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

Our cash balance stood at $8.0$4.2 million on December 31, 20242025; and we have recorded an operating loss of $4.7 million and a net loss of $10.8$7.0 million for the year ended December 31, 2024,2025. orWhile approximatelywe reduced our operating losses to $0.2 million in the third quarter of 2025, generated a modest operating profit of $55 thousand in the fourth quarter of 2025, and generated positive operating cash flow of $0.9 million perin month.the Wethird quarter of 2025 and $1.1 million in the fourth quarter of 2025, we expect to continue to experience net losses and negative cash flows to continue in the near term, as our Company grows. While we believe that our existing cash resources, together with available borrowings and cashamended equivalentsdebt willterms, beprovide sufficient liquidity to fund operations for at least the next twelve months, we have based these estimates on assumptions that may prove to be wrong, and we could spend our available financial resources much faster than we currently expect and need to raise additional capital to fund our operations and support our business growth. However, equity and debt financing might not be available when needed or, if available, might not be available on terms satisfactory to us.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with U.S. generally accepted accounting principles (“GAAP”). Our management is likewise required, on a quarterly basis, to evaluate the effectiveness of our internal controls and to disclose any changes and material weaknesses identified through such evaluation in those internal controls. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of the Company’s financial reporting.

Any failure to maintain adequate internal control over financial reporting could adversely impact our ability to report our financial position and results from operations on a timely and accurate basis.basis, Wewhich canin giveturn nocould assuranceharm thatour thebusiness, measuresimpair weinvestor have taken will remediate the outstanding material weakness, or will prevent any future material weaknesses, or restatements of financial results will not ariseconfidence in the future due to a failure to implementaccuracy and maintain adequate internal control over financial reporting or circumvention of these controls. In addition, our strengthened controls and procedures may not be adequate to prevent or identify irregularities or errors, which could affect the fair presentationcompleteness of our consolidated financial statements.reports, impair our access to the capital markets, cause the price of our common stock to decline and subject us to higher risk of shareholder litigation.

The recent imposition of additional tariffs by the U.S. government on a number of countries in 2025,countries, and threat of trade wars against foreign countries/regions have created even more uncertainties in international trade which may affect our business. We cannot predict what further actions may ultimately be taken concerning tariffs or other trade measures between the U.S. and the PRC or other countries, what products or entities may be subject to such actions, or what steps may be taken by other countries in response.

On October 7, 2022, the U.S. Department of Commerce’s Bureau of Industry and Security ("BIS") announced a series of regulations – issued as an interim final rule – amending the Export Administration Regulations to enhance export controls on a range of goods, software, and technology and restrict the PRC’s ability to purchase and manufacture advanced computing chips. The regulations imposed new controls on items relating to advanced computer and semiconductor manufacturing capabilities, broadened end-use restrictions, expanded the scope of foreign-produced items subject to licensing requirements, and added to Entity List prohibitions. We do not anticipate these regulations will have a material effect on our financial condition or operations. The production of our high-performance MMICs is not reliant on any manufacturing in the PRC, or, to our knowledge, on any companies that are owned by the PRC or Chinese investors. In 2024,2025, we received onlyless than 1% of all our sales from customers located within the PRC. RF semiconductors, such as what we design and produce, are not currently covered under the BIS restrictions. We have taken steps to ensure our export control processes and controls observe enacted and evolving export sanctions imposed upon the PRC and all restricted entities that have been identified by the United States government. Nevertheless, if we inadvertently make any product sales or shipments to any sanctioned entities, such non-compliance may have a material effect on our financial condition or operations.

Guerrilla RF possesses in-house design, applications, sales, and customer support functions as a fabless semiconductor company. We outsource the manufacture and production of our MMIC products to subcontractors, providing access to multiple semiconductor process technologies. Guerrilla RF’s primary external wafer foundries are located in Taiwan and Singapore, and our primary assembly and test supplierssupplier areis located in MalaysiaMalaysia. andWe have also contracted with wafer foundries in the Philippines.United States of America.

● Purchases of property, plant and equipment were $0.4$1.4 million for fiscal year 20242025 and $0.1$0.4 million for the fiscal year 2023.2024. The majority of capital expenditures for 20242025 are related to capital additions for the Company's production assets, laboratory equipment and related facilities.

In the first quarter of 2023, we moved into a new headquarters building in Greensboro, NCN.C. to support our growing employee base and research and development and customer support laboratory space requirements. The new facility incorporates over 50,000 square feet of office and clean laboratory space, and replaced our former headquarters (also in Greensboro) of approximately 10,000 square feet of space.

We derive our revenue from sales of high-performance RF semiconductor products. We design, integrate, and package differentiated, semiconductor-based products that we sell to customers through our direct sales organization, a network of independent sales representatives, and distributors. We generate revenue from customers located within and outside the U.S. In addition to sales to customers, we generate royalty revenue under a royalty agreementagreements with onetwo semiconductor manufacturer.manufacturers.

Administrative expenses consist primarily of employee compensation costs related to executive management of the Company, financial management, human resources and information technology. In addition, administrative expenses include business and liability insurance, audit and legal fees as well as consulting and advising fees. Currently the Company is focused on limiting the growth of administrative expenses and expect such expenses to decline moderately in the coming year.

Interest expense consists primarily of the interest incurred on our debt obligations, our factoring arrangement expenses, the non-cash interest expense associated with the amortization of shares of common stock issued to certain debtholders as debt discount(s), and debtholders that have a bifurcated conversion feature related to certain convertible notes payable, and leaseinterest expense related to our capitalfinance leases.

Change in fair value of derivative liabilities is fully attributable to the call and put options features of the convertible notes for the yearsyear ended December 31, 2024 and December 31, 2023.2024.

We generate revenue from customers located within and outside the U.S.United WhileStates. weThe haveCompany several large customers, we definedefines major customers as those responsibleaccounting for more than 10% of Guerrilla RF’s annual product shipment revenue. UsingFor thisthe definition,year Guerrillaended RFDecember 31, 2025, the Company had onetwo major customer,customers, Richardson RFPD, Inc. ("RFPD"), duringand RFMW, a division of Exponential Technology Group, Inc. (“RFMW”), both of which are global distributors serving a broad base of end customers. The Company had one major customer, RFPD, for the yearsyear ended December 31, 2024, and December 31, 2023.2024. RFPD, a large product distributor serving numerous end customers, generatedaccounted 77%for approximately 65% and 81%77% of product shipment revenue for the years ended December 31, 20242025 and 2023.2024. RFMW accounted for approximately 15% of product shipment revenue for the year ended December 31, 2025.

International product shipments amountedtotaled $9.4 million, or approximately 42% of total product revenue, for the year ended December 31, 2025, compared to $4.0 millionmillion, (or approximately 20% of total product revenue) and $2.3 million (approximately 16% of total product revenue)revenue, for the yearsyear ended December 31, 2024, and December 31, 2023, respectively.2024.

Other expenseincome decreasedand expenses increased approximately $1.1$0.3 million to $2.3 million for the year ended December 31, 2025, compared to $2.0 million for the year ended December 31, 2024, compared to $3.0 million for the year ended December 31, 2023.2024. The decrease was largely attributable to a change in fair value of warrant liabilities of $2.2$3.7 million, which was driven by a significant decreaseincrease in the Company’s share price, which was a key determinant in the value of those warrant liabilities. Offsetting this gainThis was aoffset lossby the decrease of $1.5interest expense of $2.3 million onand the loss on debt extinguishment.extinguishment of $1.5 million. Following the significant funding event in the third quarter of 2024, the Company repaid a significant amount of an existing loan facility (the “Salem Loan Facility”) with Salem Investment Partners V, Limited Partnership (“Salem”), resulting in the write-off of unamortized costs associated with that debt that was being amortized over 5 years.

In addition, the Company had smaller contributors to other income includingand $0.2expenses, such as $0.3 million inof interestother income earneddriven on funds deposited inby a moneygrant marketthat accountwas whichreceived itduring did2024, notas havewell inas 2023, and athe change in its derivative liabilities, reflecting ana decrease in fair value of $0.2 million.

As described in Note 1 to our consolidated financial statements, we have incurred recurring losses and negative cash flows from operations since inception and have an accumulated deficit at December 31, 20242025 of $53.8$60.8 million. WeHowever, expectduring lossesthe andsecond negativehalf of 2025, the Company generated positive cash flows tofrom continueoperating activities, including approximately $0.9 million in the nearthird term, primarily due to continued investment in researchquarter and development,$1.1 sales and marketing efforts, and increased administration expenses as our Company grows. We plan to continue to investmillion in the implementationfourth ofquarter, ourreflecting long-termimproved strategicoperating planperformance and wecontinued anticipatefocus thaton weexpense will continue to narrow cash burn from historical levels. so that cash reserves will provide the necessary working capital to conclude the Company is a going concern.discipline.

Cash used in operating activities was $6.7$1.4 million and $13.5$6.7 million for the years ended December 31, 20242025 and 2023,2024, respectively. Cash used in operating activities for the year ended December 31, 20242025 principally resulted from our net loss of $10.8$7.0 million, with uses offset by $1.7$1.0 million in share-based compensation, non-cash depreciation and amortization of $1.5$1.2 million, accretiona non-cash loss of notes payable of $1.3 million, non-cash interest expense related to debt refinancing of $0.4 million, as well as a change in inventory allowance of $0.2 million, and further adjusted by an aggregate gain of $2.3$1.5 million on the change in fair value of derivativewarrant liabilities, and warrantnon-cash liabilities.lease expense of $1.1 million. There was also $0.1$0.7 million of cash provided fromby the decrease of prepaid expenses, an increase of accounts receivable of $0.2 million, and an increasechange in operating leaseassets liabilityand of $0.4 million. In addition, there was a $0.5 million increase in inventories.liabilities.

Cash used in operating activities for the year ended December 31, 2023,2024 principally resulted from our net loss of $16.0$10.8 million, with uses offset by $1.7 million in share-based compensation, non-cash depreciation and amortization of $1.6$1.5 million, accretion of notes payable of $1.3 million, non-cash interest expense related to debt refinancing of $0.4 million, accretion of notes payable of $1.1 million as well as $1.3 million in share-based compensation. There was also $1.0 million provided from the decrease of prepaid expenses, an increase of accounts receivable of $1.0 million, and a decrease in operatingnon-cash lease expense of $0.1$1.2 million.million, and further adjusted by an aggregate gain of $2.3 million on the change in fair value of derivative and warrant liabilities. In addition, there was aalso $2.2$1.1million millionof decreasecash provided by the change in accountsoperating payableassets and accrued expenses and a $0.1 million decrease in inventory.liabilities.

Cash providedused by financing activities during the year ended December 31, 2024,2025 of $14.6$1.0 million was principally attributable to $8.3$0.1 million in net paymentsproceeds related to the Spectrum Loan Facility and Salema Loanrefund of unused offering costs, which was more than offset by total$1.1 net proceeds from equity financingmillion of $24.6 million. Principalprincipal payments on capital leasesleases, reducedpayments totalon cashfinanced providedinsurance bypremiums financingand by $1.0 million.software.

Liquidity and Going Concern

SECOND QUARTER AND FIRST QUARTERHALF FISCAL 2026 FINANCIAL HIGHLIGHTS

● Gross margin for the firstsecond quarter of fiscal 2026 was approximately 69.9% of revenues, as70.9%, compared towith 61.1%64.9% in the prior year period. The improvement in gross margin was primarily drivenattributable byto higher productionsales volumes, improved manufacturing efficiencies, and favorable product mix.mix, including a greater contribution from aerospace & defense applications, and improved operating leverage. Contribution margin remained strong at approximately 79.5%,78.7%, reflecting favorable product economics and the scalability of the Company’sour fabless semiconductor operating model. Over these same periods,Although overhead expenses increased modestly in absolute dollarsdollars, butthey declined as a percentage of revenue,revenue demonstratingas higher sales volumes provided improved operating leverage on higher sales volumes.leverage.

● Operating lossincome was approximately $0.04$1.0 million for the firstsecond quarter of fiscal 2026, as compared towith an operating loss of $3.16$1.4 million infor the firstsecond quarter of fiscal 2025, bringing the Company near operating breakeven.2025. The substantial$2.3 reductionmillion improvement in operating lossresults was primarily drivenattributable byto the increase in revenue and gross profit, combinedtogether with continued costoperating expense discipline. Total operating expenses decreased approximately 21.9%3% year-over-yearyear over year to $4.6$4.7 million.million, Researchdespite the 49% increase in revenue. The improvement reflects our revenue strength and developmentexpense expenses decreased approximately 20.4%, sales and marketing expenses decreased approximately 14.6%, and general and administrative expenses decreased approximately 33.5%, reflecting the Company’s ongoing cost optimization initiatives. As a percentage of revenue, operating expenses declined meaningfully, further evidencing improved operating efficiency.discipline.

● Net income (loss) per share was $0.06$0.21 and ($0.34)$0.05 for the firstsecond quarter of fiscal 2026 and 2025, respectively.

Interest expense consists primarily of the interest incurred on our debt obligations, our factoring arrangement expense, the non-cash interest expense associated with the amortization ofdebt common shares issued to certain of our debtholders,discount, and leaseinterest expense related to our finance leases.

Other Income (Expense)

Other income includeswas primarily attributable to net proceeds from an employee retention tax credit. Other expense consisted of various individually immaterial items.

Comparison of the three months ended MarchJune 31,30, 2026 and 2025 (unaudited):

Revenues increased $2.1$2.6 million, or 48%,49%, to $6.5$8.0 million for the three months ended MarchJune 31,30, 2026, compared to $4.4$5.4 million for the three months ended MarchJune 31,30, 2025. The increase in revenues was primarily driven by continued strength in the Company’s catalog category, which increasedgrew $3.2$3.0 million, or 207%,142.0%, to $4.8$5.0 million, reflecting higherthe volumes across a broad setconversion of end markets and the continued increase in production resulting from prior design wins.wins Thisinto growthproduction wasrevenue partiallyand offsetincreased bydemand aacross decreasemultiple end markets. Within the catalog category, revenue from aerospace and defense applications increased to $2.2 million from $0.5 million in the Company’sprior-year automotiveperiod, category, which declined $1.2 million, or 53%, to $1.1 million,driven primarily dueby to reduced demandstrength in certain legacy automotive programs, including compensatordrone and SDARSsatellite communications applications. Revenue from the Company’s wireless infrastructure category increased modestly by $0.03 million, or 6.2%, to $0.6 million.

Revenue from the infrastructure category increased $0.5 million, or 96.5%, to $1.1 million, reflecting higher demand across certain infrastructure programs. These increases were partially offset by a $0.7 million, or 27.6%, decrease in automotive revenue to $1.9 million, primarily due to lower demand from certain legacy automotive programs, including compensator and satellite digital audio radio service applications The increase in total revenue was also driven by higher shipments of existing products, which increased $2.8$3.3 million, or 83%,81.7%, to $6.3$7.3 million for the three months ended MarchJune 31,30, 2026, compared to $3.4$4.0 million in the prior year period. This growth reflects the continued conversion of prior design wins into production.production and sales. New product revenue decreased to $0.2$0.7 million, compared to $1.0$1.3 million in the prior year period, as fewer new product introductionsproducts reached initial production during the current quarter.

We generate revenue from customers located within and outside the United States. Domestic revenue increased $1.1$0.7 million, or 32.9%,20.6%, to $4.3$4.1 million, while international revenue increased $1.0$2.0 million, or 88.9%,108.3%, to $2.2$3.9 million for the three months ended MarchJune 31,30, 2026, compared to the prior year period. International revenue represented 33.4%48.6% of total product revenue for the quarter, compared to 26.1%35.4% in the prior year period, reflecting continued expansion of the Company’s global distribution footprint.

Direct product costs increased $0.2$0.4 million, or 14%,24%, to $2.3 million for the three months ended June 30, 2026, compared to $1.9 million for the three months ended MarchJune 31, 2026, compared to $1.7 million for the three months ended March 31,30, 2025. The increase was primarily attributable to increases in production and sales volume which in turn led to the 49% increase in revenue. However, direct product costs wasincreased significantlyat lowera slower rate than the 47.6% increase in revenues over the same period, reflecting improved revenue leverage and favorable product mix.

Gross profit increased $1.8$2.2 million, or 69%,63%, to $4.5$5.7 million for the three months ended MarchJune 31,30, 2026, compared to $2.7$3.5 million for the prior year period. Gross margin expanded to approximately 69.9%70.9% for the three months ended MarchJune 31,30, 2026, compared to 61.1%64.9% in the prior year period, representing an increase of approximately 890601 basis points.

Research and development expenses decreased $0.5$0.6 million, or 20%,13%, to $2.0$4.1 million for the threesix months ended MarchJune 31,30, 2026, compared to $2.5$4.7 million for the threesix months ended MarchJune 31,30, 2025. The decrease was primarily attributable to ongoing expense reduction initiatives and year-over-year headcount rationalization efforts implemented across the organization.

Sales and marketing expenses decreased $0.3$0.2 million, or 15%,7%, to $1.6$3.1 million for the threesix months ended MarchJune 31,30, 2026 compared to $1.9$3.4 million for the threesix months ended MarchJune 31,30, 2025. The decrease was primarily driven by ongoing cost reduction initiatives and lower personnel-related expenses as a result of headcount rationalization.

General and administrative expenses decreased $0.5 million, or 33%,20%, to $1.0$2.1 million for the threesix months ended MarchJune 31,30, 2026, compared to $1.5$2.6 million for the threesix months ended MarchJune 31,30, 2025. The decrease was primarily attributable to continued execution of the Company’s cost reduction initiatives, including headcount rationalization and reductions in professional services and other administrative expenses.

Interest expense remaineddecreased unchanged$0.03 atmillion, $0.2or 7% to $0.4 million for the threesix months ended MarchJune 31,30, 2026 andcompared 2025.to the prior year period.

During the threesix months ended MarchJune 31,30, 2026 , the Company recordedrecognized a gain$2.1 onmillion loss related to the change in fair value of warrant liabilities of $0.9 million as compared to a lossgain on the change in fair value of warrant liabilities of $0.2$0.8 million during the threesix months ended MarchJune 31,30, 2025, which represented aan unfavorable net change of $1.2$2.9 million.million in the aggregate. The changes are the result of the remeasurement of the Historical Warrants and the North Run Warrants that are accounted for as liabilities and carried at fair value at MarchJune 31,30, 2026 and 2025.

Other income increased $0.4 million primarily due to the ERTCemployee retention tax credit received during the threesix months ended MarchJune 31,30, 2026. In addition, during the threesix months endended MarchJune 31,30, 2026, the Company had interest income of $0.02$0.04 million compared to $0.07$0.1 million in the comparable period of 2025.

Our primary sources of liquidity have been proceeds from private placements and borrowings under our credit facilities. As of MarchJune 31,30, 2026, we had cash and cash equivalents of $3.2$4.6 million. We also have two loan facilities, one of which is for up to $3.75 million with a specialty lender (referred to as the Spectrum Loan Facility, described in Note 5 to our unaudited condensed consolidated financial statements), and the other of which is a $4.5 million term loan with a different lender (referred to as the Salem Loan Facility, also described in Note 5 to our unaudited condensed consolidated financial statements).

As discussed in Note 1 to our condensed consolidated financial statements, we have historically incurred recurring losses and negative cash flows from operations since inception and had an accumulated deficit of $59.7$61.9 million as of MarchJune 31,30, 2026. While weWe generated positive operating cash flow during the secondfirst half of 2025,2026, which is a significant improvement to $3.3 million negative operating cash flows from operating activitiesflow for the threesame monthsperiod ended March 31, 2026 were negative, albeit significantly improved compared to the three months ended March 31,in 2025.

Based on current operating plans, existing cash balances, positive operating cash flow during the first half of 2026, and availability under the Spectrum Loan Facility, we believe that our liquidity will be sufficient to fund operations for at least the next twelve months from the issuance date of these financial statements. However, this assessment is based on current forecasts and assumptions, and there can be no assurance that we will not require additional capital. We may seek to raise additional funds through equity, debt financings, or other sources as market conditions permit.

Cash usedprovided inby operating activities for the threesix months ended MarchJune 31,30, 2026 was principally due to our net incomeloss of $1.1 million, aan decreaseincrease in non-cash items of $0.2$3.6 million, and a decrease in working capital of $2.2$1.3 million. For the threesix months ended MarchJune 31,30, 2026, non-cash items that were a part of the net operating incomeloss included depreciation and amortization of $0.3$0.7 million, share-based compensation of $0.1$0.4 million, non-cash operating lease cost of $0.5 million, and operating lease expense of $0.2 million, which were more than offset by a decrease in the change in the fair value of warrant liabilities of $0.9$2.1 million.