars (in thousands) | ||||
| Working capital | ||||
| Long terms assets | ||||
| Long term liabilities | ( | ) | ||
| Goodwill | ||||
| Total consideration transferred | ||||
No separately identifiable intangible assets were recognized, as the Company, with the assistance of the valuation specialist, did not identify any material order backlog, customer relationships, proprietary technology or non-compete arrangements that met the recognition criteria under ASC 805.
Goodwill represents the excess of the purchase price over the fair value of the identifiable net liabilities assumed and is primarily attributable to expected synergies, future growth opportunities, assembled workforce and other intangible benefits that do not qualify for separate recognition. The goodwill recognized is not expected to be deductible for income tax purposes.
The acquisition was completed on January 15, 2026.
F-23
T3 DEFENSE INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 5 – ACQUISITION OF ITS
On June 8, 2025, Star Twenty Six Ltd. (“Star Twenty Six”) entered into an agreement with ITS and its shareholder Mr. Gera
Eron, pursuant to which Star Twenty Six will lend to ITS NIS
On February 16, 2026, Star Twenty Six acquired
The Company completed the initial allocation of the purchase
price to the identifiable assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date.
| February 16, 2026 |
||||
| U.S. Dollars (in thousands) |
||||
| Working capital | ( |
) | ||
| Long terms assets | ||||
| Goodwill and Intangible assets | ||||
| Non-controlling interest | ( |
) | ||
| Long term liabilities | ( |
) | ||
| Net assets acquired | ||||
The Company equally allocated the excess of the purchase price over the fair value of identifiable net assets acquired between goodwill and intangible assets.
The acquisition was completed on February 16, 2026.
NOTE 6 – STOCKHOLDERS’ EQUITY
Transactions:
| A. | On
February 26, 2026, the Company closed a private placement pursuant to the terms of a Securities Purchase Agreement with an accredited
investor (the “Securities Purchase Agreement”) for a private placement (the “Private Placement”) pursuant to
which the investor (the “Purchaser”) agreed to purchase from the Company |
F-24
T3 DEFENSE INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 6 – STOCKHOLDERS’ EQUITY (continued)
Pursuant to the Securities Purchase Agreement, the Company is required to seek stockholder approval (the “Stockholder Approval”) related to the issuance of the units to be issued in the Private Placement. The Company is required to file a preliminary proxy statement for a special meeting of the Company’s stockholders within 75 days of the initial closing of the Private Placement. The Company’s directors and officers have agreed to execute voting agreements to vote in favor of the applicable proposals. If the Company does not obtain Stockholder Approval at the first such meeting, the Company is required to call a meeting every 4 months thereafter to seek Stockholder Approval until the earlier of the date on which Stockholder Approval is obtained or the securities are no longer outstanding.
The Company also granted the Purchaser a right of participation in subsequent financings of the Company for a period of time following closing, subject to certain exempt issuances, and has agreed not to issue securities for a period of time following the closing of the Private Placement, subject to certain exempt issuances, including issuances pursuant to strategic transactions.
Under the terms of the Securities Purchase Agreement, the Company agreed not to deliver any purchase notices under Company’s equity line of credit with the Purchaser until after the later of the date on which (i) the registration statement is declared effective and (ii) the Company obtains Stockholder Approval and even after such date, certain market conditions must be satisfied.
Series B Preferred Stock
Pursuant to the Certificate of Designations of Rights,
Preferences and Limitations which was filed with the Secretary of State of the State of Delaware prior to closing of the Private Placement,
each share of Series B Preferred Stock has a stated value of $
The Series B Preferred Stock is convertible at the option
of the holder at any time and will be automatically converted into Common Stock or Pre-Funded Warrants in lieu thereof on the effective
date of the registration statement, whether or not the Stockholder Approval has been obtained. If at any time after the one-year anniversary of the closing of the Private Placement,
the Series B Preferred Stock is then outstanding and the Company has not received Stockholder Approval, the Series B Preferred Stock
is redeemable at the option of the holder at a price per Share equal to
The holders of Series B Preferred Stock are entitled to
F-25
T3 DEFENSE INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 6 – STOCKHOLDERS’ EQUITY (continued)
The Company has agreed not to issue
any parity stock or senior securities without the written consent of a majority in interest of the Series B Preferred Stock. Upon a change
of control, liquidation or winding up of the Company the holders of the Series B Preferred Stock are entitled to a liquidation preference
of $
Common Warrants
The Common Warrants are exercisable on a cash or cashless
basis at the earlier of (i) 180 days following their issuance and (ii) the date the stockholder approval is obtained, and expire 5 years
from the date of issuance. Each Common Warrant will be initially exercisable for
In the event of a Fundamental Transaction (as defined in the Common Warrants), the holders of the Common Warrants will be entitled to receive upon exercise of the Common Warrants the kind and amount of securities, cash or other property that the holders would have received had they exercised the Common Warrants immediately prior to such Fundamental Transaction. Additionally, as more fully described in the Common Warrants, the holders of the Common Warrants will be entitled to receive consideration in an amount equal to the Black Scholes value of the Common Warrant in connection with a Fundamental Transaction.
If the Company fails to timely deliver the Warrant Shares issuable upon exercise of the Common Warrants, the Company will be subject to liquidated damages, payable in the Company’s discretion in cash or shares on the Registration Date (as defined therein) or buy-in. If the Company elects to pay in shares, the number of shares due will be based on the LD Share Formula (as defined below).
Registration Rights Agreement
In connection with the Private Placement, on February 24,
2026, the Company and the Purchaser entered into a Registration Rights Agreement (the “Registration Rights Agreement”). Pursuant
to the terms of the Registration Rights Agreement, the Company is required to register the resale of the Conversion Shares (and any shares
underlying the Pre-Funded Warrants, if any) and the Warrant Shares. The Company is required to prepare and file an initial registration
statement (the “Initial Registration Statement”) with the Securities and Exchange Commission within
F-26
T3 DEFENSE INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 6 – STOCKHOLDERS’ EQUITY (continued)
In connection with the Private Placement, the Company entered
into a Placement Agency Agreement, dated February 24, 2026, with Dawson James Securities Inc. (the “Placement Agent”), pursuant
to which the Placement Agent acted as the sole placement agent for the Private Placement. In consideration for the foregoing, the Company
has agreed to pay customary placement fees to the Placement Agent, including a cash fee equal to
The Company analyzed the February 2026 Private Placement in accordance with ASC 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging. The Company determined that the Common Warrant do not meet the criteria for equity classification. Accordingly, the Common Warrant were accounted for as a liability-classified instrument. The Common Warrants are initially recorded at fair value and are remeasured at fair value at each reporting date, with changes in fair value recognized in the consolidated statements of operations until settlement or expiration.
The Company, with the assistance of
a third-party specialist allocated the total proceeds received in the initial closing of the February 2026 Private Placement between
the Common Warrant liability and the Series B Preferred Stock. Because the initial fair value of the Common Warrant liability exceeded
the gross proceeds received, the entire $
Warrant Shares liability
The fair value of the Common Warrant was calculated using the Monte Carlo Simulation Model. The assumptions used to perform the calculations are detailed below:
| February 24, 2026 | March 31, 2026 | |||||||
| Expected volatility (%) | % | % | ||||||
| Risk-free interest rate (%) | % | % | ||||||
| Expected dividend yield | % | % | ||||||
| Expected term (years) | ||||||||
| Conversion price (U.S. dollars) | ||||||||
| Underlying share price (U.S. dollars) | ||||||||
| Fair value (U.S. dollars in thousands) | ||||||||
Based on the above the entire February 2026 Private Placement proceeds were allocated to the Common Warrants liability.
For the three months ended March 31,
2026, the Company recognized a loss from the change in fair value of the Common Warrant liability of approximately $
On January 2, 2026, the Company issued
In addition, on January 2, 2026, the
Company issued
F-27
T3 DEFENSE INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 6 – STOCKHOLDERS’ EQUITY (continued)
| B. | On September 19, 2025, the Company and Esousa Company Holdings,
LLC, a New York limited liability company (the “Investor”), entered into a common stock purchase agreement (the “ELOC
Purchase Agreement”), pursuant to which, subject to the terms and conditions set forth therein, the Company may sell to the Investor,
from time to time during the term of the ELOC Purchase Agreement, up to the lesser of (i) $ |
Additionally, on September 19, 2025, the Company and the Investor entered into a registration rights agreement (the “ELOC RRA”), pursuant to which the Company agreed to file a registration statement with the United States Securities and Exchange Commission (“SEC”) covering the resale of Common Shares that are issued to the Investor under the ELOC Purchase Agreement, including the Commitment Shares.
On January 2, 2026, the Company issued
During the period from January 1,
2026 to February 4, 2026, the Company elected to sell to the Investor an aggregate of
Advance shares are not treated as completed sales on the date they were transferred to the Investor. Rather, the related share issuances and proceeds were recognized upon each drawdown, when the applicable purchase price was determined in accordance with the VWAP pricing provisions of the ELOC Purchase Agreement
F-28
T3 DEFENSE INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 7 – WARRANTS
The following table summarizes the shares of the Company’s common stock issuable upon exercise of warrants outstanding as of March 31, 2026:
| Warrants Outstanding | ||||||||||||||||
| Range of Exercise Price | Number Outstanding at December 31, 2025 | Weighted Average Remaining Contractual Life (Years) | Weighted Average Exercise Price | |||||||||||||
| Public and Private Warrants | ||||||||||||||||
| September 2025 Private Placement Warrant | ||||||||||||||||
| February 2026 Warrants | ||||||||||||||||
The following table summarizes the shares of the Company’s common stock issuable upon exercise of warrants outstanding as of December 31, 2025:
| Warrants Outstanding | ||||||||||||||||
| Range of Exercise Price | Number Outstanding at December 31, 2025 | Weighted Average Remaining Contractual Life (Years) | Weighted Average Exercise Price | |||||||||||||
| Public and Private Warrants | ||||||||||||||||
| April 2024 Warrants | ||||||||||||||||
| August 2025 Warrant | ||||||||||||||||
| September 2025 Private Placement Warrant | ||||||||||||||||
Warrant activities for the three month ended March 31, 2026 were as follows:
| Number of warrants | Weighted Average Exercise Price | |||||||
| USD | ||||||||
| Outstanding at December 31, 2025 | ||||||||
| Expired | ( | ) | ||||||
| Granted | ||||||||
| Exercised | ( | ) | ||||||
F-29
T3 DEFENSE INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 8 – STOCK BASED COMPENSATION
Stock options generally vest over one to three years, with a maximum term of ten years from the date of grant. These awards become available to the recipient upon the satisfaction a vesting condition based on a period of service. Total stock options activity for the year ended March 31, 2026 is summarized as follows:
| Number of Options | Weighted Average Exercise Price | |||||||
| USD | ||||||||
| Outstanding at December 31, 2025 | ||||||||
| Granted | ||||||||
| Exercised | ||||||||
| Outstanding at March 31, 2026 | ||||||||
| Exercisable at March 31, 2026 | ||||||||
| Options expected to vest | ||||||||
Stock-based compensation expense
for three month ended March 31, 2026 and 2025, was and $
NOTE 9 – LITIGATION
On March 3, 2026, the Company, obtained a copy of a summons and complaint filed in the Supreme Court of the State of New York dated February 24, 2026 by Kingswood Capital Partners, LLC against Star, Nukkleus, Inc. and the Company. The complaint alleges that a success fee is due for an earned investment banking success fee arising from a transaction. The Company denies all the allegations and intends to vigorously defend such action, which it believes is without merit.
F-30
T3 DEFENSE INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 10 – RELATED PARTIES
| A. |
| As of March 31, | As of December 31, | |||||||
| 2026 | 2025 | |||||||
| Note receivable - related party | ||||||||
| Promissory note – related party | ||||||||
| Due from related parties | ||||||||
| Other current liabilities | ||||||||
| B. | Other information: |
On February 17, 2026, the Board of Directors, based on the recommendations and approval of the Compensation Committee, approved the terms of the terms and provisions of a Consulting Agreement between the Company and Billio Ltd., a company in Israel, to provide the services of Menachem Shalom as the principal executive officer of the Company. The consulting agreement terminates and supersedes the (i) Consulting Agreement dated December 16, 2024 between the Company and Billio Ltd., pursuant to which the Company obtained consulting services from the Consultant through Menachem Shalom; (ii) Management Services Agreement dated June 28, 2024, as amended by Amendment No. 1 dated August 8, 2024, between Star 26 Capital, Inc. (“Star Capital”) and Zero One Capital LLC, a Nevada limited liability company (“Zero One”) in which Mr. Shalom is the chief executive officer and controlling member and shareholder of Zero One; and (iii) Offsetting Management Services Agreement dated August 12, 2024 between Zero One and B. Rimon Agencies Ltd., an Israeli company which is currently wholly-owned by Star Capital.
Given the performance of the Company
within the last 15 months, the Compensation Committee and the Board of Directors determined that it was in the best interest of the Company
to provide Mr. Shalom with the amended consulting agreement and increased compensation. The Committee and the Board also authorized a
cash bonus to Mr. Shalom in the amount of $
Pursuant to the terms of the Consulting
Agreement, which is effective as of January 1, 2026, Mr. Shalom will continue to act as the chief executive officer of the Company while
maintaining other executive roles in non-competing companies. For his services, Mr. Shalom will receive a base salary of $
In the event Mr. Shalom is terminated for cause or is no longer employed by the Company for reason of death or disability, he shall only be entitled to his compensation at such time. If he is terminated by the Company without cause, he shall be entitled to 6 months of his base compensation, and if Mr. Shalom resigns, he shall be entitled to compensation for 12 months. If he is terminated for cause, Mr. Shalom shall not be entitled to any compensation.
The Consulting Agreement contains customary non-competition, non-solicitation and confidentiality provisions.
On February 23, 2026, the Company received a letter of resignation from Ms. Aviya Volodarsky pursuant to which Ms. Volodarsky resigned from her position as a member of the board of directors of the Company and from all the committees on which she served for personal reasons. The resignation was effective immediately.
F-31
T3 DEFENSE INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 11 – SEGMENT REPORTING
As of March 31, 2026, the Company
has several subsidiaries, each representing an operating segment: (i) Rimon, (ii) ITS, (iii) Tiltan, (iv) Nimbus and (v) Water. As
of March 31, 2026, Nimbus and Water were not considered material and therefore were reported at
The Company’s chief operating decision maker is its .
The measurement of segment assets is reported on the balance sheet as total consolidated assets.
The chief operating decision maker uses gross profit (loss) to evaluate income generated from the segment assets (return on assets) in deciding whether to reinvest profits into the segment or into other parts of the entity.
The following table presents information about the Company’s reportable segments for the three months ended March 31, 2026 and 2025:
| Three months ended | ||||||||
| March 31 | ||||||||
| 2026 | 2025 | |||||||
| Revenue from Rimon | ||||||||
| Salaries and related compensation | ( | ) | ||||||
| Depreciation | ( | ) | ||||||
| Other cost related to Rimon (mainly materials) | ( | ) | ||||||
| Gross income | ||||||||
| Revenue from ITS | ||||||||
| Salaries and related compensation | ( | ) | ||||||
| Depreciation | ( | ) | ||||||
| Other cost related to ITS (mainly materials) | ( | ) | ||||||
| Gross loss | ( | ) | ||||||
| Revenue from TILTAN | ||||||||
| Salaries and related compensation | ( | ) | ||||||
| Depreciation and amortization | ( | ) | ||||||
| Cost related to TILTAN (mainly lease expenses) | ( | ) | ||||||
| Gross income | ||||||||
| Revenue from other reportable segments | ||||||||
| Cost related to other reportable segments | ( | ) | ||||||
| Gross income | ||||||||
| Research and development expenses | ( | ) | ||||||
| Selling and marketing expenses | ( | ) | ||||||
| Professional services | ( | ) | ( | ) | ||||
| Salaries and related compensation | ( | ) | ( | ) | ||||
| Other general and administrative expenses | ( | ) | ( | ) | ||||
| General and administrative expenses of consolidated variable interest entities | ( | ) | ||||||
| Total Operating expenses | ( | ) | ( | ) | ||||
| Loss from operations | ( | ) | ( | ) | ||||
| Interest expense | ( | ) | ( | ) | ||||
| Interest income of consolidated variable interest entities | ||||||||
| Interest on related parties promissory note | ( | ) | ||||||
| Change in fair value - convertible note | ||||||||
| Change in fair value - stock purchase warrant liabilities | ( | ) | ||||||
| Net loss before tax | ( | ) | ||||||
| Discontinued operation | ( | ) | ( | ) | ||||
| Income taxes | ( | ) | ||||||
| Net loss | ( | ) | ||||||
F-32
T3 DEFENSE INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 12 – SUBSEQUENT EVENTS
Nasdaq Deficiency
On May 5, 2026, the Company received a written notice (the “Notice”) from The Nasdaq Stock Market, LLC (“Nasdaq”)
that it is not in compliance with the minimum bid requirements set forth in Nasdaq Listing Rule 5450(a)(1) for continued listing on The
Nasdaq Global Market. Nasdaq Listing Rule 5450(a)(1) requires listed securities to maintain a minimum bid price of $
The Notice provides that the Company has 180 calendar days, or until November 2, 2026,
to regain compliance with Nasdaq Listing Rule 5450(a)(1). To regain compliance, the bid price of the Company’s common stock must
have a closing bid price of at least $
The Company intends to monitor the closing bid price of its common stock and may, if appropriate, consider implementing available options, including, but not limited to, implementing a reverse stock split of its outstanding securities, to regain compliance with the minimum bid price requirement under the Nasdaq Listing Rules.
Conversion of Debt
On
April 27, 2026, the Company, and Mr. Shalom, executed and delivered the Note Exchange Agreement, pursuant to which the original principal
amount of the notes issued to Mr. Shalom and accrued interest thereon in the amount of $
The notes were assigned to Mr. Shalom from Star 26 Capital Inc. (“Star 26”) pursuant to the terms of the Amended and Restated Securities Purchase Agreement and Call Option dated September 15, 2025 (the “Star Purchase Agreement”) among the Company, Star 26 and the other parties signatory thereto and pursuant to the exercise by Mr. Shalom of his right to obtain shares, notes and warrants from Esousa Group Holdings LLC (“Esousa”) in accordance with the terms of the Call Option Agreement dated January 13, 2026.
In connection with the consummation of the transactions contemplated by the Star Purchase Agreement on January 12, 2026, the Company issued
to Star 26 a warrant to purchase a total of
Sale of Zorronet
On April 10, 2026, Water IO Ltd. (“Water IO”), an Israeli public company traded on the Tel Aviv Stock Exchange in which Star
26 Capital Inc. (“Star 26”), a wholly-owned subsidiary of the Company, holds an approximately
F-33
T3 DEFENSE INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 12 – SUBSEQUENT EVENTS (continued)
As
consideration for the Zorronet shares, BiomX issued to Water IO: (i)
As a result
of the transaction, Water IO holds
Resignation of Directors and Appointment of New Directors
On May 19, 2026, Shiran Fridman and Asaf Nachum were appointed to the Board of Directors of the Company, effective as of May 19, 2026.
Ms. Fridman, age 39, has been an independent business and financial consultant since 2025. From 2007 through 2025 she was an investment manager at Four Seasons Real Estate in Israel.
Mr. Nachum, age 49, is an independent investment advisor and portfolio manager.
Each of Ms. Fridman and Mr. Nachum is entitled to $
The appointments were made to replace David Rokach and Reuven Yeganeh, both of whom resigned as of May 19, 2026.
Exchange of Shares with VisionWave
On May 17, 2026, T3 exchanged
VisionWave, through its own internal developments, various industry partnerships, and through its wholly owned subsidiaries VisionWave Technologies Inc., a Nevada corporation, and Solar Drone Ltd, an Israeli corporation, is at the forefront of creating software and hardware solutions for UxV (Unmanned Vehicles including UAVs, UGVs and USVs – Aerial, Ground and Submersible) capabilities by integrating advanced artificial intelligence (AI) and autonomous solutions for both defense and aerospace applications, and commercial uses. Its technologies, both those available for sale and in development— ranging from high-resolution radars and advanced vision systems; to radio frequency (RF) sensing technologies; to high-speed computer platforms; to payload management for various UxVs like drones and UGVs, seek to improve operational efficiency and precision dual markets; for military and homeland security applications, and for commercial use cases worldwide.
The exchange was consummated pursuant to the terms of the Share Exchange and Swap Agreement dated as of May 13, 2026 (the “Exchange Agreement”) by and between the Company and VisionWave. Both VisionWave and the Company agreed to a 6-month lockup of the shares exchanged and no registration rights were provided. The Exchange Agreement also contained typical representations and warranties for an agreement of this nature.
F-34
TABLE OF CONTENTS
| Page | ||
| REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (Firm Name: Somekh Chaikin / PCAOB ID No. 1057/ Location: Tel Aviv, Israel) | F-36 | |
| Report of Independent Registered Public Accounting Firm – GreenGrowth CPAs (PCAOB ID 6580) | F-37 | |
| CONSOLIDATED FINANCIAL STATEMENTS: | ||
| Consolidated Balance Sheets as of December 31, 2025 and December 31, 2024 | F-39–F-40 | |
| Consolidated Statements of Comprehensive Loss for the years ended December 31, 2025 and 2024 | F-42 | |
| Statements of Changes in Stockholders’ Equity for the years ended December 31, 2025 and 2024 | F-43–F-45 | |
| Consolidated Statements of Cash Flows for the years ended December 31, 2025 and 2024 | F-46–F-48 | |
| Notes to Consolidated Financial Statements | F-49–F-95 |
| Page | ||
| Condensed Consolidated Balance Sheets as of September 30, 2025 (Unaudited) and December 31, 2024 | ||
| Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the Nine Months Ended September 30, 2025 and 2024 | ||
| Unaudited Condensed Consolidated Statements of Changes in Stockholders’ (Deficit) Equity for the Nine Months Ended September 30, 2025 and 2024 | ||
| Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024 | ||
| Notes to Unaudited Condensed Consolidated Financial Statements |
| Page | ||
| Report of Independent Registered Public Accounting Firm – Green Growth CPAs (PCAOB ID 6580) | F-96 | |
| Consolidated Financial Statements: | ||
| Consolidated Balance Sheets - As of December 31, 2024 and September 30, 2024 and 2023 | ||
| Consolidated Statements of Operations and Comprehensive Loss - For the Three Months Ended December 31, 2024 and Years Ended September 30, 2024 and 2023 | ||
| Consolidated Statements of Changes in Stockholders’ Deficit - For the Three Months Ended December 31, 2024 and Years Ended September 30, 2024 and 2023 | ||
| Consolidated Statements of Cash Flows – For the Three Months Ended December 31, 2024 and Years Ended September 30, 2024 and 2023 | ||
| Notes to Consolidated Financial Statements |
Star 26 Capital, Inc.
| Page | ||
| CONDENSED CONSOLIDATED FINANCIAL STATEMENTS: | ||
| Interim unaudited condensed consolidated balance sheets | ||
| Interim unaudited condensed consolidated statements of comprehensive income | ||
| Interim unaudited condensed consolidated statements of stockholders’ deficit | ||
| Interim unaudited condensed consolidated statements of cash flows | ||
| Notes to interim unaudited condensed consolidated financial statements |
Audited Consolidated Financial Statements for the fiscal years ended December 31, 2024 and 2023 and the nine months ended September 30, 2025
| Page | ||
| FINANCIAL STATEMENTS: | ||
| INDEPENDENT AUDITORS’ REPORT | ||
| Consolidated Balance Sheet as of December 31, 2024 | ||
| Consolidated Statement of Comprehensive Loss for the period ended December 31, 2024 | ||
| Consolidated Statement of Changes in Shareholders’ Deficit for the period ended December 31, 2024 | ||
| Consolidated Statement of Cash Flows for the period ended December 31, 2024 | ||
| Notes to Consolidated Financial Statements |
B. Rimon Agencies Ltd.
Audited Consolidated Financial Statements for the fiscal years ended December 31, 2023 and 2022
| Page | ||
| REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | ||
| FINANCIAL STATEMENTS: | ||
| Balance Sheets as of December 31, 2023 and December 31, 2022 | ||
| Statements of Comprehensive Loss for the years ended December 31, 2023 and 2022 | ||
| Statements of Changes in Shareholders’ Deficit for the years ended December 31, 2023 and 2022 | ||
| Statements of Cash Flows for the years ended December 31, 2023 and 2022 | ||
| Notes to Financial Statements |
F-35
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
T3 Defense, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheet of T3 Defense, Inc. and subsidiaries (the Company) as of December 31 2025, the related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ deficit, and cash flows for the year then ended, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the year ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
Somekh Chaikin
Member Firm of KPMG International
We have served as the Company’s auditor since 2026.
Tel Aviv, Israel
April 9, 2026
F-36
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders
of Nukkleus, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Nukkleus, Inc. (the Company) as of December 31, 2024 and September 30, 2024 and the related consolidated statements of comprehensive income (loss), consolidated statements of changes in stockholders’ deficit, and consolidated statements of cash flows for the 3 months and year then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and September 30, 2024, and the results of its operations and its cash flows for the 3 months and year then ended in conformity with accounting principles generally accepted in the United States of America.
Going concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and has a working capital deficit that raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the Company’s auditor from 2023 to 2025.
Los Angeles, California
May 8, 2025
PCAOB ID Number 6580
F-37
Report of Independent Registered Public Accounting Firm – GreenGrowth CPAs (PCAOB ID 6580)
F-38
T3 DEFENSE INC.
CONSOLIDATED BALANCE SHEETS
(USD in thousands except share and per share data)
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | ||||||||
| Current assets of consolidated variable interest entities | ||||||||
| Cash and cash equivalents | ||||||||
| Other current assets | ||||||||
| Restricted cash | ||||||||
| Marketable Securities | ||||||||
| Note receivable - related party (Note 1B) | ||||||||
| Due from related parties (Note 18) | ||||||||
| Accounts receivable, less allowance for credit losses of $ | ||||||||
| Other current assets (Note 5) | ||||||||
| Loan granted (Note 6) | ||||||||
| Current assets from discontinued operations (Note 3) | ||||||||
| Total Current assets | ||||||||
| Non-Current Assets | ||||||||
| Intangible assets (Note 7) | ||||||||
| Operating right of use assets (Note 8) | ||||||||
| Non-Current assets of consolidated variable interest entities | ||||||||
| Cash and securities held in trust account (Note 1D) | ||||||||
| Other non-current assets | ||||||||
| Property and equipment, net | ||||||||
| Goodwill (Note 4) | ||||||||
| Other intangible asset (Note 4) | ||||||||
| Non-Current assets from discontinued operations (Note 3) | ||||||||
| Total Non-Current assets | ||||||||
| Total Assets | ||||||||
The accompanying notes are an integral part of the consolidated financial statements.
F-39
T3 DEFENSE INC.
CONSOLIDATED BALANCE SHEETS
(USD in thousands except share and per share data)
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Liabilities and Shareholders’ Deficit | ||||||||
| Current Liabilities | ||||||||
| Short term loan | ||||||||
| Accounts payable | ||||||||
| Operating lease liability, current portion (Note 8) | ||||||||
| Convertible notes payable, net (Note 9) | ||||||||
| Note payable, net | ||||||||
| Due to related parties | ||||||||
| Other current liabilities (Note 10) | ||||||||
| Other current liabilities of consolidated variable interest entities | ||||||||
| Loans payable - former related parties, current (Note 11) | ||||||||
| Stock purchase warrant liabilities | ||||||||
Deferred considerations (Note 4) | ||||||||
| Derivative liability | ||||||||
| Current liabilities from discontinued operations (Note 3) | ||||||||
| Total current liabilities | ||||||||
| Non-Current liabilities | ||||||||
| Non-current operating lease liabilities (Note 8) | ||||||||
| Loan payable - former related parties, net of current portion (Note 11) | ||||||||
| Deferred tax liability (Note 4) | ||||||||
| Non-current liabilities from discontinued operations (Note 3) | ||||||||
| Total Non-Current liabilities | ||||||||
| Total Liabilities | ||||||||
Noncontrolling interests Subject to Possible Redemption (Note 1D) | ||||||||
| Stockholders’ Deficit (Note 12) | ||||||||
| Preferred stock ($ | ||||||||
| Common stock ($ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive (loss) | ( | ) | ||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Company’s stockholders’ deficit | ( | ) | ( | ) | ||||
| Non-controlling interest | ||||||||
| Total stockholders’ deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ deficit | ||||||||
| (*) | Less than $1 thousand. |
The accompanying notes are an integral part of the consolidated financial statements.
F-40
T3 DEFENSE INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(USD in thousands except share and per share data)
| Year ended December 31 | Three months ended December 31 | Year ended September 30, | ||||||||||
| 2025 | 2024 | 2024 | ||||||||||
| Operating expenses | ||||||||||||
| Impairment loss | ( | ( | ||||||||||
| General and administrative expenses (Note 15) | ( | ) | ( | ) | ( | ) | ||||||
| General and administrative expenses of consolidated variable interest entities | ( | ) | ||||||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ||||||
| Other income (expenses) | ||||||||||||
| Financial expense, net | ( | ) | ( | ) | ( | ) | ||||||
| Interest income of consolidated variable interest entities | ||||||||||||
| Loss on settlement of vendor obligations | ( | ) | ( | ) | ||||||||
| Gain on settlement of vendor obligations | ||||||||||||
| Loss on shares issued as commitment for ELOC agreement | ( | ) | ||||||||||
| Gain on settlement of due to affiliates | ||||||||||||
| Loss on debt extinguishment | ( | ) | ||||||||||
| Penalties on late registration | ( | ) | ||||||||||
| Change in fair value - convertible note embedded derivative | ( | ) | ||||||||||
| Change in fair value - stock purchase warrant liabilities | ( | ) | ||||||||||
| Day one loss of stock purchase warrants issued in connection with conversion of convertible notes | ( | ) | ||||||||||
| Day one loss on private placement | ( | ) | ( | ) | ||||||||
| Other income | ||||||||||||
| Total other income (expense), net | ( | ) | ( | ) | ||||||||
| Net income (loss) before income taxes | ( | ) | ( | ) | ||||||||
| Income taxes | ( | ) | ||||||||||
| Net income (loss) from continuing operation | ( | ) | ( | ) | ||||||||
| Net gain (loss) from discontinued operations (Note 3) | ( | ) | ( | ) | ||||||||
| Net income (loss) | ( | ) | ( | ) | ||||||||
| Net income attributable to non-controlling interests | ||||||||||||
| Net income attributable to the Company’s stockholders | ( | ) | ( | ) | ||||||||
| Net income (loss) | ( | ) | ( | ) | ||||||||
| Earnings (loss) per share from continuing operations (basic) | ( | ) | ( | ) | ||||||||
| Earnings (loss) per share from discontinued operations (basic) | ( | ) | ( | ) | ||||||||
| Total loss per share (basic) | ( | ) | ( | ) | ||||||||
| Weighted average number of shares of Common Stock outstanding - basic (*) (Note 17) | ||||||||||||
| - | ||||||||||||
| Earnings (loss) per share from continuing operations (diluted) | ( | ) | ( | ) | ||||||||
| Earnings (loss) per share from discontinued operations (diluted) | ( | ) | ( | ) | ||||||||
| Total gain per share (diluted) | ( | ) | ( | ) | ||||||||
| Weighted average number of shares of Common Stock outstanding – diluted (Note 17) | ||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
F-41
T3 DEFENSE INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(USD in thousands except share and per share data)
| Year ended | Three months ended | Year ended | ||||||||||
| December 31 | December 31 | September 30, | ||||||||||
| 2025 | 2024 | 2024 | ||||||||||
| Comprehensive income (loss): | ||||||||||||
| Net income | ( | ) | ( | ) | ||||||||
| Other comprehensive loss from discontinued operations | ( | ) | ||||||||||
| Comprehensive income (loss) | ( | ) | ( | ) | ||||||||
| Comprehensive income attributable to non-controlling interests | ||||||||||||
| Comprehensive income (loss) attributable to the Company's stockholders | ( | ) | ( | ) | ||||||||
| Comprehensive income (loss) | ( | ) | ( | ) | ||||||||
The accompanying notes are an integral part of the consolidated financial statements.
F-42
T3 DEFENSE INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
(USD in thousands, except share and per share data)
| Preferred Stock | Common Stock | Additional | Accumulated Other | Non- | Total stockholders’ | ||||||||||||||||||||||||||||||
| Number of Shares |
Amount | Number of Shares |
Amount | paid-in capital |
Accumulated deficit |
Comprehensive Income (Loss) |
controlling interest |
equity (deficit) |
|||||||||||||||||||||||||||
| BALANCE AT DECEMBER 31, 2024 | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||||
| Issuance of common stock from exercise of warrants | - | ||||||||||||||||||||||||||||||||||
| Stock based compensation | - | ||||||||||||||||||||||||||||||||||
| Issuance of common stock and warrants for services performed | - | ||||||||||||||||||||||||||||||||||
| Issuance of common stock in relation to settlement agreement | - | ||||||||||||||||||||||||||||||||||
| Issuance of common stock in relation to conversion of notes | - | ||||||||||||||||||||||||||||||||||
| Issuance of common stock from exercise of options | - | * | |||||||||||||||||||||||||||||||||
| Issuance of common stock in exchange for digital assets | - | ||||||||||||||||||||||||||||||||||
| Issuance of equity-classified warrants | - | - | |||||||||||||||||||||||||||||||||
| Adjustments in relation to deconsolidation of subsidiary | - | - | |||||||||||||||||||||||||||||||||
| Commitment to issue shares as penalty | - | - | |||||||||||||||||||||||||||||||||
| Shares issued as commitment for ELOC agreement | - | - | |||||||||||||||||||||||||||||||||
| Issuance of shares as collateral for investment | - | * | |||||||||||||||||||||||||||||||||
| Issuance of shares for settlement of debt on related party | - | ||||||||||||||||||||||||||||||||||
| Capital contribution – SCII | - | - | |||||||||||||||||||||||||||||||||
| Accretion of Noncontrolling interests Subject to Possible Redemption | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | ( |
) | ( |
) | |||||||||||||||||||||||||||||
| Comprehensive loss for the year | - | - | |||||||||||||||||||||||||||||||||
| BALANCE AT DECEMBER 31, 2025 | ( |
) | ( |
) | |||||||||||||||||||||||||||||||
| (*) | Less than $1 thousand. |
The accompanying notes are an integral part of the consolidated financial statements.
F-43
T3 DEFENSE INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
(USD in thousands, except share and per share data)
| Preferred Stock | Common Stock | Additional | Accumulated Other | Total stockholders’ | ||||||||||||||||||||||||||||
| Number of Shares |
Amount | Number of Shares |
Amount | paid-in capital |
Accumulated deficit |
Comprehensive Income (Loss) |
equity (deficit) |
|||||||||||||||||||||||||
| BALANCE AT SEPTEMBER 30, 2024 | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Rounding of post-split shares outstanding per transfer agent | - | |||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||||||
| Issuance of common stock as compensation for services | - | |||||||||||||||||||||||||||||||
| Issuance of common stock in connection with Exit and Settlement Agreement | - | |||||||||||||||||||||||||||||||
| Issuance of common stock as compensation to board of directors | - | |||||||||||||||||||||||||||||||
| Issuance of common stock to settle accrued expenses and other current liabilities | - | |||||||||||||||||||||||||||||||
| Issuance of common stock, net of issuance of costs | - | |||||||||||||||||||||||||||||||
| Issuance of common stock to settle convertible notes payable | - | |||||||||||||||||||||||||||||||
| Issuance of common stock in connection with private placement and embedded derivative, net of issuance costs | - | |||||||||||||||||||||||||||||||
| Reclassification of stock purchase warrants from equity-classified to liability-classified | - | - | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | ||||||||||||||||||||||||||||||
| Comprehensive loss for the year | - | - | ( |
) | ( |
) | ||||||||||||||||||||||||||
| BALANCE AT DECEMBER 31, 2024 | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||
| (*) | Less than $1 thousand. |
The accompanying notes are an integral part of the consolidated financial statements.
F-44
T3 DEFENSE INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
(USD in thousands, except share and per share data)
| Preferred Stock | Common Stock | Additional | Accumulated Other | Total stockholders’ | ||||||||||||||||||||||||||||
| Number of Shares | Amount | Number of Shares | Amount | paid-in capital | Accumulated deficit | Comprehensive Income (Loss) | equity (deficit) | |||||||||||||||||||||||||
| BALANCE AT SEPTEMBER 30, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||||||
| Issuance of Old Nukk common stock in exchange for a receivable from Brilliant | - | - | ||||||||||||||||||||||||||||||
| Issuance of Old Nukk common stock to settle accrued expenses and other current liabilities | - | - | ||||||||||||||||||||||||||||||
| Issuance of common stock to settle accrued expenses and other current liabilities | - | - | ||||||||||||||||||||||||||||||
| Issuance of stock purchase warrants | - | - | - | |||||||||||||||||||||||||||||
| Issuance of common stock to settle loans payable – related parties | - | - | ||||||||||||||||||||||||||||||
| Issuance of common stock to settle due to affiliates | - | - | ||||||||||||||||||||||||||||||
| Issuance of common stock in connection with reverse recapitalization | - | - | ||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Comprehensive loss for the year | - | - | ( | ) | - | ( | ) | |||||||||||||||||||||||||
| BALANCE AT SEPTEMBER 30, 2024 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
F-45
T3 DEFENSE INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(USD in thousands)
Year ended | Three months ended |
Year ended | ||||||||||
| December 31 | December 31, | September 30, | ||||||||||
| 2025 | 2024 | 2024 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
| Net income (loss) for the year from continuing operations | ( | ) | ( | ) | ||||||||
| Net gain (loss) from discontinued operations | ( | ) | ( | ) | ||||||||
| Net gain (loss) for the year from continuing operation | ( | ) | ( | ) | ||||||||
| Adjustments required to reconcile net loss for the year to net cash used in operating activities: | ||||||||||||
| Amortization of debt discount | ||||||||||||
| Depreciation | ||||||||||||
| Stock-based compensation | ||||||||||||
| Interest earned on marketable securities held in Trust Account | ( | ) | ||||||||||
| Loss on extinguishment of vendor obligations | ||||||||||||
| Gain on extinguishment of vendor obligations | ( | ) | ||||||||||
| Gain on extinguishment of affiliates liabilities due to | ( | ) | ||||||||||
| Impairment loss | ||||||||||||
| Gain on deconsolidation | ( | ) | ||||||||||
| Loss on extinguishment of convertible notes payable | ||||||||||||
| Shares and warrants issued in connection with JV agreement | ||||||||||||
| Shares issued as part of settlement agreement | ||||||||||||
| Shares issued as penalty for filing | ||||||||||||
| Shares issued as commitment for ELOC agreement | ||||||||||||
| Gain on marketable securities | ( | ) | ||||||||||
| Day one loss on stock purchase warrants issued in connection
with private placement | ||||||||||||
| Change in fair value - stock purchase warrant liabilities | ( | ) | ||||||||||
| Change in fair value of liability-classified stock purchase warrants | ( | ) | ||||||||||
| Changes in lease assets and lease liabilities | ( | ) | ||||||||||
| Change in fair value of derivative liabilities | ||||||||||||
| Loss on reclassification of stock purchase warrants from equity-classified
to liability-classified | ||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Other current assets | ( | ) | ( | ) | ||||||||
| Accounts payable | ||||||||||||
| Due to affiliates | ||||||||||||
| Interest payable - related parties | ( | ) | ||||||||||
| Accrued expenses and other current liabilities | ||||||||||||
| Change from discontinued operations | ||||||||||||
| Net cash used in operating activities – continuing operations | ( | ) | ( | ) | ( | ) | ||||||
| Net cash used in operating activities – discontinuing operations | ( | ) | ( | ) | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ( | ) | ||||||
F-46
T3 DEFENSE INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(USD in thousands)
| Year ended December 31 | Three months ended December 31, | Year ended September 30, | ||||||||||
| 2025 | 2024 | 2024 | ||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||
| Proceeds from sale of investment | ||||||||||||
| Investment in short term securities | ||||||||||||
| Loan granted | ( | ) | ||||||||||
| Investment of cash in Trust Account | ( | ) | ||||||||||
| Due to affiliates, net | ( | ) | ||||||||||
| Cash provided by purchase of subsidiary | ||||||||||||
| Payment on property and equipment | ( | ) | ||||||||||
| Advance to target of planned acquisition | ( | ) | ( | ) | ||||||||
| Net cash used in investing activities – continuing operations | ( | ) | ( | ) | ||||||||
| Net cash used in investing activities – discontinuing operations | ( | ) | ||||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
| Business Combination, net of issuance costs | ||||||||||||
| Proceeds from issuance of loans payable - related parties | ||||||||||||
| Proceeds from issuance of private placement and embedded derivative, net of issuance costs | ||||||||||||
| Proceeds from sale of SPAC Units and Private Placement Units, net of issuance costs | ||||||||||||
| Proceeds from issuance of common stock, net of issuance costs | ||||||||||||
| Repayments on loans payable - related parties | ( | ) | ( | ) | ||||||||
| Proceeds from issuance of convertible notes payable and embedded derivative, net of issuance costs | ||||||||||||
| Proceeds from issuance of convertible notes payable and stock purchase warrants, net of issuance costs | ||||||||||||
| Proceeds from issuance of note payable and stock purchase warrants | ||||||||||||
| Net cash provided by financing activities – continuing operations | ||||||||||||
| Net cash provided by financing activities – discontinuing operations | ||||||||||||
| Net cash provided by financing activities | ||||||||||||
| Effect of exchange rate changes on cash and cash equivalents– continuing operations | ||||||||||||
| Effect of exchange rate changes on cash and cash equivalents– discontinuing operations | ||||||||||||
| INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | ( | ) | ( | ) | ||||||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR, INCLUDING DISCONTINUED OPERATIONS | ||||||||||||
| CASH, CASH EQUIVALENTS, RESTRICTED CASH INCLUDING CASH FROM HELD FOR SELL COMPANY AT END OF YEAR, INCLUDING DISCONTINUED OPERATIONS | ||||||||||||
| LESS CASH FROM DISCONTINUED OPERATIONS | ||||||||||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF YEAR FROM CONTINUING OPERATIONS | ||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
F-47
T3 DEFENSE INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(USD in thousands)
| Supplemental disclosure of cash flow information: | ||||||||||||
| Cash paid during the year for: | ||||||||||||
| Interest | ||||||||||||
| Non cash transactions: | ||||||||||||
| Issuance of common stock to settle loans payable – related parties and accrued and unpaid interest | ||||||||||||
| Capital reduction on settlement of loans payable – related parties and accrued and unpaid interest through issuance of common stock | ( | ) | ||||||||||
| Issuance of common stock to settle due to affiliates | ||||||||||||
| Capital reduction on settlement of due to affiliates through issuance of common stock | ( | ) | ||||||||||
| Issuance of common stock to settle accrued expenses and other current liabilities | ||||||||||||
| Settlement of due to affiliates through issuance of loan payable – related parties | ||||||||||||
| Settlement of accrued expenses and other current liabilities through issuance of Old Nukk common stock | ||||||||||||
| Issuance of Old Nukk common stock to Brilliant vendors in exchange for receivable from Brilliant | ||||||||||||
| Settlement of loans payable – related parties through exchange of notes receivable – related parties and accrued and unpaid interest | ||||||||||||
| Settlement of loans payable – related parties through exchange of due from affiliates | ||||||||||||
| Fair value of the stock purchase warrants issued in connection with the private placement agreement | ||||||||||||
| Issuance of common stock issued as compensation for services | ||||||||||||
| Issuance of common stock issued to settle Exit and Settlement Agreement | ||||||||||||
| Issuance of common stock issued as compensation to board of directors | ||||||||||||
| Fair value of derivative liability embedded within convertible note payable | ( | ) | ||||||||||
| Fair value of liability-classified warrants issued in connection with conversion of convertible notes | ( | ) | ||||||||||
| Settlement of convertible notes payable through issuance of common stock | ||||||||||||
| Fair value of stock purchase warrants reclassified from equity-classified to liability-classified | ( | ) | ||||||||||
| Issuance of common stock for digital assets purchased | ||||||||||||
| Initial recognition of operating lease liability and a corresponding right-of- use asset | ||||||||||||
| Fair value of the derivative liability extinguished from conversion of convertible note | ||||||||||||
| Fair value of warrants exercised | ||||||||||||
| Share issued to cover subsidiary's liabilities | ||||||||||||
| Offering costs included in accrued offering costs | ||||||||||||
| Fair value of common stock issued in connection with conversion of convertible note | ||||||||||||
| Cash provided by purchase of subsidiary consolidated for the first time: | ||||||||||||
| Working capital (excluding cash and cash equivalents) | ( | ) | ||||||||||
| Long terms assets | ||||||||||||
| Intangible assets | ||||||||||||
| Goodwill | ||||||||||||
| Deferred considerations | ( | ) | ||||||||||
| Long terms liabilities | ( | ) | ||||||||||
| Net cash provided by from the purchase of subsidiary consolidated for the first time | ( | ) | ||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
F-48
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 1 – GENERAL
| A. | T3 Defense Inc. (formerly known as Nukkleus Inc.) (the “Company” or “T3”) was formed on |
The Business Combination was completed on December 22, 2023. On the Closing Date, and in connection with the closing of the Business Combination, Brilliant changed its name to Nukkleus Inc. and the Company’s common stock began trading on the NASDAQ under the ticker symbol NUKK.
Effective February 9, 2026, the Company changed its name to “T3 Defense Inc.” As a result of the name change, the new ticker symbol for the Company’s common stock is “DFNS” and trading commenced under the new ticker symbol on The Nasdaq Stock Market LLC on February 9, 2026.
Old Nukk was determined to be the accounting acquirer in the Business Combination under Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”). This determination was primarily based on Old Nukk’s shareholders holding a majority of the voting interests in the combined entity, Old Nukk’s ability to appoint and maintain control over the majority of the board of directors of the combined entity, and the continuity of senior management and operations. Accordingly, the Business Combination was accounted for as a reverse recapitalization, with Old Nukk deemed to have issued equity for the net assets of Brilliant. The net assets of Brilliant were recorded at historical cost, and no goodwill or intangible assets were recognized.
While Brilliant was the legal acquirer, Old Nukk was the accounting acquirer; therefore, the historical financial statements of Old Nukk became those of the Company. Accordingly, the consolidated financial statements reflect: (i) Old Nukk’s historical results prior to the Business Combination; (ii) the combined results thereafter; (iii) Old Nukk’s assets and liabilities at their historical cost; and (iv) the Company’s equity structure for all periods presented.
Following the Business Combination, until the change in management in September 2024, the Company operated in the technology business as a full-service transactions technology and advisory business providing end-to-end transactions technology solutions. The Company offered an advanced transactions platform for dealing and risk management with global liquidity and customizable leverage, where users have control over quote and liquidity strategies.
Historically, the Company, through its wholly owned subsidiary, provided
software and technology solutions for the worldwide retail foreign exchange trading industry. The Company’s primary customer was
Triton Capital Markets Ltd. (“TCM”) (formerly known as FXDD Malta Limited). Substantially all of the Company’s revenues
prior to January 1, 2024 were generated pursuant to a General Services Agreement (“GSA”) entered into in May 2016 between
Nukkleus Limited and TCM. The GSA provided for minimum monthly payments of $
Due to non-payment by TCM under the GSA, the Company notified TCM of termination of the agreement. On September 30, 2024, the Company entered into a Release Agreement with TCM and FXDirectDealer LLC confirming that the GSA (and a related services agreement with FXDirectDealer LLC) had been terminated effective January 1, 2024, and that no obligations or liabilities remained outstanding between the parties as of the agreement date. The parties mutually released one another from all claims arising under the agreements.
F-49
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 1 – GENERAL (continued)
The Company historically operated its
blockchain payment solutions through Digital RFQ Limited (“DRFQ”), an indirect wholly owned subsidiary of the Company. In
January 2024, the Company ceased its general support service operations, terminating the existing customer and supplier contracts with
a related party, and shifted its focus to the payment services operations. On December 27, 2024, the Company entered into a Share Purchase
Agreement to sell DRFQ for nominal consideration of £
| B. | Star 26 Capital Inc. |
On
December 15, 2024, the Company entered into a Securities Purchase Agreement and Call Option, as amended by Amendment No. 1 dated February
11, 2025, Amendment No. 2 dated May 13, 2025, and Amendment No. 3 dated June 15, 2025 with Star 26 Capital Inc. (“Star”),
the shareholders of Star (“Star Equity Holders”) and Menachem Shalom, the representative of the Star
Equity Holders, to acquire a controlling
On September 15, 2025, the Company
entered into an Amended and Restated Securities Purchase Agreement (the “Star
Agreement”) with Star, Star Equity Holders, and Menachem
Shalom, pursuant to which the Company agreed to acquire
Pursuant to the Star Agreement, T3 is to acquire a controlling
In addition, Star would receive:
| ● |
| ● | a five-year warrant to purchase an aggregate of |
| ● | $ |
| ● | a |
The shares, warrants, cash and the 6-month note will be assigned by Star to the Star Equity Holders pro-ratably.
The transaction was approved by the Company’s shareholders on December 16, 2025 and was completed on January 12, 2026, at which time Star became a wholly owned subsidiary of the Company.
Because the acquisition closed subsequent to December 31, 2025, the transaction has not been reflected in the accompanying consolidated financial statements. The Company will account for the acquisition under ASC 805, Business Combinations. The preliminary allocation of purchase consideration to the assets acquired and liabilities assumed has not yet been completed as of the date of issuance of these financial statements.
| C. | Tiltan Software Engineering Ltd. |
On December 30, 2025, the Company consummated the acquisition of all
of the issued and outstanding shares of Tiltan Software Engineering Ltd. (“Tiltan”) pursuant to a Stock Purchase Agreement,
as amended, among the Company, its wholly owned subsidiary Nukk Picolo Ltd. (“Nukk Picolo”), Tiltan and Arie Shafir (the “Tiltan
Seller”), in consideration of NIS
F-50
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 1 – GENERAL (continued)
| D. | SC II Acquisition Corp. |
On October 16, 2025, a registration statement was filed with the Securities and Exchange Commission (the “SEC”) regarding a proposed initial public offering (“IPO”) of units of SC II Acquisition Corp. (“SC II”), a newly formed special purpose acquisition company and indirect subsidiary of the Company.
On November 28, 2025, SC II consummated
its IPO of
Simultaneously with the closing of
the Initial Public Offering (“IPO”), SC Capital II Sponsor LLC (the “Sponsor”), a Delaware limited liability
company and indirect subsidiary of the Company in which the Company holds a majority interest, purchased
The proceeds of the IPO were placed in a trust account to be used for the purpose of completing a business combination in accordance with SC II’s amended and restated memorandum and articles of association.
The Company evaluated SC II under ASC 810, Consolidation, including the variable interest entity (“VIE”) model. SC II was determined to be a VIE because, among other factors, the holders of the Class A ordinary shares lack substantive decision-making rights over the activities that most significantly impact SC II’s economic performance and the Sponsor, through its governance rights and economic interests, has the ability to direct such activities.
The Company concluded that it is the primary beneficiary of SC II as it (i) has the power, through its majority ownership and control of the Sponsor, to direct the activities that most significantly impact SC II’s economic performance, including identifying and negotiating a potential business combination, and (ii) has the obligation to absorb losses and the right to receive benefits that could potentially be significant to SC II.
Accordingly, SC II has been consolidated in the Company’s consolidated financial statements as of December 31, 2025.
The
assets held in the trust account are held in money market funds which
invest in U.S. Treasury securities. The Public Shares contain a redemption feature which allows for the redemption of such Public Shares
in connection with the Company’s liquidation, or if there is a shareholder vote or tender offer in connection with the Company’s
initial Business Combination. In accordance with ASC 480-10-S99, the Company classifies Public Shares subject to redemption outside of
permanent equity as the redemption provisions are not solely within the control of the Company. The Company recognizes changes in redemption
value immediately as they occur and will adjust the carrying value of redeemable shares to equal the redemption value at the end of each
reporting period. Immediately upon the closing of the IPO, the Company recognized the accretion from initial book value to redemption
value. The change in the carrying value of redeemable shares will result in charges against additional paid-in capital (to the extent
available) and accumulated deficit. Accordingly, as of December 31, 2025, Class A ordinary shares subject to possible redemption are
presented at redemption value as temporary equity, outside of the shareholders’ equity section of the Company’s balance sheet.
| Gross proceeds | ||||
| Less: | ||||
| Proceeds allocated to Public Rights | ( | ) | ||
| Class A ordinary shares issuance costs | ( | ) | ||
| Plus: | ||||
| Remeasurement of carrying value to redemption value | ||||
| Class A ordinary shares subject to redemption as of December 31, 2025 |
F-51
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 1 – GENERAL (continued)
| E. | Mandragola Joint Venture |
On August 28, 2025, the Company, Nukk Picolo and Mandragola Ltd., an Israeli corporation (“Mandragola”), entered into a Joint Venture Agreement (the “JV Agreement”).
Pursuant to the JV Agreement, the parties
agreed to establish a joint venture company in Israel (the “JV Company”). The JV Company is intended to develop advanced
manufacturing zones in the Baltics and Israel designed to support civil and defense aviation activities, including the establishment
of a NATO-compliant logistics hub in Riga and facilities dedicated to licensed maintenance and repair (MRO) services, aircraft modernization,
resale and leasing activities. Under the JV Agreement, Nukk Picolo will hold a
The JV Agreement further provides that, under certain specified conditions, the Company may require Mandragola to sell its participating interest in the JV Company to the Company in exchange for shares of the Company’s common stock based on a pre-determined valuation formula set forth in the JV Agreement.
Mandragola has committed to provide
the JV Company with a 24-month credit line of up to $
In connection with the JV Agreement, the Company issued to Mandragola:
| ● |
| ● | five-year warrants to purchase |
| ● | five-year performance-based warrants to purchase | |
| ● | As of December 31, 2025 the JV Company has not commenced its operations. |
| F. | Reverse stock split |
Effective October 24, 2024, the Company
amended its amended and restated certificate of incorporation to implement a one-for-eight reverse stock split of its common stock (the
“2024 Reverse Stock Split”) and increased the number of authorized shares of the Company’s common stock from
As a result of the Reverse Stock Split, every seven shares of the Company’s outstanding Common Stock prior to the effect of that amendment were combined and reclassified into one share of the Company’s Common Stock. No fractional shares were issued in connection with or following the reverse split and the shares were rounded to the nearest whole number.
All shares, stock option and per share information in these consolidated financial statements have been restated to reflect the Reverse Stock Split on a retroactive basis.
| G. | Change of Company’s fiscal year |
On February 14, 2025, the Board of Directors of the Company approved a change in the Company’s fiscal year end from September 30 to December 31, effective for the fiscal year beginning January 1, 2024. This change results in a transition period from October 1, 2024, to December 31, 2024.
The decision to change the fiscal year end was made to align the Company’s financial reporting with the calendar year, which is expected to enhance operational efficiency, improve comparability with industry peers, and better serve the needs of shareholders. Further, the Company intends to align its fiscal year with Star.
The periods presented are the year ended December 31, 2025, the three months ended December 31, 2024 (the “Transition Period”), and the year ended September 30, 2024 (“Fiscal 2024”). Each of the Company’s fiscal quarters ends on the last day of the calendar month.
F-52
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 1 – GENERAL (continued)
| H. | Nasdaq Compliance Matter |
On August 28, 2025, the Company received a notification letter from
Nasdaq indicating that the Company was not in compliance with the Market Value Rule because the Company had failed to maintain a minimum
market value of listed securities of $
On September 26, 2025, the Company received written confirmation from
the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) informing the Company that it regained compliance
with the minimum market value of listed securities requirement under Nasdaq Listing Rule 5450(b)(2)(A) (the “Market Value Rule”).
Nasdaq’s September 26, 2025 letter confirmed that, for the last
Consequently, the Company is now in compliance with the Market Value Rule and this matter has been closed.
| I. | Israel – Hamas war |
In October 2023, a large-scale terrorist attack in southern Israel led to the outbreak of armed conflict between Israel and Hamas. The conflict subsequently expanded to additional regional fronts and contributed to a period of heightened geopolitical and security instability in the region.
During 2024 and 2025, hostilities included military operations in Lebanon and direct confrontations involving Iran. These developments increased regional uncertainty and, at times, resulted in temporary disruptions to the Company’s operations in Israel, including limited interruptions to routine business activities.
In September 2025, a ceasefire agreement was reached between Israel and Hamas, and all remaining living Israeli hostages were released and returned to Israel. While the ceasefire has generally held as of the date of these financial statements, the security situation remains sensitive, and the potential for renewed hostilities or broader regional escalation cannot be ruled out. More recently, on February 28, 2026, hostilities between Israel and Iran escalated again. Israel, together with the United States, conducted a major joint military campaign of air and missile strikes against targets in Iran, which triggered a broad Iranian response and contributed to significant regional instability. The situation remains highly fluid, and management is unable to predict when, or on what terms, this escalation will be resolved. Accordingly, the extent of the continued impact on the Company’s operations and financial results, if any, cannot be reasonably estimated at this time.
Given that the majority of the Company’s operations are conducted in Israel, and that all members of the Company’s board of directors and management, as well as most employees, consultants, and service providers, are located in Israel, the Company is directly affected by the economic, political, geopolitical, and military conditions impacting the region. As of December 31, 2025, while ceasefire arrangements with Hamas, Lebanon and Iran were generally in effect and large-scale military operations had subsided, the overall security environment in Israel and the surrounding region remained unstable and unpredictable. Any further escalation or expansion of the conflict could negatively affect both regional and global conditions, and may adversely impact the Company’s business, financial condition, and results of operations.
| J. | Going concern. |
These consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) assuming the Company will continue as a going concern.
At December 31, 2025, the Company had
negative working capital of approximately $
After evaluating these conditions,
management concluded that its plans, when considered in aggregate, alleviate substantial doubt about the Company’s ability to continue
as a going concern. Those plans include: (i) cancellation of a previously contemplated $
Management has determined that its plans are probable of being effectively implemented and probable of mitigating the conditions described above, enabling continuation of the Company’s operations for the foreseeable future.
F-53
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
These consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP).
| A. | Use of Estimates in the preparation of financial statements |
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, certain revenues and expenses, and disclosure of contingent assets and liabilities as of the date of the financial statements. Actual results could differ from those estimates.
As applicable to these financial statements, the most significant estimates and judgments involve valuation of stock-based compensation, valuation of equity-classified stock purchase warrants, valuation of liability-classified stock purchase warrants, valuation of derivative liability, the useful lives of long-lived assets and assumptions used in assessing impairment of long-lived assets.
| B. | Functional currency |
A majority of the revenues of the Company and its subsidiaries are generated in U.S. dollars. In addition, most of the Company’s and its subsidiaries’ costs and expenses are denominated and determined in U.S. dollars. Management believes that the U.S. dollar is the currency of the primary economic environment in which the Company and its subsidiaries operate. Thus, the functional and reporting currency of the Company and its subsidiaries is the U.S. dollar.
Transactions and monetary balances in other currencies are translated into the functional currency using the current exchange rate. Accordingly, monetary accounts maintained in currencies other than the dollar are remeasured into U.S. dollars in accordance with Accounting Standards Codification (“ASC”) 830, “Foreign Currency Matters”. All transaction gains and losses of the remeasured monetary balance sheet items are reflected in the statements of operations as financial income or expenses, as appropriate.
| C. | Principles of consolidation |
The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated on consolidation.
| D. | Change in Presentation |
In the fourth quarter of Fiscal 2025, the Company changed our presentation in tables from United States Dollars to thousands, unless otherwise designated. As a result, certain rounding adjustments have been made to prior period disclosed amounts in order to conform to the current year presentation. In addition, certain prior period amounts may not recalculate due to rounding. These changes were not significant, and no other updates were made to previously reported financial information.
| E. | Cash and cash equivalents, and restricted cash |
Cash equivalents are short-term highly liquid investments which include short term bank deposits (up to three months from date of deposit), that are not restricted as to withdrawals or use that are readily convertible to cash with maturities of three months or less as of the date acquired.
Restricted cash as of December 31,
2025 and 2024 include $
Restricted cash also includes Cash
held in trust account in the amount of $
F-54
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued)
| F. | Marketable Securities |
The Company accounts for marketable equity securities in accordance with ASC Topic 321, “Investments – Equity Securities”. Investments in marketable equity securities are recorded at fair value based on quoted market prices, with unrealized gains and losses, reported as financial income or expenses, as appropriate. These securities are a Level 1 fair value measurement.
| G. | Digital assets |
The Company holds blockchain-based digital tokens. The Company evaluates each class of tokens to determine appropriate accounting treatment. Fair value is determined under ASC 820 using quoted prices in active markets (Level 1).
Crypto assets that meet the scope of ASC 350-60 are measured at fair value, with changes in fair value recognized in earnings as a component of other income (expense). Fair value is determined in accordance with ASC 820 using quoted prices in active markets (Level 1).
Digital tokens that provide enforceable contractual rights to receive future goods or services from the issuer are accounted for based on their economic substance and are excluded from ASC 350-60. Such tokens are recognized as intangible assets and are initially measured at the fair value of consideration transferred, including, when applicable, the grant-date fair value of equity instruments issued.
These intangible service assets are classified as non-current until the related services become available for use and are amortized to operating expense over the expected period of service consumption. The Company evaluates these assets for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable.
| H. | Accounts receivables |
The Company manages credit risk associated with accounts receivables at the customer level. Pursuant to Topic 326 for our accounts receivables, the Company maintain an allowance for doubtful accounts that reflects our estimate of our expected credit losses. Our allowance is estimated using a loss-rate model based on delinquency. The estimated loss rate is based on our historical experience with specific customers, our understanding of our current economic circumstances, reasonable and supportable forecasts, and our own judgment as to the likelihood of ultimate payment based upon available data. The actual rate of future credit losses, however, may not be similar to past experience. Our estimate of doubtful accounts could change based on changing circumstances, including changes in the economy or in the particular circumstances of individual customers. Accordingly, the Company may be required to increase or decrease our allowance for doubtful accounts.
F-55
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued)
| I. | Property, plant and equipment, net |
| 1. | Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. When an asset is retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition is reflected in the Statements of Operations and Comprehensive Loss. |
| 2. | Rates of depreciation: |
| % | ||||
| Furniture and office equipment | ||||
| Leasehold improvements | ||||
| Computers | ||||
| Vehicle | ||||
| (*) |
| J. | Fair value |
Fair value of certain of the Company’s financial instruments including cash, accounts payable, accrued expenses, and other accrued liabilities approximate cost because of their short maturities. The Company measures and reports fair value in accordance with Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements” which defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements.
Fair value, as defined by ASC 820, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of an asset should reflect its highest and best use by market participants, principal (or most advantageous) markets, and an in-use or an in-exchange valuation premise.
Valuation techniques are generally classified into three categories: (i) the market approach; (ii) the income approach; and (iii) the cost approach. The selection and application of one or more of the techniques may require significant judgment and are primarily dependent upon the characteristics of the asset or liability, and the quality and availability of inputs. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. ASC 820 also provides fair value hierarchy for inputs and resulting measurement as follows:
Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities.
Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities; and
Level 3: Unobservable inputs for the asset or liability that are supported by little or no market activity, and that are significant to the fair values.
F-56
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair value measurements are required to be disclosed by the level within the fair value hierarchy in which the fair value measurements in their entirety fall. Fair value measurements using significant unobservable inputs (in level 3 measurements) are subject to expanded disclosure requirements including a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (i) total gains or losses for the period (realized and unrealized), (ii) segregating those gains or losses included in earnings, and (iii) a description of where those gains or losses included in earning are reported in the statement of operations.
The Company’s financial assets that are measured at fair value on a recurring basis by level within the fair value hierarchy are as follows:
| As of December 31, 2025 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| US$ | ||||||||||||||||
| Assets: | ||||||||||||||||
| Marketable Securities | ||||||||||||||||
| Total assets | ||||||||||||||||
The Company’s financial liabilities that are measured at fair value on a recurring basis by level within the fair value hierarchy are as follows:
| As of December 31, 2025 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| US$ | ||||||||||||||||
| Liabilities: | ||||||||||||||||
| September 2025 Private Placement Warrant | ||||||||||||||||
| Total liabilities | ||||||||||||||||
| As of December 31, 2024 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| US$ | ||||||||||||||||
| Liabilities: | ||||||||||||||||
| Embedded Derivative Liability | ||||||||||||||||
| June 2024 Warrants | ||||||||||||||||
| November 2024 Warrant | ||||||||||||||||
| Pre-funded Warrants | ||||||||||||||||
| Private Placement Warrant | ||||||||||||||||
| Total liabilities | ||||||||||||||||
F-57
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued)
The following table presents the changes in fair value of the level 3 fair value measurements of the Company’s liabilities for the period from December 31, 2024 through December 31, 2025.
Changes in fair value are recognized in the consolidated statement of operations within finance expenses. The fair value of the Level 3 liabilities was determined using valuation models. Significant unobservable inputs include expected volatility, expected term, risk-free interest rate and discount rates.
| Embedded Derivative Liability | June 2024 Warrants | November 2024 Warrants | Pre-funded Warrants | Common Stock Warrant | Private Placement Warrant | Total | ||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||
| Outstanding at December 31, 2024 | ||||||||||||||||||||||||||||
| Additions | ||||||||||||||||||||||||||||
| Exercised | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Changes in fair value | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Outstanding at December 31, 2025 | ||||||||||||||||||||||||||||
| Embedded Derivative Liability | June 2024 Warrants | November 2024 Warrants | Pre-funded Warrants | Common Stock Warrant | Private Placement Warrant | Total | ||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||
| Outstanding at October 1, 2024 | ||||||||||||||||||||||||||||
| Additions | ||||||||||||||||||||||||||||
| Changes in fair value | ||||||||||||||||||||||||||||
| Outstanding at December 31, 2024 | ||||||||||||||||||||||||||||
| K. | Variable Interest Entities |
The Company accounts for variable interest entities in accordance with ASC Topic 810, Consolidation (“ASC 810”). Under ASC 810, a variable interest entity (“VIE”) is an entity that either (i) has insufficient equity to permit the entity to finance its activities without additional subordinated financial support or (ii) has equity investors who lack the characteristics of a controlling financial interest. The primary beneficiary of a VIE is the party with both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and the obligation to absorb the losses or the right to receive benefits that could potentially be significant to the VIE.
To assess whether the Company has the power to direct the activities of a VIE that most significantly impact its economic performance, the Company considers all the facts and circumstances including its ongoing rights and responsibilities.
This assessment includes identifying the activities that most
significantly impact the VIE’s economic performance and identifying which party, if any, has power over those activities. In general, the party that makes the most significant decisions affecting the VIE is determined to have the power to direct the activities of the VIE. To assess whether the Company has the obligation to absorb the losses or the right to receive benefits that could potentially be significant to the VIE, the Company considers all of its economic interests, including debt and equity interests, and any other variable interests in the VIE. If the Company determines that it is the party with the power to make the most significant decisions affecting the VIE, and the Company has an obligation to absorb the losses or the right to receive benefits that could potentially be significant to the VIE, then the Company consolidates the VIE.
F-58
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued)
| L. | Business Combinations |
The Company uses its best estimates and assumptions to assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date. The Company’s estimates are inherently uncertain and subject to refinement. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed, with the corresponding offset to goodwill. In addition, uncertain tax positions, tax-related valuation allowances and pre-acquisition contingencies are initially recorded in connection with a business combination as of the acquisition date. The Company continues to collect information and reevaluates these estimates and assumptions quarterly and records any adjustments to the Company’s preliminary estimates to goodwill provided that the Company is within the measurement period. Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the Company’s consolidated statements of operations.
| M. | Intangible assets: |
Intangible assets that are not considered to have an indefinite useful life are amortized using the straight-line basis over their estimated useful lives, as noted below. Recoverability of these assets is measured by a comparison of the carrying amount of the asset to the undiscounted future cash flows expected to be generated by the assets. If the assets are considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired assets.
Intangible assets and their useful lives are as follows:
| Useful Life (in Years) | ||||
| Customer relationships | ||||
| Developed technology | ||||
Acquisition-related intangible assets:
The Company accounts for ASC 350-20 “Goodwill and Other Intangible Assets” (“ASC 350-20”). ASC 805-10 specifies the accounting for business combinations and the criteria for recognizing and reporting intangible assets apart from goodwill.
| N. | Goodwill: |
Goodwill represents the excess of the purchase price over the fair value of the identifiable net assets acquired in business combinations accounted for in accordance with the “purchase method” and is allocated to reporting units at acquisition. Goodwill is not amortized but rather tested for impairment at least annually in accordance with the provisions of ASC Topic 350, “Intangibles - Goodwill and Other”. The Company performs its goodwill annual impairment test for the reporting units at December 31 of each year, or more often if indicators of impairment are present.
Intangible assets with finite lives are amortized using the straight-line basis over their useful lives, to reflect the pattern in which the economic benefits of the intangible assets are consumed or otherwise used up.
F-59
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued)
| O. | Derivative financial instruments |
The Company accounts for derivative instruments in accordance with ASC 815, Derivatives and Hedging (“ASC 815”). Changes in the fair value of derivative instruments are recognized in the consolidated statement of operations... The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risk.
The Company evaluates all of its financial instruments, including notes payable, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. The Company applies significant judgment to identify and evaluate complex terms and conditions in its contracts and agreements to determine whether embedded derivatives exist. Embedded derivatives must be separately measured from the host contract if all the requirements for bifurcation are met. The assessment of the conditions surrounding the bifurcation of embedded derivatives depends on the nature of the host contract. Bifurcated embedded derivatives are recognized at fair value, with changes in fair value recognized in the statement of operations each period. Bifurcated embedded derivatives are classified with the related host contract on the Company’s balance sheet. The Company identified embedded derivatives primarily related to conversion features included in certain financial instruments. These features were evaluated in accordance with ASC 815 and, where required, were bifurcated from the host contract and accounted for as derivative liabilities at fair value.
An evaluation of specifically identified conditions is made to determine whether the fair value of the derivative issued is required to be classified as equity or as a derivative liability. Changes in the estimated fair value of the liability-classified derivative financial instruments are recognized as a non-cash gain or loss on the accompanying consolidated statements of operations and comprehensive loss.
| P. | Stock purchase warrants |
The Company accounts for stock purchase warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing liabilities from equity (“ASC 480”), and ASC 815. The assessment considers whether the stock purchase warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the stock purchase warrants meet all of the requirements for equity classification under ASC 815, including whether the stock purchase warrants are indexed to the Company’s own common shares and whether the holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of issuance, modification, and as of each subsequent quarterly period end date while the stock purchase warrants are outstanding.
For issued or modified stock purchase warrants that meet all of the criteria for equity classification, the stock purchase warrants are required to be recorded as a component of additional paid-in capital at the time of issuance.
For issued or modified stock purchase warrants that do not meet all the criteria for equity classification, the stock purchase warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the liability classified stock purchase warrants are recognized as a non-cash gain or loss on the accompanying consolidated statements of operations and comprehensive loss.
The Company assesses the classification of its common stock purchase warrants at each reporting date to determine whether a change in classification between equity and liability is required. For modified stock purchase warrants that result in a change of classification from equity to liability, a liability is recognized equal to the fair value on the date of modification, additional paid-in capital is adjusted by the fair value of the warrant on the date of issuance.
F-60
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued)
| D. | Assets held for sale |
The Company records assets held for sale in accordance with ASC 360 at the lower of carrying value or fair value less costs to sell. Fair value is the amount obtainable from the sale of the asset in an arm’s length transaction. The reclassification takes place when the assets are available for immediate sale and the sale is highly probable. These conditions are usually met from the date on which a letter of intent or agreement to sell is ready for signing.
| E. | Discontinued operations |
A component of an entity is identified as operations and cash flows that can be clearly distinguished, operationally and financially, from the rest of the entity. Under ASC 205-20, “Presentation of Financial Statements - Discontinued Operations” (“ASC 205-20”), a discontinued operation is a component of an entity that either has been disposed of, or is classified as held for sale and represents a strategic shift that has or will have a major effect on the entity’s operations and financial results, or a newly acquired business or nonprofit activity that upon acquisition is classified as held for sale. Discontinued operations are presented separately from continuing operations in the consolidated statements of Operations and the consolidated statements of cash flows (see Note 9). For long-lived assets or disposals that are classified as held for sale but do not meet the criteria for discontinued operations, the assets and liabilities are presented separately on the balance sheet of the initial period in which it is classified as held for sale.
| F. | Impairment of long-lived assets |
The Company’s long-lived assets are reviewed for impairment in accordance with ASC Topic 360, “Property, Plant and Equipment”, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. impairment expenses were recorded during the years ended December 31, 2025 or 2024.
| G. | Severance pay |
All the Company’s employees have
been signed on Section 14 of Israel’s Severance Compensation Law, 1963 (“Section 14”). Pursuant to Section 14, the
Company’s employees, covered by this section, are entitled only to monthly deposits, at a rate of
Severance expenses for the years ended
December 31, 2024 and 2023 amounted to $
| Q. | Income taxes |
The Company accounts for income taxes in accordance with ASC Topic 740, “Income Taxes”. Accordingly, deferred taxes are determined utilizing the asset and liability method based on the estimated future tax effects of differences between the financial statement carrying amount and the tax bases of assets and liabilities under the applicable tax law. Deferred tax balances are computed using the enacted tax rates expected to be in effect when these differences reverse. Valuation allowances in respect of deferred tax assets are provided for, if necessary, to reduce deferred tax assets to amounts more likely than not to be realized.
The Company accounts for unrecognized
tax benefits in accordance with ASC Topic 740, which prescribes detailed guidance for the financial statement recognition, measurement
and disclosure of unrecognized tax benefits recorded in a Company’s financial statements. According to ASC Topic 740, tax positions
must meet a more-likely-than-not recognition threshold to be recognized. Recognized tax positions are measured as the largest amount
that is greater than
F-61
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued)
| R. | Basic and diluted profit (loss) per Common Stock |
Basic loss per Common Stock is computed by dividing the loss for the period attributable to common stockholders, after allocation of earnings or losses to non-controlling interests or other classes of equity, by the weighted average number of shares of Common Stock outstanding during the period. In computing diluted loss per share, basic loss per share is adjusted to reflect the potential dilution that could occur upon the exercise of potential shares.
| S. | Stock-based compensation |
The Company measures and recognizes the compensation expense for all equity-based payments to employees and nonemployees based on their estimated fair values in accordance with ASC 718, “Compensation- Stock Compensation”. Share-based payments including grants of stock options are recognized in the statement of comprehensive loss as a compensation expense based on the fair value of the award at the date of grant. The fair value of stock options granted is estimated using the Black-Scholes option-pricing model. The Company has expensed compensation costs, net of forfeitures as they occur, applying the accelerated vesting method, over the requisite service period or over the implicit service period when a performance condition affects the vesting, and it is considered probable that the performance condition will be achieved.
| T. | Concentrations of credit risk |
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, loan granted as well as certain other current assets that do not amount to a significant amount. Cash and cash equivalents, which are primarily held in Dollars and New Israeli Shekels, are deposited with major banks in Israel and United States. The Company considers that its cash and cash equivalents have low credit risk based on the credit ratings of the counterparties.
The Company may also be exposed to credit risk with respect to loans granted to third parties. Prior to granting such loans, the Company evaluates the creditworthiness of the borrowers and may obtain collateral or other security when deemed appropriate. The Company monitors the collectability of such loans on an ongoing basis and assesses, at each reporting date, whether there is a need to recognize an allowance for credit losses based on the borrower’s financial condition and other relevant factors.
The Company does not have any significant off-balance-sheet concentration of credit risk, such as foreign exchange contracts, option contracts or other foreign hedging arrangements.
F-62
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued)
| U. | Commitments and Contingencies |
The Company records accruals for loss contingencies arising from claims, litigation and other sources when it is probable that a liability has been incurred and the amount can be reasonably estimated. These accruals are adjusted periodically as assessments change or additional information becomes available. Legal costs incurred in connection with loss contingencies are expensed as incurred.
| V. | Extinguishment and Modification of Debt and Related Instruments |
The Company accounts for the extinguishment of debt in accordance with ASC 470, Debt. An extinguishment of debt occurs when the Company is legally released from being the primary obligor under the liability, including through repayment, settlement, or a modification of terms that is considered substantial.
Upon extinguishment, the Company derecognizes the carrying amount of the debt and recognizes a gain or loss in the consolidated statement of operations for the difference between the reacquisition price and the net carrying amount of the extinguished debt.
The Company evaluates modifications of debt instruments to determine whether such modifications should be accounted for as a modification or an extinguishment. If the terms of the modified debt are substantially different from the original terms, including based on a quantitative assessment, the transaction is accounted for as an extinguishment of the original debt and the issuance of new debt.
In transactions where debt is settled through the issuance of equity instruments, warrants, or other derivative instruments, the Company evaluates whether such transactions represent an extinguishment of debt. The fair value of the instruments issued is used to determine the reacquisition price, and any resulting gain or loss is recognized in the consolidated statement of operations.
| W. | Leases |
The Company determines if an arrangement is or contains a lease at contract inception.
The Company is a lessee in certain operating leases primarily for office space and vehicles. Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities, and operating lease liabilities in our consolidated balance sheets.
ROU assets represent Company’s right to use an underlying asset for the lease term and lease liabilities represent Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, the Company generally uses the incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
The Company monitors for events or changes in circumstances that require
a reassessment of one of its leases. When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment
is made to the carrying amount of the corresponding ROU asset unless doing so would reduce the carrying amount of the ROU asset to an
amount less than
F-63
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued)
| X. | Emerging growth company: |
The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups (“JOBS”) Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as to those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.
| Y. | New Accounting Pronouncements |
Recently Adopted Accounting Standards
The Company adopted ASU 2023-08 on January 1, 2025 using a modified retrospective approach. The adoption affected the accounting for certain crypto assets within the scope of ASC 350-60, which are now measured at fair value with changes in fair value recognized in earnings. Digital tokens that provide enforceable contractual rights to receive future goods or services from the issuer are excluded from the scope of ASC 350-60 and continue to be accounted for based on their economic substance. The impact of adoption was not material to the Company’s consolidated financial statements.
Accounting Standards Not Yet Adopted
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this ASU add specific requirements for income tax disclosures to improve transparency and decision usefulness. The guidance in ASU 2023-09 requires that public business entities disclose specific categories in the income tax rate reconciliation and provide additional qualitative information for reconciling items that meet a quantitative threshold. In addition, the amendments in ASU 2023-09 require that all entities disclose the amount of income taxes paid disaggregated by federal, state, and foreign taxes and disaggregated by individual jurisdictions. The ASU also includes other disclosure amendments related to the disaggregation of income tax expense between federal, state and foreign taxes. The ASU is effective for fiscal years beginning after December 15, 2025. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The amendments in this update should be applied on a prospective basis and retrospective application is permitted. The Company is currently evaluating this ASU to determine its impact on the Company’s disclosures.
F-64
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued)
In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805): Identifying the Acquirer in a Business Combination Involving a Variable Interest Entity. This ASU modifies the guidance for identifying the accounting acquirer in transactions involving VIEs. The ASU is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years, and early adoption is permitted. The amendments are applied prospectively to business combinations occurring after the adoption date. The Company consolidates certain entity that is considered VIEs and is currently evaluating the impact of the adoption of this ASU on its consolidated financial statements and related disclosures.
The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements; however, the impact will depend on the nature of future transactions.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments introduce a practical expedient for estimating expected credit losses on current accounts receivable and current contract assets arising from transactions accounted for under ASC 606. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the timing of adoption and the impact of this guidance on its consolidated financial statements and related disclosures.
In September 2025, the FASB issued ASU 2025-07, Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract. The ASU is effective for annual reporting periods beginning after December 15, 2026, and interim periods within those annual periods. Early adoption is permitted. The Company does not currently have contracts that include share-based noncash consideration; however, management is evaluating the potential impact of this ASU on future transactions.
In September 2025, the FASB also issued ASU 2025-06, Targeted Improvements to the Accounting for Internal-Use Software, which modifies the recognition threshold for capitalization of internal-use software costs. The ASU is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual periods. Early adoption is permitted. The Company is evaluating the impact of this ASU on its internal-use software capitalization policy and does not expect a material impact upon adoption.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies the guidance in Topic 270 to improve the consistency of interim financial reporting. The ASU provides a comprehensive list of required interim disclosures and introduces a disclosure principle requiring entities to 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 fiscal years beginning after December 15, 2028, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating this ASU to determine its impact on the Company’s disclosures.
F-65
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 3 – DISCONTINUED OPERATIONS AND DECONSOLIDATION
On November 8, 2024, the Company entered into a Settlement Agreement
and Release (the “Settlement Agreement”) with Mr. Khurshid, the Company’s former chief executive officer and director
and Match Financial Ltd (“Match”), a subsidiary of the Company, pursuant to which the Company agreed, subject to shareholder
approval, to sell Digital RFQ Limited (“DRFQ”), a wholly owned subsidiary of the Match to Mr. Khurshid or his nominee. In
connection therewith, on December 23, 2024, the parties entered into a Share Purchase Agreement providing for the sale of the subsidiary
for consideration of GBP
As a result of the execution of the Settlement Agreement and management’s commitment to a plan to dispose of the subsidiary, the financial services operating activities met the criteria to be classified as held for sale under ASC 205-20 as of November 8, 2024. Accordingly, the assets and liabilities of the subsidiary were classified as held for sale beginning on that date, and the results of operations of the financial services operating segment have been presented as discontinued operations for all periods subsequent to such classification.
On August 5, 2025, the Company was notified that on July 29, 2025, Match had been placed into administration in the United Kingdom pursuant to the Insolvency Act 1986, and administrators were appointed. On July 29, 2025, the administrators completed a pre-packaged sale of Match’s entire shareholding of the subsidiary to an entity owned by Mr. Khurshid. As a result, the Company lost control of the subsidiary and deconsolidated the subsidiary as of July 29, 2025 in accordance with ASC 810-10-40.
During the preparation of the consolidated financial statements for the quarter ended June 30, 2025, management was unable to obtain complete financial information from the subsidiary due to the loss of direct access to systems and limited cooperation from subsidiary personnel. Accordingly, the results of discontinued operations for the period from April 1, 2025 through July 29, 2025 are based on management’s best estimates derived from historical trends and available information.
Upon deconsolidation, the Company derecognized
the subsidiary’s assets and liabilities and recognized a net gain on deconsolidation of approximately $
Summary Reconciliation of Discontinued Operations
The following tables present the balance sheets and the results of operations of the Company classified as discontinued operations for the periods presented:
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| USD in thousands | USD in thousands | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | ||||||||
| Customer custodial funds | ||||||||
| Customer digital currency assets | ||||||||
| Due from affiliates | ||||||||
| Other current assets | ||||||||
| Total Current assets | ||||||||
| Non-Current Assets | ||||||||
| Intangible asset, net | ||||||||
| Total Non-Current assets | ||||||||
| Total Assets | ||||||||
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T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 3 – DISCONTINUED OPERATIONS AND DECONSOLIDATION (continued)
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| USD in thousands | USD in thousands | |||||||
| Liabilities and Shareholders’ Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | ||||||||
| Customer custodial cash liabilities | ||||||||
| Customer digital currency liabilities | ||||||||
| Due to affiliates | ||||||||
| Loans payable - related parties, current | ||||||||
| Interest payable - related parties, current | ||||||||
| Accrued expenses and other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Non-Current liabilities | ||||||||
| Loan payable - related parties, net of current portion | ||||||||
| Total Non-Current liabilities | ||||||||
| Total Liabilities | ||||||||
| Year ended December 31 | Three months ended December 31 | Year ended September 30 | ||||||||||
| 2025 | 2024 | 2024 | ||||||||||
| Revenues from financial services | ||||||||||||
| Cost of revenues | ( | ) | ( | ) | ( | ) | ||||||
| Gross profit | ||||||||||||
| Operating expenses: | ||||||||||||
| General and administrative | ( | ) | ( | ) | ( | ) | ||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ||||||
| Other income (expenses): | ||||||||||||
| Interest expense - related parties | ( | ) | ( | ) | ( | ) | ||||||
| Gain on termination of GSS GSA – related party | ||||||||||||
| Gain on deconsolidation | ||||||||||||
| Other income (expense) | ( | ) | ||||||||||
| Total other income (expense), net | ( | ) | ||||||||||
| Net loss from discontinued operations | ( | ) | ( | ) | ||||||||
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T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 4 – ACQUISITION OF TILTAN
On December 30, 2025, the Company completed
the acquisition of
The contractual purchase price was
NIS
The cash portion of NIS
The equity portion, equal to NIS
The acquisition has been accounted for as a business combination under ASC 805, Business Combinations. The Company determined that Tiltan constitutes a business as defined under ASC 805 as the acquired set includes inputs, processes, and the ability to generate outputs.
As of December 31, 2025, the Company,
with the assistance of a third-party valuation specialist, completed the allocation of the purchase price to the identifiable assets
acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The aggregate fair value of consideration
transferred was approximately $
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T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 4 – ACQUISITION OF TILTAN (continued)
The acquisition was completed on December 30, 2025 and therefore did not contribute to the Company’s revenues or earnings for the year ended December 31, 2025. Pro forma results of operations have not been presented as the impact of the acquisition is not material. Acquisition-related costs were expensed as incurred and are included in general and administrative expenses.
The allocation of the purchase price was as follows (in thousands):
| December 31, | ||||
| 2025 | ||||
| Net tangible assets acquired | ( | ) | ||
| Customer relationships ( | ||||
| Developed technology ( | ||||
| Deferred tax liabilities | ( | ) | ||
| Goodwill | ||||
Customer relationships were valued using the multi-period excess earnings method. Developed technology was valued using the relief-from-royalty method. The identified intangible assets are being amortized on a straight-line basis over their estimated useful lives.
Deferred tax liabilities were recognized primarily in respect of the fair value adjustments to identifiable intangible assets.
Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired and is primarily attributable to expected synergies, future growth opportunities, assembled workforce and other intangible benefits that do not qualify for separate recognition. The goodwill recognized is not expected to be deductible for income tax purposes.
NOTE 5 – OTHER CURRENT ASSETS
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Prepaid expenses | ||||||||
| Other receivable | ||||||||
NOTE 6 – LOAN GRANTED
On November 1, 2025, the Company entered
into an unsecured promissory note agreement with a third party, pursuant to which the Company advanced an aggregate principal amount
of $
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T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 7 – DIGITAL ASSETS
On July 30, 2025, the Company entered
into a Warrant to Purchase Tokens agreement with Synthetic Darwin LLC (the “Darwin”), pursuant to which the Company paid
a purchase price of $
Tokens issued upon exercise are subject to a six-month transfer restriction, subject to certain parity protections. The agreement also provides anti-dilution style protections, including entitlement to a pro rata portion of future token issuances, forks, or increases in total token supply.
At the time of initial acquisition
in July 2025, the Company exercised a warrant to acquire
Darwin is a blockchain-based digital token issued and recorded on a distributed ledger. The token may be transferable and trade at market-determined
prices on digital asset platforms. The token does not represent an equity interest or contractual claim to assets or cash flows of the
Darwin.
The Company accounts for the warrant
and the underlying tokens based on their economic substance. The tokens acquired upon exercise represent rights to receive services within
a blockchain-based ecosystem but do not represent a contractual claim to cash flows or equity interests. Accordingly, the Company has
concluded that the tokens are not within the scope of ASC 350-60 since they do not represent crypto assets within the scope of that guidance,
but rather rights to future services, and are recognized upon acquisition as indefinite-lived intangible assets. The tokens are initially
measured at the fair value of the consideration transferred, including the fair value of equity instruments issued in accordance with
the contractual pricing mechanism. Because the related services are not yet available, the tokens are not amortized and are instead evaluated
for impairment in accordance with the accounting policy described above. During the year ended December 31, 2025 the Company recorded
an impairment loss of $
NOTE 8 – LEASES
| A. |
| Year ended | Three months ended | Year ended | ||||||||||
| December 31 | December 31, | September 30, | ||||||||||
| 2025 | 2024 | 2024 | ||||||||||
| Operating lease costs | ||||||||||||
| B. |
| Year ended | Three months ended | Year ended | ||||||||||
| December 31 | December 31, | September 30, | ||||||||||
| 2025 | 2024 | 2024 | ||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||||||
| Operating cash flows from operating leases | ||||||||||||
| Right-of-use assets obtained in exchange for lease obligations (non-cash): | ||||||||||||
| Operating leases | ||||||||||||
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T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 8 – LEASES (continued)
| C. |
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Operating leases: | ||||||||
| Operating leases right-of-use asset | ||||||||
| Current operating lease liabilities | ||||||||
| Non-current operating lease liabilities | ||||||||
| Total operating lease liabilities | ||||||||
| - | ||||||||
| Weighted average remaining lease term (years) | ||||||||
| Weighted average discount rate | % | |||||||
| D. |
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| Total operating lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Present value of lease liabilities | ||||
On December 15, 2025, the Company entered into a new lease agreement
for office space in Netanya, Israel for a period of
In December 2025 the Subsidiary exercised
its extension option of a lease agreement for the office space in
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T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 9 – CONVERTIBLE NOTES PAYABLE, NET
The Company’s convertible notes payable consisted of the following:
| Year ended | ||||||||
| December 31 | ||||||||
| 2025 | 2024 | |||||||
| August 2024 Note | ||||||||
| December 2024 Note | ||||||||
| Less: debt issuance costs | ( | ) | ||||||
| Convertible notes payable, net | ||||||||
August 2024 Note:
In August 2024, the Company issued
a senior unsecured promissory note (the “August 2024 Note”) in the principal amount of $
The August 2024 Warrant was determined
to be an equity classified warrant and fair value was calculated as $
In June 2025, the lender sold August
2024 Note and the August 2024 Warrant to an unaffiliated third party. In August 2025, the Company entered into a settlement agreement
with the new holder (the “Holder”) of the August 2024 Note and August 2024 Warrant. Pursuant to the terms of the settlement
agreement, the Holder agreed to waive all events of default in relation to the August 2024 Note. Additionally, the Holder agreed to convert
the August 2024 Note into
Furthermore, on August 11, 2025, the
Company agreed to exchange the August 2024 Warrant for a new warrant (the “Exchange Warrant”) in form and substance similar
to the August 2024 Warrant, provided that such Exchange Warrant permitted the Holder to exercise such Exchange Warrant on a cashless
basis. The Holder then exercised the Exchange Warrant on a cashless basis, resulting in an issuance of
F-72
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 9 – CONVERTIBLE NOTES PAYABLE, NET (continued)
December 2024 Note:
On December 3, 2024, the Company issued
a convertible promissory note (the “December 2024 Note”) in the principal amount of $
The note bears interest at
The note was convertible at the option
of the holder into shares of the Company’s common stock at a conversion price equal to the lower of (i) $
Upon the occurrence of specified events,
including certain price-based triggers, exchange cap limitations, or registration-related events (each, an “Amortization Event”),
the Company was required to make monthly payments of $
Certain embedded features, including
redemption and default provisions, were required to be bifurcated and presented as derivative liabilities at fair value according to ASC
815. The embedded derivatives were initially recorded at fair value of $
During May and June 2025, the holder
converted the entire balance of the note into
NOTE 10 – OTHER CURENT LIABILITIES
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Employees and related institutions | ||||||||
| Accrued expenses | ||||||||
| Dividends payable to former Tiltan shareholder | ||||||||
| Other payable | ||||||||
F-73
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 11 – LOANS PAYABLE – FORMER RELATED PARTIES
Between October 2023 through September
2024, the Company issued promissory notes in the aggregate principal of $
The 2024 Shareholder Loans bear interest
of
In July 2024, a shareholder of the Company made payments on the Company’s behalf to settle an obligation with an affiliate in which the shareholder has a controlling interest. The shareholder entered into an assignment of debt agreement with the affiliate whereby the affiliate assigned its right, title obligation and interest in the obligation by the Company to the shareholder (the “July 2024 Loan”). The July 2024 Loan is noninterest bearing and was due and payable at issuance.
Consisting of the above-mentioned loans, the Company’s loans payable – related parties is summarized as follows:
| Year ended | ||||||||
| December 31 | ||||||||
| 2025 | 2024 | |||||||
| Shareholder 2024 Loans additions | ||||||||
| July 2024 Loan additions | ||||||||
| July 2024 Loan repayments | ( | ) | ( | ) | ||||
| Accrued interest | ||||||||
| As part of current liabilities | ||||||||
| As part of non-current liabilities | ||||||||
In June 2024, as part of the terms
of a note payable entered into,
F-74
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 12 – STOCKHOLDERS’ EQUITY (DEFICIT)
Description of the rights attached to the Shares in the Company:
Common Stock:
Holders of common stock are entitled
to receive dividends and other distributions, as and if declared by the Board out of assets or funds of the Company legally available
and shall share equally on a per share basis. The common stock possesses all voting power of the Company. Each share of common stock
is entitled to
Reverse stock split:
Effective October 24, 2024, the Company
amended its amended and restated certificate of incorporation to implement a one-for-eight reverse stock split of its common stock (the
“2024 Reverse Stock Split”) and increased the number of authorized shares of the Company’s common stock from
Preferred Stock:
The Company is authorized to issue
Transactions:
| A. | In December 2023, |
| B. | In December 2023, |
| C. | In December 2023, |
| D. | In December 2023, |
| E. | During the nine months ending September 30, 2024, the Company issued a total of |
F-75
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 12 – STOCKHOLDERS’ EQUITY (DEFICIT) (continued)
| F. | In November 2024, |
| G. | In November 2024, the Company entered into two securities purchase agreements pursuant to which the Company sold |
| H. | On November 8, 2024, the Company entered into an exit and settlement agreement
(the “Exit and Settlement Agreement”) with three directors of the Board, under which each director resigned effective immediately
and each director received |
| I. | On December 16, 2024, the Company issued an aggregate of |
| J. | In December 2024, |
| K. | On December 18, 2024, the Company entered into a securities purchase agreement for a private placement (the “2024 Private Placement”) pursuant to which an investor purchased from the Company |
On December 19, 2024,
Pursuant
to the terms of the Private Placement, the Company was obligated to file a resale registration statement related to the securities purchased
in the Private Placement and to ensure that such resale registration statement was declared effective within
F-76
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 12 – STOCKHOLDERS’ EQUITY (DEFICIT) (continued)
The Pre-funded Warrant and the Private
Placement Warrant permit the investor to acquire a fixed amount of shares of the Company’s common stock at a per share price of
$
The Company analyzed the 2024 Private Placement in accordance with ASC 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging. The Company determined that the Pre-funded Warrant and the Private Placement Warrant do not meet the criteria for equity classification. Accordingly, the Pre-funded Warrant and the Private Placement Warrant were accounted for as a single liability-classified instrument. The Pre-funded Warrant and the Private Placement Warrant were initially recorded at fair value and are remeasured at fair value at each reporting date, with changes in fair value recognized in the consolidated statements of operations until settlement or expiration.
The Company using a third-party specialist allocated the total proceeds to the Warrant Shares liability and to the Series A Preferred Stock.
Pre-funded Warrant and the Private Placement Warrant Shares liability
The fair value of the Pre-funded Warrant was calculated using the Black-Scholes option pricing Model. The assumptions used to perform the calculations are detailed below:
| December 18, 2024 | December 31, 2024 | |||||||
| Expected volatility (%) | % | % | ||||||
| Risk-free interest rate (%) | % | % | ||||||
| Expected dividend yield | % | % | ||||||
| Expected term (years) | ||||||||
| Conversion price (U.S. dollars) | ||||||||
| Fair value (U.S. dollars in thousands) | ||||||||
The fair value of the Private Placement Warrant was calculated using the Monte Carlo Simulation Model. The assumptions used to perform the calculations are detailed below:
| December 18, 2024 | December 31, 2024 | |||||||
| Expected volatility (%) | % | % | ||||||
| Risk-free interest rate (%) | % | % | ||||||
| Expected dividend yield | % | % | ||||||
| Expected term (years) | ||||||||
| Probability of a fundamental event | % | % | ||||||
| Conversion price (U.S. dollars) | ||||||||
| Fair value (U.S. dollars in thousands) | ||||||||
Based on the above the entire 2024 Private Placement proceeds were allocated to the warrants.
As of December 31, 2025 the Pre-funded Warrant and the Private Placement Warrant were fully exercised
F-77
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 12 – STOCKHOLDERS’ EQUITY (DEFICIT) (continued)
| L. | In February 2025, the investor in the Private Placement sold |
| M. | During July and August 2025, the remaining |
| N. | In April 2025, the Company issued |
| O. | In May and July 2025, the Company issued |
| P. | In May and June 2025, the Company issued a total of |
| Q. | In August 2025, the Company issued |
| R. | In September 2025, the Company issued |
| S. | On September 4, 2025, the Company entered into a Securities Purchase
Agreement with certain accredited investors (the “Securities Purchase Agreement”) for a private placement (the “2025
Private Placement”) pursuant to which the investors (the “Purchasers”) agreed to purchase from the Company |
The Series A Preferred Stock is convertible
at the option of the holder at any time and will be automatically converted into Common Stock or Pre-Funded Warrants in lieu thereof
on the effective date of the Initial Registration Statement whether or not Stockholder Approval has been obtained. If at any time after
the one-year anniversary of the closing of the 2025 Private Placement, the Series A Preferred Stock is then outstanding and the Company
has not received Stockholder Approval, the Series A Preferred Stock is redeemable at the option of the holder at a price per Share equal
to
F-78
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 12 – STOCKHOLDERS’ EQUITY (DEFICIT) (continued)
Pursuant to the Securities Purchase Agreement, the Company was required to seek stockholder approval (the “Stockholder Approval”) related to certain provisions contained in the Certificate and to file a preliminary proxy statement for a special or annual meeting of the Company’s stockholders within six months of the closing of the 2025 Private Placement and hold a meeting as soon as practicable thereafter to seek Stockholder Approval. The Company also granted the Purchasers a right of participation in subsequent financings of the Company for a period of time following closing, subject to certain exempt issuances, and the Company has agreed not to issue securities for a period of time following the closing of the 2025 Private Placement, subject to certain exempt issuances, including issuances pursuant to strategic transactions.
Pursuant to the terms of the 2025 Private
Placement, the Company was obligated to file a resale registration statement related to the securities purchased in the Private Placement
and to ensure that such resale registration statement was declared effective within
The Company analyzed the 2025 Private Placement in accordance with ASC 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging. The Company determined that the Warrant Shares do not meet the criteria for equity classification. Accordingly, the Warrant Shares were accounted for as a single liability-classified instrument. The Warrants are initially recorded at fair value and are remeasured at fair value at each reporting date, with changes in fair value recognized in the consolidated statements of operations until settlement or expiration.
The Company using a third-party specialist allocated the total proceeds to the Warrant Shares liability and to the Series A Preferred Stock.
Warrant Shares liability
The fair value of the Warrant Shares was calculated using the Monte Carlo Simulation Model. The assumptions used to perform the calculations are detailed below:
| September 4, 2025 | December 31, 2025 | |||||||
| Expected volatility (%) | % | % | ||||||
| Risk-free interest rate (%) | % | % | ||||||
| Expected dividend yield | % | % | ||||||
| Expected term (years) | ||||||||
| Conversion price (U.S. dollars) | ||||||||
| Underlying share price (U.S. dollars) | ||||||||
| Fair value (U.S. dollars in thousands) | ||||||||
Based on the above the entire 2025 Private Placement proceeds were allocated to the warrants.
After
the balance sheet date, on January 2, 2026, the Company issued
In addition, on January 2, 2026, the
Company issued
F-79
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 12 – STOCKHOLDERS’ EQUITY (DEFICIT) (continued)
| T. | On September 19, 2025, the Company and Esousa Company Holdings,
LLC, a New York limited liability company (the “Investor”), entered into a common stock purchase agreement (the “ELOC
Purchase Agreement”), which provides that subject to the terms and conditions set forth therein, the Company may sell to the
Investor up to the lesser of (i) $ |
Additionally, on September 19, 2025, the Company and the Investor entered into a registration rights agreement (the “ELOC RRA”), pursuant to which the Company agreed to file a registration statement with the United States Securities and Exchange Commission (“SEC”) covering the resale of Common Shares that are issued to the Investor under the ELOC Purchase Agreement, including the Commitment Shares.
After
the balance sheet date, on January 2, 2026, the Company issued
| U. | On October 9, 2025, the Company issued an aggregate of |
| V. | On October 9, 2025, the Company issued an aggregate of |
| W. | On October 9, 2025, the Company issued |
| X. | On October 9, 2025, the Company issued |
| Y. | On November 13, 2025, the board of directors of the Company approved the issuance of an equity grant to executive officers and consultants under its 2025 Equity Incentive Plan amounting to a total of |
| Z. | On November 13, 2025 and December 23, 2025, the Company issued an aggregate of |
F-80
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 13 – WARRANTS
| a. | On June 11, 2024 (the “Effective Date”), the Company issued
a Senior Unsecured Promissory Note (the “X Group Note 1”) in the principal amount of $ |
The Company and X Group also entered
into a Restructuring Agreement providing that, among other items, X Group, in its sole discretion, will have the right for a period for
six months from the Effective Date (the “Investment Period”), to lend the Company an additional $
In order to induce X Group to provide
the loan contemplated pursuant to the Note, Emil Assentato, a former director and executive officer of the Company, entered into a Voting
Agreement with the Company and X Group agreeing to vote his shares in support of any transaction provided by X Group. The Company and
X Group have agreed that
On September 10, 2024, the Company issued an additional Senior Unsecured
Promissory Note (the “X Group Note 2”) in the principal amount of $
On November 8, 2024, the Company entered
into a Conversion Agreement (the “Conversion Agreement”) with X Group to convert outstanding principal and interest totaling
of $
The assumptions used for the Black-Scholes option pricing model for liability-classified stock purchase warrants are as follows:
| June 2024 Warrants | November 2024 Modification | |||
| Expected volatility (%) | % | |||
| Risk-free interest rate (%) | % | |||
| Expected dividend yield | % | |||
| Expected term of options (years) | ||||
| Exercise price (US dollars) | ||||
| Share price (US dollars) | ||||
F-81
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 13 – WARRANTS (continued)
| November 2024 Warrants | November 2024 Issuance | |||
| Expected volatility (%) | % | |||
| Risk-free interest rate (%) | % | |||
| Expected dividend yield | % | |||
| Expected term of options (years) | ||||
| Exercise price (US dollars) | ||||
| Share price (US dollars) | ||||
| b. | On August 28, 2025, the Company, Nukk Picolo and Mandragola, entered into a JV Agreement (see note 1E). In connection with the JV Agreement, the Company agreed to issue to Mandragola. five-year warrants to purchase |
The Company accounted for the JV Warrants as share-based payment award. Accordingly, the JV Warrants were measured at grant-date fair value and with no subsequent update
The fair value of the JV Warrants was calculated as of grant date using a Monte Carlo simulation model. The key assumptions used in the valuation were as follows:
| Fair value of the JV Warrants | August 28, 2025 | |||
| Expected volatility (%) | % | |||
| Risk-free interest rate (%) | % | |||
| Expected dividend yield | % | |||
| Expected term of options (years) | ||||
| Exercise price (US dollars) | $ | |||
| Share price (US dollars) | $ | |||
| Fair value (U.S. dollars) | $ | |||
The Performance Warrants vest only
upon the JV Company achieving cumulative revenues of $
As of December 31, 2025, management concluded that the revenue target had not been met and that the performance condition was not yet considered probable. Accordingly, no amount was recognized with respect to the Performance Warrants as of that date.
| c. | Pursuant to the September 4, 2025, 2025 Private Placement, the Company issued restricted common stock purchase warrants to initially purchase up to |
F-82
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 13 – WARRANTS (continued)
The following table summarizes the shares of the Company’s common stock issuable upon exercise of warrants outstanding of December 31, 2025:
| Warrants Outstanding | ||||||||||||||||
| Range of Exercise Price | Number Outstanding at December 31, 2025 | Weighted Average Remaining Contractual Life (Years) | Weighted Average Exercise Price | |||||||||||||
| Public and Private Warrants | ||||||||||||||||
| April 2024 Warrants | ||||||||||||||||
| August 2025 Warrant | ||||||||||||||||
| September 2025 Private Placement Warrant | ||||||||||||||||
The following table summarizes the shares of the Company’s common stock issuable upon exercise of warrants outstanding at December 31, 2024:
| Warrants Outstanding | ||||||||||||||||
| Range of Exercise Price | Number Outstanding at December 31, 2024 | Weighted Average Remaining Contractual Life (Years) | Weighted Average Exercise Price | |||||||||||||
| USD | ||||||||||||||||
| Public and Private Warrants | ||||||||||||||||
| April 2024 Warrants | ||||||||||||||||
| June 2024 Warrants | ||||||||||||||||
| August 2024 Warrants | ||||||||||||||||
| November 2024 Warrant | ||||||||||||||||
| Pre-funded Warrants | ||||||||||||||||
| Private Placement Warrant | ||||||||||||||||
Warrant activities for the year ended December 31, 2025 were as follows:
| Number of warrants | Weighted Average Exercise Price | |||||||
| USD | ||||||||
| Outstanding at December 31, 2024 | ||||||||
| Granted | ||||||||
| Exercised | ( | ) | ||||||
F-83
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 14 – STOCK BASED COMPENSATION
Old Nukk Equity Incentive Plan
For periods prior to the reverse recapitalization, the Old Nukk Equity Incentive Plan (the “Old Nukk Plan”) permitted the granting of various awards including stock options (including both nonqualified options and incentive options), stock appreciate rights (“SARs”), stock awards, phantom stock units, performance awards and other share-based awards to employees, outside directors and consultants, and advisors to the Company. Only stock options have been awarded to consultants and advisors under the Old Nukk Plan.
Assumed Options converted into an option to purchase a number of shares of the Company’s common stock equal to the product of the number of shares of Old Nukk common stock and the Exchange Ratio at an exercise price per share equal to the exercise price of the Assumed Options divided by the Exchange Ratio. Each Assumed Option is governed by the same terms and conditions applicable to the Assumed Options prior to the Business Combination. No further grants can be made under the Old Nukk Plan.
2024 Equity Incentive Plan
On October 11, 2024, the Company’s shareholders approved a new long-term incentive award plan (the “2024 Plan”). The 2024 Plan is administered by the Board. The selection of participants, allotment of shares, determination of price and other conditions are approved by the Board at its sole discretion to attract and retain personnel instrumental to the success of the Company.
On November 13, 2024, the Company issued
2025 Equity Incentive Plan
In February 2025, the Company established the Nukkleus Inc 2025 Equity Incentive Plan (the “2025 Plan”) to attract, retain and motivate employees, officers, directors, consultants, agents, advisors and independent contractors of the Company by providing them the opportunity to acquire a proprietary interest in the Company and to align their interest and efforts to the long-term interest of the Company’s stockholders.
On November 13, 2025, the board of
directors of the Company approved the issuance of an equity grant to executive officers and consultants under its 2025 Equity Incentive
Plan amounting to a total of
F-84
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 14 – STOCK BASED COMPENSATION (continued)
Stock options generally vest over one to three years, with a maximum term of ten years from the date of grant. These awards become available to the recipient upon the satisfaction a vesting condition based on a period of service. Total stock options activity for the year ended December 31, 2025 is summarized as follows:
| Number of Options | Weighted Average Exercise Price | |||||||
| USD | ||||||||
| Outstanding at December 31, 2024 | ||||||||
| Granted | ||||||||
| Exercised | ( | ) | ||||||
| Outstanding at December 31, 2025 | ||||||||
| Exercisable at December 31, 2025 | ||||||||
| Options expected to vest | ||||||||
Stock-based compensation expense for
year ended December 31, 2025, for three months ended December 31, 2024 and for year ended September 30, 2024 was $
NOTE 15 – GENERAL AND ADMINISTRATIVE EXPENSES
| Year ended | Three months ended | Year ended | ||||||||||
| December 31 | December 31 | September 30, | ||||||||||
| 2025 | 2024 | 2024 | ||||||||||
| Professional services | ||||||||||||
| Salaries and related expenses | ||||||||||||
| Stock based compensation | ||||||||||||
| Rent and office maintenance | ||||||||||||
| Depreciation | ||||||||||||
| Other expenses | ||||||||||||
F-85
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 16 – INCOME TAX
| A. |
| Year ended | Three months ended | Year ended | ||||||||||
| December 31 | December 31 | September 30, | ||||||||||
| 2025 | 2024 | 2024 | ||||||||||
| United States – continuing operations | ( | ) | ( | ) | ||||||||
| United States – discontinued operations | ( | ) | ||||||||||
| Foreign – discontinued operations | ( | ) | ( | ) | ||||||||
| Income (loss) before income taxes | ( | ) | ( | ) | ||||||||
| B. |
| Year ended | Three months ended | Year ended | ||||||||||
| December 31 | December 31 | September 30, | ||||||||||
| 2025 | 2024 | 2024 | ||||||||||
| Statutory federal income tax rate | % | % | % | |||||||||
| State tax | % | % | % | |||||||||
| Foreign rate different rates | % | % | ( | )% | ||||||||
| Permanent differences | % | % | ( | )% | ||||||||
| Change in valuation allowance | ( | )% | ( | )% | ( | )% | ||||||
| Effective tax rate | % | % | % | |||||||||
| C. |
| Year ended | Three months ended | Year ended | ||||||||||
| December 31 | December 31 | September 30, | ||||||||||
| 2025 | 2024 | 2024 | ||||||||||
| Income (loss) from continuing operation before income taxes | ( | ) | ( | ) | ||||||||
| U.S federal statutory income tax rate | % | % | % | |||||||||
| Income tax (benefit) computed at the statutory income tax rate | ( | ) | ( | ) | ||||||||
| State tax, net of federal benefit | ( | ) | ( | ) | ||||||||
| Discontinued operations | ||||||||||||
| Deferred taxes assets recognition for prior years | ( | ) | ( | ) | ( | ) | ||||||
| Change in valuation allowance | ( | ) | ||||||||||
F-86
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 16 – INCOME TAX (continued)
| D. |
| December 31 | December 31 | |||||||
| Composition of deferred tax assets: | 2025 | 2024 | ||||||
| Operating loss carry-forwards | ||||||||
| Accrued directors’ compensation | ||||||||
| Stock-based compensation | ||||||||
| Income (loss) from change in fair value – derivative liabilities | ||||||||
| Impairment of digital assets | ||||||||
| Allowance for credit losses | ||||||||
| Unrealized foreign currency exchange loss | ||||||||
| Capitalized SPAC acquisition related professional fee | ||||||||
| Operating lease liabilities | ||||||||
| Other temporary differences | ||||||||
| Total deferred tax assets | ||||||||
| Composition of deferred tax liabilities: | ||||||||
| Right-of-use asset | ||||||||
| Intangible assets | ||||||||
| Total deferred tax liabilities | ||||||||
| Net deferred tax assets | ||||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| ( | ) | |||||||
U.S. resident companies are taxed on
their worldwide income for corporate income tax purposes at a statutory rate of
As of December 31, 2025, the Company
and subsidiaries have operating loss carry forwards of approximately $
The Company has a December 31 tax year-end. The federal, state and foreign income tax returns of the Company are subject to examination by various tax authorities.
F-87
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 17 – EARNINGS (LOSS) PER SHARE
Basic loss per share is computed by dividing net loss by the weighted average number of shares outstanding during the year. The weighted average number of shares of Common Stock used in computing basic and diluted loss per Common Stock for the years ended December 31, 2025 and 2024, are as follows:
| Year ended | Three months ended | Year ended | ||||||||||
| December 31 | December 31 | September 30, | ||||||||||
| 2025 | 2024 | 2024 | ||||||||||
| BASIC EPS: | ||||||||||||
| Net income (loss) from continuing operation (numerator): | ( | ) | ( | ) | ||||||||
| Less: net (income) loss attributable to noncontrolling interest | ( | ) | ||||||||||
| Less: accrued distribution on redeemable noncontrolling interest in subsidiary | ( | ) | ||||||||||
| Less: Net income (loss) attributable to preferred stockholders | ( | ) | ||||||||||
| Adjusted income (loss), net of tax - basic | ( | ) | ( | ) | ||||||||
| Weighted average number of shares of Common Stock outstanding attributable to stockholders (Number of shares) | ||||||||||||
| Earnings (loss) per share from continuing operations (basic) | ( | ) | ( | ) | ||||||||
| Net gain (loss) from discontinued operations | ( | ) | ( | ) | ||||||||
| Earnings (loss) per share from discontinued operations (basic) | ( | ) | ( | ) | ||||||||
| DILUTED EPS: | ||||||||||||
| Adjusted income (loss), net of tax - basic | ( | ) | ( | ) | ||||||||
| Add: Net income (loss) attributable to preferred stockholders | ||||||||||||
| Adjusted income (loss), net of tax - diluted | ( | ) | ( | ) | ||||||||
| Weighted-average number of shares outstanding – basic (Number of shares) | ||||||||||||
| Add: dilutive effect of Warrants (Number of shares) | ||||||||||||
| Add: if converted dilutive effect of preferred stockholders | ||||||||||||
| Weighted-average number of shares outstanding - diluted | ||||||||||||
| Earnings (loss) per share from continuing operations (diluted) | ( | ) | ( | ) | ||||||||
| Net gain (loss) from discontinued operations | ( | ) | ( | ) | ||||||||
| Earnings (loss) per share from discontinued operations (diluted) | ( | ) | ( | ) | ||||||||
| Total weighted average number of shares of Common Stock related to outstanding options, excluded from the calculations of diluted loss per share (Number of shares) | ||||||||||||
F-88
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 18 – RELATED PARTIES
| A. |
| Year ended | Three months ended | Year ended | ||||||||||
| December 31 | December 31 | September 30, | ||||||||||
| General and administrative expenses: | ||||||||||||
| Directors’ compensation | ||||||||||||
| Salaries and fees to officers | ||||||||||||
| Total General and administrative expenses | ||||||||||||
| (*) Include share base compensation | ||||||||||||
| B. |
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| Note receivable - related party | ||||||||
| Due from related parties | ||||||||
| Due to related parties | ||||||||
| Other current liabilities | ||||||||
| C. | Other information: |
Menachem Shalom was appointed as a director on July 24, 2024. On December
16, 2024, the Company entered into a Consultancy Agreement with Menachem Shalom, the Company’s CEO, effective September 1, 2024.
Pursuant to the agreement, Mr. Shalom is employed as Chief Executive Officer of the Company unless terminated pursuant to the terms of
the agreement. During the initial term of the agreement (September 2024 through February 2025), Mr. Shalom is entitled to receive $
On December 8, 2025, the Board of Directors of the Company, appointed Morel Levi as the Chief Financial Officer of the Company, effective as of December 8, 2025. Mr. Levi will also serve as the Chief Financial Officer of Nukk Picolo Ltd., a wholly owned subsidiary of the Company (the “Subsidiary”), and has entered into an employment agreement with the Subsidiary.
In connection with his appointment
as Chief Financial Officer of the Company and Subsidiary, Mr. Levi will receive a salary of $
In December 2024, the Company advanced $
F-89
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 19 – SEGMENT REPORTING
During 2025, the Company sold its previously existing operations, which are now presented as discontinued operations (see Note 3). On December 30, 2025, the Company acquired a subsidiary operating in the Defense Software sector (see Note 4).
As of December 31, 2025, the Company
identifies
The Company’s chief operating decision maker is its .
The measurement of segment assets is reported on the balance sheet as total consolidated assets.
The chief operating decision maker uses net income (loss) to evaluate income generated from the segment assets (return on assets) in deciding whether to reinvest profits into the segment or into other parts of the entity.
All of Company's long-lived assets are located in Israel.
Since the acquisition of the Defense Software subsidiary was completed on December 30, 2025, the results of operations for this segment for the year ended December 31, 2025, were immaterial.
Net income (loss), financial expenses (as appear in the statement of comprehensive loss) and information on expenses included in note 15 are used to monitor budget versus actual results. The chief operating decision maker also uses net income (loss) in competitive analysis by benchmarking to the Company’s competitors. The competitive analysis along with monitoring of budget versus actual results are used in assessing performance of the segment and in establishing management’s compensation.
NOTE 20 – SUBSEQUENT EVENTS
Proposed Business Combination
On March 31, 2026, SC II Acquisition Corp., a Cayman Islands exempted
company (the “SPAC”), entered into a non-binding letter of intent (the “LOI”) with a payments technology company
(the “Target”), which outlines the general terms and conditions of a potential business combination (the “Proposed Transaction”)
pursuant to which the SPAC would acquire
The LOI is a preliminary, non-binding expression of mutual interest and does not constitute a binding commitment, obligation or agreement of the SPAC or the Target to consummate the Proposed Transaction or any other transaction. Except for certain limited binding provisions, including, among other things, exclusivity, confidentiality, the waiver of claims against the SPAC’s trust account, and governing law, neither the SPAC nor the Target has any legal obligation to the other party with respect to the Proposed Transaction by virtue of the LOI.
F-90
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 20 – SUBSEQUENT EVENTS (continued)
Cancellation of $16,000,000 Indebtedness
On January 12, 2026, the Company completed the Star purchase transaction
– see note 1B above. On March 31, 2026, the Company agreed on the termination of its obligation to pay $
Pursuant to the terms of the Cancellation Agreement, the entire $
Litigation
On March 3, 2026, the Company, obtained a copy of a summons and complaint filed in the Supreme Court of the State of New York dated February 24, 2026 by Kingswood Capital Partners, LLC against Star, Nukkleus, Inc. and the Company. The complaint alleges that a success fee is due for an earned investment banking success fee arising from a transaction. The Company denies all the allegations and intends to vigorously defend such action, which it believes is without merit.
Private Placement
On February 26, 2026, T3 closed a private placement pursuant to the
terms of a Securities Purchase Agreement with an accredited investor (the “Securities Purchase Agreement”) for a private placement
(the “Private Placement”) pursuant to which the investor (the “Purchaser”) agreed to purchase from the Company
F-91
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 20 – SUBSEQUENT EVENTS (continued)
Pursuant to the Securities Purchase Agreement, the Company is required to seek stockholder approval (the “Stockholder Approval”) related to the issuance of the units to be issued in the Private Placement. The Company is required to file a preliminary proxy statement for a special meeting of the Company’s stockholders within 75 days of the initial closing of the Private Placement. The Company’s directors and officers have agreed to execute voting agreements to vote in favor of the applicable proposals. If the Company does not obtain Stockholder Approval at the first such meeting, the Company is required to call a meeting every 4 months thereafter to seek Stockholder Approval until the earlier of the date on which Stockholder Approval is obtained or the securities are no longer outstanding.
The Company also granted the Purchaser a right of participation in subsequent financings of the Company for a period of time following closing, subject to certain exempt issuances, and has agreed not to issue securities for a period of time following the closing of the Private Placement, subject to certain exempt issuances, including issuances pursuant to strategic transactions.
Under the terms of the Securities Purchase Agreement, the Company agreed not deliver any purchase notices under Company’s equity line of credit with the Purchaser until after the later of the date on which (i) the registration statement is declared effective and (ii) the Company obtains Stockholder Approval and even after such date, certain market conditions must be satisfied.
Series B Preferred Stock
Pursuant to the Certificate of Designations
of Rights, Preferences and Limitations which was filed with the Secretary of State of the State of Delaware prior to closing of the Private
Placement, each share of Series B Preferred Stock has a stated value of $
The Series B Preferred Stock is convertible
at the option of the holder at any time and will be automatically converted into Common Stock or Pre-Funded Warrants in lieu thereof
on the effective date of the registration statement, whether or not the Stockholder Approval has been obtained. If at any time after
the one-year anniversary of the closing of the Private Placement, the Series B Preferred Stock is then outstanding and the Company has
not received Stockholder Approval, the Series B Preferred Stock is redeemable at the option of the holder at a price per Share equal
to
The holders of Series B Preferred Stock
are entitled to
F-92
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 20 – SUBSEQUENT EVENTS (continued)
Common Warrants
The Common Warrants are exercisable
on a cash or cashless basis at the earlier of (i) 180 days following their issuance and (ii) the date the stockholder approval is obtained,
and expire 5 years from the date of issuance. Each Common Warrant will be initially exercisable for
In the event of a Fundamental Transaction (as defined in the Common Warrants), the holders of the Common Warrants will be entitled to receive upon exercise of the Common Warrants the kind and amount of securities, cash or other property that the holders would have received had they exercised the Common Warrants immediately prior to such Fundamental Transaction. Additionally, as more fully described in the Common Warrants, the holders of the Common Warrants will be entitled to receive consideration in an amount equal to the Black Scholes value of the Common Warrant in connection with a Fundamental Transaction.
If the Company fails to timely deliver the Warrant Shares issuable upon exercise of the Common Warrants, the Company will be subject to liquidated damages, payable in the Company’s discretion in cash or shares on the Registration Date (as defined therein) or buy-in. If the Company elects to pay in shares, the number of shares due will be based on the LD Share Formula (as defined below).
Registration Rights Agreement
In connection with the Private Placement,
on February 24, 2026, the Company and the Purchaser entered into a Registration Rights Agreement (the “Registration Rights Agreement”).
Pursuant to the terms of the Registration Rights Agreement, the Company is required to register the resale of the Conversion Shares (and
any shares underlying the Pre-Funded Warrants, if any) and the Warrant Shares. The Company is required to prepare and file an initial
registration statement (the “Initial Registration Statement”) with the Securities and Exchange Commission within
F-93
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 20 – SUBSEQUENT EVENTS (continued)
In connection with the Private Placement,
the Company entered into a Placement Agency Agreement, dated February 24, 2026, with Dawson James Securities Inc. (the “Placement
Agent”), pursuant to which the Placement Agent acted as the sole placement agent for the Private Placement. In consideration for
the foregoing, the Company has agreed to pay customary placement fees to the Placement Agent, including a cash fee equal to
Consulting Agreement
On February 17, 2026, the Board of Directors, based on the recommendations and approval of the Compensation Committee, approved the terms of the terms and provisions of a Consulting Agreement between the Company and Billio Ltd., a company in Israel, to provide the services of Menachem Shalom as the principal executive officer of the Company. The consulting agreement terminates and supersedes the (i) Consulting Agreement dated December 16, 2024 between the Company and Billio Ltd., pursuant to which the Company obtained consulting services from the Consultant through Menachem Shalom; (ii) Management Services Agreement dated June 28, 2024, as amended by Amendment No. 1 dated August 8, 2024, between Star 26 Capital, Inc. (“Star Capital”) and Zero One Capital LLC, a Nevada limited liability company (“Zero One”) in which Mr. Shalom is the chief executive officer and controlling member and shareholder of Zero One; and (iii) Offsetting Management Services Agreement dated August 12, 2024 between Zero One and B. Rimon Agencies Ltd., an Israeli company which is currently wholly-owned by Star Capital.
Given the performance of the Company
within the last 15 months, the Compensation Committee and the Board of Directors determined that it was in the best interest of the Company
to provide Mr. Shalom with the amended consulting agreement and increased compensation. The Committee and the Board also authorized a
cash bonus to Mr. Shalom in the amount of $
Pursuant to the terms of the Consulting
Agreement, which is effective as of January 1, 2026, Mr. Shalom will continue to act as the chief executive officer of the Company while
maintaining other executive roles in non-completing companies. For his services, Mr. Shalom will receive a base salary of $
In the event Mr. Shalom is terminated for cause or is no longer employed by the Company for reason of death or disability, he shall only be entitled to his compensation at such time. If he is terminated by the Company without cause, he shall be entitled to 6 months of his base compensation, and if Mr. Shalom resigns, he shall be entitled to compensation for 12 months. If he is terminated for cause, Mr. Shalom shall not be entitled to any compensation.
The Consulting Agreement contains customary non-competition, non-solicitation and confidentiality provisions.
F-94
T3 DEFENSE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
NOTE 20 – SUBSEQUENT EVENTS (continued)
Director Resignation
On February 23, 2026, the Company received a letter of resignation from Ms. Aviya Volodarsky pursuant to which Ms. Volodarsky resigned from her position as a member of the board of directors of the Company and from all the committees on which she served for personal reasons. The resignation was effective immediately.
Name Change
Effective February 9, 2026, the Company changed its name by the filing of a certificate of correction to the Amendment to its Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to change the name of the Company to “T3 Defense Inc.”. The change in the name of the Company was effectuated pursuant to Section 242(d)(1) of the Delaware General Corporation Law. As a result of the name change, the new ticker of the Company became “DFNS”.
Nimbus Acquisition
On January 15, 2026, the Company consummated
its acquisition (the “Nimbus Acquisition”) of
F-95
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders
of Nukkleus, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Nukkleus, Inc. (the Company) as of December 31, 2024, September 30, 2024 and 2023 and the related consolidated statements of operations and comprehensive loss, consolidated statement of changes in stockholders’ deficit, and consolidated statement of cash flows for the 3 months and years then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, September 30, 2024 and 2023, and the results of its operations and its cash flows for the 3 months and years then ended in conformity with accounting principles generally accepted in the United States of America.
Going concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and has a working capital deficit that raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the Company’s auditor since 2023
Los Angeles, California
May 8, 2025
PCAOB ID Number 6580
F-96
T3 DEFENSE INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2026
(in thousands)
The unaudited pro forma condensed combined financial statements have been prepared for informational purposes only and are not necessarily indicative of what the Company’s condensed financial position or results of operations actually would have been had the Acquisition been consummated on January 1, 2025. In addition, the unaudited pro forma condensed combined financial statements do not purport to project the future financial position or operating results of the Company.
| T3 Defense Inc. | Acquisition of ITS (C) | Adjustments | Pro Forma Combined | |||||||||||||
| REVENUES | ||||||||||||||||
| Revenue | $ | 3,653 | 916 | - | 4,569 | |||||||||||
| COSTS OF REVENUES | ||||||||||||||||
| Cost of revenue | (3,282 | (919 | ) | (40 | )(*) | (4,241 | ) | |||||||||
| GROSS PROFIT (LOSS) | ||||||||||||||||
| Gross Profit (loss) | 371 | (3 | ) | (40 | ) | 328 | ||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Research and development expenses | 274 | - | - | 274 | ||||||||||||
| Selling and marketing expenses | 157 | 12 | - | 169 | ||||||||||||
| General and administrative expenses | 3,528 | 146 | - | 3,674 | ||||||||||||
| General and administrative expenses of consolidated variable interest entities | 223 | - | - | 223 | ||||||||||||
| Total operating expenses | 4,182 | 158 | - | 4,340 | ||||||||||||
| LOSS FROM OPERATIONS | (3,811 | ) | (161 | ) | (40 | ) | (4,012 | ) | ||||||||
| OTHER (EXPENSE) INCOME: | ||||||||||||||||
| Income (interest) expense | (2,591 | ) | 33 | - | (2,558 | ) | ||||||||||
| Interest income of consolidated variable interest entities | 1,790 | - | - | 1,790 | ||||||||||||
| Interest on related parties promissory note | (354 | ) | - | - | (354 | ) | ||||||||||
| Change in fair value - convertible note | 5,392 | - | - | 5,392 | ||||||||||||
| Change in fair value - stock purchase warrant liabilities | (26,635 | ) | - | - | (26,635 | ) | ||||||||||
| Total other income (expense), net | (22,398 | ) | 33 | - | (22,365 | ) | ||||||||||
| LOSS BEFORE INCOME TAXES | (26,209 | ) | (128 | ) | (40 | ) | (26,377 | ) | ||||||||
| Income tax expense | (38 | ) | - | - | (38 | ) | ||||||||||
| NET LOSS FROM CONTINUING OPERATIONS | (26,247 | ) | (128 | ) | (40 | ) | (26,415 | ) | ||||||||
| Net loss from discontinued operations | (104 | ) | - | - | (104 | ) | ||||||||||
| Net Loss | (26,351 | ) | (128 | ) | (40 | ) | (26,519 | ) | ||||||||
| Net income (loss) attributable to noncontrolling interest | 796 | - | 63 | (**) | 859 | |||||||||||
| Net loss attributable to the Company’s stockholders | (27,147 | ) | (128 | ) | (103 | ) | (27,378 | ) | ||||||||
| Loss per common share, basic: | ||||||||||||||||
| Loss from continuing operations, net of tax | (1.01 | ) | (1.01 | ) | ||||||||||||
| Loss from discontinued operations, net of tax | - | - | ||||||||||||||
| Net loss | (1.01 | ) | (1.01 | ) | ||||||||||||
| Loss per common share, diluted: | ||||||||||||||||
| Loss from continuing operations, net of tax | (1.14 | ) | (1.14 | ) | ||||||||||||
| Loss from discontinued operations, net of tax | ||||||||||||||||
| Net Loss | (1.14 | ) | (1.14 | ) | ||||||||||||
| Weighted-average shares outstanding: | ||||||||||||||||
| Basic | 28,158,248 | 28,158,248 | ||||||||||||||
| Diluted | 30,874,436 | 30,874,436 | ||||||||||||||
| (*) | Attributable to the other intangible assets in ITS recognized as part of the purchase price allocation (PPA). |
| (**) | The share of loss attributable to non-controlling (minority) interests reflects the 49% non-controlling interest in ITS. |
F-97
T3 DEFENSE INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2025
(in thousands)
| T3 Defense Inc. | Acquisition of Star26 (A) | Acquisition of ITS (C) | Acquisition of Nimbus (B) | Acquisition of Tiltan (D) | Transaction Adjustments– Tiltan (D) | Transaction Adjustments ITS (C) | Pro Forma Combined | |||||||||||||||||||||||||
| REVENUES | ||||||||||||||||||||||||||||||||
| Revenue | $ | - | 4,103 | 6,746 | 977 | 2,185 | - | - | 14,011 | |||||||||||||||||||||||
| COSTS OF REVENUES | ||||||||||||||||||||||||||||||||
| Cost of revenue | - | (3,538 | ) | (7,135 | ) | (853 | ) | (780 | ) | (606 | )(**) | (485 | )(*) | (13,397 | ) | |||||||||||||||||
| GROSS PROFIT (LOSS) | - | |||||||||||||||||||||||||||||||
| Gross Profit (loss) - other | - | 565 | (389 | ) | 124 | 1,405 | (606 | ) | (485 | ) | 614 | |||||||||||||||||||||
| OPERATING EXPENSES | ||||||||||||||||||||||||||||||||
| Impairment loss | 4,344 | - | - | - | - | - | - | 4,344 | ||||||||||||||||||||||||
| Research and development expenses | - | - | - | - | 484 | - | - | 484 | ||||||||||||||||||||||||
| General and administrative expenses | 28,082 | 3,335 | 2,249 | 152 | 427 | - | - | 34,245 | ||||||||||||||||||||||||
| General and administrative expenses of consolidated variable interest entities | 174 | - | - | - | - | - | - | 174 | ||||||||||||||||||||||||
| 32,600 | 3,335 | 2,249 | 152 | 911 | - | - | 39,247 | |||||||||||||||||||||||||
| LOSS FROM OPERATIONS | (32,600 | ) | (2,770 | ) | (2,638 | ) | (28 | ) | 494 | (606 | ) | (485 | ) | (38,633 | ) | |||||||||||||||||
| OTHER (EXPENSE) INCOME: | ||||||||||||||||||||||||||||||||
| Financial expense, net | (154 | ) | 383 | (472 | ) | (5 | ) | 32 | - | - | (216 | ) | ||||||||||||||||||||
| interest income of consolidated variable interest entities | 279 | - | - | - | - | - | - | 279 | ||||||||||||||||||||||||
| Loss on shares issued as commitment for ELOC agreement | (1,250 | ) | - | - | - | - | - | - | (1,250 | ) | ||||||||||||||||||||||
| Loss on debt extinguishment | (7,484 | ) | - | - | - | - | - | - | (7,484 | ) | ||||||||||||||||||||||
| Penalties on late registration | (1,100 | ) | - | - | - | - | - | - | (1,100 | ) | ||||||||||||||||||||||
| Change in fair value - convertible note embedded derivative | 588 | - | - | - | - | - | - | 588 | ||||||||||||||||||||||||
| Change in fair value - stock purchase warrant liabilities | 131,766 | - | - | - | - | - | - | 131,766 | ||||||||||||||||||||||||
| Day one loss on private placement | (13,435 | ) | - | - | - | - | - | - | (13,435 | ) | ||||||||||||||||||||||
| Other expenses | (577 | ) | - | - | (577 | ) | ||||||||||||||||||||||||||
| Total other income (expense), net | 109,210 | (194 | ) | (472 | ) | (5 | ) | 32 | - | - | 108,571 | |||||||||||||||||||||
| LOSS BEFORE INCOME TAXES | 76,610 | (2,964 | ) | (3,110 | ) | (33 | ) | 526 | (606 | ) | (485 | ) | 69,938 | |||||||||||||||||||
| Income tax expense | (9 | ) | 80 | (154 | ) | - | (48 | ) | 73 | (**) | - | (58 | ) | |||||||||||||||||||
| NET LOSS FROM CONTINUING OPERATIONS | $ | 76,601 | (2,884 | ) | (3,264 | ) | (33 | ) | 478 | (533 | ) | (485 | ) | 69,880 | ||||||||||||||||||
| Net loss from discontinued operations | 2,030 | (26 | ) | - | - | - | - | - | 2,004 | |||||||||||||||||||||||
| NET LOSS | 78,631 | (2,910 | ) | (3,264 | ) | (33 | ) | 478 | (533 | ) | (485 | ) | 71,884 | |||||||||||||||||||
| Net loss attributable to noncontrolling interest | 82 | - | - | - | - | 1,600 | (**) | 1,682 | ||||||||||||||||||||||||
| Net loss attributable to T3 Defense Inc. | 78,549 | (2,910 | ) | (3,264 | ) | (33 | ) | 478 | (533 | ) | (1,600 | ) | 70,202 | |||||||||||||||||||
| (*) | Attributable to the other intangible assets in ITS recognized as part of the purchase price allocation (PPA). |
| (**) | The share of loss attributable to non-controlling (minority) interests reflects the 49% non-controlling interest in ITS. |
| (***) | Attributable to the other intangible assets in Tiltan recognized as part of the purchase price allocation (PPA) |
F-98
T3 DEFENSE INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS
Note 1 - Description of Transaction
| A. | ACQUISITION OF STAR 26 |
On December 15, 2024, the Company entered into a Securities Purchase Agreement and Call Option, as amended by Amendment No. 1 dated February 11, 2025, Amendment No. 2 dated May 13, 2025, and Amendment No. 3 dated June 15, 2025 with Star 26 Capital Inc. (“Star”), the shareholders of Star (“Star Equity Holders”) and Menachem Shalom, the representative of the Star Equity Holders, to acquire a controlling 51% interest in Star, an Israeli corporation engaged as a supplier of generators for “iron dome” launchers and other defence products.
On September 15, 2025, the Company entered into an Amended and Restated Securities Purchase Agreement (the “Star Agreement”) with Star, Star Equity Holders, and Menachem Shalom, pursuant to which the Company agreed to acquire 100% of the issued and outstanding equity of Star. Mr. Shalom, the Company’s Chief Executive Officer and a director, is also a controlling shareholder and director of Star.
On January 12, 2026, T3 acquired 100% interest in Star pursuant to the terms of the Star Agreement. The consideration consisted of $21,000,000, to be paid by a 12-month $16,000,000 promissory note and the balance in $5,000,000 cash, less $4,000,000 representing all amounts lent to Star from T3 since December 15, 2024, the date the original Star Agreement was signed.
In addition, Star received:
| ● | 4,770,340 shares of common stock of T3, | |
| ● | a five-year warrant to purchase an aggregate of 12,017,648 shares of T3’s common stock for an exercise price of $1.50 per share, | |
| ● | A promissory note in the principal amount of $3,000,000 (the “Six-Month Note”), which note accrues interest at the rate of 8% per annum and matures July 12, 2026; and | |
| ● | A promissory note in the principal amount of $3,000,000 (the “Three-Month Note”), which note matures April 12, 2026. |
The shares, warrants, the Six-Month Note and the Three-Month Note were assigned by Star to the Star Equity Holders pro-ratably.
The transaction was approved by the Company’s shareholders on December 16, 2025 and was completed on January 12, 2026, at which time Star became a wholly owned subsidiary of the Company.
F-99
T3 DEFENSE INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS
Note 1 - Description of Transaction (continued)
The acquisition has been accounted for as a business combination under ASC 805, Business Combinations. The Company determined that Star constitutes a business as defined under ASC 805 as the acquired set includes inputs, processes, and the ability to generate outputs.
The Company, with the assistance of a third-party specialist, calculated the total consideration at $69,433. The fair value of the share issued was determined at $18,151 based on the share price of Company’s common stock as the date of the closing. The Fair value of the promissory notes issued was determined at $5,636.
The fair value of the Common Warrant was calculated using the Black Scholes option pricing model. The assumptions used to perform the calculations are detailed below:
| January 12, 2026 | ||||
| Expected volatility (%) | 264 | % | ||
| Risk-free interest rate (%) | 3.66 | % | ||
| Expected dividend yield | 0.0 | % | ||
| Expected term (years) | 5 | |||
| Conversion price (U.S. dollars) | 1.5 | |||
| Underlying share price (U.S. dollars) | 3.81 | |||
| Fair value (U.S. dollars in thousands) | 45,645 | |||
F-100
T3 DEFENSE INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS
Note 1 - Description of Transaction (continued)
The table below summarizes the fair value of assets acquired and liabilities assumed following the adjustments mentioned above as of the acquisition date:
| January 12, 2026 | ||||
| U.S. Dollars (in thousands) | ||||
| Working capital | (6,683 | ) | ||
| Long terms assets | 4,805 | |||
| Intangible assets | 333 | |||
| Intangible assets of available for sale, net | 697 | |||
| Goodwill | 72,255 | |||
| Other comprehensive income | 139 | |||
| Non-controlling interest | (734 | ) | ||
| Long term liabilities | (1,379 | ) | ||
| Net assets acquired | 69,433 | |||
As of March 31, 2026, the Company, with the assistance of a third-party valuation specialist, completed the initial allocation of the purchase price to the identifiable assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The aggregate fair value of consideration transferred was approximately $69.4 million.
F-101
T3 DEFENSE INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS
Note 1 - Description of Transaction (continued)
The allocation of the purchase price was as follows (in thousands):
| January 12, 2026 | ||||
| Net tangible assets acquired | (3,702 | ) | ||
| Customer relationships (2-year useful life) | 31 | |||
| Distributor relations (3-year useful life) | 16 | |||
| Order backlog (2-year useful life) | 190 | |||
| Intangible assets of available for sale | 905 | |||
| Deferred tax liabilities | (54 | ) | ||
| Deferred tax liabilities of available for sale | (208 | ) | ||
| Goodwill | 72,255 | |||
| 69,433 | ||||
Customer relationships, distributor relations and order backlog were valued using the multi-period excess earnings method. Developed technology was valued using the relief-from-royalty method. The identified intangible assets are being amortized on a straight-line basis over their estimated useful lives.
Deferred tax liabilities were recognized primarily in respect of the fair value adjustments to identifiable intangible assets.
Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired and is primarily attributable to expected synergies, future growth opportunities, assembled workforce and other intangible benefits that do not qualify for separate recognition. The goodwill recognized is not expected to be deductible for income tax purposes.
F-102
T3 DEFENSE INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS
Note 1 - Description of Transaction (continued)
| B. | ACQUISITION OF NIMBUS |
On January 15, 2026, the Company consummated its acquisition (the “Nimbus Acquisition”) of 100% of Nimbus Drones Technologies and Marketing Ltd., an Israeli private company (“Nimbus”) specializing in unmanned aerial systems and services, pursuant to the terms of that certain Stock Purchase Agreement, dated January 15, 2026 (the “Nimbus Purchase Agreement”), by and among the Company, Nimbus and Elad Defense LLC (“Elad”). In connection with the closing of the Nimbus Acquisition, the Company issued to Elad as consideration (i) 1,850,000 shares of Common Stock and (ii) a $3,250,000 convertible 24-month note (the “Nimbus Note”) bearing 6% interest, which is convertible at the option of the holder at a fixed price of $2.00 per share. The Nimbus Note also prohibits the Company from issuing the holder shares that would result in the holder beneficially owning more than 4.99% of the outstanding shares of Common Stock. As of February 17, 2026, the Nimbus Note was converted into an aggregate of 1,625,000 shares of Common Stock.
The acquisition has been accounted for as a business combination under ASC 805, Business Combinations. The Company determined that Nimbus constitutes a business as defined under ASC 805 as the acquired set includes inputs, processes, and the ability to generate outputs.
The total consideration of the acquisition was calculated using a third-party appraiser at approximately $15,298 and is comprised of the following components:
| 1. | Share consideration consisting of 1,850,000 shares of the Company’s Common Stock, issued to Elad, with an estimated fair value of $6,753, based on Company’s closing share price of $3.65 on the acquisition date. |
| 2. | The Nimbus Note, with an estimated fair value of approximately $8,545 thousand. The fair value of the Nimbus Note was estimated as of the acquisition date with the assistance of a third-party valuation specialist, considering the terms of the Nimbus Note, including the fixed conversion price of $2.00 per share, the Company’s closing share price of $3.65 on the acquisition date. |
The Company completed the initial allocation of the purchase price to the identifiable assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The following table summarizes the allocation of the purchase price as of January 15, 2026:
| January 15, 2026 | ||||
| U.S. Dollars (in thousands) | ||||
| Working capital | 21 | |||
| Long terms assets | 2 | |||
| Long term liabilities | (84 | ) | ||
| Goodwill | 15,359 | |||
| Total consideration transferred | 15,298 | |||
F-103
T3 DEFENSE INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS
Note 1 - Description of Transaction (continued)
The Company, with the assistance of a third-party valuation specialist, completed the initial allocation of the purchase price to the identifiable assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. No separately identifiable intangible assets were recognized, as the Company, with the assistance of the valuation specialist, did not identify any material order backlog, customer relationships, proprietary technology or non-compete arrangements that met the recognition criteria under ASC 805.
Goodwill represents the excess of the purchase price over the fair value of the identifiable net liabilities assumed and is primarily attributable to expected synergies, future growth opportunities, assembled workforce and other intangible benefits that do not qualify for separate recognition. The goodwill recognized is not expected to be deductible for income tax purposes.
The acquisition was completed on January 15, 2026.
| C. | ACQUISITION OF ITS |
On June 8, 2025, Star Twenty Six Ltd. (“Star Twenty Six”) entered into an agreement with ITS and its shareholder Mr. Gera Eron, pursuant to which Star Twenty Six will lend to ITS NIS 10,000,000 (approximately USD 3 million). In return Star Twenty Six would receive 51% of the share capital of ITS on a fully diluted basis. Pursuant to the terms of the agreement, Star Twenty Six was also granted an option to purchase the remainder 49% of ITS for three years from the controlling shareholder. Depending on whether the option is exercised in the first, second- or third-year hereafter, the agreed purchase price for the 49% is 25 million NIS, 30 million NIS or 35 million NIS, respectively.
On February 16, 2026, Star Twenty Six acquired 51% of the outstanding equity capital of ITS on a fully diluted basis and has a 3- year option to acquire the remainder 49% from the other shareholder of ITS.
The Company completed the initial allocation of the purchase price to the identifiable assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The following table summarizes the allocation of the purchase price as of February 16, 2026:
| February 16, 2026 | ||||
| U.S. Dollars (in thousands) | ||||
| Working capital | (2,592 | ) | ||
| Long terms assets | 2,915 | |||
| Goodwill and Intangible assets | 9,698 | |||
| Non-controlling interest | (1,005 | ) | ||
| Long term liabilities | (7,972 | ) | ||
| Net assets acquired | 1,044 | |||
The Company equally allocated the excess of the purchase price over the fair value of identifiable net assets acquired between goodwill and intangible assets.
The Company has estimated the amortization of the other intangible assets over a period of ten years. The acquisition was completed on February 16, 2026. The unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2026 include the operations of ITS from January 1, 2026 until February 15, 2026.
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T3 DEFENSE INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS
Note 1 - Description of Transaction (continued)
| D. | ACQUISITION OF TILTAN |
On December 30, 2025, the Company completed the acquisition of 100% of the issued and outstanding shares of Tiltan Software Engineering Ltd. (“Tiltan”), an Israeli provider of AI-based software solutions for defense and aerospace applications, pursuant to a Stock Purchase Agreement (the “Tiltan Purchase Agreement”). The acquisition was undertaken to expand the Company’s capabilities in AI-based software solutions and to leverage expected synergies and growth opportunities in the defense and aerospace sectors. As a result of the acquisition, Tiltan became an indirect wholly owned subsidiary of the Company.
The contractual purchase price was NIS 47.6 million (approximately $14.0 million based on the exchange rate at the acquisition date), payable 75% in cash and 25% in shares of the Company’s common stock.
The cash portion of NIS 35,700 thousand is payable in installments through June 29, 2026 and is primarily evidenced by a secured promissory note in the principal amount of NIS 29,750 thousand. The note does not bear interest unless an event of default occurs and is secured by a first-priority pledge over the shares of Tiltan. Deferred cash payments were measured at fair value as of the acquisition date by discounting contractual amounts using a market-based discount rate.
The equity portion, equal to NIS 11,900 thousand, represents a fixed monetary amount to be settled in a variable number of shares. At closing, shares were deposited into escrow, with the final number of shares to be determined based on the market price on June 29, 2026. If the value of escrowed shares is less than the required amount, the Company is obligated to issue additional shares or pay the shortfall in cash. The equity consideration was measured at fair value based on the closing market price of the Company’s common stock on the acquisition date.
The acquisition has been accounted for as a business combination under ASC 805, Business Combinations. The Company determined that Tiltan constitutes a business as defined under ASC 805 as the acquired set includes inputs, processes, and the ability to generate outputs.
As of December 31, 2025, the Company, with the assistance of a third-party valuation specialist, completed the allocation of the purchase price to the identifiable assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The aggregate fair value of consideration transferred was approximately $14.3 million.
The acquisition was completed on December 30, 2025 and therefore did not contribute to the Company’s revenues or earnings for the year ended December 31, 2025. Acquisition-related costs were expensed as incurred and are included in general and administrative expenses.
The allocation of the purchase price was as follows (in thousands):
| December 31, | ||||
| 2025 | ||||
| Net tangible assets acquired | (86 | ) | ||
| Customer relationships (11-year useful life) | 4,663 | |||
| Developed technology (15-year useful life) | 2,725 | |||
| Deferred tax liabilities | (887 | ) | ||
| Goodwill | 7,688 | |||
| 14,103 | ||||
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T3 DEFENSE INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS
Note 1 - Description of Transaction (continued)
Customer relationships were valued using the multi-period excess earnings method. Developed technology was valued using the relief-from-royalty method. The identified intangible assets are being amortized on a straight-line basis over their estimated useful lives.
Deferred tax liabilities were recognized primarily in respect of the fair value adjustments to identifiable intangible assets.
Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired and is primarily attributable to expected synergies, future growth opportunities, assembled workforce and other intangible benefits that do not qualify for separate recognition. The goodwill recognized is not expected to be deductible for income tax purposes.
Note 2 - Basis of Presentation
The unaudited pro forma condensed combined financial information is presented to illustrate the effects of the acquisition of subsidiaries, as if it had occurred on January 1, 2025 the beginning of the most recently completed fiscal year preceding the Acquisitions. The unaudited pro forma condensed combined financial statements were prepared in accordance with Article 11 of Regulation S-X, as amended by Securities and Exchange Commission (the “SEC”) Final Rule Release No. 33-10786, Amendments to Financial Disclosures About Acquired and Disposed Businesses and are presented to illustrate the estimated effects of the Acquisitions and Related Transactions.
The unaudited pro forma condensed combined statements of operations for the three months ended March 31, 2026 and for the year ended December 31, 2025 are based upon, derived from and should be read in conjunction with the Company’s historical unaudited condensed consolidated financial statements for the three months ended March 31, 2026 as filed on Form 10-Q with the SEC on May 20, 2026 and the Company’s historical audited consolidated financial statements for the year ended December 31, 2025 (which are available in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 as filed with the SEC on April 9, 2026 ). The financial statements of Star, including its wholly-owned subsidiary B. Rimon Agencies Ltd., and the requisite pro forma financial statements were included in the proxy statement regarding the special stockholders’ meeting with respect to the acquisition of Star by T3 which was filed with the SEC on September 30, 2025 and the registration statement on Form S-1 which was filed with the SEC on February 11, 2025 (registration no. 333-293384). The audited financial statements of ITS, including its wholly-owned subsidiary Positech, as well as pro forma financial statements, were filed with the SEC under a Form 8-K/A on April 1, 2026.
F-106
T3 DEFENSE INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS
Note 2 - Basis of Presentation (continued)
The historical combined financial information has been adjusted to give pro forma effect to reflect the accounting for the Acquisitions in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). In the opinion of management, all adjustments necessary to present fairly the unaudited pro forma condensed combined financial information have been made. The assumptions underlying the pro forma adjustments are described fully in the accompanying notes, which should be read in conjunction with the unaudited pro forma condensed combined financial information. Balance sheet pro forma has not been presented since the consolidated balance sheet as of March 31, 2026 includes all the entities acquired.
The Acquisitions is being accounted for as a business combination using the acquisition method of accounting under the provisions of Accounting Standards Codification (“ASC”) Topic 805, “Business Combinations” (“ASC 805”). Under ASC 805, all assets acquired and liabilities assumed are recorded at their acquisition date fair value. The allocation of the purchase price as reflected in the unaudited pro forma condensed combined financial information is based upon management’s internally developed preliminary estimates of the fair market value of the assets acquired and liabilities assumed, as if the Acquisitions had occurred on the aforementioned dates. This allocation of the purchase price depends upon certain estimates and assumptions, all of which are preliminary and, in some instances, are incomplete. Any adjustments to the preliminary estimated fair value amounts could have a significant impact on the unaudited pro forma condensed combined financial information contained herein, and our future results of operations and financial position.
The accounting policies used in the preparation of the unaudited pro forma condensed combined financial information are consistent with those described in the Company’s unaudited financial statements as of and for the three months ended March 31, 2026. Management performed a comprehensive review of the accounting policies between the entities. Management is currently not aware of any significant accounting policy differences and has therefore not made any adjustments to the pro forma condensed combined financial information related to any potential differences.
The unaudited pro forma condensed combined financial information is not necessarily indicative of the combined financial position or results of operations that would have been realized had the Acquisitions occurred as of the dates indicated, nor is it meant to be indicative of any anticipated combined financial position or future results of operations that the Company will experience after the Acquisitions.
F-107
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses expected to be incurred in connection with the issuance and distribution of common stock registered hereby, all of which, except for the SEC registration fee, are estimated.
| SEC registration fee | $ | 1467 | ||
| Miscellaneous expenses | $ | 0 | ||
| Legal | $ | 30,000 | ||
| Accounting fees and expenses | $ | 20,000 | ||
| Printing expenses | $ | 0 | ||
| Total | $ | 51,467 |
We will pay the expenses, other than any underwriting discounts and commissions, associated with the resale of securities pursuant to this prospectus. The Selling Stockholders will bear all commissions and discounts, if any, attributable to their sales of the shares of Common Stock.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law contains provisions for indemnification of our officers and directors, and under certain circumstances, our employees and other persons. Our bylaws require us to indemnify such persons to the fullest extent permitted by Delaware law. Each such person will be indemnified in any proceeding if such person acted in good faith and in a manner that such person reasonably believed to be in, or not opposed to, our best interests. The indemnification would cover expenses, including attorney’s fees, judgments, fines and amounts paid in settlement. Our bylaws also provide that we may purchase and maintain insurance on behalf of any of our present or past directors or officers insuring against any liability asserted against such person incurred in their capacity as a director or officer or arising out of such status, whether or not we would have the power to indemnify such person.
We have no other indemnification provisions in our certificate of incorporation, bylaws or otherwise specifically providing for indemnification of directors, officers and controlling persons against liability under the Securities Act.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us under the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
On May 28, 2024, the Company entered into a Settlement Agreement and Stipulation (the “Settlement Agreement”) with Silverback Capital Corporation (“SCC”) to settle outstanding claims owed to SCC. Pursuant to the Settlement Agreement, SCC has agreed to purchase certain outstanding payables between the Company and designated vendors of the Company totaling $1,118,953.75 (the “Payables”) and will exchange such Payables for a settlement amount payable in shares of common stock of the Company (the “Settlement Shares”). The Settlement Shares shall be priced at 70% of the average of the three lowest trading prices during the five trading day period prior to a share request, which may not be less than $0.05 per share. In the event the Company’s market price decreases to or below $0.75 per share, then either the Company or SCC may declare a default. SCC has agreed that it will not become the beneficial owner of more than 4.99% of common stock of the Company at any point in time. Further, the Settlement Agreement provides that Settlement Shares may not be issued to SCC if such issuance would exceed 19.9% of the outstanding common stock as of May 23, 2024. The Settlement Agreement and the issuance of the Settlement Shares was approved by the Circuit Court of the Twelfth Judicial Circuit Court for Manatee County, Florida (the “Court”) on May 29, 2024 (Case No. 2024 CA 755). The Court entered an Order confirming the fairness of the terms and conditions of the Settlement Agreement and the issuance of the Settlement Shares.
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Pursuant to the Settlement Agreement, during the period from May 1, 2024 through November 13, 2024, the Company issued an aggregate of 590,854 shares of its common stock.
Senior Unsecured Promissory Note – August 2024
On August 1, 2024 (the “August 2024 Effective Date”), the Company issued a Senior Unsecured Promissory Note (the “East Asia Note”) in the principal amount of $515,500 to East Asia Technology Investments Limited (the “East Asia”) in consideration of cash proceeds in the amount of $412,075. The August 2024 Note bears interest of 12.0% per annum and is due and payable six months after issuance. As an additional inducement to provide the loan as outlined under the East Asia Note, the Company issued East Asia a Stock Purchase Warrant (“East Asia Warrant”) to acquire 175,000 shares of common stock at a per share price of $2.00 for a term of five years that may be exercised on a cash or cashless basis. East Asia shall have the right to convert the principal and interest payable under the East Asia Note into shares of common stock of the Company at a per share conversion price of $2.50.
On June 25, 2025, East Asia sold the East Asia Note and the East Asia Warrant to an unaffiliated third party. In connection with the sale, the Company, East Asia and Palm Global Technologies Limited (“Palm”), a party in which the Company has previously entered into letter of intent, entered into a Mutual Release Agreement dated June 19, 2025 which was executed June 25, 2025. Pursuant to the Mutual Release Agreement, Palm and East Asia released the Company and the Company released Palm and East Asia from all claims, demands, causes of action, suits, debts, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, extents, executions, and any other liabilities whatsoever.
Common Shares
In July 2024, the Company issued 500,000 shares of its common stock to settle accrued and unpaid professional fees.
In July 2024, the Company issued 300,000 shares of its common stock for services rendered and to be rendered.
On November 8, 2024, the Company entered into a securities purchase agreement with NUKK TRACKER NOTES - CH1108678926 / 23714, series of notes (Series 24) issued by ProETP DAC pursuant to which the Company sold 110,707 shares of its common stock at a purchase price of $2.09456 per share, for aggregate gross proceeds of $231,882.
On November 8, 2024, the Company entered into a Conversion Agreement (the “Conversion Agreement”) with X Group Fund of Funds to convert outstanding principal and interest totaling $771,085 (the “X Group Debt”) into shares of common stock of the Company. Pursuant to the Conversion Agreement, the Company issued 385,542 shares of its common stock and a warrant to purchase 351,424 shares of common stock exercisable for a period of five years at an exercise price of $2.00 per share in exchange for the cancellation of the X Group Debt. Further, the Company and X Group entered into a letter agreement providing that X Group may not exercise the Stock Purchase Warrant dated June 11, 2024 to acquire 150,000 shares of common stock at a per share price of $2.00 in the event such exercise would result in X Group holding in excess of 19.9% of the Company’s outstanding shares of common stock as of November 8, 2024.
On November 8, 2024, the Company entered into Settlement Agreement and Release with each of Craig Vallis and Oliver Worsley providing that the Company will issue 125,000 and 75,000 shares of common stock, respectively, in consideration of each party releasing the Company for compensation owed for services.
On December 3, 2024, the Company entered into the Standby Equity Purchase Agreement (“SEPA”) with YA II PN, LTD, a Cayman Islands exempt limited partnership (the “Investor”) pursuant to which the Company has the right to sell to the Investor up to $10 million of shares of its common stock, subject to certain limitations and conditions set forth in the SEPA, from time to time during the term of the SEPA. Sales of the shares of common stock to the Investor under the SEPA, and the timing of any such sales, are at the Company’s option, and the Company is under no obligation to sell any shares of common stock to the Investor under the SEPA except in connection with notices that may be submitted by the Investor, in certain circumstances as described below.
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In connection with the SEPA, and subject to the conditions set forth therein, the Investor has agreed to advance to the Company in the form of convertible promissory notes (the “Convertible Notes”) an aggregate principal amount of $2.0 million (the “Pre-Paid Advance”), which was to be advanced to the Company in three tranches. The first tranche of the Pre-Paid Advance, in the amount of $0.50 million, was disbursed to the Company on December 3, 2024 (the “YA Note”). On December 19, 2024, the Company and YA II PN Ltd. (the “Investor”) entered into a Termination Agreement pursuant to which the SEPA and the Registration Rights Agreement were terminated provided that such termination had no effect or bearing on, and shall in no way alter in any way the YA Note or any portion of the SEPA or the Registration Rights Agreement related to the Note, or any rights of the Investor or obligations of the Company related to the Note.
Private Placement - December 2024
On December 18, 2024, the Company entered into a Securities Purchase Agreement with an accredited investor (the “Securities Purchase Agreement”) for a private placement (the “Private Placement”) pursuant to which the investor (the “Purchaser”) agreed to purchase from the Company 1,666,666 units for an aggregate purchase price of $10,000,000 or a per unit price of $6.00 with each unit consisting of (i) one share (the “Shares”) of common stock, par value $0.0001 per share, of the Company (the “Common Stock”) and (ii) a common stock purchase warrant to purchase up to one and one half shares of Common Stock (the “Common Warrant”). At the discretion of the Purchaser, it may elect to acquire one pre-funded common stock purchase warrant in lieu of one Share (the “Pre-Funded Warrant”). Each Share and accompanying Common Warrant was sold together at a combined offering price of $6.00 per Share and Common Warrant. The Pre-Funded Warrant is immediately exercisable, at a nominal exercise price of $0.0001 per share, and may be exercised at any time until the Pre-Funded Warrant is fully exercised. The Common Warrant will have an exercise price of $6.00 per share, are immediately exercisable on a cash or cashless basis and will expire five (5) years from the date of issuance. The Units were priced in excess of the average Nasdaq Official Closing Price of the Company’s common stock (as reflected on Nasdaq.com) for the five trading days immediately preceding the signing of the Securities Purchase Agreement. The Private Placement closed on December 20, 2024.
The Securities Purchase Agreement contains customary representations, warranties and agreements of the Company and the Purchaser and customary indemnification rights and obligations of the parties thereto. Pursuant to the Securities Purchase Agreement, the Company is required to register the resale of the Shares and the shares issuable upon exercise of the Common Warrant and the Pre-Funded Warrant. The Company is required to prepare and file a registration statement with the Securities and Exchange Commission within 15 days of the date of the Securities Purchase Agreement (the “Filing Deadline”) and to use commercially reasonable efforts to have the registration statement declared effective within 45 days of the closing of the Private Placement or 75 days in the event of a full review (the “Effectiveness Deadline”). In certain circumstances including, but not limited to, if the Company misses the Filing Deadline or the Effectiveness Deadline, then the Company will be required to pay to the Purchasers an amount in cash, as partial liquidated damages and not as a penalty, equal to the product of 5.0% multiplied by the aggregate purchase price.
Pursuant to a Placement Agency Agreement, dated December 18, 2024, between the Company and Dawson James Securities Inc. (the “Placement Agent”) entered into in connection with the Private Offering, the Placement Agent acted as the sole placement agent for the Private Placement and the Company has paid customary placement fees to the Placement Agent, including a cash fee equal to 7.0% of the gross proceeds raised in the Private Placement and 4.0% on all proceeds from the exercise of the Common Warrants. Pursuant to the Placement Agency Agreement, the Company has also agreed to reimburse certain expenses of the Placement Agent incurred in connection with the Private Placement.
In order to compensate various executive officers, directors and consultants of the Company who have provided services to the Company for an extended period of time with limited compensation, the Company issued an aggregate of 1,337,500 restricted stock grants consisting of restricted shares of common stock under its stock incentive plans on December 16, 2024 prior to the market opened on such date of which Menachem Shalom received 500,000 shares of common stock, Anastasiia Kotaieva, a former director, received 150,000 shares of common stock and each of the directors of the Company received 10,000 shares of common stock. To date, prior to the restricted stock grant, the directors of the Company have not received any compensation for their service and Mr. Shalom has not received an equity award for his service. The shares of common stock were issued without registration under the Securities Act pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act. The sale of the shares of common stock did not involve any public offering and each participant either received or had access to adequate information the Company. No advertising or general solicitation was made in connection with the issuance of the shares of common stock.
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Private Placement – September 2025
On September 4, 2025, the Company entered into a Securities Purchase Agreement with certain accredited investors for a private placement (the “September 2025 Private Placement”) pursuant to which the investors agreed to purchase from the Company 200 units for an aggregate purchase price of $10,000,000 or a per unit price of $50,000, with each unit consisting of (i) one restricted share of the Company’s Series A Convertible Preferred Stock, par value $0.0001 per share, and (ii) restricted common stock purchase warrants to initially purchase up to 15,957 shares of the Company’s common stock, subject to adjustment and exchange pursuant to the terms thereunder. The September 2025 Private Placement Offering closed on September 9, 2025.
The issuances of the shares described above were exempt from registration under Section 4(a)(2) and/or Rule 506(b) of Regulation D as promulgated by the Securities and Exchange Commission under the Securities Act, as transactions by an issuer not involving any public offering.
Equity Line of Credit – September 2025
On September 19, 2025, the Company and Esousa Group Holdings, LLC, a New York limited liability company (the “ELOC Investor”), entered into a common stock purchase agreement (the “ELOC Purchase Agreement”), which provides that subject to the terms and conditions set forth therein, the Company may sell to the ELOC Investor up to the lesser of (i) $250,000,000 of Common Stock (the “ELOC Common Shares”) and (ii) the number of shares of Common Stock (including the Commitment Shares (as defined below)) which equals 19.99% of the Common Stock outstanding immediately prior to the execution of the ELOC Purchase Agreement (subject to certain exceptions provided in the ELOC Purchase Agreement), from time to time during the term of the ELOC Purchase Agreement. Upon entering into the ELOC Purchase Agreement, the Company agreed to issue to the ELOC Investor $1,250,000 worth of Common Stock (the “Commitment Shares”), determined by the lower of the (i) the VWAP on the effective date of the registration statement covering the Common Shares and the Commitment Shares and (ii) the closing sale price on the effective date of said registration statement; provided, however, that if the Company elects to terminate the ELOC Purchase Agreement, the Commitment Shares’ calculation shall be based on the date of termination rather than the effective date of the registration statement. The ELOC Common Shares purchased pursuant to the ELOC Purchase Agreement will be purchased from time to time at a price equal to a discounted price of 97.5% of the lower of: (i) the lowest daily VWAP of any trading day during the three trading days preceding the date on which the Company submits a draw down notice; and (ii) the closing sale price of the Common Stock on the applicable VWAP purchase date. The maximum amount of any VWAP purchase shall not exceed 20% of the trading volume in the Common Stock on the Nasdaq Stock Market on the applicable purchase date.
Based in part upon the representations of the ELOC Investor in the ELOC Purchase Agreement, the offer and sale of the Commitment Shares to the ELOC Investor is exempt from the registration requirements of the Securities Act pursuant to the exemptions afforded by Section 4(a)(2) of the Securities Act. The ELOC Investor represented that it is an accredited investor, as such term is defined in Rule 501(a)(3) of Regulation D under the Securities Act, and that it is acquiring the shares for investment purposes and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered under or exempt from the registration requirements of the Securities Act.
Tiltan Acquisition
On December 30, 2025, the Company consummated its acquisition (the “Tiltan Acquisition”) of all of the issued and outstanding shares of Tiltan Software Engineering Ltd. (“Tiltan”) pursuant to a Stock Purchase Agreement, as amended (the “Tiltan Purchase Agreement”), among the Company, its wholly owned subsidiary Nukk Picolo Ltd. (“Nukk Picolo”), Tiltan and Arie Shafir (the “Seller”). In connection with the closing of the Tiltan Acquisition, the Company (i) deposited 2,000,000 shares of Common Stock into escrow with an escrow agent as consideration that may be released to the Seller in accordance with the Tiltan Purchase Agreement and (ii) issued a secured promissory note in the principal amount of NIS 29,750,000 (approximately $8,750,000) to the Seller as consideration. The issuances of these securities were exempt from registration under Section 4(a)(2) of the Securities Act as transactions by an issuer not involving a public offering.
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Star 26 Acquisition
On January 12, 2026, the Company consummated its acquisition (the “Star 26 Acquisition”) of 100% of the issued and outstanding capital stock of Star 26 Capital, Inc., a Nevada corporation (“Star 26”), pursuant to the terms of that certain Amended and Restated Securities Purchase Agreement and Call Option, dated September 15, 2025 (the “Star 26 Purchase Agreement”), by and among the Company, Star 26, the shareholders of Star 26 (the “Star Sellers”), and Menachem Shalom, as representative of the Star Sellers. In connection with the closing of the Star 26 Acquisition, the Company issued to Star 26 as consideration: (i) a 12-month note in the principal amount of $16,000,000; (ii) 4,770,340 shares of Common Stock; (iii) a warrant to purchase 12,017,648 shares of Common Stock at an exercise price of $1.50 per share, exercisable for a period of five years from the closing date; (iv) a promissory note in the principal amount of $3,000,000, which accrues interest at the rate of 8% per annum and matures on July 12, 2026; and (v) a promissory note in the principal amount of $3,000,000, which matures on April 12, 2026. The issuances of the securities described above were exempt from registration under Section 4(a)(2) and/or Rule 506(b) of Regulation D as promulgated by the Securities and Exchange Commission under the Securities Act, as transactions by an issuer not involving any public offering.
Nimbus Acquisition
On January 15, 2026, the Company consummated its acquisition (the “Nimbus Acquisition”) of 100% of Nimbus Drones Technologies and Marketing Ltd., an Israeli private company (“Nimbus”), pursuant to the terms of that certain Stock Purchase Agreement, dated January 15, 2026 (the “Nimbus Purchase Agreement”), by and among the Company, Nimbus and Elad Defense LLC (“Elad”). In connection with the closing of the Nimbus Acquisition, the Company issued to Elad as consideration (i) 1,850,000 shares of Common Stock and (ii) a $3,250,000 convertible 24-month note bearing 6% interest, which is convertible at the option of the holder at a fixed price of $2.00 per share.
Private Placement – February 2026
On February 24, 2026, the Company entered into a Securities Purchase Agreement with a certain accredited investor for a private placement (the “February 2026 Private Placement”) pursuant to which the investors agreed to purchase from the Company 400 units for an aggregate purchase price of $20,000,000 or a per unit price of $50,000, with each unit consisting of (i) one restricted share of the Company’s Series B Convertible Preferred Stock, par value $0.0001 per share, and (ii) restricted common stock purchase warrants to initially purchase up to 35,211 shares of the Company’s common stock, subject to adjustment and exchange pursuant to the terms thereunder. The February 2026 Private Placement closed on February 24, 2026.
Exchange of Debt for Shares
On April 27, 2026, the Company, and Menachem Shalom, the Company’s Chief Executive Officer and a member of the Company’s Board of Directors (the “Board”), executed and delivered the Note Exchange Agreement, pursuant to which the original principal amount of the notes issued to Mr. Shalom and accrued interest thereon in the amount of $2,138,962 was cancelled in its entirety in exchange for the issuance of 4,174,399 shares of common stock (the “Exchange Shares”). The exchange price of $0.5124 was the last consolidated bid price of a share of common stock as reported by The Nasdaq Stock Market LLC. The Exchange Shares are restricted shares and may not be sold without registration or an applicable exemption therefrom. The notes were assigned to Mr. Shalom from Star 26 Capital Inc. (“Star 26”) pursuant to the terms of the Amended and Restated Securities Purchase Agreement and Call Option dated September 15, 2025 (the “Star Purchase Agreement”) among the Company, Star 26 and the other parties signatory thereto and pursuant to the exercise by Mr. Shalom of his right to obtain shares, notes and warrants from Esousa Group Holdings LLC (“Esousa”) in accordance with the terms of the Call Option Agreement dated January 13, 2026.
The issuances of the shares described above were exempt from registration under Section 4(a)(2) and/or Rule 506(b) of Regulation D as promulgated by the Securities and Exchange Commission under the Securities Act, as transactions by an issuer not involving any public offering.
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ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
The following exhibits are filed with this registration statement:
| Incorporated by Reference | ||||||||
| Exhibit | Description | Schedule/ Form |
Exhibits | Filing Date | ||||
| 2.1# | Amended and Restated Agreement and Plan of Merger dated as of June 23, 2023, by and among Nukkleus and Brilliant. | Form 8-K | 2.1 | June 26, 2023 | ||||
| 2.2# | First Amendment to Amended and Restated Agreement and Plan of Merger dated as of November 1, 2023, by and among Nukkleus and Brilliant. | Form 8-K | 2.2 | November 2, 2023 | ||||
| 3.1 | Amended and Restated Certificate of Incorporation of Nukkleus Inc. (f/k/a Brilliant Acquisition Corp.) | Form 8-K | 3.2 | January 2, 2024 | ||||
| 3.2 | Bylaws of Nukkleus Inc. | Form 8-K | 3.3 | January 2, 2024 | ||||
| 3.3 | Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation dated October 11, 2024 | Form 8-K | 3.1 | October 18, 2024 | ||||
| 3.4 | Certificate of Correction to the Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation dated October 16, 2024 | Form 8-K | 3.2 | October 18, 2024 | ||||
| 3.5 | Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation dated October 18, 2024 | Form 8-K | 3.3 | October 18, 2024 | ||||
| 3.6 | Amended and Restated Bylaws | Form 8-K | 3.1 | November 12, 2024 | ||||
| 3.7 | Certificate of Designation, Rights, Preferences and Limitations of Series A Convertible Preferred Stock | Form 8-K | 3.1 | September 5, 2025 | ||||
| 3.8 | Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation dated February 2, 2026 | Form 8-K | 3.8.2 | February 9, 2026 | ||||
| 3.9 | Certificate of Correction to the Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation dated February 3, 2026 | Form 8-K | 3.8.1 | February 9, 2026 | ||||
| 4.1 | Senior Unsecured Promissory Note dated June 11, 2024 issued to X Group Fund of Funds | Form 8-K | 4.1 | June 17, 2024 | ||||
| 4.2 | Common Stock Purchase Warrant issued to X Group Fund of Funds | Form 8-K | 4.2 | June 17, 2024 | ||||
| 4.3 | Senior Unsecured Promissory Note dated August 1, 2024 issued to East Asia Technology Investments Limited | Form 8-K | 4.1 | August 5, 2024 | ||||
| 4.4 | Common Stock Purchase Warrant issued to East Asia Technology Investments Limited | Form 8-K | 4.2 | August 5, 2024 | ||||
| 4.5 | Form of Senior Unsecured Promissory Note dated September 10, 2024 issued to X Group Fund of Funds | Form 8-K | 4.1 | September 12, 2024 | ||||
| 4.6 | Form of Warrant – December 2024 | Form 8-K | 4.1 | December 20, 2024 | ||||
| 4.7 | Form of Pre-Funded Common Stock Purchase Warrant – December 2024 | Form 8-K | 4.2 | December 20, 2024 | ||||
| 4.8 | Description of Securities | Form 10-KT | 4.8 | May 8, 2025 | ||||
| 4.9 | Warrant issued as of August 28, 2025 | Form 8-K | 4.1 | August 29, 2025 | ||||
| 4.10 | Warrant issued as of August 28, 2025 | Form 8-K | 4.2 | August 29, 2025 | ||||
| 4.11 | Form of Warrant | Form 8-K | 4.1 | September 5, 2025 | ||||
| 4.12 | Form of Pre-Funded Common Stock Purchase Warrant | Form 8-K | 4.2 | September 5, 2025 | ||||
| 4.13 | Secured Promissory Note, dated December 30, 2025, issued by Nukkleus Inc. in favor of Arie Shafir | Form 8-K | 4.1 | December 30, 2025 | ||||
| 4.14 | Form of Warrant to Purchase Common Stock (Star 26) | Form 8-K | 4.13 | January 13, 2026 | ||||
| 4.15 | Investment Note, dated January 12, 2026, issued by Nukkleus Inc. to Star 26 Capital Inc. | Form 8-K | 4.14 | January 13, 2026 | ||||
| 4.16 | Form of Three-Month Promissory Note (Star 26) | Form 8-K | 4.15 | January 13, 2026 | ||||
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| 4.17 | Form of Six-Month Promissory Note (Star 26) | Form 8-K | 4.16 | January 13, 2026 | ||||
| 4.18 | Convertible Note, dated January 15, 2026 | Form 8-K | 4.17 | January 16, 2026 | ||||
| 5.1+ | Opinion of McDermott Will & Schulte LLP | |||||||
| 10.1* | Nukkleus 2023 Equity Plan. | Form 8-K | 10.1 | January 2, 2024 | ||||
| 10.2 | Form of Registration Rights Agreement by and among Nukkleus, Brilliant and certain stockholders. | Form 8-K | 10.3 | June 26, 2023 | ||||
| 10.3 | Form of Lock-Up Agreement by and among Nukkleus, Brilliant and certain stockholders. | Form 8-K | 10.2 | June 26, 2023 | ||||
| 10.4 | General Service Agreement between Nukkleus Limited and FML Malta Limited dated May 24, 2016 | Form 10-K | 10.4 | July 12, 2024 | ||||
| 10.5 | General Service Agreement between Nukkleus Limited and FXDirectDealer LLC dated May 24, 2016 | Form 10-K | 10.5 | July 12, 2024 | ||||
| 10.6 | Amendment No. 1 dated June 3, 2016 to the General Service Agreement between Nukkleus Limited and FXDD Trading Limited | Form 10-K | 10.6 | July 12, 2024 | ||||
| 10.7 | Amendment dated October 17, 2017 of that certain General Service Agreement between Nukkleus Limited and FML Malta Limited | Form 10-K | 10.7 | July 12, 2024 | ||||
| 10.8 | Letter Agreement entered between FML Malta Ltd., FXDD Malta Limited and Nukkleus Limited | Form 10-K | 10.8 | July 12, 2024 | ||||
| 10.9 | Settlement Agreement and Stipulation dated May 28, 2024 by and between Nukkleus Inc. and Silverback Capital Corporation | Form 8-K | 10.1 | June 4, 2024 | ||||
| 10.10 | Restructuring Agreement dated June 11, 2024 between Nukkleus Inc. and X Group Fund of Funds | Form 8-K | 10.1 | June 17, 2024 | ||||
| 10.11 | Voting Agreement dated June 11, 2024 between Nukkleus Inc. and X Group Fund of Funds | Form 8-K | 10.2 | June 17, 2024 | ||||
| 10.12 | Release Agreement between Nukkleus Inc., Triton Capital Markets Ltd. and FXDirectDealer LLC dated September 30, 2024 | Form 8-K | 10.1 | October 4, 2024 | ||||
| 10.13 | Form of Exit and Settlement Agreement dated November 8, 2024 | Form 8-K | 10.1 | November 12, 2024 | ||||
| 10.14 | Securities Purchase Agreement dated November 8, 2024 | Form 8-K | 10.2 | November 12, 2024 | ||||
| 10.15 | Conversion Agreement entered with X Group Fund of Funds dated November 8, 2024 | Form 8-K | 10.3 | November 12, 2024 | ||||
| 10.16 | Settlement Agreement and Release among Nukkleus Inc., Jamal Khurshid and Match Financial Limited dated November 8, 2024 | Form 8-K | 10.4 | November 12, 2024 | ||||
| 10.17 | Letter Agreement between Nukkleus Inc. and X Group Fund of Funds dated November 14, 2024 | Form 8-K | 10.1 | November 15, 2024 | ||||
| 10.18 | Securities Purchase Agreement dated November 19, 2024 | Form 8-K | 10.1 | November 22, 2024 | ||||
| 10.19 | Standby Equity Distribution Agreement dated December 3, 2024 between Nukkleus Inc. and YA II PN, Ltd. | Form 8-K | 10.1 | December 6, 2024 | ||||
| 10.20 | Form of Convertible Promissory Notes issued to YA II PN, Ltd. | Form 8-K | 10.2 | December 6, 2024 | ||||
| 10.21 | Registration Rights Agreement dated December 3, 2024 between Nukkleus Inc. and YA II PN, Ltd. | Form 8-K | 10.3 | December 6, 2024 | ||||
| 10.22# | Securities Purchase Agreement and Call between Nukkleus Inc. Star 26 Capital Inc., the shareholders of Star 26 Capital Inc. and the representative of such shareholders, dated December 15, 2024 | Form 8-K | 10.1 | December 17, 2024 | ||||
| 10.23# | Form of Securities Purchase Agreement dated December 18, 2024 between Nukkleus Inc. and the purchasers identified therein | Form 8-K | 10.1 | December 20, 2024 | ||||
| 10.24 | Form of Registration Rights Agreement – December 2024 | Form 8-K | 10.2 | December 20, 2024 | ||||
| 10.25 | Placement Agent Agency Agreement dated December 18, 2024 between Nukkleus Inc. and Dawson James Securities Inc. | Form 8-K | 10.3 | December 20, 2024 | ||||
| 10.26 | Termination Agreement entered between Nukkleus Inc. and YA II PN Ltd dated December 19, 2024 | Form 8-K | 10.4 | December 20, 2024 |
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| 10.27 | Amendment No. 1 to the Securities Purchase Agreement and Call between Nukkleus Inc. Star 26 Capital Inc., the shareholders of Star 26 Capital Inc. and the representative of such shareholders, dated February 11, 2025 | Form 8-K | 10.2 | February 14, 2025 | ||||
| 10.28* | Nukkleus Inc. 2024 Equity Incentive Plan | Form 10-KT | 10.27 | May 8, 2025 | ||||
| 10.29 | Amendment No. 2 to the Securities Purchase Agreement and Call between Nukkleus Inc. Star 26 Capital Inc., the shareholders of Star 26 Capital Inc. and the representative of such shareholders, dated May 13, 2025 | Form 8-K | 10.1 | May 14, 2025 | ||||
| 10.30 | Promissory Note issued by Star 26 Capital Inc. dated May 13, 2025 | Form 8-K | 10.2 | May 14, 2025 | ||||
| 10.31 | Amendment No. 3 to the Securities Purchase Agreement and Call between Nukkleus Inc. Star 26 Capital Inc., the shareholders of Star 26 Capital Inc. and the representative of such shareholders, dated June 15, 2025 | Form S-1/A | 10.31 | June 18, 2025 | ||||
| 10.32 | Amendment No. 4 to the Securities Purchase Agreement and Call between Nukkleus Inc. Star 26 Capital Inc., the shareholders of Star 26 Capital Inc. and the representative of such shareholders, dated July 25, 2025 | Form 8-K | 10.1 | July 25, 2025 | ||||
| 10.33 | Mutual Release Agreement dated June 19, 2025 between Nukkleus Inc., East Asia Technology Investments Ltd. and PALM Global Technologies Limited | Form S-1/A | 10.33 | July 29, 2025 | ||||
| 10.34 | Warrant Agreement dated July 30, 2025 issued by Synthetic Darwin LLC to Nukkleus Inc. | Form 8-K | 10.1 | July 31, 2025 | ||||
| 10.35 | Exclusive Distribution Agreement dated August 20, 2025, between Nukkleus Inc. and Blade Ranger Ltd. | Form 8-K | 10.1 | August 25, 2025 | ||||
| 10.36 | Joint Venture Agreement dated August 28, 2025, between Nukkleus Inc. and Mandragola Aviation Ltd. | Form 8-K | 10.1 | August 29, 2025 | ||||
| 10.37 | Stock Purchase Agreement dated September 1, 2025, by and among Nukkleus Inc., Nukk Picolo Ltd., Tiltan Software Engineering Ltd., and Arie Shafir. | Form 8-K | 10.1 | September 2, 2025 | ||||
| 10.38# | Form of Securities Purchase Agreement dated September 4, 2025, between Nukkleus Inc. and the purchasers identified therein | Form 8-K | 10.1 | September 5, 2025 | ||||
| 10.39 | Form of Registration Rights Agreement, dated September 4, 2025, between Nukkleus Inc. and the signatories identified therein | Form 8-K | 10.2 | September 5, 2025 | ||||
| 10.40 | Placement Agent Agency Agreement dated September 4, 2025 between Nukkleus Inc. and Dawson James Securities Inc. | Form 8-K | 10.3 | September 5, 2025 | ||||
| 10.41 | Amended and Restated Securities Purchase Agreement and Call Option dated as of September 15, 2025 by and among Nukkleus Inc. Star 26 Capital Inc., the shareholders of Star 26 Capital Inc. and Menachem Shalom, the representative of such shareholders | Form 8-K | 10.1 | September 16, 2025 | ||||
| 10.42 | Common Stock Purchase Agreement dated as of September 19, 2025 between Nukkleus Inc. and Esousa Group Holdings, LLC | Form 8-K | 10.1 | September 19, 2025 | ||||
| 10.43 | Registration Rights Agreement dated as of September 19, 2025 between Nukkleus Inc. and Esousa Group Holdings, LLC | Form 8-K | 10.2 | September 19, 2025 | ||||
| 10.44 | Amendment to Stock Purchase Agreement, dated December 30, 2025, by and among Nukkleus Inc., Nukk Picolo Ltd., Tiltan Software Engineering Ltd., and Arie Shafir | Form 8-K | 10.1 | December 30, 2025 | ||||
| 10.45 | Pledge Agreement, dated December 30, 2025, by and between Nukk Picolo Ltd. and Arie Shafir | Form 8-K | 10.2 | December 30, 2025 | ||||
| 10.46 | Escrow Agreement, dated December 30, 2025, by and among Nukkleus Inc., Arie Shafir and Adv. Lior Hinkus, as escrow agent. | Form 8-K | 10.3 | December 30, 2025 | ||||
| 10.47 | Assignment from Star 26 Capital, Inc. to each of the shareholders, dated January 12, 2026 | Form 8-K | 10.44 | January 13, 2026 |
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| 10.48 | Stock Purchase Agreement dated January 15, 2026 between Nukkleus Inc. and Elad Defense LLC | Form 8-K | 10.45 | January 16, 2026 | ||||
| 10.49* | Nukkleus Inc. 2025 Equity Incentive Plan | Form S-8 | 10.1 | November 25, 2025 | ||||
| 10.50 | Translation of the Agreement dated June 8, 2025, by and among Star Twenty Six Ltd., I.T.S. Industrial Techno-logic solutions Ltd., and Gera Eron. | Form 8-K | 10.50 | February 17, 2026 | ||||
| 14.1 | Code of Ethics | Form 10-KT | 14.1 | May 8, 2025 | ||||
| 19.1 | Insider Trading Policy | Form 10-K/A | 19.1 | April 14, 2025 | ||||
| 21.1 | List of Subsidiaries | Form S-1 | 21.1 | February 11, 2026 | ||||
| 23.1 | Consent of Green Growth CPA | |||||||
| 23.2+ | Consent of McDermott Will & Schulte LLP (included in Exhibit 5.1) | |||||||
| 23.3 | Consent of KPMG Somekh Chaikin | |||||||
| 97.1 | Policy for the Recovery of Erroneously Awarded Compensation adopted April 8, 2025 | Form 10-K/A | 97.1 | April 14, 2025 | ||||
| 99.1 | Policy on Granting Equity Awards | Form 10-KT | 99.1 | May 8, 2025 | ||||
| 107 | Filing Fee Table |
| + | To be filed by amendment. |
| * | Indicates management contract or compensatory plan or arrangement. |
| # | Certain of the exhibits and schedules to this exhibit have been omitted in accordance with Regulation S-K Item 601. The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request. |
(b) Financial Statement Schedules
See the Index to Financial Statements included on page F-1 for a list of the financial statements included in this prospectus.
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ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(a) (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;
Provided, however, that:
(B) Paragraphs (a)(1)(i), (ii) and (iii) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the SEC by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
(b) The registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant’s annual report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Tel Aviv, Israel on June 4, 2026.
| T3 DEFENSE INC. | ||
| By: | /s Menachem Shalom | |
| Menachem Shalom | ||
| Chief Executive Officer (Principal Executive Officer) | ||
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement on Form S-1 has been signed by the following persons in the capacities and on the dates indicated below.
| Signature | Title | Date | ||
| /s/ Menachem Shalom | Chief Executive Officer and Director | June 4, 2026 | ||
| Menachem Shalom | (Principal Executive Officer) | |||
| /s/ Morel Levi | Chief Financial Officer | June 4, 2026 | ||
| Morel Levi | (Principal Financial and Accounting Officer) | |||
| /s/ Shiran Fridman | Director | June 4, 2026 | ||
| Shiran Fridman | ||||
| /s/ Tomer Nagar | Director | June 4, 2026 | ||
| Tomer Nagar | ||||
| /s/ Asaf Nachum | Director | June 4, 2026 | ||
| Asaf Nachum |
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