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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
September 30,
2025
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number:
001-39489
NUBURU, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware
85-1288435
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
7442 S Tucson Way
,
Suite 130
,
Centennial
,
CO
80112
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (
720
)
767-1400
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, par value $0.0001 per share
BURU
NYSE American
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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 files).
Yes
☒
No
☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☐
Accelerated filer
☐
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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
☐
No
☒
As of November 10, 2025, the registrant
had
433,644,251
s
hares of common stock, $0.0001 par value per share, outstanding.
This Quarterly Report on Form 10-Q (this "Quarterly Report") contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which statements involve substantial risk and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. Forward-looking statements contained in this Quarterly Report include, but are not limited to, statements about:
•
our ability to obtain required financing;
•
our ability to maintain the listing of our common stock, par value of $0.0001 per share (the "Common Stock") on a securities exchange;
•
our ability to successfully obtain required approvals for, close, implement and integrate key acquisitions;
•
our success in retaining or recruiting, or changes required in, our officers, key employees, or directors;
•
our public securities’ potential liquidity and trading;
•
our ability to implement our announced business plan, including diversifying our assets and expanding with international operations;
•
the fact that we have not achieved commercialization and our ability to achieve commercialization in the future;
•
the outcome of any legal proceedings that may be instituted against us related to our business or the Business Combination;
•
existing regulations and regulatory developments in the United States and other jurisdictions, including related to tariff policies and trade restrictions;
•
the need to hire additional personnel and our ability to attract and retain such personnel;
•
our plans and ability to obtain, maintain, enforce, or protect intellectual property rights;
•
our business, operations and financial performance, including:
•
expectations with respect to financial and business performance, including financial projections and business metrics and any underlying assumptions thereunder;
•
expectations regarding future acquisitions, partnerships, or other relationships with third parties;
•
future business plans and growth opportunities;
•
expectations regarding product development and pipeline;
•
expectations regarding research and development efforts;
•
expectations regarding market size;
•
expectations regarding the competitive landscape; and
•
future capital requirements and sources and uses of cash, including the ability to obtain additional capital in the future.
Forward-looking statements are not guarantees of performance. You should not put undue reliance on these statements, which speak only as of the date hereof. The forward-looking statements contained in this Quarterly Report are based on our current expectations and beliefs concerning future developments and their potential effects on our business. There can be no assurance that future developments affecting our business will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control), or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors under the heading "Risk Factors" in this Quarterly Report and in our Annual Report on Form 10-K for the year ended December 31, 2024, as amended (our "Annual Report"), as well as the following important factors:
•
our ability to obtain financing;
•
our ability to regain compliance with NYSE American’s continued listing standards;
•
our ability to protect our intellectual property;
•
whether the market embraces our products and investments;
•
whether we achieve commercialization in a timely manner;
•
the outcome of any legal proceedings that may be instituted against us;
•
our ability to achieve effective internal control over financial reporting, including our ability to remediate identified material weaknesses in internal control over financial reporting successfully and expediently;
the possibility that we may be adversely affected by economic, business, or competitive factors;
•
volatility in the markets caused by geopolitical and economic factors; and
•
other risks and uncertainties set forth in the section titled “Risk Factors” and in other sections of our Annual Report.
•
other risks and uncertainties set forth under the heading “Risk Factors” in Part II, Item 1A and elsewhere in this Quarterly Report.
Should one or more of these risks or uncertainties materialize, or should any of the assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
Item 1. Condensed Consolidate
d Financial Statements
NUBURU, INC.
CONDENSED CONSOLIDA
TED BALANCE SHEETS
September 30,
2025
December 31,
2024
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents
$
5,941,542
$
209,337
Restricted cash
875,141
—
Inventories, net of reserve of
nil
and $
1,161,469
at September 30, 2025 and December 31, 2024, respectively
—
1,526,467
Prepaid expenses and other current assets (including $
1,750,000
and
nil
with related parties, respectively)
4,322,880
162,749
Total current assets
11,139,563
1,898,553
Property and equipment, net
—
4,834,729
Operating lease right-of-use assets
—
202,411
Convertible note receivable (related party)
2,011,700
—
Other assets
—
34,359
TOTAL ASSETS
$
13,151,263
$
6,970,052
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
Current liabilities
Accounts payable
$
3,889,781
$
6,301,310
Accrued expenses
4,618,521
4,301,195
Current portion of operating lease liability
—
237,369
Contract liabilities
24,000
24,000
Shareholder advances
99,936
644,936
Current portion of notes payable (including $
4,345,626
and $
8,130,638
with related parties, respectively)
10,854,863
9,242,183
Claims settlement liability
502,196
—
Convertible note derivative liability
—
37,900
Preferred stock liability
21,889,050
—
Total current liabilities
41,878,347
20,788,893
SEPA liability
3,467,142
—
Warrant liabilities
21,662,084
128,615
TOTAL LIABILITIES
67,007,573
20,917,508
Commitments and Contingencies (Note 6)
Convertible preferred stock, $
0.0001
par value;
50,000,000
shares authorized;
2,188,905
and
2,388,905
shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively
(1)
—
23,889,050
Stockholders’ Deficit
Common Stock, $
0.0001
par value;
900,000,000
shares authorized;
208,586,879
and
20,274,238
shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively
24,740
2,028
Additional paid-in capital
118,785,501
93,968,071
Accumulated deficit
(
172,666,551
)
(
131,806,605
)
Total Stockholders’ Deficit
(
53,856,310
)
(
37,836,506
)
TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
$
13,151,263
$
6,970,052
__________
(1)
As of September 30, 2025, the value of the convertible preferred stock is presented within preferred stock liability. For additional information, See Note 9.
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
NOTES TO CONDENSED CONSOL
IDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE
1. BACKGROUND AND ORGANIZATION
Nuburu, Inc. (“Nuburu” or the “Company”) was originally incorporated in Delaware on July 21, 2020 under the name Tailwind Acquisition Corp. (“Tailwind”) as a special purpose acquisition company, formed for the purpose of effecting an initial business combination with one or more target businesses. On September 9, 2020 (the “IPO Closing Date”), the Company consummated its initial public offering (the “IPO”). On January 31, 2023 (the "Closing Date"), the Company consummated a business combination with Nuburu Subsidiary, Inc. f/k/a Nuburu, Inc. (“Legacy Nuburu”), a privately held operating company which merged into the Company's subsidiary Compass Merger Sub, Inc. (the “Business Combination”) and changed its name to “Nuburu, Inc.,” and the Company became the owner, directly or indirectly, of all of the equity interests of Nuburu Subsidiary, Inc. and its subsidiaries.
On July 22, 2025, the Company filed a Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company with the Delaware Secretary of State, increasing the number of shares of stock that the Company has the authority to issue to
950,000,000
shares, of which
900,000,000
shares are Common Stock and
50,000,000
shares are Preferred Stock.
In September 2025, the Company formed NUBURU Defense, LLC ("NUBURU Defense"), a new wholly-owned subsidiary incorporated in Delaware.
Throughout the notes to the condensed consolidated financial statements, unless otherwise noted, the “Company,” “we,” “us” or “our” and similar terms refer to Legacy Nuburu prior to the consummation of the Business Combination, and Nuburu and its subsidiaries after the consummation of the Business Combination.
Going Concern and Liquidity
The Company is an emerging growth company that has not yet achieved full commercialization and is expected to incur losses until it does.
From inception through September 30, 2025, the Company has incurred operating losses and negative cash flows from operating activities. For the nine months ended September 30, 2025 and 2024, the Company has incurred operating losses, including net losses of
$
51,257,996
and
$
22,689,705
, respectively, and the Company has an accumulated deficit of
$
172,666,551
as of September 30, 2025. The operating loss for the nine months ended September 30, 2025 included $
10,398,050
of non-cash interest expense recognized on remeasurement of the preferred stock liability. For additional information on this interest expense, see Note 9. The Company expects to continue executing its comprehensive growth and diversification strategy, expanding into complementary domains such as defense-tech, security, and operational resilience solutions. The Company anticipates that it will incur net losses for the foreseeable future and, even if it increases its revenue, there is no guarantee that it will ever become profitable. All of the aforementioned factors raise substantial doubt about the Company's ability to continue as a going concern.
Until the Company can generate sufficient revenue, it plans to finance its business with the proceeds from the issuance and sale of debt or equity securities and borrowings under credit facilities, including sales pursuant to its SEPA with the SEPA Investor, each defined and further described in Note 11. The Company plans to rely on proceeds received from using the SEPA to the extent permitted under the terms of the Offering, as defined in Note 9. There is no assurance that management's plans to obtain additional debt or equity financing or credit facilities will be successfully implemented or implemented on terms favorable to the Company.
NYSE Regulation Notice of Noncompliance
On April 29, 2025, the Company received a Notice of Noncompliance from NYSE Regulation indicating that the Company was not in compliance with Section 1003(a)(i) of the NYSE American LLC Company Guide (the “Company Guide”), which requires a company to maintain stockholders’ equity of $
2.0
million or more if it has reported losses from continuing operations or net losses in two of its three most recent fiscal years.
As required by the Company Guide, the Company submitted a detailed plan on May 29, 2025. The detailed plan advised NYSE Regulation of actions the Company has taken or will take to regain compliance with the continued listing standards by the compliance deadline of October 29, 2026. On July 22, 2025, the NYSE notified the Company that it had accepted the Company’s plan outlining definitive actions that the Company has taken or will take to regain compliance with NYSE’s continued listing standards (the “Compliance Plan”) and granted a plan period through October 29, 2026 (the “Plan Period”).
The NYSE will review the Company periodically for compliance with the Compliance Plan. If the Company is not in compliance with the continued listing standards by October 29, 2026, or if the Company does not make progress consistent with the Compliance Plan during the Plan Period, the NYSE American may initiate delisting proceedings as appropriate. However, the Company may appeal a staff delisting determination in accordance with the Company Guide.
The NYSE notice and NYSE’s acceptance of the Compliance Plan have no immediate effect on the listing or trading of the Company’s securities and the Company’s Common Stock will continue to trade on the NYSE American under the symbol “BURU” during the Plan Period with the designation of “.BC” to indicate that the Company is not in compliance with the NYSE American’s continued listing standards.
The Company believes that, upon consummation of certain of the transactions that it has recently announced, it will be able to regain compliance. However, such transactions are subject to regulatory approvals, stockholder approval, and other closing conditions and, as a result, may not be consummated. Even if consummated, such transactions may not achieve the anticipated results or benefits to the Company.
Inventory, Property and Equipment and Right-of-Use Asset Impairment
The Company leased approximately
27,900
square feet of office space in Centennial, Colorado under a noncancelable operating lease agreement. The original term of the lease was set to expire in
December 2024
, however, in November 2023, the Company elected to extend the lease through
June 2025
. As further described in Note
3
, as of March 31, 2025, the Company was in default under its lease, and Centennial Tech Industrial Owner (the "Landlord") pursued available remedies in advance of the expiration of the lease term in June 2025.
As such, during the first quarter of 2025, the Company determined that, based on the assumption that the Landlord would fully exercise its rights with respect to all assets remaining on the premises, (i) it no longer had control over the inventory and that recovery was not probable, therefore, inventory was written down to a net realizable value of
zero
, (ii) the carrying value of its property and equipment, all of which was at the leased location, was no longer recoverable, and the assets were written down to a net book value of $
0
,
and (iii) the right-of-use asset
associated
with this lease was fully impaired, as the Company could no longer use the leased premises, each of which is recorded within loss on impairment of inventories, property and equipment and operating lease right-of-use asset on the condensed consolidated statement of operations for the nine months ended September 30, 2025
.
See Note
3 for additional information.
Certain Significant Risks and Uncertainties
The Company’s future results of operations involve a number of risks and uncertainties. Factors that could affect the Company’s future operating results and cause actual results to vary materially from expectations include, but are not limited to, those summarized in the
Cautionary Note Regarding Forward-Looking Statements
above.
NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (“SEC”). Certain information or footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results, and cash flows for the periods presented.
The results of operations for the three and nine months ended September 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025 or any future period. These unaudited condensed consolidated financial statements and their notes should be read in conjunction with the Company’s Annual Report on Form 10-K as filed with the SEC on
April 15, 2025, and as subsequently amended.
Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
Reverse Stock Split
Following stockholder approval on February 22, 2024, the Company effected a reverse stock split of its Common Stock at a ratio of
1-for-40
(the “Reverse Stock Split.”) The Reverse Stock Split was effective July 23, 2024. No changes were made to the number of authorized shares in connection with the Reverse Stock Split. Proportional adjustments were made to the number of shares of Common Stock issuable upon exercise or conversion of the Company’s equity awards, warrants, and other equity instruments convertible into Common Stock, as well as the applicable exercise price. All share and per share amounts of our Common Stock presented have been retroactively adjusted to reflect the Reverse Stock Split, including reclassifying an amount equal to the reduction in par value of Common Stock to additional paid-in capital.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are not applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Significant Accounting Policies
The significant accounting policies used in preparation of these condensed consolidated financial statements are disclosed in the notes to consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as amended. Other
than as noted below, the significant accounting policies have not changed significantly since that filing.
Standby Equity Purchase Agreement
In
May 2025
, the Company entered into a SEPA with the SEPA Investor, each defined and further described in Note
11
. Pursuant to the SEPA, the Company has the right, but not the obligation, to sell to the SEPA Investor up to $
100.0
million of shares of Common Stock at the Company’s request any time during the 36 months following the execution of such purchase agreement, subject to certain conditions.
The SEPA is accounted for as a liability at fair value under Accounting Standards Codification ("ASC") 815, as it includes an embedded put option and an embedded forward contract that do not meet the indexed to equity and the equity classification scope exception. The put option is recognized at inception, and the forward option is recognized upon issuance of notice for the sale
of the Company's Common Stock. The change in the fair value of the SEPA is recorded in other gain (loss), net on the condensed consolidated statements of operations. See Note 11
for further details.
Fair value opti
on for certain financial instruments
The Company elected the fair value option (“FVO”) for recognition of (i) certain debt instruments, as described in Notes 4 and
8, and (ii) the Convertible Note Receivable (as defined and described in Note 5), as permitted under ASC 825,
Financial Instruments
. Under this option, financial instruments are initially recognized at fair value as an asset or liability on the condensed consolidated balance sheets with subsequent changes in fair value, inclusive of interest, market risk, and other factors affecting valuation, reflected in the condensed consolidated statements of operations. The Company elected to recognize interest expense within the line item presented for the change in the fair value of the asset or liability. Additionally, the change in fair value of financial liabilities attributable to the change in the instrument-specific credit risk is required to be presented separately in other comprehensive income. For the three and nine months ended September 30, 2025, the change in fair value related to a change in the instrument-specific credit risk was immaterial. All costs associated with the issuance of financial instruments accounted for using the FVO are expensed upon issuance or as incurred. See Note 5
and Note 8
for additional information.
Mandatorily redeemable preferred stock
The Company accounts for mandatorily redeemable preferred stock in accordance with ASC 480,
Distinguishing Liabilities from Equity
. Preferred stock that is mandatorily redeemable on a fixed or determinable date, or upon the occurrence of an event certain to occur, is classified as a liability on the condensed consolidated balance sheets. Mandatorily redeemable preferred stock is initially recognized at its fair value, and subsequently measured at its redemption value. See Note 4
for additional information.
Recently Issued Accounting Pronouncements
ASU 2023-09
In December 2023, the Financial Accounting Standards Board (“FASB") issued Accounting Standards Update (“ASU") 2023-09,
Income Taxes (Topic 740)
–
Improvements to Income Tax Disclosures
. The ASU requires that an entity disclose specific categories in the effective tax rate reconciliation as well as reconciling items that meet a quantitative threshold. Further, the ASU requires additional disclosures on income tax expense and taxes paid, net of refunds received, by jurisdiction. The new standard is effective for annual periods beginning after December 15, 2024 on a prospective basis with the option to apply it retrospectively. Early adoption is permitted. The adoption of this guidance will result in the Company being required to include enhanced income tax related disclosures. The Company is currently evaluating the impact this standard will have on its consolidated financial statements.
ASU 2024-03
In November 2024, the FASB issued ASU 2024-03,
Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses
, which is intended to provide more detailed information about specified categories of expenses (purchases of inventory, employee compensation, depreciation and amortization) included in certain expense captions presented on the consolidated statement of operations. This new standard is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either (1) prospectively to financial statements issued for periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the consolidated financial statements. The Company is in the process of finalizing the disclosures that will be required by the adoption of the provisions of ASU 2023-09, and will adopt these amendments for annual disclosures in the Annual Report on Form 10-K for the year ending December 31, 2027.
NOTE
3. BALANCE SHEET COMPONENTS
The Company leased approximately
27,900
square feet of office space in Centennial, Colorado, with a lease term through
June 2025
. Consistent with the Company’s previously disclosed business plan for its future business, the Company does not believe that assets or equipment that remain on this leased property are critical to its new business strategy, given that it will not be conducting full-scale manufacturing or laser design or development that would involve the prior patent portfolio, which was transferred to its former secured lenders. The Company is pursuing a lease for a replacement facility that is more appropriate for the Company’s new business strategy, which will involve laser development in different verticals and outsourcing of manufacturing and inventory management. However, entering into a new lease and appropriately equipping a new facility is costly and time-consuming and may cause delays in the Company’s progress with respect to the business plan focused on building a stable foundation for its future business.
As of March 31, 2025, the Company was in default under the lease, and the Landlord pursued available remedies in advance of the lease term that expired in
June 2025
. In April 2025, the Landlord obtained a default judgment against the Company in the amount of $
409,278
,
which accrues interest at a rate of
10
% per annum beginning in March 2025 until paid in ful
l. The Company and the Landlord entered into a settlement agreement on October 14, 2025, pursuant to which the parties released any claims related to the lease in exchange for the Company’s payment of $
130,000
to the Landlord.
The Landlord exercised its rights under the lease agreement and applicable law with respect to a lessee in default and such lessee’s assets located on the premises, including the removal and disposal of inventories and property and equipment remaining on the property.
As such, during the first quarter of 2025, the Company determined that, based on the assumption that the Landlord would fully exercise its rights with respect to all assets remaining on the premises, (i) it no longer had control over the inventory and that recovery was not probable, therefore, inventory was written down to a net realizable value of
zero
, (ii) the carrying value of its property and equipment, all of which was at the leased location, was no longer recoverable, and the assets were written down to a net book value of $
0
, and (iii) the right-of-use asset associated with this lease was fully impaired, as the Company could no longer use the leased premises, each of which is recorded within loss on impairment of inventories, property and equipment and operating lease right-of-use asset on the condensed consolidated statement of operations for the
nine months ended September 30, 2025
.
Restricted Cash
Restricted cash represents funds held in collateral accounts maintained in connection with outstanding letters of credit in connection with our contemplated acquisition of a controlling interest in Tekne S.p.A (“Tekne”), as further described in Note 6. Th
e letters of credit expire on
August 31, 2026
, and, in accordance with bank policy, the collateral will be released
30
days after the expiration date. The collateral funds are not invested and earn interest at a rate of
1
%
per annum.
As
of September 30, 2025 and December 31, 2024, restricted cash totaled $
875,141
and
nil
,
respectively, and is included in restricted cash on the condensed consolidated balance sheets. See Note 6 for additional information.
Inventories, Net
Inventories, net as of
December 31, 2024 consisted of the following:
December 31,
2024
Raw materials and supplies
$
1,913,013
Work-in-process
161,137
Finished goods
613,786
Inventories, gross
2,687,936
Less: inventory reserve
(
1,161,469
)
Inventories, net
$
1,526,467
As of September 30, 2025
, the Company's inventory value was
nil
, as it
no longer had control over the inventory and recovery was not probable. During each of the three and nine months ended September 30, 2025 and the three months ended September 30, 2024, the Company recorded lower of cost or net realizable value ch
arges of
nil
.
During the nine months ended September 30, 2024, the Company recorded lower of cost or net realizable value
charges of $
28,012
. During t
he first half of 2025
, in connection with the lease default described above, inventory was written down to a net realizable value of zero through a $
1,526,467
loss recorded within loss on impairment of inventories, property and equipment and operating lease right-of-use asset on the condensed consolidated statement of operations for the
nine months ended September 30, 2025.
Property and Equipment, Net
Property and equipment, net as of
December 31, 2024 consisted of the following:
December 31,
2024
Machinery and equipment
$
7,203,592
Leasehold improvements
897,948
Furniture and office equipment
205,897
Computer equipment and software
197,386
Property and equipment, gross
8,504,823
Less: accumulated depreciation and amortization
(
3,670,094
)
Property and equipment, net
$
4,834,729
As of September 30, 2025
, the Company's property and equipment, net value was
nil
, as
the carrying value of its property and equipment, all of which was at the leased location, was no longer recoverable.
Depreciation and amortization expense related to property and equipment was
nil
and $
206,718
during the
three months ended September 30, 2025 and 2024, respectively, and $
446,449
and $
596,256
during the nine months ended September 30, 2025 and 2024, respectively.
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets as of
September 30, 2025 and December 31, 2024 consisted of the following:
September 30,
2025
December 31,
2024
Common stock issued for services
$
692,792
$
—
Prepaid insurance
159,672
123,959
Other prepaid assets
1,379,726
28,521
Other current assets
(1)
2,090,690
10,269
Total prepaid expenses and other current assets
$
4,322,880
$
162,749
(1)
Includes (i) $
1,500,000
related to the
Trumar Capital LLC acquisition agreement, including a $
1,350,000
related party receivable from the Company's Executive Chairman and Co-Chief Executive Officer, as discussed further in Note
6
, (ii) $
400,000
related to the related party SYME Inventory Advance, as defined and further described in Note
6, and (iii)
$
110,000
receivable from Liqueous in connection with the
Liqueous Settlement Agreement, as defined and further described in Note 6
.
Accrued expenses as of
September 30, 2025 and December 31, 2024 consisted of the following:
September 30,
2025
December 31,
2024
Accrued legal, accounting and professional fees
$
2,794,345
$
2,448,594
Accrued TCEI acquisition costs
32,193
—
Accrued transaction costs related to the reverse recapitalization
503,600
503,600
Accrued lease-related payables
409,278
54,288
Accrued taxes payable
373,397
357,953
Accrued payroll and benefits
361,473
232,966
Accrued interest
55,381
560,501
Other
88,854
143,293
Total accrued expenses
$
4,618,521
$
4,301,195
Accounts Payable - 3(a)(10) Claims Settlement
On July 17, 2025, the Company and Silverback Capital Corporation (“Silverback”) agreed to settle outstanding claims in an amount of $
5,662,479
(the “Claims”) owed to Silverback in exchange for a settlement amount payable in shares of Common Stock (the “Settlement Shares”), subject to court approval (the "Silverback Claims Settlement"). The Settlement Shares are priced in an amount equal to the last trading price of Common Stock on July 17, 2025 (the “Closing Price”), which was $
0.3070
; provided that, if the sale price of Common Stock drops below the Closing Price, the purchase price of the Settlement Shares will be the lower of (i) the Closing Price or (ii)
75
% multiplied by the average of the three lowest traded prices during the fifteen day trading period preceding the share request made by Silverback, subject to other terms of the Settlement. Under the Settlement terms, Silverback may not hold more than
4.99
% of issued and outstanding Common Stock at any time. The Claims include bona fide, outstanding, and unpaid creditor claims that Silverback acquired from the Company’s creditors and agreed to exchange for shares of Common Stock in a state court-approved transaction, in compliance with the terms of Section 3(a)(10) of the Securities Act. The Company also agreed to issue
400,000
shares of Common Stock as a settlement fee (the "Settlement Fee Shares"), which were issued during the third quarter of 2025. The settlement was approved by the state court on July 30, 2025, after a fairness hearing pursuant to the requirements of Section 3(a)(10) of the Securities Act.
The Company is required to meet certain conditions, including timely delivery of Settlement Shares, compliance with specified covenants, and maintenance of trading eligibility and SEC filing compliance. If these conditions are not satisfied, Silverback may declare the Company in default and terminate its remaining obligations, including the funding of payments under related claims purchase agreements. In the event of default, the Company remains obligated to issue Settlement Shares and fee shares for any liabilities previously purchased by Silverback, and Silverback may elect to declare either a full or partial default.
Upon initial recognition of the Silverback Claims Settlement, the Company derecognized the liabilities to vendors, which were each included in accounts payable on the condensed consolidated balance sheet, in an aggregate amount of $
3,113,854
and recognized a claims settlement liability to Silverback in an aggregate amount of $
9,627,408
calculated based on the fair value of the shares of Common Stock that can be issued to Silverback to satisfy the claims and the settlement fee, resulting in $
6,513,554
recognized as loss on extinguishment of accounts payable in the condensed consolidated statement of operations for the
nine months ended September 30, 2025.
From July 2025 to September 2025, the Company issued
42,564,420
Settlement Shares at an aggregate fair value of $
6,540,488
to settle $
4,262,479
of contractual claims under the Silverback Claims Settlement. Additionally, during the three and nine months ended September 30, 2025, the Company recorded a change in fair value of $
2,584,724
of the claims settlement liability, which is included in change in fair value of claims settlement liability on the condensed consolidated statements of operations. As of the date of this quarterly report, the Silverback program was performed and concluded.
NOTE
4. FAIR VALUE MEASUREMENTS
Assets and liabilities recorded at fair value on a recurring basis in the balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, as follows:
Level 1: Valuations based on quoted prices for identical assets and liabilities in active markets.
Level 2: Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.
Level 3: Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.
An asset's or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
The Company’s financial instruments that are carried at fair value consist of Level 1 and Level 3 assets and liabilities:
•
Level 1:
o
Level 1 assets include highly liquid bank deposits and money market funds, which were not material in any period presented herein.
o
Level 1 liabilities include the Public Warrants, which are classified as Level 1 due to the use of an observable market quote in an active market, however,
were determined to have
no
value as of
September 30, 2025 and December 31, 2024
due to a notification from the NYSE American in December 2023 that the NYSE American had determined to (a) commence proceedings to delist the Company’s Public Warrants, each whole warrant exercisable to purchase one share of the Company’s Common Stock, par value $
0.0001
per share, at a price of $
11.50
per share, and listed to trade on the NYSE American under the symbol “BURU.WS”, and (b) immediately suspend trading in the Public Warrants due to “abnormally low” trading price levels.
•
Level 3:
o
Level 3 assets include the Convertible Note Receivable (as defined and described in Note 5), which is classified as Level 3 due to the use of unobservable inputs in the valuation of the asset. There were no transfers between Level 1, Level 2, and Level 3 in any periods presented.
o
Level 3 liabilities include (i) the Junior Note Warrants (as defined and described in Notes 8
and 10), (ii) the Offering Common Stock Warrants (as defined and described in Notes 9 and 10), (iii) our debt recorded under the fair value option, including the Indigo Capital Convertible Notes, AZ Promissory Note, TAG Promissory Note, Diagonal Convertible Notes, Agile Note, Brick Lane Convertible Notes, Bomore Convertible Notes, Boot Convertible Note, Torcross Convertible Note and Yorkville Promissory Note (each as defined and described in Note 8), and (iv) through early March 2025, the August 2024 Convertible Note Derivative Liability (as defined and described in Note 8), each of which is classified as Level 3 due to the use of unobservable inputs in the valuation of the liability. Gains or losses from the remeasurement of (i) the Junior Note Warrants and Offering Common Stock Warrants are recorded as part of change in fair value of warrant liabilities, (ii) debt recorded under the fair value option are recorded as part of change in fair value of notes payable, (iii) the SEPA liability, as further described in Note 11, are recorded as part of change in fair value of SEPA liability, (iv) the Silverback Claims Settlement, as further described in Note 3, are recorded as part of change in fair value of claims settlement liability and (v) the August 2024 Convertible Note Derivative Liability are recorded as part of change in fair value of derivative liability in the condensed consolidated statements of operations. There were no transfers between Level 1, Level 2, and Level 3 in any periods presented.
The following tables set forth the fair value of the Company’s financial assets and liabilities by level within the fair value hierarchy as of
September 30, 2025 and December 31, 2024:
At September 30, 2025
Level 1
Level 2
Level 3
Total
Assets:
Convertible Note Receivable
$
—
$
—
$
2,011,700
$
2,011,700
Total assets
$
—
$
—
$
2,011,700
$
2,011,700
Liabilities:
Junior Note Warrants
$
—
$
—
$
57,593
$
57,593
Offering Common Stock Warrants
—
—
21,604,491
21,604,491
Notes payable - fair value option
—
—
10,861,237
10,861,237
SEPA liability
—
—
3,467,142
3,467,142
Claims settlement liability
—
—
502,196
502,196
Total liabilities
$
—
$
—
$
36,492,659
$
36,492,659
At December 31, 2024
Level 1
Level 2
Level 3
Total
Liabilities:
Junior Note Warrants
$
—
$
—
$
128,615
$
128,615
Convertible note derivative liability
(1)
—
—
37,900
37,900
Total liabilities
$
—
$
—
$
166,515
$
166,515
(1)
Represents the August 2024 Convertible Note Derivative Liability, as defined and described in Note 8. In March 2025, the remaining August 2024 Convertible Notes were purchased by Indigo Capital and subsequently extinguished. For additional information, see Note 8
.
Level 3 Financial Assets
Convertible Note Receivable
The following table sets forth a summary of the changes in fair value of the Company's Convertible Note Receivable:
The aggregate fair value of the Convertible Note Receivable was estimated using a Monte Carlo simulation based approach, a Lev
el 3 valuation.
The significant inputs to the calculation of the fair value of the Convertible Note Receivable at issuance through
September 30, 2025 were as follows:
Nine Months Ended September 30,
2025
Convertible Note Receivable
Stock price
$
0.000038
-
0.000048
Expected term (in years)
0.75
-
1.25
Expected volatility
157.7
% -
188.1
%
Risk-free interest rate
3.8
% -
4.2
%
Expected dividend yield
0.0
%
Level 3 Financial Liabilities
Junior Note Warrants
The following table sets forth a summary of the changes in fair value of the Company's Junior Note Warrants issued in November 2023:
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
Fair value, beginning balance
$
18,301
$
452,007
$
128,615
$
2,238,519
Change in fair value
39,292
(
369,674
)
(
71,022
)
(
2,156,186
)
Fair value, ending balance
$
57,593
$
82,333
$
57,593
$
82,333
The aggregate fair value of the Junior Note Warrants was estimated using a Monte Carlo simulation based approach, a Level 3 valuation.
The range of significant inputs to the calculation of the fair value of the Junior Note Warrant liability during the periods presented were as follows:
Nine Months Ended September 30,
2025
2024
Junior Note Warrants:
Stock price
$
0.15
-
0.35
$
0.03
-
0.51
Expected term (in years)
3.2
-
4.4
4.2
-
4.9
Expected volatility
62.4
% -
182
%
58.9
% -
76.9
%
Risk-free interest rate
3.7
% -
3.9
%
3.6
% -
4.3
%
Expected dividend yield
0.0
%
0.0
%
Offering Common Stock Warrants
The following table sets forth a summary of the changes in fair value of the Company's Offering Common Stock Warrants:
The aggregate fair value of the Offering Common Stock Warrants was estimated using a Monte Carlo simulation based approach, a Level 3 valuation.
The range of significant inputs to the calculation of the fair value of the warrant liability related to the Offering Common Stock Warrants at issuance through
September 30, 2025 were as follows:
Nine Months Ended September 30,
2025
Offering Common Stock Warrants:
Stock price
$
0.1395
-
0.1488
Expected term (in years)
5
Expected volatility
144.0
% -
145.0
%
Risk-free interest rate
3.6
% -
3.7
%
Expected dividend yield
0.0
%
Notes Payable - Fair Value Option
The following tables set forth a summary of the changes in fair value of the Company's notes payable recorded under the fair value option:
The fair value of the Company's notes payable recorded under the fair value option was estimated using Level 3 fair value measurements. The range of significant inputs to the calculation of the fair value of the notes payable recorded under the fair value option
at issuance through September 30, 2025 were as follows:
Nine Months Ended September 30, 2025
Valuation Inputs:
Indigo Capital Convertible Notes
(1)
Diagonal
Convertible Note
(1)
Agile Note
(2)
Brick Lane
Convertible Notes
(1)(3)
Bomore
Convertible Notes
(3)
Stock price
$
0.15
-
0.35
$
0.14
-
0.35
N/A
$
0.15
-
0.35
$
0.15
-
0.35
Expected term (in years)
0.42
-
1.00
0.41
-
0.79
0.24
-
0.58
0.67
-
1.00
0.71
-
1.00
Expected volatility
194.6
% -
268.7
%
145.6
% -
245.4
%
N/A
258.4
%
N/A
Risk-free interest rate
3.7
% -
4.2
%
3.8
% -
4.2
%
N/A
4.1
%
N/A
Risk-adjusted discount rate
0.0
% -
12.9
%
N/A
18.0
% -
19.1
%
N/A
N/A
Expected dividend yield
N/A
N/A
N/A
N/A
N/A
Nine Months Ended September 30, 2025
Valuation Inputs:
Boot
Convertible Note
(1)
Torcross Convertible Note
(3)
TAG Promissory Note
(1)
AZ Promissory Note (Related Party)
(1)
Yorkville Promissory Note (Related Party)
(1)
Stock price
$
0.14
-
0.35
$
0.15
-
0.35
$
0.15
-
0.32
$
0.15
-
0.35
$
0.35
Expected term (in years)
0.41
-
0.79
0.73
-
1.00
0.33
-
0.55
0.58
-
0.8
1
2.90
Expected volatility
157.9
% -
245.4
%
N/A
120.5
% -
196.2
%
146.0
% -
231.3
%
206.0
%
Risk-free interest rate
3.9
% -
4.2
%
N/A
4.0
% -
4.3
%
3.8
% -
4.2
%
3.7
%
Risk-adjusted discount rate
N/A
N/A
N/A
N/A
N/A
Expected dividend yield
N/A
N/A
N/A
N/A
N/A
(1)
Fair value was estimated using a Monte Carlo simulation model, which incorporates significant assumptions including the expected volatility of the Company's stock price, the risk-free interest rate, and the timing and probability of future liquidity events.
(2)
Fair value was estimated using a discounted cash flow method, which applies a risk-adjusted discount rate to projected future cash flows. The valuation involves significant judgment in determining key inputs such as forecasted revenue growth, margin expectations and discount rates.
(3)
Fair value was estimated using the current value method, which allocates the Company's most recent enterprise value to the various classes of equity based on their respective rights and preferences.
SEPA Liability
The following table sets forth a summary of the changes in fair value of the Company's SEPA
liability:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2025
2025
Fair value, beginning balance
$
3,297,922
$
—
Fair value at issuance
—
3,582,724
Common stock issued
(1)
(
2,308,076
)
(
2,853,385
)
Settlement of Yorkville Promissory Note
1,261,880
1,261,880
Cash receipts under SEPA liability
568,973
568,973
Change in fair value
646,443
906,950
Fair value, ending balance
$
3,467,142
$
3,467,142
(1)
Includes the fair value of the shares issued to the SEPA Investor in connection with the commitment fee payable under the SEPA in an amount equal to
1
% of the Commitment Amount, or $
1,000,000
, to be paid
50
% on execution of the SEPA and
50
% to be paid
90
days after execution of the SEPA,
as further detailed in Note 11
.
The fair value of the Company's SEPA liability at issuance and through September 30, 2025
was estimated using (i) related to the put option, a Monte Carlo valuation model utilizing various inputs including the Company’s stock price, volatility, risk-free interest rate, expected term of the agreement and expected share draw amount and (ii) for the June 30, 2025 valuation, related to the shares issuable in connection with the SEPA commitment fee, the fair value of the underlying shares, each of which is a Level 3 valuation.
The range of significant inputs to the calculation of the fair value of the SEPA liability at issuance through
September 30, 2025 were as follows:
The following table sets forth a summary of the changes in fair value of the Company's Claims Settlement liability
:
Three and Nine Months Ended September 30,
2025
Fair value, beginning balance
$
—
Fair value at issuance
9,627,408
Common stock issued
(
6,540,488
)
Change in fair value
(
2,584,724
)
Fair value, ending balance
$
502,196
The fair value of the Company's Claims Settlement liability at issuance and as of September 30, 2025
was estimated using a Monte Carlo valuation model utilizing various inputs including the Company’s stock price, volatility, risk-free interest rate, expected term of the agreement and expected share amount.
The range of significant inputs to the calculation of the fair value of the claims settlement liability at issuance and
September 30, 2025 were as follows:
Nine Months Ended September 30,
2025
Claims Settlement Liability
Stock price
$
0.15
-
0.31
Expected term (in years)
0.50
-
0.70
Expected volatility
143.1
% -
213.4
%
Risk-free interest rate
3.8
% -
4.2
%
August 2024 Convertible Note Derivative Liability
In March 2025, the remaining August 2024 Convertible Notes were purchased by Indigo Capital and subsequently extinguished. For additional information, see Note 8.
The following table sets forth a summary of the changes in fair value of the Company's
August 2024 Convertible Note Derivative Liability:
Certain conversion features of the Convertible Note Receivable would typically be considered derivatives that would require bifurcation. In lieu of bifurcating various features in the agreement, the Company elected the fair value option for the Convertible Note Receivable. During March 2025, the excess of the issuance date fair value of $
260,000
of the Convertible Note Receivable over the proceeds paid of $
150,000
was recorded to additional paid-in capita
l. As of September 30, 2025
, the fair value of the Convertible Note Receivable was $
2,011,700
, and the principal amount of the Convertible Note Receivable was
$
2,957,394
. Additionally, accrued interest as of September 30, 2025
under the Convertible Note Receivable was $
66,419
, which is included in prepaid expenses and other on the condensed consolidated balance sheets. In October 2025, the Company paid SYME the remaining amount of $
2,192,606
.
The Company leased approximately
27,900
square feet of office space in Centennial, Colorado under a noncancelable operating lease agreement. The original term of the lease was set to expire in
December 2024
, however, in November 2023, the Company elected to extend the lease through
June 2025
. As further described in Note
3
, the Company was in default under its lease, and the Landlord pursued available remedies in advance of the lease term that expired in June 2025. As such, the Company (i) wrote down its inventory to a net realizable value of zero, (ii) wrote down the carrying value of its property and equipment, all of which was at the leased location, to a net book value of $
0
, and (iii) fully impaired the right-of-use asset associated with this lease, as the Company could no longer use the leased premises, each of which is recorded within loss on impairment of inventories, property and equipment and operating lease right-of-use asset on the condensed consolidated statement of operations for the
nine months ended September 30, 2025. See Note 3 for additional information.
As of September 30, 2025
, $
409,278
was included within accrued expenses on the condensed consolidated balance sheets related to the default judgment obtained by the Landlord against the Company, primarily to unpaid rent payments, interest and attorney's fees. Subsequent to
September 30, 2025
, the Company reached a settlement agreement with the Landlord in the amount of $
130,000
, which was paid in October 2025, effectively settling the liability.
In connection with the default under the lease described above, the Company recorded an impairment of $
150,077
to reduce the right-of-use asset to zero, which is recorded within loss on impairment of inventories, property and equipment and operating lease right-of-use asset on the condensed consolidated statement of operations for the
nine months ended September 30, 2025.
Operating lease cost was
nil
and $
102,938
for the
three months ended September 30, 2025 and 2024
, respectively, and
nil
and $
308,814
for the
nine months ended September 30, 2025 and 2024, respectively, and is included within general and administrative expenses within the condensed consolidated statement of operations.
Liqueous Settlement Agreement
In January 2025 and April 2025, in connection with a settlement and mutual release agreement entered into between the Company and Liqueous LP (“Liqueous”) (the "Liqueous Settl
ement Agreement"), as amended, the parties provided an immediate mutual release of claims and obligations through payments from Liqueous to the Company in an aggregate $
1,450,000
, of which $
1,000,000
was paid during the first quarter of 2025. Such payment was made in connection with the issuance of the remaining
9,186,581
shares issued to extinguish an aggregate $
411,865
of principal and accrued interest under the Junior Notes and, accordingly, reduced the loss on extinguishment of notes payable recorded in the nine months ended September 30, 2025
. In April 2025, the Company received $
300,000
of the remaining $
450,000
agreed upon under the Liqueous Settlement Agreement, which was recorded within other income (loss), net as a gain on settlement during the
nine months ended September 30, 2025
. Additionally, in September 2025, the Company received $
40,000
under the Liqueous Settlement Agreement.
Legal Proceedings
In the normal course of business, the Company may become involved in legal proceedings. The Company will accrue a liability for legal proceedings when it is probable that a liability has been incurred and the amount can be reasonably estimated. Significant judgment is required to determine both probability and the estimated amount. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued.
During the nine months ended September 30, 2025, the Company was subject to five separate actions seeking default judgments for the alleged failure to pay amounts when due.
CFGI, LLC obtained a default judgment in March 2025 in the amount of $
86,826
through the Superior Court of the Commonwealth of Massachusetts. The default judgment obtained by CFGI, LLC was paid in full in September 2025 by Silverback in accordance with the Silverback Claims Settlement, which was approved by the state court under Section 3(a)(10) of the Securities Act. FICTIV, Inc. obtained a default judgment through the Superior Court of California on January 30, 2025 in the amount $
197,899
, which was subsequently paid by the Company on September 23, 2025. The Landlord obtained a default judgment in the Arapahoe County Colorado District Court in April 2025 in the amount of $
409,278
, which accrued interest at a rate of
10
% per annum beginning in March 2025 until paid in full. The Company settled the default judgment with a payment of $
130,000
to the Landlord on October 14, 2025. See additional details regarding the Landlord default judgment in
Note 1.
In August 2025, ficonTEC, Inc. obtained a default judgment through the Arapahoe County Colorado District Court in the amount of $
394,274
with post judgment interest accruing at
8
% per annum. The Company settled the default judgment with ficonTEC, Inc. on October 13, 2025. In August 2025, Corporation for International Business obtained a default judgment through the Circuit Court of Cook County, Illinois, in the amount of $
30,379
with post-judgment interest accruing at
9
% per annum.
On September 19, 2025, J.H. Darbie & Co., Inc. (“Darbie”) filed a claim in the U.S. District Court of the Southern District of Florida, West Palm Beach Division, alleging breach of contract under a Finder’s Fee Agreement entered into between the Company and Darbie in May 2024 and under a Financial Advisory Agreement, dated June 10, 2024, between the parties. Darbie is seeking, among other things, damages in the amount of the fee payments allegedly owed to Darbie, specific performance requiring the Company to issue warrants to Darbie, attorney’s fees and costs. The Company denies liability related to these claims beyond what it has already paid and intends to vigorously defend against these claims.
Purchase Commitments
As of September 30, 2025, the Compa
ny had $
455,048
in outstanding firm purchase commitments to acquire inventory and research and development parts from suppliers for the Company's ongoing operations. The Comp
any's purchase commitments do not reflect any liabilities that are included in its September 30, 2025 condensed consolidated balance sheet.
Related Party Transactions
Ron Nicol, who was the Executive Chairman of the Company’s board of directors through January 2025,
paid director and officer insurance premiums of approximately $
1.5
million
on behalf of the Company because the Company did not have available cash to pay such amounts when due. The Company is obligated
to
repay such amount to Mr. Nicol, without interest or other charges. As of September 30, 2025 and December 31, 2024, such amount is included in accrued expenses on our condensed consolidated balance sheets.
In January 2025, the Company issued the TAG Promissory Note to The AvantGarde Group ("TAG"), which is founded and owned by the Company's Executive Chairman and Co-Chief Executive Officer, Mr. Zamboni, as a replacement of a previously recorded shareholder advance. For additional information, see Note 8
.
In April 2025, in connection with the TCEI Acquisition, as defined below, the Company issued the AZ Promissory Note to the Company's Executive Chairman and Co-Chief Executive Officer. For additional information, see Note 8
.
Additionally, in connection with the failure to achieve the second stage of the TCEI Acquisition, the Company holds a receivable of $
1,350,000
from its Executive Chairman and Co-Chief Executive Officer, which is r
eflected within prepaid expenses and other current assets on the condensed consolidated balance sheet as of September 30, 2025.
Acquisition and Joint Venture Plans
Initial Commitment Letter related to Tekne and Orbit
On February 19, 2025, the Company entered into a commitment letter (the “Trumar Agreement”) with Trumar Capital LLC ("Trumar") to acquire, through the purchase of the shares of TCEI S.a.r.l., a wholly owned subsidiary of Trumar (“TCEI”) (the “TCEI Acquisition”): (i) a license of certain technology that would allow the Company to expand its existing business within the defense sector; (ii) a controlling interest in Tekne, a defense-tech company that specializes in the design, production, and outfitting of a diverse range of vehicles, including industrial and military applications, as well as electronic devices for defense and security, advanced telecommunications, and tracking systems; and (iii) a controlling interest in Orbit
S.r.l. (“Orbit”), formerly known as 1AF2 S.r.l., an Italian software company specializing in digitalizing operational resilience solutions for mission-critical corporations, which is wholly-owned by the Company’s Executive Chairman and Co-Chief Executive Officer.
The TCEI Acquisition was expected to occur in two stages. In the first stage, which was completed in March 2025, the Company purchased a
20
% ownership interest in TCEI for an aggregate price of $
1.5
million in cash plus $
23.5
million in a note payable. The note payable was not recorded because it was cancellable if the second stage of the TCEI Acquisition was not completed by July 31, 2025. Because certain conditions were not satisfied by July 31, 2025, the note payable was cancelled during the third quarter of 2025. Of the $
1.5
million cash portion of the purchase price, $
600,000
was paid in cash and $
900,000
was retained by the Company with a corresponding related-party promissory note to the Company's Executive Chairman and Co-Chief Executive Officer, and because the second stage of the TCEI Acquisition was not completed, such amounts were reflected within prepaid expenses and other current assets on the condensed consolidated balance sheet as of September 30, 2025. In July 2025, the $
900,000
promissory note was amended to provide for a conversion feature, as further described in Note 8.
For the second stage of the TCEI Acquisition, the Company had planned to purchase the remaining
80
% ownership interest in TCEI, resulting in (i) the Company’s having a controlling interest in Tekne and Orbit and (ii) the Company’s issuing Common Stock in excess of
19.9
% of its outstanding Common Stock as part of the purchase price. Since certain conditions were not satisfied, the Trumar Agreement expired on its own terms as of July 31, 2025 and the Company no longer holds any ownership interest in TCEI.
The Company also agreed to issue
6,086,957
shares of Common Stock to
S.F.E. Equity Investments SARL (“SFE EI”)
as consideration for SFE EI's escrowing approximately $
4.2
million in assets for purposes of guaranteeing the Company's performance obligations in connection with the TCEI Acquisition, subject to any required shareholder approval.
Since the TCEI Acquisition was subject to continued due diligence, receipt of an acceptable valuation from a third-party valuation firm, regulatory approvals, and stockholder consent, the Company concluded that, because of these contingencies, it had not assumed the risks and rewards consistent with equity ownership at the time of the initial TCEI investment. Consequently, the Company recorded the initial payment as a deposit on the anticipated acquisition of TCEI. Similarly, the Company did not record the contingent liability for the commitment, including the note, since it was not both probable and estimable that the liability had been incurred.
On March 31, 2025, the Company also entered into a Joint Pursuit Agreement with Tekne (the “Joint Pursuit Agreement”) to allow both parties to jointly develop and market certain defense-related vehicles and services in advance of closing the full TCEI Acquisition, which has been superseded by the Tekne Letter described below.
Tekne letter signed in August 2025 (“August Letter”)
In response to feedback from the Italian government in connection with its “Golden Power” review of the Company’s proposed acquisition (directly or indirectly) of a controlling interest in Tekne, on August 27, 2025, the Company executed a commitment letter (the “August Letter”) with shareholders of Tekne, pursuant to which the Company modified the terms of its previously announced phased acquisition of a
70
% interest in Tekne. Through its subsidiary, NUBURU Defense, the Company expected to acquire (directly or indirectly) (i) an initial
3
% equity interest in Tekne (the “First Stage”), and (ii) the remaining 67% interest in Tekne by the end of 2025 (the “Second Stage”). Based on a third-party valuation, the August Letter also established an enterprise value of Tekne at $
60
million, with the
70
% interest to be acquired by the Company derivatively valued at approximately $
42
million. Pursuant to the August Letter and subject to requirements imposed by the Italian government, Tekne granted the Company a one-year (a) period of exclusivity and (b) option right to complete the Second Stage.
To address matters raised in the Golden Power review, the Company agreed to assist with financing up to EUR
40
million for Tekne’s working capital needs over the next 12 months through August 2026. The Company planned to provide such support through (i) a EUR
10.5
million cash financing (“Capital Support”), and (ii) a EUR
30
million inventory monetization program. Any Capital Support provided to Tekne is expected to be converted to equity ownership of Tekne, once the investment is approved by the Italian government. In the event that the acquisition of a controlling interest in Tekne by Nuburu is not approved, Tekne will be obligated to repay all Capital Support provided by the Company.
In the August Letter, the Company and Tekne also agreed to form a U.S.-based joint venture (“Tekne US JV”), which would be owned
80
% by the Company and
20
% by Tekne.
The rights and obligations of Tekne and the Company under the August Letter were subsequently replaced in their entirety by the Tekne Letter entered into in November 2025 and described below.
Tekne letter of intent signed in November 2025 (“Tekne Letter”)
In November 2025, the Company, Tekne and shareholders of Tekne executed a letter of intent (the “Tekne Letter”) that replaced the rights and obligations of the parties under the August Letter. As set forth in the Tekne Letter, the parties intend to establish a “Contratto di Rete” (the “Network Contract”), which is a specific form of joint-venture contractual agreement under Italian law, instead of forming Tekne US JV or pursuing the Joint Pursuit Agreement described above. Under the Network Contract, (i) in the Americas, the Company will receive exclusive distribution rights for Tekne's products and solutions, with Tekne providing marketing and pre-sales support; (ii) for NATO, MENA and APAC countries, the Company and Tekne will collaborate on promoting and executing individual orders, potentially through joint ventures with local entities; and (iii) in Italy, the Company will pursue qualification as a new defense operator, the parties will jointly propose the Company’s products and solutions to Tekne's Italian clients, and Tekne will adopt in due course the Company’s operational resilience solutions to be provided upon the Company’s acquisition of Orbit. Tekne will provide its know-how, personnel, and Italian production and operational facilities for the design, development, and realization phases, while, for international markets, the Company will provide necessary guarantees, acquire existing and future project credits (a form of receivables financing), cover certain costs and expenses, and potentially establish regional production sites.
The Company also intends to provide EUR
15
million in support to Tekne by (i) providing EUR
2
million utilizing the Supply@ME (SYME) platform to facilitate an inventory monetization program, and (ii) providing EUR
13
million as a convertible loan (the “Tekne Loan”) upon the signing of the Network Contract, which is expected to occur by November 30, 2025. Conversion of the Tekne Loan requires approval of the Italian government. The Company’s willingness to enter into the Tekne Loan is conditioned on the Company being permitted to acquire an initial
2.9
% interest in Tekne. In addition, the parties agreed that (i) Tekne’s affiliate will return the $
4.2
million in assets placed in escrow by SFE EI for purposes of guaranteeing the Company's performance obligations in connection with the TCEI Acquisition, which is no longer required, and (ii) Tekne will release to the Company $
875,000
in cash collateral provided by the Company and used to obtain a letter of credit for Tekne, which the Company intends to reinvest in Tekne. Once the above financial support structure has been established, the Company intends to submit, via its specialized subsidiary NUBURU Defense, a new “Golden Power” application to the Italian government by December 31, 2025.
Performance under the Tekne Letter is subject to the negotiation and execution of definitive agreements as well as stockholder and regulatory approvals.
SYME and its operating subsidiaries provide its platform for use by manufacturing and trading companies to access inventory trade solutions, enabling their businesses to generate cashflow, through a non-credit arrangement and without incurring debt. This is achieved by their existing eligible inventory being added to the platform and then monetised through purchases by third-party inventory funders. The inventory to be monetised can include warehoused goods waiting to be sold to end-customers or goods that are part of a typical import/export transaction.
In September 2025, in connection with the inventory monetization program discussed above, the Company advanced $
400,000
(the “SYME Inventory Advance”) to a special purpose vehicle (“SPV”), an affiliate of SYME, pursuant to an advance payment letter in connection with a proposed subscription of a financial instrument to be issued by the SPV with the aim of monetizing the inventory of Tekne. The SYME Inventory Advance is non-interest-bearing and is refundable within two business days if the instrument is not issued on or before December 31, 2025 or upon breach by the SPV. As of
September 30, 2025
, the advance is recorded as a receivable within prepaid expenses and other current assets in the Company’s condensed consolidated balance sheet. Subsequent to September 30, 2025 through the date of issuance of this quarterly report, the Company advanced an additional $
2,743,545
related to the SYME Inventory Advance.
NOTE
7. REVENUE
The Company’s primary revenue-generating activity involves sales of high-powered lasers and related installation services. The Company has sales to customers throughout the U.S., Europe, and Asia. All sales are settled in U.S. dollars.
The following table presents revenue from contracts with customers disaggregated by geography:
The following table presents revenue from contracts with customers disaggregated by the timing of revenue recognition:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2025
2024
2025
2024
Revenue recognized at a point in time
$
—
$
—
$
—
$
123,827
Revenue recognized over time
—
—
—
19,000
Total
$
—
$
—
$
—
$
142,827
Contract liabilities consist of customer deposits that are applied to invoices as the performance obligation is performed.
Accounts receivable and contract liabilities were as follows on the dates presented:
Accounts Receivable
Contract Liabilities
January 1, 2024
$
482,279
$
30,400
December 31, 2024
$
—
$
24,000
September 30, 2025
$
—
$
24,000
During the three months ended September 30, 2025 and 2024, the Company recog
nized
no
revenue that was included in the contract liabilities balance at the beginning of the reporting period.
During the nine months ended September 30, 2025 and 2024, the Company recog
nized
nil
and $
30,400
of revenue, respectively, that was included in the contract liabilities balance at the beginning of the reporting period.
NOTE
8. NOTES AND CONVERTIBLE NOTES PAYABLE
As of
September 30, 2025 and December 31, 2024, the Company's outstanding debt consisted of the following:
September 30,
2025
December 31,
2024
Current portion of notes payable:
Indigo Capital Convertible Notes
$
4,473,515
$
—
AZ Promissory Note (related party)
2,679,500
$
—
TAG Promissory Note (related party)
1,666,126
—
Diagonal Convertible Notes
641,790
—
Agile Note
435,800
—
Brick Lane Convertible Notes
333,526
—
Bomore Convertible Notes
291,309
—
Boot Convertible Note
177,098
—
Torcross Convertible Note
145,654
—
Liqueous Obligation
10,545
1,053,824
Senior Convertible Notes Issued June 2023
—
4,683,069
Junior Notes Issued November 2023
—
2,369,122
August 2024 Convertible Notes
—
537,375
Additional August 2024 Convertible Notes
—
687,315
Unamortized debt discount and deferred financing costs
—
(
88,522
)
Current portion of notes payable
$
10,854,863
$
9,242,183
Junior Notes Issued November 2023
On November 13, 2023, the Company entered into Note and Warrant Purchase Agreements (the "Junior Note Purchase Agreements") with the lenders identified therein (the "Lenders") providing for (i) zero-interest promissory notes, issued with a
10
% original issue discount, in the aggregate principal amount of $
5,500,000
(the "Junior Notes"), and (ii) warrants ("Junior Note Warrants," refer to Note 10), exercisable for an amount of the Company's Common Stock equal to
100
% of the principal amount of the Junior Notes (limited to an aggregate of
19.9
% of the Company's outstanding Common Stock until such time as the transaction is approved by the Company's stockholders), which are exercisable for $
5.00
per share of the Company's Common Stock (subject to adjustments noted in the Junior Note Purchase Agreements).
The Junior Notes were junior and secured by the Company's patent portfolio pursuant to a security agreement among the parties (the "Security Agreement"). The terms of the Junior Notes provided that they would mature on the earlier of: (i) the Company closing a credit facility in principal amount of at least $
20
million, (ii) a Sale Event (as defined in the Junior Note Purchase Agreements), or (iii)
twelve
months
after issuance. The Junior Notes contained customary events of default. Because the Junior Notes had not been repaid within six or nine months after issuance, the Junior Notes began to bear interest at the
Secured Overnight Financing Rate (“
SOFR") rate
plus
9
% and at the
SOFR
rate
plus
12
%, respectively, and additional
25
% warrant coverage was required at each such date, with a per share exercise price equal to
120
% of the trading price of the Company's Common Stock at the time of issuance and a redemption right in favor of the Company when the trading price of the Common Stock was greater than
200
% of the applicable exercise price for
20
out of any
30
consecutive trading days. Shares of Common Stock issuable upon exercise of the Junior Note Warrants are limited to an aggregate of
19.9
% of the Company's outstanding Common Stock until such time as the transaction is approved by the Company's stockholders. The obligations under the Junior Notes were extinguished in connection with the Foreclosure (defined below).
Refer to Note 10
for the Company's accounting for the Junior Note Warrants. As a result of that accounting, the Junior Notes contain the original issue discount of $
500,000
as well as the discount associated with the Junior Note Warrant liability of $
2,668,169
. The discount will be amortized over the term of the Junior Notes in accordance with FASB ASC 835 -
Interest.
Extinguishment
s
During the nine months ended September 30, 2025, the Company issued
9,186,581
shares to noteholders to extinguish an aggregate $
411,865
of principal and accrued interest under the Junior Notes. The reacquisition value of the debt was higher than the related carrying value, and thus resulted in an aggregate net loss on extinguishment of debt of $
1,174,519
recorded in the condensed consolidated statement of operations.
During the nine months ended September 30, 2024
, the Company issued
2,173,894
shares to noteholders to extinguish $
2,459,267
of principal as well as interest accrued on the Junior Notes. The reacquisition value of the debt was higher than the related carrying value, and thus resulted in a loss on debt extinguishment of $
6,366,173
recorded in the condensed consolidated statement of operations for the
nine months ended September 30, 2024.
See Foreclosure collateral sale further below in this Note 8 for discussion of the extinguishment of the remaining Junior Notes on March 5, 2025.
Related Parties
The table below summarizes the outstanding principal amount of the Junior Notes to related parties
:
Noteholder
September 30,
2025
December 31,
2024
David Seldin
(1)
$
—
$
762,211
Eunomia, LP
(2)
—
1,100,000
Total Junior Notes - related parties
$
—
$
1,862,211
(1)
David Seldin was a member of the Legacy Nuburu board of directors and at the time of the issuance was the sole manager of Anzu Nuburu LLC, Anzu Nuburu II LLC, Anzu Nuburu III LLC and Anzu Nuburu V LLC (the "Anzu SPVs"), which at that time owned more than
5
% of Legacy Nuburu’s capital stock.
(2)
Ron Nicol, manager of Eunomia, LP, was the Executive Chairman of the Company’s board of directors through January 2025.
Junior Notes Issued August 2024 (the "August 2024 Convertible Notes")
On August 6, 2024 and August 19, 2024, the Company entered into a subordinated convertible note agreement (the "August 2024 Convertible Note Agreement") with Esousa Group Holdings LLC ("Esousa") for the sale of convertible notes (the "August 2024 Convertible Notes”) in the aggregate principal amount of $
673,000
, issued at a discount of $
25,000
. The August 2024 Convertible Notes bore interest at
15
% per annum, with principal and accrued interest due at maturity on
February 6, 2025
, unless earlier paid or converted into Common Stock. The notes were prepayable at any time prior to the maturity date without penalty. Upon the occurrence and continuance of an event of default or spin-off of a subsidiary, a default interest rate of an additional 5% per annum could be applied to any outstanding borrowings (in the case of an event of default only) and the investor could declare all outstanding principal plus accrued interest immediately due. Additionally, at any point after issuance, the investor had the option to convert the August 2024 Convertible Notes into Common Stock at the lower of (i) a fixed price of $
2.03
or (ii)
80
% of the lowest daily volume weighted-average price in the
10
trading days prior to such conversion date, subject to certain adjustments. Issuances of Common Stock on conversion were (i) subject to approval by NYSE American of a supplemental listing application, (ii) limited to an amount equal to
19.9
% of the outstanding Common Stock as of the date of execution, until such time as the transaction was approved by stockholders and (iii) required to be registered with the SEC for resale.
The Company determined that the conversion and share-settled redemption features, as well as the automatic increase in interest rate upon an event of default feature, of the August 2024 Convertible Notes were embedded derivatives that were required to be bifurcated from the host instrument and accounted for as embedded derivative instruments, which the Company compounded (the "August 2024 Convertible Note Derivative Liability"). As the Company did not elect the fair value option for the August 2024 Convertible Notes, the proceeds from the August 2024 Convertible Notes were allocated to the initial fair value of the August 2024 Convertible Note Derivative Liability, which was determined to be $
179,000
, with the residual balance allocated to the initial carrying value of the August 2024 Convertible Notes host instrument. For additional information related to the fair value of the August 2024 Convertible Note Derivative Liability
, see Note 4.
The Company incurred $
114,800
in deferred financing costs for legal fees related to the issuance of the August 2024 Convertible Notes. Additionally, in connection with the issuance of the August 2024 Convertible Notes, the Company issued warrants to a financial services firm as compensation for their services performed, the fair value of which was determined to be $
40,657
and was recorded as a deferred financing cost.
For additional information regarding these warrants, see Note 10.
Concurrent with the above, Esousa also purchased
$
687,315
of outstanding principal and accrued interest under the Senior Convertible Notes
(as defined below)
from an existing investor and subsequently exchanged such notes for subordinated convertible notes (the "Additional August 2024 Convertible Notes"). The Additional August 2024 Convertible Notes could be prepaid at any time without penalty, did not accrue interest, matured on
February 6, 2025
and could be converted at any time on or after the issuance date into Common Stock at a conversion price of
25
% of the closing price of the Common Stock on the trading day prior to such conversion date, subject to certain adjustments.
The August 2024 Convertible Notes and Additional August 2024 Convertible Notes were unsecured and subordinated to the Company’s outstanding Senior Convertible Notes and Junior Notes in right of payment, whether in respect to payment or redemptions, interest, damages, upon liquidation or dissolution or otherwise.
During the nine months ended September 30, 2025, the Company issued
1,878,620
shares to Esousa to extinguish an aggregate $
389,375
of principal and accrued interest under the August 2024 Convertible Notes. The reacquisition value of the debt was higher than the related carrying value, and thus resulted in an aggregate net loss on extinguishment of notes payable of $
2,123,403
recorded in the condensed consolidated statement of operations.
In March 2025, the remaining August 2024 Convertible Notes were purchased by Indigo Capital and subsequently extinguished, as further described below. The transaction resulted in a loss on extinguishment of notes payable of $
12,303
associated with the extinguishment of these notes.
Senior Convertible Notes Issued June 2023
On June 12, 2023 and June 16, 2023, the Company entered into Note and Warrant Purchase Agreements (the “Senior Convertible Note Purchase Agreements”) with certain investors (each, an “Investor”) for the sale of (i) convertible promissory notes (“Senior Convertible Notes”) in the aggregate principal amount of $
9,225,000
, and (ii) warrants (“Senior Note W
arrants," refer to Note 10) to
purchase up to
287,972
shares of the Company’s Common Stock from the June 12, 2023 Senior Convertible Note Purchase Agreement and up to
47,238
shares of Common Stock from the June 16, 2023 Senior Convertible Note Purchase Agreement.
The Senior Convertible Notes were senior, secured obligations of the Company, which became secured by the Company's patent portfolio per the Security Agreement as of November 2023, bore interest at the rate of
7.0
% per annum, and were payable on the earlier of June 23, 2026 or the occurrence of an Event of Default, as defined in the Senior Convertible Notes. The Senior Convertible Notes were senior to the Junior Notes pursuant to an intercreditor agreement between the parties. The Senior Convertible Notes could be converted at any time following June 23, 2023 and prior to the payment in full of the principal amount of the Senior Convertible Notes at the Investor’s option.
As further described above, during August 2
024, $
687,315
of outstanding principal and accrued interest under the Senior Convertible Notes was purchased by another investor and subsequently exchanged for the issuance of a subordinated convertible note.
On December 16, 2024, the Lead Investor (as defined in the agreement governing the Senior Convertible Notes) issued a notice of default and acceleration, as well as a demand for payment, to the Company as a result of the failure of the Company to make certain required repayments under existing debt obligations, which constituted an event of default under the terms of the Senior Convertible Notes. The obligations under the Senior Convertible Notes were extinguished in connection with the Foreclosure (defined below).
Extinguishment
s
During the nine months ended September 30, 2024
, the Company issued
2,474,268
shares to noteholders to extinguish $
1,902,169
of principal as well as interest accrued on the Senior Convertible Notes. The reacquisition value of the debt was higher than the related carrying value, and thus resulted in a loss on debt extinguishment of $
5,231,630
recorded in the condensed consolidated statement of operations for the
nine months ended September 30, 2024.
See Foreclosure collateral sale further below in this Note 8 for discussion of the extinguishment of the remaining Senior Convertible Notes on March 5, 2025.
Related Parties
The table below summarizes the outstanding principal amount of the Senior Convertible Notes to related parties:
Investor
September 30,
2025
December 31,
2024
Wilson-Garling 2023 Family Trust
(1)
$
—
$
5,138,055
Eunomia, LP
(2)
—
1,027,611
Curtis N Maas Revocable Trust
(3)
—
102,761
Total Senior Convertible Notes - related parties
$
—
$
6,268,427
(1)
Thomas J. Wilson, an affiliat
e of Wilson-Garling 2023 Family Trust, was a member of the Legacy Nuburu board of directors.
(2)
Ron Nicol, manager of Eunomia, LP, was the Chairman of the Company’s board of directors until January 2025.
(3)
Curtis Maas, an affiliate of the Curtis N Maas Revocable Trust, was a member of the Legacy Nuburu board of directors.
Foreclosure Collateral Sale
On March 5, 2025, as part of the foreclosure process initiated by the Lead Investor (the “Foreclosure”), the lenders holding the outstanding Senior Convertible Notes held an auction for the sale of collateral securing the Company’s repayment obligations, which resulted in such lenders taking possession of such collateral in exchange for a full discharge and extinguishment of the Company’s $
8,961,872
of indebtedness with respect to the Junior Notes and Senior Convertible Notes, as well as a loss on extinguishment of the Senior Convertible Notes of $
1,682,641
, of which $
27,139
of this loss relates to related parties. The extinguishment of the Junior Notes did not result in a gain or loss on extinguishment as the proceeds deemed to be received by the holders of the Junior Notes in connection with the Foreclosure approximated the carrying value of the Junior Notes and all issuance costs were fully amortized. The loss on extinguishment of the Senior Convertible Notes is included within loss on extinguishment of notes payable within the condensed consolidated statement of operations for the
nine months ended September 30, 2025.
Liqueous Obligation
In October 2024, the Company and Liqueous agreed to terms where the Company borrowed $
1,053,824
from Liqueous (the “Liqueous Obligation”). The Liqueous Obligation was subordinated to the Company's other outstanding debt instruments, accrued interest at
8
% per annum and matured in
October 2025
.
The
Liqueous Obligation was prepayable at any time prior to the maturity date without penalty. Upon an event of default, the investor could require all outstanding and accrued interest immediately due and payable.
In February 2025, in connection with the Liqueous Settlement Agreement, as amended, the Company agreed to issue
6,406,225
pre-funded warrants exercisable into Common Stock, which included a nominal exercise price, to extinguish the Liqueous Obligation. In April 2025, through an additional amendment to the Liqueous Settlement Agreement, the Company agreed to settle the Liqueous Obligation through the issuance of
9,090,959
shares of Common Stock.
During the third quarter of 2025, the Liqueous Obligation was assigned to Redstone Group I LLC (“Redstone”) and $
1,097,113
of outstanding principal and accrued interest was settled through the issuance of
9,000,000
shares of the Company's Common Stock to Redstone, resulting in a loss on extinguishment of notes payable of $
424,887
included in the condensed consolidated statement of operations for the three and
nine months ended September 30, 2025 and an increase to additional paid-in capital of $
1,519,152
.
TAG Promissory Note (Related Party)
In January 2025, the Company issued a promissory note in a principal amount of $
545,000
(the "TAG Promissory Note") to The AvantGarde Group ("TAG"), which is founded and owned by the Company's Executive Chairman and Co-Chief Executive Officer, as a replacement of a previously recorded shareholder advance. The TAG Promissory Note is subordinated to the Company's other outstanding debt instruments at the time of issuance, accrues interest beginning October 28, 2025 at
SOFR
plus a margin of
10
% per annum and matures in
January 2026
, which may be extended by six months at the election of the Company if the Company does not have at least $
2.5
million in available cash at the maturity date. The note is prepayable at any time prior to the maturity date without penalty. Upon an event of default, all outstanding principal and accrued interest is immediately due and payable.
In July 2025, following stockholder approval, the TAG Promissory Note was amended to permit TAG to convert any outstanding principal and unpaid accrued interest due under the TAG Promissory Note into shares of Common Stock at a conversion price equal to a
33.33
% discount to the lowest
daily volume weighted average price as reported by Bloomberg L.P. (“
VWAP") during the
5
days prior to the conversion date.
Certain conversion features of the TAG Promissory Note would typically be considered derivatives that would require bifurcation. The TAG Promissory Note is recorded at fair value, and the changes in t
he fair value are recorded within the condensed consolidated statement of operations. As the addition of the conversion feature resulted in debt that was considered substantially different, the amendment resulted in a loss on debt extinguishment of $
1,094,914
included in the condensed consolidated statement of operations for the three and
nine months ended September 30, 2025.
AZ Promissory Note (Related Party)
In April 2025, in connection with the TCEI Acquisition described in Note 6,
the Company issued a promissory note in a principal amount of $
900,000
to the Company's Executive Chairman
and Co-Chief Executive Officer
(the "AZ Promissory Note"). The AZ Promissory Note is subordinated to the Company's current and future outstanding secured debt instruments issued by an institutional lender and the Series A Preferred Stock, accrues interest beginning July 30, 2025 at
10
% per annum, payable monthly after that date, and matures in
April 2026
. The note is prepayable at any time prior to the maturity date without penalty. The agreement requires immediate repayment of all outstanding principal and accrued interest if the Company is sold or raises more than $
100
million through a single issuance or series of related issuances of securities (excluding employee, consultant, or strategic non-fundraising issuances). Upon an event of default, all outstanding principal and accrued interest is immediately due and payable.
In July 2025, following stockholder approval, the AZ Promissory Note was amended to permit the Company's Executive Chairman and Co-Chief Executive Officer to convert any outstanding principal and unpaid accrued interest due under the Chariman Promissory Note into shares of Common Stock at a conversion price equal to a
33.33
% discount to the lowest
daily
VWAP during the
5
days prior to the conversion date.
Certain conversion features of the AZ Promissory Note would typically be considered derivatives that would require bifurcation.
As such, the Company elected to account for the AZ Promissory Note at fair value, and the changes in the fair value are recorded within the condensed consolidated statement of operations. As the addition of the conversion feature resulted in debt that was considered substantially different, the amendment resulted in a loss on debt extinguishment of $
1,745,201
included in the condensed consolidated statement of operations for the three and
nine months ended September 30, 2025.
Indigo Capital Convertible Notes
March 2025
On March 3, 2025, the Company entered into the following transactions:
•
in exchange for a capital infusion of $
1,500,000
, the Company issued to Indigo Capital LP ("Indigo Capital") a $
1,578,495
face amount unsecured, convertible note (the "Indigo Capital Convertible Note"). The Indigo Capital Convertible Note bears no interest for so long as it is not in default and has a
March 1, 2026
maturity date and a
conversion price equal to a
20
% discount to the lowest
daily
VWAP during the
5
days prior to the conversion date
;
•
in exchange for the extinguishment of the remaining August 2024 Convertible Notes held by Indigo Capital, which it purchased from Esousa on March 3, 2025, the Company issued to Indigo Capital a $
894,708
face amount unsecured, convertible note (the "March Indigo Capital Exchange Convertible Note"). The March Indigo Capital Exchange Convertible Note bears no interest for so long as it is not in default, and has a
March 1, 2026
maturity date and a conversion price equal to
33.33
% of the lowest VWAP during the
5
days prior to the conversion date.
The convertible notes issued in connection with the above transactions are collectively referred to herein as the "March Indigo Capital Convertible Notes". The terms of the March Indigo Capital Convertible Notes allow the Company to convert at any time after issuance without penalty at the conversion prices discussed above.
From and after the occurrence of an event of default, the interest rate under the March Indigo Capital Convertible Notes increases to
15.0
% .
Issuances of Common Stock on conversion of the March Indigo Capital Convertible Notes are limited to an amount equal to
19.9
% of the outstanding Common Stock as of the date of execution, until such time as the transaction is approved by stockholders. On July 9, 2025, at the Company's annual meeting of stockholders
(the “2025 Annual Meeting”)
, the Company's stockholders approved the issuance of shares on conversion of the March Indigo Capital Exchange Convertible Note in excess of the above
19.99
% limit.
The transaction documents contain customary representations, warranties, and covenants, and the notes include customary events of default including, but not limited to, failure to pay amounts due when required, default in covenants, bankruptcy events, and suspension or delisting from trading of the Common Stock on an eligible exchange. The Company is also obligated to register, and has registered, for resale the shares issuable upon conversion of the notes.
Certain conversion features of the March Indigo Capital Convertible Notes would typically be considered derivatives that would require bifurcation. The March Indigo Capital Convertible Notes are recorded at fair value, and the changes in t
he fair value are recorded within the condensed consolidated statement of operations. The excess of the initial fair value of $
2,207,800
of the March Indigo Capital Convertible Notes over the proceeds received was recorded as a loss on issuance of notes payable on the condensed consolidated statement of operations of $
707,800
during the
nine months ended September 30, 2025
. The excess of the initial fair value of $
3,003,300
of the March Indigo Capital Exchange Convertible Note over the carrying amount of the August 2024 Convertible Notes was recorded as a loss on debt extinguishment on the condensed consolidated statement of operations of $
2,123,403
during the
nine months ended September 30, 2025
. Transaction costs of $
20,000
were expensed as incurred and included in the condensed consolidated statements of operations as a component of general and administrative expenses during the
nine months ended September 30, 2025.
In March 2025, Indigo Capital converted $
307,320
of contractual principal under the March Indigo Capital Exchange Convertible Notes, resulting in the issuance of
4,313,272
shares of Common Stock to Indigo Capital at a fair value of $
907,578
, which resulted in a gain of $
124,014
recorded within change in fair value of notes payable
in the condensed consolidated statements of operations for the nine months ended September 30, 2025.
April 2025
On April 22, 2025, the Company entered into the following transactions:
•
in exchange for a capital infusion of $
1,350,000
, the Company issued to Indigo Capital a $
1,421,053
face amount unsecured, convertible note (the "April Indigo Capital Convertible Note"). The April Indigo Capital Convertible Note bears no interest for so long as it is not in default, has an
April 21, 2026
maturity date and a
conversion price equal to the lowest VWAP during the
5
days prior to the conversion date
;
•
in exchange for the extinguishment of an existing unsecured promissory note of the Company with a $
2,003,097
face amount, the Company issued to Indigo Capital a $
2,108,523
face amount unsecured, convertible note (the "April Indigo Capital Exchange Convertible Note") that bears no interest for so long as it is not in default, has an
April 21, 2026
maturity date and a conversion price equal to the lowest VWAP during the
5
days prior to the conversion date.
The convertible notes issued in connection with the above transactions are collectively referred to herein as the "April Indigo Capital Convertible Notes", collectively with the March Indigo Capital Convertible Notes, the "Indigo Capital Convertible Notes". The terms of the April Indigo Capital Convertible Notes allow the Company to convert at any time after issuance without penalty at the conversion prices discussed above.
From and after the occurrence of an event of default, the interest rate under the April Indigo Capital Convertible Notes increases to
15.0
% .
The April Indigo Capital Convertible Notes are subordinate to the currently outstanding Series A Preferred Stock, solely with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company.
Issuances of Common Stock on conversion of such notes are limited to an amount equal to
19.9
% of the outstanding Common Stock as of the date of execution, until such time as the transaction is approved by stockholders.
At the 2025 Annual Meeting, the Company's stockholders approved the issuance of shares on conversion of the April Indigo Capital Convertible Notes in excess of the above
19.99
% limit.
The transaction documents contain customary representations, warranties, and covenants, and the notes include customary events of default including, but not limited to, failure to pay amounts due when required, default in covenants, bankruptcy events, and suspension or delisting from trading of the Common Stock on an eligible exchange. The Company is also obligated to register, and has registered, for resale the shares issuable upon conversion of the notes.
Certain conversion features of the April Indigo Capital Convertible Notes would typically be considered derivatives that would require bifurcation. As such, the Company elected to account for the April Indigo Capital Convertible Notes at fair value, and the changes in the fair value are recorded within the condensed consolidated statement of operations.
The excess of the initial fair value of $
1,531,351
of the
April Indigo Capital Convertible Note
over the proceeds received was recorded as a loss on issuance of notes payable on the condensed consolidated statement of operations of $
181,351
during the
nine months ended September 30, 2025.
The Company incurred debt issuance costs of
$
40,000
related to the issuance of the April Indigo Capital Convertible Notes, which is included within other gain (loss), net on the condensed consolidated statements of operations for the nine months ended September 30, 2025.
July 2025
On July 16, 2025, the Company, in exchange for a capital infusion of $
150,000
, issued to Indigo a $
150,000
face amount unsecured, convertible note (the “July Indigo Capital Convertible Note”). The July Indigo Capital Convertible Note bears no interest for so long as it is not in default and has a
July 15, 2026
maturity date and a
conversion price equal to
80
% of the lowest VWAP during the
5
days prior to the conversion date
.
Issuances of Common Stock on conversion of the July Indigo Capital Convertible Note are limited to an amount equal to
19.9
% of the outstanding Common Stock as of the date of execution, until such time as the transaction is approved by stockholders, and may not result in Indigo’s holding more than
9.9
% and
4.99
%, respectively, of the Company’s outstanding Common Stock at any time. The July Indigo Capital Convertible Note is also subordinate to the currently outstanding Series A Preferred Stock, solely with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company.
The foregoing transaction documents contain customary representations, warranties, and covenants, including customary events of default including, but not limited to, failure to pay amounts due when required, default in covenants, and bankruptcy events.
Certain conversion features of the July Indigo Capital Convertible Note would typically be considered derivatives that would require bifurcation. As such, the Company elected to account for the July Indigo Capital Convertible Note at fair value, and the changes in the fair value are recorded within the condensed consolidated statement of operations. The excess of the initial fair value of $
193,858
of
the July Indigo Capital Convertible Note over the proceeds received was
recorded
as a loss on issuance of notes payable on the condensed consolidated statement of operations of $
43,858
during the three and
nine months ended September 30, 2025.
August 2025
On August 18, 2025, the Company, in exchange for a capital infusion of $
225,000
, issued to Indigo a $
225,000
face amount unsecured, convertible note (the “August Indigo Capital Convertible Note”). The August Indigo Capital Convertible Note bears no interest for so long as it is not in default and has an
August 17, 2026
maturity date and a
conversion price equal to
80
% of the lowest VWAP during the
5
days prior to the conversion date
.
Issuances of Common Stock on conversion of the August Indigo Capital Convertible Note are limited to an amount equal to
19.9
% of the outstanding Common Stock as of the date of execution, until such time as the transaction is approved by stockholders, and may not result in Indigo holding more than
9.9
% of the Company’s outstanding Common Stock at any time. The August Indigo Capital Convertible Note is also subordinate to the currently outstanding Series A Preferred Stock, solely with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company.
The foregoing transaction documents contain customary representations, warranties, and covenants, including customary events of default including, but not limited to, failure to pay amounts due when required, default in covenants, and bankruptcy events.
Certain conversion features of the August Indigo Capital Convertible Note would typically be considered derivatives that would require bifurcation. As such, the Company elected to account for the August Indigo Capital Convertible Note at fair value, and the changes in the fair value are recorded within the condensed consolidated statement of operations. The excess of the initial fair value of $
274,300
of the August Indigo Capital Convertible Note over the proceeds received was recorded as a loss on issuance of notes payable on the condensed consolidated statement of operations of $
49,300
during the three and
nine months ended September 30, 2025.
The August Indigo Capital Convertible Note, July Indigo Capital Convertible Note, April Indigo Capital Convertible Notes and March Indigo Capital Convertible Notes are referred to collectively herein as the "Indigo Capital Convertible Notes". At September 30, 2025, the outstanding principal amount under the Indigo Capital Convertible Notes was $
3,277,153
. For additional information regarding the fair value of the Indigo Capital Convertible Notes, see Note 4.
Extinguishment
s
During the three and nine months ended September 30, 2025, Indigo Capital converted $
1,875,503
and $
3,100,626
of principal under the Indigo Capital Convertible Notes, resulting in the issuance of
15,413,379
and
29,221,075
shares, respectively, of Common Stock to Indigo Capital and a reduction in the fair value of the Indigo Capital Convertible Notes, with a corresponding increase to additional paid-in capital of
$
2,284,909
and
$
5,953,849
, respectively.
In connection with the issuance of the April Indigo Capital Exchange Convertible Note in exchange for the extinguishment of an existing unsecured promissory note of the Company with a carrying value of $
2,108,523
, the Company recorded a loss on debt extinguishment of $
185,388
during the
nine months ended September 30, 2025.
Agile Note
On May 12, 2025, the Company entered into a Business Loan and Security Agreement with Agile Capital Funding, LLC and its affiliates (“Agile”), pursuant to which the Company issued to Agile a $
525,000
face amount secured
promissory note (the “Agile Note”). The Agile Note bears interest at
44.0
%, and requires
weekly
repayments of $
27,000
through
November 2025
, totaling $
756,000
. From and after the occurrence of an event of default, the interest rate increases by
5.0
%. The Agile Note is secured by the Company’s cash and deposit accounts. Upon an event of default, all accrued and unpaid principal and interest plus a prepayment premium is immediately due and payable (including any default interest, as applicable). The prepayment premium is equal to the aggregate amount of contractual interest that would be owed from the date of acceleration through the maturity date. The terms of the Agile Note allow for the Company to prepay any unpaid principal, accrued interest and other obligations due, as applicable, at anytime. Upon such prepayment, the Company is also required to pay the prepayment premium.
Certain features of the Agile Note would typically be considered derivatives that would require bifurcation. As such, the Company elected to account for the Agile Note at fair value, and the changes in the fair value are recorded within the condensed consolidated statements of operations.
The Company received net proceeds of $
443,620
from the issuance of the Agile Note, which includes (i) a debt discount of $
25,000
and (ii) debt issuance costs of
$
56,380
, which are included in other gain (loss), net on the consolidated statements of operations during the nine months ended September 30, 2025.
On May 30, 2025, the Company executed an amendment to the Business Loan and Security Agreement with Agile, which amended (i) the principal amount of the Agile Note to $
1,000,000
, (ii) the weekly payments from $
27,000
to $
48,000
and (iii) the maturity date to
December 26, 2025
. In connection with the amendment, the Company received net proceed
s of $
248,000
, which comprises (a) the new principal of $
1,000,000
, less (b) the aggregate principal and prepayment premium owed under the original agreement of $
702,000
and
(c) $
50,000
of debt discount.
At September 30, 2025, the outstanding principal amount outstanding under the Agile Note was
$
447,917
. For additional information regarding the fair value of the Agile Note, see Note 4.
Diagonal Convertible Notes
May 2025
On May 13, 2025, the Company entered into a Securities Purchase Agreement (the “SPA”)
with 1800 Diagonal Lending LLC (“Diagonal”), pursuant to which the Company issued to Diagonal a $
227,700
face amount convertible promissory note (the “Diagonal Convertible Note”). The Diagonal Convertible Note bears interest at
10
% and has a maturity date of
February 28, 2026
. From and after the occurrence of an event of default, the interest rate increases by
12.0
%. Beginning 180 days after the issuance date, the note may be converted into Common Stock for a conversion price equal to a discount of
25
% to the lowest trading price during the ten days prior to the conversion date. The Company may prepay the Diagonal Convertible Note (i) for
120
% of the outstanding principal plus accrued interest beginning on the issuance date and ending 120 days following the issuance date and (ii) for
125
%
of the outstanding principal plus accrued interest
beginning
121 days following the issuance date and ending 180 days following the issuance date. Diagonal also agreed to provide additional tranches of financing during the twelve months following the date of the SPA, up to an aggregate of $
2,275,000
, subject to further agreement between the Company and Diagonal.
The Diagonal Convertible Note is subordinate to the currently outstanding Series A Preferred Stock, solely with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution, or winding up of the Company. Issuances of Common Stock on conversion of the Diagonal Convertible Note are limited to an amount equal to
19.9
% of the outstanding Common Stock as of the date of execution, until such time as the transaction is approved by stockholders. The terms of the Diagonal Convertible Note contain customary representations, warranties, and covenants, including customary events of default including, but not limited to, failure to pay amounts due when required, default in covenants, and bankruptcy events.
Certain conversion features of the Diagonal Convertible Note would typically be considered derivatives that would require bifurcation. As such, the Company elected to account for the Diagonal Convertible Note at fair value, and the changes in the fair value are recorded within the condensed consolidated statement of operations.
The excess of the initial fair value of $
399,955
of the Diagonal Convertible Note over the proceeds received was recorded as a loss on issuance of notes payable on the condensed consolidated statement of operations of $
192,955
during the
nine months ended September 30, 2025.
The Company receive
d net proceeds of $
178,000
from the issuance of the Diagonal Convertible Note, which includes (i) a debt discount of $
20,700
and (ii) debt issuance costs of
$
29,000
, which are included in other gain (loss), net on the consolidated statements of operations during the nine months ended September 30, 2025.
July 2025
On July 21, 2025, the Company entered into a Securities Purchase Agreement with Diagonal, pursuant to which, in exchange for a capital infusion of $
157,000
, the Company issued to Diagonal a $
172,700
face amount convertible promissory note (the “July Diagonal Convertible Note”). The July Diagonal Convertible Note bears interest at
10
% and has a maturity date of
April 30, 2026
. Beginning 180 days after the issuance date, the July Diagonal Convertible Note may be converted into Common Stock for a conversion price equal to a discount of
25
% to the lowest trading price during the ten days prior to the conversion date.
Issuances of Common Stock on conversion of the July Diagonal Convertible Note are limited to an amount equal to
19.9
% of the outstanding Common Stock as of the date of execution, until such time as the transaction is approved by stockholders, and may not result in Diagonal’s holding more than
4.99
% of the Company’s outstanding Common Stock at any time. The July Diagonal Convertible Note is also subordinate to the currently outstanding Series A Preferred Stock, solely with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company.
The foregoing transaction documents contain customary representations, warranties, and covenants, including customary events of default including, but not limited to, failure to pay amounts due when required, default in covenants, and bankruptcy events.
Certain conversion features of the July Diagonal Convertible Note would typically be considered derivatives that would require bifurcation. As such, the Company elected to account for the July Diagonal Convertible Note at fair value, and the changes in the fair value are recorded within the condensed consolidated statement of operations. The excess of the initial fair value of $
299,242
of the July Diagonal Convertible Note over the proceeds received was recorded as a loss on issuance of notes payable on the condensed consolidated statement of operations of $
142,242
during the three and
nine months ended September 30, 2025.
The Company receive
d net proceeds of $
141,000
from the issuance of the July Diagonal Convertible Note, which includes (i) a debt discount of $
15,700
and (ii) debt issuance costs of $
16,000
, which are included in other gain (loss), net on the consolidated statements of operations during the three and
nine months ended September 30, 2025.
The Diagonal Convertible Note and July Diagonal Convertible Note issued in connection with the above transactions are collectively referred to herein as the "Diagonal Convertible Notes". At September 30, 2025, the outstanding principal amount outstanding under the Diagonal Convertible Notes was
400,400
. For additional information regarding the fair value of the Diagonal Convertible Notes, see Note 4.
Boot Convertible Note
On May 13, 2025, the Company entered into a Securities Purchase Agreement with Boot Capital LLC (“Boot”), pursuant to which the Company issued to Boot a $
110,000
face amount convertible promissory note (the “Boot Convertible Note”). The Boot Convertible Note bears interest at
10
% and has a maturity date of
February 28, 2026
. From and after the occurrence of an event of default, the interest rate increases by
12.0
%. Beginning 180 days after the issuance date, the note may be converted into Common Stock for a conversion price equal to a discount of
25
% to the lowest trading price during the ten days prior to the conversion date.
The Boot Convertible Note is subordinate to the currently outstanding Series A Preferred Stock, solely with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution, or winding up of the Company. Issuances of Common Stock on conversion of the Boot Convertible Note are limited to an amount equal to
19.9
% of the outstanding Common Stock as of the date of execution, until such time as the transaction is approved by stockholders. The Company may prepay the Boot Convertible Note (i) for
120
% of the outstanding principal plus accrued interest beginning on the issuance date and ending 120 days following the issuance date and (ii) for
125
% of the outstanding principal plus accrued interest beginning 121 days following the issuance ending 180 days following the issuance date. The terms of the Boot Convertible Note contain customary representations, warranties, and covenants, including customary events of default including, but not limited to, failure to pay amounts due when required, default in covenants, and bankruptcy events
.
Certain conversion features of the Boot Convertible Note would typically be considered derivatives that would require bifurcation. As such, the Company elected to account for the Boot Convertible Note at fair value, and the changes in the fair value are recorded within the condensed consolidated statement of operations.
The excess of the initial fair value of $
193,215
of the Boot Convertible Note over the proceeds received was recorded as a loss on issuance of notes payable on the condensed consolidated statement of operations of $
93,215
during the
nine months ended September 30, 2025.
The Company received net proceeds of $
84,000
from the issuance of the Boot Convertible Note, which includes (i) a debt discount of $
10,000
and (ii) debt issuance costs of
$
16,000
, which are included in other gain (loss), net on the consolidated statements of operations during the nine months ended September 30, 2025.
At September 30, 2025, the outstanding principal amount outstanding under the Boot Convertible Note was
$
110,000
. For additional information regarding the fair value of the Boot Convertible Note, see Note 4.
Brick Lane Convertible Notes
June 2025
On June 3, 2025, the Company entered into the following transactions with Brick Lane Capital Management Limited (“Brick Lane”):
•
in exchange for transferring
100,000
shares of the Company’s outstanding Series A Preferred Stock to the Company, which Brick Lane purchased from an existing investor, the Company issued to Brick Lane a $
1,050,000
face amount unsecured, convertible note (the "Brick Lane Exchange Convertible Note"). The note bears no interest for so long as it is not in default, has an
April 17, 2026
maturity date and a conversion price equal to the lowest VWAP during the
5
days prior to the conversion date; and
•
in exchange for a capital infusion of $
250,000
, the Company issued to Brick Lane a $
250,000
face amount unsecured, convertible note. The note bears no interest for so long as it is not in default, has a
June 2, 2026
maturity date and a conversion price equal to the lowest VWAP during the
5
days prior to the conversion date.
The convertible notes issued in connection with the above transactions are collectively referred to herein as the "June Brick Lane Convertible Notes".
Issuances of Common Stock on conversion of such notes are limited to an amount equal to
19.9
% of the outstanding Common Stock as of the date of execution, until such time as the transaction is approved by stockholders, and may not result in Brick Lane holding more than
9.9
% of the Company’s outstanding Common Stock at any time. The notes are also subordinate to the currently outstanding Series A Preferred Stock, solely with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company. The Company is obligated to register for resale the shares issuable upon conversion of the notes.
The foregoing transaction documents contain customary representations, warranties, and covenants, including customary events of default including, but not limited to, failure to pay amounts due when required, default in covenants, and bankruptcy events.
Certain conversion features of the June Brick Lane Convertible Notes would typically be considered derivatives that would require bifurcation. As such, the Company elected to account for the June Brick Lane Convertible Notes at fair value, and the changes in the fair value are recorded within the condensed consolidated statement of operations.
September 2025
On September 2, 2025, the Company, in exchange for a capital infusion of $
125,000
, issued to Brick Lane a $
125,000
face amount unsecured, convertible note (the “September Brick Lane Convertible Note”). The September Brick Lane Convertible Note bears no interest for so long as it is not in default and has a
September 2, 2026
maturity date and a
conversion price equal to
70
% of the lowest VWAP during the
5
days prior to the conversion date
.
Issuances of Common Stock on conversion of the September Brick Lane Convertible Note are limited to an amount equal to
19.9
% of the outstanding Common Stock as of the date of execution, until such time as the transaction is approved by stockholders, and may not result in Brick Lane holding more than
9.9
% of the Company’s outstanding Common Stock at any time. The September Brick Lane Convertible Note is also subordinate to the currently outstanding Series A Preferred Stock, solely with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company.
The foregoing transaction documents contain customary representations, warranties, and covenants, including customary events of default including, but not limited to, failure to pay amounts due when required, default in covenants, and bankruptcy events.
The September Brick Lane Convertible Note and June Brick Lane Convertible Notes are collectively referred to herein as the "Brick Lane Convertible Notes". The terms of the Brick Lane Convertible Notes allow the Company to convert at any time after issuance without penalty at the conversion prices discussed above.
From and after the occurrence of an event of default, the interest rate under the Brick Lane Convertible Notes increases to
15.0
%.
Certain conversion features of the September Brick Lane Convertible Note would typically be considered derivatives that would require bifurcation. As such, the Company elected to account for the September Brick Lane Convertible Note at fair value, and the changes in the fair value are recorded within the condensed consolidated statement of operations. The excess of the initial fair value of $
177,366
of the September Brick Lane Convertible Note over the proceeds received was recorded as a loss on issuance of notes payable on the condensed consolidated statement of operations of $
52,366
during the three and
nine months ended September 30, 2025.
At September 30, 2025, the outstanding principal amount outstanding under the Brick Lane Convertible Notes was $
232,661
. For additional information regarding the fair value of the Brick Lane Convertible Notes, see Note 4.
Extinguishment
s
During the second quarter of 2025, the Company recorded a loss on debt extinguishm
ent of $
1,071,997
related
to the
issuance of the Brick Lane Exchange Convertible Note to extinguish the
100,000
shares of the Company's outstanding Series A Preferred Stock, which represents the excess of the fair value of the Brick Lane Exchange Convertible Note over the carrying amount of the Series A Preferred Stock included in preferred stock liability on the consolidated balance sheet.
During the three and nine months ended September 30, 2025, Brick Lane converted $
142,339
and $
1,192,339
of principal under the Brick Lane Exchange Convertible Note, resulting in the issuance of
806,452
and
7,606,970
shares of Common Stock to Brick Lane and a reduction in the fair value of the Brick Lane Convertible Notes, with a corresponding increase to additional paid-in capital, of
$
131,452
and $
2,396,025
, respectively.
On June 18, 2025, the Company entered into the following transactions with Bomore Opportunity Group Ltd (“Bomore”):
•
in exchange for transferring
100,000
shares of the Company’s outstanding Series A Preferred Stock to the Company, the Company issued to Bomore a $
1,050,000
face amount unsecured, convertible note (the "Bomore Exchange Convertible Note"). The note bears no interest for so long as it is not in default, has an
June 17, 2026
maturity date and a conversion price equal to the lowest VWAP during the
5
days prior to the conversion date; and
•
in exchange for a capital infusion of $
250,000
, the Company issued to Bomore a $
250,000
face amount unsecured, convertible note. The note bears no interest for so long as it is not in default, has a
June 17, 2026
maturity date and a conversion price equal to the lowest VWAP during the
5
days prior to the conversion date.
The convertible notes issued in connection with the above transactions are collectively referred to herein as the "Bomore Convertible Notes". The terms of the Bomore Convertible Notes allow the Company to convert at any time after issuance without penalty at the conversion prices discussed above.
From and after the occurrence of an event of default, the interest rate under the Bomore Convertible Notes increases to
15.0
% .
Issuances of Common Stock on conversion of such notes are limited to an amount equal to
19.9
% of the outstanding Common Stock as of the date of execution, until such time as the transaction is approved by stockholders, and may not result in Bomore holding more than
9.9
% of the Company’s outstanding Common Stock at any time. The notes are also subordinate to the currently outstanding Series A Preferred Stock, solely with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company.
The foregoing transaction documents contain customary representations, warranties, and covenants, including customary events of default including, but not limited to, failure to pay amounts due when required, default in covenants, and bankruptcy events.
Certain conversion features of the Bomore Convertible Notes would typically be considered derivatives that would require bifurcation. As such, the Company elected to account for the Bomore Convertible Notes at fair value, and the changes in the fair value are recorded within the condensed consolidated statement of operations.
At September 30, 2025, the outstanding principal amount outstanding under the Bomore Convertible Notes was $
250,000
. For additional information regarding the fair value of the Bomore Convertible Notes, see Note 4.
Extinguishment
s
During the nine months ended September 30, 2025, the Company recorded a loss on debt extinguishment of $
140,323
related to the issuance of the Bomore Exchange Convertible Note to extinguish the
100,000
shares of the Company's outstanding Series A Preferred Stock, which represents the excess of the fair value of the Bomore Exchange Convertible Note over the carrying amount of the Series A Preferred Stoc
k included in preferred stock liability on the consolidated balance sheet.
During the three months ended September 30, 2025, Bomore converted $
1,050,000
of principal under the Bomore Convertible Notes, resulting in the issuance of
3,253,796
shares of Common Stock to Bomore and a reduction in the fair value of the Bomore Convertible Notes, with a corresponding increase to additional paid-in capital, of $
1,112,798
.
Torcross Convertible Note
On June 25, 2025, the Company entered into the following transactions with Torcross Capital LLC (“Torcross”):
•
in exchange for the transfer of
40,000
shares of the Company’s outstanding Series A Preferred Stock to the Company, the Company is required to issue to Torcross a $
400,000
face amount unsecured, convertible note (the "Torcross Exchange Convertible Note"), which transaction was not yet closed as of September 30, 2025 and therefore the Torcross Exchange Convertible Note is not reflected in these condensed consolidated financial statements nor is the transfer of the
40,000
shares of Series A Preferred Stock to the Company. In November 2025, through a rescission agreement, the Company and Torcross rescinded the transactions set forth in the Torcross Exchange Convertible Note, such that the parties are deemed to have not entered into such transactions; and
•
in exchange for a capital infusion of $
100,000
, the Company issued to Torcross a $
100,000
face amount unsecured, convertible note (the "Torcross Convertible Note"). The note bears no interest for so long as it is not in default, has a
June 24, 2026
maturity date and a
conversion price equal to
80
% of the lowest VWAP during the
5
days prior to the conversion date
.
The terms of the Torcross Convertible Note allow the Company to convert at any time after issuance without penalty at the conversion prices discussed above.
From and after the occurrence of an event of default, the interest rate under the Torcross Convertible Note increases to
15.0
%.
Issuances of Common Stock on conversion of such note is limited to an amount equal to
19.9
% of the outstanding Common Stock as of the date of execution, until such time as the transaction is approved by stockholders, and may not result in Torcross holding more than
9.9
% of the Company’s outstanding Common Stock at any time. The note is also subordinate to the currently outstanding Series A Preferred Stock, solely with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company.
The foregoing transaction documents contain customary representations, warranties, and covenants, including customary events of default including, but not limited to, failure to pay amounts due when required, default in covenants, and bankruptcy events.
Certain conversion features of the Torcross Convertible Note would typically be considered derivatives that would require bifurcation. As such, the Company elected to account for the Torcross Convertible Note at fair value, and the changes in the fair value are recorded within the condensed consolidated statement of operations.
The excess of the initial fair value of $
133,883
of the Torcross Convertible Note over the proceeds received was recorded as a loss on issuance of notes payable on the condensed consolidated statement of operations of $
33,883
during the
nine months ended September 30, 2025.
At September 30, 2025, the outstanding principal amount outstanding under the Torcross Convertible Note was
$
100,000
. For additional information regarding the fair value of the Torcross Convertible Note, see Note 4.
Yorkville Promissory Note
On June 30, 2025, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with the investors party thereto pursuant to which the Company issued a debenture in the amount of $
1,250,000
in exchange for a capital infusion of $
1,100,000
(the "Yorkville Promissory Note"), which closed in July 2025.
The Yorkville Promissory Note bears interest at an annual rate equal to
8
% for so long as it is not in default and has an
October 30, 2025
maturity date. From and after the occurrence of an event of default, the interest rate under the Yorkville Promissory Note increases to
18.0
%. The Company may prepay the Yorkville Promissory Note at any time after issuance without penalty. Among other things, the Purchase Agreement prohibits the Company from incurring additional indebtedness or entering into variable rate transactions, with certain exceptions. The Company is required to use any proceeds received under the SEPA, as defined and described in Note
11
,
to pay outstanding principal and interest under the Yorkville Promissory Note until the Yorkville Promissory Note is paid in its entirety.
The foregoing transaction documents contain customary representations, warranties, and covenants, including customary events of default including, but not limited to, failure to pay amounts due when required, default in covenants, and bankruptcy events.
Certain features of the Yorkville Promissory Note would typically be considered derivatives that would require bifurcation. As such, the Company elected to account for the Yorkville Promissory Note at fair value, and the changes in the fair value are recorded within the condensed consolidated statement of operations.
The excess of the initial fair value of $
1,255,700
of the Yorkville Convertible Note over the proceeds received was recorded as a loss on issuance of notes payable on the condensed consolidated statement of operations of $
155,700
during the
nine months ended September 30, 2025.
The Company incurred debt issuance costs of
$
127,000
related to the issuance of the Yorkville Promissory Note, which is included within other gain (loss), net on the condensed consolidated statements of operations for the nine months ended September 30, 2025.
The excess of the initial fair value of $
1,255,700
of the Yorkville Promissory Note over the proceeds received was recorded as a loss on issuance of notes payable on the condensed consolidated statements of operations of $
155,700
during the three and
nine months ended September 30, 2025. Du
ring the third quarter of 2025, the Company used proceeds from the SEPA to pay all outstanding principal and interest under the Yorkville Promissory Note, as further described in Note 11.
NOTE
9. EQUITY
Common Stock
On September 16, 2025, the Company consummated a best efforts public offering (the “Offering”) of an aggregate of (i)
32,373,536
shares of Common Stock, par value $
0.0001
per share, of the Company, (ii)
51,660,075
warrants, with an exercise price of $
0.0001
per share, to purchase shares of Common Stock ("Offering Pre-Funded Warrants"), and (iii)
126,050,417
warrants, with an exercise price of $
0.1714
per share, to purchase shares of Common Stock ("Offering Common Stock Warrants"). Each share of Common Stock or Offering Pre-Funded Warrant was sold together with one Offering Common Stock Warrant to purchase
1.5
shares of Common Stock. The combined offering price for each share of Common Stock and Offering Common Stock Warrant was $
0.1428
, and the combined offering price for each Offering Pre-Funded Warrant and accompanying Offering Common Stock Warrant was $
0.1427
. For additional information related to the warrants issued in connection with the Offering, see Note
10.
The Company received gross proceeds of $
11,994,834
from the Offering and incurred $
1,668,303
of offering costs, including the initial fair value of the Offering Placement Agent Warrants, as defined below, of $
417,815
, which were recorded as a reduction of additional paid-in capital, resulting in net cash proceeds of $
10,744,346
. The Company intends to use the net proceeds from this Offering to support the phased acquisitions of businesses and for working capital and general corporate purposes. The Offering was completed on the terms available to the Company at that time.
In connection with the Offering, the Company entered into a Securities Purchase Agreement (the “Offering Purchase Agreement”) with certain institutional and retail investors. Pursuant to the Offering Purchase Agreement, the Company agreed not to issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of Common Stock or any securities convertible into or exercisable or exchangeable for shares of Common Stock or file any registration statement or prospectus, or any amendment or supplement thereto for 60 days after the closing date of the Offering (i.e. November 15, 2025), subject to certain exceptions. The Company agreed not to effect or enter into an agreement to effect any issuance of Common Stock or any securities convertible into or exercisable or exchangeable for shares of Common Stock involving a Variable Rate Transaction (as defined in the Offering Purchase Agreement) until six months after the closing date of the Offering (i.e. March 16, 2026), subject to certain exceptions. Additionally, in connection with the Offering, each of the officers and directors of the Company and holders of
10
% or more of the Company’s outstanding shares of Common Stock entered into lock-up agreements, pursuant to which they agreed not to sell or transfer any of the Company securities they hold, subject to certain exceptions, during the 60 days following the closing of the Offering.
The Offering Purchase Agreement contains customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification obligations of the Company and the purchasers, including for liabilities arising under the Securities Act of 1933, as amended (the “Securities Act”), other obligations of the parties and termination provisions. The representations, warranties and covenants contained in the Offering Purchase Agreement were made only for the purposes of such agreement and as of specific dates, were solely for the benefit of the parties to such agreement and may be subject to limitations agreed upon by the contracting parties. A holder will not have the right to exercise any portion of the Offering Common Stock Warrants or Offering Pre-Funded Warrants if the holder (together with its affiliates) would beneficially own in excess of
4.99
% or
9.99
%, as applicable, of the number of shares of Common Stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Offering Common Stock Warrants or the Offering Pre-Funded Warrants, respectively.
Pursuant to a Placement Agency Agreement (the “Placement Agency Agreement”) with Joseph Gunnar & Co., LLC (the “Placement Agent”), the Company agreed to pay the Placement Agent in connection with the Offering (i) a total cash fee equal to up to seven and a half percent (
7.5
%) of the aggregate gross proceeds raised in the Offering for amounts up to and including $
10,000,000
, and an additional cash fee equal to six percent (
6.0
%) of the gross proceeds raised in the Offering for amounts in excess of $
10,000,000
,
and (ii) reimbursement for reasonable accountable and out-of-pocket expenses incurred relating to the
Also pursuant to the Placement Agency Agreement, the Company, in connection with the Offering, agreed to issue to the Placement Agent or its designees warrants (the “Offering Placement Agent Warrants”) to purchase up to an aggregate of
3,361,344
shares of Common Stock. The Offering Placement Agent Warrants have an exercise price of $
0.1785
per share (which represents
125
% of the combined public offering price per share of Common Stock and accompanying Offering Common Stock Warrant), expire on the
five-year
anniversary of the commencement of sales in the Offering, and are exercisable beginning six months from the date of issuance.
The shares of Common Stock, the Offering Pre-Funded Warrants, the Offering Common Stock Warrants and the Offering Placement Agent Warrants were offered by the Company pursuant to a registration statement filed with the SEC on September 10, 2025, and declared effective by the SEC on September 12, 2025, and a registration statement filed with the SEC on September 16, 2025.
The foregoing descriptions of the Offering Purchase Agreement, the Placement Agency Agreement, the Offering Common Stock Warrants, the Offering Pre-Funded Warrants and the Offering Placement Agent Warrants are not complete and are qualified in their entirety by reference to the full text of the form of Offering Purchase Agreement, Placement Agency Agreement, the form of Offering Common Stock Warrant, the form of Offering Pre-Funded Warrant, and the form of Offering Placement Agent Warrant.
Series A Preferred Stock
The Company is authorized to issue
50,000,000
shares of preferred stock with a par value of $
0.0001
per share
(the “Preferred Stock”) with such designation, rights and preferences as may be determined from time to time by the Company’s board of directors. As of September 30, 2025 and December 31, 2024
, there were
2,188,905
and
2,388,905
, respectively, of shares of preferred stock issued and outstanding.
During June 2025, the Company purchased (i)
100,000
shares of preferred stock from Brick Lane and (ii)
100,000
shares of preferred stock from Bomore, which Brick Lane and Bomore had each acquired from an existing investor, in exchange for a conve
rtible note, as further described in Note 8.
Ranking
The Company’s Preferred Stock ranks senior to the Company’s Common Stock with respect to rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company.
Dividends
Holders of the Company’s Preferred Stock participate, on an as-converted basis (without regard to any conversion limitations) in all dividends paid to the holders of the Company’s Common Stock.
Conversion Rights
Prior to January 31, 2025, as further described under
Redemption
below, the Preferred Stock was convertible at any time into Common Stock at a conversion price equal to $
10.00
(subject to equitable adjustment in the event of a stock split, stock consolidation, subdivision or certain other events of a similar nature that increase or decrease the number of shares of Preferred Stock outstanding (the “Original Issuance Price”)) divided by the lesser of (i) $
11.50
and (ii) the greater of (x)
115
% of the lowest VWAP per share of the Company’s Common Stock for any consecutive ninety-trading day period prior to the calculation of such VWAP and (y) $
5.00
, in each case subject to adjustment as set forth in the Certificate of Designations (the “Conversion Price”).
Mandatory Conversion
If the VWAP is greater than
200
% of the Conversion Price for any
20
trading days in a
30-day
trading day period, the Company may elect to convert all, but not less than all, of the Preferred Stock then outstanding into the Company’s Common Stock at a conversion rate with respect to each share of Preferred Stock equal to the Original Issuance Price as of the date of such conversion divided by the then applicable Conversion Price.
Voting Rights
The holders of Preferred Stock are not entitled to vote at or receive notice of any meeting of stockholders, except the holders of Preferred Stock are entitled to certain consent rights on matters related to (i) the creation or authorization of the creation of any equity or debt securities of the Company that rank senior or equal to certain rights of the Preferred Stock and (ii) the authorization of any adverse change to the powers, preferences, or special rights of the Preferred Stock set forth in the Company’s Certificate of Incorporation or Bylaws, and shall have voting rights as required by law.
Redemption
On the second anniversary of the Closing Date, or January 31, 2025 (the “Test Date”), the Company is obligated to redeem the maximum portion of the Preferred Stock permitted by law in cash at an amount equal to the Original Issuance Price as of such date if the Conversion Price exceeds the VWAP. If, on the Test Date, the Conversion Price is equal to or less than the VWAP, the Company must convert all shares of Preferred Stock then outstanding into shares of the Company’s Common Stock at the then applicable Conversion Price. Notwithstanding the foregoing, the Company shall not be required to redeem any shares of Preferred Stock to the extent the Company does not have legally available funds to effect such redemption. The mandatory redemption and conversion provisions described herein are further subject to certain limitations detailed in the Certificate of Designations. As a result of such redemption feature, the Company recorded the Preferred Stock at its redemption value and classified the Preferred Stock as mezzanine equity on the consolidated balance sheet through January 31, 2025. As the Conversion Price of the Preferred Stock exceeded the VWAP on the Test Date, the Company was obligated to redeem the Preferred Stock beginning at that time and, as such, reclassified such Preferred Stock from mezzanine equity to a current liability on January 31, 2025. The preferred stock current liability was initially recorded at its fair value on January 31, 2025 of $
13,491,000
and subsequently remeasured to its redemption amount of $
10.00
per share, or $
23,889,050
, as the Preferred Stock is currently mandatorily redeemable at such amount, with the difference between the initial fair value and carrying value of $
10,398,050
recorded as an adjustment to net loss available to common shareholders on the condensed consolidated statement of operations for the
nine months ended September 30, 2025
. The remeasurement of the liability subsequent to issuance to the redemption value of $
10,398,050
is recorded within interest expense recognized on remeasurement of preferred stock liability on the condensed consolidated statement of operations for the
nine months ended September 30, 2025
.
The following table provides a summary of the number of the Company's outstanding warrants:
September 30,
2025
December 31,
2024
Liability-classified warrants:
Offering Common Stock Warrants
123,454,232
—
Junior Note Warrants
859,315
859,315
Public Warrants
417,770
417,770
Total liability-classified warrants outstanding
124,731,317
1,277,085
Equity-classified warrants:
Offering Pre-Funded Warrants
31,660,075
—
Offering Placement Agent Warrants
3,361,344
—
June 2023 Senior Note Warrants
335,210
335,210
Pre-Funded Warrants
—
837,116
August 2024 Warrants Issued with Junior Notes
19,892
19,892
Total equity-classified warrants outstanding
35,376,521
1,192,218
Liability-Classified Warrants
November 2023 Junior Note Warrants
In connection with the Junior Notes discussed in Note 8
,
the Company issued the Junior Note Warrants to purchase up to
550,000
shares of the Company's Common Stock. The Junior Note Warrants currently outstanding have an exercise price equal to $
5.00
per share (subject to adjustment per the Junior Note Purchase Agreements) and expire on
December 6, 2028
. The Junior Note Purchase Agreements also provide for additional warrants to be issued if the Junior Notes remain outstanding for certain periods of time: (i) if the Junior Notes have not been repaid six months after issuance, additional warrants will be issued to each Lender in an amount equal to the principal amount of the Note multiplied by
25
%, and such quotient divided by a per share cash exercise price equal to
120
% of the VWAP of the Company's Common Stock during the ten trading days immediately prior to issuance and (ii) if the Junior Notes have not been repaid nine months after issuance, additional warrants will be issued to each Lender in an amount equal to the principal amount of the Note multiplied by
25
%, and such quotient divided by a per share cash exercise price equal to
120
% of the VWAP of the Company's Common Stock during the
ten
trading days immediately prior to issuance. As a portion of the Junior Notes were outstanding at each of May 13, 2024 and August 13, 2024, the Company was required to issue
309,315
additional warrants pursuant to the Junior Note Purchase Agreements during the year ended December 31, 2024.
Based on the terms of the Junior Note Purchase Agreements, the Junior Note Warrants were evaluated under FASB ASC 815-40
- Derivatives and Hedging-Contracts in Entity's Own Equity
("ASC 815-40") and the Company concluded they did not initially meet the criteria to be classified in stockholders' equity (deficit). Specifically, there were contingent exercise provisions and settlement provisions that existed, as described above, where the number of shares available under the Junior Note Warrants may be adjusted. Because the number of outstanding common shares was not a fair value input to a fixed-for-fixed model, the Junior Note Warrants are treated as liabilities and are remeasured at each reporting date. The proceeds of $
5,500,000
were allocated first to the Junior Note Warrant liability at fair value and then to the Junior Notes. The Company further determined that the Junior Note Warrants liability meets the criteria to be accounted for as a bifurcated derivative due to the
significant discount it creates on the Junior Notes.
Public Warrants
In connection with the closing of the Business Combination, Nuburu assumed the
16,710,785
Public Warrants outstanding on the date of Closing. As of
September 30, 2025
, all
16,710,785
Public Warrants remain outstanding. However, on December 12, 2023, the NYSE notified the Company and publicly announced that the NYSE had determined to (a) commence proceedings to delist the Company’s Public Warrants, each whole Public Warrant exercisable to purchase one share of the Company’s Common Stock at a price of $
460.00
per share, and listed to trade on the NYSE under the symbol “BURU WS”, and (b) immediately suspend trading in the Public Warrants due to “abnormally low” trading price levels. As such, the Public Warrants were determined to have no value in the financial statements as of
September 30, 2025.
Each whole Public Warrant entitles the registered holder to purchase one share of Common Stock at a price of $
460.00
per share, subject to adjustment as discussed below, at any time commencing
30
days after the completion of the Business Combination. Pursuant to the Warrant Agreement, a Public Warrant holder may exercise its warrants only for a whole number of shares of Common Stock. The Public Warrant will expire
five years
after the completion of the Business Combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.
Redemptions of Public Warrants when the price of Common Stock equals or exceeds
$
720.00
— Once the Public Warrants become exercisable, the Company may redeem the Public Warrants:
•
in whole and not in part;
•
at a price of $
0.40
per warrant;
•
upon not less than
30
days’ prior written notice of redemption to each warrant holder; and
•
if, and only if, the closing price of the Common Stock equals or exceeds $
720.00
per share for any
20
trading days within a
30
-trading day period ending
three
trading days before the Company sends the notice of redemption to the warrant holders.
If and when the Public Warrants become redeemable by the Company, it may exercise its redemption right even if the Company is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
Redemption of Public Warrants when the price per share of Common Stock equals or exceeds
$
400.00
— Once the Public Warrants become exercisable, the Company may redeem the Public Warrants:
•
in whole and not in part;
•
at $
16.00
per warrant upon a minimum of
30
days’ prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares based on the redemption date and the fair market value of the Common Stock; and
•
if, and only if, the last reported sale price of the Common Stock equals or exceeds $
400.00
per share (as adjusted per stock splits, stock dividends, reorganizations, reclassifications, recapitalizations and the like) for any
20
trading days within the
30
-trading day period ending
three
trading days before the Company sends the notice of redemption to the warrant holders.
Offering Common Stock Warrants
On September 16, 2025, in connection with the Offering, as described in Note 9
, the Company issued
126,050,417
liability-classified Offering Common Stock Warrants to purchase shares of Common Stock. Each Offering Common Stock Warrant is immediately exercisable, has an exercise price of $
0.1714
per share, subject to adjustment upon certain events, and expires on September 16, 2030. The warrants may be exercised in whole or in part for cash or, in certain circumstances, on a cashless basis, subject to certain beneficial ownership limitations. Net proceeds from the Offering were first allocated to the liability-classified Offering Common Stock Warrants at their aggregate issuance date fair value
of $
20,747,899
,
which was greater than the net proceeds received from the Offering of $
10,744,346
, therefore the Company recorded a loss on issuance of warrants on the condensed consolidated statements of operations of $
8,756,303
for the
three and nine months ended September 30, 2025, with no residual net proceeds allocated to the Common Stock and Offering Pre-Funded Warrants. Changes in the fair value of the Offering Common Stock Warrants are included within change in fair value of warrant liabilities in the consolidated statements of operations for the three and nine months ended September 30, 2025.
During the three and nine months ended September 30, 2025
,
2,596,185
Offering Common Stock Warrants were exercised, resulting in the issuance of
3,361,443
shares of Common Stock and the derecognition of the related warrant liability, which resulted in an increase to equity of $
496,714
for the three and
nine months ended September 30, 2025.
During October 2025, the Company issued
122,688,974
shares of Common Stock upon the cashless exercise of
121,570,710
Offering Common Stock Warrants.
Equity-Classified Common Stock Warrants
June 2023 Senior Note Warrants
In connection with the issuance of Senior Convertible Notes discussed in Note 8
, the Company issued the Senior Note Warrants to purchase up to
287,972
shares of the Company's Common Stock pursuant to the June 12, 2023 Senior Note Purchase Agreement and
47,238
shares of Common Stock pursuant to the June 16, 2023 Senior Note Purchase Agreement. The Senior Note Warrants have an exercise price equal to $
41.20
per share and expire on
June 23, 2028
.
As the Senior Note Warrants were part of a bundled transaction, the gross proceeds from the issuance of $
9,225,000
were allocated to the Senior Convertible Notes and the Senior Note Warrants based on their respective relative fair value upon issuance.
The aggregate fair value of the Senior Note Warrants of $
3,401,366
was estimated using the Black-Scholes option-pricing model with the following assumptions:
Upon Issuance
Common Stock Warrants:
Expected term (in years)
5.0
Expected volatility
47.9
%
Risk-free interest rate
4.0
%
Expected dividend yield
0.0
%
The allocated proceeds from the Senior Note Warrants of $
2,511,759
were recorded in additional paid-in capital in the condensed consolidated balance sheets upon issuance of the Senior Note Warrants.
Pre-Funded Warrants
On May 1, 2024, the Company entered into a Pre-Funded Warrant Purchase Program (the “Program”) with strategic investors, pursuant to which from time-to-time the Company could sell and the investors could acquire pre-funded warrants, up to a total purchase price to the Company equal to $
15
million. The exercise price for pre-funded warrants is substantially paid by the purchaser at closing and, as a result, such warrants may be exercised in the future with a nominal exercise price payment. Investors also received a warrant to acquire the same number of shares covered by the pre-funded warrant for a purchase price equal to
150
% of the relevant pre-funded warrant purchase price exercisable for a period of
5
years. Each specific transaction was entered into on terms agreed by the parties; provided however, that in no case would the purchase price per share be less than
110
% of the closing price per share of the Company’s Common Stock on the trading day immediately preceding the date of purchase. Contemporaneously with the acquisition of pre-funded warrants, the investors could also voluntarily convert outstanding notes previously issued by the Company; provided that such transactions, as a whole, could not result in an effective direct or indirect discount to market price to the investors of greater than
30
%. During 2024, the Company issued
837,116
pre-funded warrants for total cash proceeds of $
2,139,866
in pre-funded warrants pursuant to the Program.
Pre-Funded Warrants Modification
— In February 2025, in connection with the Liqueous Settlement Agreement, as amended, the Company agreed to (i) modify
665,410
outstanding equity-classified Pre-Funded Warrants issued in connection with the Program during 2024, resulting in the issuance of
3,647,416
equity-classified pre-funded warrants outstanding immediately after the modification exercisable into Common Stock and (ii) modify the remaining
171,706
outstanding equity-classified Pre-Funded Warrants issued in connection with the Program during 2024, resulting in
9,360,888
pre-funded
warrants outstanding immediately
after
the modification that were concurrently exercised into
9,360,888
shares of the Company's Common Stock for no additional cash consideration, as the modified pre-funded warrants had a nominal exercise price (the "Pre-Funded Warrants Modification"). As a result of the Liqueous Settlement Agreement, there will not be further issuances under the Program.
The Company accounted for the Pre-Funded Warrants Modification in accordance with ASC 815,
Derivatives and Hedging
, where the effect of a modification shall be measured as the difference between the fair value of the modified warrant and the fair value of the original warrant immediately before its terms are modified, with each measured on the modification date. As a result of the Pre-Funded Warrants Modification, which was not contemplated as a result of an equity or debt financing, but rather, as a settlement of any claims between the parties related to non-performance of obligations under certain previous agree
ments executed between the Company and Liqueous, the Company recorded (i) an increase to additional paid-in capital of $
3,075,444
related to the incremental fair value of the modified Pre-Funded Warrants over the fair value of the original Pre-Funded Warrants, each measured on the modification date and (ii) a loss on settlement of an aggregate $
2,026,380
, which represents the incremental fair value of the modified Pre-Funded Warrants over the fair value of the original Pre-Funded Warrants, each measured on the modification date, less cash received or receivable related to the Liqueous Settlement Agreement of $
1,050,000
. The loss on settlement is recorded in loss on extinguishment of notes payable on the condensed consolidated statement of operations during the
nine months ended September 30, 2025.
In March 2025, the
3,647,416
outstanding warrants were exercised into
3,647,416
shares of Common Stock for no additional cash consideration, as the pre-funded warrants had a nominal exercise price.
August 2024 Warrants Issued with Junior Notes
As discussed in Note 8, in co
nnection with the issuance of the August 2024 Convertible Notes, the Company issued an aggregate
19,892
warrants to a financial services firm as compensation for their services performed, the fair value of which was determined to be $
40,657
and was recorded as a deferred financing cost and associated additional paid-in capital in the consolidated balance sheet, as the warrants were determined to be equity-classified. The warrants are exercisable through payment of an exercise price ranging from $
2.18
to $
3.18
, subject to certain customary antidilution adjustments, at any time after issuance through the expiration date in August 2029.
Offering Pre-Funded Warrants and Offering Placement Agent Warrants
On September 16, 2025, in connection with the Offering, as described in Note 9
, the Company issued (i)
51,660,075
equity-classified Offering Pre-Funded Warrants to purchase shares of Common Stock and (ii)
3,361,344
equity-classified Offering Placement Agent Warrants to purchase shares of Common Stock. The Offering Pre-Funded Warrants have an exercise price of $
0.0001
per share, are exercisable immediately, and remain outstanding until exercised in full. The Offering Placement Agent Warrants have an exercise price of $
0.1785
per share, subject to adjustment upon certain events, are exercisable beginning
March 16, 2026
, and expire on
September 16, 2030
. The Offering Pre-Funded Warrants and Offering Placement Agent Warrants may be exercised in whole or in part for cash or, in certain circumstances, on a cashless basis, subject to certain beneficial ownership limitations. As discussed above, net p
roceeds from the Offering were first allocated to the liability-classified Offering Common Stock Warrants at their aggregate issuance date fair value, and no residual proceeds were allocated to the Common Stock and Offering Pre-Funded Warrants.
The issuance date fair value of the Offering Placement Agent Warrants of $
417,815
was treated as an equity-issuance cost and reduction in additional-paid in capital, and
was estimated using the Monte Carlo simulation based approach, a Level 3 valuation, with the following assumptions:
Upon Issuance
Offering Placement Agent Warrants:
Stock price
$
0.1395
Expected term (in years)
5.0
Expected volatility
145.0
%
Risk-free interest rate
3.6
%
Expected dividend yield
0.0
%
During the three and nine months ended September 30, 2025
,
20,000,000
Offering Pre-Funded Warrants were exercised, resulting in the issuance of
19,986,000
shares of Common Stock.
During October 2025, the Company issued
31,637,913
shares of Common Stock upon the cashless exercise of
31,660,075
Offering Pre-Funded Warrants.
NOTE
11. STANDBY EQUITY PURCHASE AGREEMENT
On
May 30, 2025
, the Company entered into the Standby Equity Purchase Agreement (as it may be amended from time to time, the “SEPA”) with YA II PN, LTD, a Cayman Islands exempt limited company (together with its successors or assigns, the “SEPA Investor”) pursuant to which the Company has the right to sell to the SEPA Investor up to $
100
million of Common Stock (the “Commitment Amount”), subject to certain limitations and conditions set forth in the SEPA, from time to time during the term of the SEPA. The Company also agreed to register the resale of shares of Common Stock issued to the SEPA Investor pursuant to the SEPA. Sales of the shares of Common Stock to the SEPA 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 SEPA Investor under the SEPA.
Upon the satisfaction of the conditions to the SEPA Investor’s purchase obligation set forth in the SEPA, including having a registration statement registering the resale of the shares of Common Stock issuable under the SEPA declared effective by the SEC, which occurred on July 24, 2025, the Company will have the right, but not the obligation, from time to time at its discretion, to direct the SEPA Investor to purchase a specified number of shares of Common Stock (an “Advance”) by delivering written notice to the SEPA Investor (an “Advance Notice”). On July 24, 2025, a registration statement was declared effective by the SEC allowing the SEPA Investor to resell up to
20
million shares of Common Stock.
On September 23, 2025, a registration statement was declared effective by the SEC allowing the SEPA Investor to resell up to another
30
million shares of Common Stock.
While there is no mandatory minimum amount for any Advance, it may not exceed
100
% of the average of the daily traded amount during the five consecutive trading days immediately preceding an Advance Notice.
The shares of Common Stock purchased pursuant to an Advance will be purchased at a price equal to
97
%
of the lowest daily VWAP of the shares of Common Stock during the three consecutive trading days commencing on the date of the delivery of the Advance Notice, other than the daily VWAP on a day in which
the
daily VWAP is less than a minimum acceptable price as stated by the Company in the Advance Notice or there is no VWAP on the subject trading day, in which cases the size of the Advance may be reduced to account for such day(s) in which the daily VWAP is less than the applicable minimum acceptable price or there is no VWAP. The Company may establish a minimum acceptable price in each Advance Notice below which it will not be obligated to make any sales to the SEPA Investor.
Under applicable NYSE American rules and the terms of the SEPA, in no event may the Company issue to the SEPA Investor under the SEPA shares of Common Stock equal to greater than
19.99
% of the shares of Common Stock outstanding immediately prior to the execution of the SEPA (the “SEPA Share Cap”), unless (i) the Company obtains stockholder approval to issue shares of Common Stock in excess of the SEPA Share Cap in accordance with applicable NYSE American rules, or (ii) the average price per share paid by the SEPA Investor for all of the shares of Common Stock that the Company directs the SEPA Investor to purchase from it pursuant to the SEPA, if any, equals or exceeds the lower of (a) the official closing price of the Common Stock on NYSE American immediately preceding the execution of the SEPA and (b) the average official closing price of the Common Stock on NYSE American for the five consecutive trading days immediately preceding the execution of the SEPA. On July 9, 2025, at the 2025 Annual Meeting, the Company's stockholders approved the issuance of shares pursuant to the SEPA in excess of the SEPA Share Cap. Moreover, in accordance with terms of the SEPA, the Company may not issue or sell any shares of Common Stock to the SEPA Investor under the SEPA which, when aggregated with all other shares of Common Stock then beneficially owned by the SEPA Investor and its affiliates (as calculated pursuant to Section 13(d) of the Exchange Act and Rule 13d-3 thereunder), would result in the SEPA Investor beneficially owning more than
4.99
% of the then outstanding shares of Common Stock.
Actual sales of shares of Common Stock to the SEPA Investor under the SEPA will depend on a variety of factors to be determined by the Company from time to time, which may include, among other things, market conditions, the trading price of the Common Stock and determinations by the Company as to the appropriate sources of funding for its business and operations.
The SEPA will automatically terminate on the earlier of (i) the 36-month anniversary of the date of the SEPA and (ii) the date on which the SEPA Investor shall have made payment of Advances pursuant to the SEPA for Common Stock equal to the Commitment Amount. The Company has the right to terminate the SEPA at no cost or penalty upon five (5) trading days’ prior written notice to the SEPA Investor, provided that (i) there are no outstanding Advance Notices for which shares of Common Stock need to be issued and (ii) the Company has paid all amounts owed to the SEPA Investor pursuant to the SEPA.
The net proceeds payable to the Company under the SEPA will depend on the frequency and prices at which Common Stock is sold. The Company was required to use any proceeds received under the SEPA to pay outstanding principal and interest under the Yorkville Promissory Note (as defined and described in Note 8) until the Yorkville Promissory Note was paid in its entirety. Since the Yorkville Promissory Note was repaid in full, the Company expects that proceeds received from such sales will be used primarily for working capital and general corporate purposes and for purposes of implementing its business plan focused on building a stable foundation for the future business.
Joseph Gunnar & Co., LLC acted as the sole placement agent for the private placement.
The SEPA is accounted for as a liability at fair value under ASC 815, as it includes an embedded put option and an embedded forward contract. The put option is recognized at inception, and the forward option is recognized upon issuance of notice for the sale of the Company's Common Stock. The fair value of the derivative liability related to the embedded put option is included within SEPA liability on the condensed consolidated balance sheet, and
was estimated at $
2,582,724
at inception of the agreemen
t, with changes in fair value each reporting period recognized within change in fair value of SEPA liability on the condensed consolidated statements of operations.
As consideration for the SEPA Investor’s commitment to purchase the shares of Common Stock pursuant to the SEPA, the Company incurred (i) a structuring fee payable to the SEPA Investor in the amount of $
25,000
, (ii) a commitment fee payable to the SEPA Investor in Common Stock in an amount equal to
1
% of the Commitment Amount, or $
1,000,000
, to be paid
50
% on execution of the SEPA and
50
%
90
days following the date of the SEPA and (iii) legal expenses of $
50,000
related to the issuance of the SEPA. Such fees are included within
SEPA fees and issuance costs on the condensed consolidated statements of operations for the nine months ended September 30, 2025 and SEPA liability on the condensed consolidated balance sheet as of June 30, 2025
. The
50
% portion of the commitment fee payable that was owed at execution of the SEPA resulted in the issuance of
1,332,623
shares of Common Stock to the SEP
A Investor during the second quarter of 2025. Additionally, on July 15, 2025, the Company issued the remaining
1,332,623
shares of Common Stock to the SEP
A Investor.
As a result of the Company's public offering on September 16, 2025, the Company's use of the SEPA is subject to limitations set forth in the Offering Purchase Agreement for a period of six months.
During the three months ended September 30, 2025, the Company sold
9,801,958
shares of Common Stock under the SEPA for aggregate gross proceeds of approximately
$
1,830,853
, before deducting cash fees and expenses of approximately
$
28,451
. Of the total gross proceeds, approximately $
1,261,880
was used to pay the outstanding principal and accrued interest under the Yorkville Promissory Note.
Through the date of issuance of this quarterly report, the Company issued an aggregate
50,000,000
shares of Common Stock under the SEPA and received aggregate net cash proceeds of $
21,909,405
.
NOTE
12. STOCK-BASED COMPENSATION
As of September 30, 2025, the Company had an active stock-based incentive compensation plan and an employee stock purchase plan: the 2022 Equity Incentive Plan (the “2022 Plan”) and the 2022 Employee Stock Purchase Plan (the “ESPP”). All new equity compensation grants are issued under these two plans; however, outstanding awards previously issued under inactive plans will continue to vest and remain exercisable in accordance with the terms of the respective plans.
The 2022 Plan provides for the grant of stock and stock-based awards including stock options, restricted stock, restricted stock units, performance awards, and stock appreciation rights. Effective July 1, 2025, the shares available for grant under the 2022 Plan and the ESPP increased by
3,560,000
and
710,000
shares, respectively, in accordance with the terms of the respective plans. As of September 30, 2025, there were approximately
3,844,680
shares available for grant under the 2022 Plan and approximately
753,000
shares available for grant under the ESPP.
Total stock-based compensation expense recognized in the Company’s condensed consolidated statements of operations is classified as follows:
Three months ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
Cost of revenue
$
—
$
118,774
$
105,734
$
364,286
Research and development
—
112,528
93,425
378,442
Selling and marketing
41,395
9,371
244,264
(
189,828
)
General and administrative
166,113
206,932
558,731
959,392
Total stock-based compensation expense
$
207,508
$
447,605
$
1,002,154
$
1,512,292
The Company’s stock-based compensation expense is based on the value of the portion of stock-based payment awards that are ultimately expected to vest. During the three months ended September 30, 2025 and 2024, stock-based compensation relating to stock-based awards granted to consultants was $
41,375
and
$
40,993
, respectively. During the nine months ended September 30, 2025 and 2024, stock-based compensation relating to stock-based awards granted to consultants was $
282,818
and $
152,010
, respectively. The 2025 amounts include expense that relates to the arrangements further described below under
Common Stock Issued for Services
.
Restricted Stock Units
The Company grants Restricted Stock Units ("RSUs") to its employees for their services with a liquidity event requirement. The RSUs granted to employees vest over a period of time from the grant date and are subject to the participants continuing service to the Company over the period.
The following table shows a summary of the Company's RSUs outstanding as of
September 30, 2025 and December 31, 2024 as well as activity during the period then ended:
RSUs
Number of Shares
Weighted Average Grant Date Fair Value
Unvested at December 31, 2024
4,562
$
223.07
RSUs vested
(
2,675
)
$
229.53
RSUs forfeited
(
275
)
$
36.42
Unvested at September 30, 2025
1,612
$
244.19
The total grant date fai
r value of RSUs awarded was
nil
and $
246,000
during the
nine months ended September 30, 2025 and 2024, respectively. The total grant date fair value of RSUs vested was $
613,989
and $
1,049,265
during
the nine months ended September 30, 2025 and 2024, respectively.
As of September 30, 2025, total unrecognized stock-based compensation costs related to RSUs were $
393,631
, which are expected to be recognized over a remaining weighted average period of
0.25
years. A
s of September 30, 2025, all of the outstanding RSUs are expected to vest.
Stock Options
The Company's outstanding stock options generally expire
10
years from the date of grant and are exercisable when the options vest, generally over
four years
, the majority of which vest at a rate of
25
% on the first anniversary of the grant date, with the remainder vesting ratably each month over the next
three years
.
A summary of stock option activity is as follows:
Number of Stock Options Outstanding
Weighted-Average Exercise Price
Weighted-Average Remaining Contractual Life (Years)
Aggregate Intrinsic Value
Options outstanding at December 31, 2024
218,430
$
40.80
7.1
$
7,375.15
Options cancelled or forfeited
(
177,362
)
$
36.65
Options outstanding at September 30, 2025
41,068
$
58.69
2.2
$
—
Options exercisable at September 30, 2025
35,860
$
63.86
1.4
$
—
Options vested and expected to vest at September 30, 2025
41,068
$
58.69
2.2
$
—
The weighted-average grant date fair value of options granted to employees and consultants was
nil
and $
5.46
per share for the
nine months ended September 30, 2025 and 2024, respectively.
As of September 30, 2025, total unrecognized stock-based compensation cost related to stock options was $
46,189
, which is expected to be recognized over a weighted-average period of
1.82
years.
The Company estimates the fair value of the options utilizing the Black-Scholes option pricing model, which is subjective and dependent upon several variables, including expected option term, expected volatility of the Company’s share price over the expected term, expected risk-free interest rate over the expected option term, and expected dividend yield rate over the expected option term, and actual forfeiture rates.
A summary of the weighted-average assumptions the Company u
tilized for option grants during the nine months ended September 30, 2025 and 2024, respectively, are as follows:
Nine Months Ended September 30,
2025
2024
Expected term (in years)
N/A
4.0
Expected volatility
N/A
47.8
% -
55.0
%
Risk-free interest rate
N/A
4.0
% -
4.5
%
Expected dividend yield
N/A
0.0
%
Common Stock Issued for Services
During the first quarter of 2025, the Company entered into arrangements with non-employee consultants for services to be provided in exchange for (i) the required issuance of
3,830,189
shares of Common Stock, (a)
1,000,000
of which were equity-classified, with
500,000
of those shares relating to services previously provided and the remaining
500,000
shares relating to services to be provided over the term of the agreement, and (b)
2,830,189
of which were liability-classified, and for which all services have not yet been provided by the non-employee consultants, and (ii) the required quarterly issuance of a variable number of shares of Common Stock equal to $
25,000
, priced based on the average closing price of the Company's Common Stock for the previous five trading dates prior to issuance, which are liability-classified. During the second quarter of 2025, the Company issued the
3,830,189
shares of Common Stock.
The a
mount of
2,830,189
shares of Common Stock was adjustable, as of the earlier of a resale registration statement’s effectiveness or six months from the date of the agreement, to ensure an aggregate market value of $
600,000
, with shares of Common Stock forfeited if the value was higher and additional shares of Common Stock issued if lower. In accordance with this provision, during the three months ended September 30, 2025, the Company was required to issue an additional
1,425,130
shares of Common Stock, which were not yet issued as of September 30, 2025. Additionally, as of September 30, 2025, the Company was required to issue
375,920
shares of Common Stock pursuant to the required quarterly issuances under the arrangement, which had not yet been issued as of
September 30, 2025.
Equity-classified awards
Stock-based compensation expense for the equity-classified awards was recognized based on the fair value of the Company’s Common Stock on the date of grant over the requisite service period. For the three and nine months ended September 30, 2025, the total stock-based compensation expense recognized for the equity-classified awards was $
16,375
and $
169,208
, respectively. Additionally, as of September 30, 2025, as the non-employee consultants
had not provided all services related to the
500,000
shares issued and
the service term had not ended, $
92,792
was recorded within prepaid expenses and other current assets on the condensed consolidated balance sheet, which will be amortized using the straight-line method to stock-based compensation expense over the remaining requisite service period.
Liability-classified awards
Liability-classified awards represent compensation for services to be provided over the term of the agreements, and are measured based on a fixed monetary value to be paid to the non-employee consultants settled through the issuance of a variable number of shares of Common Stock.
For the three and nine months ended September 30, 2025, the total stock-based compensation expense recognized for the liability-classified awards was $
25,000
and $
75,000
, respectively. As of September 30, 2025
, $
75,000
is included within accrued expenses on the condensed consolidated balance sheet related to the required quarterly issuance of Common Stock. Additionally, as of
September 30, 2025
, as the non-employee consultants had not provided all services related to the
4,255,319
shares issued and required to be issued and the service term had not ended, $
600,000
wa
s recorded within prepaid expenses and other current assets on the condensed consolidated balance sheets, which will be amortized using the straight-line method to stock-based compensation expense over the remaining requisite service period.
NOTE
13. INCOME TAX
Due to its current operati
ng losses, the Company recorded
zero
income tax expense during the
three and nine months ended September 30, 2025 and 2024. During these periods, the Company’s activities were limited to U.S. federal and state tax jurisdictions, as it does not have any significant foreign operations.
Due to the Company’s history of cumulative losses and after considering all the available objective evidence, management concluded that it is not more likely than not that all of the Company’s net deferred tax assets will be realized in the future. Accordingly, the Company’s deferred tax assets, which include net operating loss (“NOL”) carryforwards and tax credits related primarily to research and development, continue to be subject to a valuation allowance as of September 30, 2025. The Company expects to continue to maintain a full valuation allowance until there is sufficient evidence to support recoverability of its deferred tax assets.
Utilization of the NOL carryforwards and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by Section 382 and Section 383 of the Internal Revenue Code of 1986, as amended, and similar state provisions. Generally, in addition to certain entity reorganizations, the limitation applies when one or more "5-percent stockholders" increase their ownership, in the aggregate, by more than
50
percentage points over a 36-month time period testing period, or beginning the day after the most recent ownership change, if shorter. The Company has determined that a Section 382 change in ownership occurred during 2023. As a result of this change in ownership, we expect that certain of the Company's NOLs may not be utilized in the future to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. However, due to the full valuation allowance recorded as of
September 30, 2025, the limitation does not affect the Company's results of operations for the periods presented.
On July 4, 2025, the One Big Beautiful Bill Act ("OBBB Act"), which includes a broad range of tax reform provisions, was signed into law in the United States and the Company continues to assess its impact. The Company currently does not expect the OBBB Act to have a material impact on its estimated annual effective tax rate in 2025.
NOTE
14. NET LOSS PER SHARE
Contingently issuable shares are included in basic and diluted earnings per share (“EPS") only when all specified contingencies other than time have been satisfied. Shares issuable in
connection with the SEPA are excluded from basic EPS because issuances are contingent on meeting price thresholds, volume limitations, and regulatory caps. As those contingencies were not satisfied as of September 30, 2025,
no
shares issuable under the SEPA were included in the denominator of basic EPS for the three and
nine months ended September 30, 2025.
Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue Common Stock were exercised, vested, or converted into Common Stock, and is computed by dividing net income (loss) available to common stockholders by the weighted-average number of shares of Common Stock outstanding during the period, adjusted for the effect of potentially dilutive shares of Common Stock using the treasury stock or if-converted methods, as applicable. Diluted EPS for the three and nine months ended September 30, 2025 and 2024 excluded the effect of potentially dilutive shares of Common Stock because the effect of their inclusion would be anti-dilutive or would decrease the reported loss per share.
Basic and diluted EPS presented for the three and nine months ended September 30, 2025
includes (i)
24,700,419
shares of Common Stock that the Company was required to issue but had not yet issued as of
September 30, 2025
and (ii)
11,688,075
in Offering Pre-Funded Warrants issued but not yet exercised as of
September 30, 2025.
The following t
able sets forth securities outstanding that could potentially dilute the calculation of diluted earnings per share:
Three and Nine Months Ended September 30,
2025
2024
Offering Common Stock Warrants
123,454,232
185,642
Offering Pre-Funded Warrants
31,660,075
859,315
Offering Placement Agent Warrants
3,361,344
417,770
Junior Note Warrants
859,315
335,210
Public Warrants
417,770
19,892
Pre-Funded Warrants
—
837,116
June 2023 Senior Note Warrants
335,210
—
August 2024 Warrants Issued with Junior Notes
19,892
—
Stock options outstanding
41,068
—
Unvested restricted stock units
1,612
6,620
If-converted Common Stock from Series A Preferred Stock(1)
109,445
119,445
If-converted Common Stock from convertible notes
37,551,994
3
2,932,138
Total
197,811,957
35,713,148
(1)
Assumed that all shares of Series A Preferred Stock were converted into Common Stock at a conversion rate equal to $
0.25
divided by $
5.00
, representing the maximum number of shares issuable to holders of Series A Preferred Stock.
NOTE
15. SEGMENT REPORTING
Operating segments are defined as components of an entity about which discrete financial information is evaluated regularly by the Chief Operating Decision Maker ("CODM") in deciding how to allocate resources and assess performance. The Company operates and manages its business as
one
business segment, which is high-power, high-brightness blue laser technology. Accordingly, the Company has
one
reportable segment. The Company has a single management team that reports to the Executive Chairman and Co-Chief Executive Officer, the Company's CODM, who comprehensively manages the entire Company. The accounting policies of the segment are the same as those described in the summary of significant accounting policies.
When evaluating the Company’s financial performance, the CODM is regularly provided with more detailed expense information than what is included in the Company’s statements of operations. The CODM uses net loss, as reported in the consolidated statements of operations, in evaluating the performance of the segment. Decisions regarding resource allocation are made primarily during the annual budget planning process and reallocated as needed throughout the year. The measure of segment assets is reported on the balance sheets as total assets.
The following table shows a reconciliation of the Company’s net loss, including the significant expense categories regularly provided to and reviewed by the CODM, as computed under U.S. GAAP, to the Company’s total net loss in the condensed consolidated statements of operations:
Three months ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
Revenue
$
—
$
—
$
—
$
142,827
Cost of revenue:
Materials
(
13,261
)
5,581
3,202
55,741
Direct labor
—
245,377
151,708
1,180,035
Direct job costs
(
36,545
)
(
5,916
)
(
84,818
)
237,832
Overhead
—
114,908
111,281
477,024
Total cost of revenue
(
49,806
)
359,950
181,373
1,950,632
Gross margin
49,806
(
359,950
)
(
181,373
)
(
1,807,805
)
Operating expenses:
Research and development
—
206,474
184,563
1,656,350
Selling and marketing
790,779
113,445
1,861,112
385,965
General and administrative
1,883,497
1,796,774
8,057,531
6,390,017
Total operating expenses
2,674,276
2,116,693
10,103,206
8,432,332
Other segment items
(1)
(
19,797,126
)
(
1,869,081
)
(
40,973,417
)
(
12,449,568
)
Segment net loss
$
(
22,421,596
)
$
(
4,345,724
)
$
(
51,257,996
)
$
(
22,689,705
)
(1)
Other segment items consist of interest income, interest expense, change in fair value of warrant liabilities, change in fair value of derivative liability, change in fair value of convertible note receivable, change in fair value of notes payable, change in fair value of SEPA liability, change in fair value of claims settlement liability, loss on issuance of warrants, loss on issuance of notes payable, loss on issuance of SEPA, loss on extinguishment of accounts payable, loss on extinguishment of notes payable, SEPA fees and issuance costs, gain on sale of intellectual property intangible assets, loss on impairment of inventories, property and equipment and operating lease right-of-use asset, interest expense recognized on remeasurement of preferred stock liability and other gain (loss), net.
NOTE
16. SUBSEQUENT EVENTS
Orbit Transactions (Related Party)
On October 31, 2025, the Company, NUBURU Defense, Alessandro Zamboni, and Vanguard Holdings S.r.l. (“Vanguard”), a newly-formed Italian limited liability company wholly owned by Alessandro Zamboni, entered into a Sale, Purchase and Investment Agreement (the “Orbit Agreement”) for the sale of all of the ownership interests in Orbit to NUBURU Defense (the “Orbit Acquisition”). NUBURU Defense is making up to a $
5.0
million equity investment in Orbit (the “Equity Infusion”), the proceeds of which are anticipated to provide working and growth capital (including for the repayment of payables incurred in the ordinary course of business) for Orbit. In addition to the Equity Infusion, NUBURU Defense will acquire all outstanding capital stock of Orbit from Vanguard for an aggregate purchase price of $
12.5
million, consisting of $
3.75
million in cash and $
8.75
million in securities (the “Orbit Consideration”). Since Orbit is wholly owned by Alessandro Zamboni, the Company’s Executive Chairman and Co-Chief Executive Officer, indirectly through Vanguard, the Orbit Acquisition constitutes a related party transaction under U.S. securities laws and, as a result, the Orbit Acquisition and Orbit Agreement have been reviewed and approved by the Company’s independent directors and Audit Committee.
Under the Orbit Agreement, the Company has agreed to consummate the Equity Infusion in tranches, with the final tranche closing no later than
October 7, 2028
. The Company paid $
1.5
million of the Equity Infusion amount in connection with the signing of the binding letter of intent, dated October 6, 2025 (the “Orbit LOI”), between the Company and Alessandro Zamboni, resulting in Nuburu’s holding a
10.7
% ownership interest in Orbit. Upon NUBURU Defense’s obtaining a
20
% ownership interest in Orbit, Orbit’s bylaws will be amended; Alessandro Zamboni will resign as a director of Orbit; and new members of Orbit’s board of directors and, if applicable, a board of statutory auditors, will be appointed pursuant to the new bylaws. Following the appointment of the new directors to Orbit’s board of directors, Alessandro Zamboni will be appointed as Chairman of Orbit and NUBURU Defense will designate Orbit’s chief executive officer.
Under the Orbit Agreement, in exchange for the Orbit Consideration, the Company will acquire full ownership of Orbit from Vanguard in tranches, with the final tranche closing no later than
December 31, 2026
. The Orbit Consideration is based in part on a third-party valuation of Orbit with approximately $
11
million being the high-end of the range, adjusted to take into account the risk associated with a significant portion of the purchase price being paid through the issuance of securities.
The Company agreed to pay an advance payment of the Orbit Consideration worth $
3.75
million (the “Advance Payment”), by (i) offsetting of a credit owed by Mr. Zamboni to the Company of $
1.35
million related to the TCEI Acquisition, which is no longer being completed, and (ii) paying $
2.4
million to Mr. Zamboni in
four
tranches of $
600,000
that are due (1) on the date of signing of the Orbit LOI, (2) by December 31, 2025, (3) by March 31, 2026, and (4) by June 30, 2026; provided that the Company agreed to allocate
20
% of the proceeds arising from any fund-raising transactions consummated by the Company to accelerate the payment of such amounts. As of the date of this quarterly report, the Advance Payment was satisfied.
Subject to obtaining stockholder approval, the Company agreed to pay the non-cash portion of the Orbit Consideration in the amount of $
8.75
million, by December 31, 2026, in the form of preferred shares of the Company that, subject to NYSE American approval, have voting rights at a ratio of
5
:1 as compared to shares of the Company’s Common Stock, include anti-dilution protections, and are convertible into shares of Common Stock on a
1
:1 basis (the “Orbit Preferred Shares”). The Company agreed that, by no later than July 31, 2026, it will hold a stockholders’ meeting to seek approval of the issuance of the Orbit Preferred Shares to Vanguard.
Upon the signing of the Orbit LOI and for
36
months, the Company has the exclusive right to market, sell, promote and distribute the Orbit platform to the security sector globally. The parties intend to complete the closing of the Orbit Acquisition by
December 31, 2026
.
Agreement with Maddox Defense Incorporated
On October 22, 2025, the Company entered into a non-binding Strategic Framework Agreement (the “SFA”), among the Company, NUBURU Defense and Maddox Defense Incorporated (“Maddox”), pursuant to which the Company and Maddox plan to establish a joint venture company (the “Maddox JV”) to develop, manufacture, and deploy military drones for NATO customers and for commercial or civilian unmanned aerial vehicle (UAV) applications. Under the SFA, the parties intend to execute a definitive joint venture agreement on or before December 15, 2025, establishing Maddox JV under Italian law as a European-based manufacturing and research hub. The parties intend for NUBURU Defense to contribute up to $
10
million in funding while Maddox contributes eligible assets, intellectual property, expertise and personnel. The value of Maddox’s eligible assets would be evaluated by a formal appraisal process in accordance with Italian law. The equity ownership of the Maddox JV would be determined proportionally based on the ratio of the Company’s capital commitment compared to the value of Maddox’s eligible assets evaluation; provided, that, NUBURU Defense would have the controlling interest in the Maddox JV. The SFA includes a
six-month
exclusivity period and has a term of
six months
, unless earlier terminated by either party upon
30 days
written notice.
Fraudulent Wire Transfer
In October 2025, the Company was the victim of email fraud due to its receiving an invoice from a criminal actor posing as its financial advisor and the Company’s paying the invoice amount to the criminal actor’s bank account based on the falsified wiring instructions. As a result, the Company incurred a loss of $
1,005,352
. The Company pursued recovery of this amount with the banks involved in the wire transfer, but at this time it does not expect that it will be able to recover such funds.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYS
IS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The interim financial statements included in this Quarterly Report and this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the financial statements and notes thereto for the year ended December 31, 2024, and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, contained in the Annual Report filed with the SEC on April 15, 2025, as subsequently amended by the Form 10-K/A filed with the SEC on April 30, 2025 and the Form 10-K/A filed with the SEC on May 20, 2025 (as amended, the "Annual Report"). In addition to historical information, this discussion and analysis contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are subject to risks and uncertainties, including those under “Risk Factors” in this Quarterly Report and our Annual Report that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements.
Unless otherwise indicated, references in this section to “Nuburu,” “we,” “us,” “our” and the “Company” refer to Nuburu, Inc. and its consolidated subsidiaries, Nuburu Subsidiary, Inc. and NUBURU Defense. Defined terms used herein and not otherwise defined are as defined in Part I, Item 1 of this Quarterly Report.
The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
We have not yet achieved commercialization and expect continued losses until we can do so. During 2024 and 2025, management negotiated several funding agreements with multiple investors and completed the Offering. Given the lack of sufficient funding, management initiated measures designed to reduce costs, which included implementing a furlough of employees beginning in 2024. In response to the furloughs and financing challenges, several key employees resigned.
We generated total revenue of nil for each of the three months ended September 30, 2025 and 2024 and had net losses of $22,421,596 and $4,345,724 during the three months ended September 30, 2025 and 2024, respectively, and generated total revenue of nil and $142,827 and had net losses of $51,257,996 and $22,689,705 during the nine months ended September 30, 2025 and 2024, respectively.
The operating loss for the nine months ended September 30, 2025 included $10,398,050 of non-cash interest expense recognized on remeasurement of the preferred stock liability. For additional information on this interest expense, see Note 9 to the condensed consolidated financial statements.
We expect to incur significant expenses and operating losses for the foreseeable future, as we devote substantial resources to implement a business plan focused on building a stable foundation for the future business (the "Transformation Plan") and related acquisitions; and operate as a public company. Until the Company can generate sufficient revenue, it plans to finance its business with the proceeds from the issuance and sale of debt or equity securities, including sales pursuant to its SEPA, as defined and further described in Note 11, and borrowings under credit facilities. There is no assurance that management's plans to obtain additional debt or equity financing or credit facilities will be successfully implemented or implemented on terms favorable to the Company.
ACQUISITION AND JOINT VENTURE PLANS
Initial Commitment Letter related to Tekne and Orbit
On February 19, 2025, the Company entered into a commitment letter (the “Trumar Agreement”) with Trumar Capital LLC ("Trumar") to acquire, through the purchase of the shares of TCEI S.a.r.l., a wholly owned subsidiary of Trumar (“TCEI”) (the “TCEI Acquisition”): (i) a license of certain technology that would allow the Company to expand its existing business within the defense sector; (ii) a controlling interest in Tekne, a defense-tech company that specializes in the design, production, and outfitting of a diverse range of vehicles, including industrial and military applications, as well as electronic devices for defense and security, advanced telecommunications, and tracking systems; and (iii) a controlling interest in Orbit
S.r.l. (“Orbit”), formerly known as 1AF2 S.r.l., an Italian software company specializing in digitalizing operational resilience solutions for mission-critical corporations, which is wholly-owned by the Company’s Executive Chairman and Co-Chief Executive Officer.
The TCEI Acquisition was expected to occur in two stages. In the first stage, which was completed in March 2025, the Company purchased a 20% ownership interest in TCEI for an aggregate price of $1.5 million in cash plus $23.5 million in a note payable. The note payable was not recorded because it was cancellable if the second stage of the TCEI Acquisition was not completed by July 31, 2025. Because certain conditions were not satisfied by July 31, 2025, the note payable was cancelled during the third quarter of 2025. Of the $1.5 million cash portion of the purchase price, $600,000 was paid in cash and $900,000 was retained by the Company with a corresponding related-party promissory note to the Company's Executive Chairman and Co-Chief Executive Officer, and because the second stage of the TCEI Acquisition was not completed, such amounts were reflected within prepaid expenses and other current assets on the condensed consolidated balance sheet as of September 30, 2025. In July 2025, the $900,000 promissory note was amended to provide for a conversion feature, as further described in Note 8.
For the second stage of the TCEI Acquisition, the Company had planned to purchase the remaining 80% ownership interest in TCEI, resulting in (i) the Company’s having a controlling interest in Tekne and Orbit and (ii) the Company’s issuing Common Stock in excess of 19.9% of its outstanding Common Stock as part of the purchase price. Since certain conditions were not satisfied, the Trumar Agreement expired on its own terms as of July 31, 2025 and the Company no longer holds any ownership interest in TCEI.
The Company also agreed to issue 6,086,957 shares of Common Stock to S.F.E. Equity Investments SARL (“SFE EI”) as consideration for SFE EI's escrowing approximately $4.2 million in assets for purposes of guaranteeing the Company's performance obligations in connection with the TCEI Acquisition, subject to any required shareholder approval.
Since the TCEI Acquisition was subject to continued due diligence, receipt of an acceptable valuation from a third-party valuation firm, regulatory approvals, and stockholder consent, the Company concluded that, because of these contingencies, it had not assumed the risks and rewards consistent with equity ownership at the time of the initial TCEI investment. Consequently, the Company recorded the initial payment as a deposit on the anticipated acquisition of TCEI. Similarly, the Company did not record the contingent liability for the commitment, including the note, since it was not both probable and estimable that the liability had been incurred.
On March 31, 2025, the Company also entered into a Joint Pursuit Agreement with Tekne (the “Joint Pursuit Agreement”) to allow both parties to jointly develop and market certain defense-related vehicles and services in advance of closing the full TCEI Acquisition, which has been superseded by the Tekne Letter described below.
Tekne letter signed in August 2025 (“August Letter”)
In response to feedback from the Italian government in connection with its “Golden Power” review of the Company’s proposed acquisition (directly or indirectly) of a controlling interest in Tekne, on August 27, 2025, the Company executed a commitment letter (the “August Letter”) with shareholders of Tekne, pursuant to which the Company modified the terms of its previously announced phased acquisition of a 70% interest in Tekne. Through its subsidiary, NUBURU Defense, the Company expected to acquire (directly or indirectly) (i) an initial 3% equity interest in Tekne (the “First Stage”), and (ii) the remaining 67% interest in Tekne by the end of 2025 (the “Second Stage”). Based on a third-party valuation, the August Letter also established an enterprise value of Tekne at $60 million, with the 70% interest to be acquired by the Company derivatively valued at approximately $42 million. Pursuant to the August Letter and subject to requirements imposed by the Italian government, Tekne granted the Company a one-year (a) period of exclusivity and (b) option right to complete the Second Stage.
To address matters raised in the Golden Power review, the Company agreed to assist with financing up to EUR 40 million for Tekne’s working capital needs over the next 12 months through August 2026. The Company planned to provide such support through (i) a EUR 10.5 million cash financing (“Capital Support”), and (ii) a EUR 30 million inventory monetization program. Any Capital Support provided to Tekne is expected to be converted to equity ownership of Tekne, once the investment is approved by the Italian government. In the event that the acquisition of a controlling interest in Tekne by Nuburu is not approved, Tekne will be obligated to repay all Capital Support provided by the Company.
In the August Letter, the Company and Tekne also agreed to form a U.S.-based joint venture (“Tekne US JV”), which would be owned 80% by the Company and 20% by Tekne.
The rights and obligations of Tekne and the Company under the August Letter were subsequently replaced in their entirety by the Tekne Letter entered into in November 2025 and described below.
Tekne letter of intent signed in November 2025 (“Tekne Letter”)
In November 2025, the Company, Tekne and shareholders of Tekne executed a letter of intent (the “Tekne Letter”) that replaced the rights and obligations of the parties under the August Letter. As set forth in the Tekne Letter, the parties intend to establish a “Contratto di Rete” (the “Network Contract”), which is a specific form of joint-venture contractual agreement under Italian law, instead of forming Tekne US JV or pursuing the Joint Pursuit Agreement described above. Under the Network Contract, (i) in the Americas, the Company will receive exclusive distribution rights for Tekne's products and solutions, with Tekne providing marketing and pre-sales support; (ii) for NATO, MENA and APAC countries, the Company and Tekne will collaborate on promoting and executing individual orders, potentially through joint ventures with local entities; and (iii) in Italy, the Company will pursue qualification as a new defense operator, the parties will jointly propose the Company’s products and solutions to Tekne's Italian clients, and Tekne will adopt in due course the Company’s operational resilience solutions to be provided upon the Company’s acquisition of Orbit. Tekne will provide its know-how, personnel, and Italian production and operational facilities for the design, development, and realization phases, while, for international markets, the Company will provide necessary guarantees, acquire existing and future project credits (a form of receivables financing), cover certain costs and expenses, and potentially establish regional production sites.
The Company also intends to provide EUR 15 million in support to Tekne by (i) providing EUR 2 million utilizing the Supply@ME (SYME) platform to facilitate an inventory monetization program, and (ii) providing EUR 13 million as a convertible loan (the “Tekne Loan”) upon the signing of the Network Contract, which is expected to occur by November 30, 2025. Conversion of the Tekne Loan requires approval of the Italian government. The Company’s willingness to enter into the Tekne Loan is conditioned on the Company being permitted to acquire an initial 2.9% interest in Tekne. In addition, the parties agreed that (i) Tekne’s affiliate will return the $4.2 million in assets placed in escrow by SFE EI for purposes of guaranteeing the Company's performance obligations in connection with the TCEI Acquisition, which is no longer required, and (ii) Tekne will release to the Company $875,000 in cash collateral provided by the Company and used to obtain a letter of credit for Tekne, which the Company intends to reinvest in Tekne. Once the above financial support structure has been established, the Company intends to submit, via its specialized subsidiary NUBURU Defense, a new “Golden Power” application to the Italian government by December 31, 2025.
Performance under the Tekne Letter is subject to the negotiation and execution of definitive agreements as well as stockholder and regulatory approvals.
For additional information on the August Letter and the Tekne Letter, see Note 6 to the condensed consolidated financial statements
SYME and its operating subsidiaries provide its platform for use by manufacturing and trading companies to access inventory trade solutions, enabling their businesses to generate cashflow, through a non-credit arrangement and without incurring debt. This is achieved by their existing eligible inventory being added to the platform and then monetised through purchases by third-party inventory funders. The inventory to be monetised can include warehoused goods waiting to be sold to end-customers or goods that are part of a typical import/export transaction.
In September 2025, in connection with the inventory monetization program discussed above, the Company advanced $400,000 (the “SYME Inventory Advance”) to a special purpose vehicle (“SPV”), an affiliate of SYME, pursuant to an advance payment letter in connection with a proposed subscription of a financial instrument to be issued by the SPV with the aim of monetizing the inventory of Tekne. The SYME Inventory Advance is non-interest-bearing and is refundable within two business days if the instrument is not issued on or before December 31, 2025 or upon breach by the SPV. As of September 30, 2025, the advance is
recorded as a receivable within prepaid expenses and other current assets in the Company’s condensed consolidated balance sheet. Subsequent to September 30, 2025 through the date of issuance of this quarterly report, the Company advanced an additional $2,743,545 related to the SYME Inventory Advance.
For additional information related to SYME, see Note 6 to the condensed consolidated financial statements.
Orbit Transactions (Related Party)
On October 31, 2025, we, NUBURU Defense, Alessandro Zamboni, and Vanguard, a newly-formed Italian limited liability company wholly owned by Alessandro Zamboni, entered into the Orbit Agreement for the sale of all of the ownership interests in Orbit to NUBURU Defense (the “Orbit Acquisition”). NUBURU Defense is making up to a $5.0 million equity investment in Orbit (the “Equity Infusion”). In addition to the Equity Infusion, NUBURU Defense will acquire all outstanding capital stock of Orbit from Vanguard for an aggregate purchase price of $12.5 million, consisting of $3.75 million in cash and $8.75 million in securities (the “Orbit Consideration”). Since Orbit is wholly owned by Alessandro Zamboni, our Executive Chairman and Co-Chief Executive Officer, indirectly through Vanguard, the Orbit Acquisition constitutes a related party transaction under U.S. securities laws and, as a result, the Orbit Acquisition and Orbit Agreement have been reviewed and approved by our independent directors and Audit Committee.
Under the Orbit Agreement, we have agreed to consummate the Equity Infusion in tranches, with the final tranche closing no later than October 7, 2028. We paid $1.5 million of the Equity Infusion amount in connection with the signing of the Orbit LOI on October 6, 2025, resulting in our holding a 10.7% ownership interest in Orbit.
Under the Orbit Agreement, in exchange for the Orbit Consideration, we will acquire full ownership of Orbit from Vanguard in tranches, with the final tranche closing no later than December 31, 2026. We agreed to pay an Advance Payment of the Orbit Consideration worth $3.75 million by (i) offsetting of a credit owed by Mr. Zamboni to the Company of $1.35 million related to the TCEI Acquisition, which is no longer being completed, and (ii) paying $2.4 million to Mr. Zamboni in four tranches. As of the date of this quarterly report, the Advance Payment was satisfied. Subject to obtaining stockholder approval, we agreed to pay the non-cash portion of the Orbit Consideration in the amount of $8.75 million in the form of preferred shares of the Company as described in the Orbit Agreement. We have the exclusive right to market, sell, promote and distribute the Orbit platform to the security sector globally for 36 months. The parties intend to complete the closing of the Orbit Acquisition by December 31, 2026.
For additional information related to the Orbit Acquisition, see Note 16 to the condensed consolidated financial statements.
Maddox Joint Venture
On October 22, 2025, we entered into the SFA, among the Company, NUBURU Defense and Maddox, pursuant to which we and Maddox plan to establish the Maddox JV to develop, manufacture, and deploy military drones for NATO customers and for commercial or civilian unmanned aerial vehicle (UAV) applications. Under the SFA, the parties intend to execute a definitive joint venture agreement on or before December 15, 2025. The parties intend for NUBURU Defense to contribute up to $10 million in funding while Maddox contributes eligible assets, intellectual property, expertise and personnel. The value of Maddox’s eligible assets would be evaluated by a formal appraisal process in accordance with Italian law. The equity ownership of the Maddox JV would be determined proportionally based on the ratio of our capital commitment compared to the value of Maddox’s eligible assets evaluation; provided, that, NUBURU Defense would have the controlling interest in the Maddox JV. The SFA includes a six-month exclusivity period and has a term of six months, unless earlier terminated by either party upon 30 days written notice.
For additional information related to the Maddox JV, see Note 16 to the condensed consolidated financial statements.
RECENT FINANCING TRANSACTIONS, SETTLEMENTS AND DEBT EXTINGUISHMENTS
The Offering
On September 16, 2025, we consummated a best efforts public offering (the “Offering”) of an aggregate of (i) 32,373,536 shares of Common Stock, (ii) 51,660,075 Offering Pre-Funded Warrants to purchase shares of Common Stock, and (iii) 126,050,417 Offering Common Stock Warrants to purchase shares of Common Stock. Each share of Common Stock or Offering Pre-Funded Warrant was sold together with one Offering Common Stock Warrant to purchase 1.5 shares of Common Stock. The combined offering price for each share of Common Stock and Offering Common Stock Warrant was $0.1428, and the combined offering price for each Offering Pre-Funded Warrant and accompanying Offering Common Stock Warrant was $0.1427.
Additionally, in connection with the Offering, we agreed to issue to the placement agent or its designees 3,361,344 Offering Placement Agent Warrants to purchase shares of Common Stock.
We received gross proceeds of $11,994,884 from the Offering and incurred $1,668,303 of offering costs, including the initial fair value of the Offering Placement Agent Warrants of $417,815, which were recorded as a reduction of additional paid-in capital, resulting in net cash proceeds of $10,744,346. We intend to use the net proceeds from this Offering to support the phased acquisitions of businesses and for working capital and general corporate purposes.
For additional information related to the Offering and related warrants issued, see Notes 9 and 10 to the condensed consolidated financial statements.
3(a)(10) Claims Settlement
On July 17, 2025, we and Silverback agreed to settle outstanding Claims owed to Silverback in exchange for a settlement amount payable in shares of Common Stock, subject to court approval. The settlement was approved by the state court on July 30, 2025, after a fairness hearing pursuant to the requirements of Section 3(a)(10) of the Securities Act. As of the date of this quarterly report, the Silverback program was performed and concluded.
For additional information, see Note 3 to the condensed consolidated financial statements.
Standby Equity Purchase Agreement
On May 30, 2025, we entered into the SEPA with the SEPA Investor, pursuant to which we have the right to sell to the SEPA Investor up to $100 million of Common Stock, subject to certain limitations and conditions set forth in the SEPA, from time to time during the term of the SEPA. We are not obligated to make
any sales under the SEPA. The SEPA will terminate on the earlier of 36 months from execution or full utilization of the Commitment Amount, and may be terminated earlier by us with five trading days’ written notice, subject to certain conditions.
For additional information regarding the SEPA, see Note 11 to the condensed consolidated financial statements.
Indigo Capital Convertible Notes, Agile Note, Diagonal Convertible Notes, Boot Convertible Note, Brick Lane Convertible Notes, Bomore Convertible Notes, Torcross Convertible Note and Yorkville Promissory Note
During the three and nine months ended September 30, 2025, we entered into certain convertible notes with various third parties. For additional information, see Note 8 to the condensed consolidated financial statements.
Junior Notes, Senior Notes, August 2024 Convertible Notes and Foreclosure Collateral Sale
During the first quarter of 2025, we fully extinguished our (i) Junior Notes and Senior Notes in connection with certain conversions and as part of a foreclosure process initiated by certain investors (the “Foreclosure”) and (ii) August 2024 Convertible Notes (each as defined and described in Note 8 to the condensed consolidated financial statements). For additional information, see Note 8 to the condensed consolidated financial statements.
SFE EI Senior Note Settlement Agreement and Company Funding
On January 13, 2025, we entered into a letter agreement with S.F.E. Equity Investments SARL (“SFE EI”), pursuant to which SFE EI agreed to engage in efforts and commit capital to finance the operations of the Company for the next twelve months pursuant to the Transformation Plan.
Liqueous Settlement Agreement
In the first quarter of 2025, we entered into the Liqueous Settlement Agreement, as amended, with Liqueous, whereby we (i) received certain cash payments during the three and nine months ended September 30, 2025, as further described in Note 6 to the condensed consolidated financial statements, (ii) modified and issued certain warrants, which were subsequently exercised into Common Stock, and (iii) agreed to issue shares of Common Stock to extinguish the Liqueous Obligation, as defined and described in Note 8. During the third quarter of 2025, the Liqueous Obligation was assigned to Redstone Group I LLC (“Redstone”) and $1,097,113 of outstanding principal and accrued interest was settled through the issuance of 9,000,000 shares of the Company's Common Stock to Redstone.
In October 2024, we entered into the Master Agreement with Liqueous pursuant to which, among other things, we agreed to implement a $50 million ELOC pursuant to which we could require Liqueous to purchase Common Stock from time-to-time in the amounts and for the prices determined in accordance with the terms of the ELOC. Following the Liqueous Settlement Agreement, the ELOC will not be implemented and no additional equity will be sold to Liqueous, other than as set forth in the Liqueous Settlement Agreement.
For additional information, see Notes 6, 8 and 10 to the condensed consolidated financial statements.
ADDITIONAL RECENT DEVELOPMENTS
Inventory, Property and Equipment and Right-of-Use Asset Impairment
During the first quarter of 2025, in connection with our default under our lease and a default judgment obtained by the landlord against us, we (i) wrote down our inventory to a net realizable value of zero, (ii) wrote down the carrying value of our property and equipment, all of which was at the leased location, to a net book value of zero, and (iii) fully impaired the right-of-use asset associated with this lease, as we could no longer use the leased premises. For additional information, see Notes 1 and 3 to the condensed consolidated financial statements.
NYSE Regulation Notice of Noncompliance
On April 29, 2025, we received a Notice of Noncompliance (the “Notice”) from NYSE Regulation indicating that we were not in compliance with Section 1003(a)(i) of the NYSE American LLC Company Guide (the “Company Guide”), which requires a company to maintain stockholders’ equity of $2.0 million or more if it has reported losses from continuing operations or net losses in two of its three most recent fiscal years. The Notice had no immediate effect on the listing or trading of our securities and our Common Stock continues to trade on the NYSE American under the symbol “BURU” with the designation of “.BC” to indicate that we are not in compliance with the NYSE American’s continued listing standards.
As required by the Company Guide, on May 29, 2025, we submitted a detailed plan to NYSE Regulation advising of actions we have taken or will take to regain compliance with the continued listing standards (the “Compliance Plan”) by the compliance deadline of October 29, 2026, which includes the implementation of our previously announced Transformation Plan. On July 22, 2025, the NYSE American notified us that it had accepted our Compliance Plan and granted a plan period through October 29, 2026 (the “Plan Period”). NYSE American will review us periodically for compliance with the Compliance Plan. If we are not in compliance with the continued listing standards by October 29, 2026, or if we do not make progress consistent with the Compliance Plan during the Plan Period, NYSE American may initiate delisting proceedings as appropriate. However, we may appeal a staff delisting determination in accordance with the Company Guide.
We believe that, upon consummation of certain of the transactions that we have recently announced, we will be able to regain compliance. However, such transactions are subject to regulatory approvals, stockholder approval, and other closing conditions and, as a result, may not be consummated. Even if consummated, such transactions may not achieve the anticipated results or benefits to us.
NYSE American 2024 Delisting and Reinstatement
On June 13, 2024, NYSE American LLC announced that it had determined to commence proceedings to delist our Common Stock. Trading of our stock on NYSE American was immediately suspended and we commenced trading on the over-the-counter market.
On July 29, 2024, we received a notification from NYSE American informing us that we had resolved the continued listing deficiency with respect to low selling price as described in Section 1003(f)(v) of the Company Guide. As a result, the staff of NYSE Regulation withdrew its delisting determination and lifted the trading suspension on our Common Stock. The Common Stock recommenced trading on NYSE American on Friday, August 2, 2024 under the symbol “BURU.”
On February 22, 2024, we held a special meeting of stockholders where stockholders approved proposals to authorize the Company to effect a reverse stock split of our issued and outstanding Common Stock within a range from 1-for 30 to 1-for-75, with the exact ratio of the reverse stock split to be determined by our board of directors. On July 23, 2024, we effected a 1-for-40 reverse stock split (the "Reverse Stock Split").
Components of Statements of Operations
Revenue
Revenue consists of revenue recognized from sales and installation services of high-powered lasers. We have customers in the United States, Europe and Asia. In all sales arrangements, revenue is recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration we expect to be entitled to receive in exchange for those goods or services.
Cost of Revenue
Cost of revenue primarily consists of the cost of materials, overhead and employee compensation associated with the manufacturing of our high-powered lasers. Product cost also includes lower of cost or net realizable value inventory (“LCNRV”) adjustments if the carrying value of the inventory is greater than its net realizable value as well as adjustments for excess or obsolete inventory.
Operating Expenses
As described above, during 2024, management initiated measures designed to reduce costs, which included implementing a furlough of employees. This significantly impacted commercialization and operations, particularly in the second half of 2024 and continuing in 2025.
Research and Development
Research and development expenses consist primarily of compensation and related costs for personnel, including stock-based compensation, employee benefits, training, travel, third-party consulting services, laboratory supplies, and research and development equipment depreciation incurred to further our commercialization development efforts. We expense research and development costs as incurred. We anticipate research and development expenses to increase significantly as we expand our product portfolio.
Selling and Marketing
Selling and marketing expenses consist primarily of compensation and related costs for our direct sales force, sales management, and marketing and include stock-based compensation, employee benefits, and travel for selling and marketing employees as well as costs related to trade shows, marketing programs. third-party consulting expenses, and application lab depreciation expenses. We expense selling and marketing costs as incurred. We expect selling and marketing expenses to increase in future periods as we expand our sales force, marketing, and customer support organizations and increase our participation in trade shows and marketing programs.
General and Administrative
Our general and administrative expenses consist primarily of compensation and related costs for our finance, human resources and other administrative personnel, and include stock-based compensation, employee benefits and travel expenses. In addition, general and administrative expenses include our third-party consulting and advisory services, legal, audit, accounting services and facilities costs. We expect our general and administrative expenses to increase for the foreseeable future as we scale headcount with the growth of our business, and as a result of operating as a public company, including compliance with the rules and regulations of the SEC, legal, audit, additional insurance expenses, investor relations activities, and other administrative and professional services.
Interest Income
Interest income consists primarily of interest income received on our cash and cash equivalents.
Interest Expense
Interest expense consists primarily of (i) interest owed on our outstanding debt, (ii) through the first quarter of 2025, amortization of deferred financing costs and (iii) during 2025, interest expense incurred in connection with the amounts payable to the Landlord as part of the lease settlement. For additional information related to our lease settlement and debt obligations, see Notes 3 and 8, respectively, in the condensed consolidated financial statements included in Item 1 of this Quarterly Report.
Change in Fair Value of Warrant Liabilities
Change in fair value of warrant liabilities consists of non-cash gains or losses recognized based on the change in the fair value of our liability-classified warrants, which are re-measured to fair value at each balance sheet date with the corresponding gain or loss from the adjustment. Refer to Notes 4 and 10 in the condensed consolidated financial statements included in Item 1 of this Quarterly Report for more information.
Change in Fair Value of Derivative Liability
Change in fair value of derivative liability consists of non-cash gains or losses recognized based on the change in the fair value of the embedded derivatives under the August 2024 Convertible Notes that were required to be bifurcated from the host instrument and accounted for at fair value at issuance, as well as each
subsequent balance sheet date. Refer to Notes 4 and 8 in the condensed consolidated financial statements included in Item 1 of this Quarterly Report for more information.
Change in Fair Value of Convertible Note Receivable
Change in fair value of convertible note receivable relates to the unrealized gain or loss resulting from the change in fair value of the Convertible Note Receivable for which the fair value option was elected. This amount reflects the remeasurement of the asset to its current fair value as of the reporting date. For additional information, see Note 5
to the condensed consolidated financial statements included in Item 1 of this Quarterly Report.
Change in Fair Value of Notes Payable
Change in fair value of notes payable relates to the unrealized gain or loss resulting from the change in fair value of debt instruments for which the fair value option was elected. This amount reflects the remeasurement of such liabilities to their current fair value as of the reporting date. Refer to Note 8 in the condensed consolidated financial statements included in Item 1 of this Quarterly Report for additional information.
Change in Fair Value of SEPA Liability
Change in fair value of SEPA liability relates to the unrealized gain or loss resulting from the change in the fair value of the SEPA liability, which includes (i) the fair value of the put option and (ii) related to the June 30, 2025 valuation, the fair value related to the unissued shares for the commitment fee.
Change in Fair Value of Claims Settlement Liability
Change in fair value of claims settlement liability relates to the unrealized gain or loss resulting from the change in the fair value of the claims settlement liability associated with the Silverback Claims Settlement. Refer to Note 4 in the condensed consolidated financial statements included in Item 1 of this Quarterly Report for additional information.
Loss on Issuance of Warrants
Loss on issuance of warrants relates to the excess initial fair value of the Offering Common Stock Warrants over the net proceeds received from the Offering. Refer to Notes 4 and 10 in the condensed consolidated financial statements included in Item 1 of this Quarterly Report for more information.
Loss on Issuance of Notes Payable
Loss on issuance of notes payable relates to the excess of the initial fair value of certain debt instruments accounted for under the fair value option over the proceeds received. Refer to Note 8 in the condensed consolidated financial statements included in Item 1 of this Quarterly Report for additional information.
Loss on Issuance of SEPA
Loss on issuance of SEPA relates to the initial fair value of the SEPA put right at inception of the SEPA on May 30, 2025. For additional information regarding the SEPA, see Note 11 to the condensed consolidated financial statements included in Item 1 of this Quarterly Report.
Loss on Extinguishment of Accounts Payable
Loss on extinguishment of accounts payable relates to the derecognition of the liabilities to vendors in connection with the Silverback Claims Settlement, based on the fair value of the shares of Common Stock that can be issued to Silverback to satisfy the claims and the settlement fee. For additional information, see Note 3 to the condensed consolidated financial statements included in Item 1 of this Quarterly Report.
Loss on Extinguishment of Notes Payable
Loss on extinguishment of notes payable consists of losses incurred to extinguish debt during the periods presented. Refer to Note 8 in the condensed consolidated financial statements included in Item 1 of this Quarterly Report for additional information.
SEPA fees and issuance costs
SEPA fees and issuance costs relates to fees and issuance costs incurred in connection with the SEPA. For additional information regarding the SEPA, see Note 11 to the condensed consolidated financial statements included in Item 1 of this Quarterly Report.
Gain on Sale of Intellectual Property Intangible Assets
Gain on sale of intellectual property intangible assets primarily relates to the sale of collateral to the lenders holding both the outstanding Senior Convertible Notes and Junior Notes in exchange for a full discharge and extinguishment of our Junior Notes and Senior Convertible Notes, as further described in Note 8 in the condensed consolidated financial statements included in Item 1 of this Quarterly Report.
Loss on Impairment of Inventories, Property and Equipment and Operating Lease Right-of-Use Asset
Loss on impairment of inventories, property and equipment and operating lease right-of-use asset relates to write-downs and impairments recorded on our inventories, property and equipment and right-of-use-asset in connection with our default under our lease, and ultimate judgment obtained by the Landlord, in April 2025. For additional information, see Notes 1, 3 and 6 to the condensed consolidated financial statements included in Item 1 of this Quarterly Report.
Interest Expense Recognized on Remeasurement of Preferred Stock Liability
Interest expense recognized on remeasurement of preferred stock liability relates to the subsequent remeasurement of the preferred stock liability after issuance through March 31, 2025 in connection with the reclassification of the preferred stock from mezzanine equity to a short-term liability on January 31, 2025. For additional information, see Note 9 to the condensed consolidated financial statements included in Item 1 of this Quarterly Report.
Comparison of the three months ended September 30, 2025 and 2024
The following table sets forth our operations for the periods presented:
Three Months Ended
September 30,
2025
2024
$ Change
Revenue
$
—
$
—
$
—
Cost of revenue
(49,806
)
359,950
(409,756
)
Gross margin
49,806
(359,950
)
409,756
Operating expenses:
Research and development
—
206,474
(206,474
)
Selling and marketing
790,779
113,445
677,334
General and administrative
1,883,497
1,796,774
86,723
Total operating expenses
2,674,276
2,116,693
557,583
Loss from operations
(2,624,470
)
(2,476,643
)
(147,827
)
Non-operating income (loss):
Interest income
48,090
721
47,369
Interest expense
(35,405
)
(1,076,607
)
1,041,202
Change in fair value of warrant liabilities
(1,392,598
)
369,674
(1,762,272
)
Change in fair value of convertible note receivable
(1,044,294
)
—
(1,044,294
)
Change in fair value of notes payable
(44,800
)
—
(44,800
)
Change in fair value of SEPA liability
(646,443
)
—
(646,443
)
Change in fair value of claims settlement liability
2,584,724
—
2,584,724
Loss on issuance of warrants
(8,756,303
)
—
(8,756,303
)
Loss on issuance of notes payable
(443,466
)
—
(443,466
)
Loss on extinguishment of accounts payable
(6,513,554
)
—
(6,513,554
)
Loss on extinguishment of notes payable
(3,265,002
)
(1,303,969
)
(1,961,033
)
SEPA fees and issuance costs
(28,451
)
—
(28,451
)
Other gain (loss), net
(259,624
)
—
(259,624
)
Loss before provision for income taxes
(22,421,596
)
(4,345,724
)
(18,075,872
)
Provision for income taxes
—
—
—
Net loss
$
(22,421,596
)
$
(4,345,724
)
$
(18,075,872
)
Cost of Revenue.
Cost of revenue decreased $409,756 during the three months ended September 30, 2025 compared to the same period in 2024. This decrease is primarily due to a period-over-period decrease of approximately (i) $276,000 of direct labor and job costs and (ii) $115,000 in overhead, due to decreased production of the laser systems related to the measures implemented by management during 2024 designed to reduce costs, which included implementing a furlough of employees that significantly impacted commercialization and operations and has had a continued impact into the third quarter of 2025. Cost of revenue for the three months ended September 30, 2025 primarily relates to the release of a laser warranty accrual for which no revenue was generated in the period.
Research and Development.
Research and development expenses decreased $206,474 during the three months ended September 30, 2025 compared to the same period in 2024. This decrease is primarily due to decreases in (i) stock-based compensation expense of approximately $77,000, due primarily to the furlough of research and development employees as part of the cost reduction measures instituted by management discussed above, (ii) personnel costs of approximately $65,000, due primarily to the furlough of research and development employees as part of the cost reduction measures instituted by management which began during 2024 and continued into 2025 and (iii) depreciation expense of approximately $41,000, due to the write-down of property and equipment to a net book value of zero during the first quarter of 2025. For additional information on the write-down of property and equipment, see Notes 1 and 3 to the condensed consolidated financial statements.
Selling and Marketing.
Selling and marketing expenses increased $677,334 during the three months ended September 30, 2025 compared to the same period in 2024. This increase is primarily due to an increase in professional and consulting related expenses of approximately $685,000 as part of our Transformation Plan.
General and Administrative.
General and administrative expenses increased $86,723 during the three months ended September 30, 2025 compared to the same period in 2024. This increase is primarily driven by the net effect of (i) an increase in professional and consulting services of approximately $326,000, (ii) a decrease in rent expense of approximately $170,000, due to the termination of the Company’s operating lease agreement (see Note 6 for additional information), (iii) a decrease in personnel costs of approximately $153,000, primarily as a result of the cost reduction measures instituted by management which began during 2024 and continued into 2025, (iv) a decrease in insurance expenses of approximately $143,000 and (v) an increase in accounting and audit services of approximately $111,000.
Interest Expense.
Interest expense decreased $1,041,202 during the three months ended September 30, 2025 compared to the same period in 2024, primarily due to lower interest-bearing debt balances. Interest expense during the three months ended September 30, 2025 was comprised primarily of interest accrued on the Agile Note, the Liqueous Obligation, and interest accrued in connection with the amounts payable to the Landlord as part of the lease settlement. Refer to Note 8 in the condensed consolidated financial statements included herein for additional information on our debt obligations.
Change in Fair Value of Warrant Liabilities.
We recorded a loss of $1,392,598 during the three months ended September 30, 2025, which is primarily related to the increase in the fair value of the Offering Common Stock Warrants, largely due to an increase in the Company's share price from the time of issuance on September 16, 2025 through September 30, 2025. We recorded a gain of $369,674 in the third quarter of 2024, which resulted from the decrease in the fair value of the Junior Note Warrants between June 30, 2024 and September 30, 2024.
Change in Fair Value of Convertible Note Receivable.
We recorded a gain of $1,044,294 during the three months ended September 30, 2025, which primarily relates to the net effect of (i) an increase in principal amount under the Convertible Note Receivable and (ii) a decrease in the fair value of the Convertible Note Receivable, primarily due to the potential dilutive impact on SYME's market value of the expected future conversion of the Convertible Note Receivable into SYME ordinary shares and warrants. For additional information, see Note 5 to the condensed consolidated financial statements.
Change in Fair Value of SEPA Liability.
We recorded a loss of $646,443 during the three months ended September 30, 2025 related to the increase in the fair value of the SEPA liability, primarily due to a change in the amount and timing of expected share draws under the SEPA.
Change in Fair Value of Claims Settlement Liability.
We recorded a loss of $2,584,724 during the three months ended September 30, 2025 related to the change in the fair value of the claims settlement liability associated with the Silverback Claims Settlement, primarily driven by a significant reduction in the probability of payment to the remaining unpaid vendor as of September 30, 2025, resulting in a significant reduction in the expected settlement amount. For additional information, see Note 4 to the condensed consolidated financial statements.
Loss on Issuance of Warrants.
We recorded a loss of $8,756,303 during the three months ended September 30, 2025 related to the excess initial fair value of the Offering Common Stock Warrants over the net proceeds received from the Offering. For additional information regarding the Offering and Offering Common Stock Warrants, see Notes 9 and 10 to the condensed consolidated financial statements.
Loss on Issuance of Notes Payable.
We recorded a loss of $443,466 during the three months ended September 30, 2025, primarily related to an excess of (i) $142,242 related to the July Diagonal Convertible Note, (ii) $93,158 related to the August Indigo Capital Convertible Note and July Indigo Capital Convertible Note and (iii) $52,366 related to the September Brick Lane Convertible Note, each over the proceeds received. For additional information regarding our notes payable, see Note 8 to the condensed consolidated financial statements.
Loss on Extinguishment of Accounts Payable.
During the three months ended September 30, 2025, we recorded a loss of $6,513,554 related to the derecognition of the liabilities to vendors in connection with the Silverback Claims Settlement, which was calculated based on the fair value of the shares of Common Stock that can be issued to Silverback to satisfy the claims and the settlement fee. For additional information, see Note 4 to the condensed consolidated financial statements.
Loss on Extinguishment of Notes Payable.
During the three months ended September 30, 2025, we recorded a loss on the extinguishment of notes payable of $3,265,002, which primarily is comprised of (i) $1,745,201 related to the amendment of the AZ Promissory Note to include a conversion feature, (ii) $1,094,914 related to the amendment of the TAG Promissory Note to include a conversion feature and (iii) $424,887 related to the issuance of 9,000,000 shares to settle $1,097,113 of outstanding principal and accrued interest under the Liqueous Obligation. We recorded a loss on the extinguishment of debt of $1,303,969 for the three months ended September 30, 2024, which primarily relates to the issuance of 2,399,850 shares to noteholders of the Senior Notes and Junior Notes to extinguish an aggregate amount of $677,061 of principal and accrued interest under the Senior Notes and Junior Notes. For additional information regarding our notes payable, see Note 8 to the condensed consolidated financial statements.
Comparison of the nine months ended September 30, 2025 and 2024
The following tables set forth our operations for the nine months ended September 30, 2025 and 2024:
Nine Months Ended
September 30,
2025
2024
$ Change
Revenue
$
—
$
142,827
$
(142,827
)
Cost of revenue
181,373
1,950,632
(1,769,259
)
Gross margin
(181,373
)
(1,807,805
)
1,626,432
Operating expenses:
Research and development
184,563
1,656,350
(1,471,787
)
Selling and marketing
1,861,112
385,965
1,475,147
General and administrative
8,057,531
6,390,017
1,667,514
Total operating expenses
10,103,206
8,432,332
1,670,874
Loss from operations
(10,284,579
)
(10,240,137
)
(44,442
)
Non-operating income (loss):
Interest income
74,669
17,202
57,467
Interest expense
(389,837
)
(3,384,422
)
2,994,585
Change in fair value of warrant liabilities
(1,282,284
)
2,156,186
(3,438,470
)
Change in fair value of derivative liability
37,900
141,100
(103,200
)
Change in fair value of convertible note receivable
(1,055,694
)
—
(1,055,694
)
Change in fair value of notes payable
(1,211,173
)
—
(1,211,173
)
Change in fair value of SEPA liability
(906,950
)
—
(906,950
)
Change in fair value of claims settlement liability
2,584,724
—
2,584,724
Loss on issuance of warrants
(8,756,303
)
—
(8,756,303
)
Loss on issuance of notes payable
(1,917,562
)
—
(1,917,562
)
Loss on issuance of SEPA
(2,582,724
)
—
(2,582,724
)
Loss on extinguishment of accounts payable
(6,513,554
)
—
(6,513,554
)
Loss on extinguishment of notes payable
(10,138,337
)
(11,597,803
)
1,459,466
SEPA fees and issuance costs
(1,103,451
)
—
(1,103,451
)
Gain on sale of intellectual property intangible assets
8,961,872
—
8,961,872
Loss on impairment of inventories, property and equipment and operating lease right-of-use asset
(6,064,823
)
—
(6,064,823
)
Interest expense recognized on remeasurement of preferred stock liability
(10,398,050
)
—
(10,398,050
)
Other gain (loss), net
(311,840
)
218,169
(530,009
)
Loss before provision for income taxes
(51,257,996
)
(22,689,705
)
(28,568,291
)
Provision for income taxes
—
—
—
Net loss
$
(51,257,996
)
$
(22,689,705
)
$
(28,568,291
)
Revenue.
Revenue decreased $142,827 during the nine months ended September 30, 2025 compared to the same period in 2024. This decrease is primarily due to the measures implemented by management during 2024 and continued into the first nine months of 2025, designed to reduce costs, which included implementing a furlough of employees that significantly impacted commercialization and operations.
Cost of Revenue.
Cost of revenue decreased $1,769,259 during the nine months ended September 30, 2025 compared to the same period in 2024. This decrease is primarily due to a period-over-period decrease of approximately (i) $1,351,000 of direct labor and job costs and (ii) $366,000 in overhead, due to decreased production of the laser systems related to the measures implemented by management during 2024 designed to reduce costs, which included implementing a furlough of employees that significantly impacted commercialization and operations and has had a continued impact into the first nine months of 2025.
Research and Development.
Research and development expenses decreased $1,471,787 during the nine months ended September 30, 2025 compared to the same period in 2024. This decrease is primarily due to decreases in (i) personnel costs of approximately $923,000, due primarily to the furlough of research and development employees as part of the cost reduction measures instituted by management which began during 2024 and continued into 2025, (ii) stock-based compensation expenses of approximately $250,000, due primarily to the furlough of research and development employees as part of the cost reduction measures instituted by management discussed above, (iii) spend on the BL
TM
series of approximately $139,000, and (iv) depreciation expense of approximately $99,000 due to the write-down of property and equipment to a net book value of zero during the first quarter of 2025. For additional information on the write-down of property and equipment, see Notes 1 and 3 to the condensed consolidated financial statements.
Selling and Marketing.
Selling and marketing expenses increased $1,475,147 during the nine months ended September 30, 2025 compared to the same period in 2024. This increase is primarily due to the net effect of (i) an increase in professional and consulting related expenses of approximately $1,284,000 as part of our Transformation Plan, (ii) a decrease in payroll expenses of approximately $368,000, primarily as a result of the cost reduction measures instituted by management which began during 2024 and continued into 2025, (iii) an increase in stock-based compensation expense of approximately $384,000, primarily related to the forfeiture of an employee's unvested awards upon his resignation in April 2024 that resulted in a large reversal of expense in the second quarter of 2024, (vi) an increase in marketing expenses of approximately $263,000 and (v) a decrease in depreciation expense of approximately $84,000 due to the
write-down of property and equipment to a net book value of zero during the first quarter of 2025. For additional information on the write-down of property and equipment, see Notes 1 and 3 to the condensed consolidated financial statements.
General and Administrative.
General and administrative expenses increased $1,667,514 during the nine months ended September 30, 2025 compared to the same period in 2024. This increase is primarily driven by the net effect of (i) an increase in accounting and audit services of approximately $1,520,000, (ii) an increase in acquisition-related expenses of approximately $786,000, (iii) an increase in professional and consulting services of approximately $766,000, (iv) a decrease in personnel costs of approximately $622,000, primarily as a result of the cost reduction measures instituted by management which began during 2024 and continued into 2025, (v) a decrease in stock-based compensation expenses of approximately $386,000, due primarily to the cost reduction measures instituted by management which began during 2024 and continued into 2025, (vi) a decrease in insurance expenses of approximately $295,000, (vii) a decrease in rent expense of approximately $267,000 due to the termination of the Company’s operating lease agreement (see Note 6 for additional information) and (viii) an increase in depreciation expense of approximately $190,000 due to the write-down of property and equipment to a net book value of zero during the first quarter of 2025.
Interest Expense.
Interest expense decreased $2,994,585 during the nine months ended September 30, 2025 compared to the same period in 2024 primarily due to lower interest-bearing debt balances between periods, due to the extinguishment of certain notes, as detailed in Note 8. Interest expense during the nine months ended September 30, 2025 was comprised primarily of interest accrued on the Senior Convertible Notes, Junior Notes, August 2024 Convertible Notes, Agile Note, the Liqueous Obligation, and interest accrued in connection with the amounts payable to the Landlord as part of the lease settlement. Interest expense during the nine months ended September 30, 2024 was comprised of interest accrued on the Senior Convertible Notes and Junior Notes and debt discount amortization for the Junior Notes. For more information on our debt obligations, see Note 8 to the condensed consolidated financial statements.
Change in Fair Value of Warrant Liabilities, net.
We recorded a loss of $1,282,284 during the nine months ended September 30, 2025, which is primarily related to the increase in the fair value of the Offering Common Stock Warrants, largely due to an increase in the Company's share price from the time of issuance on September 16, 2025 through September 30, 2025. During the nine months ended September 30, 2024, we recorded a gain of $2,156,186 which resulted from the decrease in the fair value of the Junior Note Warrants between December 31, 2023 and September 30, 2024.
Change in Fair Value of Convertible Note Receivable.
We recorded a gain of $1,055,694 during the nine months ended September 30, 2025, which primarily relates to the net effect of (i) an increase in principal amount under the Convertible Note Receivable and (ii) a decrease the fair value of the Convertible Note Receivable, primarily due to the potential dilutive impact on SYME's market value of the expected future conversion of the Convertible Note Receivable into SYME ordinary shares and warrants. For additional information, see Note 5 to the condensed consolidated financial statements.
Change in Fair Value of Notes Payable.
We recorded a loss of $1,211,173 during the nine months ended September 30, 2025, which resulted from (i) a loss due to the increase in fair value of $1,160,158 of the Indigo Capital Convertible Notes upon conversion of contractual principal of $725,000, largely due to an increase in the Company's share price from March 31, 2025 through the conversion date in May 2025, (ii) a gain of $132,508 related to the decrease in the fair value of the Indigo Capital Convertible Notes, largely due to a decrease in the Company's share price from the time of the issuance in early March 2025 through March 31, 2025, and (ii) a gain of $124,014 related to the conversion of $307,320 of contractual principal under the Indigo Capital Exchange Convertible Notes. For additional information, see Note 8 to the condensed consolidated financial statements.
Change in Fair Value of SEPA Liability.
We recorded a loss of $906,950 during the nine months ended September 30, 2025 related to the increase in the fair value of the SEPA liability, primarily due to a change in the amount and timing of expected share draws under the SEPA.
Change in Fair Value of Claims Settlement Liability.
We recorded a loss of $2,584,724 during the nine months ended September 30, 2025 related to the change in the fair value of the claims settlement liability associated with the Silverback Claims Settlement, primarily driven by a significant reduction in the probability of payment to the remaining unpaid vendor as of September 30, 2025, resulting in a significant reduction in the expected settlement amount. Refer to Note 4 in the condensed consolidated financial statements for additional information.
Loss on Issuance of Warrants.
We recorded a loss of $8,756,303 during the nine months ended September 30, 2025 related to the excess initial fair value of the Offering Common Stock Warrants over the net proceeds received from the Offering. For additional information regarding the Offering and Offering Common Stock Warrants, see Notes 9 and 10 to the condensed consolidated financial statements.
Loss on Issuance of Notes Payable.
We recorded a loss of $1,917,562 during the nine months ended September 30, 2025, primarily related to the excess of an aggregate (i) $982,308 in the initial fair value of the Indigo Capital Convertible Notes, (ii) $335,197 in the initial fair value of the Diagonal Convertible Notes, (iii) $295,754 in the initial fair value of the Brick Lane Convertible Notes, (iv) $155,700 in the initial fair value of the Yorkville Promissory Note and (v) $93,215 in the initial fair value of the Boot Convertible Note, each over the proceeds received. For additional information, see Note 8 to the condensed consolidated financial statements.
Loss on Issuance of SEPA.
We recorded a loss of $2,582,724 during the nine months ended September 30, 2025 related to the initial fair value of the SEPA put option at inception of the SEPA on May 30, 2025. For additional information regarding the SEPA, see Note 11 to the condensed consolidated financial statements.
Loss on Extinguishment of Accounts Payable.
During the nine months ended September 30, 2025, we recorded a loss of $6,513,554 related to the derecognition of the liabilities to vendors in connection with the Silverback Claims Settlement, which was calculated based on the fair value of the shares of Common Stock that can be issued to Silverback to satisfy the claims and the settlement fee. For additional information, see Note 4 to the condensed consolidated financial statements.
Loss on Extinguishment of Notes Payable.
During the nine months ended September 30, 2025, we recorded a loss on the extinguishment of notes payable of $8,393,137, which primarily is comprised of (i) $2,123,403 related to excess of the initial fair value of $3,003,300 of the March Indigo Capital Exchange Convertible Note over the carrying amount of the August 2024 Convertible Notes, (ii) $1,745,201 related to the amendment of the AZ Promissory Note to include a conversion feature, (iii) $1,682,641 related to the sale of collateral, further described in Note 8 to the condensed consolidated financial statements, (iv) $1,174,519 related to the issuance of 9,186,581 shares to holders of Junior Notes to extinguish an aggregate $411,865 of principal and accrued interest under the Junior Notes, (v) $1,094,914 related to the amendment of the TAG Promissory Note to include a conversion feature, (vi) $1,071,997 related to the excess of the fair value of the Brick Lane Exchange Convertible Note at issuance and the carrying value of the 100,000 shares of the Company's outstanding Series A Preferred Stock that was extinguished, (vii) $480,399 related to the issuance of 1,878,620 shares to Esousa to extinguish an aggregate $389,375 of principal and accrued
interest under the August 2024 Convertible Notes, (viii) $424,887 related to the issuance of 9,000,000 shares to settle $1,097,113 of outstanding principal and accrued interest under the Liqueous Obligation, (ix) $163,500 related to the issuance of the April Indigo Capital Exchange Convertible Note in exchange for the extinguishment of an existing unsecured promissory note of the Company with a carrying value of $2,108,523, and (x) $140,323 related to the excess of the fair value of the Bomore Exchange Convertible Note at issuance and the carrying value of the 100,000 shares of the Company's outstanding Series A Preferred Stock that was extinguished. For further information, see Note 8 to the condensed consolidated financial statements.
In the nine months ended September 30, 2024, we issued 4,648,162 shares to noteholders to extinguish principal and accrued interest under the Senior Notes and Junior Notes. The reacquisition value of the debt was higher than the related carrying value, and thus resulted in a loss on debt extinguishment of $11,597,803 for the nine months ended September 30, 2024. For further information, see Note 8 to the condensed consolidated financial statements.
SEPA Fees and Issuance Costs.
We recorded $1,103,451 of SEPA fees and issuance costs during the nine months ended September 30, 2025, which relates to (i) a structuring fee payable to the SEPA Investor in the amount of $25,000, (ii) a commitment fee payable to the SEPA Investor in Common Stock in an amount equal to 1% of the Commitment Amount, or $1,000,000, to be paid 50% on execution of the SEPA and 50% 90 days following the date of the SEPA, (iii) legal expenses of $50,000 related to the issuance of the SEPA, and (iv) costs incurred in connection with the sale of 9,801,958 shares of Common Stock under the SEPA for aggregate gross proceeds of approximately $1,830,853. The 50% portion of the commitment fee payable that was owed at execution of the SEPA resulted in the issuance of 1,332,623 shares of Common Stock to the SEPA Investor during the second quarter of 2025. Additionally, on July 15, 2025, the Company issued the remaining 1,332,623 shares of Common Stock to the SEPA Investor. For additional information regarding the SEPA, see Note 11 to the condensed consolidated financial statements.
Gain on Sale of Intellectual Property Intangible Assets.
We recorded a gain on the sale of intellectual property of $8,961,872 during the nine months ended September 30, 2025, which primarily related to the sale of collateral to extinguish the remaining outstanding Junior Notes and Senior Convertible Notes, as further described in Note 8 to the condensed consolidated financial statements.
Loss on Impairment of Inventories, Property and Equipment and Operating Lease Right-of-Use Asset.
We recorded a loss on impairment of inventories, property and equipment and operating lease right-of-use asset of $6,064,823 related to write-downs and impairments recorded on our inventories, property and equipment and right-of-use asset in connection with our default under our lease, and ultimate judgment obtained by the Landlord, in April 2025. For additional information, see Notes 1, 3, and 6 to the condensed consolidated financial statements.
Interest Expense Recognized on Remeasurement of Preferred Stock Liability.
We recorded
non-cash
i
nterest expense of $10,398,050 related to the subsequent remeasurement of the preferred stock liability after issuance through March 31, 2025 in connection with the reclassification of the preferred stock from mezzanine equity to a current liability on January 31, 2025. For additional information, see Note 9 to the condensed consolidated financial statements.
Liquidity and Capital Resources
Overview
Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business operations, including working capital needs, debt service, acquisitions, contractual obligations, and other commitments. As of the date of this Quarterly Report, we have yet to generate meaningful revenue from our business operations and have funded capital expenditure and working capital requirements through debt and equity financing.
As of September 30, 2025, we had cash and cash equivalents of $5,941,542 as compared to $209,337 as of December 31, 2024. During the nine months ended September 30, 2025, we received gross cash proceeds of (i) $11,994,834 related to the Offering, as further described in Note 9 to the condensed consolidated financial statements, (ii) $7,156,708 from certain debt instruments issued, as further described in Note 8 to the condensed consolidated financial statements, (iii) $1,830,853 under the SEPA, as further described in Note 11 to the condensed consolidated financial statements, and (iv) $1,340,000 from the Liqueous Settlement Agreement, and future liquidity may be provided from certain agreements executed subsequent to September 30, 2025, as further described in Note 6 to the condensed consolidated financial statements. Our cash flows from operations are not sufficient to fund our current operating model and expansion plans. As of January 31, 2025, we were also required to redeem the Preferred Stock as permitted by law in cash at an amount equal to $10.00 per share, or $23,889,050. Notwithstanding the foregoing, we are not required to redeem any shares of Preferred Stock to the extent we do not have legally available funds to effect such redemption.
From inception through September 30, 2025, we have incurred operating losses and negative cash flows from operating activities. For the nine months ended September 30, 2025 and 2024, we have incurred net losses of $51,257,996 and $22,689,705, respectively, and we have an accumulated deficit of $172,666,551 as of September 30, 2025. The operating loss for the nine months ended September 30, 2025 included $10,398,050 of non-cash interest expense recognized on remeasurement of the preferred stock liability. For additional information on this interest expense, see Note 9 to the condensed consolidated financial statements.
We anticipate that we will incur net losses for the foreseeable future and, even if we generate revenue, there is no guarantee that we will ever become profitable. Unless we are able to implement our Transformation Plan, all of the aforementioned factors raise substantial doubt about our ability to continue as a going concern.
Until we can generate sufficient revenue, we plan to finance our business with the proceeds from the issuance and sale of debt or equity securities, including sales pursuant to the SEPA, or borrowings under credit facilities. We plan to rely on proceeds received from the SEPA to the extent permitted under the terms of the Offering. There is no assurance our management's plans to obtain additional debt or equity financing or credit facilities will be successfully implemented or implemented on terms favorable to us.
The further development of our products, commencement of commercial operations and expansion of our business will require a significant amount of cash for expenditures. Our ability to successfully manage this growth will depend on many factors, including our working capital needs, the availability of equity or debt financing and, over time, our ability to generate cash flows from operations.
Given our current liquidity position, we will need to raise additional capital. If we raise additional funds by issuing equity securities, this would result in dilution to our stockholders. If we raise additional funds by issuing any additional preferred stock, such securities may also provide for rights, preferences, or privileges senior to those of holders of Common Stock. If we raise additional funds by issuing debt securities, such debt securities would have rights, preferences and privileges senior to those of holders of Common Stock. The terms of debt securities or borrowings could impose significant restrictions on our operations. The
credit market and financial services industry have in the past, and may in the future, experience periods of uncertainty that could impact the availability and cost of equity and debt financing.
Cash Flows
The following table summarizes our cash flows from operating, investing and financing activities for the periods presented.
Nine Months Ended
September 30,
2025
2024
Net cash used in operating activities
$
(7,084,481
)
$
(5,499,839
)
Net cash used in investing activities
$
(3,957,394
)
$
—
Net cash provided by financing activities
$
17,649,221
$
3,583,214
Cash flows from operating activities
Our cash flows used in operating activities to date have been primarily comprised of costs related to research and development, selling and marketing, and other general and administrative activities. We expect our expenses related to personnel and general and administrative activities to increase as a result of operating as a public company.
Net cash used in operating activities was $7,084,481 and $5,499,839 for the nine months ended September 30, 2025 and 2024, respectively. The increase in cash used in operating activities is primarily the result of an increase in cash used from an increase in net loss, partially offset by decreases in cash used from non-cash expenses, including (i) interest expense recognized on remeasurement of preferred stock liability of $10,398,050, (ii) loss on the issuance of warrants of $8,756,303, (iii) loss on extinguishment of accounts payable of $6,513,554, (iv) loss on impairment of inventories, property and equipment and operating lease right-of-use asset of $6,064,823, (v) loss on fair value of warrant liabilities of $3,438,470, partially offset by increases in cash used from non-cash expenses including the gain on sale of intellectual property intangible assets of $8,961,872.
Cash flows from investing activities
Our cash flows from investing activities have historically been comprised primarily of purchases of equipment and installation of improvements to our leased facilities and headquarters.
Net cash used in investing activities was $3,957,394 and nil for the nine months ended September 30, 2025 and 2024, respectively. The amount used in investing activities for the nine months ended September 30, 2025 relates to (i) $2,957,394 of payments under the Convertible Note Receivable, (ii) $600,000 of cash paid for the anticipated acquisition of TCEI, as further described in Note 6 to the condensed consolidated financial statements, and (iii) $400,000 of cash paid related to the p
ayment for the SYME Inventory Advance, as further described in Note
6 to the condensed consolidated financial statements.
Cash flows from financing activities
We have financed our operations primarily through the sale of preferred stock, Common Stock, convertible notes, and promissory notes.
Net cash provided by financing activities was $17,649,221 and $3,583,214 for the nine months ended September 30, 2025 and 2024, respectively.
Net cash provided by financing activities during the nine months ended September 30, 2025 is comprised primarily of (i) $11,994,834 of proceeds from the Offering as further described in Note 9 to the condensed consolidated financial statements, (ii) $7,156,708 of proceeds from certain debt instruments issued, as further described in Note 8 to the condensed consolidated financial statements, (iii) $2,674,899 of payments on debt borrowings, (iv) $1,830,853 of proceeds from the SEPA, (v) $1,658,319 of payments of debt and equity isuance costs and (v) 1,000,000 of proceeds received from the Liqueous Settlement Agreement.
Net cash provided by financing in activities in the nine months ended September 30, 2024 is comprised primarily of proceeds from the issuance of pre-funded warrants and Common Stock of $2,139,866 and $200,000, respectively, as well as proceeds from debt borrowings of $743,000 and proceeds from shareholder advances of $644,936, partially offset by payments of accrued debt issuance costs for the Junior Notes totaling $71,500 and tax withholdings for RSU issuances totaling $73,088.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of September 30, 2025. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.
Contractual Obligations
For our contractual obligations that are expected to have an effect on our liquidity and cash flow, see section “Notes to Condensed Consolidated Financial Statements – Note 6” in the condensed consolidated financial statements.
Critical Accounting Estimates
Our condensed consolidated financial statements are prepared in conformity with U.S. GAAP, which requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. We evaluate our estimates and assumptions on an ongoing basis. Our estimates and assumptions are based on historical experience and on various other factors that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates.
There have been no significant changes to our accounting policies during the nine months ended September 30, 2025, as compared to the critical accounting policies described in our audited financial statements included in the Annual Report (as defined above).
Recently Issued and Adopted Accounting Pronouncements
We review new accounting standards to determine the expected financial impact, if any, that the adoption of each new standard will have. For the recently issued and adopted accounting standards that we believe may have an impact on our condensed consolidated financial statements, see the section entitled “Notes to Condensed Consolidated Financial Statements – Note 2" in the condensed consolidated financial statements.
Item 3. Quantitative and Qualitati
ve Disclosures About Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
Item 4. Controls a
nd Procedures
Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the Executive Chairman and Co-Chief Executive Officer, as appropriate, to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended September 30, 2025, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial and accounting officer have concluded that during the period covered by this report, our internal control over financial reporting was not effective due to a material weakness in our control environment around the accounting and presentation of complex financial instrument transactions that was not effectively designed or maintained. Additionally, subsequent to the end of the third quarter, management identified a control deficiency related to wire-transfer authorization that resulted in a fraudulent disbursement, as further described in Note 16 to the condensed consolidated financial statements. Management determined that this deficiency constitutes a material weakness. These material weaknesses could result in material misstatements of the financial statements that would not be prevented or detected on a timely basis.
We plan to take steps to enhance and improve the design of our internal control over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we intend to implement the following changes during our fiscal year ending December 31, 2025: (i) hire additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out in (i) and (ii) are, in part, dependent upon our receiving additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in management's evaluation pursuant to Rules 13a-15(f) or 15d-15(f) of the Exchange Act during the period covered by this Quarterly Report that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
The information under the caption “
Legal Proceedings
” in Note 6 of the unaudited condensed consolidated financial statements of this Quarterly Report is incorporated herein by reference.
Item 1A.
Risk Factors.
The following risk factors supplement the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024, as amended (the “Amended Form 10-K”). If any of the risks discussed in this Item 1A or in our Amended Form 10-K, are realized, our business, financial condition, results of operations and prospects could be materially and adversely affected. Defined terms used herein and not otherwise defined are as defined in Part I, Item 1 of this Quarterly Report.
There is no guarantee that our acquisitions of interests in Tekne, SYME or Orbit will close.
The Company has executed the Tekne Letter, pursuant to which it intends to acquire a controlling interest in Tekne. The Company is currently negotiating definitive agreements relating to the Tekne acquisition and the Tekne acquisition requires, among other things, approvals by the Italian government and approval of the Company’s stockholders prior to closing. There can be no assurance that the Tekne transaction will close in the expected timeframe or at all.
The Company has entered into a convertible facility with SYME to loan SYME up to $5.15 million in exchange for receiving a controlling interest in SYME. The acquisition of the ownership interest remains subject to receipt of approval from SYME stockholders and certain foreign regulatory approvals and there can be no assurance that the investment will close in the expected timeframe or at all.
On October 31, 2025, the Company entered into the Orbit Agreement to purchase all of the ownership interests in Orbit owned by Vanguard in a transaction scheduled to close by December 31, 2026. The Company is required to obtain stockholder approval to issue preferred stock to Vanguard, as well as approval of certain preferred stock terms by the NYSE American. As a result, there is no guarantee that the acquisition of Orbit will close in the time frame expected or at all.
In connection with our planned acquisitions, we have made monetary contributions to targeted investment entities and may be unable to recoup those payments.
In connection with our planned acquisitions of ownership interests in certain strategic targets, as of the date of this quarterly report, we have made cash contributions of approximately $8.9 million. To the extent that such acquisitions do not close as anticipated, such entities are required to repay all or part of the funds that we have contributed to them. If such acquisition targets are unable or unwilling to repay such advanced funds, this would have a material adverse effect on our business, financial condition, results of operations and cash flows.
We face a number of risks related to our strategic transactions.
Our Transformation Plan includes periodic acquisitions and divestitures of businesses and technologies. Strategic transactions of this nature involve numerous risks, including the following:
•
Competition for suitable acquisition or investment targets;
•
Inability to consummate deals on favorable or acceptable terms, or due to failure to obtain stockholder, government, regulatory or other necessary approvals or satisfy other closing conditions;
•
Diversion of management’s attention from normal daily operations of the business;
•
Potential difficulties in completing projects associated with in-process research & development;
•
Difficulties in entering markets in which we have no or limited prior experience and where competitors have stronger market positions;
•
In the case of foreign acquisitions and investments, the impact of particular economic, tax, currency, political, legal and regulatory risks associated with specific countries;
•
Inability to successfully integrate the acquired technology, data assets and operations into our business and maintain uniform standards, controls, policies, and procedures;
•
Inability to realize synergies or anticipated benefits within the expected time frame or at all;
•
Unidentified issues not discovered in our due diligence process, including product or service quality issues, security policies, standards, and practices, intellectual property issues and legal contingencies;
•
Inability of an acquisition to further our business strategy as expected or overpay for, or otherwise not realize the expected return on, our investments;
•
Expected earn-outs may not be achieved in the time frame or at the level expected or at all;
•
Lack of ability to recognize or capitalize on expected growth, synergies or cost savings;
•
Insufficient net revenue to offset increased expenses associated with acquisitions;
•
Potential loss of key employees of the acquired companies;
Inadequate internal control procedures and disclosure controls to comply with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or poor integration of a target company’s or business’ procedures and controls;
•
To the extent we use debt to fund acquisitions or for other purposes, our interest expense and leverage will increase significantly, and to the extent we issue equity securities as consideration in an acquisition, current shareholders’ percentage ownership and earnings per share will be diluted.
•
Assumption of unknown liabilities; and
•
Becoming subject to litigation related to the acquired businesses or assets.
An investment in our Common Stock carries a high degree of risk and stockholders may not be adequately compensated for the business and financial risks associated with an investment in our Common Stock.
A purchase of our Common Stock is subject to a high degree of risk. A purchase of our Common Stock is speculative and requires a long-term commitment, with no certainty of return. Returns generated from the Company’s investments may be insufficient to compensate stockholders adequately for the business and financial risks that must be assumed. There is no guarantee that the Company’s performance will meet any stockholder’s targeted or projected return. The value of the Company’s investments in new businesses may fall, as well as rise, and stockholders may not get back the amount they have invested.
We may make acquisitions or form joint ventures that are unsuccessful.
Our ability to implement our Transformation Plan is partially dependent on our ability to successfully acquire interests in other companies, which creates substantial risk. In order to pursue a growth by acquisition strategy successfully, we must identify suitable candidates for these transactions; however, because of our limited funds, we may not be able to purchase those companies that we have identified as potential successful acquisition candidates. Additionally, we may have difficulty managing post-closing issues such as the integration into our corporate structure. Integration issues are complex, time consuming and expensive and, without proper planning and implementation, could significantly disrupt our business, including, but not limited to, the diversion of management’s attention, the loss of key business and/or personnel from the acquired company, unanticipated events, and legal liabilities. As a result, the consummation of acquisitions or joint ventures may not be successful and, if an acquired business or investment does not perform as expected, it may have an adverse financial impact on the Company.
Related party investments include interests of members of our management that may differ from interests of other investors.
Our Executive Director and Co-Chief Executive Officers have identified and negotiated investments, option rights, and other control relationships with respect to certain companies and businesses, in certain cases with the goal of allowing the Company to ultimately acquire controlling interests in such entities at the right time and on appropriate terms. The initial investment, option, or control relationship creates a conflict of interest when the Company then invests in such entity or business, as such executives may receive benefits (directly or indirectly) not shared by all stockholders. Notwithstanding these conflicts of interest, the Company believes that having access to strategic transactions sourced by our executives is critical to the Company’s future success and anticipates similar transactions in the future. The Company has such related party transactions reviewed and approved by independent directors and the Audit Committee; however, such processes and procedures do not ensure that such investments will be successful or beneficial to stockholders.
Ite
m 2. Unregiste
red Sales of Equity Securities and Use of Proceeds.
Descriptions of the financing transactions described above under "
Recent Financing Transactions, Settlements and Debt Extinguishments
" in Part I, Item 2 in this Quarterly Report on Form 10-Q and Note 8 to the condensed consolidated financial statements, as well as share-based compensation arrangements described in Note 12 to the condensed consolidated financial statements are incorporated herein by reference. Such transactions were conducted as private placements to accredited investors exempt from registration under Section 4(a)(2) of the Securities Act.
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* Filed herewith
** Furnished herewith.
† Certain of the exhibits and schedules to these exhibits have been omitted in accordance with Regulation S-K Item 601(a)(5). The registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request.
Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
November 14, 2025
NUBURU, INC.
By: /s/ Alessandro Zamboni
Name:
Alessandro Zamboni
Title:
Executive Chairman and Co- Chief Executive Officer
(Principal Executive Officer and Principal Financial and Accounting Officer)
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