UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended ~~September~~December 3031, ~~2024~~ 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

001-39341

Commission file number

~~Nukkleus~~T3 ~~Inc~~DEFENSE INC.

(Exact name of registrant as specified in its charter)

Delaware		38-3912845
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

575 Fifth Ave, 14^th Floor, New York, New York		10017
(Address of principal executive offices)		(Zip Code)

212-791-4663

Registrant’s telephone number, including area code

Brilliant Acquisition Corporation

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value per share	~~NUKK~~DFNS	The Nasdaq Stock Market LLC
Warrants, each warrant exercisable for one Share of Common Stock for $92.00 per share	~~NUKKW~~DFNSW	The Nasdaq Stock Market LLC

Securities registered under Section 12(g) of the Exchange Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for ~~the~~ the past 90 days. ☐☒ Yes ☒ ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such fi les). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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	☐
Non-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 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was approximately $7140,~~326~~329,000 as of ~~January~~June 2330, 2025, based upon the closing stock price $2810.50 93 per share reported for such date.

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date.

Class		Outstanding ~~February~~April 107, ~~2025~~2026
Common Stock, $0.0001 par value per share		437,~~790~~823,~~431~~538 shares

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that involve a number of risks and uncertainties. Although our forward-looking statements reflect the good faith judgment of our management, these statements can be based only on facts and factors of which we are currently aware. Consequently, forward-looking statements are inherently subject to risks and uncertainties. Actual results and outcomes may differ materially from results and outcomes discussed in the forward-looking statements.

Forward-looking statements can be identified by the use of forward-looking words such as “may,” “will,” “should,” “anticipate,” “believe,” “expect,” “plan,” “future,” “intend,” “could,” “estimate,” “predict,” “hope,” “potential,” “continue,” or the negative of these terms or other similar expressions. These statements include, but are not limited to, statements under the captions “Risk Factors,” “Management’s Discussion and Analysis or Plan of Operation” and “Description of Business,” as well as other sections in this report. Such forward-looking statements are based on our management’s current plans and expectations and are subject to risks, uncertainties and changes in plans that may cause actual results to differ materially from those anticipated in the forward-looking statements. You should be aware that, as a result of any of these factors materializing, the trading price of our common stock may decline. These factors include, but are not limited to, the following:

● the availability and adequacy of capital to support and grow our business; ● economic, competitive, business and other conditions in our local and regional markets; ● actions taken or not taken by others, including competitors, as well as legislative, regulatory, judicial and other governmental authorities; ● competition in our industry; ● changes in our business and growth strategy, capital improvements or development plans; ● the availability of additional capital to support development; and ● other factors discussed elsewhere in this annual report.

● economic, competitive, business and other conditions in our local and regional markets;

● actions taken or not taken by others, including competitors, as well as legislative, regulatory, judicial and other governmental authorities;

● competition in our industry;

● changes in our business and growth strategy, capital improvements or development plans;

● the availability of additional capital to support development; and

● other factors discussed elsewhere in this annual report.

The cautionary statements made in this annual report are intended to be applicable to all related forward-looking statements wherever they may appear in this report.

We urge you not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly update any forward looking-statements, whether as a result of new information, future events or otherwise.

All references in this Form 10-K that refer to the “Company”, “~~Nukkleus~~T3 Defense”, “we,” “us” or “our” refer to T3 Defense Inc. f/k/a Nukkleus Inc. and its consolidated subsidiaries.

TABLE OF CONTENTS

Item 1.	Business	1
Item 1A.	Risk Factors	1121
Item 1B.	Unresolved Staff Comments	4140
Item 1C.	Cybersecurity	4140
Item 2.	Properties	41
Item 3.	Legal Proceedings	41
Item 4.	Mine Safety Disclosures	41
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	42
Item 6.	[Reserved]	4443
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4543
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	60
Item 8.	Financial Statements and Supplementary Data	F-1
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	6154
Item 9A.	Controls and Procedures	6154
Item 9B.	Other Information	6256
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.	6256
Item 10.	Directors, Executive Officers and Corporate Governance	6357
Item 11.	Executive Compensation	6661
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	6963
Item 13.	Certain Relationships and Related Transactions, and Director Independence	7064
Item 14.	Principal Accounting Fees and Services	7670
Item 15.	Exhibits, Financial Statement Schedules	7771
SIGNATURES		7974

PART I

Item 1. Business.

Nukkleus Inc. (formerly known as, Brilliant Acquisition Corporation) (the “Company” or “Nukkleus”) was formed on May 24, 2019. 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 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.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.

InAs ~~connection~~a result of Business Combination, we became a financial technology company with the ~~Business~~aim of providing blockchain-enabled technology solutions. From the consummation of the Business Combination until the change of management in September 2024, ~~Brilliant~~we ~~changed~~operated ~~its~~in ~~name~~the technology business as a full-service transactions technology and advisory business providing end-to-end ~~“Nukkleus~~transactions ~~Inc~~technology solutions.” ~~The~~We ~~Business~~offered ~~Combination~~an ~~was~~advanced ~~completed~~transactions onplatform for ~~December~~dealing 22and risk management with global liquidity and customizable leverage, ~~2023~~where users have control over quote and liquidity strategies.

~~Overview~~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.

AsThe Company historically operated its blockchain payment solutions through Digital RFQ Limited (“DRFQ”), a ~~result~~wholly owned subsidiary of ~~Business~~Match ~~Combination,~~Financial weLtd. ~~had~~(“Match”), ~~become~~a wholly owned subsidiary of the Company. On November 8, 2024, the Company entered into a ~~financial~~Settlement ~~technology~~Agreement and ~~company~~Release with ~~the~~Jamal ~~aim~~Khurshid ofand Match providing ~~blockchain-enabled~~that ~~technology~~Match ~~solutions~~agreed to sell DRFQ, to Mr. ~~Since~~Khurshid ~~the~~or ~~Business~~his ~~Combination,~~nominee subject to the Company weobtaining ~~have~~shareholder ~~operated~~approval in(the “Settlement Agreement”). As required by the ~~technology~~Settlement ~~business~~Agreement, asthe Company, Match and Mr. Khurshid entered into a ~~full-service~~Share ~~transactions~~Purchase ~~technology~~Agreement ~~and~~dated ~~advisory~~December ~~business~~27, 2024 providing ~~end-~~that the Company, subject to~~-end~~ ~~transactions~~it obtaining ~~technology~~shareholder ~~solutions.~~approval, Wewill ~~offer~~sell anDRFQ ~~advanced~~to ~~transactions~~Mr. ~~platform~~Khurshid ~~for~~in ~~dealing~~consideration ~~and~~of ~~risk~~£1,000. ~~management~~The ~~with~~Company ~~global~~believed ~~liquidity~~the ~~and~~sale ~~customizable~~of DRFQ was in the ~~leverage,~~best ~~where~~interest ~~users~~of ~~have~~the ~~control~~Company ~~over~~due ~~quote~~to ~~and~~continuing ~~liquidity~~net ~~strategies~~loss generated by DRFQ.

OnAs ~~December~~of ~~15,~~August ~~2024~~2025, the Company determined ~~entered~~that ~~into~~it no longer had a ~~Securities~~controlling ~~Purchase Agreement~~financial ~~and~~interest ~~Call~~in ~~Option~~Digital ~~between~~RFQ ~~Nukkleus~~due ~~Inc.,~~to ~~Star~~loss 26of ~~Capital~~access ~~Inc~~to financial records. ~~(“Star”)~~Accordingly, the Company deconsolidated DRFQ during the ~~shareholders~~third quarter of ~~Star~~fiscal 26year ~~Capital Inc~~2025. ~~(“Star~~The ~~Equity~~Company ~~Holders”)~~was ~~and~~notified ~~Menachem~~that ~~Shalom~~on July 29, 2025, Match was placed into administration in the ~~representative~~United ofKingdom ~~such~~pursuant ~~shareholders~~to the Insolvency Act 1986 resulting in the appointment of two administrators (the “~~Star Agreement~~Administrators”) to. ~~acquire~~The Administrators completed a ~~controlling~~pre-packaged ~~51%~~sale ~~interest~~of Match’s entire shareholding in ~~Star~~DRFQ to Match Financial Holdings Limited, a ~~defense~~newly ~~acquisition~~formed ~~company~~entity owned by Mr. Khurshid, for nominal consideration of £102,000.

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 has 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 has 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 believes the sale of DRFQ is in the best interest of the Company due to continuing net loss generated by DRFQ.

As a result of the above transaction and subject to the closing of the acquisition of Star and the sale of DRFQ, the Company’s business will be focused on the defense sector.

Recent Developments

X Group – June 2024

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 $312,500 to X Group Fund of Funds, a Michigan limited partnership (“X Group”) 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 a Stock Purchase Warrant (“X Group Warrant 1”) to acquire 150,000 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. X Group was initially convertible at a per share conversion price of $2.00. The number of shares and exercise prices for the X Group Note and X Group Warrant 1 reflect the October 2024 reverse stock split.

~~The~~T3 ~~Company~~Defense 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 $500,000 in consideration of a convertible promissory note that will have a term of two years, bear interest at 12% and will convert into shares of common stock at a per share price of $2.00. During the Investment Period, the Company may not incur additional debt or enter into any equity financing arrangement without the written consent of the X Group.Overview

InFollowing ~~order to induce X Group to provide~~ the ~~loan contemplated pursuant~~appointment toin ~~the~~September ~~Note,~~2024 ~~Emil~~of ~~Assentato~~Menachem Shalom, aour ~~former~~current ~~director~~chief ~~and~~ executive officer ofand ~~the~~a ~~Company~~director, ~~entered~~we ~~into~~have atransformed ~~Voting~~from ~~Agreement~~a ~~with~~financial ~~the Company~~technology ~~and~~services Xprovider ~~Group~~into ~~agreeing~~a tostrategic ~~vote~~acquirer ~~his~~and ~~shares~~operator ~~in support~~ of ~~any~~aerospace ~~transaction~~and ~~provided~~defense by(A&D) ~~X Group~~businesses. ~~The~~We ~~Company~~are ~~and~~building Xa ~~Group~~portfolio ~~have agreed that 100%~~ of mission-critical ~~all~~suppliers ~~loan~~and ~~balances~~advanced ~~including~~technology ~~loans~~companies ~~payable~~and tostrategic ~~Emil~~infrastructure ~~Assentato~~opportunities byacross the ~~Company~~defense, ~~will~~aerospace, and beadvanced ~~recorded~~manufacturing onsectors ~~the~~across ~~books of~~ the ~~Company~~United ~~as a bona fide debt of the Company~~States, ofIsrael ~~which 30% of such debt will be paid within nine (9) months of the Effective Date~~ and ~~the balance to be repaid within twenty-four (24) months of the Effective Date~~Europe.

OnThe ~~September~~Company ~~10,~~is ~~2024,~~positioned as ~~the~~a ~~Company~~strategic ~~issued~~platform ancompany ~~additional~~focused ~~Senior~~on ~~Unsecured Promissory~~acquiring, ~~Note~~integrating, ~~(the~~and “Xscaling ~~Group~~high-impact ~~Note~~businesses ~~2”)~~ in the ~~principal~~aerospace ~~amount~~and ofdefense ~~$125,000~~industries. Our tostrategy Xtargets ~~Group~~Tier in2 ~~consideration~~and ofTier ~~cash~~3 ~~proceeds~~suppliers in that form the ~~amount~~industrial backbone of ~~$100,000,~~national ~~which~~security ~~was~~infrastructure, ~~funded~~with particular emphasis on ~~September~~companies 4offering dual-use technologies, ~~2024~~advanced AI applications, and critical manufacturing capabilities.

OnThe ~~November~~chart 8,below ~~2024,~~shows the ~~Company entered into a Conversion Agreement~~ ~~(the~~current ~~“Conversion~~ownership ~~Agreement”) with X Group to convert outstanding principal~~ and ~~interest~~names ~~totaling~~ of ~~$771,085~~our ~~payable~~portfolio 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.companies:

~~East~~Our ~~Asia~~Current Portfolio:

~~On August~~Defense 1,and ~~2024,~~Aerospace ~~the Company issued a Senior Unsecured Promissory Note (the “East Asia Note”) in the principal amount of $515,000 to East Asia~~ Technology Investments Limited (“East Asia”) in consideration of cash proceeds in the amount of $412,075. The East Asia 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 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 $2.00. The number of shares and exercise prices for the East Asia Note and East Asia Warrant reflect the October 2024 reverse stock split.Acquisitions:

~~Reverse~~● ~~Split~~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]

~~The~~● ~~Board~~Tiltan ofSoftware ~~Directors~~Engineering ~~(the~~Ltd. ~~“Board”)~~- ofIsraeli ~~the~~AI ~~Company~~software ~~unanimously approved~~company aspecializing ~~reverse~~in ~~stock~~defense ~~split~~and ofaerospace ~~the~~applications ~~Company’s~~including ~~common~~GPS-denied ~~stock~~navigation, at3D amapping, ~~ratio~~simulation ofsystems, ~~one-for-eight~~and ~~(the~~AI ~~“Reverse~~training ~~Stock~~platforms. ~~Split”)~~[closed December 30, 2025] ● Nimbus Drones Technologies and Marketing Ltd. ~~The~~ ~~Company’s~~– ~~shareholders~~Israeli ~~approved~~company aspecializing ~~reverse~~in ~~stock~~unmanned ~~split~~arial atsystems aand ~~ratio~~services. [closed January 15, 2026] ● I.T.S. Industrial Tecno-logic Solutions Ltd.– Israeli company providing design, development, production and manufacturing of ~~not~~serial, ~~less~~fully ~~than~~integrated ~~one~~electro-~~for-two~~mechanical machines and ~~not~~sophisticated ~~greater~~assembly ~~than~~lines. ~~one~~[closed February 16, 2026] ● Positech Ltd., wholly owned subsidiary of I.T.S. – designs and manufactures top-~~for~~of-~~thirty at~~ the ~~Company’s~~line, ~~annual~~high ~~meeting~~performance onmotion ~~October~~control ~~11,~~systems ~~2024~~for military and civilian use.

On October 11, 2024, the Company filed a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation with the Delaware Secretary of State as corrected on October 16, 2024 to effect the Reverse Stock Split (the “Reverse Certificate of Amendment”), which became effective 12:01 am eastern time on October 24, 2024. As a result of the Reverse Stock Split, every eight shares of the Company’s common stock issued and outstanding on the effective were consolidated into one issued and outstanding share. All stockholders who would be entitled to receive fractional shares as a result of the Reverse Stock Split received one whole share for their fractional share interest. On October 31, 2024, the Company received notice from DTCC on behalf of the brokerage firms that hold the shares of Company common stock held in “street name” that in connection with the foregoing rounding of shares the Company would need to issue 182,004 shares of common stock. The Company does not believe the number of shares being requested is correct based on the historical number of shareholders of its common stock and is aware of similar occurrences in recent months for other companies completing a reverse stock split. As such, the Company has begun an inquiry into the calculations set forth in the request. During the pendency of this inquiry, the Company does not intend to issue any shares in connection with the fractional shares being requested. The Company may face potential liability for its failure to issue the shares of common stock if it is determined that it is required to issue such shares. There was no change in the par value of our common stock.

In addition, proportionate adjustments will be made to the exercise prices of the Company’s outstanding stock options and warrants and to the number of shares issued and issuable under the Company’s existing stock incentive plans. All amounts reflected herein have been adjusted to reflect the Reverse Stock Split.

DRFQ

On November 8, 2024, the Company entered into the Settlement Agreement 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 23, 2024 providing that the Company, subject to it obtaining shareholder approval, will sell DRFQ to Mr. Khurshid in consideration of £1,000. The Company believes the sale of DRFQ is in the best interest of the Company due to continuing net loss generated by DRFQ.

~~Vallis/Worsley~~Technology Distribution and Licensing:

On● ~~November~~Blade 8,Ranger ~~2024,~~Ltd. ~~the~~(Exclusive ~~Company~~U.S. ~~entered~~Distribution ~~into~~rights) ~~Settlement~~- ~~Agreement and~~Distribution ~~Release~~agreement ~~with~~for ~~each~~advanced ofdrone ~~Craig~~payload ~~Vallis~~systems ~~and~~for ~~Oliver~~defense ~~Worsley~~and ~~providing~~homeland ~~that~~security ~~the Company will issue 125~~markets,~~000~~ ~~and~~with ~~75,000~~minimum ~~shares~~commitments of ~~common~~30 ~~stock, respectively,~~payloads inover ~~consideration~~three ofyears. ~~each~~[August ~~party~~25, ~~releasing the Company for compensation owed for services.~~2026]

~~Standby~~● ~~Equity~~Mandragola ~~Purchase~~Aviation ~~Agreement~~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]

OnStar ~~December~~26 3,Capital 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 SEPAInc. 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.

InAcquisition ~~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~~100% ~~promissory notes (the “Convertible Notes”) an aggregate principal amount~~ of ~~$2.0~~Star 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.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 ~~December~~September 15, ~~2024~~2025, the parties ~~Company~~executed ~~entered~~and ~~into~~delivered the ~~Star~~Amended ~~Agreement with Star, the Star Equity Holders~~ and ~~Mr.~~Restated ~~Shalom~~Securities asPurchase ~~the~~Agreement ~~representative of~~ (the “Star ~~Equity~~Agreement”) ~~Holders.~~with Star ~~holds 95% of Rimon~~, anthe ~~Israeli~~Star ~~corporation~~shareholders ~~engaged as a supplier of generators for “iron dome” launchers~~ and ~~other~~Menachem ~~defense products. Mr.~~ Shalom, ~~who~~ is the ~~Chief~~representative ~~Executive Officer and a director~~ of ~~the~~such ~~Company~~shareholders, isto aprovide ~~controlling~~that ~~shareholder,~~at ~~Chief~~closing ~~Executive Officer and a director of Star. Pursuant to~~ the ~~Star Agreement, the~~ Company ~~at closing~~ will acquire 51 100% of the issued and outstanding capital of Star in consideration of (i) $1521,000,000, into abe ~~combination~~paid ofby ~~cash~~a in12-month $16,000,000 promissory note (the ~~minimum~~“Investment ~~amount~~Note”) ofand the balance in $5,000,000 ~~and~~cash, aless ~~promissory~~any ~~note~~amounts ~~for~~lent ~~the~~to ~~remaining~~Star ~~balance~~from ~~maturing in~~the 12Company ~~months~~since ~~following~~December 15, 2024, the ~~closing~~date (of the ~~“Investment~~original ~~Note”)~~purchase agreement, (ii) ~~the Company issuing the Seller 2~~4,~~385~~770,~~170~~340 shares of common stock of the Company ~~and~~(the “Shares”), (iii) ~~the Company issuing Star~~ a five-year warrant (the “Star Warrant”) to purchase an aggregate of 612,~~907~~017,~~859~~648 shares of the Company’s ~~common~~ common stock for an exercise price of $1.50 per share., ~~The~~(iv) ~~Star~~$3,000,000 ~~Equity~~in ~~Holders~~cash ~~granted~~and ~~the Company an option~~ (~~the “Option”~~v) to ~~purchase~~a ~~the~~6-month ~~balance~~promissory ofnote ~~their equity~~ in ~~Star~~the ~~(49%)~~principal ~~for~~amount ~~an aggregate~~ of $163,~~084~~000,~~250~~000, ~~(the~~which ~~“Option~~shall ~~Exercise~~accrue ~~Price”)~~interest inat ~~consideration for~~ the ~~issuance~~rate toof ~~the~~8%. ~~Star~~The ~~Equity~~Shares, ~~Holders~~Star ~~five-year~~Warrant, ~~warrants~~cash toand ~~purchase~~the an6-month ~~aggregate~~note ofwill ~~720,000~~be ~~shares~~assigned ofby ~~the Company’s common~~Star ~~stock~~to ~~for~~the anStar ~~exercise~~shareholders ~~price~~pro ~~of $1~~ratably.50 ~~per~~If, ~~share.~~for ~~The~~a ~~Option~~period ~~Exercise~~of ~~Price~~12 tomonths beafter ~~paid~~the byclosing, the ~~Company~~Common toStock ~~the~~is ~~Star~~delisted ~~Equity~~from ~~Holders~~Nasdaq, ~~will consist~~Star ofshall ~~$3,000,000~~have inthe ~~cash~~right, aat ~~promissory~~its ~~note~~own indiscretion, ~~the~~to ~~principal~~require ~~amount~~the ofCompany ~~$3,000,000,~~to ~~which~~exchange ~~shall~~the ~~accrue~~Investment ~~interest~~Note atfor all the ~~rate~~shares of 8%Star ~~and~~then ~~be due~~held ~~and~~by ~~payable six (6) months after~~ the ~~issuance~~Company, ~~thereof~~provided, 2however,~~385,170~~ ~~shares~~Star ofshall ~~common~~retain ~~stock~~any ofcash ~~the~~payments ~~Company~~made ~~and~~by athe ~~five-year~~Company ~~warrant~~ to ~~purchase 5,109,789~~Star ~~shares~~and of the Company’s ~~common~~shall ~~stock~~retain ~~for~~ an ~~exercise~~equity interest ~~price~~in ofStar ~~$1.50~~equivalent ~~per~~to ~~share~~all cash payments made.

~~If,~~The ~~for~~closing ~~a period~~ of 12the ~~months~~transaction was ~~after~~subject ~~the~~to customary closing conditions, including approval by the Company’s ~~shares~~ ofshareholders ~~common~~as ~~stock~~required ~~are~~under ~~delisted~~applicable ~~from~~ Nasdaq, listing ~~Star~~rules. ~~shall~~As ~~have~~a result of the ~~right~~above transaction, atthe ~~its~~Shares ~~own~~issued ~~discretion,~~ to ~~require~~Star ~~the~~and ~~Company~~assigned to ~~exchange~~ the ~~Investment~~Star ~~Note~~shareholders ~~for~~represented ~~all~~16.4% of the ~~shares~~issued ofand ~~Star~~outstanding ~~then~~shares ~~held~~of byCommon ~~the Company~~Stock, ~~provided,~~and ~~however,~~assuming the ~~Option shall be automatically cancelled and~~ Star ~~shall~~shareholders ~~retain~~exercise ~~any cash payments made by~~ the ~~Company to~~ Star ~~and~~Warrant, the ~~Company~~Star ~~shall~~shareholders would ~~retain~~hold an ~~equity~~aggregate ~~interest~~of in16,787,988 ~~Star~~shares ~~equivalent to~~of ~~all~~Common ~~cash~~Stock ~~payments~~representing 57.6% ~~The closing~~ of the ~~Transaction~~issued isand ~~subject~~outstanding toshares ~~customary~~of ~~closing~~Common ~~conditions, including regulatory approvals, third-party~~Stock ~~consents,~~of ~~fairness opinion, and approval by~~ the Company’s ~~shareholders~~ as ~~required~~of ~~under~~the ~~applicable~~date ~~Nasdaq~~of ~~listing~~the ~~rules~~closing.

~~Rimon~~On ~~operates~~January ~~two~~12, ~~primary~~2026, ~~lines~~the Company ofcompleted ~~business: (i)~~ the ~~purchase~~acquisition ~~and sale~~ of ~~generators,~~Star. ~~masts,~~As ~~and~~a ~~lightning~~result ~~products~~of ~~and~~the ~~solutions~~acquisition, ~~which~~Star it26 ~~acquires~~became ~~through~~a ~~exclusive~~wholly ~~distributorship~~owned ~~agreements~~subsidiary ~~with~~of ~~key third-party suppliers; and (ii)~~ the ~~engineering,~~Company. ~~design, production, integration, and maintenance of special tactical vehicles and trailers,~~The ~~including~~transaction ~~reconnaissance~~was ~~vehicles,~~approved ~~mobile~~by ~~command~~the ~~and~~Company’s ~~control~~shareholders ~~vehicles,~~on ~~firefighting~~December ~~trailers~~16, ~~energy~~2025 and ~~lighting~~confirmed ~~trailers,~~by ~~and~~the ~~satellite broadcast~~Nasdaq ~~mobility~~Stock ~~platforms~~Market ~~which~~on ~~are primarily sold to special defense forces~~January 9, ~~intelligence agencies and the Israeli Defense Forces~~2026.

The acquisition comes at a time of what the Company believes will be growth and transformation within the global defense sector. The Company will integrate Star operations into its existing business structure while continuing to explore additional opportunities for growth.

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 is being 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.

Equity Compensation

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 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 of 1933, as amended (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.

Star Business Description

Star Business Overview

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.

Through its structure, Star intends to offer investors an opportunity to participate in the ownership and growth of a portfolio of businesses that will continue to expand, which have traditionally been owned and managed by private equity firms, private individuals or families, financial institutions, or large conglomerates. 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.

~~For~~Star ~~the~~currently ~~avoidance~~holds (1) 100% of ~~doubt~~Rimon, an Israeli corporation engaged as distributor of ~~the~~military-grade ~~date hereof~~generators, ~~Star~~masts ~~has~~and ~~not~~lighting ~~identified~~systems ~~any~~and ~~target~~that ~~businesses~~is, ~~which~~among other itclients, ~~intends~~a tosupplier ~~acquire~~of generators for “Iron Dome” launchers, ~~nor~~(2) ~~has~~67% itof ~~made~~Water.IO ~~any~~Ltd., ~~material~~an orIsraeli ~~significant~~corporation listed ~~steps~~on ~~towards~~the ~~acquiring~~Tel ~~any~~Aviv ~~such~~Stock ~~businesses~~Exchange engaged in smart hydration technology, and (3) 51% interest in I.T.S. ~~Further~~Industrial Techno-logic Solutions Ltd., itan ~~does~~Israeli ~~not~~corporation ~~expect~~which todesigns, ~~engage~~develops inand ~~any~~manufactures ~~such~~fully ~~negotiations~~integrated ~~prior~~electro-mechanical ~~the~~machines, ~~date~~assembly lines and custom motion systems. Water.IO owns 100% of ZorroNet Ltd., an Israeli corporation specializing in the ~~Special~~development and deployment of ~~Meeting~~artificial intelligence systems for perimeter security, defense, monitoring and command and control applications.

Star’s Corporate History and Structure

Star was incorporated by ~~its~~ its founder, Menachem Shalom, on January 17, 2024, as Star 26 Capital Inc., a Nevada corporation. ~~Our~~Billio ~~founder~~Inc., isStar’s ~~the~~wholly ~~owner of all 9,250,000~~owned ~~shares~~subsidiary, ofis ~~its~~a ~~class~~Delaware Bcorporation ~~common~~formed ~~stock~~by ~~which are issued and outstanding.~~ Mr. Shalom’s ~~class~~on BFebruary ~~common stock ownership entitles him to 100 votes per share of class B common stock~~12, ~~or 925~~2021,~~000,000~~ ~~total~~to ~~votes~~act onas ~~any~~an ~~matter~~intermediate ~~which~~holding ~~its~~company ~~class~~for ~~A common stockholders are entitled to approve as a single class~~Rimon.

Zero One Capital LLC, Star’s Manager, is a New York limited liability company formed by Mr. Shalom on January 19, 2024, as a management services company. Zero One became our manager upon the execution of a management services agreement by and between the same on June 28, 2024. The Manager is also the manager of Rimon, Star’s indirect wholly owned subsidiary operating in the defense industry, pursuant to the offsetting management services agreement dated August 12, 2024, by and between Zero One, Rimon, and the Company as a third-party beneficiary.

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.

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

~~Star~~We ~~believes~~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 ~~advisory board~~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. ~~Star’s~~Our core ~~operational~~ 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, ~~Star~~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~~ companies for acquisition that are located outside the U.S. and Israel if such acquisitions fit within our overall acquisition philosophy and strategy.

~~Star~~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~~ 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, ~~Star~~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. ~~Star~~We ~~believes~~believe itwe 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

~~Star~~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. ~~Star~~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~~ 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.

~~Star~~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. ~~Star~~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 ~~Star’s~~ 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 ~~Star~~the Company’s industry specific market research and analysis, and the network and knowledge of its management team, it is ~~Star’s~~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. ~~Star’s~~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. ~~Star~~We ~~believes~~believe that through this approach ~~Star~~we will be more likely to identify and attract potential and appropriate targets for acquisition. ~~Star~~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 ~~Star~~we ~~expects~~expect our ~~its~~ management team will be most effective working with the types of businesses described above, ~~Star~~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.

Pursuant to the acquisition strategy, Star will seek to structure its transactions such that each of the businesses it acquires will become its wholly owned or controlled subsidiary. However, Star 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 Star will always acquire more than 50% of the outstanding voting control of any target, or otherwise obtain a controlling interest in such target.

Star 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 Star 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, Star 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. Star 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.

Valuation and Due Diligence

~~Star~~We ~~will~~intend to perform rigorous business operations and financial evaluations of any target businesses (or assets) that it may acquire. During such due diligence, ~~Star~~we ~~intends~~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.

~~Star~~We ~~expects~~expect ~~its~~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 of risk associated with those projections. While future performance and projections are always uncertain, ~~Star~~we ~~believes~~believe that ~~its~~our detailed target company review process will enable us to effectively evaluate the prospects and upside of any given acquisition opportunity. Additionally, to assist ~~Star~~management in identifying material risks and validating key assumptions in our financial and operational analysis, ~~Star~~we will ~~engage~~ engage third-party experts to review key risk areas, including legal, tax, regulatory, accounting, insurance and environmental. ~~Star~~We may ~~also~~ also engage technical, operational or industry consultants, as necessary.

~~Star~~We also ~~engages~~engage in an extensive evaluation of each target’s existing management team, including a focus on recent performance, expertise, experience, culture, ~~and~~ and performance incentives. Where necessary, and consistent with our management strategy, following the acquisition of a target company, we 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

~~Star~~T3 expects to finance acquisitions primarily through additional equity and debt offerings. Although ~~Star~~we cannot guarantee that itwe will be successful with this strategy, ~~Star~~ 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, ~~Star~~we ~~believes~~believe that, in the future, itwe 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 ~~its~~our acquisition strategy, ~~Star~~we may encounter intense competition from other entities that have business objectives similar to ~~Star~~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. ~~Star’s~~Our ability to acquire larger target businesses in our target sectors will be limited by its available financial resources. ~~Star’s~~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 ~~Star~~us at a competitive disadvantage in successfully negotiating acquisitions.

Competitive Advantages

~~Star~~We ~~believes~~believe that ~~its~~the ~~Manager’s~~ collective investment experience of our management and approach to executing its investment strategy will enable it to have several competitive advantages. ~~Star’s~~Our competitive strengths that differentiate ~~Star~~us from other acquisition holding companies include:

● Specialization in the Military and Defense sector. ~~Star~~We ~~believes~~believe that ~~its~~our focus on the military and defense sectors will enable itus 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.

● International and Sector-Specific Expertise. Mr. Shalom, the founder and Chief Executive Officer of ~~Star~~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 ~~Star~~us in identifying new acquisition targets, finding suitable managers, and securing international capital. Additionally, ~~its~~our directors and executive officers bring executive, investment, and operational experience in managing and growing small and middle-market companies in the defense sector. ~~Star~~We ~~believes~~believe this combined expertise gives itus a significant edge in evaluating future business and acquisition opportunities.

● Value Proposition for Business Owners. ~~Star~~We ~~employs~~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. ~~Star~~We isare open to providing a complete exit strategy to its sellers or providing opportunities to retain incumbent management. In this effort, ~~Star~~we ~~believes~~believe that ~~its~~T3 ~~company~~ is an appealing buyer for small business owners and managers. As a result, ~~Star~~we ~~believes~~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

~~Star has one full-time employee.~~ As indicated below, Star’s operating subsidiary Rimon employs 1418 people: three technicians, two engineers, ~~two~~three assembly workers, three sales employees, one customer support employee, one financial bookkeeper, and ~~two~~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

~~From~~On ~~time~~March to3, ~~time~~2026, ~~Star~~the ~~and~~Company ~~its~~obtained ~~subsidiaries~~a ~~may~~copy ~~become~~of ~~involved~~a insummons ~~various lawsuits~~ and ~~legal~~complaint ~~proceedings~~filed ~~which arise~~ in the ~~ordinary~~Supreme ~~course~~Court of ~~business.~~the ~~However, litigation~~State isof ~~subject~~New toYork ~~inherent~~dated ~~uncertainties~~February 24, ~~and~~2026 anby ~~adverse~~Kingswood ~~result~~Capital Partners, inLLC ~~these~~against orStar ~~other~~26 ~~matters~~Capital, ~~may~~Inc., ~~arise~~Nukkleus, ~~from~~Inc. ~~time~~and tothe ~~time~~Company. The complaint alleges that ~~may harm~~a ~~our~~success ~~business.~~fee Weis ~~are~~due ~~not~~for ~~currently~~an ~~aware~~earned investment ofbanking ~~any~~success ~~such~~fee ~~legal~~arising ~~proceedings~~from ora ~~claims~~transaction. ~~that~~The weCompany ~~believe~~denies ~~will~~all ~~have~~the aallegations ~~material~~and ~~adverse~~intends ~~effect on~~to ~~our~~vigorously ~~business~~defend such action, ~~financial~~which ~~condition~~it orbelieves ~~operating~~is ~~results~~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.

●

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.

B. Rimon Agencies Ltd., Star’s Israeli Defense Business

Star’s defense military technology business is operated by B. Rimon Agencies Ltd., ~~an Israeli limited liability company and~~ our indirect, wholly owned operating subsidiary that itStar acquired on February 15, 2024.

~~Through~~ Rimon, ~~Star~~is ~~operates~~an Israeli corporation inengaged ~~two~~as ~~primary~~a ~~lines~~supplier of generators for “iron dome” launchers and other defense products which business~~:(i)~~ 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. ~~Most of these products are sold to defense, security,~~ and ~~military~~ ~~clients in Israel, including Refeal,~~ the manufacturer of anti-rocket systems like Iron Dome, Israel Aviation Industries and Elbit Systems, two major Israeli defense companies with global reach, the Israeli Ministry of Defense, the Israeli Police, and other security-related entities; and (ii) the engineering, design, production, integration, and maintenance of special tactical vehicles and trailers, ~~including~~ including reconnaissance vehicles, mobile command and control vehicles, firefighting trailers, energy and lighting trailers, ~~mobile bank branches,~~ and satellite broadcast mobility platforms which are primarily sold to special defense forces, intelligence agencies, and the Israeli Defense ~~Forces,~~ ~~municipalities, and other governmental and security-focused clients~~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. ~~Star~~Israel ~~believes~~accounted ~~that~~for ~~Israel~~4.4% isof ~~a heavyweight~~global inarms ~~the~~exports ~~global~~between ~~defense~~2021 ~~market~~and 2025, ~~primarily~~up ~~due~~from to3.1% ~~its~~in ~~advanced~~the ~~military~~prior ~~industries~~five-year period, ~~with~~making Israel the ~~country~~seventh-largest ~~specifically~~arms ~~accounting~~exporter in the world and surpassing the United Kingdom for 2the first time.3% ~~of global~~Israel’s ~~military~~defense exports ~~(Observer~~reached ~~Research~~a ~~Foundation,~~record ~~the~~$14.8 ~~strategic~~billion ~~and~~in ~~military-technological~~2024, ~~significance~~the fourth consecutive year of ~~Israel).~~record ~~Israel was~~exports, ~~the~~driven ~~10th~~by ~~largest~~strong ~~defense~~global ~~exporter~~demand ~~from~~for ~~2018~~Israeli toair ~~2022~~defense, ~~with~~unmanned ~~the~~aerial ~~U.S.~~vehicle, and ~~United~~counter-UAS technologies. ~~Kingdom~~Three ~~being~~Israeli ~~among~~companies—Elbit ~~those~~Systems ~~customers~~Ltd., ~~that implemented~~Israel ~~Israeli~~Aerospace ~~defense~~Industries ~~systems~~Ltd. ~~such~~(IAI), asand ~~the~~Rafael ~~‘Trophy~~Advanced Defense Systems Ltd.—rank among SIPRI’s ~~Active~~Top ~~Protection~~100 ~~system~~global arms-producing companies, ~~which~~with ~~creates~~combined aarms ~~neutralization~~revenues ~~bubble~~of ~~around~~approximately $16.2 billion ~~military~~in ~~vehicles~~2024, ~~and~~representing ~~rapidly~~a ~~detects,~~16% ~~classifies~~year-over-year ~~and~~increase. ~~engages~~Israel’s ~~all~~military ~~known~~spending ~~chemical~~increased ~~energy~~by ~~(CE)~~65% ~~threats~~in ~~including~~2024 ~~recoilless~~to ~~rifles,~~$46.5 ~~ATGMs~~billion, or 8.8% ATof ~~rockets,~~GDP—the ~~HEAT~~second-highest ~~tank~~military ~~rounds,~~burden ~~and~~in ~~RPGs.~~the ~~Israel~~world—reflecting ~~has~~the aintensity ~~strong~~of ~~missile~~ongoing ~~defense~~multi-front ~~system~~military ~~and~~operations. Israel isremains one of few countries with successful experience in operating a multi-tiered missile defense system., ~~There~~and ~~have~~its ~~also~~defense ~~been~~technologies continue ~~multiple~~to ~~sales~~be ~~between~~adopted ~~Israel~~by ~~and~~major ~~national~~global ~~providers of defense technologies~~militaries. ~~For~~ ~~example,~~Notable ~~the~~recent ~~U.S.~~transactions ~~approved~~include the sale of ~~David’s~~the ~~Sling,~~Arrow a3 ~~complete~~missile ~~air~~ defense system ~~designed~~ to ~~defeat~~ Germany—the ~~full~~largest ~~spectrum~~arms ~~of long~~sale ~~range~~in ~~air~~Israel’s history—and ~~missile~~defense ~~threats,~~agreements bywith ~~Israel~~India ~~and~~totaling ~~the~~approximately ~~private~~$10 ~~company~~billion encompassing ~~Rafael~~air ~~Advanced~~defense ~~Defense~~systems ~~Systems~~and ~~Ltd~~drones., ~~manufacturer~~Israel ofexports ~~the~~arms ~~David’s sling system,~~ to ~~Finland~~customers onin ~~August~~23 2European countries, ~~2023~~10 Asian countries, aand ~~project~~multiple countries ~~that~~in ~~was~~the ~~valued~~Americas atand ~~more~~Africa, ~~than~~with ~~300~~Europe ~~million~~(41%) ~~euros,~~and ~~marking~~Asia a(40%) ~~key~~representing ~~development~~the inlargest ~~Israel’s medium-tier~~regional ~~missile~~shares of Israeli defense ~~offerings~~exports.

8Global 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.

~~Further,~~Tiltan ~~the~~Software ~~market~~Engineering ~~size for the defense industry was approximately $76~~Ltd.1 billion in the U.S. in 2022 and is estimated to grow to $184.7 billion by 2027. Further, it is estimated that the compound annual growth rate for the defense technology market will be approximately 15.9% from 2022 to 2027 (PitchBook, Emerging Tech Research). It has also been estimated that approximately $135.3 billion was invested in the defense industry from 2016 to 2022. While we do not currently have any United States operations or customers, and do not have any current plans to enter the United States defense industry, we may and intend to do so in the future via directed sales and marketing efforts, or via the acquisition of complimentary United States defense industry businesses.

~~Digital~~Acquisition ~~RFQ~~of 100% of Tiltan

~~Through~~On ~~our~~December ~~Digital~~30, ~~RFQ subsidiary~~2025, the weCompany ~~currently~~consummated ~~aim~~its toacquisition ~~provide~~(the ~~cross-border~~“Tiltan ~~payment~~Acquisition”) ~~and~~of ~~transactions~~all ~~solutions~~of tothe ~~institutional~~issued ~~investors,~~ and ~~offer~~outstanding ~~blockchain-enabled~~shares ~~financial~~of Tiltan Software ~~services~~Engineering ~~solutions~~Ltd. (“Tiltan”) pursuant to ~~institutional~~a ~~investors~~Stock inPurchase aAgreement, ~~secure~~as amended (the “Tiltan Purchase Agreement”), among ~~compliant~~the ~~and~~Company, ~~globally~~its ~~accessible~~wholly ~~manner.~~owned ~~The~~subsidiary ~~blockchain-enabled~~Nukk ~~payment~~Picolo ~~gateway we~~Ltd. ~~have~~(“Nukk ~~developed~~Picolo”), ~~has~~Tiltan ~~the~~and ~~capability~~Arie toShafir ~~deliver~~(the ~~global~~“Tiltan Seller”), ~~cross-border~~in ~~transfers~~consideration of ~~fiat~~NIS ~~currencies~~47,600,000 ~~using~~(approximately ~~blockchain rails~~$14,000,000). ~~Digital~~Pursuant ~~RFQ~~to ~~currently~~the Tiltan Purchase Agreement, the purchase ~~offers~~price ~~payment~~is ~~and~~payable ~~settlement~~in ~~services,~~a ~~including~~combination ~~those~~of ~~utilizing~~(i) ~~blockchain~~cash ~~networks,~~equal ~~but~~to ~~does~~75% ~~not~~of ~~provide~~the ~~custody~~purchase price (the “Cash Portion”), or ~~wallet~~NIS ~~services~~35,700,000 ~~with~~(approximately ~~respect~~$10,500,000), toa ~~digital~~portion ~~assets,~~of ~~and~~which ~~does~~(NIS ~~not~~5,283,333, ~~hold~~less ~~digital~~NIS ~~assets~~666,667 ~~reducing~~retained by the ~~risks~~Company ~~and~~as ~~regulatory~~working ~~burden~~capital onfor ~~its~~Tiltan) will ~~business.~~be Inpaid ~~future, Digital~~by ~~RFQ~~the ~~plans~~Company to ~~offer~~the aTiltan ~~white-labelled~~Seller ~~digital~~and ~~bank~~the ~~with~~remainder ~~end-to-end~~of ~~digital~~which ~~banking~~is ~~solutions~~evidenced ~~for~~by ~~international~~a ~~business.~~secured Wepromissory ~~are uncertain~~note as(the to“Tiltan Note”) ~~when~~in wethe ~~will~~principal beamount ~~able~~of toNIS ~~offer~~29,750,000 ~~these~~(approximately ~~products~~$8,750,000), and ~~intend~~(ii) toshares ~~evaluate~~of ~~potential~~Common ~~strategic~~Stock ~~opportunities~~equal ~~for~~to ~~DigiClear~~25% ~~which may~~of ~~include~~ the purchase ~~sale~~price of (the ~~assets~~“Stock Portion”), or aNIS ~~joint~~11,900,000 ~~venture~~(approximately $3,500,000). The remaining Cash Portion of ~~which~~NIS ~~there~~29,750,000 (approximately $8,750,000) is nopayable ~~guarantee.~~by ~~Our~~the ~~competitors~~Company in ~~this~~five ~~product~~installments ~~category~~at ~~are~~36-day ~~banks and~~intervals ~~other~~until ~~financial~~the ~~institutions~~final payment on June 29, ~~and~~2026, with wethe ~~intend~~first totwo ~~compete~~installments each being reduced by ~~offering~~NIS ~~faster~~666,667 ~~and~~for ~~more~~working ~~reliable~~capital ~~products~~to ~~using~~be ~~more~~retained ~~advanced~~by ~~technology~~Tiltan. The cash payments are ~~Products~~evidenced ~~and~~by ~~services~~the ~~offered~~Note and secured by ~~Digital~~the ~~RFQ~~pledge ~~are~~described ~~distributed~~below. ~~through~~As ~~our~~a ~~website~~result of the acquisition, Tiltan became an indirect wholly owned subsidiary of the Company.

Digital RFQ is regulated in the United Kingdom by the Financial Conduct Authority and is in good standing and is and has been in the past in material compliance with the applicable laws, rules and regulations promulgated thereby. Digital RFQ is subject to Anti Money Laundering (“AML”) and Counter Terrorist Finance (“CTF”) regulations consistent with our authorization by the Financial Conduct Authority as an Electronic Money Directive Agent, among others. For a discussion of the various laws and regulations Digital RFQ is subject.

The “blockchain technology” used by Digital RFQ in its payment processing business includes only advanced-stage and fully tested, well-established and fully collateralized stablecoins operated on the Bitcoin, Ethereum and Tron networks. However, in future, we will be free to use other blockchain networks if we determine that they offer more sophisticated or secure technology. Based on our risk assessments, we determine the appropriate network to use for a particular transaction or customer. We do not use stablecoins of an algorithmic nature, and in the event that we determine any particular stablecoin presents a threat or risk to the security of our business, customers or the transactions we process, we promptly move to another stablecoin network. We do not accept payment in digital assets and do not hold digital assets for investment or offer digital wallet services. For a description of the risks associated with the use of blockchain technology in financial services generally, and payment processing specifically.

DigiClear

Through DigiClear, we plan to develop technology that offers a custody and settlement utility operating system aiming to deliver value and a high-functioning automated post-trade solution. DigiClear aims to provide clients with the means to transfer underlying assets to alternative custodians at any time. We intend for DigiClear to use hardware security modules to offer technology that can secure client assets to block any unwanted modification of client settlement instructions or transfers. We expect that the transfer process that DigiClear’s technology will offer will be fully automated, monitored and can be processed within milliseconds. We are uncertain as to when we will be able to offer these products and intend to evaluate potential strategic opportunities for DigiClear which may include the sale of the assets or a joint venture, of which there is no guarantee. Our competitors in this product category are banks and other financial institutions and smaller financial technology companies, and we intend to compete by offering faster and more reliable products using more advanced technology. Assuming we are offering DigiClear products and services once commercially developed these will be distributed through our website.

~~GSA~~In ~~Agreements~~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.

OnAlso ~~May~~in ~~24,~~connection ~~2016,~~with ~~Nukkleus~~the ~~Limited~~closing ~~entered~~of ~~into~~the aTiltan ~~General~~Acquisition, ~~Service~~the ~~Agreement~~Company toissued ~~provide~~the ~~its~~Tiltan ~~software,~~Note ~~technology,~~to ~~customer~~the ~~sales~~Tiltan ~~and~~Seller. ~~marketing~~The ~~and~~Tiltan ~~risk~~Note ~~management technology~~matures ~~hardware~~in ~~and~~five ~~software~~equal ~~solutions~~installments (other ~~package~~than tothe ~~FML~~first ~~Malta~~two ~~Ltd.~~installments Inwhich ~~December~~have ~~2017,~~been ~~Nukkleus~~reduced ~~Limited,~~by ~~FML~~NIS ~~Malta~~666,667 ~~Ltd.~~for ~~and~~working ~~TCM~~capital ~~entered into~~to abe ~~letter~~retained ~~agreement~~by ~~providing~~Tiltan) ~~that~~at ~~there~~36-day intervals ~~was~~beginning anon ~~error in drafting~~ the ~~General~~36th ~~Service~~day ~~Agreement~~following ~~and acknowledging that~~ the ~~correct counter-party~~closing todate ~~Nukkleus~~until ~~Limited in~~ the ~~General~~final ~~Service~~payment ~~Agreement~~which is ~~TCM.~~due ~~Accordingly,~~on ~~all~~June ~~references~~29, ~~to FML Malta Ltd~~2026. ~~have~~The ~~been~~Tiltan ~~replaced~~Note ~~with~~does ~~TCM.~~not ~~TCM~~bear isinterest aunless ~~private~~an ~~limited~~Event ~~liability~~of ~~company~~Default ~~formed~~(as ~~under~~defined in the ~~laws~~Tiltan ofNote) ~~Malta.~~occurs, ~~The~~in ~~General~~which ~~Service~~case ~~Agreement~~the ~~entered~~outstanding ~~with~~principal ~~TCM provides~~amount ~~that~~shall ~~TCM~~bear ~~will~~interest ~~pay~~at ~~Nukkleus~~the ~~Limited~~rate atof ~~minimum~~10% ~~$2,000,000~~ per ~~month.~~annum Onfrom ~~October~~the ~~17,~~date ~~2017, Nukkleus Limited entered into an amendment~~ of ~~the~~ ~~General~~default ~~Service~~until ~~Agreement with TCM~~payment. InEvents ~~accordance~~of ~~with~~Default ~~the~~include ~~amendment,~~failure ~~which~~to ~~was~~timely make ~~effective~~a asmonthly ofinstallment ~~October~~payment 1,within ~~2017,~~ten ~~the~~(10) ~~minimum~~business ~~amount payable~~days byafter ~~TCM~~written tonotice ~~Nukkleus~~is ~~Limited~~received ~~for services was reduced~~ from ~~$2,000,000~~the ~~per~~Tiltan ~~month to $1~~Seller,~~600,000~~ ~~per~~bankruptcy of ~~month.~~the ~~Emil~~Company ~~Assentato~~or isNukk ~~also the~~Picolo, ~~majority~~material ~~member~~breach of ~~Max~~the QTiltan ~~Investments~~Purchase ~~LLC~~Agreement, ~~(“Max~~and ~~Q”),~~cessation ~~which~~of isbusiness ~~managed~~operations byfor ~~Derivative~~a ~~Marketing~~continuous period ~~Associates~~of ~~Inc.~~twenty (~~“DMA”~~20) days. ~~Mr.~~ ~~Assentato~~Upon isan ~~the~~Event ~~sole~~of ~~owner~~Default, ~~and~~the ~~manager~~Tiltan ofSeller ~~DMA.~~may ~~Max~~declare Qall ~~owns~~amounts ~~79%~~due ofand ~~Currency~~payable ~~Mountain~~and ~~Malta~~exercise ~~LLC,~~remedies under ~~which~~the inTiltan ~~turn~~Note isand the ~~sole~~Pledge ~~shareholder of~~Agreement ~~TCM~~(as defined below).

InAs ~~addition,~~security onfor ~~May~~the ~~24, 2016, in order to appropriately service TCM,~~Company’s ~~Nukkleus~~payment ~~Limited~~obligations ~~entered~~under ~~into~~the aTiltan ~~General~~Note ~~Service Agreement with FXDIRECT, which provides that Nukkleus Limited will pay FXDIRECT a minimum of $1,975,000 per month in consideration of providing personnel engaged in operational~~ and ~~technical~~the ~~support,~~Tiltan ~~marketing,~~Purchase ~~sales support~~Agreement, ~~accounting,~~ ~~risk~~Nukk ~~monitoring,~~Picolo ~~documentation processing and customer care and support. FXDIRECT may terminate this agreement upon providing 90 days’ written notice. On October 17, 2017, Nukkleus Limited~~ entered into ana ~~amendment~~pledge ofagreement (the ~~General Service~~ “Pledge Agreement”) with ~~FXDIRECT. Pursuant to~~ the ~~amendment~~Tiltan Seller, ~~which~~pursuant ~~was~~to ~~effective~~which asNukk ofPicolo ~~October~~granted ~~1, 2017,~~ the ~~minimum~~Tiltan ~~amount~~Seller ~~payable~~a byfirst-priority ~~Nukkleus~~security ~~Limited~~interest in toall ~~FXDIRECT~~100 ~~for~~shares ~~services was~~of ~~reduced~~Tiltan ~~from~~acquired ~~$1,975,000~~in ~~per~~the ~~month~~Tiltan toAcquisition. ~~$1,575,000~~The ~~per~~security ~~month.~~interest ~~Currency~~shall ~~Mountain~~be ~~Holdings~~registered ~~LLC~~with is the ~~sole~~Israeli ~~shareholder~~ Registrar of ~~FXDIRECT~~Companies. ~~Max Q~~Upon isfull ~~the~~payment ~~majority shareholder~~ of ~~Currency~~all ~~Mountain~~amounts ~~Holdings~~due ~~LLC. Due to non-payment by TCM~~ under the ~~GSA,~~Tiltan ~~the~~Note ~~Company~~and ~~has advised TCM that~~ the ~~GSA~~Tiltan ~~has~~Purchase ~~been~~Agreement, ~~terminated. The Company has historically generated substantially most of its revenue through~~ the ~~services~~pledge ~~rendered under~~shall ~~the~~be ~~GSA~~released.

~~Due to~~Business ~~non-payment by TCM under the GSA, the Company has 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 FDDD 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.Tiltan

~~The~~Tiltan ~~foregoing~~develops ~~descriptions~~simulation, ofgeospatial, ~~the~~and ~~terms~~operational ~~and~~software ~~conditions~~solutions ofthat ~~the~~enable ~~General~~its ~~Services~~defense ~~Agreement~~and ~~with~~homeland ~~FML~~security ~~Malta~~customers ~~Ltd~~to train personnel, ~~the~~test ~~amendment~~systems, navigate, toand ~~such~~operate ~~General~~in ~~Services~~complex ~~Agreement,~~environments using realistic three-dimensional mapping and sensor-based data. Tiltan’s core capabilities—mapping, ~~the~~simulation, ~~General~~and ~~Services~~machine ~~Agreement~~vision—can ~~with~~be ~~FXDIRECT~~offered as distinct products but are ~~not~~designed ~~complete~~to work together as an integrated solution for situational awareness and ~~are~~decision ~~qualified~~support. inIn ~~their~~plain ~~entirety~~terms, byTiltan ~~the~~makes ~~full~~software ~~text~~that turns complex real-world environments into clear digital tools: it helps customers create a detailed digital version of ~~the~~a ~~applicable~~physical ~~agreement~~area (a “terrain model”), build a ~~which~~digital ~~are~~copy ~~filed~~of ~~herewith~~a asreal ~~Exhibit~~location that mirrors real-world conditions (a “digital twin”), and ~~incorporated~~construct ~~herein~~computer-generated byvirtual worlds ~~reference~~for training or testing purposes (a “synthetic environment”).

InTiltan ~~addition~~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 ~~revenues from~~human ~~our~~eye ~~General~~sees), ~~Services~~infrared ~~Agreement~~(heat-based ~~with~~imagery ~~TCM~~useful for seeing in darkness), ~~Nukkleus~~and ~~received~~synthetic ~~revenue~~aperture ~~from~~radar ~~financial~~or ~~services~~SAR (radar imaging that can detect objects through ~~Digital~~clouds, ~~RFQ~~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.

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.

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.

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.

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.

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.

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.

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.

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.

ZorroNet Ltd.

ZorroNet Ltd. (“Zorronet”) is an indirect subsidiary of the Company, held through Water.IO Ltd., an Israeli public company traded on the Tel Aviv Stock Exchange in which Star 26 Capital Inc. holds an approximately 67% equity interest. Zorronet is a wholly-owned subsidiary of Water.IO.

Business Description

Zorronet is an Israeli technology company specializing in the development and deployment of artificial intelligence (AI) systems for perimeter security, defense, monitoring, and command and control applications. The company develops a smart, dynamic software platform for managing security and safety scenarios in real time. The platform operates as an external software layer (“middleware”) that connects to deployed cameras, sensors, analytics systems, and robotic assets (such as drones), as well as to existing infrastructure. The platform enables remote connection to endpoint devices and existing systems, performs continuous monitoring of data streams, and identifies anomalies using advanced processing algorithms that simulate human capabilities of detection, analysis, and prediction. The system performs real-time event analysis using Big Data principles and predictive analytics, operating autonomously to identify abnormal scenarios, generate targeted reports, route information, activate relevant response measures, and recommend courses of action—all efficiently, accurately, and without the need for continuous human intervention.

The platform is currently installed and integrated with existing systems at security operations centers, operational command rooms for border and base protection, transportation authorities, educational institutions, military and police agencies, energy companies, municipalities, and other organizations. Since 2025, Zorronet has established and deployed multiple command and control rooms and advanced monitoring capabilities, including three control rooms at IDF bases designed for multi-user observation and unified situational awareness management, a dedicated control room at Kibbutz Metzer, and a system connected to a robotic monitoring center managing approximately 3,200 devices simultaneously across kibbutzim, moshavim, and industrial facilities.

History and Structure

Zorronet was incorporated in Israel in 2021 as a private limited company. On October 23, 2025, Water.IO Ltd. completed the acquisition of 100% of Zorronet’s shares, making Zorronet a wholly-owned subsidiary of Water.IO.

Market Opportunity and Growth

Zorronet operates in the rapidly growing market for AI-powered video analytics, monitoring, and autonomous security solutions. This market is driven by the increasing volume of security threats, significant expansion in the number of connected cameras and sensors, and the growing need for skilled monitoring personnel—factors that create substantial operational burden on organizations and reinforce demand for autonomous solutions capable of replacing resource-intensive manual processes. The company’s target markets include military, government, and defense organizations requiring real-time detection and reduced manpower at monitoring centers; transportation and public infrastructure operators (including a successfully completed pilot with Israel Railways for early detection of track intrusions); industrial facilities and construction sites requiring perimeter protection and safety monitoring; public institutions and mass event venues requiring crowd flow management and alert prioritization; and commercial organizations adopting automation for monitoring and cost reduction.

Zorronet’s growth strategy combines technological and commercial expansion. Technologically, the company is investing in enhanced real-time analytics capabilities, edge processing, and a unified operational environment combining video, audio, mapping, and control commands. Commercially, the company operates through three revenue channels: deployment and integration installations (NRE), SaaS-based annual software licenses with per-endpoint pricing, and co-development of new products with B. Rimon Agencies Ltd., a sister company within the T3 Defense group. In December 2025, Zorronet signed a distribution agreement with KeepZone AI Inc. in the United States for the installation of crowd analytics systems at stadiums in Israel and Mexico in preparation for the 2026 World Cup. Zorronet also entered into an exclusive distribution agreement with MyTrade FZ LLC for marketing and sales of its products in the United Arab Emirates.

Competition and Competitive Advantage

Zorronet operates in a competitive landscape that includes traditional camera and VMS (Video Management System) providers offering basic analytics, specialized analytics companies focused on specific detection tasks (such as people counting or object recognition), large defense technology companies integrating AI as part of broader solution packages, and local system integrators. Zorronet’s competitive advantages include its proprietary AI platform that functions as an autonomous “decision layer” above existing systems rather than a simple analytics tool; its ability to integrate with existing infrastructure without requiring customers to replace hardware, enabling rapid deployment and lower costs; accumulated field-based experience and proprietary intellectual property positioning the company at the forefront of autonomous security; and active projects with major Israeli defense primes including Elbit Systems and Rafael Advanced Defense Systems, including classified projects in border defense and command center upgrades. The company demonstrated its capabilities through a successful pilot at the Jerusalem Arena during the “NEXT” events in December 2025, conducted with official participation from the venue’s security chief and the Jerusalem District Police Command.

Human Capital

Zorronet employs approximately 7 people in Israel, including software developers, AI engineers, and operations personnel.

Sales and Marketing

Zorronet’s sales activities target defense and security organizations, military and police agencies, transportation authorities, industrial facilities, and commercial clients through direct engagements and a growing network of distributors in Israel and internationally. The company has active projects with Elbit Systems, including a NIS 500,000 pilot for AI-based camera analytics at an IDF base (received January 2026, expanded by an additional NIS 115,000 in February 2026), as well as approximately three classified projects with Rafael in the areas of border defense and command center upgrades. On the commercial side, Zorronet operates an autonomous monitoring center at Adirim Security Center serving construction sites, industrial facilities, and quarries. The company is also jointly submitting with Malam-Team for a tender for Ayalon Highway traffic monitoring and control based on AI and video analytics technologies.

Government Regulations

Zorronet is subject to Israeli data privacy and cybersecurity regulations, including requirements relating to the processing, storage, and analysis of data from cameras, sensors, and analytics systems. A portion of Zorronet’s activities involve defense and security projects that are subject to Israeli Ministry of Defense regulations and classification requirements. Zorronet operates as a subcontractor to Elbit Systems Ltd. for certain defense projects and is required to comply with applicable security and confidentiality requirements. As an indirect subsidiary of a U.S. public company, Zorronet’s activities involving technology transfers or international sales are subject to U.S. ITAR, EAR, cybersecurity standards, and anti-corruption laws including the FCPA. No material regulatory violations have been reported.

Intellectual Property

On July 8, 2025, Zorronet filed a provisional patent application (PPA) in the field of data transfer and processing and received a confirmation of innovation from the Israel Innovation Authority. The follow-on patent application was not advanced due to the lack of progress on the related railway project. Zorronet’s primary intellectual property consists of its proprietary AI software platform, including its algorithms for pattern-of-life analysis, anomaly detection, dynamic scenario generation, and autonomous operational response. Zorronet does not currently hold any registered patents or trademarks.

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

~~Nukkleus~~T3 Defense’s ~~principal~~ 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

WeT3 ~~have~~and ~~the~~its ~~equivalent~~subsidiaries toemploy ~~approximately~~112 12 employees, of which 112 work directly for T3, 39 employees work for ~~Digital~~ITS, ~~RFQ~~11 ~~and~~for ~~one~~Positech, ~~employee~~14 ~~works~~for Tiltan, 17work for ~~Nukkleus~~Nukk Picolo Ltd., 18 for Rimon, 7 for Zorronet, 2 for Water IO and 2 for Nimbus.

1020

Item 1A. Risk Factors.

Risks Related to ~~Nukkleus’s~~Our Business

~~Failure~~The toaudited ~~complete~~consolidated ~~the~~financial ~~acquisition~~statements included ~~of Star may result~~ in ~~paying a~~this ~~termination~~Annual ~~fee~~Report tohave ~~Star~~been ~~and~~prepared ~~could~~assuming ~~harm~~the ~~our~~Company ~~common~~will ~~stock~~continue ~~price~~as ~~and~~a ~~future~~going ~~business and operations~~concern.

IfThe ~~the~~Company ~~acquisition~~recorded negative working capital of ~~Star~~approximately is$30 million (which includes $24.5 million of stock purchase warrant liabilities which will not ~~completed~~require any cash to extinguish) and stockholders’ deficit of $15.6 million as of December 31, we2025; ~~are~~a ~~subject~~net tooperating 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 ~~following~~for ~~risks:~~the next 12 months.

●After ifevaluating ~~the~~these conditions, ~~Star~~management ~~Agreement~~concluded isthat ~~terminated~~its ~~under~~plans, ~~specified~~when ~~circumstances~~considered in aggregate, wealleviate ~~could~~substantial bedoubt ~~required~~about the Company’s ability to ~~pay~~continue ~~Star~~as a ~~termination~~going ~~fee~~concern. Those plans include: (i) cancellation of a previously contemplated $116 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.

●Management ~~the~~has ~~price~~determined ofthat ~~our~~its ~~common~~plans ~~stock~~are ~~may~~probable of ~~decline~~being effectively implemented and ~~could~~probable ~~fluctuate~~of ~~significantly;~~mitigating ~~and~~the conditions described above, enabling continuation of the Company’s operations for the foreseeable future.

●Our ~~costs~~unprecedented ~~related~~transformation tofrom ~~the~~financial technology ~~proposed~~to ~~acquisition,~~aerospace ~~such as legal~~ and ~~accounting~~defense ~~fees,~~lacks aany ~~majority~~operational oftrack ~~which~~record ~~must~~and bemay ~~paid~~completely ~~even if the agreement is not completed~~fail.

IfWe ~~the~~have ~~Star~~recently ~~Agreement~~completed our isbusiness ~~terminated~~model ~~and~~transformation. ~~the~~This ~~board~~transformation ofrequired ~~directors~~or ofrequires ~~the~~us to: divest our existing operations; acquire and integrate ~~Company~~multiple ~~determines~~defense tocompanies; ~~seek~~establish ~~another~~new ~~business~~regulatory ~~combination~~compliance systems for ITAR, ~~there~~DFARS, ~~can~~and beother noregulations; ~~assurance~~obtain ~~that~~facility wesecurity clearances ~~will~~that betypically ~~able~~take to12-18 ~~find~~months; ~~another~~recruit ~~third~~cleared ~~party~~personnel ~~to transact~~in a ~~business~~competitive ~~combination~~market; ~~with~~and develop prime contractor relationships from scratch, ~~yielding~~all ~~comparable~~within ora ~~greater~~short ~~benefits~~timeframe.

IfWe ~~the~~have ~~conditions~~never tomanaged ~~the~~a ~~Star~~defense program, ~~Agreement~~never ~~are~~held ~~not~~a ~~satisfied~~government orcontract, never obtained security clearances, and have no established relationships with prime defense ~~waived~~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 ~~acquisition~~substantial capital being deployed. Our complete lack of defense industry track record means investors are funding an entirely unproven strategy that may ~~not~~result ~~occur~~in total loss of invested capital.

~~Even~~We if the Star acquisition is approved by the stockholders of the Company, specified conditions must be satisfied or, to the extent permitted by applicable law, waived to complete the acquisition. These conditions are ~~set~~attempting ~~forth in the Star Agreement. We cannot assure you that all of the conditions~~ to ~~the~~integrate ~~consummation of the acquisition~~multiple ~~will~~defense becompanies ~~satisfied~~simultaneously orwithout ~~waived.~~any Ifaerospace ~~the~~and ~~conditions~~defense ~~are not satisfied or waived, the acquisition may not occur or the closing may be delayed~~experience.

We have arecently ~~limited~~acquired Star ~~operating~~26, ~~history~~Tiltan inand ~~an evolving~~Nimbus, ITS, and ~~highly~~are ~~volatile~~constantly ~~industry~~pursuing other targets, ~~which~~all ~~makes~~within ita ~~difficult~~compressed totimeframe ~~evaluate~~and ~~our~~without ~~future~~any ~~prospects~~defense industry acquisition or integration experience. Each acquisition involves different countries (U.S., Israel, Europe), currencies, regulatory regimes, and ~~may~~business ~~increase~~models. ~~the~~Managing ~~risk~~simultaneous ~~that~~integrations weof ~~will~~this magnitude typically requires extensive expertise, dedicated ~~not~~integration beteams, ~~successful~~and proven playbooks—none of which we possess.

~~Nukkleus,~~Historical ~~the~~data ~~wholly~~shows ~~owned~~that ~~operating~~70-90% ~~subsidiary,~~of ~~was~~acquisitions ~~formed~~fail ~~in 2013 and since then our business model has continued~~ to ~~evolve.~~achieve Inprojected ~~2021~~synergies, weand ~~acquired a controlling interest in Match. In 2019,~~ our ~~Digital~~complete ~~RFQ~~lack ~~indirect subsidiary, and wholly owned subsidiary~~ of ~~Match,~~industry ~~began~~experience tosignificantly ~~operate~~increases ~~a payment processing~~this ~~business~~failure ~~partly using blockchain technology~~risk. ~~The~~We ~~comparability~~may ofdiscover ~~our~~post-closing ~~results~~that inacquired ~~prior~~technologies ~~quarterly~~are orobsolete, ~~annual~~customer ~~periods~~relationships ~~should~~are not betransferable, ~~viewed~~key asemployees an indication of future performance. The “blockchain technology” used by Digital RFQ in its payment processing business and referred to throughout this annual report is intended to refer to stablecoins operated on the Bitcoindepart, ~~Ethereum and Tron networks,~~ or ~~such~~compliance ~~other~~violations ~~blockchain~~trigger networks as Digital RFQ may determine to be reliable and well established in the financial services industry, at an advanced stage and fully tested and collaterialized based on certain criteria summarized belowpenalties. The ~~blockchain~~complexity ~~networks~~of ~~used~~simultaneous ~~by Digital~~multi-jurisdictional ~~RFQ~~defense inacquisitions without ~~its~~relevant ~~payment~~experience ~~processing~~creates ~~business~~extreme ~~are~~execution ~~maintained and operated by third parties~~risk.

~~Because~~Our ~~Digital~~Chief ~~RFQ~~Executive ~~makes use~~Officer’s ~~of blockchain technology only~~ commitments to ~~process~~other ~~payments~~companies ~~and~~may ~~does~~limit ~~not~~his ~~hold~~ability ~~digital~~to ~~assets,~~devote ~~the~~full-time ~~criteria~~attention ~~for~~to ~~the~~our ~~adoption~~business and ~~use~~could ofresult ~~any blockchain network may differ from those of investors~~ in ~~stablecoins.~~competition ~~Digital RFQ evaluates each blockchain and/~~or ~~stablecoin~~conflicts ~~on a daily and transaction-by-transaction~~of ~~basis~~interest, towhich ~~minimize~~could ~~any~~adversely ~~risk~~affect ~~associated~~our ~~with~~operations ~~the blockchain or stablecoin~~ and tofinancial ~~ensure that Digital RFQ can reliably complete the transaction in and out of the stablecoin quickly to minimize such risk~~performance. ~~Digital RFQ determines that a blockchain or stablecoin is suitable for use in its payment processing services by assessing the following criteria:~~

●Menachem ~~First~~Shalom, ~~how~~our ~~widely~~Chief Executive ~~supported~~Officer, isalso serves as the ~~blockchain~~Chief ~~stablecoin~~Executive ~~combination~~Officer byof ~~Digital~~Star ~~RFQ’s~~26, ~~trading~~Motomova ~~partners~~Inc., ~~including~~and Hold Me Ltd. These roles require Mr. Shalom to devote significant time and resources to the ~~banks~~management and ~~financial~~strategic ~~institutions~~direction ~~Digital~~of ~~RFQ~~these ~~uses~~other companies, which may reduce the time and attention he can dedicate to ~~support~~T3. ~~its~~This divided focus could impair our ability to execute our business. ~~Having~~strategy, ~~sufficient~~particularly ~~trading~~as ~~partners~~we transition ~~that~~to ~~support~~a defense-focused company following the ~~blockchain~~acquisition orof ~~stablecoin~~Star ~~means~~26. ~~there~~The competing demands on Mr. Shalom’s time may bedelay critical ~~multiple~~decision-making, ~~choices~~hinder ofour ~~blockchain~~ability to ~~use~~respond ~~for~~to ~~any~~market ~~given~~opportunities, ~~trade~~or weaken our operational oversight, all of which could materially adversely affect our business, financial condition, and results of operations.

●Furthermore, the ~~Second~~businesses of Star 26, ~~whether~~Motomova ~~there~~Inc., isand ~~sufficient~~Hold ~~liquidity~~Me Ltd. may operate in ~~those~~sectors ~~partners~~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 ~~holdings~~involvement in these companies could lead to conflicts of interest, including the ~~stablecoin~~allocation of tobusiness ~~ensure~~opportunities, ~~Digital~~resources, ~~RFQ~~or isstrategic ~~able~~priorities tothat ~~trade~~may infavor these other entities over T3. Any such competition or ~~out~~conflicts could ~~without~~harm ~~exposure~~our tocompetitive ~~volatility~~position, limit our growth prospects, and ~~price~~negatively ~~risk~~impact the value of our securities.

To determine whether any blockchain technology meets Digital RFQ’s requirements and is a suitable candidate for use in Digital RFQ’s payment processing business, we assess the following criteria. We monitor these criteria for each blockchain or stablecoin we use regularly on an ongoing basis:21

● Market share. Digital RFQ assesses a blockchain or stablecoin’s share of the stablecoin market as a whole and market capitalization from publicly available information. Some stablecoins have been in existence longer than others and may have a larger market share and market capitalization. These factors also have an influence on the market perception of such stablecoins. For example, USDT ‘Tether’ is the most prominent stablecoin measured by market capitalization but has faced auditing issues, while newer products such as GBPT have had professional Big Four auditors from inception but do not have material market share to date and thus would not be perceived or assessed as at an advanced stage or well established.

● Auditing and Collateralization. Auditing is paramount to the security and stability of stablecoins and for this reason Digital RFQ will only work with firms that adhere to full collateralization that is independently verified by an outside auditor. Digital RFQ believes that collateralization is key in maturing stablecoins. For example, the UST Terra Luna ‘collapse’ showed that algorithmically-backed stability creates vulnerability to counterparty mismanagement and influence, driven by the difficulty and lack of auditing and intrinsic connection to the Terra network itself. In contrast, collateralized stablecoins such as USDT and USDC are fully backed by reserve fiat currency holdings and can be redeemed by holders for such fiat currency. Digital RFQ also views traditional markets, while much more established, as not completely free of risk since they rely substantially on fractional reserve banking to maintain the market.

● Counterparty Risk. Digital RFQ assesses counterparty risk in its stablecoin and blockchain selection in the issuer of the stablecoin and its governance and in the banks and financial institutions it uses to source liquidity. Digital RFQ assesses the degree of governance decentralization that may give direct control over funds (as backing, for example) or attack vectors to the governance architecture that could expose control over funds, and determines the degree of counterparty risk from the level of centralization. To assess the degree of centralization, Digital RFQ examines the number of parties controlling the blockchain protocol, the number of holders and the level of founder backing (demonstrated by founders holding a significant amount of the stablecoin). Digital RFQ is able to remain operationally stable throughout any given payment processing transaction due primarily to a robust counterparty infrastructure and minimal exposure to these ‘transit’ legs of the transaction (for more information on the third parties involved in Digital RFQ’s payment processing business, please refer to the section titled “We rely on connectivity to blockchain networks for our Platforms”.

● Smart Contract Risk. Smart contract risk relates to the technical security of a blockchain or stablecoin based on its underlying code. If one of the supported stablecoins or other digital currencies is compromised, collateral will be affected, thus threatening the solvency of the blockchain protocol. Projects must have undergone audits to be considered. We assess maturity based on the number of days and the number of transactions of the smart contract as a representation of use, community and development. These proxies show how strong the code is.

However, because Digital RFQ makes use of blockchain technology only to process payments, and does not hold digital assets, we are able to constantly monitor the status of any blockchain network or stablecoin before, during and after a payment is processed, and determine which of the available blockchain networks is suitable for a particular transaction. We therefore do not believe we are exposed to material risks associated with holding stablecoins or other digital assets. Furthermore, we do not use stablecoins of an algorithmic nature, and in the event that we determine any particular stablecoin presents a threat or risk to the security of our business, customers or the transactions we process, we promptly move to another stablecoin network. We do not accept payment in digital assets and do not hold digital assets for investment or offer digital wallet services.

Because we have a limited history operating our business at its current scale and scope, it is difficult to evaluate our current business and future prospects, including our ability to plan for and model future growth. For example, recently launched services require substantial resources and there is no guarantee that such expenditures will result in profit or growth of our business. The rapidly evolving nature of the market in which we operate, substantial uncertainty concerning how these markets may develop, and other economic factors beyond our control, reduces our ability to accurately forecast quarterly or annual revenue. Failure to manage our current and future growth effectively could have an adverse effect on our business, operating results, and financial condition.

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 ~~acquisition~~acquisitions of ~~Match~~Star ~~and~~26, ~~our~~Tiltan ~~proposed~~and ~~acqisition of Star~~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,~~reputation and the ~~quality~~integration 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~~revenues, licenses or other government 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.

We ~~face~~have ~~intense~~divested ~~and~~our ~~increasing~~financial ~~competition~~technology business and, ifare wenow dobuilding ~~not compete~~a ~~effectively~~defense business, ~~our~~creating ~~competitive~~operational ~~positioning~~complexity and ~~our~~execution ~~operating results will be harmed~~risk.

We ~~operate~~are innow afocused ~~rapidly~~on ~~changing~~acquiring and ~~highly~~integrating ~~competitive~~defense ~~industry~~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 ~~our~~managing ~~results~~employee ofuncertainty across both divesting and acquiring operations. The complexity of completing divestitures and ~~future~~acquisitions ~~prospects~~within ~~depend~~a ~~on,~~short ~~among~~timeframe ~~other~~significantly ~~things:~~increases execution risk and the potential for value destruction in both transactions.

● the growth of our customer base,

● our ability to monetize our customer base,

● our ability to acquire customers at a lower cost, and

● our ability to increase the overall value to us of each of our customers while they use our products and services.

Despite the regulatory barriers to enter the markets we serve, we expect our competition to continue to increase. In addition to established enterprises, we may also face competition from early-stage companies attempting to capitalize on the same, or similar, opportunities as we are. Some of our current and potential competitors have longer operating histories, particularly with respect to our digital financial services products, significantly greater financial, technical, marketing and other resources, and a larger customer base than we do. This allows them, among others, to potentially offer more competitive pricing or other terms or features, a broader range of digital financial products, or a more specialized set of specific products or services, as well as respond more quickly than we can to new or emerging technologies and changes in customer preferences.

Our existing or future competitors may develop products or services that are similar to our products and services or that achieve greater market acceptance than our products and services. This could attract new customers away from our services and reduce our market share in the future. Additionally, when new competitors seek to enter our markets, or when existing market participants seek to increase their market share, these competitors sometimes undercut, or otherwise exert pressure on, the pricing terms prevalent in that market, which could adversely affect our market share and/or ability to capitalize on new market opportunities.

We currently compete at multiple levels with a variety of competitors, including:

● payment platforms;

● banks and non-bank financial institutions (including without limitation those using the Society for Worldwide Interbank Financial Telecommunication (SWIFT) payment system); and

● foreign exchange and derivative, including contract for difference (“CFD”), transfer processors.

Because we do not currently control a bank or a bank holding company, we may be subject to regulation by a variety of state, federal and international regulators across our products and services and we rely on third-party banks to provide payment-processing services to our customers. This regulation by federal, state and international authorities increases our compliance costs, as we navigate multiple regimes with different examination schedules and processes and varying disclosure requirements.

We believe that our ability to compete depends upon many factors, both within and beyond our control, including the following:

● the size, diversity and activity levels of our customer base;

● the timing and market acceptance of products and services, including developments and enhancements to those products and services offered by us and our competitors;

● customer service and support efforts;

● selling and marketing efforts;

● the ease of use, performance, price and reliability of solutions developed either by us or our competitors;

● changes in economic conditions, regulatory and policy developments;

● our ability to successfully execute on our business plans;

● our ability to enter new markets;

● general digital payments, capital markets, blockchain and stablecoin market conditions;

● the ongoing impact of the COVID-19 pandemic; and

● our brand strength relative to our competitors.

Our current and future business prospects demand that we act to meet these competitive challenges but, in doing so, our revenue and results of operations could be adversely affected if we, for example, increase marketing expenditures or make other expenditures. All of the foregoing factors and events could adversely affect our business, financial condition, results of operations, cash flows and future prospects.

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.

Our business involves the collection, storage, processing and transmission of confidential information, customer, employee, service provider and other personal data, as well as information required to access customer assets. We have built our reputation on the premise that our products and services offer customers a secure way to accept and make payments and store value. As a result, any actual or perceived security breach of us or our third-party partners may:

● harm our reputation and brand;

● result in our systems or services being unavailable and interrupt our operations;

● result in improper disclosure of data and violations of applicable privacy and other laws;

● result in significant regulatory scrutiny, investigations, fines, penalties, and other legal, regulatory and financial exposure;

● cause us to incur significant remediation costs;

● lead to theft or irretrievable loss of our or our customers’ assets;

● reduce customer confidence in, or decreased 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 or third parties as a result of losses to them or claims by them; and

● adversely affect our business and operating results.

Further, any actual or perceived breach or cybersecurity attack directed at other financial institutions or blockchain companies, whether or not we are directly impacted, could lead to a general loss of customer confidence in the use of technology to conduct financial transactions, 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 large businesses, technology companies and financial institutions, as well as government institutions, have disclosed breaches of their information security systems, some of which have involved sophisticated and highly targeted attacks, including on their websites, mobile applications, and infrastructure. Attacks upon systems across a variety of industries, including the payment processing, forex and CFD 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 state actors. 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, and do not believe we are a target of such breaches or attacks, we have developed systems and processes designed to protect the data we manage, prevent data loss and other security breaches, effectively respond to known and potential risks. 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. Certain threat actors may be 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 may 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. Outages and disruptions of our systems, including any caused by cyberattacks, may harm our reputation and our business, operating results, and financial condition.

Any significant disruption in our technology could adversely impact our brand and reputation and our business, operating results, and financial condition.

Our reputation and ability to grow our business depends on our ability to operate our service at high levels of reliability, scalability, and performance, including the ability to process and monitor, on a daily basis, a large number of transactions that occur at high volume and frequencies across multiple systems. The proper functioning of our products and services, the ability of our customers to make and receive payments, and our ability to operate at a high level, are dependent on our ability to access the blockchain networks underlying our Platforms and other supported blockchain-based products and technology, for which access is dependent on our systems’ ability to access the internet. Further, the successful and continued operations of such blockchain networks will depend on a network of computers, miners, or validators, and their continued operations, all of which may be impacted by service interruptions.

Our systems, the systems of our third-party service providers and partners, and certain blockchain networks, 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, including systems of companies we have acquired, 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 products and services may fail, resulting in unanticipated disruptions, slower response times and delays in our services, including our customers’ payments through our Platforms. This could lead to failed or unauthorized payments, incomplete or inaccurate accounting, loss of customer information, increased demand on limited customer support resources, customer 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 customers or partners to believe that our systems are unreliable, leading them to switch to our competitors or to avoid or reduce the use of our products and services, and could permanently harm our reputation and brands.

Moreover, to the extent that any system failure or similar event results in damages to our customers or their business partners, these customers or partners 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 improving and upgrading our information systems and technologies. 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 are subject to regulation in certain jurisdictions, frequent or persistent interruptions could also lead to regulatory scrutiny, significant fines and penalties, and mandatory and costly changes to our business practices, and ultimately could cause us to lose existing licenses or banking relationships that we need to operate, or prevent or delay us from obtaining additional licenses that may be required for our business.

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.

We depend on various third-party partners and payment systems. More specifically, our offering of payments and transfer services depends on our ability to offer blockchain transaction processing, Automated Clearing House network (“ACH”) transaction processing, wire transfer and other payment processing services to our customers.

In order to provide such transaction processing services, we have established relationships with financial institutions whereby such financial institutions provide us with access into the relevant payment networks (e.g., the card networks and the ACH). Our ability to offer our core services depends on our ability to maintain existing relationships with financial institutions and to seek out and obtain new such relationships.

Also, critical aspects of our technology rely on third-party technologies, including blockchain networks. Our regulatory status, the status of our Platforms and of blockchain technologies more generally, may be an impediment to our ability to receive or obtain services from financial institutions. Should our partners cease providing access to such technologies and networks, we would be at risk of being unable to provide the payment processing services that are core to our customer offering.

Third parties upon which we rely to process transactions may refuse to process transactions adequately, may breach their agreements with us, refuse to renew 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 competitive services or suffer outages in their systems, any of which could disrupt our operations and materially and adversely affect our business, financial condition, results of operations and prospects.

Some third parties that provide services to us may have or gain market power and be able to increase their prices to us without competitive constraint. In addition, there can be no assurance that third parties that provide services directly to us will continue to do so on acceptable terms, or at all, or will not suffer from outages to their systems. If any third parties were to stop providing services to us on acceptable terms, we may be unable to procure alternatives from other third parties in a timely and efficient manner and on acceptable terms, or at all, which may materially and adversely affect our business, financial condition, results of operations and prospects.

We are subject to credit risks in respect of counterparties, including financial institutions.

We are and will continue to be subject to the risk of actual or perceived deterioration of the commercial and financial soundness, or perceived soundness, of other financial institutions, in particular in relation to receivables from financial institutions regarding settled payment transactions, and cash and cash-equivalents held at financial institutions. One institution defaulting, failing a stress test or requiring mail-in by its shareholders and/or creditors and/or bail-out by a government could lead to significant liquidity problems and losses or defaults by other institutions. Even the perceived lack of creditworthiness of, or questions about, a counterparty or major financial institution may lead to market-wide liquidity problems and losses or defaults by financial institutions on which we have an exposure. This risk resulting from the interdependence on financial institutions is sometimes referred to as “systemic risk” and may adversely affect financial intermediaries, such as industry payment systems and banks, with whom we interact on a daily basis. Systemic risk, particularly within the United States, could have a material adverse effect on our ability to raise new funding and on our business, financial condition, results of operations and prospects.

Our banking relationships for transaction processing are concentrated in a small number of partners.

We use a small number of banks and financial institutions as banking services providers. Should our relationships with such banks and financial institutions deteriorate, we may be limited in our ability to offer the payment processing services that are core to our offerings. While we have multiple such banking partners and are working to diversify these relationships further, we do not have written agreements with such banks and financial institutions and there remains some risk that, in the short term, our ability to provide payment processing services may be affected by any interruption in the banking services we receive. As such, should our relationships with our existing banking and financial institution partners deteriorate or if such banks and financial institutions make a decision to discontinue the services they provide us, we could lose our ability to process payments, financial transfers and other transactions. In such an event, the value of our services would be negatively impacted and our institutional investor clients could be forced to process smaller transaction volume with us or to cease transaction processing through us entirely.

Certain large customers provide a significant share of our revenue and the termination of such agreements or reduction in business with such customers could harm our business. If we lose or are unable to renew these and other marketplace and enterprise client contracts at favorable terms, our results of operations and financial condition may be adversely affected.

The largest customer of our FX operations which is no longer operating, TCM, provided significant contribution to our revenue. For the year ended September 30, 2024, our largest customer, TCM, represented 81.1% of our revenue. The agreement with TCM has been terminated which could potentially have an adverse affect on our operations.

Our products and services may be exploited to facilitate illegal activity such as fraud, money laundering, gambling, tax evasion, and scams. If any of our customers use our products or services to further such illegal activities, we could be subject to liability and our business could be adversely affected. Our efforts to detect and monitor such transactions for compliance with law may require significant costs, and our failure to effectively deal with bad, fraudulent or fictitious transactions and material internal or external fraud could negatively impact our business.

We may in the future be subject to liability for illegal transactions, including fraudulent payments initiated by our customers, money laundering, gambling, tax evasion, and scams. Examples of fraud include when a party knowingly uses stolen or otherwise illicitly acquired access information to a transaction. In addition, we are subject to the risk that our employees, counterparties or third-party service providers commit fraudulent activity against us or our customers.

Criminals are using increasingly sophisticated methods to engage in illegal activities such as counterfeiting, account takeover and fraud. It is possible that incidents of fraud could increase in the future. The use of our products or services for illegal or improper purposes could subject us to claims, individual and class action lawsuits, and government and regulatory investigations, prosecutions, enforcement actions, inquiries, or requests that could result in liability and reputational harm for us. In addition, our efforts to detect and monitor such transactions for compliance with law may require significant costs.

Moreover, certain activities that may be legal in one jurisdiction may be illegal in another jurisdiction, and certain activities that are at one time legal may in the future be deemed illegal in the same jurisdiction. As a result, there is significant uncertainty and cost associated with detecting and monitoring transactions for compliance with local laws. In the event that a customer is found responsible for intentionally or inadvertently violating the laws in any jurisdiction, we may be subject to governmental inquiries, enforcement actions, prosecuted, or otherwise held secondarily liable for aiding or facilitating such activities. Changes in law have also increased the penalties for money transmitters, e-money issuers, broker-dealers and alternative trading systems for certain illegal activities, and government authorities may consider increased or additional penalties from time to time. Owners of intellectual property rights or government authorities may seek to bring legal action against us for involvement in the sale of infringing or allegedly infringing items. Any threatened or resulting claims could result in reputational harm, and any resulting liabilities, loss of transaction volume, or increased costs could harm our business.

Moreover, while fiat currencies can be used to facilitate illegal activities, blockchain technologies, such those used in our Platforms are relatively new and, in many jurisdictions, may be lightly regulated or largely unregulated. Many blockchains have characteristics such as the speed with which digital asset transactions can be conducted, the ability to conduct transactions without the involvement of regulated intermediaries, the ability to engage in transactions across multiple jurisdictions, the irreversible nature of certain blockchain transactions, and encryption technology that anonymizes these transactions, which may make blockchain technology susceptible to use in illegal activity.

U.S. federal and state and foreign regulatory authorities and law enforcement agencies, such as the Department of Justice, the SEC, the Commodity Futures Trading Commission, The Federal Trade Commission, the IRS and various state securities and financial regulators investigate, issue subpoenas and civil investigative demands, and take legal action against persons and entities alleged to be engaged in fraudulent schemes or other illicit activity involving blockchain technologies.

While we believe that our risk management and compliance framework is designed to detect significant illicit activities conducted by our potential or existing customers, we cannot ensure that we will be able to detect all illegal activity on our systems. If any of our customers use our products and services to further such illegal activities, our business could be adversely affected. We have not detected any material illicit activities in the past.

Our risk management and compliance framework is key to our operations and is designed to address Anti Money Laundering (“AML”) and Counter Terrorist Finance (“CTF”) considerations consistent with our authorization by the Financial Conduct Authority as an Electronic Money Directive Agent, among others. The key elements of the regulatory framework that impact us include, but are not limited to, the following U.K. legislation:

● The European Union 5th and 6th Money Laundering Directives. The main components of the 5th Money Laundering Directive was to (i) grant access to the general public to beneficial ownership information of EU based companies; (ii) requires regulated entities to consult the beneficial ownership register when performing AML due diligence; (iii) obliges EU member states to create a list of national public offices and functions that qualify as politically exposed persons (PEP); and (iv) introduces strict enhanced due diligence measures for financial flows from high risk third countries. The 6th Money Laundering Directive introduced a harmonized list of 22 predicate offences that constitute money laundering and expanded its regulatory scope and criminal definition to include “aiding and abetting”. Regulated entities such as Digital RFQ are required to ensure that their AML/CFT programs address those offences. Criminal liability for those laundering money has been extended to legal persons, which means that organizations can be punished for offences committed by the people that work for them. The change means that responsibility for corporate criminal conduct falls on management personnel in addition to individual employees.

● The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer), Regulation 2017.

● Proceeds of Crime Act 2002. Digital RFQ is required to ensure sufficient controls are in place to enable its employees to recognize money laundering.

● Terrorism Act 2000 and Counter Terrorism Act 2008. Digital RFQ is required to ensure sufficient controls are in place so that the firm can recognise terrorist financing.

● Fraud Act 2006. Digital RFQ is required to ensure controls are in place to identify the risk of both internal and external fraud and the necessary controls are implemented.

● Bribery Act 2010. Digital RFQ is required to ensure controls are in place to identify the risk of bribery and corruption and the necessary controls are implemented.

The primary objectives in establishing our AML/CTF policy are to:

● Conduct regular assessments to continually understand the money laundering and terrorist financing (“ML/TF”) risks associated with our business activities;

● Prevent Digital RFQ’s services from being used for tax evasion purposes;

● Ensure Digital RFQ has appropriate controls to mitigate the ML/TF and tax evasion risks faced by the business;

● Establish minimum standards of customer due diligence to be obtained for all entities we conduct business with, including to:

● Identify and verify legal existence;

● Understand who are the natural persons that ultimately own or control the entity;

● Understand the risks posed by higher risks clients, business relationships or transactions; and

● Establish standards to allow us to identify unusual or potential suspicious behavior and report suspicions of ML/TF or other financial crime, as advised by law.

DigitalRFQ’s risk-based approach to AML/CTF is driven by the clients risk rating. DigitalRFQ operates a three-tiered classification of a potential client relationship:

1. Low Risk — applying simplified due diligence of customers

2. Medium Risk — applying standard client due diligence

3. High Risk — applying enhanced due diligence

Standard customer due diligence is conducted on the majority of customers, who present a normal level of risk. Where enough low risk factors from the customer are identified, Digital RFQ employs simplified due diligence, which is a light touch approach involving less stringent checks. Conversely, if high risk factors are identified, then the firm employs enhanced due diligence, which involves a thorough ‘deep dive’ review of the customer. These customers, if approved, are then subject to ongoing monitoring.

Simplified due diligence is for customers who present a very low risk:

1. Timing — the general rule is to verify identity before the establishment of a business relationship. However, there is now an exemption to this if there is little risk of money laundering. With simplified due diligence, the verification can take place later, so we do not interrupt the normal flow of business, provided that the verification is completed as soon as practicable after contact is first established.

2. Electronic — a customer’s identification can be based purely on electronic identification if the verification software used is of sufficient, accredited standard and that they can corroborate some of the information obtained with the customer. This could even be the case in some non-face-to-face relationships, if there are sufficient low risk factors in place.

3. Documentation — this can be done with one document only and need not be independently certified.

Enhanced due diligence is followed in all circumstances where a customer is identified as high-risk, and this involves seven specific tasks:

1. Conduct enhanced monitoring of the business relationship by increasing the number and timing of controls applied, and selecting patterns of transactions that need further examination.

2. Obtaining additional information about the customer.

3. Capturing additional information about the intended nature of the business relationship.

4. Finding out about the source of the funds or wealth of the customer.

5. Understanding the reasons for the intended or performed transactions.

6. Getting the approval of senior management for continuing the business relationship.

7. Requiring the first payment to be carried out through an account in the customer’s name with a bank subject to similar customer due diligence standards.

Digital RFQ performs a customer risk assessment to determine whether a specific customer is high, medium or low risk and will take into consideration the customer type, their geographic location and the product or service being provided. When assessing the risk, Digital RFQ considers the following risk factors:

Risk Type High Risk Factors Low Risk Factors Customer The business relationship is conducted in unusual circumstances Customers that are resident in jurisdictions considered to present a ‘higher’ risk Legal persons or arrangements that are personal asset-holding vehicles Companies that have nominee shareholders or shares in bearer form Businesses that are cash-intensive The ownership structure of the company appears unusual or excessively complex given the nature of the company’s business Public companies listed on a stock exchange and subject to disclosure requirements (either by stock exchange rules or through law or enforceable means), which impose requirements to ensure adequate transparency of beneficial ownership Public administrations or enterprises Customers that are resident in jurisdictions considered to present a ‘lower’ risk Geographic Location Countries identified by credible sources as not having effective anti-money laundering (AML) or Combating the Financing of Terrorism (CFT) systems (such as mutual evaluations, detailed assessment reports or published follow-up reports) Countries identified by credible sources as having significant levels of corruption or other criminal activity Countries subject to sanctions, embargos or similar measures issued by, for example, the European Union or the United Nations Countries providing funding or support for terrorist activities, or that have designated terrorist organisations operating within their country EU Member States Third leg countries having effective AML/CFT systems Third leg countries identified by credible sources as having a low level of corruption or other criminal activity Third leg countries which, on the basis of credible sources such as mutual evaluations, detailed assessment reports or published follow-up reports, have requirements to combat money laundering and terrorist financing consistent with the revised FATF recommendations and effectively implement those requirements

Risk Type High Risk Factors Low Risk Factors Product or Service Products or transactions that might favour anonymity Life insurance policies for which the premium is low Non-face-to-face business relationships or transactions, without certain safeguards, such as electronic signatures Insurance policies for pension schemes, if there is no early surrender option and the policy cannot be used as collateral Payments received from unknown or un-associated third parties New products and new business practices Financial products or services that provide appropriately defined and limited services to certain types of customers, so as to increase access for financial inclusion purposes

Digital RFQ undertakes ongoing monitoring regardless of the customer risk level and whether the onboarding process involved simple, standard or enhanced due diligence. This is carried out using a risk-based approach that focuses on reviewing customer data and monitoring transactions:

Low risk factors	Normal risk factors	High risk factors
Simplified Due Diligence at onboarding, with ongoing DD monitoring conducted on a real-time suspicion basis only.	Standard Due Diligence at onboarding and then real time transaction checks as well as full customer review every couple of years.	Enhanced Due Diligence at onboarding and then real time transaction checks as well as retrospective transaction checks on a monthly basis. A full customer review every 6 months.
All checks with regards to Peps, Sanctions and adverse media take place and are refreshed every 6 months.	All checks with regards to Peps, Sanctions and adverse media take place and are refreshed every 3 months or every transaction in some circumstances.	All checks with regards to Peps, Sanctions and adverse media take place and are reviewed every transaction that takes place.
Transaction monitoring on a daily basis	Transaction monitoring on a daily basis	Transaction monitoring on a daily basis
Wallet verification and analysis when we whitelist the wallet	Wallet verification and analysis every transaction	Wallet verification and analysis on a regular basis
KYC refresh every 12 months for updated KYC for Directors, Shareholders, UBO’s	KYC refresh every 6 months for updated KYC for Directors, Shareholders, UBO’s	KYC refresh every 3 months for updated KYC for Directors, Shareholders, UBO’s
6 month review of client and transactions	6 month review of client and transactions	Monthly review of client and transactions

Internal External Raised by employee to the nominated officer Suspicious activity is irrespective of amount and derives from red flags that have been identified by the employee throughout the course of their working life An official Internal SAR form should be completed Nominated officer decides to authorise or raise an external SAR Raised by nominated officer to the National Crime Agency (NCA) Can contain details identified in internal SAR or from risk assessments Must wait for approval from NCA to continue Details of all SARs (internal and external) must be recorded Company must have documented procedures

~~The client~~We ~~risk~~are ~~rating~~subject ~~reflects~~to ~~DRFQ’s~~heightened ~~assessment of the money laundering~~ operational and ~~terrorist~~cybersecurity ~~financing risk the client poses and is determined by a combination of factors including:~~risks.

●We ~~Country~~are ~~risk~~subject —to ~~Jurisdictions~~heightened operational ~~involved~~and ~~with~~cybersecurity ~~respect~~risks. toMany 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 ~~domicile~~networks, ~~operation~~information systems, applications, and ~~control~~other oftools available to employees and service providers to be more limited or less reliable. Further, the security ~~client~~systems ~~entity~~in place at our employees’ and ~~personal~~service ~~links~~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 ~~beneficial~~data ~~owners~~security and ~~controllers;~~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 ~~Sector~~pivot ~~risk~~from —fintech ~~Links~~ to ~~sectors~~the ~~associated~~defense ~~with~~sector exposes ~~higher~~us ~~risk corruption or links~~ to ~~sectors~~new ~~that~~operational, ~~involve~~regulatory, ~~significant~~and ~~amounts~~market ofrisks ~~cash~~for aswhich ~~certain~~we ~~businesses~~have ~~are~~limited ~~considered~~prior ~~to present a higher risk of potential financial crime;~~experience.

●We ~~Entity~~have ~~risk~~successfully —transitioned our ~~the~~business ~~legal~~focus ~~form~~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 ~~entity~~defense and ~~its~~homeland ~~level~~security ofmarkets, ~~transparency~~ including ~~ownership~~sales, marketing, compliance, and ~~source~~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 ~~wealth;~~operations.

●We ~~Product~~have oran ~~service~~exclusive ~~risk~~distribution agreement —with ~~the~~an ~~nature~~Israeli ofsupplier, ~~the client’s business~~ and ~~the~~any ~~products~~termination, non-renewal, or ~~services~~disruption ~~that~~in ~~the~~this ~~client will require as far as can be assessed throughout the~~ relationship ~~and~~could ~~the~~severely ~~risk~~impact ~~classifications~~our ~~that Digital RFQ has attributed to them;~~operations.

●In ~~Reputation~~August —2025 ~~any~~we ~~adverse~~executed an ~~media~~exclusive ~~such~~U.S. asdistribution ~~allegations~~agreement 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 ~~criminality~~revenue commitments (e.g., ~~frozen~~5, ~~assets~~10, orand ~~concerns~~15 payloads in Years 1-3). Failure to meet these commitments could result in termination of ~~beneficial~~the ~~owner/director~~agreement, ~~integrity;~~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.

●Our ~~PEP~~minimum ~~risk~~purchase —and ~~all~~revenue ~~client~~commitments under ~~relationships~~the ~~that~~BladeRanger ~~have~~distribution ~~one~~agreement orcreates ~~more~~financial ~~PEPs~~risks, ~~either~~including aspotential ~~their~~cash ~~ultimate~~flow ~~beneficial~~strains ~~owner~~and orinventory ~~a controller will be classified as a PEP relationship or may be designated as high risk~~overhang.

●The ~~Sanctions~~BladeRanger ~~risk~~agreement requires —us ~~individuals~~to meet escalating minimum commitments, starting at 5 payloads in Year 1 and ~~related~~increasing ~~organizations~~thereafter. If market demand falls short—due to economic downturns, technological shifts, or competitive pressures—we may ~~have~~be ~~sanctions~~forced ~~imposed~~to purchase excess inventory or incur shortfall penalties, straining our liquidity and working capital. Excess inventory could lead to obsolescence write-offs if products become outdated before sale. Our ability to finance these commitments depends on generating sufficient cash flows or accessing capital markets, and failure to do so could lead to defaults, termination of agreements, or dilution of shareholder equity through additional financing.

~~The~~We ~~above factors~~ have ~~a cumulative~~entered ~~effect~~into onan ~~risk~~exclusive ~~rating;~~distribution agreement ~~multiple~~with ~~adverse~~minimum ~~factors~~purchase ~~will~~and ~~increase~~revenue ~~the~~commitments ~~risk~~that ~~rating~~we ofmay ~~the client and must~~ be ~~referred~~unable to ~~compliance for~~meet, ~~assessment.~~which ~~The~~could ~~client~~result ~~risk~~in ~~rating drives~~ the ~~frequency~~loss of ~~periodic~~exclusivity or ~~reviews.~~termination ~~All~~of ~~due~~these ~~diligence~~agreements, ismaterially ~~completed~~harming ~~inline with~~ our ~~AML~~business ~~policy~~ and ~~procedures~~financial ~~and is documented and stored for five years~~condition.

~~Digital~~Our ~~RFQ~~exclusive ~~performs~~distribution agreement anwith ~~annual~~BladeRanger ~~risk~~Ltd. ~~assessment~~requires ~~covering~~us ~~the~~to achieve substantial minimum purchase targets. Specifically, we must purchase minimum quantities ~~following~~of ~~risk~~drone ~~categories:~~payloads from BladeRanger (5 units in Year 1, 10 units in Year 2, and 15 units in Year 3). If we fail to meet these commitments, we may lose our exclusive distribution rights or face agreement termination, which would adversely impact our defense sector strategy.

Risk Types Assessment factors Information sources Product Risk The inherent financial crime risks presented by the product(s) and services that we are offering — being in financial services we are subject to be a target for money laundering or helping to facilitate money laundering. UK National Risk Assessment Customer Risk Separate to the Customer Risk Assessment, this is an integral part of the business wide risk assessment, which considers the customer base that is being targeted and the risks that they will bring due to Peps/sanctions lists and adverse media. Financial Actions Task Force (FATF) FCA Thematic Reviews National Crime Agency The European Commission Organizational Risk The inherent organizational risks in relation to financial crime and convoluted organizational structures in relation to shareholdings and establishing the UBO’s. Geographical Risk The inherent geographical risks our company faces by medium or high risk jurisdictions. This also includes sanctioned countries and those listed on OFAC or FAFT in relation to their risk for money laundering

Digital RFQ follows internal controls that are proportionate to its businesses size and nature and consist of a number of controls including senior management oversight, training and record keeping.

~~Our~~Any ~~compliance~~significant ~~and~~disruption ~~risk~~in ~~management~~our ~~methods~~technology ~~might~~could ~~not~~adversely beimpact ~~effective~~our brand and ~~may~~reputation ~~result~~and ~~in outcomes that could adversely affect~~ our ~~reputation~~business, operating results, and financial condition. ~~We rely on third parties for some of our KYC and other compliance obligations.~~

~~Our~~During ~~ability~~our ~~to comply with~~transformation ~~applicable complex and evolving laws~~period, ~~regulations,~~we ~~and~~are ~~rules~~building isnew ~~largely~~technology ~~dependent~~infrastructure onto ~~the~~support ~~establishment~~defense operations and ~~maintenance~~have ofdivested our ~~compliance, audit,~~legacy ~~and~~financial ~~reporting~~ technology systems,. asOur ~~well~~reputation asand ~~our~~ ability to ~~attract~~grow ~~and~~our ~~retain~~defense ~~qualified~~business ~~compliance~~depends ~~and~~on ~~other~~our ~~risk~~ability ~~management personnel. While we have devoted significant resources~~ to develop ~~policies~~ and ~~procedures~~maintain tosystems ~~identify,~~that ~~monitor,~~meet ~~and~~defense industry ~~manage~~standards ~~our~~for ~~risks~~reliability, scalability, and ~~expect to continue to do so in the future~~performance, weincluding ~~cannot~~compliance ~~assure~~with ~~that~~DFARS ~~our~~cybersecurity ~~policies~~requirements and ~~procedures will always be effective or that we will always be successful~~maintaining insystems ~~monitoring~~capable orof ~~evaluating~~handling ~~the~~classified ~~risks~~information toprocessing ~~which~~once we ~~are~~obtain ornecessary ~~may~~clearances. beThe ~~exposed~~proper infunctioning ~~all market environments or against all types~~ of ~~risks,~~our ~~including~~future ~~unidentified~~defense orproducts ~~unanticipated risks. Our risk management policies~~ and ~~procedures~~services ~~rely~~will depend on asecure ~~combination~~networks, ofencrypted ~~technical~~communications, and ~~human~~systems ~~controls and supervision~~ that ~~are~~meet ~~subject~~government tosecurity ~~error and failure~~standards.

~~Some~~Our systems, the systems of our ~~methods~~third-party ~~for~~service ~~managing~~providers ~~risk~~and ~~are~~partners, ~~discretionary by~~and ~~nature~~defense networks we will interact with, have experienced from time to time and may ~~are~~experience ~~based~~in onthe ~~internally~~future ~~developed~~service ~~controls,~~interruptions ~~observed~~or ~~historical~~degradation ~~market~~because ~~behavior,~~of hardware and ~~standard~~software ~~industry~~defects ~~practices.~~or ~~These~~malfunctions, distributed ~~methods~~denial-of-service ~~may~~and ~~not~~other ~~adequately~~cyberattacks, ~~prevent~~insider ~~losses~~threats, ~~particularly~~break-ins, assabotage, ~~they~~human ~~relate~~error, tovandalism, ~~extreme~~earthquakes, ~~market~~hurricanes, ~~movements~~floods, fires, ~~which~~and ~~may~~other benatural ~~significantly~~disasters, ~~greater than~~power ~~historical~~losses, ~~fluctuations~~disruptions in ~~the~~telecommunications ~~market.~~services, ~~Our~~fraud, ~~risk~~military ~~management~~or ~~policies~~political ~~and~~conflicts, terrorist ~~procedures~~attacks, ~~also~~computer ~~may~~viruses ~~not~~or ~~adequately~~other ~~prevent~~malware, ~~losses~~or ~~due~~other ~~to technical~~events. ~~errors~~In ifaddition, extraordinary site usage could cause our ~~testing~~computer systems ~~and~~to ~~quality~~operate ~~control~~at ~~practices~~an ~~are~~unacceptably ~~not~~slow ~~effective~~speed inor ~~preventing~~even ~~failures~~fail. InSome ~~addition~~of our systems, particularly those we ~~may~~have ~~elect~~acquired tofrom ~~adjust~~Star 26 and Tiltan, or the systems of our ~~risk~~third-party ~~management~~service ~~policies~~providers and ~~procedures~~partners toare ~~allow~~not ~~for~~fully anredundant, ~~increased~~and ~~risk~~our ~~tolerance,~~or ~~which~~their ~~could~~disaster ~~expose~~recovery planning usmay tonot ~~the~~be ~~risk~~sufficient offor ~~greater~~all ~~losses~~possible outcomes or events.

~~Regulators~~If ~~periodically~~any ~~review~~of our systems, or those of our ~~compliance~~third-party ~~with~~service providers, are disrupted for any reason, our ~~own~~defense ~~policies~~products and ~~procedures~~services ~~and~~may ~~with~~fail, aresulting ~~variety~~in ofunanticipated disruptions, ~~laws~~slower response times and ~~regulations~~delays in our services. ~~Though~~For wedefense ~~believe~~contracts, wesystem ~~have~~failures ~~robust~~could ~~risk~~result in program delays, ~~management~~cost ~~and~~overruns, ~~compliance~~performance ~~procedures~~penalties, ~~and~~or ~~have~~contract ~~received~~terminations. noThis ~~findings~~could ~~from~~lead ~~any~~to ~~applicable~~missed ~~regulator~~contract ofmilestones, ~~any~~incomplete ~~violations~~or inaccurate program reporting, loss of ~~applicable~~sensitive ~~laws and~~government ~~regulations~~information, ifincreased wedemand ~~fail~~on tolimited ~~comply~~program management resources, government claims, and complaints with ~~these~~regulatory inorganizations, ~~future~~lawsuits, or doenforcement ~~not~~actions. ~~adequately~~A ~~remediate~~prolonged ~~certain~~interruption ~~findings~~in the availability or reduction in the availability, ~~regulators~~speed, or functionality of our products and services could ~~take~~harm aour ~~variety~~business. Frequent or persistent interruptions ofin ~~actions~~our ~~that~~services could ~~impair~~cause ~~our~~current ~~ability~~or potential defense customers or partners to ~~conduct~~believe that our ~~business,~~systems ~~including~~are ~~delaying~~unreliable, ~~denying,~~leading ~~withdrawing,~~them to select other contractors or ~~conditioning~~to ~~approval~~avoid or reduce the use of our ~~licenses~~products and services, orand ~~certain~~could ~~products~~permanently harm our reputation and brands ~~services.~~in Inthe ~~addition~~defense community. Moreover, ~~regulators~~to ~~have~~the ~~broad~~extent ~~enforcement~~that ~~powers~~any system failure or similar event results in damages to ~~censure~~our customers or their programs, ~~fine~~these customers or the government could seek significant compensation or contractual penalties from us for their losses, and ~~issue~~those ~~cease~~claims, even if unsuccessful, are likely to be time-consuming and~~-desist orders~~ orcostly ~~prohibit~~for us ~~from~~to ~~engaging~~address. inProblems ~~some~~with the reliability or security of our ~~business~~systems ~~activities.~~would Inharm our reputation, and damage to our reputation and the ~~case~~cost of ~~non-compliance~~remedying orthese ~~alleged~~problems ~~non-compliance~~could negatively affect our business, operating results, and financial condition. In addition, we ~~could be~~are ~~subject~~continually todeveloping ~~investigations~~our information systems and technologies ~~proceedings~~to ~~that~~meet ~~may~~defense ~~result~~industry inrequirements. ~~substantial~~Implementation ~~penalties~~of ornew ~~civil~~systems ~~lawsuits,~~and ~~including~~technologies byis ~~customers~~complex, ~~for~~expensive, ~~damages~~time-consuming, ~~which~~and ~~can~~may not be ~~significant~~successful. ~~Any~~If ofwe ~~these~~fail ~~outcomes~~to ~~would~~timely ~~adversely~~and ~~affect~~successfully ~~our~~implement ~~reputation~~new information systems and ~~brand~~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~~ and financial condition. ~~Some~~Because ofwe ~~these~~will ~~outcomes~~be subject to defense regulation in multiple jurisdictions, frequent or persistent interruptions could ~~adversely~~also ~~affect~~lead to regulatory scrutiny, significant fines and penalties, potential debarment, and mandatory and costly changes to our business ~~ability~~practices, and ultimately could cause us to ~~conduct~~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.

~~Furthermore,~~We we rely on third parties ~~for~~in ~~some~~critical aspects of our ~~KYC~~business, ~~and~~which ~~other~~creates ~~compliance~~additional ~~obligations~~risk. IfOur ~~these~~ability ~~third~~to ~~parties~~offer ~~fail~~our toservices ~~effectively~~depends ~~provide~~on ~~these~~relationships with other financial services institutions and entities, weand ~~may be~~our ~~subject~~inability to ~~adverse~~maintain ~~consequences~~existing asrelationships ~~described~~or ~~above~~to enter into new such relationships could impact our ability to offer services to customers.

WeAs ~~rely~~we build our defense business, we will depend on ~~connectivity~~relationships with ~~blockchain~~prime ~~networks~~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 ~~our~~work, ~~Platforms~~and specialized defense supply chains.

~~Our~~To ~~connectivity~~participate ~~with~~in ~~existing~~defense ~~blockchain networks~~programs, ~~including~~we ~~the~~must ~~Bitcoin,~~establish ~~Ethereum,~~relationships ~~Tron~~with prime contractors and other ~~stablecoin~~defense ~~networks,~~companies ~~will~~for ~~enable~~teaming ~~our~~agreements, ~~customers~~joint toventures, and ~~derive~~subcontracting ~~the~~opportunities. ~~benefit such~~Major ~~networks~~primes ~~may~~like ~~provide~~Lockheed ~~them~~Martin, inBoeing, ~~facilitating~~and ~~our~~Raytheon ~~payment~~control ~~processing~~the ~~services.~~majority ~~Providing~~of ~~such~~defense ~~connectivity~~spending ~~presents~~and often aprefer ~~risk~~working ~~that~~with weestablished ~~may, under~~partners. ~~derivative~~Our ~~theories~~ability ofto ~~liability,~~win bedefense ~~held~~contracts ~~responsible~~depends ~~for~~on ~~the~~our ~~bad~~ability ~~acts,~~to ~~failures~~establish orthese ~~violations~~critical relationships ofdespite ~~law~~our lack of ~~the~~track ~~blockchain networks~~record.

Although we seek to minimize risks associated with any one blockchain network by electing which network to use for a given transaction and by determining which network is appropriate for such transaction, based on our assessment of whether such blockchain technology is at an advanced-stage, is fully tested, well-established and fully collateralized, we may be exposed to risks that affect blockchain networks generally, or we may not be aware of or be able to identify risks associated with any individual network (for a summary of Digital RFQ’s considerations in assessing which blockchain networks to use in its payment processing business. Each blockchain network has only been in existence for a limited number of years, and digital assets markets have a limited performance record, making them part of a new and rapidly evolving industry that is subject to a variety of factors that are difficult to evaluate. For example, the following are some of the risks could materially adversely affect Digital RFQ’s financial performance and results of operations:

● As a blockchain network continues to develop and grow, certain technical issues might be uncovered and the trouble-shooting and resolution of such issues requires the attention and efforts of blockchains’ global development community. Like all software, blockchain networks are at risk of vulnerabilities and bugs that can potentially be exploited by malicious actors. For example, in 2010, the Bitcoin network underwent a fork to reverse the effects of a hack in which an unknown attacker took advantage of a software vulnerability in the early source code of the Bitcoin network to fraudulently mint a large amount of digital assets.

●Also, ~~Different~~critical ~~blockchain~~aspects ~~networks~~of our ~~are~~defense ~~subject~~technology towill ~~material~~rely ~~changes~~on inthird-party ~~their~~technologies, ~~structure~~including asspecialized ~~technology~~defense ~~and~~components, ~~markets~~ITAR-controlled ~~for digital assets evolve~~technologies, and ~~such~~government-furnished ~~changes~~equipment. ~~may~~Our ~~lead~~lack toof ~~adverse~~established ~~consequences.~~relationships Asin ~~an example,~~ the ~~Ethereum~~defense ~~network~~industry ~~expects~~and toforeign ~~complete,~~ownership bystructure ~~the~~may be ~~end~~an ofimpediment ~~2021,~~to aour ~~change~~ability ~~from~~to ~~the~~establish ~~“proof-of-work”~~partnerships ~~consensus~~with ~~method~~major todefense acontractors. ~~“proof-of-stake”~~Should ~~consensus~~potential ~~method.~~partners ~~The~~refuse ~~consequences~~to ofwork ~~such~~with us, ~~change~~we ~~cannot~~would be ~~entirely~~at ~~foreseen,~~risk ~~and~~of ~~flaws~~being ~~resulting~~unable ~~from~~to ~~that~~participate ~~transition~~in ~~could~~major ~~negatively~~defense ~~affect the Ethereum network~~programs.

●Third ~~Certain~~parties ~~privacy-preserving~~upon ~~features~~which we ~~have~~rely ~~been~~for ordefense ~~are~~programs ~~expected~~may refuse to bepartner ~~introduced~~with tous, ~~blockchain~~may ~~networks~~breach their agreements with us, ~~such~~refuse asto ~~the~~enter ~~Ethereum~~into ~~network.~~agreements ~~This~~on ~~could~~commercially reasonable ~~damage~~terms, ~~the~~take ~~public~~actions ~~perception~~that degrade the functionality of ~~blockchain~~our ~~networks~~services, ~~generally~~impose additional costs or ~~any~~requirements ~~one~~on ~~blockchain~~us, ~~network~~or ingive preferential ~~particular~~treatment to established defense contractors, any of which could prevent us from competing effectively and ~~their~~materially orand adversely ~~its~~affect ~~utility~~our inbusiness, ~~Digital~~financial ~~RFQ’s~~condition, ~~payment~~results ~~processing~~of ~~system~~operations and prospects.

●Some ~~Networks~~third ~~rely~~parties onthat provide services to the ~~internet.~~defense Aindustry may have significant ~~disruption~~market ofpower ~~internet~~and ~~connectivity~~be (iable to impose unfavorable terms on new entrants like us.e. In addition, ~~one~~there can be no assurance that ~~affects~~third ~~large~~parties ~~numbers~~will ofbe ~~users~~willing to work with us on acceptable terms, or ~~geographic~~at ~~regions)~~all. ~~could~~If ~~disrupt~~we ~~blockchain~~cannot ~~networks’~~establish necessary ~~functionality~~partnerships, we may be unable to compete for defense contracts, which may materially and ~~operations~~adversely ~~until~~affect ~~the~~our ~~disruption~~business, infinancial condition, ~~the~~results ~~internet~~of isoperations ~~resolved~~and prospects.

●Risks ~~The~~Related governance of decentralized networks, such as certain blockchain networks, is by voluntary consensus and open competition. In other words, a typical network has no central decision- making body or clear manner in which participants can come to ~~an agreement other than through voluntary, widespread consensus. As a result, a lack of widespread consensus in~~ the ~~governance~~Defense of a network may adversely affect the network’s utility and ability to adapt and face challenges, including technical and scaling challenges. The decentralized governance of a network may make it difficult to find or implement solutions or marshal sufficient effort to overcome existing or future problems, especially protracted ones requiring substantial directed effort and resource commitment over a long period of time, such as scaling challenges. A network’s failure to overcome governance challenges could exacerbate problems experienced by the network or cause the network to fail to meet the needs of its users, and could cause users, miners, and developer talent to abandon the network or lead to a drop in speculative interest, which could cause the value of a digital currency to decline.Industry

●We Alack ~~network may use a cryptographic protocol to govern~~ the ~~interactions~~facility ~~within~~security ~~it.~~clearances and Incleared ~~the~~personnel ~~case~~required ~~of Bitcoin, a loose community known as the “core developers” has evolved to informally manage the source code~~ for ~~the~~90% ~~protocol. The core developers can propose amendments to the network’s source code that, if accepted by users, could alter the protocols and software~~ of ~~the network~~U. ~~These alterations would occur through software upgrades, and could potentially include changes to the irreversibility of transactions~~S. ~~Alternatively,~~defense ~~software upgrades and other changes to the protocols of the network could fail to work as intended or could introduce bugs, security risks, or otherwise adversely affect, the network~~contracts. ~~Similar dynamics occur in other blockchain networks.~~

●Approximately ~~Networks~~90% ~~that~~of ~~operate~~U.S. defense ~~based~~contracts onrequire anfacility ~~open-source~~security ~~protocol~~clearances ~~are~~that ~~often~~we ~~maintained~~completely bylack. ~~the~~Obtaining ~~core~~clearances ~~developers~~involves: ~~and~~12-18 ~~other~~month ~~contributor.~~investigation periods; Asextensive ~~blockchain~~ownership ~~network~~documentation ~~protocols~~complicated ~~generally~~by ~~are~~our ~~not~~foreign ~~sold~~ties; orsophisticated ~~made~~security ~~available~~system ~~subject~~implementation; todesignation of ~~licensing~~cleared orU.S. ~~subscription~~citizen ~~fees~~executives; and ~~their~~ongoing ~~use~~compliance ~~does~~costs ~~not~~exceeding ~~generate revenues for their development team~~$500,000 ~~the core developers are generally not compensated for maintaining and updating the source code for the network protocol~~annually. ~~Consequently,~~Our ~~there~~foreign isownership athrough ~~lack~~Israeli ~~of financial incentive for developers to maintain or develop a blockchain network and the core developers~~ subsidiaries may ~~lack~~preclude ~~the~~certain ~~resources~~clearance tolevels ~~adequately~~entirely ~~address emerging issues with the network protocol. Although blockchain networks are typically supported by core developers, there can be no guarantee that such support will continue~~ or berequire ~~sufficient~~restrictive inFOCI ~~the~~mitigation ~~future~~agreements. ~~Alternatively,~~Without ~~some developers may be funded by entities~~clearances, ~~such~~we ~~as foundations or corporations, whose interests~~ are atexcluded from ~~odds~~classified ~~with other participants in the network. In addition~~programs, a bad actor could also attempt to interfere with the operation of a network by attempting to exercise a malign influence over a core developer. To the extent that material issues arise with a network protocol and the core developers and opensole-source ~~contributors~~contracts, ~~are~~prime ~~unable~~contractor toopportunities, ~~address~~and the ~~issues~~majority ~~adequately~~of ordefense ~~in a timely manner, a blockchain network may be adversely affected~~spending.

● Fixed-price ~~Blockchain~~defense ~~technologies~~contracts ~~are~~expose us ~~premised on theoretical conjectures as~~ to ~~the~~unlimited ~~impossibility,~~losses inwithout ~~practice,~~cost ofestimation ~~solving certain mathematical problems quickly~~experience. Those conjectures remain unproven, however, and mathematical or technological advances could conceivably prove them to be incorrect. Blockchain technology may also be negatively affected by cryptography or other technological or mathematical advances, such as the development of quantum computers with significantly more power than computers presently available, that undermine or vitiate the cryptographic consensus mechanism underpinning the blockchain and other distributed ledger protocols. If either of these events were to happen, markets and processes that rely on blockchain technologies, such as Digital RFQ’s blockchain-enabled payment processing operations, could be adversely affected.

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.

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.

IfWe wemust ~~fail~~comply towith ~~develop,~~complex ~~maintain,~~defense ~~and enhance~~regulations ~~our~~without ~~brand~~any ~~and reputation, our business, operating results, and financial condition may be adversely affected~~infrastructure. ~~Moreover, unfavorable media coverage could negatively affect our business.~~

WeDefense ~~receive~~operations ~~a high degree~~require ofcompliance ~~media~~with ~~coverage.~~ITAR, ~~Unfavorable publicity regarding~~DFARS, ~~for example~~CMMC, ~~our product changes~~FAR, ~~product quality~~CAS, ~~litigation~~and orother ~~regulatory~~regulations ~~activity, privacy~~for ~~practices,~~which ~~terms~~we ofhave ~~service,~~zero ~~employment~~infrastructure ~~matters,~~or ~~the~~expertise. ~~use~~Implementation costs oftypically ~~our~~exceed ~~products,~~$3-5 ~~services,~~million orin ~~supported~~year ~~blockchain~~one. ~~technologies~~Common ~~for~~violations ~~illicit or~~include ~~objectionable~~inadvertent ~~ends~~technical discussions, ~~the~~missing ~~actions~~flow-down ~~of our customers~~clauses, and orinadequate ~~the~~cybersecurity. ~~actions~~Recent ofenforcement: ~~other~~Raytheon ~~companies~~paid ~~that~~$950 ~~provide~~million, ~~similar~~Boeing ~~services~~suspended tofrom ~~ours,~~contracts. ~~has~~Our inlack ~~the~~of compliance ~~past,~~infrastructure ~~and~~virtually ~~could~~guarantees inviolations ~~the~~resulting ~~future,~~in ~~adversely~~suspension ~~affect~~or ~~our reputation~~debarment.

InOur ~~addition,~~defense ~~actions~~distribution ~~by, or~~business ~~unfavorable~~is ~~publicity~~subject to ~~about,~~complex ~~Menachem~~export ~~Shalom,~~control alaws ~~director~~ and ~~Chief Executive Officer~~regulations, orincluding ~~other~~ITAR ~~officers~~ and ~~managers~~EAR, ~~of Nukkleus~~ and ~~its~~ ~~subsidiaries~~failure ~~may~~to ~~adversely~~comply ~~impact our brand and reputation. Such negative publicity also~~ could ~~have an adverse effect on the size and engagement of our customers and could~~ result in ~~decreased~~significant ~~revenue~~fines, ~~which could have an adverse effect on our business, operating results,~~loss ~~and financial condition. Further may be the target~~ of ~~social-media~~export ~~campaigns criticizing actual or perceived actions or inactions that are disfavored by our customers~~privileges, ~~employees, or society at-large, which campaigns could materially impact our customers’ decisions to use our products~~ and ~~services.~~reputational Any such negative publicity could have an adverse effect on the size, activity, and loyalty of our customers and result in a decrease in net revenue, which could adversely affect our business, operating results, and financial conditiondamage.

~~Concerns~~The ~~about~~distribution of drone payloads and advanced defense software is subject to strict U.S. export control regulations, including the ~~environmental~~International ~~impacts~~Traffic in Arms ofRegulations ~~blockchain~~(ITAR) ~~technology~~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 ~~adversely~~result ~~impact~~in ~~usage~~criminal and ~~perceptions~~civil penalties, loss of ~~Nukkleus~~export privileges, debarment ~~its~~from ~~subsidiaries~~government contracts, and ~~our~~severe ~~Platforms~~reputational harm.

~~The~~Dependence energy usage and environmental impact of blockchain technology, particularly in relation to proof of work mining, has attracted considerable recent attention. Government scrutiny related to restrictions on ~~such~~government ~~energy consumption may increase, resulting in additional regulation that could adversely impact usage of our Platforms~~ and ~~harm~~homeland ~~our business. The considerable consumption of electricity by mining operators may also have a negative~~security ~~environmental~~customers ~~impact,~~exposes ~~including~~us ~~contribution~~ to ~~climate~~risks ~~change,~~associated ~~which~~with ~~could~~budget ~~create a negative consumer sentiment and perception of blockchain technology generally and adversely affect our business~~constraints, ~~prospects,~~procurement ~~financial condition~~processes, and ~~operating~~policy ~~results~~changes.

AsA asignificant ~~remote-first~~portion ~~company~~of our target market consists of U.S. government agencies, wemilitary 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 ~~heightened~~navigate ~~operational~~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 ~~cybersecurity~~substantial ~~risks~~financial harm.

AsThe adefense ~~remote-first~~procurement ~~company, we~~process ~~are~~is ~~subject to heightened operational and cybersecurity risks. We are a remote-first company~~lengthy, ~~meaning that for all existing roles many~~ ~~of our employees work from their homes or other non-company dwellings. For example~~complex, ~~technologies in our employees’~~ and ~~service~~highly ~~providers’ homes and shared office spaces may not be as robust and could cause the networks~~competitive, ~~information~~which 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 beprevent ~~less~~us ~~secure than those used in corporate offices, and while we have implemented technical and administrative safeguards to help protect our systems as our employees and service providers work~~ from ~~home, we~~achieving ~~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~~revenue ~~security~~targets ~~and~~required ~~privacy~~under 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. We also face challenges due to the need to operate with a remote workforce and are addressing so to minimize the impact on our ~~ability~~distribution ~~to operate~~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 escalating purchase requirements under the BladeRanger agreement.

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.

~~Risks~~Mandatory ~~Related~~military reserve duty obligations have resulted in, and may continue to ~~Nukkleus’s~~result ~~Platforms~~in, significant personnel shortages that disrupt our operations, production schedules, and ability to fulfill contractual obligations.

~~The~~Under ~~future~~Israeli ~~development~~law, Israeli citizens and ~~growth~~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 ~~Platforms~~demand isfor ~~subject~~defense toproducts, while at the same time a ~~variety~~significant number of ~~factors~~our ~~that~~employees ~~are~~have ~~difficult~~been tocalled ~~predict~~up ~~and~~for ~~evaluate~~military ~~and~~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 indisproportionately ~~the~~severe. ~~hands~~Many of ~~third~~our ~~parties~~key technical personnel, engineers, and production workers are of military reserve age and are subject to acall-up with little or no advance notice, for unpredictable durations. During the initial phase of the conflict, ~~substantial~~Israeli ~~extent~~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 ~~Platforms~~employees doare ~~not~~called ~~grow~~for asreserve duty simultaneously, or if key personnel are called during critical project delivery or acquisition integration periods, we ~~expect~~may be unable to meet contractual deadlines, maintain production schedules, fulfill customer orders, or operate our ~~business~~businesses at required levels, ~~operating~~any ~~results~~of which could result in breach of contract, loss of customer relationships, financial penalties, and material harm to our business, financial condition, ~~could~~and beresults ~~adversely affected~~of operations.

WeEscalating ~~introduced~~global ~~fund~~conflicts, ~~transfer~~particularly ~~and~~the ~~payment~~ongoing ~~processing~~wars ~~using blockchain technologies only~~ in ~~2019, and such technology remains in~~ the ~~early~~Middle ~~stages~~East ~~of development while continuing to evolve. The further growth~~ and ~~development~~Ukraine, ofcreate ~~any~~both ~~such~~heightened ~~technology~~demand and ~~the~~severe ~~underlying~~operational ~~networks~~risks ~~and~~for ~~other~~our ~~cryptographic and algorithmic protocols governing such technology and products represent a new and evolving paradigm that is subject to a variety of factors that are difficult to evaluate, including:~~business.

●The ~~Any~~global ~~blockchain-enabled~~security ~~process~~environment has ordeteriorated ~~product~~significantly, ~~like~~with ~~our~~active ~~Platforms~~military conflicts in the Middle East (including the ongoing conflict in Israel and the broader regional tensions involving Iran, ~~rely~~Hezbollah, onand ~~third~~other ~~parties~~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 ~~financial~~B. ~~institutions~~Rimon Agencies Ltd., Tiltan Software Engineering Ltd., Nimbus Drones Technologies Ltd., and ~~counterparties~~I.T.S. Industrial Tecno-logic Solutions Ltd., tooperate ~~hold~~in ~~funds~~an active conflict zone where missile attacks, ~~cash~~drone ~~equivalents~~incursions, and ~~other~~ground ~~assets~~operations pose immediate threats to our facilities, personnel, and supply chains. ~~Those~~Mandatory ~~third~~military ~~parties~~reserve duty requirements have ~~their~~at ~~own~~times ~~policies~~removed significant portions of the Israeli workforce from civilian employment, directly affecting our subsidiaries’ ability to maintain production schedules and ~~may~~fulfill ~~change~~contractual ~~their~~obligations. ~~view~~Flight suspensions and ~~acceptance~~port ofdisruptions ~~any~~in ~~blockchain~~Israel orcan ~~stablecoin~~impede atlogistics ~~any~~and ~~time~~delay delivery of critical defense products. ~~This~~The ~~may~~continuation or escalation of these conflicts could result in ~~delays~~physical ~~and~~damage ~~other~~to ~~barriers~~our facilities, loss of key personnel, disruption of production, inability to ~~payment~~fulfill ~~processing~~contractual ~~through~~obligations, ~~our~~and ~~Platforms~~substantial uninsured losses.

●We ~~Many~~do ~~blockchain~~not ~~networks~~carry ~~have~~war ~~limited~~risk ~~operating~~insurance ~~histories,~~for ~~have~~our ~~not~~Israeli ~~been validated in production~~operations, and ~~are~~losses ~~still~~arising infrom ~~the~~military ~~process~~conflict ofwould ~~developing~~be ~~and~~entirely ~~making significant decisions that will affect the underlying blockchain, any of which could adversely affect the blockchain technologies on which our Platforms rely~~unrecovered.

●Standard ~~The~~commercial ~~governance~~insurance policies ofmaintained ~~many~~by ~~blockchain~~our ~~networks~~Israeli issubsidiaries byexclude ~~voluntary~~losses ~~consensus~~arising ~~and~~from ~~open~~war, ~~competition~~military action, terrorism, and ~~many~~related ~~developers~~events. ~~are~~Specialized war ~~not~~risk ~~directly~~insurance ~~compensated~~coverage for ~~their~~our ~~contributions.~~Israeli Asoperations ais ~~result~~either unavailable or available only at costs that are prohibitively expensive relative to our current financial resources. Accordingly, ~~there~~we ~~may~~carry beno ainsurance ~~lack~~coverage for physical damage to our facilities, destruction of ~~consensus~~inventory or ~~clarity~~equipment, onbusiness ~~the~~interruption, ~~governance~~or loss of ~~any~~key ~~particular~~personnel ~~blockchain~~resulting ~~network~~from missile strikes, adrone ~~lack~~attacks, or other military action. To date, none of ~~incentives~~our ~~for~~facilities ~~developers~~have tosustained ~~maintain~~physical ordamage ~~develop~~from the ~~network~~conflict, ~~and~~but ~~other~~we ~~unforeseen~~cannot ~~issues~~predict whether this will remain the case, ~~any~~particularly in the event of ~~which~~an ~~could~~escalation ~~result~~of inhostilities ~~unexpected~~with Iran or ~~undesirable~~an ~~errors,~~expansion ~~bugs,~~of orthe ~~changes,~~conflict orto ~~stymie~~additional ~~such~~fronts. ~~network’s~~Any war-related ~~utility~~losses ~~and~~would ~~ability~~be toborne ~~respond~~entirely toby ~~challenges~~us with no prospect of insurance recovery, which could materially impair our financial condition and ~~grow~~ability to continue operations.

~~These~~The ~~risks~~conflict ~~are~~has ~~fundamentally beyond~~resulted ~~our~~in ~~control~~limitations ~~and~~on ~~could~~exports ~~materially~~to ~~and~~Israel, attacks ~~adversely~~on ~~affect~~defense ~~our~~companies ~~Platforms~~by anti-Israeli organizations, and ~~our~~reputational ~~business,~~risks ~~financial~~that ~~condition~~may ~~and~~impair ~~operating~~our ~~results~~ability to conduct international business.

~~Due~~The ongoing conflict has resulted in limitations imposed by certain countries on exports to ~~unfamiliarity~~Israel, ~~and~~restrictions ~~some~~on ~~negative~~defense ~~publicity~~cooperation with Israeli entities, ~~associated~~and expanding boycott, divestment, and sanctions (BDS) campaigns targeting Israeli companies and companies doing business with ~~blockchain~~Israel. As ~~technology~~a smaller company without the resources or global infrastructure of an established prime contractor, ~~our~~we ~~customer~~are ~~base~~vulnerable to such disruptions. International customers, partners, and distributors may ~~lose~~decline ~~confidence~~to do business with us or our Israeli subsidiaries due to political pressure, reputational concerns, or changes in ~~products~~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 ~~services~~retain ~~that~~talent. ~~utilize~~Any ~~blockchain~~of ~~technology~~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.

Products and services that are based on blockchain technologies are relatively new. Many of our competitors are unlicensed, unregulated, operate without supervision by any governmental authorities, and do not provide the public with significant information regarding their ownership structure, management team, corporate practices, cybersecurity, and regulatory compliance. As a result, customers and the general public may lose confidence in blockchain technology, including regulated products and services like ours.

Since the inception of blockchain technologies, numerous blockchain-enabled businesses and platforms have been sued, investigated, or shut down due to fraud, illegal activities, the sale or issuance of unregistered securities, manipulative practices, business failure, and security breaches. In many of these instances, customers of these platforms, products and services were not compensated or made whole for their losses. We may be a target of hackers and malware and may also be more likely to be targets of regulatory enforcement actions.

Negative perception, a lack of stability and standardized regulation, and the closure or temporary shutdown of blockchain-enabled platforms, including our Platforms, due to fraud, business failure, hackers or malware, or government mandated regulation, and associated losses suffered by customers may reduce confidence in blockchain technologies and result in greater volatility of the prices of assets, including significant depreciation in value. Any of these events could have a material and adverse impact on our business.

Our Platforms and blockchain-enabled payment processing services are innovative and are difficult to analyze vis-à-vis existing financial services laws and regulations around the world. Our platforms involve certain risks, including reliance on third parties, which could limit or restrict our ability to offer the product in certain jurisdictions.

Our ability to offer our Platforms in jurisdictions around the world is unclear from a regulatory perspective. Further, our Platforms are dependent on certain partners who will provide liquidity and the regulatory requirements with respect to those partners are uncertain. Our dependency on the performance of those partners raises risk that turns upon their performance. If our partners fail to perform, both we and our customers could be subject to losses, and we may be required to cease offering such Platform.

~~Risks~~Our ~~Related~~business partners, customers, and suppliers may invoke force majeure or otherwise fail to ~~Nukkleus’s~~perform ~~Financial~~their ~~Condition~~contractual obligations as a result of the conflict, which could disrupt our operations and revenue.

~~There~~The isSEC nohas ~~assurance~~noted that wecompanies with ~~will~~operations ~~maintain~~or ~~profitability~~business orrelationships 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 ~~models~~operations ~~will~~could be ~~successful~~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.

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.

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 subsidiaries are currently 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

We lack the financial infrastructure required for defense contracting.

We will require additional capital to support our operations, particularly since we intend to focus on obtaining meaningful defense contracts. Defense contractors require, among other requirements, 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.

Risks Related to Our Existing Capital Structure

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 report, 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.

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.

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.

On August 28, 2025, we received a deficiency letter from Nasdaq indicating that we no longer complied with the minimum Market Value of Listed Securities requirement of $50 million for continued listing. On September 26, 2025, we received written confirmation from Nasdaq that we had regained compliance with the minimum Market Value of Listed Securities requirement and the matter was now closed. 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.

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.

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~~ income taxes and other tax liabilities requires significant judgment and, in the ordinary course of business, there are many transactions ~~and~~ and calculations where the ultimate tax determination is complex and uncertain. ~~Moreover,~~Defense ascontracts aoften ~~multinational~~involve ~~business,~~complex wecost ~~have subsidiaries~~accounting ~~that~~standards ~~engage~~and inallowable ~~many~~cost ~~intercompany~~determinations ~~transactions~~that inaffect ~~a variety of~~ tax ~~jurisdictions where the ultimate tax determination is complex and uncertain~~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.

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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~~ 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 of ~~Nukkleus~~T3 — Critical Accounting Policies”. 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, ~~and~~among ~~the~~others. ~~fiat~~Defense ~~reserves~~contracts werequire particular judgment in percentage-of-completion ~~hold,~~accounting ~~among~~and ~~others~~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 ~~Nukkleus~~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~~ 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.

~~For~~Defense ~~example,~~contracting ~~on March 31,~~involves ~~2022,~~unique ~~the~~accounting ~~staff~~requirements ofincluding ~~the~~Cost ~~SEC issued Staff~~ Accounting ~~Bulletin~~Standards ~~No. 121~~(CAS), orprogress ~~SAB~~payment ~~121~~billing, ~~which~~and ~~represents~~complex arevenue ~~significant~~recognition ~~change regarding how a company safeguarding digital assets held~~ for ~~its platform users reports such digital assets on its balance sheet and requires retrospective~~ ~~application~~long-term ~~as of January 1, 2022~~contracts. ~~Moreover,~~We ~~recent~~lack ~~actions~~experience ~~and~~with ~~public~~these ~~comments~~specialized ~~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 subjected to heightened scrutiny by regulators and the public. Further~~requirements, ~~there has been limited precedent for the financial accounting of digital assets~~ and ~~related valuation~~establishing ~~and~~DCAA-compliant ~~revenue recognition, and no official guidance has been provided by the FASB or the SEC, with the exception of SAB 121. In May 2022, the FASB added a project to its technical agenda to improve the~~ accounting ~~for and disclosure of certain digital assets. In~~systems ~~October~~typically ~~2022,~~costs ~~the FASB decided to require fair value measurement of digital assets that fall within the scope of this project. While the FASB has begun deliberating on the scope of this project~~$500,000 ~~there has been no formal proposal or guidance issued related~~ to ~~the~~$1 ~~project and no timeline has been publicly communicated for the issuance of such guidance~~million.

AtThere ~~certain~~remains ~~times, the funds~~uncertainty ofon ~~customers~~how ofcompanies ~~Digital~~transitioning ~~RFQ~~between ~~that~~industries weshould ~~use~~account tofor ~~make~~discontinued ~~payments~~operations, onacquisition-related ~~behalf of our customers~~costs, ~~remain~~and intransformation expenses. ~~the~~Uncertainties ~~form of digital assets~~ in ~~our~~or ~~customers’ wallets~~changes atto ~~our~~regulatory ~~licensed~~or ~~trust~~financial ~~companies~~accounting ~~awaiting~~standards ~~final~~could ~~conversion~~result ~~and/or~~in ~~transfer to~~ the ~~customer’s~~need ~~payment~~to ~~final~~change ~~destination.~~our ~~These~~accounting ~~indirectly held digital assets~~methods, ~~may~~restate ~~consist~~our offinancial ~~USDT~~statements ~~(Stablecoin),~~or ~~Bitcoin,~~impair ~~and~~our ~~Ethereum~~ability ~~(collectively,~~to ~~“our~~provide ~~customers’~~timely ~~digital assets”).~~and Weaccurate ~~engage~~financial ~~third parties~~information, which ~~are~~could ~~licensed trust companies, to provide certain custodial services, including holding~~adversely ~~our~~affect ~~customers’ digital token identifiers, securing~~ our ~~customers’~~financial ~~digital assets~~statements, ~~and~~result ~~protecting them from loss or theft, including indemnification against certain types of losses such as theft. Our third-party custodian holds the digital assets~~ in a ~~custodial account~~loss ~~in Digital RFQ’s name for the benefit~~ of ~~Digital~~investor ~~RFQ’s customers. We maintain the internal recordkeeping of our customers’ digital assets~~confidence, ~~including the amount~~ and ~~type~~more ofgenerally ~~digital~~impact ~~asset owned by each of~~ our ~~customers and digital token identifiers in that custodial account. Given that we currently utilize one third-party custodian~~business, ~~there~~operating ~~is concentration risk in the event the custodian is not able~~results, toand ~~perform~~financial ~~in accordance with our agreement~~condition.

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There remains uncertainty on how companies can account for blockchain transactions, value, and related revenue. 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.

WeAs ~~regularly~~we ~~review~~transition ~~business~~from financial ~~metrics~~technology ~~and~~to ~~other~~defense, ~~measures~~our totraditional ~~evaluate~~business ~~growth~~metrics ~~trends,~~are ~~measure~~no ~~our~~longer ~~performance~~applicable, and ~~make~~we ~~strategic~~have ~~decisions~~not yet established meaningful defense industry metrics. ~~For~~We ~~example~~will need to develop new metrics relevant to defense contracting, wesuch ~~measure~~as ~~transaction~~contract backlog, book-to-bill ratios, ~~volumes~~win rates, and ~~concentration~~program performance indices. These metrics ~~are~~will be calculated using internal company data and ~~have~~initially will not ~~been~~be validated against byindustry ~~an independent third party~~standards. While these numbers ~~are~~will be based on what we ~~currently~~ believe to be reasonable estimates for the applicable period of measurement, there are inherent challenges in such measurements. IfDuring weour ~~fail~~transformation toperiod, ~~maintain~~we anhave ~~effective~~minimal ~~analytics~~operational ~~platform~~metrics to report, ~~our~~making ~~calculations~~it ~~may~~difficult befor ~~inaccurate, and~~investors weto ~~may~~evaluate ~~not~~our beprogress ~~able~~or compare us to ~~identify~~established ~~those~~defense ~~inaccuracies~~contractors.

Our ~~business~~future defense business metrics may also be impacted by ~~compliance~~program ordelays, ~~fraud-related~~contract ~~bans~~modifications, ~~technical~~stop-work ~~incidents~~orders, or ~~false~~classification orrestrictions ~~spam~~that ~~accounts~~limit ~~in existence on our platform~~disclosure. ~~Our~~ ~~customers~~Government ~~are~~contracting ~~primarily~~involves ~~institutional~~unique ~~and,~~reporting ~~though~~requirements ~~we believe there is no reason for them to establish multiple accounts with us unless such accounts serve a different business purpose for them, we permit our customers to hold~~ and ~~access~~restrictions ~~multiple~~that ~~accounts,~~differ ~~which~~significantly ~~could~~from ~~overstate the~~commercial ~~number of customers we serve. Though we rely predominantly on transaction volumes to make projections about our~~ business, ~~such customer~~ metrics ~~may also be used in our models~~. If our metrics provide us with incorrect or incomplete information about ~~customers~~program performance and ~~their~~contract ~~behavior~~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.

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 ~~Nukkleus’s~~our ~~commons~~Common ~~stock~~Stock to make claims on our assets, and the terms of any debt could restrict our operations.

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WeRisks ~~may~~Related beto ~~affected~~Our byEmployees ~~fluctuations~~and inOther ~~currency~~Service ~~exchange rates~~Providers

We are potentially exposed to adverse as well as beneficial movements in currency exchange rates. An increase in the value of the dollar could increase the real cost to our customers of our products in those markets outside the U.S. where we sell in dollars, and a weakened dollar could increase the cost of local operating expenses from sources outside the United States, and overseas capital expenditures. We also conduct certain investing and financing activities in local currencies. Therefore, changes in exchange rates could harm our financial condition and results of operations.

Risks Related to Nukkleus’s 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~~chief ~~personnel~~executive officer, 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 aan ~~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.

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.

Risks Related to Government Regulation

We are subject to various laws and regulations, and any adverse changes to, or our failure to comply with, any laws and regulations could adversely affect our brand, reputation, business, operating results, and financial condition.

Our business is subject to laws, rules, regulations, policies, orders, determinations, directives, treaties, and legal and regulatory interpretations and guidance in the markets in which we operate, which may include those governing financial services and banking, securities, broker-dealers, cross-border and domestic money transmission, blockchain technologies, privacy, data governance, data protection, cybersecurity, fraud detection, payment services, escheatment, antitrust and competition, bankruptcy, tax, anti-bribery, economic and trade sanctions, anti-money laundering, and counter-terrorist financing.

The key elements of the regulatory framework that impact us include, but are not limited to, the following U.K. legislation:

● The European Union 5th and 6th Money Laundering Directives,

● The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer), Regulation 2017,

● Proceeds of Crime Act 2002,

● Terrorism Act 2000,

● Counter Terrorism Act 2008,

● Fraud Act 2006, and

● Bribery Act 2010.

These legal and regulatory regimes, including the laws, rules, and regulations thereunder, evolve frequently and may be modified, interpreted, and applied in an inconsistent manner from one jurisdiction to another, and may conflict with one another. For a discussion of our risk management framework and more detailed descriptions of the legislation and regulations applicable to Digital RFQ’s business.

We are currently regulated in the United Kingdom by the Financial Conduct Authority. We plan to expand our operations to other countries in future, including Dubai and Lithuania, in which case we would be subject to regulation in those jurisdictions. From our UK operations, we currently offer cross-border payment processing services, in numerous countries in Europe, Dubai, Sub-Saharan Africa and Asia. We offer payment processing services using blockchain technologies in the United Kingdom, the United States and Sub-Saharan Africa, and intend to develop such products and services across other regions. As a business, we do not differentiate between cross-border and domestic payment processing, so generally offer cross-border services in the countries in which we operate. While we believe our risk management and compliance frameworks are sufficient to ensure we remain in material compliance with the applicable laws, and regulations of the jurisdictions in which we operate, to the extent we do not comply with such laws, rules, and regulations, we could be subject to fines, revocation of licenses, limitations on our products and services, reputational harm, and other regulatory consequences, each of which may be significant and could adversely affect our business, operating results, and financial condition.

In addition to existing laws and regulations, various governmental and regulatory bodies, including legislative and executive bodies in the United States, United Kingdom and in other countries, may adopt new laws and regulations, or new interpretations of existing laws and regulations may be issued by such bodies or the judiciary, which may adversely impact the development of blockchain as a whole and our legal and regulatory status in particular by changing how we operate our business, how our products and services are regulated, and what products or services we and our competitors can offer, requiring changes to our compliance and risk mitigation measures, imposing new licensing requirements, or imposing a total ban on transactions using blockchain technologies.

Legislative and regulatory actions taken now or in the future may increase our costs and impact our business, governance structure, financial condition or results of operations.

Federal, state and international regulatory agencies frequently adopt changes to their regulations or change the way existing regulations are applied. Regulatory or legislative changes to laws applicable to the financial industry, if enacted or adopted, may impact the profitability of our business activities, require more oversight or change certain of our business practices, including the ability to offer new products and to continue offering our current products, and could expose us to additional costs, including increased compliance costs. These changes also may require us to invest significant management attention and resources to make any necessary changes to operations to comply and could have a material adverse effect on our business, financial condition and results of operations.

Various U.S. federal, state, and local and foreign governmental organizations and public advocacy groups have been examining the operations of businesses using blockchain technologies and networks, and the safety and soundness of platforms and other service providers that hold use such networks and technologies on behalf of users. Many of these entities have called for heightened regulatory oversight and have issued advisories describing the risks posed by blockchain technologies to users and investors. Use of blockchain technologies is novel and there is limited access to policymakers and lobbying organizations in many jurisdictions. Competitors from other, more established industries, including traditional financial services, may have greater access to lobbyists or governmental officials, and regulators that are concerned about the potential for stablecoins for illicit usage may affect statutory and regulatory changes. As a result, new laws and regulations may be proposed and adopted in the United States and internationally, or existing laws and regulations may be interpreted in new ways that harm the stablecoin and blockchain industry, which could adversely impact our business.

The regulatory environment to which we are subject gives rise to various licensing requirements, legal and financial compliance costs and management time, and non-compliance could result in monetary and reputational damages, all of which could have a material adverse effect on our business, financial position and results of operations.

There can be no assurance that we will be able to maintain our existing, or obtain additional, required regulatory licenses, certifications and regulatory approvals in the countries where we provide services or want to expand to. Furthermore, where we have obtained such regulatory licenses, certifications and regulatory approvals, there are costs and potential product changes involved in maintaining such regulatory licenses, certifications, and approvals, and we could be subject to fines or other enforcement action if we are found to violate disclosure, reporting, anti-money laundering, capitalization, corporate governance or other requirements of such licenses. These factors could impose substantial additional costs and involve considerable delay to the development or provision of our products or services, or could require significant and costly operational changes or prevent us from providing any products or services in a given market.

These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity or unclear application to the business of non-traditional financial services. As a result, their application in practice may evolve over time as new guidance is provided by supervisory authorities and the interpretation of requirements by supervisory authorities and courts may be further clarified over time. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory bodies or supervisory authorities due to ambiguities related to their interpretation, application and practice, supervisory authorities may initiate legal and regulatory proceedings against us and our business, reputation, financial condition, results of operations and cash flow could be materially and adversely affected.

In certain countries, it may not be clear whether we are required to be licensed as a money transmitter, payment services provider, bank, financial institution, custodian, broker-dealer, exchange, or otherwise. Local regulators may use their power to slow or halt payments or otherwise prohibit us from doing business in a country. We and our local businesses do not only need to comply with the local laws and regulations, but also with certain laws and regulations with worldwide application. Further, because our services are accessible worldwide, one or more jurisdictions may claim that we or our customers or partners are required to comply with their laws. Laws regulating the internet, mobile and related technologies outside the United States may impose different, more specific, or even conflicting obligations on us, as well as broader liability.

If we are unable to commit sufficient resources to regulatory compliance, this could lead to delays and errors and may force us to choose between prioritizing compliance matters over administrative support for business activities, or may ultimately force us to cease offering certain products or services globally or in certain jurisdictions. Any delays or errors in implementing regulatory compliance could lead to substantial monetary damages and fines, public reprimands, a material adverse effect on our reputation, regulatory measures in the form of cease and desists orders, increased regulatory compliance requirements or other potential regulatory restrictions on our business, enforced suspension of operations and in extreme cases, withdrawal of regulatory licenses or authorizations to operate particular businesses, or criminal prosecution in certain circumstances.

In addition to non-compliance by us ourselves, we may in the future suffer negative consequences of non-compliance by third parties that use our payments and transfer infrastructure. We may also suffer negative consequences of customers operating businesses or schemes in violation of applicable rules and regulations whose activities we could be held responsible for monitoring and, where applicable, to denounce, interrupt or terminate the extension of services to such customers. We may be required to incur greater expenditures and devote additional resources and management time to addressing these liabilities and requirements, which could have an adverse effect on our business, financial position and results of operations.

The financial services industry is subject to intensive regulation. Major changes in laws and regulations, as well as enforcement actions, could adversely affect our business, financial position, results of operations and prospects.

In pursuit of a broad reform and restructuring of financial services regulation, national and supra-national legislatures and supervisory authorities, predominantly in the United States and Europe but also elsewhere, continue to introduce and implement a wide range of proposals that could result in major changes to the way our global operations are regulated and could have adverse consequences for our business, business model, financial position, results of operations, reputation and prospects. These changes could materially impact the profitability of our businesses or the value of our assets, require changes to business practices or force us to discontinue businesses and expose us to additional costs, taxes, liabilities, enforcement actions and reputational risk and are likely to have a material impact on us.

The timing and full impact of new laws and regulations cannot be determined and are beyond our control. The introduction of these and other new rules and requirements could significantly impact the manner in which we operate, particularly in situations where regulatory legislation can interfere with or even set aside national private law. New requirements may adversely affect our business, capital and risk management strategies and may result in us deciding to modify our legal entity structure, capital and funding structures and business mix or exit certain business activities altogether, or determine not to expand in certain business areas despite their otherwise attractive potential.

The large number of legislative initiatives, in particular with respect to the financial services industry, requires constant attention from our senior management and consumes significant levels of resources to identify and analyze the implications of these initiatives. We may have to adapt our strategy, operations and businesses, including policies, procedures and documentation, to comply with these new legal requirements. Based on the volume of existing initiatives, it cannot be excluded that certain new requirements will not be implemented in a timely fashion or implemented without errors, or in a manner satisfactory to the applicable supervisory authority, resulting in non-compliance and possible associated negative consequences such as administrative fine or public reprimands. Additionally, we may be forced to cease to serve certain types of customers or cease to offer certain services or products as a result of new requirements. Any of the other above factors, events or developments may materially adversely affect our businesses, financial position and results of operations and prospects.

We are subject to laws, regulations, and executive orders regarding economic and trade sanctions, anti-bribery, anti-money laundering, and counter-terror financing that could impair our ability to compete in international markets or subject us to criminal or civil liability if we violate them. As we continue to expand and localize our international activities, our obligations to comply with the laws, rules, regulations, and policies of a variety of jurisdictions will increase and we may be subject to investigations and enforcement actions by U.S. and non-U.S. regulators and governmental authorities.

As we expand and localize our international activities, we have and will become increasingly obligated to comply with the laws, rules, regulations, policies, and legal interpretations both of the jurisdictions in which we operate and those into which we offer services on a cross-border basis. Laws regulating financial services, the internet, mobile technologies, blockchain technologies, and related technologies outside the United States often impose different, more specific, or even conflicting obligations on us, as well as broader liability.

We are subject to various anti-money laundering and counter-terrorist financing laws and regulations around the world that prohibit, among other things, our involvement in transferring the proceeds of criminal activities. In the United States, most of our services are subject to anti-money laundering laws and regulations, including the Bank Secrecy Act of 1970, as amended by the USA PATRIOT Act of 2001, and its implementing regulations (collectively, the “BSA”) and other similar laws and regulations. The BSA, among other things, requires money transmitters to develop and implement risk-based anti-money laundering programs, to report large cash transactions and suspicious activity, and, in some cases, to collect and maintain information about customers who use their services and maintain other transaction records. Regulators in the United States and globally continue to increase their scrutiny of compliance with these obligations, which may require us to further revise or expand our compliance program including the procedures we use to verify the identity of our customers and to monitor transactions on our system, including payments to persons outside of the United States. Regulators regularly re-examine the transaction volume thresholds at which we must obtain and keep applicable records or verify identities of customers, and any change in such thresholds could result in greater costs for compliance. We could be subject to potentially significant fines, penalties, inquiries, audits, investigations, enforcement actions, and criminal and civil liability if regulators or third-party auditors identify gaps in our anti-money laundering program and such gaps are not sufficiently remediated, or if our anti-money laundering program is found to violate the BSA by a regulator.

Despite our efforts to comply with the applicable laws, rules, and regulations, there can be no guarantee that these measures will be viewed as compliant. If we were to be found to have violated sanctions, or become involved in government investigations, that could result in negative consequences for us, including costs related to government investigations, financial penalties, and harm to our reputation. The impact on us related to these matters could be substantial. Although we have implemented controls and screening tools designed to prevent similar activity, there is no guarantee that we will not inadvertently provide our products and services to individuals, entities, or governments prohibited by U.S. sanctions or those of another jurisdiction to whose laws and regulations we may be subject.

Regulators worldwide frequently study each other’s approaches to the regulation of any novel or developing industry, including those using blockchain-enabled technologies. Consequently, developments in any jurisdiction may influence other jurisdictions. New developments in one jurisdiction may be extended to additional services and other jurisdictions. The European Commission, for example, has proposed revisions to the Anti-Money Laundering Directives, which could make compliance more costly and operationally difficult to manage. As a result, the risks created by any new law or regulation in one jurisdiction are magnified by the potential that they may be replicated, affecting our business in another place or involving another service. Conversely, if regulations diverge worldwide, we may face difficulty adjusting our products, services, and other aspects of our business with the same effect. These risks are heightened as we face increased competitive pressure from other similarly situated businesses that engage in regulatory arbitrage to avoid the compliance costs associated with regulatory changes.

We may operate our business in foreign countries where companies often engage in business practices that are prohibited by regulations applicable to us. We are subject to anti-corruption laws and regulations, including the FCPA and other laws that prohibit the making or offering of improper payments to foreign government officials and political figures. We have implemented policies, procedures, systems, and controls designed to identify and address potentially impermissible transactions under such laws and regulations; however, there can be no assurance that all of our employees, consultants and agents, including those that may be based in or from countries where practices that violate U.S. or other laws may be customary, will not take actions in violation of our policies, for which we may be ultimately responsible.

Our consolidated balance sheets may not contain sufficient amounts or types of regulatory capital to meet the changing requirements of our various regulators worldwide, which could adversely affect our business, operating results, and financial condition.

Effective management of our capital and liquidity is critical to our ability to operate our businesses, to grow organically and to pursue our strategy. As a regulated and licensed entity in various jurisdictions, we may be required to possess sufficient financial soundness and strength to adequately support our regulated affiliate entities. The maintenance of adequate capital and liquidity is also necessary for our financial flexibility in the face of turbulence and uncertainty in the global economy. We may from time to time incur indebtedness and other obligations which could make it more difficult to meet applicable regulatory requirements.

In addition, although we are not a bank holding company for purposes of United States law or the law of any other jurisdiction, as a global provider of financial services and in light of the changing regulatory environment in various jurisdictions, we could become subject to new capital requirements introduced or imposed by U.S. federal, state or international regulators. The changes to applicable current or future capital and liquidity requirements may require us to raise additional regulatory capital or hold additional liquidity buffers, for example because of different interpretations of or methods for calculating risk exposure amounts or liquidity outflows or inflows, or because we do not comply with ratios and levels, or instruments and collateral requirements that currently qualify as capital or capital risk mitigating techniques no longer do so in the future because of changes to the requirements or interpretations thereof. Any change or increase in these regulatory requirements could have an adverse effect on our business, operating results, and financial condition.

If we are unable to raise the requisite regulatory capital, we may be required to reduce the amount of our risk exposure amount or business levels, restrict certain activities or engage in the disposition of core and other non-core businesses, which may not occur on a timely basis or at prices which would otherwise be attractive to us, and such inability to raise sufficient regulatory capital could have an adverse effect on the market’s trust in respect of the long-term viability of our products and services, which could, for example, result in customers transferring to use our competitors’ platforms for financial transfer and payment infrastructure. As a result of stricter liquidity requirements or higher liquidity buffers, we may be required to optimize our funding composition which may result in higher funding costs for us, and in having to maintain buffers of liquid assets which may result in lower returns than less liquid assets. Furthermore, if we are unable to adequately manage our liquidity position, this may prevent us from meeting our short-term financial obligations. It is possible we may experience errors in currency handling, accounting, and regulatory reporting that leads us to be out of compliance with those requirements.

The above changes and any other changes that limit our ability to manage effectively our balance sheet, liquidity position and capital resources going forward, or to access funding sources, could have a material adverse impact on our financial position, regulatory capital position and liquidity provision.

We obtain and process a large amount of sensitive customer data. Any real or perceived improper use of, disclosure of, or access to such data could harm our reputation, as well as have an adverse effect on our business.

Our operations involve the storage and/or transmission of sensitive information, including highly personal data of our customers. Consequently, we are subject to complex and evolving UK, European, and other jurisdictions’ laws, rules, regulations, orders and directives (referred to as “privacy laws”) relating to the collection, use, retention, security, processing and transfer (referred to as “process”) of personally identifiable information (referred to as “personal data”) in the countries where we operate. Much of the personal data that we process, especially financial information, is regulated by multiple privacy laws and, in some cases, the privacy laws of multiple jurisdictions. In many cases, these laws apply not only to third-party transactions, but also to transfers of information between or among us and our subsidiaries. Any failure, or perceived failure, by us to comply with our privacy policies or with any applicable privacy laws in one or more jurisdictions could result in proceedings or actions against us by governmental entities or others, including class action privacy litigation in certain jurisdictions, significant fines, penalties, judgments and reputational damages to us, requiring us to change our business practices, increasing the costs and complexity of compliance, any of which could materially and adversely affect its business, financial condition, results of operations and prospects.

Data protection, privacy and information security have become the subject of increasing public, media and legislative concern. If our customers were to reduce their use of our products and services as a result of these concerns, our business could be materially harmed. In addition, we are also subject to the possibility of security breaches, which themselves may result in a violation of these privacy laws. Any failure of us or our partners or others who use our services to adequately protect sensitive data could have a material and adverse effect on its reputation, business, financial condition, results of operations and prospects.

We are subject to complex and evolving laws, regulations, and industry requirements related to data privacy, data protection and information security across different markets where we conduct our business, including in the European Economic Area, such laws, regulations, and industry requirements are constantly evolving and changing. Our actual or perceived failure to comply with such laws, regulations, and industry requirements, or our privacy policies/notices could harm our business by impairing customer trust and could subject us to fines and reputational harm.

Various local, state, federal, and international laws, directives, and regulations apply to our collection, use, retention, protection, disclosure, transfer, and any other processing of personal data. There is uncertainty and inconsistency in how these data protection and privacy laws and regulations are interpreted and applied, and they continue to evolve in ways that could adversely impact our business. These laws have a substantial impact on our operations directly as a data controller/business and as a data processor/service provider and handler for various offshore entities.

In the United States, state and federal lawmakers and regulatory authorities have increased their attention on the collection and use of consumer data. While our current product offering does not target retail consumers, some of our prior products have been offered to retail consumers. In the United States, non-sensitive consumer data generally may be used under current rules and regulations, subject to certain restrictions, so long as the consumer does not affirmatively “opt out” of the collection or use of such data. If an “opt-in” model or additional required “opt-outs” were to be adopted in the United States, less data could be available, and the cost of data would be higher.

~~California~~Additional ~~has~~Risk enacted the California Consumer Privacy Act, or the CCPA, along with related regulations, in 2020 and the California Privacy Rights Act, or the CPRA, which has been passed and became effective on January 1, 2023. The CCPA gives California residents new rights to access and request deletion of their personal data, opt out of the sale of personal data, and receive detailed information about how their personal data is processed. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that involving the loss of personal data. This private right of action may increase the likelihood of, and risks associated with, data breach litigation. The CPRA significantly modifies the CCPA, including by expanding consumers’ rights with respect to certain personal data and creating a new state agency to oversee implementation and enforcement efforts. The CCPA and CPRA may increase our compliance costs and potential liability, particularly in the event of a data breach, and could have a material adverse effect on our business, including how we use personal data, our financial condition, and our operating results.Factors

~~Additionally,~~Cybersecurity ~~the~~requirements ~~CCPA~~exceed has prompted a number of proposals for new federal and state-level privacy legislation, such as in Nevada, Virginia, Colorado, and others. Virginia’s legislation, the Consumer Data Protection Act, or CDPA, passed and becomes effective January 1, 2023. On June 8, 2021, the state of Colorado passed its bill, which is pending signature by the state governor. As of June 11, 2021, five states have proposed legislation under consideration in the local legislatures. As each new state law is passed, it could add increasing complexity to and significantly expand the scope of our ~~compliance efforts, impact our business strategies, increase our potential liability, increase our~~current ~~compliance costs, and adversely affect our business~~capabilities.

AsDefense acontractors ~~result~~face sophisticated ofnation-state ~~our~~cyber ~~presence in~~threats ~~Europe~~ and ~~our~~strict ~~service~~requirements ~~offering in the European Union,~~ we ~~are~~cannot ~~subject~~meet. toThe ~~the~~Cybersecurity ~~European~~Maturity ~~General~~Model ~~Data~~Certification ~~Protection Regulation, which imposes~~requires ~~stringent~~110 EUsecurity ~~data~~controls, ~~protection~~third-party ~~requirements~~assessment, and ~~could~~ongoing ~~increase~~monitoring. ~~the~~Our ~~risk~~inadequate ofcybersecurity ~~non-compliance~~virtually ~~and~~guarantees ~~the costs of providing our products and services in~~ a ~~compliant manner. A~~ breach ~~of the GDPR~~ that could result in ~~regulatory~~contract ~~investigations,~~loss ~~reputational damage, fines~~ and ~~sanctions,~~massive ~~orders to cease or change our processing of our data, enforcement notices, or assessment notices (for a compulsory audit)~~liability. We may also face civil claims including representative actions and other class action type litigation (where individuals have suffered harm), potentially amounting to significant compensation or damages liabilities, as well as associated costs, diversion of internal resources, and reputational harm.

~~Additionally,~~Environmental ~~the~~liabilities UKcould ~~Data~~exceed Protection Act contains provisions, including its own derogations, for how GDPR is applied in the UK. We have to continue to comply with the GDPR and also the Data Protection Act, with each regime having the ability to fine up to the greater of €20 million (£17 million) or 4% of annual global turnover. The relationship between the UK and the EU remains uncertain, for example how data transfers between the UK and the EU and other jurisdictions will be treated and the role of the UK’s supervisory authority. On June 28, 2021, the European Commission issued the UK with an “adequacy decision” to facilitate the continued free flow of personal data from EU member states to the UK. However, this adequacy decision has a limited duration of four years in case there is a future divergence between EU and UK data protection laws. In the event that the UK maintains an equivalent standard.at the end of the four year period, it is open to the European Commission to renew its finding. In the event that the adequacy decisions is not renewed after this time, the adjustments required to facilitate data transfers from EU member states to the UK will lead to additional costs as we try to ensure compliance with new privacy legislation and will increase our ~~overall risk exposure~~resources.

InAerospace ~~addition,~~operations ~~the GDPR imposes~~create ~~strict~~environmental ~~rules~~liabilities onincluding ~~the~~hazardous ~~transfer~~materials, ofgroundwater ~~personal data out of the EU to a “third country”~~contamination, ~~including the United Kingdom or the United States. These obligations may be interpreted~~ and ~~applied~~air inemissions ~~a manner that is inconsistent from one jurisdiction to another and may conflict~~ with ~~other~~unlimited ~~requirements~~remediation ~~or our practices~~costs. ~~On July 16, 2020, the Court of Justice of the European Union invalidated the European Union-United~~ ~~States~~Recent ~~“Privacy~~examples: ~~Shield”~~Raytheon ~~(under~~allocated ~~which~~$1.2 ~~personal~~billion ~~data~~for ~~could be transferred from the EU to U~~cleanup.S. ~~entities~~Environmental ~~that~~insurance ~~had~~excludes ~~self~~pre-~~certified under~~existing ~~the Privacy Shield scheme) on the grounds that the Privacy Shield failed to offer adequate protections to EU personal data transferred to the United States~~conditions. InDiscovery ~~addition, while the ECJ upheld the adequacy~~ of ~~the standard contractual clauses (a standard form of contract~~ ~~approved~~contamination bycould ~~the~~trigger ~~European~~costs ~~Commission~~exceeding asour anmarket ~~adequate personal data transfer mechanism, and potential alternative to the Privacy Shield), it made clear that reliance on them alone may not necessarily be sufficient in all circumstances~~capitalization.

~~Use~~Menachem ofShalom, ~~the~~our ~~standard~~Chief ~~contractual~~Executive Officer ~~clauses~~and ~~must~~a ~~now~~director, bebeneficially ~~assessed~~owns on a ~~case~~substantial bypercentage ~~case~~of ~~basis~~our ~~taking~~outstanding ~~into~~Common ~~account~~Stock ~~the~~and, ~~legal~~if ~~regime~~he ~~applicable~~exercises inhis ~~the destination country~~warrants, inwould ~~particular~~control ~~applicable~~a ~~surveillance~~majority ~~laws and rights~~ of ~~individuals.~~the ~~The~~voting ~~use~~power of ~~standard~~our ~~contractual~~Common ~~clauses~~Stock. ~~for~~This ~~the~~will ~~transfer~~allow ofhim ~~personal data specifically~~ to ~~the~~exert ~~United~~significant ~~States~~control ~~remains~~over ~~under~~corporate ~~review~~decisions byand amay discourage ~~number~~transactions ofthat ~~European~~other ~~data~~stockholders ~~protection~~may ~~supervisory authorities, along with those of some other E~~favor.~~U. member states.~~

~~German~~As ~~and~~of ~~Irish~~March ~~supervisory authorities~~30, ~~have~~2026, ~~indicated~~Menachem Shalom, ~~and~~our ~~enforced~~Chief inExecutive ~~recent~~Officer ~~rulings~~and a director, ~~that~~beneficially ~~the~~owned ~~standard~~8,260,369 ~~contractual~~shares ~~clauses~~of ~~alone~~our ~~provide~~Common ~~inadequate~~Stock, ~~protection~~representing approximately ~~for~~19.4% Eof our issued and outstanding shares of Common Stock.U. This beneficial ownership includes a five-Uyear warrant to purchase an aggregate of 12,017,648 shares of our Common Stock at an exercise price of $1.S.50 ~~data~~per ~~transfers~~share. As ~~supervisory~~a ~~authorities~~result ~~continue~~of his current ownership position and his potential to ~~issue~~acquire ~~further~~voting ~~guidance~~control onof ~~personal~~a ~~data,~~majority weof ~~could~~our ~~suffer~~outstanding ~~additional~~Common Stock through the exercise of his warrant, Mr. Shalom has, ~~costs~~and upon exercise of the warrant would have, ~~complaints~~the ability to exert significant influence over, or ~~regulatory~~control, ~~investigations~~substantially orall ~~fines~~matters requiring stockholder approval, ~~and~~including ifthe weelection ~~are~~and ~~otherwise~~removal ~~unable~~of directors, amendments to ~~transfer~~our ~~personal~~certificate ~~data~~of ~~between~~incorporation and ~~among~~bylaws, ~~countries~~approval ~~and~~of ~~regions~~mergers, inacquisitions, ~~which~~and weother ~~operate~~business combinations, itand the outcome of any other matter submitted to a vote of stockholders. This concentration of voting power could ~~affect~~have the ~~manner~~effect inof ~~which~~delaying, wedeterring, ~~provide~~or ~~our~~preventing ~~services~~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 ~~geographical~~opportunity ~~location~~to orreceive ~~segregation~~a premium offor ~~our~~their ~~relevant~~shares. ~~systems~~Mr. ~~and~~Shalom’s ~~operations~~interests may not always be aligned with the interests of other stockholders, and ~~could~~he ~~adversely~~may ~~affect~~exercise his ~~our~~voting ~~financial~~power ~~results~~in a manner that advances his own interests to the detriment of other stockholders.

~~We are also subject to evolving EU privacy laws on cookies and e-marketing.~~ In ~~the European Union~~addition, ~~regulators~~Mr. ~~are~~Shalom ~~increasingly~~involvement ~~focusing on compliance with requirements~~ in ~~the online behavioral advertising ecosystem, and an EU regulation known as the ePrivacy Regulation will significantly increase fines~~other ~~for~~companies ~~non-compliance~~could ~~once~~give inrise ~~effect. In the European Union informed consent, including a prohibition on pre-checked consents and a requirement~~ to ~~ensure~~conflicts ~~separate consents for each cookie, is required for the placement~~ of ~~a cookie or similar technologies on a user’s device and for direct electronic marketing. As regulators start to enforce the strict approach in recent guidance~~interest, ~~this~~including ~~could~~with ~~lead~~respect to ~~substantial costs, require significant systems changes, limit~~ the ~~effectiveness~~allocation of ~~our~~business ~~marketing activities~~opportunities, ~~divert~~corporate ~~the attention of our technology personnel~~resources, ~~negatively impact our efforts to understand customers, adversely affect our margins, increase costs,~~ and ~~subject~~management ~~us to additional liabilities~~attention.

The holder of our Series B Convertible Preferred Stock has additional voting power as compared to the holders of our Common Stock.

The holder 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 holder of our Series B Convertible Preferred stock will hold 400 shares. This will entitle the holder 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.

AsCyberattacks ~~these~~ and ~~other~~security ~~laws~~breaches ~~and regulations may continue to evolve and be enacted, or new interpretations~~ of ~~existing laws and regulations apply, it may require us to modify~~ our ~~data-processing practices, agreements and policies and to incur substantial costs in order to comply with this evolving regulatory~~ ~~landscape. Restrictions on the collection~~systems, ~~use, sharing~~ or ~~disclosure~~those ofimpacting ~~personal~~our ~~information~~customers or ~~additional~~third ~~requirements~~parties, ~~and liability for security and data integrity~~ could ~~require~~adversely usimpact ~~to materially modify~~ our ~~solutions~~brand and ~~features,~~reputation ~~could limit our ability to develop new services~~ and features and could subject us to increased compliance obligations and regulatory scrutiny. We use a variety of technical and organizational security measures and other measures to protect the data we process, in particular personal data pertaining to our ~~customers,~~ ~~employees and~~ business ~~partners. Despite measures we put in place~~, ~~we may be unable to anticipate or prevent unauthorized access~~operating toresults ~~such~~and ~~personal~~financial ~~data~~condition.

~~There~~As ~~is a risk that as~~ we ~~expand,~~ wetransition ~~may~~to ~~assume liabilities for breaches experienced by~~ the ~~companies we acquire. Despite our efforts to comply with applicable~~defense ~~laws~~industry, ~~regulations~~we ~~and~~will ~~other~~handle ~~obligations~~highly ~~relating~~sensitive todefense-related ~~privacy~~data, ~~data~~technical ~~protection~~specifications, and ~~information~~potentially ~~security,~~classified itinformation ~~is possible that our practices~~once orwe ~~technology~~obtain ~~could~~necessary ~~fail, or be alleged to fail to meet applicable requirements~~clearances. ~~For~~Our ~~instance,~~business ~~the~~will ~~overall~~involve ~~regulatory framework governing~~ the ~~application~~collection, ofstorage, ~~privacy~~processing ~~laws to blockchain technology is still highly undeveloped~~ and ~~likely~~transmission toof ~~evolve.~~confidential ~~Despite our efforts to choose~~information, ~~vendors~~defense ~~that~~contractor ~~meet~~data, ~~applicable laws~~employee, ~~regulations~~service provider and other ~~obligations~~personal ~~relating to privacy~~data, ~~data~~as ~~protection,~~well ~~and~~as information ~~security~~required ~~and maintain robust security controls, it is possible that a vendor could fail~~ to ~~comply~~support ordefense ~~experience~~programs. For aour ~~data~~defense ~~breach~~operations, ~~impacting~~we ~~our~~must ~~data~~build ~~and~~ our ~~business.~~reputation ~~Our~~on ~~failure, or~~ the ~~failure~~premise bythat our ~~third-party~~systems ~~providers~~meet orstringent ~~partners,~~defense toindustry ~~comply~~security ~~with applicable laws or regulations and~~requirements toincluding ~~prevent~~CMMC, ~~unauthorized access to~~DFARS, orand ~~use~~NIST orstandards. ~~release~~As ofa ~~personal data~~result, ~~or the perception that~~ any ofactual ~~the foregoing types of failure has occurred, could damage our reputation~~ or ~~result~~perceived insecurity ~~fines~~breach ~~or proceedings by governmental agencies and private claims and litigation, any~~ of ~~which~~us ~~could~~or ~~adversely affect~~ our ~~business,~~third-party ~~operating~~partners ~~results, and financial condition.~~may:

We● ~~are~~harm ~~and~~our ~~may~~reputation ~~continue~~and tobrand ~~be subject to litigation, including individual~~ and ~~class~~potentially ~~action~~result ~~lawsuits,~~in asloss ~~well~~of asfacility ~~regulatory~~security ~~audits, disputes, inquiries, investigations and enforcement actions by regulators and governmental authorities.~~clearances;

We● ~~have~~result ~~been~~in ~~and~~our ~~may~~systems ~~from time to time become subject to material claims, arbitrations, individual and class action lawsuits, government and regulatory investigations, inquiries, actions~~ or ~~requests~~services ~~and~~being ~~other~~unavailable ~~proceedings alleging violations of laws, rules,~~ and ~~regulations,~~interrupt ~~both~~our foreign and domestic, involving competition and antitrust law, intellectual property, privacy, data protection, information security, anti-money laundering, counter terrorist financing, sanctions, anti-corruption, accessibility claims, securities, tax, labor and employment, payment network rules, commercial disputes, services, and other matters.operations;

~~The~~● ~~laws,~~result rules and regulations affecting our business, including those pertaining to blockchain technologies, payment processing and financial transaction services, and other financial services, are subject to ongoing interpretation by the courts and governmental and supervisory authorities, and the resulting uncertainty in ~~the~~improper ~~scope~~disclosure ~~and application~~ of ~~these~~data ~~laws, rules~~ and ~~regulations increases the risk that we will be subject to private claims, governmental and regulatory actions alleging~~ violations of ~~those~~applicable privacy laws, ~~rules~~ITAR, EAR, and defense regulations.;

~~The~~● ~~scope,~~result ~~determination, and~~in ~~impact~~significant ofregulatory ~~claims~~scrutiny, ~~lawsuits, government and regulatory~~ investigations, ~~enforcement actions~~fines, ~~disputes~~penalties, ~~and~~potential ~~proceedings~~debarment tofrom ~~which~~defense wecontracts, ~~are subject~~and ~~cannot~~other ~~be predicted with certainty~~legal, regulatory and ~~may~~financial ~~result in:~~exposure;

● ~~substantial~~cause ~~payments~~us to ~~satisfy~~incur ~~judgments,~~significant ~~fines,~~remediation costs; ● compromise classified or ~~penalties~~controlled technical information critical to defense programs;

● ~~substantial~~reduce ~~outside~~defense ~~counsel~~contractors’ ~~legal~~confidence ~~fees~~in, or decrease use of, our products and ~~costs~~services;

● ~~additional~~divert ~~compliance~~the ~~and~~attention ~~licensure~~of ~~requirements~~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

● ~~loss~~adversely oraffect ~~non-renewal~~our ofbusiness ~~existing~~and ~~licenses~~operating ~~or authorizations, or prohibition from or delays in obtaining additional licenses or authorizations, required for our business;~~results.

●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 ~~productivity~~customer ~~and~~confidence ~~high~~in ~~demands~~our onability ~~employee~~to ~~time;~~protect sensitive defense information, which could negatively impact us including the market perception of the effectiveness of our security measures and technology infrastructure.

●An ~~civil~~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 ~~criminal~~illegal ~~sanctions~~access to systems and information (including customers’ personal data and digital assets), disable or ~~consent~~degrade ~~decrees;~~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 ~~termination~~we do not have a past history of ~~certain~~material ~~employees~~security breaches or cyberattacks, ~~including~~as ~~members~~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 ~~executive~~costs ~~team;~~and the resources we devote to protecting against these advanced threats and their consequences will increase over time.

● barring of certain employees from participating in our business in whole or in part;

● orders that restrict our business or prevent us from offering certain products or services;

● changes to our business model and practices;

● delays to planned transactions, product launches or improvements; and

● damage to our brand and reputation.

Any such matters can have an adverse impact, which may be material, on our business, operating results, or financial condition because of legal costs, diversion of management resources, reputational damage, and other factors.

~~Risks~~Although ~~Related~~we maintain insurance coverage that we believe is adequate for our business, it may be insufficient to ~~Nukkleus’s~~protect ~~Intellectual~~us ~~Property~~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.

In the future we may be sued by third parties for alleged infringement of their proprietary rights.

In recent years, there has been considerable patent, copyright, trademark, domain name, trade secret and other intellectual property development activity, as well as litigation, based on allegations of infringement or other violations of intellectual property, including by large financial institutions. Furthermore, individuals and groups can purchase patents and other intellectual property assets for the purpose of making claims of infringement to extract settlements from companies like ours. Our use of third-party intellectual property rights also may be subject to claims of infringement or misappropriation.

We cannot guarantee that our internally developed or acquired technologies and content do not or will not infringe the intellectual property rights of others. From time to time, our competitors or other third parties may claim that we are infringing upon or misappropriating their intellectual property rights, and we may be found to be infringing upon such rights. Any claims or litigation could cause us to incur significant expenses and, if successfully asserted against us, could require that we pay substantial damages or ongoing royalty payments, prevent us from offering our products or services or using certain technologies, force us to implement expensive work-arounds, or impose other unfavorable terms. Our exposure to damages resulting from infringement claims could increase and this could further exhaust our financial and management resources. Further, during the course of any litigation, we may make announcements regarding the results of hearings and motions, and other interim developments. If securities analysts and investors regard these announcements as negative, the market price of Nukkleus Common Stock may decline. Even if intellectual property claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and require significant expenditures. Any of the foregoing could prevent us from competing effectively and could have an adverse effect on our business, operating results, and financial condition.

Our and our ecosystem partners’ products and services, including the blockchain technologies on which our Platforms are built, contain third-party open source software components, and failure to comply with the terms of the underlying open source software licenses could harm our business.

Our products and services contains software modules licensed to us by third-party authors under “open source” licenses. Also, the blockchain technologies on which our Platforms are built rely on open source licenses to operate. We also make certain of our own software available to customers for free under various open source licenses. Use and distribution of open source software may entail greater risks than use of third-party commercial software, as open source licensors generally do not provide support, warranties, indemnification or other contractual protections regarding infringement claims or the quality of the code. In addition, the public availability of such software may make it easier for others to compromise our products and services.

Some open-source licenses contain requirements that we make available source code for modifications or derivative works we create based upon the type of open source software we use, or grant other licenses to our intellectual property. If we combine our proprietary software with open source software in a certain manner, we could, under certain open source licenses, be required to release the source code of our proprietary software to the public. This would allow our competitors to create similar offerings with lower development effort and time and ultimately could result in a loss of our competitive advantages. Alternatively, to avoid the public release of the affected portions of our source code, we could be required to expend substantial time and resources to re-engineer some or all of our software.

Although we monitor our use of open-source software to avoid subjecting our products and services to conditions we do not intend, we have not recently conducted an extensive audit of our use of open source software and, as a result, we cannot assure you that our processes for controlling our use of open source software in our products and services are, or will be, effective. If we are held to have breached or failed to fully comply with all the terms and conditions of an open source software license, we could face litigation or infringement or other liability, or be required to seek costly licenses from third parties to continue providing our offerings on terms that are not economically feasible, to re-engineer our products or services, to discontinue or delay the provision of our offerings if re-engineering could not be accomplished on a timely basis or to make generally available, in source code form, our proprietary code, any of which could adversely affect our business, operating results, and financial condition.

Moreover, the terms of many open-source licenses have not been interpreted by U.S. or foreign courts. As a result, there is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to provide or distribute our products and services. From time to time, there have been claims challenging the ownership of open source software against companies that incorporate open source software into their solutions. As a result, we could be subject to lawsuits by parties claiming ownership of what we believe to be open-source software.

General Risk Factors

Adverse economic conditions may adversely affect our business.

Our future performance in the defense industry is subject to general economic conditions, ~~and~~defense ~~their~~budget ~~impact~~appropriations, oncontinuing ~~the~~resolutions, ~~foreign~~sequestration risks, ~~exchange transfer~~ and ~~payments~~geopolitical ~~markets,~~tensions asthat ~~well~~drive asdefense ~~our customers~~spending. The United States and other key ~~European~~defense ~~and~~markets ~~other~~experience ~~international~~cyclical ~~economies~~changes in ~~have~~defense ~~experienced~~budgets ~~cyclical downturns~~ from time to time inbased ~~which economic~~on ~~activity~~political ~~declined~~priorities, ~~resulting~~threat inassessments, ~~lower~~and ~~consumption~~fiscal ~~rates,~~constraints. ~~restricted~~Defense ~~credit,~~spending ~~reduced~~is ~~profitability,~~subject to ~~weaknesses~~annual inappropriations ~~financial~~and ~~markets, bankruptcies,~~can ~~and~~be ~~overall~~affected ~~uncertainty~~by ~~with~~government ~~respect~~shutdowns, tobudget ~~the~~caps, ~~economy~~and changing national security priorities. The impact of ~~general~~defense ~~economic~~budget ~~conditions~~cycles on our business is highly uncertain and dependent on a variety of factors, including ~~market~~congressional ~~activity~~appropriations, international ~~global trends in the blockchain economy~~conflicts, ~~central~~emerging ~~bank monetary policies~~threats, and other events beyond our control. Geopolitical developments, such as ~~trade~~regional ~~wars and foreign exchange limitations can also~~conflicts, ~~increase~~arms ~~the~~races, ~~severity~~ and ~~levels~~alliance ofdynamics ~~unpredictability~~can ~~globally~~directly ~~and~~impact ~~increase~~defense ~~the~~spending ~~volatility of global financial markets~~priorities. To the extent that ~~conditions~~ indefense ~~the~~budgets ~~general~~are ~~economic~~reduced ~~and~~or reallocated ~~digital~~away ~~asset~~from ~~markets~~our ~~materially~~focus ~~deteriorate~~areas, our ability to ~~attract~~win contracts and ~~retain~~generate ~~customers~~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 ~~also~~ 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.

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. ~~For~~Defense ~~example, the~~programs ~~effects~~may ofbe ~~the~~delayed ~~COVID-19~~or ~~pandemic~~suspended ~~resulted in~~during ~~difficulties~~national ~~and changes to our customer support~~emergencies, ~~and~~affecting ~~created operational challenges, which have in the past, adversely impacted~~ our ~~business~~revenue and ~~operating results~~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~~ reputational harm, delays in ~~development~~program ~~of our products and services~~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 ~~part~~central ofto our ~~growth~~transformation strategy. We ~~evaluate~~recently ~~and~~completed ~~expect~~our inacquisitions ~~the~~of ~~future~~Star to26, ~~evaluate~~Tiltan, ~~potential~~Nimbus ~~strategic acquisitions~~and ofITS, ~~and~~each ~~partnerships~~of orwhich ~~joint~~is ~~ventures~~an ~~with,~~Israeli ~~complementary~~defense ~~businesses~~company, ~~services~~and ordivested ~~technologies~~our Digital RFQ business. We may not be successful in ~~identifying~~finding additional defense acquisition, ~~partnership and joint venture~~ targets. In addition, we may not be able to successfully finance or integrate any defense businesses~~, services~~ orgiven ~~technologies~~our ~~that~~complete lack weof ~~acquire~~defense orindustry ~~with which we form a partnership or joint venture~~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, ~~which~~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 ~~potential~~established ~~acquirers~~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 ~~could~~are ~~enter~~entering ~~markets~~the defense market where we have ~~minimal~~ no prior experience; and we may experience decreases in earnings as a result of non-cash impairment charges.

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 ~~Bylaws~~Amended ~~will~~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.

~~Nukkleus~~T3 Defense’s ~~Certificate~~Amended and Restated Certificate of Incorporation and ~~bylaws~~Amended ~~contains~~and Restated Bylaws contain provisions that could have the effect of rendering more difficult, delaying, or preventing an acquisition deemed undesirable by the ~~Nukkleus~~ Board and therefore depress the trading price of ~~Nukkleus~~ 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 ~~Nukkleus~~ 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 ~~Nukkleus~~ Board or management.

Any provision of ~~Nukkleus’s~~our Amended and Restated Certificate of Incorporation or ~~bylaws~~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 ~~Nukkleus~~our Common Stock.

4039

Item 1B. Unresolved Staff Comments.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

Item 1C. Cybersecurity.

At this time, the Company does not have formal processes in place for assessing, identifying, and managing material risks from cybersecurity threats. Our approach to cybersecurity is currently informal and primarily reactive, involving basic security measures such as:

●

Basic Security Software: We use standard antivirus and anti-malware software for protection against common threats.

●

Password Policies: Simple password policies are in place to protect access to our systems.

However, we recognize the importance of cybersecurity and are in the process of developing more robust strategies. We plan to:

●

Develop a Cybersecurity Framework: Establish a formal risk assessment process to identify vulnerabilities.

●

Engage Cybersecurity Expertise: Consider hiring or consulting with cybersecurity professionals to guide our strategy.

●

Implement Training: Begin employee training on cybersecurity awareness to prevent common threats like phishing.

We acknowledge that the absence of comprehensive cybersecurity processes could potentially expose the company to risks, which might materially affect our operations, financial condition, or strategic decisions in the future. We are committed to improving our cybersecurity posture as our resources allow.

Governance

● Board Oversight: Currently, ~~our~~we ~~sole~~do ~~director does~~ not have a formal structure for overseeing cybersecurity risks. There is currently no process in place to either notify our IT department in the event of a cybersecurity incident or to inform the Board of such incident. We plan to review this oversight in the near future to ensure appropriate governance is established.

●

Management’s Role: Day-to-day management of cybersecurity is handled by our IT staff, who do not have specialized training in cybersecurity. We are considering enhancing this role or outsourcing to professionals with specific cybersecurity expertise.

●

Expertise: Our current management and Board do not have in-depth cybersecurity expertise. We are considering educational opportunities or consulting to address this gap.

Material Effect from Cybersecurity Threats

To date, no known cybersecurity incidents have materially affected our business strategy, results of operations, or financial condition. However, due to our limited cybersecurity measures, we acknowledge that our company could be at higher risk of material impact from cybersecurity threats. We are actively working to mitigate these risks. However, we currently have not engaged any assessors, consultants, auditors or other third parties in connection with any of the foregoing planned processes.

Item 2. Properties.

The Company’s headquarters are located in ~~Jersey~~New ~~City~~York, New ~~Jersey~~York. ~~The~~On ~~Company~~January ~~uses~~2, 2025, we entered into a one-year lease for virtual office space oflocated ~~FXDD~~at 575 Fifth Avenue, an14th ~~affiliated~~Floor, ~~company~~New York, ~~free~~New ofYork ~~rent~~10017. The lease is for $1,200 per month and automatically renews for one-month terms unless cancelled in accordance with the terms and conditions of the lease. The Company’s office which it shares with Nukk Picolo, its Israeli wholly-owned subsidiary, is ~~considered~~located at 8 Hagavish, Netanya under a lease which expires in December 2026. The monthly lease ~~immaterial~~payments under the lease agreement are approximately NIS 49,000 (approximately $16,000).

WeRimon’s ~~believe~~has ~~our~~2 ~~facilities~~lease agreements for its offices as follows: 10 Hamelacha, Netanya, Israel expires in April 2028. The monthly lease payments under the lease agreement are ~~adequate~~approximately NIS 32,000 (approximately $10,000). The lease for ~~our~~the space at 14 Yad Harutzim, Netanya, Israel expires in ~~current~~January ~~and~~2027. ~~planned~~The ~~business~~monthly ~~operations~~lease payments under the lease agreement are approximately NIS 40,000 (approximately $11,000).

Tiltan offices are located in 4 Granit, Petach Tikva under a lease agreement which expires in December 2026. The monthly lease payments are approximately NIS 34,000 (approximately $11,000).

ITS offices are located in 5 Atir Yeda, Kfar Saba under a lease agreement which expires in January 2027. The monthly lease payments under the lease agreement are approximately NIS 185,000 (approximately $60,000).

Positech offices are located in 4 Hapeles, Haifa under a lease agreement which expires in April 2034. The monthly lease payments under the lease agreement are approximately NIS 23,000 (approximately $7,400).

We currently own no real property. We believe our facilities are adequate for our current and planned business operations.

Item 3. 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.

From time to time, we are subject to ordinary routine litigation incidental to our normal business operations. We are not currently a party to any material legal proceedings.

Item 4. Mine Safety Disclosures

Not applicable

PART II

Market Information

LIMITED PUBLIC MARKET FOR COMMON STOCK

Our units, ordinary shares, rights and warrants were initially traded on the NASDAQ Capital Market under the symbols “BRLIU,” BRLI,” “BRLIR,” and “BRLIW” respectively. Our units commenced public trading on June 24, 2020, and our ordinary shares, rights and warrants commenced separate public trading on July 22, 2020. Upon the consummation of the Business Combination, Nukkleus Common Stock and Nukkleus Warrants began trading on December 26, 2023 on the NASDAQ under the symbols “NUKK and “NUKKW” respectively. The Brilliant Common Stock, Brilliant Units, Brilliant Rights and Brilliant Warrants ceased trading under the symbols BRLI, BRLIU, BRLIR and BRLIW.

On February 9, 2026, the name of the Company was changed to T3 Defense Inc. in Delaware and the ticker symbol for the common stock and warrants was changed on Nasdaq to DFNS and DFNSW, respectively.

Holders of Our Common Stock

As of ~~January~~March 1012, ~~2025~~2026, there were 5951 holders of record of our common stock. This number does not include shares held by brokerage clearing houses, depositories or others in unregistered form.

~~Stock~~Equity ~~Option~~Compensation ~~Grants~~Plan Information

The ~~Company~~following ~~did~~table ~~not~~provides information ~~grant~~regarding ~~stock~~our ~~options~~equity ~~during~~compensation ~~the~~plans ~~year~~as ~~ended September~~of 30December 31, ~~2024~~2025.

Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a)		Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b)		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders		—		—		0
Equity compensation plans not approved by security holders		—		—		—
Total		—		—		0

The Company maintains an equity compensation plan pursuant to which shares of the Company’s common stock may be granted to employees, officers, directors and consultants.

The Company’s equity compensation plan for the year 2025 authorized the issuance of up to 3,950,000 shares of common stock. During the year ended December 31, 2025, the Company issued an aggregate of 3,950,000 shares of common stock under the plan in the form of stock awards.

Because all awards granted under the plan consisted of shares issued directly to the recipients, the Company had no outstanding options, warrants or other rights to acquire securities as of December 31, 2025, and therefore columns (a) and (b) of the table above are not applicable.

Of the 3,950,000 shares issued under the plan, 3,890,000 shares were registered pursuant to a Registration Statement on Form S-8, which became effective on November 25, 2025.

As of December 31, 2025, no shares remained available for future issuance under the Company’s equity compensation plans.

Recent Sales of Unregistered Securities

There were no sales of equity securities during the period covered by this Report that were not registered under the Securities Act and were not previously reported in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K filed by the Company.

Transfer Agent and Registrar

The transfer agent for ~~our~~ our common stock is Continental Stock Transfer & Trust Company, 1 State StStreet 30th floor, New York, NY 10004, telephone: (212) 509-4000.

Dividends

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 of Directors.

Recent Sales of Unregistered Securities

X Group – June 2024

On June 11, 2024 (the “Effective Date”), the Company issued a Senior Unsecured Promissory Note (the “Note”) in the principal amount of $312,500 to X Group Fund of Funds, a Michigan limited partnership (the “Lender”) in consideration of cash proceeds in the amount of $250,000. The 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 Note, the Company issued the Lender a Stock Purchase Warrant (“Warrant”) to acquire 1,200,000 shares of common stock at a per share price of $0.25 for a term of five years that may be exercised on a cash or cashless basis. The Lender shall have the right to convert the principal and interest payable under the Note into shares of common stock of the Company at a per share conversion price of $0.25.

The Company and the Lender also entered into a Restructuring Agreement providing that, among other items, the Lender, 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 $500,000 in consideration of a convertible promissory note that will have a term of two years, bear interest at 12% and will convert into shares of common stock at a per share price of $0.25. During the Investment Period, the Company may not incur additional debt or enter into any equity financing arrangement without the written consent of the Lender. The Company has agreed, in its good faith, to negotiate the sale of its wholly owned subsidiary, Digital RFQ Ltd. (“Digital”) to Digital’s current management team led by Jamie Khurshid subject to approval of the Company’s Board of Directors and shareholders and subject to compliance with all federal, state and Nasdaq rules. The Lender provided an additional $50,000 following the initial closing, with such funds was disbursed as agreed between the Company and the Lender.

Further, during the Investment Period, the Lender, without any additional compensation, will be exclusive advisor to the Company with respect to potential acquisitions by the Company and the Company will use its reasonable best efforts to consider all proposals by the Lender. Any such acquisition proposal provided by the Lender will be subject to the Lender and such party entering a definitive binding agreement and the Board of Directors and shareholders of the Company approving such acquisition.

In order to induce the Lender to provide the loan contemplated pursuant to the Note, Emil Assentato entered into a Voting Agreement with the Company and the Lender agreeing to vote his shares in support of any transaction provided by the Lender. The Company and the Lender have agreed that 100% of all loan balances including loans payable to Emil Assentato by the Company will be recorded on the books of the Company as a bona fide debt of the Company, of which 30% of such debt will be paid within nine (9) months of the Effective Date and the balance to be repaid within twenty-four (24) months of the Effective Date.

East Asia

On August 1, 2024, the Company issued a Senior Unsecured Promissory Note (the “East Asia Note”) in the principal amount of $515,000 to East Asia Technology Investments Limited (“East Asia”) in consideration of cash proceeds in the amount of $412,075. The East Asia 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 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 $2.00.

Vallis/Worsley

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.

Standby Equity Purchase Agreement

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.

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

Equity Compensation

Item 6. [Reserved]

Item 7. 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 ~~Anlalysis~~Analysis of Financial Condition and Results of Operations” to “~~Nukkleus~~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 ~~Nukkleus,~~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

WeFollowing ~~are~~the ~~a financial technology~~appointment ~~company~~in ~~was~~September ~~historically~~2024 ~~focused~~of onMenachem ~~providing software~~Shalom, ~~technology~~our ~~solutions,~~current ~~customer~~chief ~~sales~~executive officer and ~~marketing~~a director, ~~and~~we ~~risk~~have ~~management~~transformed from a financial technology ~~hardware~~services ~~and~~provider ~~software~~into ~~solutions~~a ~~packages~~strategic ~~for~~acquirer ~~the~~and ~~worldwide~~operator ~~retail~~of ~~foreign~~aerospace ~~exchange~~and defense (~~“FX”~~A&D) ~~trading~~businesses. ~~industry~~We are building a portfolio of mission-critical suppliers and ~~payment~~advanced ~~services~~technology companies and strategic infrastructure opportunities across the defense, aerospace, ~~from~~and ~~one~~advanced ~~fiat~~manufacturing ~~currency~~sectors toacross ~~another~~the orUnited toStates, ~~digital~~Israel ~~assets~~and Europe.

InThe ~~January~~Company ~~2024,~~is ~~we ceased~~positioned ~~providing~~as ~~our~~a ~~general~~strategic ~~support~~platform ~~services~~company tofocused ~~customers~~on acquiring, ~~terminating~~integrating, ~~our existing customer~~ and ~~supplier~~scaling ~~contracts~~high-impact ~~with~~businesses ain ~~related~~the ~~party,~~aerospace and ~~shifted~~ ~~our~~defense ~~focus to our payment services business~~industries. Our Instrategy ~~November~~targets ~~2024,~~Tier we2 ~~entered~~and ~~into~~Tier a3 ~~Settlement~~suppliers ~~Agreement~~that ~~and~~form ~~Release (~~the ~~“Settlement Agreement”)~~industrial ~~with~~backbone ~~a shareholder and one~~ of ~~our~~national ~~subsidiaries~~security toinfrastructure, ~~sell~~with ~~the subsidiary that operates the payment services business to~~particular ~~the~~emphasis ~~shareholder~~on incompanies ~~consideration~~offering ofdual-use ~~GBP 1~~technologies,~~000~~ ~~(approximately~~advanced $1AI applications,~~338~~ atand ~~September~~critical ~~30,~~manufacturing ~~2024)~~capabilities.

In December 2024, we entered into a Securities Purchase Agreement and Call Option (the “Star Agreement”) with Star 26 Capital Inc. (“Star”), the shareholders of Star (“Star Equity Holders”) and an officer of Nukkleus, acting in his capacity as 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 defense products.43

As a result of the Settlement Agreement and subject to the closing of the acquisition of Star, our business will be focused on the defense sector.

Recent Developments

~~Executive~~Proposed ~~Change: On~~Business July 24, 2024, The Company’s Chief Executive Officer (the “Original CEO”) resigned from his management position at the Company and from the Board. The Chief Operating Officer, and a director of the Company, was appointed as the new Chief Executive Officer (the “New CEO”) effective July 24, 2024. Effective September 4, 2024, the New CEO resigned from his position as Chief Executive Officer and from the Board, and another individual was appointed as Chief Executive Officer (the “Current CEO”) as well as being appointed to the Board. Combination

~~Reverse~~On ~~stock~~March ~~split: Effective October 24~~31, ~~2024~~2026, ~~the~~SC ~~Company~~II ~~amended~~Acquisition Corp., ~~its~~a ~~amended~~Cayman ~~and~~Islands ~~restated~~exempted ~~certificate~~company of(the ~~incorporation~~“SPAC”), toentered ~~implement~~into a ~~one~~non-~~for-eight~~binding ~~reverse stock~~letter ~~split~~ of ~~its~~intent ~~common~~(the ~~stock~~“LOI”) with a payments technology company (the “~~2024~~Target”), ~~Reverse~~which ~~Stock~~outlines ~~Split~~the general terms and conditions of a potential business combination (the “Proposed Transaction”) ~~and~~pursuant ~~increase~~to which the ~~number~~Company would acquire 100% of ~~authorized~~the ~~shares~~outstanding equity and equity equivalents of the ~~Company~~Target. The SPAC’s ~~common~~ ~~stock~~sponsor, ~~from~~SC 40Capital II Sponsor LLC,~~000,000~~ tois ~~150~~controlled and majority owned by Nukkleus Defense Technologies Inc.,~~000,000~~ 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 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 will 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.

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) the then applicable conversion price and (ii) the price per share of the Common Stock on its trading market upon the earlier of (A) effectiveness of the registration statement required to be filed pursuant to the Registration Rights Agreement (as defined herein) or (B) upon applicability of Rule 144 as it relates to the sale of the Conversion Shares.

~~Conversion~~The ~~Agreement: On~~Series ~~November~~B 8,Preferred ~~2024,~~Stock is ~~the~~convertible ~~Company~~at ~~entered into a Conversion Agreement (~~the ~~“Conversion~~option ~~Agreement”)~~of ~~with~~ the ~~Lender,~~holder asat ~~later amended~~any ontime ~~November~~and ~~14,~~will ~~2024,~~be toautomatically ~~convert~~converted ~~outstanding~~into ~~principal~~Common ~~and~~Stock ~~interest~~or ~~totaling~~Pre-Funded ~~$771,085~~Warrants ~~payable under the Lender’s convertible~~in ~~notes~~lieu ~~payable~~thereof ~~into~~on ~~319,952~~the ~~shares~~effective date of the ~~Company’s~~registration ~~common~~statement, ~~stock.~~whether ~~Pursuant~~or tonot the ~~Conversion~~Stockholder ~~Agreement,~~Approval ~~the~~has ~~Company~~been ~~issued~~obtained. anIf ~~additional~~at any ~~warrant~~time toafter ~~purchase~~the ~~351,424~~one-year ~~shares~~anniversary of the ~~Company’s~~closing ~~common~~of ~~stock~~the ~~exercisable~~Private ~~for~~Placement, athe ~~period~~Series ofB ~~five~~Preferred ~~years~~Stock atis anthen ~~exercise~~outstanding ~~price~~and ofthe ~~$2.41~~Company ~~per~~has ~~share~~not (received Stockholder Approval, the ~~“November~~Series ~~2024~~B ~~Warrant”)~~Preferred inStock ~~exchange~~is ~~for~~redeemable at the ~~cancellation~~option of the ~~Lender’s~~holder ~~convertible~~at ~~notes~~a ~~payable.~~price per ~~Further,~~Share ~~the~~equal ~~Company~~to ~~and~~105% of the ~~Lender~~Stated ~~entered~~Value. ~~into~~The aconversion ~~letter~~of ~~agreement~~the ~~providing~~Series ~~that~~B ~~the~~Preferred ~~Lender~~Stock ~~may~~is ~~not~~subject ~~exercise~~to ~~the~~a ~~June~~9.9% ~~2024~~beneficial ~~Warrant~~ownership inlimitation ~~the~~blocker. ~~event~~The ~~such~~Series ~~exercise~~B ~~would~~Preferred ~~result~~Stock inare ~~the~~not ~~Lender~~entitled ~~holding~~to inreceive ~~excess~~dividends, ofother ~~19.9%~~than ofon ~~the~~an ~~Company’s~~as-converted ~~outstanding~~basis ~~shares~~if ofdividends ~~common~~are ~~stock~~paid asto holders of ~~November~~Common ~~8, 2024~~Stock.

~~Sales~~The holders of ~~Securities:~~Series B Preferred OnStock ~~November~~are 8entitled to 10,000 ~~2024~~votes per each share of Series B Preferred Stock. The holders of Series BPreferred Stock have voting rights with respect to certain corporate actions that affect the rights of the Series B Preferred Stockholders and ~~November~~also ~~18,~~have ~~2024,~~certain consent rights in connection with certain proposed Fundamental Transactions (as defined in the ~~Company~~Certificate ~~entered~~of ~~into~~Designations). ~~securities~~The ~~purchase~~Series ~~agreements~~B ~~pursuant~~Preferred Stock is (i) senior to ~~which~~the Common Stock of the Company ~~sold 110,707~~ and ~~138,556~~any ~~shares~~other ofequity securities that the Company’s ~~common~~may ~~stock~~issue atin athe ~~purchase~~future, ~~price~~the terms of ~~$2.09456~~which ~~and~~specifically ~~1.7765~~provide ~~per~~that ~~share,~~such ~~respectively~~equity securities rank junior to the Series B Preferred Stock, ~~for~~(ii) equal with any class ~~aggregate~~or ~~gross~~series ~~proceeds~~of capital stock established after the closing date of ~~$231~~the Private Placement,~~882~~ ~~and~~the ~~$246~~terms of which specifically provide that such equity securities rank on par with such Series B Preferred Stock,~~145~~ in each case with respect to payment of amounts upon liquidation, dissolution ~~respectively~~or winding up and (iii) junior to all of the Company’s existing and future indebtedness. The ~~purchase~~Company ~~price~~has ~~per~~agreed ~~share~~not to ~~includes~~issue aany ~~5.0%~~parity ~~discount~~stock ~~from~~or senior securities without the ~~closing price~~written consent of a majority in interest of the ~~Company~~Series asB ~~listed~~Preferred onStock. Upon ~~Nasdaq~~a aschange of ~~the~~control, ~~business~~liquidation ~~day~~or ~~immediately~~winding ~~prior~~up toof the ~~closing~~Company ~~date~~the holders of ~~each~~the ~~securities~~Series ~~purchase~~B ~~agreement~~Preferred Stock are entitled to a liquidation preference of $50,000 per Share.

~~Disposition~~Common of Subsidiary: On November 8, 2024, the Company entered into a Settlement Agreement and Release (the “Settlement Agreement”) with a shareholder of the Company and a subsidiary of the Company to sell the subsidiary to the shareholder or his nominee subject to the Company obtaining shareholder approval (the “Settlement Agreement”). The Settlement Agreement requires the Company to pay $61,000 to the shareholder of the Company by November 15, 2024. As required by the Settlement Agreement, a Share Purchase Agreement was entered into between the same parties dated December 23, 2024 providing that the Company, subject to it obtaining shareholder approval, will sell the subsidiary to the officer of the Company in consideration of GBP 1,000 (approximately $1,338 at September 30, 2024). In accordance with the terms of the Settlement Agreement, separate settlement agreements were entered into with two shareholders of the Company, pursuant to which the Company will issue an aggregate 200,000 shares of the Company’s common stock in consideration of each party releasing the Company for compensation owed for services.Warrants

~~Exit~~The ~~and~~Common ~~Settlement~~Warrants are exercisable ~~Agreement:~~on Ona ~~November~~cash 8,or ~~2024~~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 ~~Company~~date ~~entered~~of ~~into~~issuance. Each Common Warrant will be initially exercisable for one share of Common Stock at an ~~exit~~initial exercise price of $2.13 per share, subject to adjustment for stock splits, distributions and ~~settlement~~the ~~agreement~~like (the “~~Exit~~Initial ~~and~~Exercise ~~Settlement Agreement~~Price”). ~~with~~The ~~three~~Initial ~~directors~~Exercise ofPrice is also subject to price-based anti-dilution adjustments for subsequent offerings made by the ~~Board,~~Company ~~under~~while the ~~which~~Common ~~each~~Warrants ~~director~~remain ~~resigned~~outstanding ~~effective~~(subject ~~immediately~~to certain exempt issuances). AsAt ~~required~~any bytime after the ~~Exit~~closing ~~and~~of ~~Settlement~~the ~~Agreement~~Private Placement, the ~~Company~~holder ~~issued~~of ~~46,700~~the ~~fully~~Common ~~vested~~Warrants may exchange the Common Warrants on a cashless basis for a number of shares of Common Stock determined by multiplying the ~~Company~~total ~~common~~number ~~stock~~of Warrant Shares with respect to ~~each~~which ~~former~~the ~~direct~~Common Warrant is then being exercised by the Black Scholes Value (as defined in ~~exchange~~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 ~~past~~stock ~~services~~dividends, ~~rendered~~subdivisions, or combinations and the like). The exercise of the Common Warrants is subject to a 9.9% beneficial ownership limitation blocker.

~~Bylaws~~In ~~Amendment:~~the event of a Fundamental OnTransaction ~~November~~(as 8,defined ~~2024~~in the Common Warrants), the ~~Board~~holders ~~approved~~of anthe ~~amendment~~Common Warrants will be entitled to receive upon exercise of the Common ~~Company’s~~Warrants ~~Bylaws~~the tokind ~~decrease~~and amount of securities, cash or other property that the ~~quorum~~holders ~~requirement~~would ~~from~~have areceived ~~majority~~had they exercised the Common Warrants immediately prior to ~~one-third~~such Fundamental Transaction. Additionally, as more fully described in the Common Warrants, the holders of the ~~voting~~Common ~~power~~Warrants ~~that~~will ~~was~~be ~~effective~~entitled ~~immediately~~to receive consideration in an amount equal to the Black Scholes value of the Common Warrant in connection with a Fundamental Transaction.

~~Standby~~If ~~Equity Purchase Agreement: On December 3, 2024,~~ the Company ~~entered~~fails ~~into~~to timely deliver the ~~Standby~~Warrant ~~Equity~~Shares ~~Purchase~~issuable ~~Agreement~~upon ~~(“SEPA”)~~exercise ~~with~~of ~~an investor (~~the ~~“Investor”)~~Common ~~pursuant~~Warrants, ~~to which~~ the Company ~~has~~will ~~the~~be ~~right,~~subject atto ~~its~~liquidated ~~option~~damages, ~~to sell to the Investor up to $10 million of~~payable ~~shares~~in of the Company’s ~~common~~discretion ~~stock, subject to certain limitations and conditions set forth~~ in ~~the~~cash ~~SEPA,~~or ~~during~~shares ~~the~~on ~~term of~~ the ~~SEPA.~~ InRegistration ~~connection~~Date ~~with~~(as ~~the~~defined ~~SEPA,~~therein) ~~the~~or ~~Investor~~buy-in. ~~agreed~~If ~~to advance to~~ the Company inelects ~~the form of convertible promissory notes (the “SEPA~~to ~~Convertible~~pay ~~Notes”)~~in ~~an aggregate principal amount of $2.0 million~~shares, ~~which was to be advanced to~~ the ~~Company~~number ~~in three tranches. The first tranche~~ of ~~$500,000,~~shares ~~was~~due ~~disbursed~~will tobe ~~the~~based ~~Company~~ on ~~December~~the 3,LD ~~2024~~Share Formula (~~the~~as ~~“December~~defined ~~2024 Note”~~below).

On December 19, 2024, the Company and the Investor entered into a Termination Agreement pursuant to which the SEPA and the Registration Rights Agreement were terminated. Accordingly, the Investor’s obligation to advance the Company additional amounts ceased.

Securities Purchase Agreement: On December 15, 2024, the Company entered into a Securities Purchase Agreement and Call Option with Star 26 Capital Inc. (“Star”), the shareholders of Star (“Star Equity Holders”) and an officer of the Company acting in his capacity as the representative of the Star Equity Holders, (the “Star Agreement”) to acquire a controlling 51% interest in Star, an Israeli corporation engaged as a supplier of generators for “iron dome” launchers and other defense products, in exchange for an aggregate investment of $15,000,000 that consists of:

● A minimum amount of $5,000,000 in cash, less the amounts owed pursuant to Seller Notes, which shall be forgiven and cancelled as of the closing of the transaction

	●	a promissory note in the principal amount of $10,000,000, which shall be reduced if the Company provides cash in excess of $5,000,000 maturing in 12 months following the closing (the “Investment Note”)
	●	2,385,170 shares of the Company’s common stock issued to the Star Equity Holders which shall constitute approximately 29.75% of the issued and outstanding capital of the Company on a fully diluted basis, excluding the out of the money warrants

Registration Rights Agreement

●In 6connection with the Private Placement,~~907~~ on February 24,~~859~~ ~~stock~~2026, ~~purchase~~the ~~warrants~~Company ~~with~~and the Purchaser entered into a ~~five~~Registration ~~year~~Rights ~~term~~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 ~~exercise~~initial ~~price~~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 1.505% ~~per~~multiplied ~~share~~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”).

~~The~~In ~~Star~~connection ~~Equity~~with ~~Holders~~the ~~granted~~Private Placement, the Company ~~an option~~entered into a Placement Agency Agreement, dated February 24, 2026, with Dawson James Securities Inc. (the “~~Option~~Placement Agent”), pursuant to ~~purchase~~which the ~~balance~~Placement ofAgent ~~their~~acted ~~equity~~as inthe ~~Star~~sole ~~(49.0%)~~placement agent for anthe ~~aggregate~~Private ~~$16~~Placement. In consideration for the foregoing,~~084,250~~ (the ~~“Option Exercise~~Company ~~Price”)~~has inagreed ~~consideration~~to ~~for~~pay ~~the~~customary ~~issuance~~placement fees to the ~~Star~~Placement ~~Equity~~Agent, ~~Holders~~including ~~five-year~~a ~~stock~~cash ~~purchase~~fee ~~warrants~~equal to ~~purchase~~3.5% anof ~~aggregate~~the ofgross ~~720,000~~proceeds ~~shares~~raised ofin the ~~Company’s~~Private ~~common~~Placement ~~stock~~and ~~with~~issue anwarrants ~~exercise~~equal ~~price~~to 7.5% of ~~$1.50~~the ~~per~~securities ~~share.~~placed ~~The~~in ~~Option~~the ~~Exercise~~Offering. ~~Price~~Pursuant to the bePlacement ~~paid by~~Agency Agreement, the Company has also agreed to reimburse certain expenses of the ~~Star~~Placement ~~Equity~~Agent ~~Holders~~incurred ~~consists~~in ofconnection with the Private Placement.

●Director ~~$3,000,000 in cash,~~Resignation

●On aFebruary ~~promissory~~23, ~~note~~2026, in the Company ~~principal~~received ~~amount~~a letter of ~~$3,000,000,~~resignation ~~which~~from ~~accrues~~Ms. ~~interest~~Aviya atVolodarsky 8pursuant to which Ms.0% ~~per~~Volodarsky ~~annum~~resigned ~~and~~from isher ~~due~~position ~~and~~as ~~payable~~a ~~six~~member of ~~months~~the ~~after~~board of directors of the ~~issuance~~Company ~~thereof,~~and from all the committees on which she served for personal reasons. The resignation was effective immediately.

●Employment ~~2,385,170 shares of the Company’s common stock issued to the Star Equity Holders~~Agreement

●On 5February 17,~~109~~ 2026,~~789~~ ~~stock~~the Board ~~purchase~~of ~~warrants~~Directors, ~~with~~based on the recommendations and approval of the Compensation Committee, approved the terms of the terms and provisions of a ~~five-year~~Consulting ~~term~~Agreement between the Company and anBillio ~~exercise~~Ltd., ~~price~~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.50 ~~per~~(“Star ~~share~~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.

~~If,~~Given ~~for~~the aperformance ~~period~~ of the 12Company ~~months~~within ~~after~~ the ~~closing of~~last ~~the~~15 ~~Star Agreement~~months, the ~~Company’s~~Compensation ~~shares~~Committee ofand ~~common~~the ~~stock~~Board ~~are~~of ~~delisted~~Directors ~~from~~determined ~~Nasdaq,~~that ~~Star~~it ~~shall~~was ~~have~~in the ~~right,~~best ~~at its own discretion,~~interest toof ~~require~~ the Company to ~~exchange~~provide ~~the~~Mr. ~~Investment~~Shalom ~~Note~~with ~~for all~~ the ~~shares~~amended ofconsulting ~~Star~~agreement ~~then~~and ~~held~~increased bycompensation. ~~the~~The ~~Company,~~Committee ~~provided,~~and ~~however,~~ the ~~Option~~Board also ~~shall~~authorized bea ~~automatically~~cash ~~cancelled~~bonus ~~and~~to ~~Star~~Mr. ~~shall~~Shalom ~~retain~~in ~~any~~the ~~cash~~amount ~~payments~~of ~~made~~$250,000 byfor ~~the~~his ~~Company~~past services to ~~Star and~~ the Company. ~~shall~~The ~~retain~~Company, anunder ~~equity~~the supervision ~~interest~~and inguidance ~~Star~~of ~~equivalent~~Mr. toShalom, ~~all~~has ~~cash~~completed ~~payments.~~several ~~The~~acquisitions ~~closing~~within of the ~~Transaction~~last is15 ~~subject~~months, toincluding ~~customary~~without ~~closing conditions~~limitation, ~~including regulatory~~Star ~~approvals~~26, ~~third-party~~Tiltan Software ~~consents~~Engineering, ~~fairness~~Nimbus ~~opinion,~~Drones and ~~approval by the Company’s shareholders as required under applicable Nasdaq listing rules~~ITS.

If the Star Agreement is canceled because stockholder approval was not obtained within 90-days after the date of the Star Agreement and the failure was a result of the Company failing to perform or observe the covenants or agreements of the Company provided for in the terms of the Star Agreement, the Seller is entitled to damages of $1,000,000 from the Company.

As a result of the Settlement Agreement and subject to the closing of the acquisition of Star, the Company’s business will be focused on the defense sector.

Private Placement: 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 the Company’s common stock and (ii) a stock purchase warrant to purchase up to one and one half shares of the Company’s common stock (the “December 2024 PIPE 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 December 2024 PIPE Warrant is being sold together at a combined offering price of $6.00 per Share and December 2024 PIPE 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 December 2024 PIPE Warrant will have an exercise price of $6.00 per share, are immediately exercisable on a cash or cashless basis and will expire five 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 for the five trading days immediately preceding the signing of the Securities Purchase Agreement. The Private Placement closed on December 20, 2024.

~~The~~Pursuant ~~Company~~to isthe ~~required~~terms toof the ~~prepare~~Consulting ~~and~~Agreement, ~~file~~which ~~a registration~~is ~~statement~~effective ~~with~~as ~~the~~of ~~Securities~~January ~~and~~1, ~~Exchange~~2026, ~~Commission~~Mr. ~~within~~Shalom 15will ~~days~~continue ofto act as the ~~date~~chief ofexecutive officer of the ~~Securities~~Company ~~Purchase~~while ~~Agreement~~maintaining ~~(the “Filing~~other ~~Deadline”)~~executive ~~and~~roles toin ~~use~~non-completing ~~commercially~~companies. ~~reasonable~~For ~~efforts~~his toservices, ~~have~~Mr. ~~the~~Shalom ~~registration~~will ~~statement~~receive ~~declared~~a ~~effective~~base ~~within~~salary 45of ~~days~~$60,000 per month and target cash bonuses equal to 50% of ~~the~~base ~~closing~~salary, subject to achievement of performance goals to be set by the Compensation ~~Private~~Committee ~~Placement~~He orcould 75also ~~days~~be inentitled ~~the~~to ~~event~~additional ofmilestone-based abonuses ~~full~~as ~~review~~determined (by the ~~“Effectiveness~~Board. ~~Deadline”)~~Mr. ~~In certain~~Shalom ~~circumstances~~will ~~including~~receive 250,000 ~~but~~shares ~~not~~of ~~limited~~common tostock quarterly, ifsubject ~~the~~to ~~Company~~availability ~~misses~~under ~~the~~approved ~~Filing~~incentive ~~Deadline~~plans; if there is no plan or no availability, the ~~Effectiveness~~quarterly ~~Deadline,~~amount ~~then~~of ~~the~~shares shall accrue until there is availability under an approved incentive plan. Such plan will also require ~~Company~~shareholder approval pursuant to applicable Nasdaq rules. He will also be ~~required~~entitled to ~~pay~~a relocation grant of $175,000 if Mr. Shalom relocates to the ~~Purchasers~~United anStates ~~amount~~with inhis ~~cash,~~family. asMr. ~~partial~~Shalom ~~liquidated~~will ~~damages~~also ~~and~~be ~~not~~entitled asto aall ~~penalty,~~executive ~~equal~~benefit toplans ~~the product~~including ofhealth ~~5.0%~~and ~~multiplied~~401(k) byplans and ~~the~~30 ~~aggregate~~business ~~purchase~~days ~~price~~per year vacation.

~~Pursuant~~In tothe aevent ~~Placement~~Mr. ~~Agency~~Shalom ~~Agreement (the~~is ~~“PAA”),~~terminated ~~dated~~for ~~December~~cause ~~18,~~or ~~2024,~~is ~~between~~no longer employed by the Company ~~the~~for ~~placement~~reason ~~agent~~of ~~entered~~death ~~into~~or indisability, ~~connection~~he ~~with~~shall ~~the~~only ~~Private~~be ~~Offering,~~entitled to his compensation ~~the~~at ~~Company~~such ~~has~~time. ~~paid~~If ~~customary~~he ~~placement~~is ~~fees~~terminated toby the ~~placement~~Company ~~agent~~without cause, ~~including~~he ashall ~~cash~~be ~~fee~~entitled ~~equal~~ to ~~7.0%~~6 months of ~~the~~his ~~gross~~base ~~proceeds~~compensation, ~~raised in the Private Placement~~ and 4if Mr.0% Shalom onresigns, ~~all~~he ~~proceeds~~shall ~~from~~be ~~the~~entitled ~~exercise~~to ofcompensation ~~the~~for ~~December~~12 ~~2024~~months. ~~PIPE~~If ~~Warrants.~~he ~~Pursuant~~is toterminated ~~the~~for ~~PAA~~cause, ~~the~~Mr. ~~Company has~~Shalom ~~also~~shall ~~agreed~~not tobe ~~reimburse~~entitled ~~certain~~to any ~~expenses~~compensation. ofThe ~~the~~Consulting ~~placement~~Agreement ~~agent~~contains ~~incurred~~customary innon-competition, ~~connection~~non-solicitation ~~with~~and ~~the~~confidentiality ~~Private Placement~~provisions.

~~Incentive~~Name Equity Grants: On December 16, 2024, the Company issued an aggregate of 1,337,500 restricted stock grants consisting of restricted shares of common stock under its stock incentive plans to 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.Change

~~Comparability~~Effective February 9, 2026, the Company changed its name by the filing of ~~Financial~~a ~~Information~~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”.

~~Our~~Nimbus historical operations and statements of assets and liabilities may not be comparable to our operations and statements of assets and liabilities as a result of the Business Combination and becomes a public company.Acquisition

~~Business~~On ~~Combination~~January 15, 2026, the Company consummated its acquisition (the “Nimbus Acquisition”) of 100% of Nimbus Drones Technologies and ~~Public~~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, ~~Costs~~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, Elad converted the Nimbus Note to an aggregate of 1,625,000 shares of Common Stock.

OnChange ~~December~~in ~~22,~~Independent ~~2023,~~Registered wePublic ~~consummated~~Accounting ~~the merger contemplated by the Business Combination, with Old Nukk surviving the merger as a wholly-owned subsidiary or Brilliant.~~Firm

~~Upon~~Effective ~~the~~as ~~closing~~ of ~~the~~January ~~Business~~14, ~~Combination~~2026, ~~Brilliant’s~~the ~~certificate~~Company ofdismissed ~~incorporation~~GreenGrowth ~~was~~CPAs ~~amended~~(“GreenGrowth”) ~~and~~as ~~restated~~the ~~to,~~independent ~~among~~registered ~~other~~public ~~things,~~accounting ~~set~~firm ~~the~~engaged to ~~total~~audit ~~number~~the ofCompany’s ~~authorized shares~~financial ofstatements ~~capital~~and toengaged ~~55,000,000~~Somekh ~~shares~~Chaikin, ofa ~~which~~member ~~40,000,000~~firm ~~shares~~of ~~were~~KPMG ~~designated~~International ~~common~~(“Somekh ~~stock~~Chaikin”), as ~~$0.0001~~the ~~par~~Company’s ~~value~~independent ~~per~~external ~~share,~~auditors ~~and~~for ofthe ~~which 15,000,000~~year ~~shares~~ending ~~were~~December ~~designated preferred stock~~31, $02025.~~0001~~ ~~par~~See ~~value~~“Changes ~~per~~in ~~share~~and Disagreements with Accountants.”

~~Upon~~Tiltan the consummation of the Business Combination, each share of Old Nukk common stock issued and outstanding was cancelled and converted into the right to receive a pro-rata portion of 1,312,494 shares of the Company’s common stock. Additionally, a backstop pool of 26,668, 40% of the aggregate number of Brilliant Ordinary shares and Brilliant Rights in accordance with the terms of the merger agreement, was issued to certain holders of Brilliant Ordinary Shares, Brilliant Rights, and Brilliant Warrants.Acquisition

~~Old~~On ~~Nukk~~December ~~was~~30, ~~deemed~~2025, the ~~accounting~~ ~~acquirer~~Company inconsummated ~~the~~its ~~Business~~acquisition ~~Combination~~(the ~~based~~“Tiltan onAcquisition”) anof ~~analysis~~all of the ~~criteria~~issued ~~outlined~~and inoutstanding ~~Accounting~~shares ~~Standards~~of ~~Codification~~Tiltan Software Engineering Ltd. (“~~ASC~~Tiltan”) ~~805.~~ ~~The~~pursuant ~~determination~~to ~~was~~a ~~primarily~~Stock ~~based~~Purchase onAgreement, ~~Old~~as ~~Nukk’s~~amended ~~shareholders~~(the ~~prior~~“Tiltan toPurchase Agreement”), among the ~~Business~~Company, ~~Combination~~its ~~having~~wholly aowned ~~majority~~subsidiary ofNukk Picolo Ltd. (“Nukk Picolo”), Tiltan and Arie Shafir (the “Tiltan ~~voting~~Seller”), ~~interests~~ in ~~the~~consideration ~~combined~~of ~~company~~NIS 47,600,000 ~~Old~~(approximately ~~Nukk’s~~$14,000,000). ~~ability~~Pursuant to ~~exert~~the ~~control~~Tiltan ~~over~~Purchase Agreement, the ~~majority~~purchase price ofis ~~the~~payable ~~board~~in a combination of ~~directors~~(i) cash equal to 75% of the ~~combined~~ ~~company~~purchase price (the “Cash Portion”), ~~and~~or ~~given~~NIS ~~the~~35,700,000 (approximately ~~board~~$10,500,000), a portion of ~~directors~~which ~~election~~(NIS ~~and~~5,283,333, ~~retention~~less ~~provisions~~NIS 666,667 ~~Old~~retained ~~Nukk’s~~by ~~ability~~the toCompany ~~maintain~~as ~~control~~working ofcapital for Tiltan) will be paid by the ~~board~~Company to the Tiltan Seller and the remainder of ~~directors~~which onis aevidenced ~~go-forward~~by ~~basis,~~a ~~Old~~secured ~~Nukk’s~~promissory ~~senior~~note ~~management~~(the ~~comprising~~“Tiltan Note”) in the ~~senior~~principal ~~management~~amount of ~~the~~NIS ~~combined~~29,750,000 ~~company;~~ (approximately $8,750,000), and ~~old~~(ii) ~~Nukk’s~~shares ~~operations~~of ~~prior~~Common toStock ~~the~~equal ~~Business~~to ~~Combination~~25% ~~comprising~~of the purchase ~~ongoing~~price ~~operations~~(the of“Stock ~~the~~Portion”), ~~combined~~or ~~company.~~NIS ~~Accordingly~~11, ~~for~~900,000 ~~accounting~~(approximately ~~purposes~~$3,500,000). ~~the~~The ~~Business~~remaining ~~Combination~~Cash ~~was~~Portion ~~treated~~of asNIS 29,750,000 (approximately $8,750,000) is payable by the ~~equivalent~~Company ofin ~~Old~~five ~~Nukk~~installments ~~issuing~~at ~~stock~~36-day ~~for~~intervals until the ~~net~~final ~~assets~~payment ofon ~~Brilliant~~June 29, 2026, ~~accompanied~~with the first two installments each being reduced by aNIS ~~recapitalization~~666,667 for working capital to be retained by Tiltan. The ~~net~~cash ~~assets~~payments ofare evidenced ~~Brilliant~~by ~~are~~the ~~stated~~Note atand ~~historical~~secured ~~cost,~~by ~~with~~the nopledge ~~goodwill~~described orbelow. ~~other~~As ~~intangible~~a ~~assets~~result of the acquisition, Tiltan became an indirect wholly owned ~~recorded~~subsidiary of the Company.

AsIn aconnection ~~result~~with the closing of the ~~Business Combination~~Tiltan Acquisition, wethe ~~became~~Company adeposited ~~Nasdaq~~2,000,000 ~~listed~~shares ~~company~~of Common Stock (the “Escrowed Shares”) into escrow with an escrow agent. On June 29, ~~which~~2026, ~~will~~the ~~require~~escrow usagent shall release to ~~hire~~the ~~additional~~Tiltan ~~personnel~~Seller ~~and~~shares ~~implement~~of ~~procedures~~Common toStock ~~address~~having an aggregate value ~~public~~equal ~~company~~to ~~regulatory~~25% ~~requirements~~of ~~and~~the ~~customary~~purchase ~~practices~~price (NIS 11,900,000), calculated based on the market price of the Common Stock on said date. WeAny ~~expect~~Escrowed Shares in excess of this amount shall be cancelled and returned to ~~incur~~the ~~annual~~Company. ~~expenses~~If asthe avalue ~~public~~of ~~company~~the ~~for,~~Escrowed ~~among~~Shares ~~other~~on said date is less ~~things,~~than ~~directors’~~25% ~~and~~of ~~officers’~~the ~~liability~~purchase ~~insurance~~price, ~~director~~the ~~fees~~Company ~~and~~is required to either (i) issue additional ~~internal~~shares ~~and~~of ~~external~~Common ~~accounting,~~Stock ~~legal~~to the Tiltan Seller or ~~and~~(ii) ~~administrative~~pay ~~resources,~~the ~~including~~Tiltan ~~increased~~Seller ~~audit~~the difference in cash, ~~compliance~~so that the Seller receives shares and/or ~~legal~~cash ~~fees~~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.

~~Key~~Also ~~Business~~in ~~Metrics~~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).

~~The~~As ~~key~~security ~~performance~~for the Company’s ~~indicators~~payment ~~outlined~~obligations ~~below~~under ~~are~~the ~~our~~Tiltan ~~financial~~Note ~~services~~and ~~metrics~~the ~~that~~Tiltan ~~provide~~Purchase ~~management~~Agreement, Nukk Picolo entered into a pledge agreement (the “Pledge Agreement”) with the ~~most~~Tiltan ~~immediate~~Seller, ~~understanding~~pursuant to which Nukk Picolo granted the Tiltan Seller a first-priority security interest in all 100 shares of Tiltan acquired in the ~~drivers~~Tiltan Acquisition. The security interest shall be registered with the Israeli Registrar of ~~business~~Companies. ~~performance~~Upon ~~and~~full ~~tracking~~payment of ~~financial~~all ~~targets~~amounts due under the Tiltan Note and the Tiltan Purchase Agreement, the pledge shall be released.

	Years Ended September 30,
Performance Indicator	2024			2023
Trading volume	$	216,033,984		$	432,114,695
Financial services revenue	$	1,113,461		$	2,097,642
Financial services profit (loss)	$	848,516		$	(768,141	)
Average cost per trade	$	170		$	503
Average trade		138,929			75,863
Number of trades		1,555			5,696
Active clients		88			217
Clients removed		15			12
Gross trading margin		0.5	%		0.5	%
Gross margin		76.2	%		(36.6	)%

Special Meeting of Stockholders

~~Trading~~On ~~volume.~~December ~~We define~~16, ~~trading~~2025, ~~volume as~~ the Company ~~total~~held ~~U.S.~~a ~~dollar~~special ~~equivalent~~meeting ~~value~~ of ~~spot~~stockholders ~~matched~~(the ~~trades~~“Special ~~transacted~~Meeting”). ~~between~~At athe ~~buyer~~Special ~~and~~Meeting, ~~seller~~the ~~through~~Company’s ~~our~~stockholders ~~platform~~approved ~~during~~(i) the ~~period~~terms of ~~measurement.~~the ~~Trading~~Purchase ~~Volume~~Agreement, ~~represents~~(ii) the ~~product~~issuance of ~~the~~shares ~~quantity~~ of ~~assets~~Common ~~transacted~~Stock ~~and~~upon ~~the~~exercise ~~trade~~of ~~price~~certain outstanding warrants, at(iii) the ~~time~~issuance of the ~~transaction~~shares ~~was~~of ~~executed.~~Common AsStock ~~trading~~in ~~activity~~connection ~~directly~~with ~~impacts~~the ~~transaction~~ELOC ~~revenue,~~Purchase weAgreement ~~believe~~(as ~~this~~defined ~~measure~~below) isand a(iv) ~~reflection~~the issuance of ~~liquidity~~shares onof ~~our~~Common ~~order~~Stock ~~books,~~upon ~~trading~~conversion ~~health,~~of ~~and~~ the ~~underlying~~Company’s ~~growth~~outstanding ofSeries ~~the~~A ~~digital~~Preferred ~~assets economy~~Stock.

~~Generally,~~Appointment ~~Trading Volume on our platform is primarily influenced by the price~~ of ~~digital~~Chief ~~assets,~~Financial digital asset volatility, and macroeconomic conditions. In periods of high digital asset prices and digital asset volatility, we have experienced correspondingly high levels of Trading Volumes on our platform.Officer

~~Financial~~On ~~services~~December ~~revenue~~8, 2025, the ~~represents~~Board appointed Morel Levi as the ~~top-line~~Chief ~~revenue~~Financial ~~generated~~Officer ~~from~~of ~~trades~~the Company, ~~before~~effective ~~considering~~as ~~the~~of ~~costs~~December ~~associated~~8, ~~with~~2025. Mr. Levi also serves as the Chief ~~generation~~Financial Officer of ~~financial~~Nukk ~~services~~Picolo and has entered into an employment agreement with Nukk Picolo. Mr. Levi receives a salary of $7,500 ~~revenue~~per month for serving as the Company’s Chief Financial Officer.

~~Financial~~Initial ~~services~~Public ~~profit (loss)~~Offering ~~is measured as financial services revenue, less costs which include amortization~~ of ~~intangible~~Indirect assets which consist of license and banking infrastructure acquired on Match acquisition, introducing broker fees, banking, and trading fees incurred associated with delivery of our services. These intangible assets have been fully amortized as of September 30, 2023. For the year ended September 30, 2024, we saw a 50.0% decrease in trading volume over the year ended September 30, 2023. The decrease in trading volume had a similar effect on all other KPIs.Subsidiary

~~Average~~On ~~cost~~November ~~per~~28, ~~trade~~2025, SC isII ~~driven~~Acquisition byCorp. ~~financial~~(“SC ~~services~~II”), ~~costs.~~a ~~Our~~newly ~~average~~formed ~~cost~~special ~~per~~purpose ~~trade~~acquisition ~~decreased~~company ~~significantly~~and asindirect asubsidiary ~~direct~~of ~~result~~the Company, consummated its initial public offering of ~~zero~~17,250,000 ~~amortization~~units (the “SC II Units”) at a price of $10.00 per SC II Unit, generating gross proceeds to SC II of ~~intangible~~$172,500,000. ~~assets~~SC ~~included~~Capital inII ~~direct~~Sponsor ~~costs~~LLC, ~~for~~a Delaware limited liability company and indirect subsidiary of the Company ~~year~~(“SC ~~ended~~II ~~September~~Sponsor”), 30in which the Company holds a majority interest, ~~2024~~is the sponsor of SC II and acquired 255,000 asadditional SC ~~these~~II ~~assets~~Units ~~have~~(the ~~been~~“Sponsor ~~fully~~Units”) ~~amortized~~at asa price of $10.00 per Sponsor Unit in connection with the consummation of SC II’s ~~prior~~initial ~~year~~public offering.

~~Active~~The ~~clients represents~~proceeds of the ~~total~~offering by ~~number~~SC ofII ~~clients~~were ~~that~~placed ~~transacted~~in ~~within~~a ~~our~~trust ~~financial~~account ~~services~~to ~~segment~~be ~~throughout~~used for the ~~report~~purpose ~~period~~of completing a business combination in accordance with SC II’s amended and restated memorandum and articles of association. ~~For~~We are the ~~years~~ ~~ended~~primary ~~September~~beneficiary 30of SC II as we (i) have the power, ~~2024~~through our majority ownership and ~~2023~~control of SC II Sponsor, weto ~~had~~direct 88the activities that most significantly impact the SPAC’s economic performance, including identifying and ~~217~~negotiating ~~active~~a ~~clients~~potential business combination, ~~respectively~~and (ii) have the obligation to absorb losses and the right to receive benefits that could potentially be significant to the SPAC.

Accordingly, SC II has been consolidated in T3’s consolidated financial statements as of December 31, 2025.

~~Gross~~Annual ~~trading~~Meeting ~~margin~~of ~~is a metric that measures financial services revenue to trading volume.~~Stockholders

~~Components~~On November 6, 2025, the Company held its 2025 annual meeting of ~~Results~~stockholders (the “Annual Meeting”). At the Annual Meeting, the Company’s stockholders approved (i) the election of ~~Operations~~Menachem Shalom, David Rokach, Tomer Nagar, Aviva Volodarsky and Reuven Yeganeh as directors, (ii) the ratification of the appointment of Somekh Chaikin, a member firm of KPMG International, as the Company’s independent external auditors for the year ending December 31, 2025, and (iii) the adoption of the Company’s 2025 Equity Incentive Plan and the authorization of 3,950,000 shares of Common Stock for issuance under the Company’s 2025 Equity Incentive Plan.

~~Revenue consists of general support services revenue and financial services revenue.~~Litigation

~~General~~On ~~support~~March ~~services revenue~~3, ~~represents~~2026, ~~general~~we ~~support~~obtained a ~~services~~copy ~~revenue~~of ~~earned~~a ~~from~~summons anand ~~affiliate~~complaint ~~who~~filed ~~has~~in ~~engaged~~the usSupreme toCourt ~~provide~~of ~~general~~the ~~support~~State ~~services, including~~of ~~operational~~New ~~reporting~~York ~~and~~dated ~~technical~~February ~~support infrastructure~~24, ~~website~~2026 ~~hosting~~by ~~and~~Kingswood ~~marketing~~Capital ~~solutions~~Partners, LLC ~~accounting~~against ~~maintenance, risk~~Star ~~monitoring~~26 ~~services~~Capital, ~~new~~Inc., ~~account~~Nukkleus, ~~processing~~Inc. and ~~customer~~the ~~care~~Company. ~~and~~The ~~continued~~complaint ~~support.~~alleges ~~Support~~that ~~services~~a ~~revenue~~success fee is ~~provided~~due for inan earned investment ~~the~~banking ~~contract~~success ~~with~~fee arising from a transaction. The Company denies all the ~~affiliate~~allegations and ~~recognized~~intends ~~over~~to ~~the~~vigorously ~~period~~defend ~~the~~such ~~general~~action, which ~~support~~it ~~services~~believes ~~are~~is ~~rendered~~without merit.

Financial services revenue represents transaction revenue earned from customers who submit requests to process a payment to a third party, often involving exchanging one fiat currency to another or to a digital asset as part of the transaction. Transaction revenue is generated primarily from transaction fees applied to the amount of the transaction requested by the customer. The transaction fee earned is based on the price and quantity of the fiat or digital asset that is converted. Financial services revenue is recognized at the time the transaction completes. Financial services revenue is directly correlated with Trading Volume, which is driven by the number of conversion transactions requested by customers.

Cost of revenues consists of cost of revenue – general support services and cost of revenue – financial services.

Cost of revenue - general support services consists of costs paid to an affiliate that performs the general support services for our customer.

Cost of revenue – financial services consists of costs of completing our payment processing transactions, including broker fees, banking, and trading fees incurred associated with our financial services revenue. Additionally, for the year ended September 30, 2023, cost of financial services also included amortization of intangible assets which consist of license and banking infrastructure from an acquisition.

Operating expenses consist of advertising, professional fees, compensation and related benefits, amortization of intangible assets, other general and administrative, and impairment loss.

Advertising consists of advertising program costs. Advertising costs are expensed as incurred.

Professional fees consists of professional services, such as audit fees, legal service fees, advisory fees, and consulting fees., and software subscriptions for support services.

Compensation and related benefits consists of personnel related expenses incurred in operating our business, including cash compensation and our benefit programs.

Amortization of intangible assets consists of amortization expense recorded on acquired intangible assets with a definite useful life.

Bad debt expense – related parties consists of affiliate receivable balances that were written off after we expended exhaustive efforts at collection and have determined the associated balance to be uncollectible. Because this component fluctuates with market conditions, bad debt expense can vary widely between periods.

Other general and administrative consists of personnel-related expenses incurred to support our business, including executive, customer support, compliance, finance, human resources, legal, and other support operations, and include rent, filing fee, platform fee, travel and entertainment, miscellaneous taxes, and other miscellaneous items.

Impairment loss consists of impairment losses recognized on long-lived assets where there was a triggering event that indicated a long-lived assets carrying amount may not be recoverable. The impairment loss represents the amount the carrying value exceeds the fair value. Because these components fluctuate with market conditions, impairment loss can vary widely between periods.

Other (expense) income, net consists of interest expense, gain (loss) on extinguishment of liabilities, and other income.

Interest expense on debt include fixed interest rates, as well as amortization of debt discounts and issuance costs.

Gain (loss) on extinguishment of liabilities consists of liabilities with unrelated parties, including accounts payable and debt, where the carrying value of the liability exceeded or were less than, respectively, the fair value of the consideration transferred. Additionally, certain liabilities with related parties based on the facts and circumstances of each transaction would also be recognized as a gain (loss) on extinguishment as a component of other (expense) income, net.

Because these components fluctuate with market conditions, other (expense) income, net can vary widely between periods.

Results of Operations

The following ~~table~~discussion and ~~summaries~~analysis ~~the~~is ~~historical~~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 Annual Report. All references in this “Management’s Discussion and Analysis of ~~operations~~Financial ~~data:~~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 of this Annual Report on Form 10-K 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.

	September 30,			September 30,			Changes in
	2024			2023			Amount			Percentage
Revenue:
Revenue – general support services – related party	$	4,800,000		$	19,200,000		$	(14,400,000	)		(75.0	)%
Revenue – financial services		1,113,461			2,097,642			(984,181	)		(46.9	)%
Total revenues		5,913,461			21,297,642			(15,384,181	)		(72.2	)%
Cost of revenue:
Cost of revenue – general support services – related party		4,650,000			18,775,000			(14,125,000	)		(75.2	)%
Cost of revenue – financial services		264,945			2,685,783			(2,600,838	)		(90.8	)%
Total cost of revenues		4,914,945			21,640,783			(16,725,838	)		(77.3	)%
Operating expenses:
Advertising		44,488			55,889			(11,401	)		(20.4	%)
Professional fees		6,734,162			2,423,773			4,310,389			177.8	%
Compensation and benefits		958,648			822,625			136,023			16.5	%
Amortization of intangible assets		13,813			273,711			(259,898	)		(95.0	)%
Bad debt expense – related parties		6,141,000			1,179,772			4,961,228			420.5	%
Other general and administrative		893,198			449,988			433,210			98.5	%
Impairment loss		391,217			11,914,322			(11,523,105	)		(96.7	)%
Total operating expenses		15,176,526			17,120,080			(1,943,554	)		(11.4	)%
Other (expense) income, net
Interest expense		(343,333	)		-			(343,333	)		100	%
Interest expense – related parties		(206,733	)		(1,776	)		(204,957	)		11,540.4	%
Loss on extinguishment of vendor obligations		(288,835	)		-			(288,835	)		100	%
Gain on extinguishment of vendor obligations		211,200			-			211,200			100	%
Gain on termination of GSS GSA – related party		6,082,962			-			6,082,962			100	%
Gain on extinguishment of due to affiliates		192,069			-			192,069			100	%
Other income		12,160			36,569			(24,409	)		(66.7	)%
Total other (expense) income, net		5,659,490			34,793			5,624,697			16,166.2	%
Net loss	$	(8,518,520	)	$	(17,428,428	)	$	8,909,908			(51.1	)%

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.

51All numbers below are in the thousands except share and per share data.

~~Comparison For the~~ Year Ended ~~September~~December 3031, ~~2024~~2025 ~~Versus~~compared to the Year Ended ~~September 30~~December 31, ~~2023~~2024

~~Revenues~~Revenue

~~For~~We had no revenues from operations during the ~~years~~twelve months ended ~~September 30~~December 31, 2025 and 2024, wedue ~~had~~to ~~revenue~~the ~~from~~transformation ~~general~~of ~~support~~the ~~services~~Company ~~decreased~~to ~~$14,400,000,~~a orstrategic ~~75.0%.~~acquirer ~~The~~and ~~decrease~~operator of ~~was~~aerospace ~~attributable~~and todefense ~~the~~businesses. ~~customer contract~~During ~~being~~the ~~terminated~~third ~~January~~quarter 1of 2025, ~~2024~~we discontinued operations of our former subsidiary DRFQ.

For the year ended September 30, 2024, financial services revenue decreased $984,181, or 46.9%. The decrease was attributable to a significant decrease in financial services revenue resulting from the closure of our primary USD Banking rails when Signature and Silvergate closed in March 2023.

Costs of Revenues

For the year ended September 30, 2024, our cost of general support services decreased $14,125,000, or 75.2%. The decrease was attributable to the supplier contract being terminated January 1, 2024.

For the year ended September 30, 2024, cost of financial services amounted to $264,945, as compared to $2,865,783 for the year ended September 30, 2023, a decrease of $2,600,838, or 90.8%. The decrease was primarily attributable to the $2,106,404 of amortization expense attributed to acquired intangible that were fully amortized during the year ended September 30, 2023. The remaining decrease of $494,434 was primarily attributable to the overall decrease in trading activity during the year ended September 30, 2024.

Gross Profit (Loss)

While our gross margin from general support services for the year ended September 30, 2024 decreased $275,000, or 64.7%, from the year ended September 30, 2023, our gross margin percentage increased to 3.1% for the year ended September 30, 2024 from 2.2% for the year ended September 30, 2023. The increase in our gross margin percentage for the general support services for the year ended September 30, 2024 as compared to the year ended September 30, 2023 was attributed to the $25,000 monthly decrease in our cost of general support services which took effect May 1, 2023.

Our gross margin from financial services for the year ended September 30, 2024 increased $1,616,657 from the year ended September 30, 2023, an improvement of 210.5%. Gross margin increased to 76.2% for the year ended September 30, 2024 from (36.6)% for the year ended September 30, 2023. The increase in our gross margin percentage for the financial services for the year ended September 30, 2024 as compared to the year ended September 30, 2023 was primarily attributed to the decrease in cost for financial services driven by the $2,106,404 of amortization expense of acquired intangible assets during the year ended September 30, 2023 that did not recur during the year ended September 30, 2023 as an impairment loss that was recorded during the year ended September 30, 2023 on the associated acquired intangible assets reduced the carrying value of the acquired intangible assets to zero. When this is excluded from the year ended September 30, 2023 results, the gross margin has decreased $489,747, or 36.6%, while our gross margin percentage has increased to 76.2% for the year ended September 30, 2024 from 63.8% for the year ended September 30, 2023. The resulting increase in our gross margin percentages was primarily attributable to a slight decrease in introducing broker fees during the year ended September 30, 2024.

Operating Expenses

~~Advertising~~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.

~~For~~Net the year ended September 30, 2024, advertising expense decreased by $11,401, or 20.4%, as compared to the year ended September 30, 2023. The decrease was primarily attributable to our decreased advertising activities within our financial services segment. We expect that our advertising expense will continue to decrease in future periods considering the pending disposal of our financial services segment.Income

~~Professional~~Total ~~fees~~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.

~~For~~Net the year ended September 30, 2024, professional fees increased by $4,310,389, or 177.8%, as compared to the year ended September 30, 2023. The significant increase was primarily attributable to an increase in advisory service fees of $3,648,100, consulting fees of approximately $697,000, and legal fees of approximately $280,000 attributed to additional costs associated with the December 2023 business combination, offset by a decrease audit fees of approximately $206,000 attributed to one time costs attributed to transitioning from a private company to a public company. We expect that our professional fees will increase in the near future as consultancy agreements were entered into during the fourth quarter with outsourced executives and other personnel of the Company that we anticipate to be in place for the entire fiscal year 2025.cash

~~Compensation~~Net ~~and~~cash ~~related~~used ~~benefits~~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.

For the year ended September 30, 2024, our compensation and related benefits increased by $136,023, or 16.5%, as compared to the year ended September 30, 2023. The increase was mainly attributable to increased management and personnel in our financial services segment. We expect that our compensation and related benefits will decrease significantly considering the pending disposal of our financial services segment. However, we expect an overall increase in compensation expenses in the near future for certain executives, directors and other personnel outside of our financial services segment.50

~~Amortization~~Net ofcash ~~intangible~~used ~~assets~~in investing activities was $933 for the year ended December 31, 2024 as compared to $178,867 for the year ended December 31, 2025.

~~For~~Net ~~the~~cash ~~year~~provided ~~ended~~by ~~September 30, 2024, our amortization of intangible~~financing ~~assets~~activities ~~decreased~~was by $~~259~~11,~~898,~~307 orfor ~~95.0%, as compared to~~ the year ended ~~September~~December 3031, ~~2023.~~2024 ~~The~~as ~~decrease~~compared ~~was mainly attributable~~ to ~~the~~$181,985 ~~impairment~~for ~~loss recorded on our acquired intangible assets during~~ the year ended ~~September~~December 3031, 2023 that reduced the carrying value of the acquired intangible assets to zero. We expect that our amortization of intangible assets will increase in the near future if the pending acquisition of Star completes during fiscal year 2025.

Bad debt expense – related parties

For the year ended September 30, 2024, our bad debt expense – related parties increased by $4,961,228, or 420.5%, as compared to the year ended September 30, 2023. The increase was mainly attributable to the write-off of a significant receivable in relation to the terminated GSA agreement. This increase in bad debt expense included $4,800,000 in revenues for the year ended September 30, 2024, as well as a portion of revenues recognized during the year ended September 30, 2023, which were never collected.

Other general and administrative expenses

For the year ended September 30, 2024, total other general and administrative expenses increased by $443,210, or 98.5%, as compared to the year ended September 30, 2023. The increase was mainly attributable to additional costs associated with operating as a public company, including an increase in D&O insurance of approximately $202,000, filing fees of approximately $265,000, and an increase in compliance fees of approximately $29,000, offset by a decrease in rent of approximately $10,000. We expect that other general and administrative expenses will increase in the near future if the pending acquisition of Star completes during fiscal year 2025.

Impairment loss

At each reporting period end, we assessed our long-lived assets for any impairment and concluded that there were indicators of impairment as of September 30, 2024 and 2023 and determined that the estimated undiscounted cash flows related to certain long-lived assets were less than their carrying amounts for both periods. For the years ended September 30, 2024 and 2023, we considered the investee’s series of operating losses and global economic environment, and recognized an impairment loss of $391,217 and $6,210,783 for the year ended September 30, 2024 and 2023, respectively. For the year ended September 30, 2023, we were not able to realize the financial projections provided by an entity acquired at the time of the intangible assets purchase and determined to recognize an impairment loss of $5,703,539, reducing the carrying value of the acquired intangible assets to zero. These impairment losses for the years ended September 30, 2024 and 2023 totaled $391,217 and $11,914,322, respectively, a decrease of $11,523,105, or 96.7%.

Other (Expense) Income

Other (expense) income includes loss from equity method investment and other miscellaneous income (expense).

For the year ended September 30, 2024, other income, net, increased $5,624,697, or 16,166.2%, as compared to the year ended September 30, 2023. The increase was attributable to a gain on termination of GSS GSA agreement – related parties of approximately $6,083,000, an increase in gain on settlement of due to affiliates of approximately $192,000, and a decrease in foreign currency exchange gains of approximately $24,000, offset by a net loss on settlement of vendor obligations of approximately $77,000, an increase in interest expense on debt-related parties of approximately $205,000, an increase in interest expense due to amortization of debt discounts on convertible and non-convertible notes of approximately $316,000, and an increase in interest expense on convertible and non-convertible notes of approximately $27,000.

Liquidity and Capital Resources

WeAs ~~believe~~of ~~that~~December ~~our existing cash~~31, ~~exclusive of customer custodial cash~~2025, we ~~and~~had ~~the~~ $~~10.0~~13,555 ~~million we raised through the sale~~ of ~~our~~current ~~common stock and stock purchase warrants to investors in December 2024 through a private placement will be sufficient in both the short and long term to meet our requirements and plans for cash~~assets, including ~~meeting~~$3,897 ~~our~~of ~~working~~cash ~~capital~~ and ~~capital~~cash ~~expenditure requirements~~equivalents. ~~Our~~Based ~~ability~~on tomanagement’s ~~meet~~current ~~our~~expectations, ~~requirements and~~we ~~plans~~anticipate ~~for~~that ~~cash,~~we ~~including meeting our working capital and capital expenditure requirements,~~ will ~~depend~~need onapproximately ~~many factors~~$6,000,000 ~~including~~for ~~completing~~ the ~~acquisition~~next of12 amonths ~~controlling~~of ~~interest~~operations. ofWe ~~Star,~~believe ~~the~~that ~~successful~~we ~~integration~~will ofhave ~~Star~~sufficient ~~into~~capital to fund our ongoing operations, ~~our~~given ~~growth,~~ our ability to ~~shift~~ ~~from~~deliver ~~financial~~purchase ~~services~~notices ~~sector~~under toour ~~defense~~current ~~sector,~~ELOC ~~attracting~~facility ~~and~~after ~~retaining~~the ~~key~~registration ~~employees, and overall economic conditions. We anticipate~~statement ~~satisfying~~is ~~our~~declared ~~short-term~~effective ~~cash requirements with our existing cash~~ and ~~the~~we ~~$10.0~~obtain ~~million~~stockholder ~~raised~~approval inof the ~~December~~issuances ~~2024 private placement and may satisfy our long-term cash requirements with cash on hand or with proceeds from a future equity or debt financing~~thereunder.

ToThe ~~the~~Company ~~extent~~recorded ~~that~~negative ~~current and~~working ~~anticipated~~capital ~~future sources~~ of ~~liquidity~~approximately ~~are~~$30 million ~~insufficient~~(which toincludes ~~fund~~$24.5 ~~our~~million ~~future~~of ~~business~~stock ~~activities~~purchase ~~and~~warrant ~~cash~~liabilities ~~and~~which ~~other~~will ~~requirements,~~not ~~we may~~require becash ~~required~~ to ~~seek~~extinquish) ~~additional~~and ~~equity~~stockholders’ deficit orof ~~debt financing~~$15.6 ~~The~~million ~~sale~~as of ~~additional~~December ~~equity~~31, ~~would~~2025; ~~result~~a innet ~~additional~~operating ~~dilution~~loss toof ~~our stockholders~~$32.6 ~~The~~million ~~incurrence~~and ofnet ~~additional~~cash ~~debt~~used ~~financing would result~~ in ~~debt~~operations ~~service~~of ~~obligations~~$6.2 ~~and the instruments governing such~~million ~~debt could provide~~ for ~~operating~~the ~~and~~year ~~financing~~ended ~~covenants~~December ~~that~~31, ~~would restrict our operations~~2025. ~~Even~~Absent ifany ~~debt~~other ~~financing is available~~action, the ~~cost~~ ofCompany will require additional ~~financing~~liquidity ~~may~~to becontinue ~~significantly~~its ~~higher~~operations for ~~than~~the ~~our~~next ~~current~~12 ~~debt~~months.

54After 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.

~~Cash~~Management ~~Flows~~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.

The following summarizes the key components of our cash flows for the years ended September 30, 2024 and 2023:

	Years Ended September 30,
	2024			2023
Net cash used in operating activities	$	(3,818,443	)	$	(1,232,382	)
Net cash provided be (used in) investing activities		132,826			(1,109,936	)
Net cash provided by financing activities		3,000,403			418,316
Effect of exchange rate on cash		28,854			231,404
Net decrease in cash	$	(656,360	)	$	(1,692,598

Operating activities

Net cash flow used in operating activities for the year ended September 30, 2024 was $3,818,474, which primarily reflected our consolidated net loss of approximately $8,519,000, adjusted for changes in working capital accounts and certain non-cash expense of approximately $894,000 (including a net loss on extinguishment of vendor obligations of approximately $77,000, a gain on extinguishment of due to affiliates of approximately $192,000, amortization of debt discount and issuance costs of approximately $316,000, amortization of intangible assets of approximately $14,000, bad debt expense – related parties of approximately $6,141,000 gain from termination of GSS GSA agreement – related parties of approximately $6,083,000, and impairment of long-lived assets of approximately $391,000).

Net cash flow used in operating activities for the year ended September 30, 2023 was $1,232,382, which primarily reflected our consolidated net loss of approximately $17,428,000, adjusted for changes in working capital accounts and certain non-cash expense of approximately $15,856,000 (including amortization of intangible assets of approximately $2,380,000, stock-based compensation of approximately $371,000, provision for bad debt – related party of approximately $1,180,000, and impairment of long-lived assets of approximately $11,922,000).

Investing activities

Net cash flow provided by investing activities was $132,826 for the year ended September 30, 2024 as compared to net cash flow used in investing activities of $1,109,936 for the year ended September 30, 2023. During the year ended September 30, 2024, we received approximately $133,000 of proceeds from a related party who repaid the outstanding balance of the note receivable. During the year ended September 30, 2023, we advanced monies to affiliates under note receivable – related parties of approximately $1,921,000 and acquired intangible asset of approximately $42,000, offset by repayments from related parties on the outstanding balance of the notes receivable of approximately $853,000.

Financing activities

Net cash flow provided by financing activities was $3,000,403 for the year ended September 30, 2024, as compared to $418,316 for the year ended September 30, 2023. During the year ended September 30, 2024, we received cash in relation to reverse recapitalization of approximately $150,000, cash in relation to proceeds from loan payable – related parties of approximately $2,094,000, cash in relation to proceeds from issuance of convertible debt and non-convertible debt of approximately $812,000 and $78,000, respectively, offset by repayments of loan payable – related parties of approximately $134,000. During the year ended September 30, 2023, we received proceeds from loan payable - related parties of approximately $418,000.

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 Annual Report on Form 10-K 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 32. Summary of Significant Accounting Policies of the Notes to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K 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.

~~Acquired intangible assets~~51

~~We determined that intangible~~Derivative assets represent critical accounting estimates, as they involve significant judgment, estimates, and assumptions and to the extent that our estimates and assumptions materially change or if actual circumstances differ from those in the assumptions, our financial ~~statements could be materially impacted.~~instruments

~~Acquired~~The ~~intangible~~Company ~~assets are~~accounts ~~initially valued at fair value using generally accepted valuation methods appropriate~~ for ~~the~~derivative instruments ~~type~~in ofaccordance ~~intangible asset. Intangible assets~~ with ~~definite~~ASC ~~lives~~815, ~~are~~Derivatives ~~amortized over their estimated useful lives~~ and ~~are~~Hedging ~~reviewed~~(“ASC ~~for impairment if indicators of impairment arise~~815”). ~~Intangible~~Changes ~~assets~~in ~~assessed as having indefinite lives are not amortized, but are assessed for indicators that~~ the ~~useful~~fair ~~life~~value ~~is no longer indefinite or for indicators~~ of ~~impairment~~derivative ~~each period. Indicators we review, as applicable, include whether there has been~~instruments ~~a significant adverse change in the extent or manner in which our assets~~ are ~~being~~recognized ~~used, a significant adverse change~~ in ~~legal factors affecting our assets, customer attrition, and/or a cash flow loss. Due to~~ the ~~dynamic~~consolidated ~~nature~~statement of ~~our~~operations. ~~business~~The ~~and~~Company ~~the~~does ~~regulatory environment in which we operate, it is~~ not ~~practicable~~use toderivative ~~model~~instruments ~~sensitivity of the valuation of these assets~~ to ~~these~~hedge ~~factors.~~exposures ~~Each reporting period, we evaluate the estimated remaining useful life of our intangible assets and whether events or changes in circumstances warrant a revision~~ to ~~the remaining period of amortization. We did not identify indicators of impairment of our intangible assets during the year ended September~~cash 30flow, ~~2024. We identified indicators of impairment of our acquired intangible assets during the year ended September 30~~market, ~~2023~~or ~~and~~foreign ~~recorded an~~currency impairment loss for $5,703,539, the amount the carrying value of the associated acquired intangible assets exceeded the estimated undiscounted cash flows associated with the respective acquired intangible assetsrisk.

~~Investments~~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.

WeAn ~~hold~~evaluation ~~two~~of ~~investments~~specifically inidentified ~~privately~~conditions ~~held~~is ~~company~~made into ~~the~~determine ~~form~~whether ofthe ~~equity securities without readily determinable~~ fair ~~values,~~value ~~one~~ of ~~which~~the wederivative doissued ~~not~~is ~~have~~required ato ~~controlling interest~~be orclassified ~~significant~~as ~~influence~~equity inor ~~and~~as ~~one of which we do not have~~ a ~~controlling interest but we do have significant influence~~derivative liability. ~~The investment~~Changes ~~where we do not hold a controlling interest and do not have significant influence~~ in isthe ~~accounted~~estimated ~~for~~fair ~~under~~value ~~the~~of ~~measurement alternative method (“~~the ~~measurement~~liability-classified ~~alternative”)~~derivative ~~and~~financial instruments are ~~measured~~recognized atas ~~cost,~~a ~~less impairment, subject to upward and downward~~non-cash ~~adjustments~~gain ~~resulting from observable price changes for identical~~ or ~~similar~~loss ~~investments~~on of the ~~same~~accompanying ~~issuer~~consolidated ~~(“pricing~~statements ~~adjustments”). The investment where we do not hold a controlling interest and do have significant influence in is measured at cost and adjusted for our share~~ of ~~operating~~operations ~~results, capital contributions~~ and ~~distributions~~comprehensive ~~(referred to as the equity method)~~loss.

56Stock purchase warrants

WeThe ~~determined~~Company ~~that~~accounts ~~valuation~~for stock purchase ofwarrants ~~privately~~as either equity-~~held~~classified ~~strategic~~or ~~investments~~liability-classified ~~represents~~instruments abased ~~critical~~on ~~accounting~~an ~~estimate~~assessment ~~because~~of ~~impairment~~the ~~evaluations~~warrant’s specific terms and ~~pricing~~applicable ~~adjustments involve~~authoritative ~~significant~~guidance ~~judgment~~in ASC 480, ~~estimates~~Distinguishing liabilities from equity (“ASC 480”), and ASC ~~assumptions~~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 ~~extent~~Company’s ~~that~~own ~~these~~common ~~estimates~~shares and ~~assumptions~~whether ~~change~~the holders ~~materially~~could orpotentially require “net cash settlement” in a circumstance outside of the Company’s control, among other ifconditions ~~actual~~for ~~circumstances~~equity ~~differ~~classification. ~~from~~This ~~those~~assessment, inwhich requires the ~~assumptions~~use of professional judgment, ~~our~~is ~~financial~~conducted ~~statements~~at ~~could~~the betime ~~materially~~of ~~impacted~~issuance, modification, and as of each subsequent quarterly period end date while the stock purchase warrants are outstanding.

~~Pricing~~For ~~adjustments: Pricing~~issued ~~adjustments~~or ~~require~~modified ~~quantitative~~stock ~~assessments~~purchase warrants ofthat ~~the~~meet ~~fair~~all ~~value~~ of ~~our~~the ~~strategic~~criteria ~~investments,~~for ~~which~~equity ~~may~~classification, ~~require~~ the ~~use~~stock ofpurchase ~~unobservable inputs.~~warrants ~~Pricing adjustments~~ are ~~determined~~required byto ~~using~~be ~~various~~recorded ~~valuation~~as ~~methodologies~~a ~~and~~component of ~~involve~~additional ~~the~~paid-in ~~use~~capital ofat ~~estimates using~~ the ~~best~~time ~~information available,~~of ~~which may include cash flow projections or other available market data~~issuance.

~~Impairment:~~For ~~Privately-held strategic~~issued ~~investments~~or ~~are~~modified ~~evaluated~~stock ~~quarterly for impairment. Our qualitative analysis includes a review of indicators such as: operating~~purchase ~~results~~warrants ~~when~~that ~~available,~~do ~~business~~not ~~prospects~~meet ofall the ~~investees,~~criteria ~~changes~~for inequity ~~the regulatory and macroeconomic environment~~classification, ~~observable price changes in similar transactions, and general market conditions of~~ the ~~geographical~~stock ~~area~~purchase orwarrants ~~industry~~are inrequired ~~which~~to ~~our~~be ~~investees~~recorded ~~operate.~~at Iftheir ~~indicators~~initial offair ~~impairment~~value ~~exist,~~on ~~we prepare quantitative measurements of~~ the ~~fair~~date ~~value~~ of ~~our equity investments using an undiscounted cash flow model that uses unobservable inputs including expected volatility~~issuance, ~~expected time to liquidity, adjustments for other company-specific developments,~~ and ~~the~~each ~~rights~~balance ~~and~~sheet ~~obligations~~date ~~of the securities we hold~~thereafter. ~~When~~Changes ~~the~~in ~~quantitative remeasurements of fair value indicate an impairment exists, we write down~~ the ~~investment~~estimated ~~to its current~~ fair value. ~~We identified indicators~~ of ~~impairment~~the ~~of our investments during~~liability ~~the~~classified ~~years~~stock ~~ended~~purchase ~~September~~warrants ~~30,~~are ~~2024~~recognized ~~and~~as ~~2023~~a ~~and~~non-cash ~~recorded~~gain anor ~~impairment~~ loss ofon ~~$391,217 and $6,210,783, respectively. The impairment loss recognized reduced~~ the ~~carrying~~accompanying ~~value~~consolidated ofstatements ~~all investments to zero as~~ of ~~September~~operations and ~~30,~~comprehensive ~~2024~~loss.

~~Revenue~~The ~~Recognition~~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.

We recognize revenue using the following five steps: 1) identification of a contract with a customer; 2) identification of the performance obligation(s) in the contract; 3) determination of the transaction price; 4) allocation of the transaction price to the performance obligation(s) in the contract; and 5) recognition of revenue when, or as, the performance obligation(s) are satisfied. The Company’s revenues are derived primarily from two sources: general support services and financial services. Thus, the Company disaggregates the revenue earned into these two segments. For additional segment disclosures, refer to Note 19 of our consolidated financial statements. We maintain written agreements that sets out the terms of the relationship, including payment terms.52

~~For general support services,~~Extinguishment ~~the Company generates revenue by providing general support services to an affiliate, which include operational reporting~~ and ~~technical support~~Modification infrastructure, website hosting and marketing solutions, accounting maintenance, risk monitoring services, new account processing and customer care and continued support. Our written agreement for general support services is in the form of aDebt written general services agreement (“GSA”), which specifies minimum monthly payments. We determined our general support services contain multiple performance obligations that are combined into one unit of accounting that is satisfied over time and ~~recognizes~~Related ~~the associated general support services revenue as services are rendered.~~Instruments

~~For~~The ~~financial services, the~~ Company ~~generates~~accounts ~~revenue by providing payment processing services, often involving exchanging one fiat currency to another or to a digital asset as part of the transaction. Our written agreement~~ for ~~financial services is in~~ the ~~form of a written service agreement that outlines~~extinguishment ~~the basis and flow~~ of ~~the~~debt ~~various~~in ~~payment~~accordance ~~services~~with weASC ~~provide. The service agreement states that a transaction agreement~~470, ~~which~~Debt. ~~sets~~An ~~out the~~extinguishment ~~services~~of todebt beoccurs ~~provided~~when at the ~~transaction~~Company ~~level, detailing all transaction fees and payment settlement information,~~ is tolegally bereleased ~~issued to~~from ~~the~~being ~~client for each instance where~~ the ~~details~~primary obligor ofunder ~~an over-~~the~~-counter~~ ~~trade~~liability, toincluding bethrough ~~executed~~repayment, ~~during the conversion/payment~~ settlement ~~process~~, ~~are~~or ~~confirmed by both parties. We determined our performance obligation is satisfied at~~ a ~~point~~modification in time as our payment services are delivered for at an individual transaction level, customer contracts are open ended, containing no termination penalty and the pricing for each transaction is set for each individual transaction based on the price and quantity of ~~the~~terms ~~fiat or digital asset~~ that is ~~converted~~considered substantial.

57Upon 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.

InThe ~~connection~~Company ~~with~~evaluates ~~our analysis~~modifications of ~~principal~~debt vsinstruments ~~agent~~to ~~considerations,~~determine wewhether ~~evaluated~~such ~~the~~modifications ~~specified~~should ~~services~~be ~~that~~accounted wefor ~~provide~~as ~~based~~a ~~on the~~modification ~~terms~~or ofan ~~our~~extinguishment. ~~written~~If ~~agreements~~the ~~with~~terms of ~~customers~~the ~~and~~modified ~~considered~~debt ~~whether~~are wesubstantially ~~control~~different from the ~~services~~original ~~before~~terms, ~~they~~including ~~are~~based ~~provided~~on toa ~~the~~quantitative ~~customer~~assessment, ~~including~~ the ~~three~~transaction is ~~indicators~~accounted offor ~~control.~~as ~~Based~~an ~~upon~~extinguishment ~~this~~of ~~analysis~~the ~~and~~original ~~our~~debt ~~specific facts~~ and ~~circumstances,~~the weissuance ~~concluded~~of ~~that~~new ~~we are~~debt.

●In ~~the~~transactions ~~principal~~where ~~for~~debt ~~our~~is ~~general~~settled through ~~support~~the ~~services~~issuance ~~because~~of weequity ~~are contractually obligated to provide the fulfillment software~~instruments, ~~technology~~warrants, ~~customer~~or ~~sales~~other ~~and~~derivative ~~marketing~~instruments, ~~and~~the ~~risk~~Company ~~management~~evaluates ~~technology~~whether ~~hardware~~such ~~and~~transactions represent ~~software~~an ~~solutions~~extinguishment ~~package~~of todebt. ~~the~~The ~~customer~~fair ~~and~~value ~~through a shareholder’s ownership~~ of the ~~third~~instruments ~~party~~issued ~~contracted~~is used to ~~perform~~determine the ~~general~~reacquisition ~~support services~~price, ~~controls~~and ~~the~~any ~~services~~resulting gain ofor ~~its~~loss ~~supplier.~~is Werecognized ~~set~~in the ~~price~~consolidated statement of ~~the general support services through an executed contract with the customer and~~operations.

● the agent for our financial services because we do not control the fiat currency or digital asset being provided before it is transferred to the customer or customer’s beneficiary, does not have inventory risk related to the fiat currency or digital asset, and is not responsible for the fulfillment of the fiat currency or digital asset. The price for the fiat currency or digital asset as the price is a market rate established by users of the platform, accordingly we do not set the price for the fiat currency or digital asset that is being exchanged.Stock-based compensation

~~Therefore,~~The Company measures and recognizes wethe ~~report~~compensation ~~revenue~~expense for all equity-based payments to employees and nonemployees based on atheir ~~gross~~estimated ~~basis~~fair ~~inclusive~~values in accordance with ASC 718, “Compensation- Stock Compensation”. Share-based payments including grants of ~~all~~stock ~~supplier~~options ~~costs~~are ~~for~~recognized ~~our~~in the ~~general~~statement ~~support~~of ~~services~~comprehensive ~~and~~loss onas 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 ~~basis~~forfeitures ~~for~~as ~~our~~they occur, applying the accelerated vesting method, over the requisite service period or over the implicit service ~~financial~~period ~~services~~when a performance condition affects the vesting, and it is considered probable that the performance condition will be achieved.

Stock-based Compensation

We account for share-based payments that involve the issuance of shares of our common stock to employees and nonemployees and meet the criteria for share-based awards as stock-based compensation expense based on the grant-date fair value of the award. The Company has elected to recognize the adjustment to stock-based compensation expense in the period in which forfeitures occur. We recognize compensation expense for awards with only service conditions on a straight-line basis over the requisite service period for the entire award.

If factors change, and we utilize different assumptions including the probability of achieving performance conditions, share-based compensation cost on future award grants may differ significantly from share-based compensation cost recognized on past award grants. If there are any modifications or cancellations of the underlying unvested securities, we may be required to accelerate any remaining unearned share-based compensation cost or incur incremental cost. Share-based compensation cost affects our compensation and benefits expenses.

Warrants

Classification: The Company determines the accounting classification of warrants it issues as either liability or equity classified by first assessing whether the warrants meet liability classification in accordance with ASC 480-10, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (“ASC 480”), then in accordance with ASC 815-40 (“ASC 815”), Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock. Under ASC 480, warrants are considered liability classified if the warrants are mandatorily redeemable, obligate the Company to settle the warrants or the underlying shares by paying cash or other assets, or warrants that must or may require settlement by issuing variable number of shares. If warrants do not meet liability classification under ASC 480, the Company assesses the requirements under ASC 815, which states that contracts that require or may require the issuer to settle the contract for cash are liabilities recorded at fair value, irrespective of the likelihood of the transaction occurring that triggers the net cash settlement feature. If the warrants do not require liability classification under ASC 815, and in order to conclude equity classification, the Company also assesses whether the warrants are indexed to its Common Stock and whether the warrants are classified as equity under ASC 815 or other applicable GAAP. After all relevant assessments, the Company concludes whether the warrants are classified as liability or equity. Liability classified warrants require fair value accounting at issuance and subsequent to initial issuance with all changes in fair value after the issuance date recorded in the statements of operations. Equity classified warrants only require fair value accounting at issuance with no changes recognized subsequent to the issuance date.

Valuation: The fair value of our equity classified stock purchase warrants are valued utilizing Level 3 inputs. using a Black-Scholes-Merton option valuation model. The fair value of an award is affected by our stock price on the date of grant as well as other assumptions, including the estimated volatility of our stock price over the term of the stock purchase warrant and the estimated period of time that we expect third parties to hold the stock purchase warrants. The risk-free interest rate assumption we use is based upon United States Treasury interest rates appropriate for the expected life of the stock purchase warrant. We use the historical volatility of our common stock in order to estimate future stock price trends. We expect third parties to hold their stock purchase warrants for the contractual term as we do not have any history to support a shorter term and do not anticipate stock purchase warrants to be exercised prior to the end of the term. Our expected dividend rate is zero since we do not currently pay cash dividends on our common stock and do not anticipate doing so in the foreseeable future. The aforementioned inputs entered into the option valuation model we use to fair value our stock purchase warrants are subjective estimates and changes to these estimates will cause the fair value of our stock purchase warrants and related debt issuance discount we recognize to vary.

Income taxes

We determined that income taxes involve critical accounting estimates because management makes significant estimates, assumptions, and judgments to determine our provision for income taxes, deferred tax assets and liabilities, and any valuation allowance recorded against deferred tax assets, and to the extent that our estimates and assumptions materially change, or if actual circumstances differ materially from those in the assumptions, our financial statements could be materially impacted.

We utilize the asset and liability method for computing our income tax provision. Deferred tax assets and liabilities reflect the expected future consequences of temporary differences between the financial reporting and tax bases of assets and liabilities as well as operating loss, capital loss, and tax credit carryforwards, using enacted tax rates. We assess the likelihood that our deferred tax assets will be recovered from future taxable income and, to the extent we believe that recovery is not likely, we establish a valuation allowance. Assessing the need for a valuation allowance requires a great deal of judgement and we consider all available evidence, both positive and negative, to determine whether it is more likely than not that our deferred tax assets are recoverable. We evaluate all available evidence including, but not limited to, history of earnings and losses, forecasts of future taxable income, and the weight of evidence that can be objectively verified. See Note 16. Income taxes of the Notes to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for details of changes in our valuation allowance for the years ended September 30, 2024 and 2023.

We recognize the tax benefit from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. Interest and penalties related to unrecognized tax benefits are recognized within provision for income taxes. See Note 16 - Income taxes of the Notes to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for details of changes in unrecognized tax benefits for the years ended December 31, 2023, 2022, and 2021.

For U.S. federal tax purposes, digital asset transactions are treated on the same tax principles as property transactions. We recognize a gain or loss when digital assets are exchanged for other property, in the amount of the difference between the fair market value of the property received and the tax basis of the exchanged digital assets. Receipts of digital assets in exchange for goods or services are included in taxable income at the fair market value on the date of receipt.

Legal and other contingencies

We are subject to various legal proceedings and claims that arise in the ordinary course of business, the outcomes of which are inherently uncertain, and such uncertainty may be enhanced due to the industry in which we operate. We record a liability when it is probable that a loss has been incurred and the amount is reasonably estimable, the determination of which requires significant judgment. In addition, we record recoveries of these losses when it is probable that they will be collected. These estimates are highly sensitive to change and involve variables that are not completely within our control nor practicable to model, including decisions made by regulators and settlement negotiations. Resolution of legal and other contingencies in a manner inconsistent with management’s expectations could have a material impact on our financial condition and results of operations.

Recently Issued Accounting Pronouncements

For information about recently issued accounting standards, refer to Note 32 to our Consolidated Financial Statements appearing elsewhere in this report.

~~Foreign Currency Risk~~53

~~Foreign~~Item 8. ~~currency~~Financial ~~transaction~~Statements ~~risk~~and Supplementary Data

~~Revenues,~~T3 ~~expenses,~~DEFENSE ~~and financial results of our foreign subsidiaries are recorded in the functional currency of these subsidiaries~~INC. Our foreign currency exposure is primarily related to transactions denominated in British Pounds attributable to cash, customer custodial funds and customer custodial cash liabilities and intercompany transactions where the transaction currency is different from a subsidiary’s functional currency. Changes in foreign exchange rates, and in particular a weakening of foreign currencies relative to the U.S. dollar may negatively affect our results of operations as expressed in U.S. dollars. We have experienced and will continue to experience fluctuations in our results of operations as a result of gains or losses on the settlement and the remeasurement of monetary assets and liabilities denominated in foreign currencies that are not the functional currency of the respective entity.

~~If an adverse 10% foreign currency exchange rate change was applied to the largest foreign currency exposure~~ (~~e.g.~~FORMERLY ~~British~~“NUKKLEUS Pound) or to all foreign currency exposures in aggregate, of monetary assets, liabilities, and commitments denominated in currencies other than its functional currency as of September 30, 2024 and 2023, it would not have a material impact on our financial resultsINC.”)

~~From~~CONSOLIDATED ~~time~~FINANCIAL to time, we may enter into derivatives or other financial instruments in an attempt to hedge our exposure to foreign currency exchange risk. It is difficult to predict the impact hedging activities would have on our results of operations. Additionally, the volatility of exchange rates depends on many factors that we cannot forecast with reliable accuracy. Our international operations increase our exposure to exchange rate fluctuations and, as a result, such fluctuations could have a material impact on our future results of operations and cash flows.STATEMENTS

~~Foreign~~AS ~~currency~~OF ~~translation~~DECEMBER ~~risk~~31, 2025

Fluctuations in functional currencies from our net investment in international subsidiaries expose us to foreign currency translation risk, where changes in foreign currency exchange rates may adversely affect our results of operations upon translation into U.S. dollars. See the consolidated statements of comprehensive income (loss) in Part II, Item 8 of this Annual Report on Form 10F-K for translation adjustments for the years ended September 30, 2024 and 2023. As of September 30, 2024 and 2023, a 10% increase or decrease in foreign currency exchange rates used in translating the financial statements of subsidiaries with functional currencies other than our reporting currency would not have a material impact on our financial results.1

~~Item~~T3 7ADEFENSE INC. ~~Quantitative and Qualitative Disclosures about Market Risk~~

WeCONSOLIDATED ~~are~~FINANCIAL ~~a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.~~STATEMENTS

60AS OF DECEMBER 31, 2025

~~Item~~TABLE 8.OF ~~Financial Statements and Supplementary Data.~~CONTENTS

NUKKLEUS INC. AND SUBSIDIARIES

		Page

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (Firm Name: Somekh Chaikin / PCAOB ID No. 1057/ Location: Tel Aviv, Israel)		F-3
Report of Independent Registered Public Accounting Firm – GreenGrowth CPAs (PCAOB ID 6580)		F-4
CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Balance Sheets as of December 31, 2025 and December 31, 2024		F-6
Consolidated Statements of Comprehensive Loss for the years ended December 31, 2025 and 2024		F-9
Statements of Changes in Stockholders’ Equity for the years ended December 31, 2025 and 2024		F-10
Consolidated Statements of Cash Flows for the years ended December 31, 2025 and 2024		F-13 – F-15
Notes to Consolidated Financial Statements		F-16 – F-62

~~CONSOLIDATED FINANCIAL STATEMENTS~~F-2

~~September~~Report of ~~30,~~Independent ~~2024~~Registered ~~and~~Public ~~2023~~Accounting Firm

~~F-1~~To the Stockholders and Board of Directors T3 Defense, Inc.:

~~NUKKLEUS~~Opinion ~~INC.~~on ~~AND~~the ~~SUBSIDIARIES~~Consolidated Financial Statements

~~INDEX~~We TOhave ~~CONSOLIDATED~~audited ~~FINANCIAL~~the ~~STATEMENTS~~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.

~~September~~Basis ~~30,~~for ~~2024 and 2023~~Opinion

~~CONTENTS~~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.

Report of Independent Registered Public Accounting Firm – GreenGrowth CPAs (PCAOB ID 6580)	F-3
Consolidated Financial Statements:
Consolidated Balance Sheets - As of September 30, 2024 and 2023	F-4
Consolidated Statements of Operations and Comprehensive Loss - For the Years Ended September 30, 2024 and 2023	F-5
Consolidated Statements of Changes in Stockholders’ Deficit - For the Years Ended September 30, 2024 and 2023	F-6
Consolidated Statements of Cash Flows – For the Years Ended September 30, 2024 and 2023	F-7
Notes to Consolidated Financial Statements	F-8

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.

~~F-2~~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.

~~Report~~Somekh ~~of Independent Registered Public Accounting Firm~~Chaikin

ToMember ~~the~~Firm ~~Board~~ of ~~Directors~~KPMG ~~and Shareholders~~International

ofWe ~~Nukkleus,~~have ~~Inc~~served as the Company’s auditor since 2026.

~~Opinion~~Tel onAviv, ~~the~~Israel April ~~Financial~~9, ~~Statements~~2026

We have audited the accompanying consolidated balance sheet of Nukkleus, Inc. (the Company) as of September 30, 2024 and 2023 and the related consolidated statements of operations and comprehensive loss, consolidated statement of changes in stockholders’ equity (deficit), and consolidated statement of cash flows for the 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 September 30, 2024 and 2023, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.F-3

~~Going~~Report ~~concern~~of Independent Registered Public Accounting Firm

~~The~~To ~~accompanying financial statements have been prepared assuming that~~ the ~~Company~~Board ~~will~~of ~~continue~~Directors ~~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.Shareholders

~~Basis~~of ~~for~~Nukkleus, ~~Opinion~~Inc.

~~These~~Opinion ~~financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion~~ on the ~~Company’s~~Financial 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.Statements

We ~~conducted~~have ~~our~~audited ~~audits~~the inaccompanying ~~accordance with the~~consolidated ~~standards~~balance sheets of ~~the~~Nukkleus, ~~PCAOB~~Inc. ~~Those~~(the ~~standards~~Company) ~~require~~as ~~that~~of weDecember ~~plan~~31, 2024 and ~~perform~~September ~~the~~30, ~~audit~~2024 toand ~~obtain~~the ~~reasonable~~related ~~assurance~~consolidated ~~about~~statements of ~~whether~~comprehensive ~~the~~income ~~financial statements~~(loss), ~~are~~consolidated ~~free~~statements of ~~material~~changes ~~misstatement~~in stockholders’ deficit, ~~whether~~and ~~due~~consolidated tostatements ~~error~~of orcash flows ~~fraud.~~for ~~The~~the ~~Company~~3 ismonths ~~not~~and ~~required~~year tothen ~~have~~ended, ~~nor~~and ~~were~~the werelated ~~engaged to~~notes ~~perform,~~(collectively anreferred ~~audit~~to ofas ~~its~~the ~~internal~~financial ~~control~~statements). ~~over~~In our opinion, the financial ~~reporting.~~statements Aspresent ~~part~~fairly, ofin ~~our~~all ~~audits~~material respects, wethe ~~are~~financial ~~required~~position toof ~~obtain~~the anCompany ~~understanding~~ as of ~~internal~~December ~~control~~31, ~~over~~2024 ~~financial~~and ~~reporting~~September 30, ~~but~~2024, ~~not~~and ~~for~~ the ~~purpose~~results of ~~expressing~~its anoperations ~~opinion~~and onits ~~the~~cash ~~effectiveness~~flows offor the ~~Company’s internal~~3 ~~control~~months ~~over~~and ~~financial~~year ~~reporting.~~then ~~Accordingly,~~ended wein ~~express~~conformity nowith ~~such~~accounting ~~opinion~~principles generally accepted in the United States of America.

~~Our~~Going 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.concern

WeThe accompanying financial statements have ~~served~~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 ~~auditor~~plans ~~since~~in ~~2023~~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.

~~Los~~Basis ~~Angeles,~~for ~~California~~Opinion

~~February~~These ~~10,~~financial ~~2025~~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. IDThose ~~Number~~standards ~~6580~~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.

~~F-3~~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.

~~NUKKLEUS~~We ~~INC.~~have ~~AND~~served ~~SUBSIDIARIES~~as the Company’s auditor from 2023 to 2025.

~~CONSOLIDATED~~Los ~~BALANCE~~Angeles, ~~SHEETS~~California

	As of September 30,
	2024			2023
ASSETS
CURRENT ASSETS:
Cash	$	3,678		$	19,318
Customer custodial funds		31,781			672,501
Customer digital currency assets		615,361			—
Digital assets		396			1,973
Due from affiliates		35,045			2,039,274
Notes receivable - related parties, net		—			162,820
Other current assets		279,448			32,522
TOTAL CURRENT ASSETS		965,709			2,928,408
NON-CURRENT ASSETS:
Investment		—			391,217
Intangible assets, net		19,290			33,000
TOTAL NON-CURRENT ASSETS		19,290			424,217
TOTAL ASSETS	$	984,999		$	3,352,625
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES:
Accounts payable	$	448,307		$	138,666
Customer custodial cash liabilities		827,589			1,443,011
Customer digital currency liabilities		23,605			—
Convertible notes payable, net		634,009			—
Note payable, net		54,198			—
Due to affiliates		579,524			6,808,749
Loans payable - related parties		2,347,809			—
Interest payable – related parties		169,052			—
Accrued expenses and other current liabilities		1,985,978			733,039
TOTAL CURRENT LIABILITIES		7,070,071			9,123,465
NON-CURRENT LIABILITIES:
Loans payable - related parties, net of current portion		966,056			420,619
Interest payable - related parties, net of current portion		46,585			1,771
TOTAL NON-CURRENT LIABILITIES		1,012,641			422,390
TOTAL LIABILITIES		8,082,712			9,545,855
COMMITMENTS AND CONTINGENCIES - (Note 18)
STOCKHOLDERS’ DEFICIT (1):
Preferred stock ($0.0001 par value; 15,000,000 shares authorized; 0 share issued and outstanding at September 30, 2024 and 2023)		—			—
—Common stock ($0.0001 par value; 150,000,000 and 40,000,000 shares authorized; 2,098,999 and 1,259,333 shares issued and outstanding at September 30, 2024 and 2023, respectively)		209			126
Additional paid-in capital		33,334,725			25,543,929
Accumulated deficit		(40,287,764	)		(31,769,244	)
Accumulated other comprehensive income		(144,883	)		31,959
TOTAL STOCKHOLDERS’ DEFICIT		(7,097,713	)		(6,193,230	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	984,999		$	3,352,625

May 8, 2025

~~(1)~~PCAOB ~~Retroactively~~ID ~~restated~~Number ~~for the reverse recapitalization as described in Note 1 and Note 4 and the one-for-eight reverse stock split described in Note 14.~~6580

~~The accompanying notes to consolidated financial statements are an integral part of these statements.~~F-4

~~F-4~~Report of Independent Registered Public Accounting Firm – GreenGrowth CPAs (PCAOB ID 6580)

~~NUKKLEUS INC. AND SUBSIDIARIES~~F-5

~~CONSOLIDATED~~T3 ~~STATEMENTS~~DEFENSE ~~OF OPERATIONS AND COMPREHENSIVE LOSS~~INC.

	For the Year Ended September 30,
	2024			2023
REVENUES
Revenue - general support services - related party	$	4,800,000		$	19,200,000
Revenue - financial services		1,113,461			2,097,642
Total revenues		5,913,461			21,297,642
COSTS OF REVENUES
Cost of revenue - general support services - related party		4,650,000			18,775,000
Cost of revenue - financial services		264,945			2,865,783
Total costs of revenues		4,914,945			21,640,783
GROSS PROFIT (LOSS)
Gross profit - general support services - related party		150,000			425,000
Gross profit (loss) - financial services		848,516			(768,141	)
Total gross profit (loss)		998,516			(343,141	)
OPERATING EXPENSES:
Advertising		44,488			55,889
Professional fees		6,734,162			2,423,773
Compensation and related benefits		958,648			822,625
Amortization of intangible assets		13,813			273,711
Bad debt expense – related parties		6,141,000			1,179,772
Other general and administrative		893,198			449,988
Impairment loss		391,217			11,914,322
Total operating expenses		15,176,526			17,120,080
LOSS FROM OPERATIONS		(14,178,010	)		(17,463,221	)
OTHER (EXPENSE) INCOME:
Interest expense		(343,333	)		—
Interest expense - related parties		(206,733	)		(1,776	)
Loss on extinguishment of vendor obligations		(288,835	)		—
Gain on extinguishment of vendor obligations		211,200			—
Gain on termination of GSS GSA – related party		6,082,962			—
Gain on extinguishment of due to affiliates		192,069			—
Other income		12,160			36,569
Total other (expense) income, net		5,659,490			34,793
NET LOSS	$	(8,518,520	)	$	(17,428,428	)
COMPREHENSIVE LOSS:
NET LOSS		(8,518,520	)		(17,428,428	)
OTHER COMPREHENSIVE (LOSS) INCOME
Unrealized foreign currency translation loss		(176,842	)		(26,260	)
COMPREHENSIVE LOSS	$	(8,695,362	)	$	(17,454,688	)
NET LOSS PER COMMON SHARE (1):
Basic and diluted	$	(4.93	)	$	(13.84	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic and diluted		1,728,144			1,259,333

CONSOLIDATED BALANCE SHEETS

(1)USD ~~Retroactively restated for the reverse recapitalization as described~~ in ~~Note~~thousands 1except ~~and~~share ~~Note 4~~ and ~~the~~per ~~one-for-eight~~share ~~reverse stock split described in Note 14.~~data)

The accompanying notes to consolidated financial statements are an integral part of these statements.

	December 31,		December 31,
	2025		2024
Assets
Current Assets
Cash and cash equivalents		2,627		6,898
Current assets of consolidated variable interest entities
Cash and cash equivalents		1,270
Other current assets		102
Restricted cash		50		-
Marketable Securities		250		-
Note receivable - related party (Note 1B)		4,500		1,000
Due from related parties (Note 18)		1,641		-
Accounts receivable, less allowance for credit losses of $27 as of December 31, 2025		506		-
Other current assets (Note 5)		224		107
Loan granted (Note 6)		2,385		-
Current assets from discontinued operations (Note 3)		-		1,089
Total Current assets		13,555		9,094

Non-Current Assets
Intangible assets (Note 7)		16		-
Operating right of use assets (Note 8)		823		-
Non-Current assets of consolidated variable interest entities				-
Cash and securities held in trust account (Note 1D)		172,779		-
Other non-current assets		36		-
Property and equipment, net		101		-
Goodwill (Note 4)		7,688		-
Other intangible asset (Note 4)		7,388		-
Non-Current assets from discontinued operations (Note 3)		-		15
Total Non-Current assets		188,831		15

Total Assets		202,386		9,109

~~F-5~~The accompanying notes are an integral part of the consolidated financial statements.

~~NUKKLEUS INC. AND SUBSIDIARIES~~F-6

~~CONSOLIDATED~~T3 ~~STATEMENTS OF~~DEFENSE ~~CHANGES IN STOCKHOLDERS’ DEFICIT (1)~~INC.

~~For~~CONSOLIDATED BALANCE ~~the Years Ended September 30, 2024 and 2023~~SHEETS

	Preferred Stock				Common Stock						Additional					Accumulated Other			Total
	Number of				Number of						Paid-in		Accumulated			Comprehensive			Shareholders’
	Shares		Amount		Shares			Amount			Capital		Deficit			Income			Deficit
Balance as of September 30, 2022		—	$	—		10,074,657		$	1,007		$	25,172,170	$	(14,340,816	)	$	58,219		$	10,890,580
Retroactive application of reverse stock split		—		—		(8,815,324	)		(881	)		881		—			—			—
Adjusted balance, beginning of period		—		—		1,259,333			126			25,173,051		(14,340,816	)		58,219			10,890,580
Stock-based compensation		—		—		—			—			370,878		—			—			370,878
Net loss		—		—		—			—			—		(17,428,428	)		—			(17,428,428	)
Foreign currency translation adjustment		—		—		—			—			—		—			(26,260	)		(26,260	)
Balance as of September 30, 2023		—	$	—		1,259,333		$	126		$	25,543,929	$	(31,769,244	)	$	31,959		$	(6,193,230	)
Stock-based compensation		—		—		—			—			229,605		—			—			229,605
Issuance of Old Nukk common stock in exchange for a receivable from Brilliant		—		—		47,533			5			1,802,210		—			—			1,802,215
Issuance of Old Nukk common stock to settle accrued expenses and other current liabilities		—		—		5,629			1			213,385		—			—			213,386
Issuance of common stock to settle accrued expenses and other current liabilities		—		—		361,532			35			1,880,152		—			—			1,880,187
Issuance of stock purchase warrants		—		—		—			—			517,702		—			—			517,702
Issuance of common stock to settle loans payable – related parties		—		—		8,767			1			270,562		—			—			270,563
Issuance of common stock to settle due to affiliates		—		—		94,710			9			2,727,051		—			—			2,727,060
Issuance of common stock in connection with reverse recapitalization		—		—		321,495			32			150,129		—			—			150,161
Net loss		—		—		—			—			—		(8,518,520	)		—			(8,518,520	)
Foreign currency translation adjustment		—		—		—			—			—		—			(176,842	)		(176,842	)
Balance as of September 30, 2024		—	$	—		2,098,999		$	209		$	33,334,725	$	(40,287,764	)	$	(144,883	)	$	(7,097,713	)

(USD in thousands except share and per share data)

(1) Retroactively restated for the reverse recapitalization as described in Note 1 and Note 4 and the one-for-eight reverse stock split described in Note 14.

	December 31,			December 31,
	2025			2024
Liabilities and Shareholders’ Deficit
Current Liabilities
Short term loan		12			-
Accounts payable		124			70
Operating lease liability, current portion (Note 8)		504			-
Convertible notes payable, net (Note 9)		-			706
Note payable, net		-			64
Due to related parties		255			42
Other current liabilities (Note 10)		3,117			1,167
Other current liabilities of consolidated variable interest entities		104
Loans payable - former related parties, current (Note 11)		842			619
Stock purchase warrant liabilities		24,521			164,771
Deferred considerations (Note 4)		14,067			-
Derivative liability		-			848
Current liabilities from discontinued operations (Note 3)		-			3,163
Total current liabilities		43,546			171,450

Non-Current liabilities
Non-current operating lease liabilities (Note 8)		143			-
Loan payable - former related parties, net of current portion (Note 11)		850			992
Deferred tax liability (Note 4)		647			-
Non-current liabilities from discontinued operations (Note 3)		-			17
Total Non-Current liabilities		1,640			1,009

Total Liabilities		45,186			172,459

Noncontrolling interests Subject to Possible Redemption (Note 1D)		172,779			-

Stockholders’ Deficit (Note 12)
Preferred stock ($0.0001 par value; 15,000,000 shares authorized; 0 and 0 shares issued and outstanding at December 31, 2025 and December 31, 2024, respectively)		-			-
Common stock ($0.0001 par value; 150,000,000 shares authorized; 19,025,767 and 4,930,531 shares issued and outstanding at December 31, 2025 and December 31, 2024, respectively)		2			*
Additional paid-in capital		102,737			37,760
Accumulated other comprehensive (loss)		-			(34	)
Accumulated deficit		(122,527	)		(201,076	)
Total Company’s stockholders’ deficit		(19,788	)		(163,350	)
Non-controlling interest		4,209			-
Total stockholders’ deficit		(15,579	)		(163,350	)
Total liabilities and stockholders’ deficit		202,386			9,109

~~The~~(*) ~~accompanying~~Less ~~notes~~than to$1 ~~consolidated financial statements are an integral part of these statements~~thousand.

~~F-6~~The accompanying notes are an integral part of the consolidated financial statements.

~~NUKKLEUS INC. AND SUBSIDIARIES~~F-7

~~CONSOLIDATED~~T3 ~~STATEMENTS~~DEFENSE ~~OF CASH FLOWS~~INC.

	For the Years Ended September 30,
	2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(8,518,520	)	$	(17,428,428	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt discount		315,834			—
Amortization of intangible assets		13,813			2,380,115
Stock-based compensation		229,605			370,878
Loss on extinguishment of vendor obligations		288,835			—
Gain on extinguishment of vendor obligations		(211,200	)		—
Gain on extinguishment of due to affiliates		(192,069	)		—
Provision for bad debt – related parties		6,141,000			1,179,772
Gain on termination of GSS GSA – related party		(6,082,962	)		—
Unrealized foreign currency exchange loss (gain)		—			3,221
Impairment loss		391,217			11,922,272
Changes in operating assets and liabilities:
Customer digital currency assets		(582,760	)		273,337
Other current assets		(247,094	)		(26,393	)
Digital assets		1,675			70,913
Due from affiliates		(4,142,922	)		(1,338,432	)
Accounts payable		280,460			82,366
Customer custodial cash liabilities		(715,780	)		(775,511	)
Customer digital currency liabilities		22,355			(273,337	)
Due to affiliates		3,939,597			2,261,395
Interest payable - related parties		205,296			1,776
Accrued expenses and other current liabilities		5,045,177			63,674
NET CASH USED IN OPERATING ACTIVITIES		(3,818,443	)		(1,232,382	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Issuance of notes receivable – related parties		—			(1,920,754	)
Payments received on notes receivable – related parties		132,826			852,651
Purchase of intangible asset		—			(41,833	)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		132,826			(1,109,936	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Business Combination, net of issuance costs		150,161			—
Proceeds from issuance of note payable		50,000			—
Repayment on note payable		(50,000	)		—
Proceeds from issuance of loans payable - related parties		2,093,817			418,316
Repayments on loans payable - related parties		(133,650	)		—
Proceeds from issuance of convertible notes payable and stock purchase warrants, net of issuance costs		812,075			—
Proceeds from issuance of note payable and stock purchase warrants		78,000			—
NET CASH PROVIDED BY FINANCING ACTIVITIES		3,000,403			418,316
EFFECT OF EXCHANGE RATE ON CASH		28,854			231,404
NET DECREASE IN CASH		(656,360	)		(1,692,598	)
Cash - beginning of year		691,819			2,384,417
Cash - end of year	$	35,459		$	691,819
CASH CONSISTED OF THE FOLLOWING:
Cash		3,678			19,318
Customer custodial funds		31,781			672,501
Total cash	$	35,459		$	691,819
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest	$	1,436		$	—
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Issuance of common stock to settle loans payable – related parties and accrued and unpaid interest		613,410
Capital reduction on settlement of loans payable – related parties and accrued and unpaid interest through issuance of common stock	$	(342,847	)	$	—
Issuance of common stock to settle due to affiliates		6,627,314
Capital reduction on settlement of due to affiliates through issuance of common stock	$	(3,900,254	)	$	—
Issuance of common stock to settle accrued expenses and other current liabilities	$	1,880,187		$	—
Settlement of due to affiliates through issuance of loan payable – related parties	$	1,213,348		$	—
Settlement of accrued expenses and other current liabilities through issuance of Old Nukk common stock	$	213,386		$	—
Issuance of Old Nukk common stock to Brilliant vendors in exchange for receivable from Brilliant	$	1,802,215		$	—
Settlement of loans payable – related parties through exchange of notes receivable – related parties and accrued and unpaid interest	$	37,978		$	—
Settlement of loans payable – related parties through exchange of due from affiliates	$	11,855		$	—

CONSOLIDATED STATEMENTS OF OPERATIONS

~~The~~(USD ~~accompanying~~in ~~notes~~thousands toexcept ~~consolidated~~share ~~financial statements~~and ~~are~~per anshare ~~integral part of these statements.~~data)

F-7

	Year ended December 31			Three months ended December 31			Year ended September 30,
	2025			2024			2024

Operating expenses
Impairment loss	(4,344)			-			(391)
General and administrative expenses (Note 15)		(28,082	)		(4,525	)		(6,714	)
General and administrative expenses of consolidated variable interest entities		(174	)		-			-
Total operating expenses		(32,600	)		(4,525	)		(7,105	)

Loss from operations		(32,600	)		(4,525	)		(7,105	)

Other income (expenses)
Financial expense, net		(154	)		(439	)		(387	)
Interest income of consolidated variable interest entities		279			-			-
Loss on settlement of vendor obligations		-			(278	)		(289	)
Gain on settlement of vendor obligations		-			-			211
Loss on shares issued as commitment for ELOC agreement		(1,250	)		-			-
Gain on settlement of due to affiliates		-			-			192
Loss on debt extinguishment		(7,484	)		-			-
Penalties on late registration		(1,100	)		-			-
Change in fair value - convertible note embedded derivative		588			(625	)		-
Change in fair value - stock purchase warrant liabilities		131,766			(140,585	)		-
Day one loss of stock purchase warrants issued in connection with conversion of convertible notes		-			(663	)
Day one loss on private placement		(13,435	)		(13,533	)		-
Other income		-			18			-
Total other income (expense), net		109,210			(156,105	)		(273	)

Net income (loss) before income taxes		76,610			(160,630	)		(7,378	)
Income taxes		(9	)		-			-
Net income (loss) from continuing operation		76,601			(160,630	)		(7,378	)
Net gain (loss) from discontinued operations (Note 3)		2,030			(158	)		(1,141	)
Net income (loss)		78,631			(160,788	)		(8,519	)
Net income attributable to non-controlling interests		82			-			-
Net income attributable to the Company’s stockholders		78,549			(160,788	)		(8,519	)
Net income (loss)		78,631			(160,788	)		(8,519	)

Earnings (loss) per share from continuing operations (basic)		8.21			(51.91	)		(4.27	)
Earnings (loss) per share from discontinued operations (basic)		0.24			(0.05	)		(0.66	)
Total loss per share (basic)		8.45			(51.96	)		(4.93	)

Weighted average number of shares of Common Stock outstanding - basic (*) (Note 17)		8,364,332			3,094,253			1,728,144
								-
Earnings (loss) per share from continuing operations (diluted)		7.74			(51.91	)		(4.27	)
Earnings (loss) per share from discontinued operations (diluted)		0.22			(0.05	)		(0.66	)
Total gain per share (diluted)		7.96			(51.96	)		(4.93	)

Weighted average number of shares of Common Stock outstanding – diluted (Note 17)		9,249,992			3,094,253			1,728,144

~~NUKKLEUS~~The ~~INC.~~accompanying ~~AND~~notes are ~~SUBSIDIARIES~~an integral part of the consolidated financial statements.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~F-8

~~NOTE~~T3 1DEFENSE ~~– DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION~~INC.

~~Nukkleus~~CONSOLIDATED ~~Inc.~~STATEMENTS ~~and~~OF ~~its~~COMPREHENSIVE ~~wholly owned subsidiaries,~~INCOME are financial technology companies focused on providing software, technology solutions, customer sales and marketing, and risk management technology hardware and software solutions packages for the worldwide retail foreign exchange (~~“FX”~~LOSS) ~~trading industry and payment services from one fiat currency to another or to digital assets.~~

~~Basis of Presentation and Principles of Consolidation: On December 22, 2023~~ (~~the~~USD ~~“Closing~~in ~~Date”),~~thousands ~~Brilliant~~except ~~Acquisition~~share Corp (“Brilliant”) entered into a business combination agreement (the “Business Combination”) with each of the shareholders of Nukkleus Inc. (“Old Nukk”). Pursuant to the Business Combination, Brilliant acquired all of the issued and ~~outstanding~~per ~~shares~~share ~~of common stock from the Old Nukk shareholders. For more information on this transaction see Note 5.~~data)

On the Closing Date, and in connection with the closing of the Business Combination, Brilliant changed its name to Nukkleus Inc (the “Company”) and the Company’s common stock began trading on the NASDAQ under the ticker symbol NUKK. Old Nukk was deemed the accounting acquirer in the Business Combination based on an analysis of the criteria outlined in Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”). The determination was primarily based on Old Nukk’s shareholders prior to the Business Combination having a majority of the voting interests in the combined company, Old Nukk’s ability to exert control over the majority of the board of directors of the combined company, and given the board of directors election and retention provisions, Old Nukk’s ability to maintain control of the board of directors on a go-forward basis, Old Nukk’s senior management comprising the senior management of the combined company; and old Nukk’s operations prior to the Business Combination comprise the ongoing operations of the combined company. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Old Nukk issuing stock for the net assets of Brilliant, accompanied by a recapitalization. The net assets of Brilliant were stated at historical cost, with no goodwill or other intangible assets recorded.

	Year ended		Three months ended			Year ended
	December 31		December 31			September 30,
	2025		2024			2024
Comprehensive income (loss):
Net income		78,631		(160,788	)		(8,519	)
Other comprehensive loss from discontinued operations		34		111			(177	)
Comprehensive income (loss)		78,665		(160,677	)		(8,696	)
Comprehensive income attributable to non-controlling interests		82		-			-
Comprehensive income (loss) attributable to the Company's stockholders		78,583		(160,677	)		(8,696	)
Comprehensive income (loss)		78,665		(160,677	)		(8,696	)

~~While~~The ~~Brilliant~~accompanying ~~was the legal acquirer in the~~notes ~~Business~~are ~~Combination,~~an ~~because~~integral ~~Old~~part ~~Nukk was deemed the accounting acquirer, the historical financial statements~~ of ~~Old Nukk became~~ the ~~historical~~ ~~financial~~consolidated ~~statements of the combined company, upon consummation of the Business Combination. As a result, the~~ financial statements included in this report reflect (i) the historical operating results of Old Nukk prior to the Business Combination; (ii) the combined results of Brilliant and Old Nukk following the closing of the Business Combination; (iii) the assets and liabilities of Old Nukk at their historical cost; and (iv) the Company’s equity structure for all periods presented.

~~Effective October 24, 2024, the Company amended its amended and restated certificate of incorporation to implement a one~~F-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 40,000,000 to 150,000,000 (see Note 14).9

InT3 ~~accordance~~DEFENSE ~~with guidance applicable to these circumstances, the equity structure has been restated in all comparative periods to give effect to the number of shares of the Company’s common stock, $0~~INC.0001 par value per share, issued to Old Nukk shareholders during the Business Combination and the 2024 Reverse Stock Split. Accordingly, the disclosure of common shares and per common share data in the accompanying consolidated financial statements and related notes reflect the Business Combination and 2024 Reverse Stock Split for all periods presented.

~~The~~STATEMENTS ~~accompanying~~OF ~~consolidated~~CHANGES ~~financial~~IN ~~statements include~~STOCKHOLDERS’ the accounts of Nukkleus Inc, and its wholly owned subsidiaries. Intercompany transactions and balances have been eliminated upon consolidation. The consolidated financial statements and accompanying notes have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Any reference in these footnotes to the applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the ASC and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).DEFICIT

~~Adjustment~~(USD ofin ~~prior interim period financial statements: During the preparation of consolidated financial statements of the Company for the year ended September 30~~thousands, ~~2024, the~~except ~~Company’s~~share management identified that the treatment of losses on extinguishment of obligations owed to affiliates during the three months ended December 31, 2023 were improperly recognized as a distribution reducing accumulated deficit for transactions where the obligations were settled through the issuance of shares of the Company’s common stock. The losses on extinguishment of obligations are to be recognized as capital reductions as the Company is in an accumulated deficit position, and ~~the~~per ~~losses should be treated as~~share a return of capital given the role of a company’s shareholder. The correction of the treatment of losses on extinguishment of obligations owed to affiliates did not have an impact on the Company’s financial position for the three months ended December 31, 2023.data)

F-8

	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		-		-		4,930,531		*		37,760			(201,076	)		(34	)		-			(163,350	)
Issuance of common stock from exercise of warrants		-		-		7,185,861		1		31,918			-			-			-			31,919
Stock based compensation		-		-		3,370,000		1		18,825			-			-			-			18,826
Issuance of common stock and warrants for services performed		-		-		310,000		*		2,817			-			-			-			2,817
Issuance of common stock in relation to settlement agreement		-		-		12,500		*		157			-			-			-			157
Issuance of common stock in relation to conversion of notes		-		-		503,455		*		1,792			-			-			-			1,792
Issuance of common stock from exercise of options		-		-		85,710		*		*			-			-			-			*
Issuance of common stock in exchange for digital assets		-		-		522,710		*		4,360			-			-			-			4,360

Issuance of equity-classified warrants		-		-		-		-		7,080			-			-			-			7,080
Adjustments in relation to deconsolidation of subsidiary		-		-		-		-		-			-			213			-			213
Commitment to issue shares as penalty		-		-		-		-		300			-			-			-			300
Shares issued as commitment for ELOC agreement		-		-		-		-		1,250			-			-			-			1,250
Issuance of shares as collateral for investment		-		-		2,000,000		*		*			-			-			-			*
Issuance of shares for settlement of debt on related party		-		-		105,000		*		509			-			-			-			509
Capital contribution – SCII		-		-		-		-		882			-			-			6,108			6,990
Accretion of Noncontrolling interests Subject to Possible Redemption										(4,913	)		-			-			(1,981	)		(6,894	)
Foreign currency translation adjustments		-		-		-		-		-			-			(179	)		-			(179	)
Comprehensive loss for the year		-		-		-		-		-			78,549			-			82			78,631
BALANCE AT DECEMBER 31, 2025		-		-		19,025,767		2		102,737			(122,527	)		-			4,209			(15,579	)

~~NOTE~~(*) 2Less –than ~~Liquidity and~~$1 ~~capital resources~~thousand.

The accompanying ~~consolidated financial statements have been prepared~~notes onare aan ~~going~~integral ~~concern~~part ~~basis, which contemplates the realization~~ of ~~assets and settlement of liabilities in~~ the ~~normal~~consolidated course of business. On December 22, 2023, the Company consummated the Business Combination and raised net proceeds of $150,161 net of transaction costs and expenses. As of September 30, 2024, the Company had cash of approximately $3,700, exclusive of customer custodial funds. The Company had a working capital deficit of approximately $6,104,000 at September 30, 2024 and incurred a net loss and generated negative cash flow from operating activities of approximately $8,519,000 and $3,818,000, respectively, for the year ended September 30, 2024. These are indicators of substantial doubt as to the Company’s ability to continue as a going concern for at least one year from issuance of these financial statements. The Company’s ability to continue as a going concern is dependent upon the management of expenses and ability to obtain necessary financing to meet its obligations and pay its liabilities arising from normal business operations when they come due, and upon profitable operations.

If additional equity or debt financing is required from outside sources, the Company may not be able to raise it on terms acceptable to it or at all. If the Company is unable to raise additional capital on acceptable terms when needed, its results of operations and financial condition would be materially and adversely affected. Any such financing likely would be dilutive to existing stockholders and could result in significant financial operating covenants that would negatively impact the Company business. On December 20, 2024, the Company closed a $F-10~~.0 million private placement whereby it received $10.0 million in cash from the sale of shares of the Company’s common stock and stock purchase warrants (see Note 20).~~

~~Based~~T3 onDEFENSE the foregoing, management believes that its current financial resources, as of the date of the issuance of these financial statements, are sufficient to fund its current twelve-month operating budget, alleviating any concerns by its historical operating results and satisfying its estimated liquidity needs for the twelve months from the issuance of these financial statementsINC.

~~NOTE~~STATEMENTS ~~3 – SUMMARY~~ OF ~~SIGNIFICANT~~CHANGES ~~ACCOUNTING~~IN ~~POLICIES~~STOCKHOLDERS’ DEFICIT

~~Emerging~~(USD ~~growth company: The Company is an emerging growth company, as defined~~ in ~~the Jumpstart Our Business Startups (“JOBS”) Act. Under the JOBS Act~~thousands, ~~emerging growth~~except ~~companies~~share 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~~per ~~companies until the earlier of the date~~share ~~that it (i~~data) 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.

Use of estimates: The preparation of the financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Making estimates requires management to exercise significant judgment. Such estimates may be subject to change as more current information becomes available and accordingly the actual results could differ significantly from those estimates. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates. The Company’s most significant estimates and judgments involve valuation of share-based compensation, valuation of equity-classified stock purchase warrants, valuation of customer digital currency assets and liabilities, classification of gains and losses on settlement of related party liabilities, calculation for allowances for credit losses, the useful lives of long-lived assets, assumptions used in assessing impairment of long-lived assets, and valuation of deferred tax assets and the associated valuation allowances.

	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		-		-		2,098,999		*		33,335			(40,288	)		(145	)		(7,098	)
Rounding of post-split shares outstanding per transfer agent		-		-		57		*		-			-			-			*
Stock-based compensation		-		-		-		-		6			-			-			6
Issuance of common stock as compensation for services		-		-		847,500		*		1,364			-			-			1,364
Issuance of common stock in connection with Exit and Settlement Agreement		-		-		140,100		*		325			-			-			325
Issuance of common stock as compensation to board of directors		-		-		690,000		*		959			-			-			959
Issuance of common stock to settle accrued expenses and other current liabilities		-		-		354,660		*		760			-			-			760
Issuance of common stock, net of issuance of costs		-		-		249,263		*		478			-			-			478
Issuance of common stock to settle convertible notes payable		-		-		319,952		*		771			-			-			771
Issuance of common stock in connection with private placement and embedded derivative, net of issuance costs		-		-		230,000		*		-			-			-			*
Reclassification of stock purchase warrants from equity-classified to liability-classified		-		-		-		-		(238	)		-			-			(238	)
Foreign currency translation adjustments		-		-		-		-		-			-			111			111
Comprehensive loss for the year		-		-		-		-		-			(160,788	)					(160,788	)
BALANCE AT DECEMBER 31, 2024		-		-		4,930,531		*		37,760			(201,076	)		(34	)		(163,350	)

~~F-9~~(*) Less than $1 thousand.

~~Segment~~The ~~reporting:~~accompanying ~~ASC 280, Segment~~notes ~~Reporting~~are ~~(“ASC 280”), defines operating segments as components of~~ an ~~enterprise~~integral ~~where~~part discrete financial information is available that is evaluated regularly by the chief operating decision-maker (“CODM”) in deciding how to allocate resources and in assessing performance. The Company’s CODM is the chief executive officer, who has ultimate responsibility for the operating performance of the ~~Company~~consolidated and the allocation of resources. The CODM uses operating results as the primary measure to manage the business. The Company determined there are two operating and reportable segment based on the level at which the CODM reviews operating results, assesses performance and makes decisions regarding resource allocation. The general support services segment provides general support services to customers, including operational reporting and technical support infrastructure, website hosting and marketing solutions, accounting maintenance, risk monitoring services, new account processing and customer care and continued support and the financial services segment provides payment processing services to customers who submit requests to process a payment to a third party, often involving exchanging one fiat currency to another or to a digital asset as part of the transactionstatements.

Cash and cash equivalents: The Company considers all highly liquid instruments with a maturity date of three months or less at the time of purchase and money market accounts to be cash equivalents. The Company had no cash equivalents at September 30, 2024 and 2023. Cash and cash equivalents excludes customer legal tender, which is reported separately as customer custodial funds in the accompanying consolidated balance sheets. At September 30, 2024 and 2023, the Company’s cash balances by geographic area were as follows:F-11

Country:	September 30, 2024				September 30, 2023
United States	$	199	5.4	%	$	7,675	39.7	%
United Kingdom		3,305	89.9	%		11,469	59.4	%
Malta		174	4.7	%		174	0.9	%
Total cash	$	3,678	100	%	$	19,318	100	%

T3 DEFENSE INC.

~~Customer~~STATEMENTS ~~custodial~~OF ~~funds~~CHANGES ~~and~~IN customer custodial cash liabilities: Customer custodial funds represent restricted cash and cash equivalents maintained in segregated Company1 bank accounts that are held for the exclusive benefit of customers and deposits in transit from financial institutions. Customer custodial cash liabilities represent the obligation to return cash deposits held by customers in the fiat wallets and unsettled fiat deposits and withdrawals. Deposits in transit represent settlements from third-party payment processors and banks for customer transactions. Deposits in transit are typically received within five business days of the transaction date. The Company establishes withdrawal-based limits in order to mitigate potential losses by preventing customers from withdrawing the digital asset to an external blockchain address until the deposit settles. Deposits in transit qualify as eligible liquid assets to meet regulatory requirements to fulfill the CompanySTOCKHOLDERS’~~s direct~~ obligations under customer custodial cash liabilities. The Company restricts the use of the assets underlying the customer custodial funds to meet regulatory requirements and classifies the assets as current based on their purpose and availability to fulfill the Company’s direct obligations under custodial cash liabilities. DEFICIT

In(USD ~~accordance with regulations~~ in ~~the United Kingdom~~thousands, ~~and~~ ~~the~~except ~~terms~~share of the principal license holder the Company operates under, the Company is able to extend credit to its customers. At the time the Company’s management designates customer custodial funds held in its United Kingdom bank account to be used to extend credit, the designated amount is re-classified as cash and ~~cash~~per ~~equivalents and no longer classified as customer custodial funds on the Company’s~~share consolidated balance sheets. The remaining assets underlying the customer custodial funds remain separately classified as such on the Company’s consolidated balance sheets. The Company identifies these customer custodial funds separately from corporate funds and maintain them in separate and non-interest bearing accounts.data)

Customer digital currency assets and liabilities: At certain times, customers’ funds that are used to make payments on behalf of the customers, remain in the form of digital assets in the customers’ wallets at the digital asset trading platforms while the digital asset awaits final conversion and/or transfer to the customer’s payment final destination. These indirectly held digital assets, may consist of USDT (Stablecoin), Bitcoin, and Ethereum (collectively, “Customer digital currency assets”).

	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		-		-		1,259,333		*		25,544		(31,769	)		32		(6,193	)
Stock-based compensation		-		-		-		-		230		-			-		230
Issuance of Old Nukk common stock in exchange for a receivable from Brilliant		-		-		47,533		*		1,802		-			-		1,802
Issuance of Old Nukk common stock to settle accrued expenses and other current liabilities		-

Filing Compare · T3 Defense Inc.