BURU 10-K & 10-Q changes, risk factors and insider trading

There is no guarantee that our acquisitions of interests in Tekne, SYME or Orbit will close.

We have executed the Tekne Purchase Agreement, pursuant to which we intend to acquire a controlling interest in Tekne. The Tekne acquisition requires, among other things, approvals by the Italian government and approval of our stockholders prior to closing. There can be no assurance that the Tekne transaction will close in the expected timeframe or at all.

We have entered into a convertible note receivable with SYME to invest up to $5,150,000 in exchange for receiving a controlling interest in SYME. The acquisition of the ownership interest remains subject to receipt of approval from SYME stockholders and certain foreign regulatory approvals and there can be no assurance that the investment will close in the expected timeframe or at all.

On October 31, 2025, we entered into the Orbit Agreement to purchase all of the ownership interests in Orbit owned by Vanguard in a transaction scheduled to close by December 31, 2026. There is no guarantee that the acquisition of Orbit will close in the time frame expected or at all.

In connection with our planned acquisitions of interests in Tekne, SYME and Orbit, we have provided funding to them and may be unable to recoup those payments if the acquisitions do not close.

In connection with our planned acquisitions of interests in Tekne, SYME and Orbit, we have provided funding of approximately $37,400,000. To the extent that such acquisitions do not close as anticipated, such entities are required to repay all or part of the funds that we have contributed to them. If such acquisition targets are unable or unwilling to repay such advanced funds, this would have a material adverse effect on our business, financial condition, results of operations and cash flows.

We face a number of risks related to our strategic transactions.

Our Transformation Plan includes periodic acquisitions and divestitures of businesses and technologies. Strategic transactions of this nature involve numerous risks, including the following:

Competition for suitable acquisition or investment targets;

Inability to consummate deals on favorable or acceptable terms, or due to failure to obtain stockholder, government, regulatory or other necessary approvals or satisfy other closing conditions;

Diversion of management’s attention from normal daily operations of the business;

Potential difficulties in completing projects associated with in-process research and development;

Difficulties in entering markets in which we have no or limited prior experience and where competitors have stronger market positions;

In the case of foreign acquisitions and investments, the impact of particular economic, tax, currency, political, legal and regulatory risks associated with specific countries;

Inability to successfully integrate the acquired technology, data assets and operations into our business and maintain uniform standards, controls, policies, and procedures;

Inability to realize synergies or anticipated benefits within the expected time frame or at all;

Unidentified issues not discovered in our due diligence process, including product or service quality issues, security policies, standards, and practices, intellectual property issues and legal contingencies;

Inability of an acquisition to further our business strategy as expected or overpay for, or otherwise not realize the expected return on, our investments;

Expected earn-outs may not be achieved in the time frame or at the level expected or at all;

Lack of ability to recognize or capitalize on expected growth, synergies or cost savings;

Insufficient net revenue to offset increased expenses associated with acquisitions;

Potential loss of key employees of the acquired companies;

Difficulty in forecasting revenues and margins;

Inadequate internal control procedures and disclosure controls to comply with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or poor integration of a target company’s or business’ procedures and controls;

To the extent we use debt to fund acquisitions or for other purposes, our interest expense and leverage will increase significantly, and to the extent we issue equity securities as consideration in an acquisition, current shareholders’ percentage ownership and earnings per share will be diluted;

Assumption of unknown liabilities; and

Becoming subject to litigation related to the acquired businesses or assets.

An investment in our Common Stock carries a high degree of risk and stockholders may not be adequately compensated for the business and financial risks associated with an investment in our Common Stock.

A purchase of our Common Stock is subject to a high degree of risk. A purchase of our Common Stock is speculative and requires a long-term commitment, with no certainty of return. Returns generated from our investments may be insufficient to compensate stockholders adequately for the business and financial risks that must be assumed. There is no guarantee that our performance will meet any stockholder’s targeted or projected return. The value of our investments in new businesses may fall, as well as rise, and stockholders may not get back the amount they have invested.

We may make acquisitions or form joint ventures that are unsuccessful.

Our ability to implement our Transformation Plan is partially dependent on our ability to successfully acquire interests in other companies, which creates substantial risk. In order to pursue a growth by acquisition strategy successfully, we must identify suitable candidates for these transactions; however, because of our limited funds, we may not be able to purchase those companies that we have identified as potential successful acquisition candidates. Additionally, we may have difficulty managing post-closing issues such as the integration into our corporate structure. Integration issues are complex, time consuming and expensive and, without proper planning and implementation, could significantly disrupt our business, including, but not limited to, the diversion of management’s attention, the loss of key business and/or personnel from the acquired company, unanticipated events, and legal liabilities. As a result, the consummation of acquisitions or joint ventures may not be successful and, if an acquired business or investment does not perform as expected, it may have an adverse financial impact on the Company.

Related party investments include interests of members of our management that may differ from interests of other investors.

Our Executive Chairman and Co-Chief Executive Officers have identified and negotiated investments, option rights, and other control relationships with respect to certain companies and businesses, in certain cases with the goal of allowing us to ultimately acquire controlling interests in such entities at the right time and on appropriate terms. The initial investment, option, or control relationship creates a conflict of interest when the Company then invests in such entity or business, as such executives may receive benefits (directly or indirectly) not shared by all stockholders. Notwithstanding these conflicts of interest, we believe that having access to strategic transactions sourced by our executives is critical to our future success and anticipate similar transactions in the future. We have such related party transactions reviewed and approved by independent directors and the Audit Committee; however, such processes and procedures do not ensure that such investments will be successful or beneficial to stockholders.

We may be unable to satisfy our significant debt service obligations, which could have an adverse effect on our business, financial condition, results of operations and cash flows.

Under the Debenture that we issued to YA in the principal amount of $25,000,000 in December 2025, we are required to pay monthly installment payments of $2,777,778 of principal plus accrued and unpaid interest beginning in March 2026. We currently do not have, and may not be able to achieve, a level of cash flows from operating activities sufficient for us to pay the principal or interest on our indebtedness and there are limitations on our obtaining funds through using the Standby Equity Purchase Agreement entered into with YA. If we are unable to repay or otherwise refinance our indebtedness when due, if we fail to comply with covenants in the financing documents with YA, or if any other event of default under the financing documents with YA is not cured or waived, YA could elect to declare all amounts outstanding to be immediately due and payable. In the event YA accelerates the repayment of our borrowings, we may not have sufficient assets to repay that indebtedness. Any acceleration of amounts due to YA could have an adverse effect on our business, financial condition and results of operations and could have a material adverse effect on the trading price of our Common Stock.

The Debenture and other financing documents with YA contain restrictions on our actions that may limit our operational flexibility or otherwise adversely affect our results of operations.

The terms of the financing documents with YA include a number of covenants that limit our ability and our subsidiaries’ ability to, among other things, incur additional indebtedness, grant liens, or enter into Variable Rate Transactions (as defined in the purchase agreement with YA). The terms of the financing documents may restrict our current and future operations and could adversely affect our ability to finance our future operations or capital needs. In addition, complying with these covenants may make it more difficult for us to successfully execute our Transformation Plan by limiting our business strategy and preventing potential acquisitions that would benefit our business.

Litigation, regulatory actions, and compliance issues could subject us to significant fines, penalties, judgments, remediation costs, negative publicity, and requirements resulting in increased expenses.

We may from time to time be involved in legal proceedings, administrative proceedings, claims and other litigation, with governmental agencies and entities as well as private parties, which arise in the ordinary course of business. Litigation can be expensive, lengthy, and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict. Responding to lawsuits brought against us, or legal actions that we may initiate, can be expensive and time-consuming. Unfavorable outcomes or developments relating to proceedings to which we are a party or transactions involving our products, such as judgments for monetary damages, injunctions, or denial or revocation of permits, could have a material adverse effect on our business, financial condition, and results of operations. To the extent such proceedings also generate negative publicity, our reputation and business could also be adversely affected. In addition, handling compliance issues and the settlement of claims could adversely affect our financial condition and results of operations.

In October 2025, we were the victim of email fraud due to our receiving an invoice from a criminal actor posing as our financial advisor and our paying the invoice amount to the criminal actor’s bank account based on the falsified wiring instructions. As a result, we incurred a loss of $1,005,352. We pursued recovery of this amount with the banks involved in the wire transfer, but at this time we do not expect that we will be able to recover such funds. We are working to enhance our controls relating to electronic payments by or for us that we believe will reduce our risk of becoming a victim of future frauds related to our payments, including by wire transfers. However, cyber-related criminal activities continue to evolve and increase in sophistication, frequency and severity. As a result, any control enhancements that may be made to our controls may not be successful in avoiding our becoming a victim to further cyber-related crimes.

Efforts to prevent cyber attackers from entering and disrupting computer systems are expensive to implement, and we may not be able to cause the implementation or enforcement of such preventions with respect to our third-party service providers. Despite the security measures that we and our service providers utilize, our infrastructure and that of our service providers may be vulnerable to physical break-ins, ransomware, computer viruses, other malicious code attacks by hackers, phishing attacks, social engineering, or similar disruptive problems. Though it is difficult to determine what, if any, harm may directly result from any specific interruption, attack or other security breach or incident, any failure to maintain performance, reliability, security and availability of systems and technical infrastructure may, in addition to other losses and liabilities, harm our reputation, brand and ability to attract customers.

On February 27, 2026, we effected a 1-for-4.99 reverse stock split of our Common Stock (the “2026 Reverse Stock Split”). The 2026 Reverse Stock Split has been reflected retroactively in all Common Stock and per share amounts for all periods presented. Proportional adjustments were made to the number of shares of Common Stock issuable upon exercise, vesting, or conversion of our outstanding stock options, restricted stock units, warrants, convertible notes, preferred stock, and other instruments convertible into or exercisable for Common Stock, as well as the applicable exercise prices, conversion prices, and per share grant date fair values. All share and per share amounts presented in this Annual Report on Form 10-K, including but not limited to earnings per share, weighted-average shares outstanding, shares reserved under equity incentive plans and the employee stock purchase plan, and shares issuable under outstanding derivative and convertible instruments, have been retroactively adjusted to reflect the 2026 Reverse Stock Split for all periods presented.

LIQUIDITY CONSTRAINTS

We have not yet achieved commercialization and expect continued losses until we can do so. We must rely on capital from investors to support operations. From inception, we have continued to incur operating losses and negative cash flows from operating activities. For the years ended December 31, 2025 and 2024, we incurred a net loss of $79,071,276 and $34,515,754 (including significant non-cash expenses), respectively, and we had an accumulated deficit of $200,479,831 and $131,806,605 as of December 31, 2025 and 2024, respectively. We generated total revenue of nil and $152,127 during the years ended December 31, 2025 and 2024, respectively.

During 2024 and 2025, due to the lack of sufficient funding, management initiated measures designed to reduce costs, which included implementing a furlough of employees beginning in 2024. In response to the furloughs and financing challenges, several key employees resigned. On March 5, 2025, our former secured lenders concluded the Foreclosure sale, which resulted in the transfer of our patent portfolio to an affiliate of the senior secured lenders in exchange for a full discharge and extinguishment of our junior and senior secured notes.

We expect to incur significant expenses and operating losses for the foreseeable future, as we devote substantial resources to implement our Transformation Plan, as described in “Item 1. Business” in this Annual Report on Form 10-K, and operate as a public company. Until we can generate sufficient revenue, we plan to finance our business with the proceeds from the issuance and sale of debt or equity securities, including sales pursuant to the SEPA, as defined and discussed below, and borrowings under credit facilities. There is no assurance that management's plans to obtain additional debt or equity financing or credit facilities will be successfully implemented or implemented on terms favorable to us. Even if we generate revenue, there is no guarantee that we will ever become profitable. While we are pursuing a Transformation Plan intended to address aspects of our financial condition and operations, there can be no assurance that these efforts will be successful or that they will alleviate the substantial doubt regarding our ability to continue as a going concern. If we are unable to obtain additional financing, or otherwise implement our Transformation Plan, we will not be able to sustain operations and will need to consider alternatives, which could include a sale, liquidation, or dissolution of the business. For additional information, refer to Note 1 to the consolidated financial statements included herein, for the Company’s evaluation of the events and conditions and its plans regarding the going concern matter.

ACQUISITION, INVESTMENT AND JOINT VENTURE PLANS

Orbit (Related-Party), Tekne, Lyocon and Maddox

For information related to certain acquisition, investment-related and joint venture transactions with Orbit S.r.l. (“Orbit”), Tekne S.p.A (“Tekne”), Lyocon S.r.l. (“Lyocon”) and Maddox Defense Incorporated (“Maddox”), including our investment in Orbit accounted for under the equity-method through January 2026, see Notes 4, 6 and 17 to the consolidated financial statements included herein.

SYME Convertible Note Receivable and Strategic Investment (Related Party)

For information regarding (i) the Convertible Note Receivable with SYME, as defined and described in Note 6 to the consolidated financial statements, and (ii) the SYME inventory advance, see Notes 6 , 7 and 17 to the consolidated financial statements included herein.

Heckler & Koch AG Investment

As part of ongoing efforts to invest our assets to build out our Defense and Security Platform, on February 6, 2026, we entered into a Securities Purchase Agreement with Brick Lane pursuant to which we acquired from Brick Lane 295,000 shares (or approximately 0.8% of the outstanding common shares) of Heckler & Koch AG, a leading manufacturer of small firearms for NATO and EU countries whose shares are listed on Euronext Paris under the ticker MLHK, for an aggregate purchase price of $15,000,000, which was paid by Subordinated Convertible Note. For additional information, see “Item 1. Business” and Note 17 to the consolidated financial statements included herein.

Transfer of Outstanding Preferred Stock

As part of our ongoing efforts to eliminate liabilities and return to compliance with NYSE American stockholder equity requirements, on February 6, 2026, we entered into an exchange agreement with Indigo Capital LP ("Indigo"), pursuant to which we agreed to issue a pre-funded warrant to Indigo in exchange for the extinguishment and cancellation of 844,938 shares of our Series A Preferred Stock held by Indigo.

February 2026 Offering and 2025 Offerings

In February 2026 and September 2025, we consummated a best efforts public offering of Common Stock and certain warrants. For additional information, see Notes 10, 11 and 17 to the consolidated financial statements included herein.

December 2025 YA Financing Transaction

On December 17, 2025, we entered into a Securities Purchase Agreement with YA, pursuant to which we completed a $25,000,000 financing transaction (the "December 2025 YA Financing Transaction"). In connection with the December 2025 YA Financing Transaction, we issued (i) a debenture with an aggregate principal amount of $25,000,000 (the “December 2025 YA Debenture”) at an original issue discount of 7.0%, resulting in gross cash proceeds to us of $23,250,000, which is further described in Note 9 to the consolidated financial statements, and (ii) the December 2025 YA Warrants, as defined and described in Note 11 to the consolidated financial statements, to purchase an aggregate of 46,092,188 shares of Common Stock at exercise prices ranging from $0.05 to $2.35 per share, which were determined to be equity-classified and are further described in Note 11 to the consolidated financial statements included herein.

3(a)(10) Claims Settlement

On July 17, 2025, we and Silverback Capital Corporation (“Silverback”) agreed to settle outstanding claims in an amount of $5,662,479 (the “Claims”) owed to Silverback in exchange for a settlement amount payable in shares of Common Stock, subject to court approval. The settlement was approved by the state court on July 30, 2025, after a fairness hearing pursuant to the requirements of Section 3(a)(10) of the Securities Act. As of the date of this Annual Report on Form 10-K, the Silverback program was performed and concluded.

For additional information, see Note 3 to the consolidated financial statements included herein.

On May 30, 2025, we entered into the Standby Equity Purchase Agreement (the “SEPA”) with YA (the “SEPA Investor”), pursuant to which we have the right to sell to the SEPA Investor up to $100,000,000 of Common Stock, subject to certain limitations and conditions set forth in the SEPA, from time to time during the term of the SEPA. We are not obligated to make any sales under the SEPA. The SEPA will terminate on the earlier of 36 months from execution or full utilization of the $100,000,000 commitment amount, and may be terminated earlier by us with five trading days’ written notice, subject to certain conditions.

For additional information regarding the SEPA, see Note 12 to the consolidated financial statements included herein.

December 2025 YA Debenture, Indigo Capital Convertible Notes, AZ Promissory Note (Related-Party), TAG Promissory Note (Related-Party), Agile Note, Diagonal Convertible Notes, Boot Convertible Note, Brick Lane Convertible Notes, Bomore Convertible Notes, Torcross Convertible Note and YA Debenture (each, as defined in Note 9 to the Consolidated Financial Statements included herein)

During the year ended December 31, 2025, we entered into certain debt instruments with various third parties. Additionally, we entered into two related-party convertible notes, the TAG Promissory Note and the AZ Promissory Note, with the Company's Executive Chairman and Co-Chief Executive Officer. For additional information, see Note 9 to the consolidated financial statements included herein.

Junior Notes, Senior Notes, August 2024 Convertible Notes and Foreclosure Collateral Sale (each, as defined in Note 9 to the Consolidated Financial Statements included herein)

Golden Power Approval of Tekne Transaction

On August 5, 2026, the Company received Golden Power regulatory approval from the Italian government, which was required in order for the Company to close its proposed acquisition of a 70% controlling interest in Tekne. As a result, the Company expects to close the Tekne transaction and obtain a 70% controlling interest in Tekne on or about 30 days following receipt of the Golden Power regulatory approval or on such later date as may be mutually agreed upon in writing by the parties to the Investment Agreement. For additional information, see Note 4 to the condensed consolidated financial statements included herein.

Notice of Delisting

On July 17, 2026, the Company’s Common Stock traded below $0.10 during the trading day. As a result, on July 17, 2026, the Company received a letter from the NYSE American stating that it had commenced proceedings to delist the Company’s Common Stock from the NYSE American because the Company was not in compliance with Section 1003(f)(v) of the NYSE American Company Guide due to the low selling price of the Company’s Common Stock. The Company’s Common Stock ceased to trade on the NYSE American on July 17, 2026 and began trading on the OTC market on July 20, 2026.

Under NYSE American delisting procedures, the Company has the right to a review of NYSE American’s determination by the Listings Qualifications Panel of the NYSE American. The Company appealed the decision and requested a review hearing, which is scheduled to take place in September 2026. The Company intends to implement a reverse stock split, for which it has already obtained stockholder approval, on the OTC market to regain compliance under NYSE American.

On February 27, 2026, we effected the 2026 Reverse Stock Split in order to return to compliance with the Minimum Trading Price requirement. Our Common Stock resumed trading on March 2, 2026.

Loss on Issuance of SEPA

Loss on issuance of SEPA relates to the initial fair value of the SEPA put right at inception of the SEPA on May 30, 2025. For additional information, refer to Notes 7 and 13 to the condensed consolidated financial statements included herein.

SEPA Fees and Issuance Costs

SEPA fees and issuance costs relates to fees and issuance costs incurred in connection with the SEPA. For additional information, refer to Notes 7 and 13 to the condensed consolidated financial statements included herein.

Cost of Revenue. Cost of revenue increased $908,034 during the three months ended June 30, 2026 compared to the same period in 2025, which is primarily due to an approximate $903,000 increase due to the Orbit Change of Control and Lyocon Acquisition.

Change in Fair Value of Convertible Notes Receivable. We recorded a gain of $288,535 during the three months ended June 30, 2026, which primarily relates to the net effect of (i) an increase of approximately $463,000 in the fair value of the Tekne Convertible Note Receivable, primarily due to (a) an increase in our pro-rata equity entitlement upon the Capital Increase resulting from additional fundings under the Tekne Convertible Note Receivable during the period and (b) interest accrued on the Tekne Convertible Note Receivable during the period of approximately $200,000, which includes interest related to the Network Contract, partially offset by (ii) a decrease of approximately $174,000 in the fair value of the SYME Convertible Note Receivable, primarily due to the net impact of (a) potential dilutive impact on SYME's market value of the expected future conversion of the SYME Convertible Note Receivable into SYME ordinary shares and warrants and (b) interest accrued on the SYME Convertible Note Receivable during the period of approximately $184,000. We recorded a loss of $11,400 during the three months ended June 30, 2025, which relates to the increase in fair value of the SYME Convertible Note Receivable, primarily due to a decrease in the Company's stock price and remaining term to maturity. For additional information, see Note 6 to the condensed consolidated financial statements included herein.

Change in Fair Value of SEPA Liability. We recorded a gain of $1,244,414 during the three months ended June 30, 2026 related to the decrease in the fair value of the SEPA liability, primarily due to changes in the expected timing and amount of remaining dollar draws under the SEPA. We recorded a loss of $260,507 during the three months ended June 30, 2025 related to the increase in the fair value of the SEPA liability, primarily due to the increase in the fair value of the put option. For additional information, refer to Notes 7 and 13 to the condensed consolidated financial statements included herein.

Loss on Issuance of SEPA. We recorded a loss of $2,582,724 during the three months ended June 30, 2025 related to the initial fair value of the SEPA put option at inception of the SEPA on May 30, 2025. For additional information, refer to Notes 7 and 13 to the condensed consolidated financial statements included herein.

SEPA Fees and Issuance Costs. We recorded $45,515 and $1,075,000 of SEPA fees and issuance costs during the three months ended June 30, 2026 and 2025, respectively, which relates to (i) a structuring fee payable to the SEPA Investor in the amount of $25,000, (ii) a commitment fee payable to the SEPA Investor in Common Stock in an amount equal to 1% of the Commitment Amount, or $1,000,000, paid 50% on execution of the SEPA, which resulted in the issuance of 1,332,623 shares of Common Stock to the SEPA Investor during the second quarter of 2025, and 50% 90 days following the date of the SEPA and (iii) legal expenses of $50,000 related to the issuance of the SEPA. For additional information, refer to Notes 7 and 13 to the condensed consolidated financial statements included herein.

Loss on Extinguishment of Debt. We recorded a loss on the extinguishment of debt of $1,375,819 during the three months ended June 30, 2025, which primarily comprises (i) $1,071,997 related to the excess of the fair value of the 2025 June Brick Lane Convertible Notes at issuance and the carrying value of the 100,000 shares of the Company's outstanding Series A Preferred Stock that was extinguished, (ii) $163,500 related to the issuance of the 2025 April Indigo Capital Convertible Notes in exchange for the extinguishment of an existing unsecured promissory note of the Company with a carrying value of $2,108,523, and (iii) $140,323 related to the excess of the fair value of the 2025 Bomore Convertible Notes at issuance and the carrying value of the 100,000 shares of the Company's outstanding Series A Preferred Stock that was extinguished. For further information, see Note 10 to the condensed consolidated financial statements included herein.

The following table sets forth our results of operations for the six months ended June 30, 2026 and 2025:

Revenue. Revenue increased $932,571 during the six months ended June 30, 2026 compared to the same period in 2025, which is due entirely to an increase in revenue resulting from the Orbit Change of Control and Lyocon Acquisition.

Cost of Revenue. Cost of revenue increased $1,325,077 during the six months ended June 30, 2026 compared to the same period in 2025, which includes an approximate $1,556,000 increase due to the Orbit Change of Control and Lyocon Acquisition. Excluding the effects of these transactions, cost of revenue decreased $231,179. This decrease is primarily due to a period-over-period decrease of approximately (i) $111,000 in overhead, due to continued reduced production volumes following the suspension of laser-system manufacturing operations in 2024, together with further reductions in production-related headcount and overhead during late 2025 and the first half of 2026 and (ii) $103,000 of direct labor and job costs.

Research and Development. Research and development expenses increased $110,417 during the six months ended June 30, 2026 compared to the same period in 2025, which is primarily due to the net effect of (i) an increase of approximately $265,000 in research and development spending related to the Maddox Program, which commenced in the first quarter of 2026, partially offset by decreases in (ii) stock-based compensation expenses of approximately $93,000, due primarily to research and development workforce reductions, (ii) depreciation expenses of approximately $41,000 due to the write-down of property and equipment to a net book value of zero during the first quarter of 2025, and (iii) personnel costs of approximately $27,000 due primarily to lower research and development headcount. For additional information regarding the Maddox Program, see Note 4 to the condensed consolidated financial statements included herein. For additional information on the write-down of property and equipment, see Notes 1 and 3 to the condensed consolidated financial statements included herein.

Selling and Marketing. Selling and marketing expenses increased $2,489,550 during the six months ended June 30, 2026 compared to the same period in 2025, which includes an insignificant increase due to the Orbit Change of Control and Lyocon Acquisition. Excluding the effects of these transactions, selling and marketing increased $2,485,464. This increase is primarily due to an increase in (i) professional and consulting related expenses of approximately $1,566,000, primarily related to an increase in branding and public relations consulting expenses as part of our Transformation Plan, (ii) marketing expenses of approximately $745,000, and (iii) stock-based compensation expenses of approximately $180,000 primarily related to an increase in stock-based compensation expense in connection with the Common Stock issued for services provided by non-employee consultants, as discussed further in Note 14 to the condensed consolidated financial statements included herein.

General and Administrative. General and administrative expenses increased $3,073,545 during the six months ended June 30, 2026 compared to the same period in 2025, which includes an approximate $163,000 increase due to the Orbit Change of Control and Lyocon Acquisition. Excluding the effects of these transactions, general and administrative increased $2,910,684. This increase is primarily driven by the net effect of (i) an increase in personnel costs of approximately $1,392,000 primarily related to an increase in bonus expense paid to executives, (ii) an increase in accounting and audit services of approximately $929,000 related to our Transformation Plan, (iii) an increase in acquisition-related expenses of approximately $638,000, and (iv) an increase in legal expenses of approximately $457,000, partially offset by (v) a decrease in stock-based compensation expenses of approximately $372,000 due primarily to a reduction in employee headcount during 2025.

Change in Fair Value of Warrant Liabilities. We recorded a gain of $12,225,675 during the six months ended June 30, 2026, which is primarily related to (i) a decrease of approximately $10,254,000 in the fair value of the February 2026 Offering Common Warrants and (ii) a decrease of approximately $1,963,000 in the fair value of the February 2026 Offering Pre-Funded Warrants, each largely due to a decrease in our share price from the time of issuance through June 30, 2026. We recorded a gain of $110,314 during the six months ended June 30, 2025, which largely resulted from a decrease in the Company's share price between December 31, 2024 and June 30, 2025.

Loss on Issuance of Warrants and Related Costs. We recorded a loss of $8,224,691 during the six months ended June 30, 2026, primarily representing (i) the excess of the initial fair value of the liability-classified February 2026 Offering Warrants over the allocated net proceeds and (ii) the portion of issuance costs allocated to the liability-classified February 2026 Offering Warrants and expensed as incurred, compared to no comparable loss during the six months ended June 30, 2025. For additional information, refer to Note 12 to the condensed consolidated financial statements included herein.