Acquisitions and Investments - The Company acquired certain tangible assets and a portfolio of intellectual property from Oceaneering Entertainment Systems for $1.6 million, expanding its attractions services business [379]. - The Company has been engaged in expanding operations through equity method investments and acquiring businesses, despite incurring losses from operations [383]. - The Company has a 50% interest in the PDP joint venture, which operates one hotel resort and theme park in Mallorca, Spain [380]. - The Company recognized a $1.1 million gain on bargain purchase from the OES Acquisition for the year ended December 31, 2025 [432]. - The company recognized an other-than-temporary impairment charge of $5.3 million for its investment in PDP for the year ended December 31, 2025 [476]. - The fair value of the company's investment in Karnival was determined to be $4.2 million, with an impairment charge of $3.0 million recognized for the year ended December 31, 2025 [478]. Financial Performance - Revenue for the year ended December 31, 2025, was $14.896 billion, an increase of $8.151 billion compared to $6.745 billion in 2024 [417]. - The Company’s net income for the year ended December 31, 2025, was $6.312 million, a decrease of $143.169 million compared to $149.481 million in 2024 [417]. - Total segment loss from operations was $1.121 million for 2025, compared to a loss of $134, indicating a deterioration of $987 million [434]. - Falcon's Attractions segment reported a loss of $3.260 million in 2025, reflecting a significant operational challenge [440]. - The Company recognized a gain of $172.3 million related to the change in fair value of earnout liabilities for the year ended December 31, 2024 [413]. - The share of gain from equity method investments increased by $20.08 million for the year ended December 31, 2025, driven by a gain from the sale of a subsidiary [424]. Expenses and Costs - Selling, general and administrative expenses increased by $3.088 million for the year ended December 31, 2025, primarily due to payroll and marketing expenses [420]. - Interest expense increased by $1.486 million for the year ended December 31, 2025, primarily due to rising interest rates on debt [427]. - Project design and build expenses increased by $2.373 million for the year ended December 31, 2025, due to new attractions service contracts [418]. - The Company incurred $8.3 million in impairment losses for equity method investments during the year ended December 31, 2025 [406]. Cash Flow and Financing - Cash used in operating activities for the year ended December 31, 2025, was $24.6 million, an increase of $12.1 million compared to 2024 [459]. - Cash provided by investing activities increased to $24.2 million for the year ended December 31, 2025, primarily due to a $27.0 million dividend distribution from PDP [462]. - Cash provided by financing activities decreased to $3.7 million for the year ended December 31, 2025, compared to $12.9 million in 2024, with net repayments of $6.9 million of debt [463]. - The company issued $32.5 million of preferred stock, raising $11.8 million in cash and exchanging $20.5 million of outstanding debt to fund its attractions division expansion [384]. - The company issued $32.5 million of Series B Preferred Stock during 2025, raising $11.8 million in cash and exchanging $20.7 million of outstanding debt [447]. Working Capital and Debt - As of December 31, 2025, the Company reported a working capital deficiency of $18.1 million, including $0.6 million of matured debt [385]. - Total indebtedness as of December 31, 2025, was approximately $15.6 million, with $1.9 million in cash and $15.5 million available for borrowing [448]. - As of December 31, 2025, the company has $16.4 million in accrued expenses and current liabilities, including $14.4 million in transaction-related fees [450]. - The company has a total outstanding balance of $5.0 million with Infinite Acquisitions as of December 31, 2025 [456]. Future Outlook and Compliance - The Company expects research and development expenses to increase as it continues to invest in new product offerings across various sectors [401]. - The company expects its capital expenditures and working capital requirements to increase materially in the near future due to various operational factors [451]. - The Company is classified as an "emerging growth company" under the JOBS Act, allowing it to delay compliance with new accounting standards until they apply to private companies [482]. - The Company has elected to use the extended transition period for accounting standards under the JOBS Act, which may complicate financial statement comparisons with other public companies [483]. - The Company will maintain its status as an emerging growth company until it meets specific revenue or market value thresholds, including total annual revenue of at least $1.235 billion or a market value exceeding $700 million [484]. - The Company is also classified as a "smaller reporting company," which allows it to provide reduced disclosure obligations, including only two years of audited financial statements [485]. - The Company will retain its smaller reporting company status until it exceeds a market value of $250 million or annual revenue of $100 million, along with a market value exceeding $700 million [485]. - As a smaller reporting company, the Company is not required to provide certain market risk disclosures [486].

Financial Position - As of December 31, 2025, the company has an accumulated deficit of $124.6 million and has raised $36.7 million in additional capital since December 31, 2024, including a $25.8 million preferred stock private placement[46]. - The company has a history of operating losses and negative cash flows since inception, funded through a series of private placements[46]. - The IMSR Plant development has received approximately $30 million in non-dilutive funding support from the U.S., Canada, and the U.K. for licensing, engineering, and fuel supply activities[164]. - The U.S. Department of Energy's Loan Programs Office has accepted a loan guarantee application for up to $890 million to support project financing of an IMSR Plant in the U.S.[165]. IMSR Plant Design and Technology - The IMSR Plant is designed to achieve a Levelized Cost of Electricity (LCOE) of approximately $69/MWh and a Levelized Cost of Heat (LCOH) of approximately $8.60/MMBtu, positioning it competitively in the market[60]. - The IMSR Plant is expected to supply industrial-grade heat at 585 °C, suitable for over two-thirds of industrial thermal applications, addressing a major decarbonization challenge[57]. - The IMSR Plant's net electrical output is designed at 390 MW, capable of meeting utility-scale needs for dispatchable zero-carbon electric energy supply[59]. - The IMSR Plant is positioned to provide reliable, high-temperature thermal energy without greenhouse gas emissions, allowing it to replace fossil combustion systems in industrial facilities[57]. - The IMSR Plant design has progressed to a Preliminary Safety Analysis Report (PSAR) standard, which is a recognized development status in the nuclear industry[104]. - The IMSR Plant's design incorporates high inherent safety features due to the use of MSR technology, which mitigates risks associated with the nuclear fission process[124]. - The IMSR's primary cooling system operates at near atmospheric pressure, potentially reducing manufacturing and construction complexity and costs[139]. - The IMSR Core-unit integrates primary reactor components into a sealed, replaceable vessel, addressing maintenance challenges associated with limited component lifetimes[153]. Revenue Model and Projections - The company’s revenue model includes four principal revenue streams, leveraging its proprietary nuclear plant design and technology throughout the 56-year operating lifecycle of an IMSR Plant[73]. - Total projected revenue from the IMSR Plant lifecycle is estimated at $2.098 billion, with a cumulative gross margin of 22%[74]. - Pre-construction services are expected to generate $75 million, representing 4% of total revenues, with a gross margin of 31%[76]. - Construction services and component supply are anticipated to contribute $486 million, accounting for 23% of total revenues, with a gross margin of 27%[77]. - Post-construction IMSR Core-unit supply is projected to generate $1.148 billion, making up 55% of total revenues, with a gross margin of 20%[78]. - IMSR Fuel Salt supply is expected to yield $389 million, representing 18% of total revenues, also with a gross margin of 20%[79]. - The IMSR Plant has a projected operational life of 56 years, with core-unit replacements occurring every seven years, ensuring recurring revenue streams[80]. Regulatory and Compliance - The company has been selected for the DOE's Advanced Reactor Pilot Program, which aims to fast-track commercial licensing activities for small and modular nuclear plants[49]. - The CNSC completed its Vendor Design Review (VDR) of the IMSR Plant design in April 2023, confirming that it meets expectations in 19 focus areas for licensing, with no fundamental barriers identified[113]. - The regulatory strategy aims to establish the IMSR Plant as licensable and deployable in key global markets, starting with the United States and Canada, to reduce commercial and development risks[105]. - The company is engaging with the IAEA to ensure compliance with international safeguards for non-proliferation and security of nuclear materials, supporting its goal of establishing the IMSR Plant in export markets[122]. Research and Development - The R&D and testing program has been ongoing since 2020, focusing on qualifying materials such as the graphite moderator and IMSR Fuel Salt, with many tests already completed[101]. - The company has developed a comprehensive code validation and verification strategy, supported by U.S. DOE-funded projects, to validate key models for IMSR fission power control and heat transport[102]. - The first phase of graphite irradiation tests has yielded substantial data demonstrating the performance of preferred graphite grades at high temperatures under irradiation[133]. Market and Competitive Landscape - The company anticipates that more than 80% of U.S. coal plant sites are suitable for conversion to advanced nuclear, representing a potential market of 198.5 GWe installed base, much of which is slated for retirement by 2035[67]. - Approximately 83% of global primary energy demand is forecasted to be met by coal, natural gas, petroleum, and large-scale nuclear in 2025, highlighting the competitive landscape[168]. - The IMSR technology utilizes readily obtained SALEU fuel instead of HALEU, enhancing its commercial viability[136]. - The IMSR Plant's distinct operating characteristics are expected to improve affordability and cost-competitiveness compared to legacy and other Gen IV nuclear technologies[151]. Company Operations and Workforce - The company employs 74 full-time employees as of December 31, 2025, with a focus on talent development and performance tracking[184]. - The company has established a consortium of over 50 collaborative industry relationships to support the growth of its project pipeline[161]. - The company was originally a special purpose acquisition company and changed its name to "Terrestrial Energy Inc." on October 23, 2025[185]. - The company anticipates that its U.S. operation will provide a substantial part of the remaining engineering work for IMSR design deployment[182].

Financial Overview - As of December 31, 2025, the company has an accumulated deficit of $124.6 million and has raised $36.7 million in additional capital since December 31, 2024, including a $25.8 million preferred stock private placement[46]. - Total cumulative revenue from IMSR Plant lifecycle is estimated at $2.098 billion, with a gross margin of 22%[74]. - Pre-construction services are expected to generate $75 million, representing 4% of total revenue, with a gross margin of 31%[76]. - Construction services and component supply are projected to contribute $486 million, accounting for 23% of total revenue, with a gross margin of 27%[77]. - Post-construction IMSR Core-unit supply is anticipated to generate $1.148 billion, making up 55% of total revenue, with a gross margin of 20%[78]. - IMSR Fuel Salt supply is expected to yield $389 million, representing 18% of total revenue, with a gross margin of 20%[79]. IMSR Plant Design and Capabilities - The IMSR Plant is designed to achieve a Levelized Cost of Electricity (LCOE) of approximately $69/MWh and a Levelized Cost of Heat (LCOH) of approximately $8.60/MMBtu, positioning it competitively in the energy market[60]. - The IMSR Plant is capable of providing industrial-grade heat at 585 °C, suitable for over two-thirds of industrial thermal applications, addressing a significant decarbonization challenge[57]. - The IMSR Plant's net electrical output is designed at 390 MW, providing dispatchable zero-carbon electric energy supply, which is crucial for grid reliability[59]. - The IMSR Plant's operational design allows for long-term revenue visibility and durable cash flows, supported by ongoing operations and maintenance contracts[80]. - The IMSR Plant utilizes SALEU as nuclear fuel, which aligns with existing fuel supply frameworks and may reduce development risks associated with HALEU[91]. - The IMSR Plant design has progressed to a Preliminary Safety Analysis Report (PSAR) standard, which is a recognized development status in the nuclear industry[104]. - The IMSR's primary cooling system operates at near atmospheric pressure, potentially reducing manufacturing and construction complexity and costs[139]. - The IMSR Core-unit is designed for a "plug-and-play" replacement process every seven years, streamlining maintenance and enhancing operational efficiency[146]. Market Potential and Strategy - The company anticipates that more than 80% of U.S. coal plant sites are suitable for conversion to advanced nuclear, representing a potential market of 198.5 GWe installed base, much of which is slated for retirement by 2035[67]. - The company is focused on three key market verticals for deployment: data center electricity supply, industrial thermal and electric energy supply, and repowering coal plants[63]. - The IMSR Plant has a pipeline of over ten early-stage projects across various industrial sectors, including mining and chemical production[160]. - The company has established a consortium of over 50 collaborative industry relationships to support the growth of its project pipeline[161]. Regulatory and Development Milestones - The company has been selected for the DOE's Advanced Reactor Pilot Program, which aims to fast-track commercial licensing activities for small and modular nuclear plants[49]. - The CNSC completed its Vendor Design Review (VDR) of the IMSR Plant design in April 2023, confirming that it meets expectations in 19 focus areas for licensing, with no fundamental barriers identified[113]. - The company anticipates a five-year pre-construction period followed by a five-year construction period for the FCP IMSR Plant project, leading to the issuance of a Construction Permit and an Operating License by the USNRC[117]. - The regulatory strategy aims to establish the IMSR Plant as licensable and deployable in key global markets, starting with the United States and Canada, to reduce commercial and development risks[105]. - The insights gained from the VDR process will be incorporated into future licensing applications, enhancing the completeness and defensibility of submissions[115]. Research and Development - The R&D and testing program has been ongoing since 2020, focusing on qualifying materials such as the graphite moderator and IMSR Fuel Salt, with many tests already completed[101]. - The company has developed a comprehensive code validation and verification strategy, supported by U.S. DOE-funded projects, to validate key models for IMSR fission power control and heat transport[102]. - The company collaborates with multiple national laboratories and universities to support R&D and testing activities critical to IMSR technological advancement[132]. Company Structure and Employment - The company employs 74 full-time employees as of December 31, 2025, with a focus on recruitment and talent development[184]. - The company was originally a special purpose acquisition company incorporated on April 4, 2024, and domesticated into a Delaware corporation on October 23, 2025[185]. - The company expects to retain its emerging growth company status until its annual revenues exceed $1.2 billion or other specified conditions are met[432].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 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 No. 001-39642 CXApp Inc. (Exact name of registrant as specified in its charter) | Delaware | 85-2104918 | | --- | --- | | (State or other jurisd ...

Product and Technology - CXApp's flagship product, the CXAI Platform, integrates AI, automation, and real-time analytics to enhance workplace engagement and operational efficiency [25] - The company has filed 37 patents, with 17 granted, focusing on technologies such as indoor navigation and real-time analytics [37] - The company is integrating artificial intelligence into its product offerings, which may incur substantial costs and present legal and regulatory challenges [139] - CXApp's AI-driven platform integrates real-time analytics, behavioral insights, and predictive modeling to support agile decision-making for distributed workforces [216] - CXAI's platform operates within existing enterprise technology environments and is deployed across physical, hybrid, and digital workplace settings [220] Financial Performance - CXApp reported recurring net losses of approximately $13,473 thousand and $19,408 thousand for the fiscal years ended 2025 and 2024, respectively [73] - Gross profit totaled $4,005 thousand for the year ended December 31, 2025, compared to $5,857 thousand in the same period of 2024, with gross margin improving to 87% [208] - Total operating expenses increased to $21,582 thousand for the year ended December 31, 2025, compared to $19,598 thousand for the year ended December 31, 2024, primarily due to a $2,148 thousand goodwill impairment charge [215] - In fiscal year 2025, recurring revenue increased to 98% from 87%, driven by the transition to a SaaS-based model focused on AI-enabled services [209] Business Model and Strategy - CXApp's revenue model is based on recurring SaaS licensing fees and one-time implementation costs, typically involving multi-year contracts [43] - The company completed its Initial Public Offering on December 17, 2020, raising gross proceeds of $276 million from the sale of 27,600,000 units at $10.00 per unit [57] - CXApp's growth strategy includes potential future acquisitions, which may disrupt operations and lead to dilution of stockholder equity [79] - Future revenue growth is dependent on increasing sales to existing customers and acquiring new customers, which may be challenging [81] - The company aims to enhance operational efficiency and profitability through ongoing cost optimization and customer retention strategies [216] Market and Competition - The market for CXApp's products is highly competitive, facing challenges from both established vendors and emerging niche providers [39] - The company operates in a highly competitive market, facing significant price competition which may require price reductions for products and services [146] - Organizations are increasingly adapting to distributed and hybrid work models, leading to higher demand for software that enhances employee engagement and operational efficiency [221] - The global employee experience and workplace technology market is expected to grow at a compound annual growth rate (CAGR) exceeding 20% [216] Risks and Challenges - The company may face significant risks related to cybersecurity threats, which could compromise customer data and impact operations [70] - The company faces risks from defects or vulnerabilities in products, which could harm reputation and operational results [85] - The company may need additional cash financing to support growth and operations, indicating potential limitations if financing is not secured [83] - The uncertain regulatory environment regarding data privacy may inhibit sales and limit the adoption of the company's cloud-based solutions [169] - The company is exposed to numerous legal and regulatory requirements, which can be costly and time-consuming to comply with, particularly in growth areas like health information technology and energy [154] Human Resources and Management - CXApp's workforce consists of approximately 35 full-time employees, with a focus on software engineering, product development, and customer success [53] - The company offers competitive compensation packages and flexible work arrangements to attract and retain top talent [54] - Attracting and retaining skilled personnel is crucial for business success; failure to do so may hinder project completion and increase costs [91] - The company must enhance management and operational controls to manage growth effectively, or risk operational inefficiencies [89] Compliance and Governance - The company is required to comply with SEC and Nasdaq regulations, which increases operational costs and management distraction [117] - The company identified material weaknesses in internal control over financial reporting as disclosed in the Annual Report for the fiscal year ended December 31, 2024 [130] - Management implemented enhanced controls and processes to address these weaknesses, concluding that they have been fully remediated as of December 31, 2025 [131] Customer Base - CXApp's customer base includes Fortune 1000 enterprises across various industries, with deployments globally [46] - The top three customers accounted for approximately 40% of gross revenue in 2025, with one customer alone contributing 16% [142] - The company focuses on high-value enterprise accounts, particularly in financial services, healthcare, and technology sectors [208] International Operations and Economic Factors - The company operates four subsidiaries, including CXApp US, CXApp Canada, and CXApp Philippines, indicating a broad operational footprint [61] - Ongoing international conflicts, such as the Russia-Ukraine war and tensions in the Middle East, may adversely affect the company's operations and financial condition due to geopolitical instability and economic sanctions [156] - Changes in U.S. administrative policy, including trade agreements and tariffs, have created heightened uncertainty, particularly regarding imports from China, which could adversely affect the company's supply chain and financial performance [164]

Financial Performance - The company reported net losses of $75.8 million and $71.3 million for the years ended December 31, 2025 and 2024, respectively, with accumulated deficit reaching $316.7 million[462]. - Net loss increased by $4.5 million, from $71.3 million in 2024 to $75.8 million in 2025, a 6% increase[475]. - Interest income decreased by $3.3 million, from $5.1 million in 2024 to $1.7 million in 2025, a 66% decline[475]. - Total operating expenses rose by $7.6 million, from $76.2 million in 2024 to $83.9 million in 2025, a 10% increase[475]. - Net cash used in operating activities was $77.2 million for the year ended December 31, 2025, compared to $62.6 million in 2024[501]. - The accumulated deficit as of December 31, 2025, was $316.7 million, raising concerns about the company's ability to continue as a going concern[492]. - The company has significant future funding requirements to support ongoing operations and R&D initiatives[491]. Cash and Financing - Cash and cash equivalents stood at $28.7 million as of December 31, 2025, which is insufficient to fund ongoing operations for at least twelve months from the date of the report[463]. - Cash provided by financing activities was $34.2 million in 2025, primarily from stock issuance[505]. - The company raised approximately $27.5 million from an underwritten public offering, issuing 11,670,707 shares of common stock[489]. - The company filed a universal shelf registration statement allowing the sale of up to $263.5 million in various securities[487]. - As of December 31, 2025, the company had cash and cash equivalents of $28.7 million, with no outstanding debt[521]. - The company intends to maintain its portfolio of cash equivalents in institutional market funds composed of U.S. Treasury securities[521]. Research and Development - The Phase 1b/2a BEACON study in Chronic Spontaneous Urticaria (CSU) showed that 100% of participants at the 240mg dose level achieved complete responses through 8 weeks[449]. - In the updated data from the BEACON study, 89% of participants in the 240mg and 360mg single-dose cohorts achieved a complete response[451]. - The Phase 1b/2a SPOTLIGHT study in Chronic Inducible Urticaria (CIndU) reported that 93% of participants in the 40mg and 120mg cohorts achieved a clinical response[452]. - The ETESIAN study in asthma demonstrated a reduction in allergen-induced Late Asthmatic Response (LAR) with improvements of 10.4% at 6 weeks and 8.7% at 12 weeks compared to baseline[454]. - The company plans to focus exclusively on mast cell driven diseases, discontinuing other development programs including those related to severe combined immunodeficiency (SCID)[456]. - The company aims to become a fully integrated discovery, development, and commercial entity in the field of mast cell therapeutics, with plans to broaden its pipeline[457]. Expenses and Costs - Research and development expenses increased by $7.3 million, from $55.8 million in 2024 to $63.1 million in 2025, representing a 13% increase[476]. - Program costs rose by $7.3 million, from $34.3 million in 2024 to $41.6 million in 2025, a 21% increase, driven by higher costs in clinical programs[479]. - Clinical program expenses increased by $3.5 million for CRO expenses, from $13.9 million in 2024 to $17.4 million in 2025[481]. - General and administrative expenses increased by $0.4 million, from $20.4 million in 2024 to $20.8 million in 2025, a 2% increase[482]. - Personnel-related costs in research and development increased by $0.2 million, from $14.9 million in 2024 to $15.1 million in 2025[477]. - General and overhead costs in research and development decreased by $0.3 million, from $6.6 million in 2024 to $6.3 million in 2025[478]. - Stock-based compensation expense was $6.7 million and $6.6 million for the years ended December 31, 2025 and 2024, respectively[517]. Other Financial Information - The company has not declared or paid any dividends to date[516]. - The company is classified as a "smaller reporting company," allowing for reduced disclosure obligations[520]. - The company has not experienced material foreign currency transaction gains or losses to date[522]. - Inflation has not had a material effect on the company's consolidated financial statements[523]. - The company has not had a formal hedging program with respect to foreign currency[522]. - The change in fair value of warrant liability increased by $8.5 million, from $0 in 2024 to $8.5 million in 2025[475]. - Total other income increased by $3.1 million, from $5.0 million in 2024 to $8.1 million in 2025[483]. - Interest income decreased by $3.4 million, from $5.1 million in 2024 to $1.7 million in 2025, due to lower cash balances[483]. - The company expects to recognize $9.1 million of total unrecognized compensation expense over a remaining weighted-average period of 2.50 years[517].

Financial Performance - Revenue for the year ended December 31, 2025, was $2,056,000, a substantial increase from $456,000 in 2024[18] - The net loss for the year ended December 31, 2025, was $475,350,000, with a basic and diluted loss per share of $5.39[18] - The company reported a net loss of $475.35 million for the year ended December 31, 2025, compared to a net loss of $70.09 million for the period through December 31, 2024[20] - Stock-based compensation increased to $27.87 million for the year ended December 31, 2025, up from $16.34 million for the previous period[20] - The company reported an adjusted EBITDA of $(78.76) million for the year ended December 31, 2025, compared to $(17.15) million for the previous period[24] Cash Flow and Liquidity - Cash, cash equivalents, and restricted cash increased to $60,449,000 as of December 31, 2025, up from $11,119,000 in 2024[17] - The company had a net cash increase of $54.33 million for the year ended December 31, 2025, compared to an increase of $11.07 million for the previous period[22] - Net cash used in operating activities was $80.68 million for the year ended December 31, 2025, compared to $29.21 million for the period through December 31, 2024[20] - Cash flows provided by financing activities totaled $139.14 million for the year ended December 31, 2025, compared to $33.47 million for the period through December 31, 2024[22] - The company reported a net cash used in investing activities of $4.13 million for the year ended December 31, 2025, compared to a net cash provided of $6.82 million for the previous period[22] Expenses and Impairments - Total operating expenses for 2025 were $466,755,000, compared to $40,753,000 in 2024, primarily due to a goodwill impairment of $346,557,000[18] - The company recognized a goodwill impairment of $346.56 million due to a decline in its publicly quoted share price and market capitalization[28] - Consolidated general and administrative expenses declined by 61% in Q4 2025 compared to Q4 2024, reflecting effective cost management[1] - The company incurred a loss on extinguishment of debt amounting to $16.06 million for the year ended December 31, 2025[29] Strategic Goals and Initiatives - Innventure reported over $50 million in bookings in early 2026, indicating a significant commercial inflection point[1] - The company aims to achieve cash-flow positivity in 2026, with Accelsius scaling operations and AeroFlexx entering anchor-customer adoption[2] - Innventure's approach focuses on building billion-dollar valuations through the commercialization of breakthrough technology solutions[5] - The company is actively reducing reliance on its balance sheet by advancing independent capital formation among its operating companies[1] Asset Management - Total assets decreased to $599,187,000 in 2025 from $905,289,000 in 2024, largely due to a reduction in goodwill[17] - The company made an investment of $2.71 million in available-for-sale debt securities for the year ended December 31, 2025[22]

Financial Performance - Gross profit increased 11% to $27.9 million in Q4 2025, with a gross margin improvement of 640 basis points to 44.3% compared to Q4 2024[8] - Net revenue for Q4 2025 was $63.0 million, a 5% decrease year-over-year, driven by an 11% decrease in total orders placed, partially offset by a 6% increase in average order value from $129 to $137[8] - The company achieved a net loss of $0.4 million in Q4 2025, significantly improved from a net loss of $31.9 million in the same period last year[8] - Adjusted EBITDA for Q4 2025 was $2.6 million, compared to a loss of $(3.3) million in Q4 2024[8] - For fiscal year 2025, net revenue was $282.3 million, an 11% decrease compared to 2024, with a 15% decrease in total orders placed[8] - For the fiscal year ended December 28, 2025, the net loss was $13,713,000, a significant improvement from the net loss of $55,286,000 for the fiscal year ended December 29, 2024[21] - Adjusted EBITDA for the fiscal year ended December 28, 2025, was $(1,196,000), compared to $(9,738,000) for the fiscal year ended December 29, 2024, indicating a positive trend in operational performance[37] - The net loss margin for the fiscal year ended December 28, 2025 was (4.9)%, compared to (17.5)% for the fiscal year ended December 29, 2024[39] - For the thirteen weeks ended December 28, 2025, the net loss was $403,000, compared to a net loss of $31,875,000 for the same period in 2024[39] - Adjusted EBITDA for the thirteen weeks ended December 28, 2025 was $2,628,000, while it was $(3,300,000) for the same period in 2024, indicating a significant improvement[39] Customer Metrics - Active customers decreased by 11% to 2.3 million in fiscal year 2025 compared to 2.6 million in 2024[8] - Active Customers remained stable at 2,620 for the fiscal year ended December 28, 2025, consistent with the previous year[37] Debt and Cash Flow - Total debt as of December 28, 2025, was $14.4 million, with net debt at $11.7 million[14] - Net Debt as of December 28, 2025, was $(11,729,000), an increase from $(8,630,000) as of December 29, 2024[38] - Net cash provided by operating activities was $1,379,000 for the fiscal year ended December 28, 2025, down from $2,601,000 for the fiscal year ended December 29, 2024[21] - Net cash used in investing activities was $2,131,000 for the fiscal year ended December 28, 2025, compared to $2,874,000 for the fiscal year ended December 29, 2024[21] - The company reported a net cash used in operating activities of $(3,768,000) for the thirteen weeks ended December 28, 2025, compared to $(2,532,000) for the same period in 2024[40] Future Outlook - The company expects first quarter 2026 revenue trends to be sequentially lower than Q4 2025, with negative Adjusted EBITDA anticipated for the first quarter[12] - Lulus forecasts a positive Adjusted EBITDA for the full year 2026, improving from a negative $(1.2) million in 2025[15] - The company aims to enhance profitability through margin optimization and a more curated assortment mix in 2026[11] - The company plans to continue focusing on strategic priorities and business initiatives to drive long-term growth, as indicated in their forward-looking statements[25] Operational Expenses - The company incurred $1,225,000 in depreciation and amortization for the thirteen weeks ended December 28, 2025, compared to $1,378,000 for the same period in 2024[39] - Interest expense for the thirteen weeks ended December 28, 2025 was $487,000, up from $313,000 in the same period in 2024[39] - Capitalized software development costs for the thirteen weeks ended December 28, 2025 were $(463,000), compared to $(430,000) for the same period in 2024[40] - The company recognized $902,000 in equity-based compensation expense for the thirteen weeks ended December 28, 2025, down from $1,940,000 in the same period in 2024[39] - Other non-routine expenses for the thirteen weeks ended December 28, 2025 amounted to $270,000, with no such expenses reported in the same period in 2024[39] Average Order Value - Average Order Value (AOV) increased to $137 for the fiscal year ended December 28, 2025, compared to $129 for the fiscal year ended December 29, 2024[37]

Financial Performance - Consolidated revenue grew by 7.8% and system-wide revenue increased by 8.2% from the year ended December 31, 2024, to the year ended December 31, 2025[27]. - For the year ended December 31, 2025, consolidated revenues reached $1.023 billion, a 7.8% increase from $948.9 million in 2024[83]. - Adjusted EBITDA for the year ended December 31, 2025, was $230.2 million, representing an Adjusted EBITDA margin of 22.5%[83]. - 58% of consolidated revenues came from commercial payors, with government payors contributing 29% and self-pay, liens, and other payors making up the remainder[69]. Market Overview - The U.S. market for diagnostic imaging services was approximately $140 billion as of December 31, 2024, with a CAGR of 4.2% from 2019 to 2024[30]. - Management estimates that the diagnostic imaging services market will continue to grow at a mid-single digit rate between 2024 and 2030, driven by increasing utilization of advanced imaging and an aging population[31]. - The outpatient diagnostic imaging services market is highly fragmented, with approximately 6,000 independent diagnostic testing facilities (IDTFs) in the U.S. as of December 31, 2025[35]. Advanced Imaging - Advanced imaging accounted for 52% of consolidated revenue and 63% of system-wide revenue for the year ended December 31, 2025[50]. - Advanced imaging payments per procedure were approximately 330% of routine imaging payments per procedure as of December 31, 2025[41]. Operational Efficiency - The company has implemented third-party AI solutions, resulting in faster scan times and improved clinical efficiency[29]. - AI implementation is expected to reduce consolidated expenses related to third-party radiologist salaries, which totaled approximately $40 million in 2025[81]. - Investments in technology and workflow design aim to enhance operational performance and reduce administrative burdens, focusing on standardized protocols and scheduling optimization[146]. Growth Strategy - The company opened 13 de novo centers since December 31, 2023, including nine in 2025, to expand its presence in underserved areas[90]. - The average initial capital investment for de novo centers is $4.0 million, targeting an annual Adjusted EBITDA contribution of $1.0 million to $3.0 million[88]. - The company has a disciplined acquisition strategy, averaging an Adjusted EBITDA multiple of eight to nine times for medium to large imaging center companies[92]. Patient Satisfaction - The company’s patient Net Promoter Score (NPS) was 91, with an overall patient satisfaction rate of 97% as of December 31, 2025[57]. - The company received referrals from over 32,000 physician practices for imaging services in 2025, indicating a broad referral base[71]. Regulatory Environment - The company must comply with stringent federal and state regulatory requirements to participate in Medicare and Medicaid programs, which may affect service costs and payment timing[100]. - The Stark Law prohibits physicians from referring Medicare patients to entities in which they have a financial interest, with penalties including exclusion from Medicare and civil monetary penalties[106]. - The Patient Protection and Affordable Care Act increased the equipment utilization factor for advanced diagnostic imaging services, leading to reduced federal reimbursement rates for medical imaging[118]. - Increased enforcement activities regarding Medicare and Medicaid fraud regulations could adversely affect the company's financial performance[113]. - Future changes in healthcare reform legislation may lead to higher uninsured populations and reduced reimbursement rates, stressing healthcare institution finances[120]. Workforce and Compliance - The company employs 4,064 full-time, 271 part-time, and 684 as-needed employees as of December 31, 2025, including 322 full-time and 10 part-time radiologists[142]. - The company focuses on building sustainable pipelines for critical clinical roles, particularly radiologists and imaging technologists, to expand access to care[143]. - The company has implemented competitive compensation and performance-aligned incentives to attract and retain skilled professionals[144]. - The company maintains a compliance program to adhere to federal and state laws applicable to healthcare entities, including a Chief Compliance Officer and audit committee[137]. Financial Risks - Negative changes in governmental capitation or fee-for-service rates could significantly adversely impact the company's revenue and financial results[102]. - The company faces potential scrutiny from government audits, which could result in significant repayment obligations and penalties[112]. - Interest expense is affected by changes in short-term interest rates due to fixed and variable interest rate debt instruments[414]. - A hypothetical 1% increase in adjusted SOFR rates would result in an increase of approximately $8.3 million in annual interest expense[416].

Acquisition and Growth - Xos completed the acquisition of ElectraMeccanica, converting 1,766,388 shares of common stock at a ratio of 0.0143739 per share[30]. - The acquisition of ElectraMeccanica is expected to create growth and operational enhancement opportunities, but realization of these benefits is uncertain[217]. - Significant costs have been incurred and are expected in connection with the acquisition and integration of ElectraMeccanica[218]. - Blue Bird Corporation has ordered over 100 powertrain units from Xos between Q2 2025 and Q1 2026, highlighting the growth in the electric school bus market[55]. Product Development and Technology - The Xos Hub product line includes configurations with energy storage capacities of 210 kWh, 420 kWh (50% increase from 280 kWh), and 630 kWh, designed for various fleet applications[37]. - Xos vehicles utilize lithium iron phosphate (LFP) batteries, which can support 3,000 to 5,000 charge cycles, significantly outperforming nickel manganese cobalt (NMC) alternatives[44]. - The Xosphere™ fleet management platform allows operators to monitor vehicle performance in real-time, optimize energy usage, and manage maintenance[52]. - Xos is designing a next-generation chassis aimed at reducing production costs and improving total cost of ownership for fleet operators[39]. - The Company has eight awarded U.S. patents and one patent pending as of December 31, 2025, with a focus on protecting its Hub mobile charging business[87]. Manufacturing and Operations - The company has reconfigured its production facility in Tennessee to increase powertrain manufacturing capacity, expecting to build hundreds of powertrain kits during the 2026 fiscal year[62]. - The Company operates from an 85,142 square foot facility in Los Angeles, with a lease agreement effective until January 31, 2027[89]. - The Company has a manufacturing facility in Byrdstown, Tennessee, utilizing Fitzgerald Manufacturing Partners, with leases expiring in 2026 and 2027[90]. - The Company has implemented new quality management systems and inventory management practices to enhance manufacturing efficiency and service parts availability[62]. - The company relies on complex machinery for manufacturing, which poses risks of unexpected malfunctions and operational inefficiencies[153]. Financial Performance and Risks - The company experienced an operating loss of $33.1 million for the year ended December 31, 2025[180]. - The company achieved positive cash flow from operating activities of $5.4 million for the first time for the fiscal year ended December 31, 2025[183]. - The Company has cash and cash equivalents totaling $14.0 million as of December 31, 2025, which includes cash acquired from the ElectraMeccanica acquisition[108]. - The Company faces substantial doubt about its ability to continue as a going concern for the next 12 months due to uncertainties regarding capital access and operational funding[104]. - The company has incurred total indebtedness of approximately $20.6 million as of December 31, 2025, which includes convertible notes, equipment notes, finance lease liabilities, and insurance financing notes[210]. Market and Competitive Landscape - The automotive industry typically experiences higher revenue in spring and summer, with a peak season for commercial vehicle sales between Thanksgiving and Christmas[85]. - The company faces intense competition in the commercial vehicle market from established OEMs and new entrants, which may have greater resources and capabilities[121]. - The growth of the company is highly dependent on the adoption of electric vehicles by last-mile delivery fleets, which may not develop as expected[123]. - The market for electric vehicles is characterized by rapidly changing technologies and evolving customer demands, which could affect competitiveness[123]. Regulatory and Compliance Issues - The Company is subject to extensive environmental regulations, which are becoming increasingly stringent, impacting its operations[75]. - The Company has received the necessary EPA Certificate of Conformity and CARB approval for its vehicles sold in California[78]. - The current U.S. presidential administration's policy changes may reduce or eliminate government subsidies for electric vehicles, adversely affecting product affordability and demand[192]. - Changes in U.S. trade policy, including tariffs, could adversely affect business, financial condition, and operating results[219]. Customer and Supplier Relationships - The Company has established a diverse customer base, including major clients like Waymo, Caltrans, and Xcel Energy, for its Xos Hub products[54]. - One customer accounted for 54% of the Company's revenue during the year ended December 31, 2025, highlighting significant customer concentration risk[112]. - The Company relies on key suppliers such as Gotion and CATL for batteries, and maintains safety inventory for critical components to mitigate production risks[64]. - The company is dependent on third-party suppliers for key components, including battery packs, which could adversely affect its business if suppliers fail to meet specifications or timelines[142]. Workforce and Human Capital - As of December 31, 2025, the Company had 101 employees, a decrease from 114 employees the previous year, including 99 full-time employees[99]. - The Company aims to enhance its human capital strategy to strengthen its workforce and adapt to the evolving commercial vehicle landscape[92]. - The company intends to expand operations and hire personnel, but may face difficulties in attracting qualified employees in a competitive labor market[163]. Risks and Uncertainties - The company has experienced delays in battery production, resulting in a manufacturing backlog that could adversely affect growth prospects[133]. - The company may incur significant costs and delays in acquiring necessary approvals for future acquisitions, impacting business strategy[131]. - The company may face significant product liability claims, which could adversely affect its financial condition and brand image[170]. - The company has identified material weaknesses in internal controls over financial reporting, particularly in revenue recognition and inventory management, which could affect financial reporting reliability[202][204].