Clinical Trials and Regulatory Pathways - The company has initiated patient recruitment for the Phase 1/2 clinical trial of ST-503 for small fiber neuropathy (SFN) after FDA clearance of the IND in November 2024, with six clinical sites activated [22]. - Isaralgagene civaparvovec (ST-920) for Fabry disease is on a clear regulatory pathway to Accelerated Approval from the FDA, following a completed Phase 1/2 STAAR clinical study [48]. - The Phase 1/2 STAAR study for ST-920 included a diverse patient population and aimed to assess treatment-emergent adverse events and changes in disease severity over a one-year period [50]. - The clinical study for prion disease (ST-506) is expected to utilize a Bayesian optimal interval design to assess safety and efficacy, aiming to delay disease progression [47]. - The FDA granted multiple designations to isaralgagene civaparvovec, including Orphan Drug and Fast Track status, which supports its regulatory pathway [53]. - A successful interaction with the FDA in October 2024 confirmed that data from the ongoing Phase 1/2 STAAR study can serve as the primary basis for Accelerated Approval, using eGFR slope at 52 weeks as an intermediate clinical endpoint [54]. - The company continues to engage with the EMA regarding the approval pathway for isaralgagene civaparvovec in Europe [60]. - The company must complete extensive preclinical testing and obtain an IND application approval to initiate human clinical trials [181]. - The company is subject to significant regulatory controls in both the U.S. and EU for its clinical trials and product development [186]. - The FDA reviews a Biologics License Application (BLA) within 60 days to determine if it is substantially complete before filing, with a standard review goal of 10 months and priority review goal of 6 months [207][212]. - The centralized procedure for marketing authorization (MA) in the EU is compulsory for specific products, including those derived from biotechnological processes and orphan medicinal products, with a maximum evaluation timeframe of 210 days [214][215]. - The EMA can grant accelerated assessment, reducing the evaluation time to 150 days in exceptional cases [215]. - Innovative products targeting unmet medical needs may qualify for expedited development programs like PRIME designation, providing benefits such as early regulatory dialogue and potentially accelerated assessment [219]. Financials and Collaborations - The company has received approximately $911 million in upfront license fees and milestone payments, with the potential to earn up to $4.8 billion in future milestone payments from ongoing collaborations [31]. - The company has collaborations with major partners including Genentech and Astellas, focusing on developing therapies for various neurological targets [23]. - Under the Genentech Agreement, the company received an upfront license fee of $50.0 million and is eligible for up to $1.9 billion in development and commercial milestones [148]. - The Astellas Agreement provided the company with a $20.0 million upfront license payment and potential earnings of up to $1.3 billion in additional licensed target fees and milestone payments [150]. - The Lilly Agreement resulted in an $18.0 million upfront license payment, with potential earnings of up to $1.4 billion in additional licensed target fees and milestone payments [152]. - The company has entered into strategic collaborations with larger biopharmaceutical companies to fund internal research and development activities and assist in product development and commercialization [146]. Clinical Study Results and Efficacy - Positive topline results from the STAAR study were announced in June 2025, showing a positive mean eGFR slope of 1.965 mL/min/1.73m²/year at 52 weeks across all dosed patients [56]. - As of April 10, 2025, 33 patients were treated in the STAAR study, with 32 achieving at least 52 weeks of follow-up, demonstrating the treatment's tolerability and safety profile [60]. - Significant improvements in disease severity and quality of life were observed, with nine patients improving their total FOS-MSSI score at 12 months [61]. - The study reported a maximum mean eGFR slope of 3.016 mL/min/1.73m²/year at 18 months post-treatment for 22 patients [61]. - 64.0% of participants experienced no bleeding events, and 88.0% had no treated bleeds during the follow-up period [89]. - A single infusion of giroctocogene fitelparvovec resulted in a 99.8% reduction in annualized infusion rate (AIR) compared to the pre-infusion period, with a mean AIR of 0.21 vs 124.39 [89]. - At Month 15, 84% of participants maintained FVIII activity levels >5%, with 82.8% continuing to do so at 2 years post-infusion [89]. - The primary endpoint was assessed in participants with ≥15 months follow-up post-infusion, demonstrating a statistically significant decrease in total ABR [89]. Safety and Adverse Events - A total of 624 adverse events (AEs) were reported, with 98.7% of participants experiencing mostly mild or moderate AEs, and 26 serious AEs in 20% of participants [89]. - The most common treatment-related AEs included pyrexia (54.7%), increased alanine aminotransferase (46.7%), and headache (38.7%) [89]. - Immunogenicity issues with enzyme replacement therapy (ERT) were noted, with 80% of patients showing decreased antibody titers post-treatment [61]. - 62.7% of participants experienced treatment-related AEs related to hepatotoxicity, with 61.3% showing ALT increases above the upper limit of normal (ULN) [109]. Technology and Development Platforms - The company is developing STAC-BBB, a proprietary engineered neurotropic AAV capsid, which has shown the ability to cross the blood-brain barrier and mediate robust transgene expression [24]. - The Modular Integrase (MINT) platform is being developed to enable large-scale genome editing, potentially treating multiple patients with unique mutations in the same gene [28]. - The proprietary AAV capsid variant STAC-BBB demonstrated a 700-fold increase in transgene expression compared to the benchmark capsid AAV9 in non-human primates (NHPs) [133]. - STAC-BBB showed robust transduction and expression throughout the brain and spinal cord, targeting key regions associated with neurological diseases [134]. - The SIFTER platform has identified new capsids, STAC-102 and STAC-103, that exhibit improved delivery to the CNS compared to AAV9 [129]. - The MINT platform has achieved transgene integration and expression in up to 45% of T cells through zinc finger targeting and activity-enhancing amino acid substitutions in Bxb1 [144]. - The company has developed a flexible approach to genome editing that is cell-type agnostic and simpler to manufacture than most other targeted integration technologies [143]. Manufacturing and Compliance - The company is substantially reliant on external partners for manufacturing clinical supply for its neurology portfolio while retaining in-house analytical capabilities [30]. - The company utilizes a distinct manufacturing platform for AAV vector production, including both insect-based and mammalian platforms [177]. - Manufacturers of biologics must comply with current Good Manufacturing Practice (cGMP) regulations, ensuring quality control and documentation, and must register with the FDA and relevant EU authorities [202]. - The FDA will inspect manufacturing facilities and clinical sites before approving a BLA to ensure compliance with cGMP and GCP requirements [209]. - The company must ensure compliance with Good Manufacturing Practices (GMP) for its biologic products [188]. Market Competition and Challenges - The company faces intense competition from various biopharmaceutical companies and academic institutions in gene therapy and genome engineering [171]. - The company anticipates that competitors may succeed in obtaining patent protection and FDA approval before it does [172].

IPO and Fundraising - The company completed its Initial Public Offering (IPO) on May 29, 2025, raising gross proceeds of $253 million from the sale of 25,300,000 Public Units at a price of $10.00 per unit[20]. - An additional $5.24 million was raised through the sale of 524,050 Private Placement Units at the same price of $10.00 per unit[21]. - A total of $253 million from the IPO and Private Placement has been placed in a Trust Account[22]. - As of December 31, 2025, the company has $259,039,707 available for a Business Combination, excluding redemptions and taxes[61]. - The Trust Account holds $253 million, which can only be invested in U.S. government securities or money market funds until the Business Combination is completed[169]. - The company raised gross proceeds of $253 million from the Initial Public Offering by selling 25,300,000 Public Units at $10.00 each[167]. - The company completed the sale of 524,050 Private Placement Units at $10.00 each, generating additional gross proceeds of $5,240,500[168]. Business Combination Plans - The company must complete its initial Business Combination by November 29, 2026, with a possible extension to May 29, 2027[23]. - The company has until November 29, 2026, to complete its Business Combination, with the option to extend this period by an additional six months[170]. - The company must complete one or more Business Combinations with an aggregate fair market value of at least 80% of the assets held in the Trust Account[55]. - The company intends to structure its initial Business Combination to acquire 100% of the equity interests or assets of the target business, but may acquire less than 100% under certain conditions[56]. - The company may pursue Business Combination opportunities with targets that are financially unstable or in early stages of development, which carries inherent risks[50]. - The company may only complete one Business Combination with the proceeds from the Initial Public Offering and Private Placement, leading to dependency on a single business and potential limited product offerings[132]. Management and Strategy - The management team is focused on acquiring businesses in the defense and aerospace sectors, which are believed to have substantial growth potential[27]. - The company aims to acquire established companies with strong financial performance and free cash flow potential[35]. - The management team believes there is a backlog of companies interested in going public, which may lead to attractive acquisition opportunities[26]. - The management team plans to leverage their extensive network to identify and evaluate potential acquisition opportunities[31]. - The company has developed a broad network of contacts and corporate relationships globally, which provides substantial potential initial Business Combination targets[63]. - The company anticipates receiving proprietary deal flow opportunities due to the track record and business relationships of its management team[65]. Competition and Risks - The company may face intense competition from other SPACs and private investors in identifying suitable acquisition targets[28]. - The company may face increased competition for attractive target businesses, which could lead to higher financial terms demanded by those targets[49]. - The company is subject to competition from other SPACs, private equity groups, and public companies, which may limit its ability to acquire larger target businesses[115]. - The company may face challenges in completing its initial Business Combination due to increased competition for attractive targets and potential negative public perception of SPAC mergers[127]. - The company may not be able to complete an initial Business Combination due to regulatory review and approval requirements, including foreign investment regulations[131]. - The company may face conflicts of interest due to the management team's obligations to other entities[136]. Financial Performance and Projections - The company generated a net income of $5,535,163 from January 7, 2025, to December 31, 2025, primarily from dividends earned on investments held in the Trust Account[173]. - Total fees incurred during the Initial Public Offering amounted to $11,024,267, including a cash underwriting fee of $3,415,500[174]. - The company has not generated any operating revenues to date and expects to incur increased expenses as a public company[172]. - For the period from January 7, 2025, through December 31, 2025, cash used in operating activities was $490,102[175]. - Cash held outside the Trust Account was approximately $709,887, with a working capital surplus of $694,188[178]. - Management has determined that the company currently lacks the liquidity to sustain operations for at least one year, raising substantial doubt about its ability to continue as a going concern[182]. Shareholder Rights and Redemption - Public Shareholders can redeem their shares either through a general meeting or a tender offer, with the decision made at the company's discretion[87]. - If the initial Business Combination is not completed, Public Shareholders who elected to redeem their shares will not receive any redemption for their shares[103]. - A Public Shareholder is restricted from redeeming more than 15% of the Public Shares sold in the Initial Public Offering without prior consent, to prevent accumulation of large blocks of shares[98]. - The company will not complete the initial Business Combination if the cash required for redemptions exceeds the available cash, and all submitted shares will be returned[97]. - The Redemption Price upon dissolution is estimated to be approximately $10.24 per Public Share as of December 31, 2025[109]. - The company has not guaranteed that the actual per-share redemption amount will not be substantially less than the Redemption Price due to potential creditor claims[109]. Governance and Compliance - The Board of Directors consists of six members, divided into three classes, with each class serving a three-year term[210]. - The Audit Committee is composed of independent directors Doron Dovrat, Yair Ramati, and Gill Zaphrir, ensuring compliance with Nasdaq and SEC rules[213]. - The Audit Committee is chaired by Gill Zaphrir, who qualifies as an "audit committee financial expert" under SEC rules[214]. - The Compensation Committee includes independent directors Doron Dovrat, Yair Ramati, and Gill Zaphrir, with Mr. Ramati serving as chair[216]. - The Compensation Committee has the authority to retain external advisers while ensuring their independence according to Nasdaq and SEC standards[217]. - The company is classified as an "emerging growth company," allowing it to take advantage of certain exemptions from reporting requirements[121].

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 number: 001-42670 Kochav Defense Acquisition Corp. (Exact name of registrant as specified in its charter) | Cayman Islands | 98-1836086 | | --- ...

Merger and Acquisition Risks - The pending merger with Merck Sharp & Dohme LLC involves a tender offer to purchase all outstanding shares at a price of $53.00 per share[204]. - If the merger is not completed, the company may face a significant decline in stock price and could incur a termination fee of $235 million[207][217]. - The company has incurred substantial costs related to the pending transaction, which will continue regardless of whether the merger is completed[218]. - The merger agreement restricts the company's ability to pursue alternative transactions, potentially deterring other acquisition proposals[219]. - The completion of the merger would result in stockholders receiving cash for their shares, eliminating their opportunity to benefit from future growth[222]. - The announcement of the merger may disrupt business operations and relationships with third parties, adversely affecting financial results[210]. - Executive officers and directors may have interests in the merger that differ from those of stockholders, potentially influencing their support for the transaction[221]. Financial Performance and Projections - The net loss attributable to common stockholders for the years ended December 31, 2025 and 2024 was approximately $96.2 million and $88.9 million, respectively, with an accumulated deficit of $517.7 million as of December 31, 2025[224]. - The company anticipates continuing to incur significant losses for the foreseeable future, complicating assessments of its viability[223]. - The company expects to continue incurring losses for the foreseeable future, particularly as it develops its lead candidate, TERN-701, and conducts clinical trials[224]. - As of December 31, 2025, the company had capital resources of $1,019.0 million, which are expected to fund planned operating expenses into 2031[226]. - The company will require substantial additional funding to finance operations and product development, with potential delays or limitations if funding is not secured[225]. Product Development and Regulatory Challenges - The success of the company heavily depends on the successful development, regulatory approval, and commercialization of TERN-701, which is still in early clinical development[234]. - The company has not previously submitted a new drug application (NDA) to the FDA, and the approval process requires extensive preclinical and clinical data[235]. - The company may face significant delays or inability to obtain regulatory approvals or commercialize TERN-701 or other product candidates due to various factors beyond its control[237]. - Clinical drug development is lengthy and expensive, with uncertain timelines and outcomes, and previous successes do not guarantee future results[239]. - The company faces significant challenges in conducting clinical trials, including regulatory disagreements and the need for extensive negotiations with contract research organizations[241]. - Delays in clinical trial completion could harm the commercial prospects of the company's product candidates and increase costs[243]. - The company must adapt to new regulatory requirements, such as the Diversity Action Plan mandated by the Food and Drug Omnibus Reform Act, which may impact clinical development[244]. - Patient enrollment difficulties could adversely affect clinical trial timelines and outcomes, potentially delaying product development[245]. Competition and Market Dynamics - The company competes with numerous pharmaceutical and biotechnology firms, many of which have greater resources and established market positions[249]. - The company may face significant competition from alternative treatments that could be available at lower prices or with better efficacy[254]. - Regulatory approval processes are lengthy and uncertain, with a small percentage of drugs successfully completing these processes[267]. - Regulatory approval does not guarantee market acceptance, and various factors such as physician preference and reimbursement will influence the commercial success of product candidates[335]. - The company faces challenges in achieving broad market acceptance for its product candidates, which is essential for commercial success[334]. Intellectual Property Risks - The company operates in a highly competitive industry with extensive intellectual property litigation risks, which could impact its ability to commercialize products[357]. - The company may face legal proceedings related to intellectual property, which could divert management attention and financial resources[358]. - There is uncertainty regarding third-party patents that could block the commercialization of the company's product candidates[359]. - The patent application process is complex and may not guarantee the issuance of patents, affecting the company's competitive position[370]. - The enforcement of intellectual property rights may not be successful, and third parties may independently develop competitive technologies[375]. - The company may incur significant expenses from litigation related to intellectual property claims, impacting financial resources[365]. - The outcome of any future litigation is unpredictable and could materially affect the company's business and financial condition[366]. - The company seeks to maintain a competitive position through patents and other intellectual property rights, but these protections may not be adequate[369]. Regulatory Compliance and Legal Risks - Compliance with healthcare regulatory laws may expose the company to penalties and could constrain business operations and financial arrangements[337]. - The company faces potential penalties for non-compliance with various healthcare laws, which could adversely affect its financial condition and operations[339]. - Future healthcare legislation may increase the difficulty and cost of obtaining marketing approval and could affect pricing strategies[343]. - The Inflation Reduction Act requires manufacturers to engage in price negotiations with Medicare, which could impact future revenue[348]. - The company may be subject to significant civil monetary penalties for errors in reporting product and pricing data if it participates in governmental pricing programs[342]. Manufacturing and Supply Chain Risks - The company relies on third parties for manufacturing clinical drug supplies, and any failure by these parties could halt or delay commercialization efforts[312]. - Changes in manufacturing partners may require extensive effort and could lead to delays in drug development[315]. - The company relies on third-party suppliers for raw materials necessary for clinical trials, with potential supply disruptions impacting product candidate development and commercialization[317]. - There is a risk that manufacturing capacity for product candidates may not be increased in a timely or cost-effective manner, potentially delaying clinical trials and marketing approval[318]. - The company has not entered into long-term agreements with contract manufacturers, which may adversely affect the supply of finished drug products[319]. Collaboration and Partnership Risks - The company depends on third parties to conduct preclinical and clinical trials, and any failure by these parties to meet regulatory standards could delay regulatory approval[320]. - Collaborations with third parties for product development, such as TERN-701, are crucial, and failure in these collaborations could adversely affect commercialization efforts[323].

Financial Performance - Spruce Power achieved record full-year Operating Income of $17.9 million in 2025, a significant improvement from a loss of $50.4 million in 2024[4]. - Revenues for the fourth quarter of 2025 were $24.0 million, representing a 19% year-over-year increase, and a 36% increase for the full year[4]. - Operating EBITDA for 2025 was $80.1 million, up 49% year-over-year, demonstrating strong operating leverage[4]. - The company generated $31.6 million in Adjusted Cash Flow from Operations for the full year 2025[4]. - Revenues for the three months ended December 31, 2025, were $24.028 million, an increase from $20.226 million in the same period of 2024, representing a growth of approximately 8.9%[36]. - Adjusted EBITDA for the three months ended December 31, 2025, was $8.715 million, compared to $1.882 million in the same period of 2024, indicating a significant increase of approximately 362.5%[42]. - Operating EBITDA for the three months ended December 31, 2025, reached $16.995 million, up from $10.806 million in the same period of 2024, reflecting a growth of about 57.2%[42]. - The net loss attributable to stockholders for the year ended December 31, 2025, was $26.026 million, compared to a net loss of $70.489 million in 2024, showing an improvement of approximately 63.1%[36]. - Adjusted Cash Flow from Operations for the year ended December 31, 2025, was $31.555 million, a significant increase from $7.144 million in 2024[40]. - Net loss for 2025 was $25,706 thousand, an improvement compared to a net loss of $70,053 thousand in 2024, representing a reduction of approximately 63.3%[47]. Cost Management - Spruce Power reduced total operating expenses to $21.8 million in Q4 2025, down from $26.7 million in Q4 2024, primarily due to lower operations and maintenance costs[8]. - Core Operating Expenses decreased to $14.9 million in Q4 2025 from $20.7 million in the prior year, reflecting effective cost management[9]. - The total operating expenses for the year ended December 31, 2025, were $93.872 million, a decrease from $132.500 million in 2024, indicating a reduction of approximately 29.2%[36]. - Core Operating Expenses for the three months ended December 31, 2025, totaled $14.859 million, down from $20.748 million in the same period of 2024, representing a decrease of approximately 28.5%[38]. Debt and Equity - The company repaid $35.1 million in debt during 2025, enhancing equity value and reducing leverage[5]. - Total stockholders' equity decreased from $146,152 thousand in 2024 to $121,252 thousand in 2025, a decrease of approximately 17.0%[45]. - Non-recourse debt decreased from $705,331 thousand in 2024 to $676,968 thousand in 2025, a reduction of approximately 4.0%[44]. - Cash paid for interest increased from $35,060 thousand in 2024 to $42,978 thousand in 2025, an increase of approximately 22.5%[48]. Cash Flow and Liquidity - Total cash at year-end 2025 was $93.1 million, equating to $5.13 per share, providing substantial liquidity[6][13]. - The company reported a net cash used in operating activities of $(3.302) million for the three months ended December 31, 2025, compared to $(13.458) million in the same period of 2024[40]. - Net cash used in operating activities improved from $41,811 thousand in 2024 to $3,530 thousand in 2025, a reduction of approximately 91.6%[47]. - Cash and cash equivalents decreased from $109,148 thousand at the beginning of the period to $93,145 thousand at the end of the period, a decline of approximately 14.7%[48]. Asset Management - Spruce Power owned cash flows from approximately 84,000 home solar assets across 18 U.S. states as of December 31, 2025[16]. - The gross portfolio value was $848.0 million as of December 31, 2025, indicating strong asset growth[14]. - The Contracted Portfolio Value as of December 31, 2025, was $729 million, while the Gross Portfolio Value was $848 million[30]. - Total assets decreased from $898,479 thousand in 2024 to $837,273 thousand in 2025, a decline of approximately 6.8%[44].

Financial Performance - Aptera reported a Q4 2025 GAAP net loss of $15.5 million, compared to a net loss of $8.9 million in Q4 2024, representing a 74.8% increase in losses year-over-year[3] - The full year 2025 GAAP net loss was $43.9 million, up from $34.9 million in 2024, indicating a 25.0% increase in annual losses[3] - Adjusted net loss for Q4 2025 was $8.7 million (Non-GAAP), compared to $5.3 million in Q4 2024, reflecting a 64.2% increase[3] - For the full year 2025, the adjusted net loss was $18.5 million (Non-GAAP), down from $20.1 million in 2024, showing a 7.9% improvement[3] Operating Expenses - Operating expenses for Q4 2025 were $15.1 million, significantly higher than $10.0 million in Q4 2024, marking a 50.8% increase[3] Cash Position - As of December 31, 2025, Aptera had $9.6 million in cash and cash equivalents, a decrease from $13.2 million at the end of 2024[3] Fundraising and Capital - In Q1 2026, Aptera raised approximately $17.1 million in gross proceeds, including $9.0 million from a public offering and $8.1 million from warrant exercises[5] Operational Developments - The company received Foreign-Trade Zone designation for its Carlsbad assembly facility in February 2026, which may enhance operational efficiency[5] - Aptera is focused on completing durability testing and ramping up to low-volume production, with plans to secure long-lead components using the newly raised capital[2] Other Income - The company recognized $4.2 million in other income for the full year 2025, primarily from a California Energy Commission grant[7]

Financial Performance - Gross written premiums decreased by 41.9% year-over-year in Q4 2025, totaling $7.9 million compared to $13.7 million in Q4 2024[7] - Net income allocable to common shareholders for Q4 2025 was a loss of $17.0 million, or $1.39 per share, compared to a loss of $25.4 million, or $2.08 per share in Q4 2024[19] - Adjusted operating loss for Q4 2025 was $15.2 million, or $1.24 per share, compared to a loss of $25.8 million, or $2.11 per share in Q4 2024[20] - Net income for Q4 2025 was $(17,041) thousand, a decrease from $(25,382) thousand in Q4 2024[28] - The diluted loss per common share for Q4 2025 was $(1.39), compared to $(2.08) for Q4 2024, showing an improvement[28] Premiums and Revenue - Personal lines premium increased by 12.7% for the year, while commercial lines premiums declined by 67%[2] - Net earned premiums for Q4 2025 were $5.7 million, down 55.2% from $12.7 million in Q4 2024[7] - Gross earned premiums for Q4 2025 were $15,111 thousand, down from $19,721 thousand in Q4 2024, reflecting a decline of approximately 23%[33] - Net earned premiums for the year ended December 31, 2025, were $32,387 thousand, compared to $60,862 thousand in 2024, a decrease of about 47%[33] - Total revenue and other income for the year ended December 31, 2025, was $43,304 thousand, down from $67,271 thousand in 2024, representing a decline of approximately 36%[33] Underwriting and Loss Ratios - The combined ratio for Q4 2025 was 333.5%, significantly higher than 292.9% in Q4 2024, indicating an underwriting loss[15] - The loss ratio for personal lines was 107.3% in Q4 2025, compared to 55.2% in Q4 2024[14] Assets and Liabilities - Total assets decreased to $239,283 thousand as of December 31, 2025, from $281,656 thousand in 2024, a reduction of about 15%[31] - Total liabilities decreased to $230,317 thousand as of December 31, 2025, from $260,131 thousand in 2024, a decline of approximately 12%[31] Investment and Taxation - The company reported a net investment income of $1.1 million for Q4 2025, down from $1.4 million in the prior year[17] - The company has recorded a full valuation allowance against its deferred tax assets as of December 31, 2025, resulting in no taxable impacts to adjusted operating income[29] Business Focus - Personal lines production comprised 100% of gross written premiums in Q4 2025, with commercial lines generating zero premium production[5] - The company is focusing on select personal lines homeowners' business to align with underwriting goals and reduce exposure to legacy commercial lines[3] Discontinued Operations - The company reported a net loss from discontinued operations of $(186) thousand in Q4 2024, with no such losses reported in Q4 2025[33]

Regulatory Environment - All revenues are generated in the PRC, with operations conducted through Beijing Feitian, making the company highly sensitive to political, economic, and social conditions in China [23]. - The Chinese economy has experienced uneven growth, with a slowdown since 2021, which could affect discretionary spending and orders for Beijing Feitian's products [26]. - Beijing Feitian has received all requisite licenses and approvals from PRC authorities, including a Class III Medical Device Operation License, which is valid for five years [31]. - The company plans to renew its medical device licenses and business licenses in a timely manner before expiration [31]. - Any adverse changes in Chinese government policies or economic conditions could materially affect Beijing Feitian's operations and competitive position [26]. - The PRC government's oversight could result in material adverse changes in operations and the value of securities if additional permissions are required [36]. - Regulatory changes may increase competition or lower market entry barriers, potentially affecting Beijing Feitian's market position [40]. - The company does not currently manage foreign currency exposure through hedging transactions, which could impact financial results if international revenues increase [28]. - Uncertainties in the interpretation and enforcement of PRC laws may limit legal protections and affect business operations [33]. - Beijing Feitian is not subject to cybersecurity review as it does not possess personal data of over one million users and does not anticipate reaching that threshold in the foreseeable future [41]. - The company is not currently involved in any cybersecurity investigations, but future regulatory changes could subject it to enhanced scrutiny and potential penalties [79]. - The PRC Foreign Investment Law, effective January 1, 2020, replaced previous laws regulating foreign investment, introducing uncertainties regarding its interpretation and implementation [81]. - Foreign investments must comply with a "negative list" issued by the State Council, which may impact Beijing Feitian's operations if its market falls under restricted or prohibited categories [82]. - The Chinese government exerts significant control over business operations, which may lead to increased compliance costs and potential adverse effects on the value of Class A Ordinary Shares [84]. - Compliance with PRC advertising laws is crucial, and any non-compliance could result in government sanctions, affecting the company's financial condition [87]. Financial and Tax Considerations - The company believes it is not a PRC resident enterprise for tax purposes, but if deemed so, it would face a 25% enterprise income tax on worldwide income [54]. - Dividends paid to non-resident enterprises would incur a 10% withholding tax, and gains from the sale of Class A Ordinary Shares may also be taxed at 10% [55]. - If classified as a PRC resident enterprise, dividends to non-PRC individual shareholders could be taxed at 20% [56]. - The ability of Beijing Feitian to distribute dividends is contingent on its accumulated profits as per PRC accounting standards [58]. - PRC regulations may limit the company's ability to inject capital into its operating entity or distribute profits, potentially affecting business operations [59]. - Future loans or capital contributions to Beijing Feitian require approval and registration with governmental authorities, which may delay funding [62]. - The company may face challenges in complying with evolving foreign exchange regulations, impacting its financial condition and operations [61]. - The company may not be able to complete necessary registrations or obtain approvals for future financing activities, affecting liquidity [67]. - The company faces uncertainties regarding indirect transfers of equity interests in PRC resident enterprises by offshore subsidiaries, which may lead to tax obligations under SAT Bulletin 7 and SAT Bulletin 37 [68]. - Gains from indirect transfers may be subject to a 10% PRC enterprise income tax, with both transferor and transferee potentially facing penalties for non-compliance [70]. Market and Competitive Landscape - The company relies primarily on the commercialization of FTTPS to generate revenue, expecting a majority of future revenue from FTTPS sales [106]. - The TPS market for brachytherapy has 6 approved products in China, including 3 specifically for radioactive particle implantation, indicating significant competition [119]. - The company’s growth may be impacted by decreasing customer demand, increasing competition, and changes in government policies [105]. - The company’s ability to achieve market acceptance for FTTPS depends on the strength of its sales, marketing, and distribution organizations [111]. - The company’s success is contingent on the widespread adoption of radiotherapy and brachytherapy as cancer treatments [110]. - The company may face challenges in maintaining product quality and safety, which are critical to its success [115]. - Beijing Feitian's operations are significantly impacted by U.S.-China trade relations, with the U.S. announcing 100% tariffs on all Chinese imports effective November 1, 2025, which could disrupt supply chains and increase costs [130]. - The company faces potential legal liabilities related to medical device safety, which could adversely affect its financial condition and operational results [123]. Operational Risks - The company has not identified any material quality deficiencies in its operations or those of its suppliers as of the report date [117]. - The company has limited control over third-party suppliers, and any significant interruption in their operations could adversely affect Beijing Feitian's business operations and customer relationships [127]. - The payment structure used in customer arrangements may lead to fluctuations in operating cash flows, impacting the company's financial performance if customers do not adhere to payment terms [143]. - Beijing Feitian's ability to attract and retain customers is crucial for revenue growth, with a risk of losing existing customers if competitors offer better products or services [139]. - The company does not carry business liability insurance, exposing it to significant costs and business disruptions related to potential claims and lawsuits [125]. - The company is vulnerable to intellectual property infringement claims, which could disrupt operations and adversely affect financial results [148]. - The company plans to expand operations with new products and markets, increasing the risk of intellectual property litigation [149]. - As of the date of the report, Beijing Feitian has no valid patents for its 3D printing technology, which may lead to competitive disadvantages [152]. - The company has identified three material weaknesses in its internal control over financial reporting as of December 31, 2025, which could result in inaccuracies in financial statements [159]. - The lack of business liability or disruption insurance exposes the company to significant costs and operational risks [154]. Shareholder and Governance Issues - Mr. Jianfei Zhang controls approximately 94.24% of the combined voting power of the company's equity interests through Class B Ordinary Shares [169]. - The company is considered a "controlled company" under Nasdaq standards, exempting it from certain corporate governance requirements [170]. - The dual class share structure allows Class B Ordinary Shares to have 20 votes per share compared to 1 vote for Class A Ordinary Shares, potentially limiting influence on corporate matters for Class A shareholders [183]. - The company may experience extreme share price volatility due to its small public float, making it difficult for investors to assess the value of Class A Ordinary Shares [172]. - There is a risk of delisting from the Nasdaq Capital Market if the company fails to meet listing requirements, which could negatively impact the price of its securities [186]. - Shareholders may face difficulties in protecting their interests due to the company's incorporation under Cayman Islands law, which has less developed securities laws compared to the U.S. [176]. - The company may not have a majority of independent directors due to its status as a controlled company, potentially affecting shareholder protections [170]. - The trading price of Class A Ordinary Shares may fluctuate significantly, with low trading volumes leading to greater price volatility [173]. - The company may rely on exemptions from certain Nasdaq requirements in the future, which could affect corporate governance practices [178]. - The trading volumes of Class A Ordinary Shares are low, leading to significant price fluctuations and potential losses for investors [191]. - Substantial sales or perceived sales of Class A Ordinary Shares could adversely affect their market price and impair future capital raising efforts [192]. - The company does not currently intend to pay dividends on Class A Ordinary Shares for the foreseeable future, focusing instead on operations and expansion [198]. - The company is classified as an "emerging growth company," allowing it to take advantage of reduced reporting requirements and exemptions from certain regulations [206]. - The company expects increased legal and financial compliance costs after ceasing to qualify as an "emerging growth company" due to the requirements of the Sarbanes-Oxley Act [211]. - If the company is classified as a passive foreign investment company (PFIC), U.S. taxpayers holding Class A Ordinary Shares may face adverse tax consequences [199]. - The market price of Class A Ordinary Shares may be negatively impacted if securities or industry analysts do not publish favorable research or coverage [194]. - The company may face challenges related to short selling, which could drive down the market price of Class A Ordinary Shares [195]. - The board of directors has the authority to issue additional classes or series of preferred shares, which could adversely affect the rights of Class A Ordinary Shareholders [205]. Corporate Actions and Future Plans - The company engaged Frost & Sullivan Limited for an industry report on the PRC medical device industry, with projections that may not materialize [213]. - The company sold 100,000,000 Class A ordinary shares at a purchase price of $0.2 per share, representing a discount of approximately 51.7% compared to the market price of $0.4141 on March 25, 2026 [215]. - The issuance of shares in the March 2026 Private Placement will result in substantial dilution to existing shareholders and decrease earnings per share in future periods [217]. - The company underwent a series of corporate restructuring, including the incorporation of Pheton as a holding company on November 2, 2022, and the acquisition of Beijing Feitian on March 27, 2023 [218]. - The company acquired 51% of iTonic Corporation and 30% of Geri-Safe, Ltd., issuing a total of 7,000,000 Class A ordinary shares as part of these transactions [218]. - The company is currently not in compliance with Nasdaq's minimum bid price requirement of $1.00 per share and has until April 20, 2026, to regain compliance [218]. - The Class A ordinary shares from the private placement are subject to a six-month lock-up period, which may lead to significant selling pressure once it expires [216]. - The company has a share reserve of 2,800,000 ordinary shares under its 2025 Equity Incentive Plan approved by the board of directors [218]. - The company has authorized share consolidations at a cumulative ratio of not more than 1:4,000 within a two-year period [218]. - The acquisition of iTonic Corporation included the issuance of warrants for up to 3,000,000 Class A ordinary shares, contingent on certain milestones [218]. - The company aims to establish a new standard of care in malignant tumor applications through its healthcare solutions [218].

Vehicle Reservations and Production Plans - Aptera Motors has amassed over 49,000 vehicle reservations since its inception in 2019[21]. - The company aims to commence low-volume production and deliver the first customer vehicles in 2026, contingent on securing additional financing[29]. - Vehicle reservations are fully refundable, meaning that the aggregate number of reservations may not accurately indicate future sales, potentially leading to lower-than-anticipated revenues[100]. - As of December 31, 2025, Aptera Motors had approximately 49,000 reservation holders for its solar electric vehicles[197]. Financial Performance and Capital Needs - The company completed its first follow-on capital raise as a publicly traded entity, raising approximately $9 million in gross proceeds in January 2026, followed by an additional $8.1 million from subsequent warrant exercises[21]. - The company has not yet generated revenue or profits from continuing operations and anticipates significant operating expenses in the near future[77][78]. - Aptera plans to raise additional capital through equity and debt financings, which may dilute existing stockholders[81][82]. - The initial low-volume production phase requires an estimated $45 million to $50 million in capital, while ramping to high-volume production will need an additional $140 million to $160 million[200]. - General, selling, and administrative expenses increased by 33% to $26.8 million in 2025, primarily due to higher stock-based compensation and increased legal and regulatory costs[206]. - Research and development expenses rose by 25% to $21.3 million in 2025, driven by a $3.9 million increase in stock-based compensation[210]. - The company has not commenced production or generated any revenue from vehicle sales, relying on future financing to achieve profitable operations[196]. Strategic Collaborations and Supply Chain - Aptera has secured a strategic collaboration with Chery New Energy for the supply of production parts, which includes a cash payment of $1 million and $5 million in Class B common stock[42]. - The company is dependent on a few suppliers for vehicle components, with some being single-source, which could adversely affect operations if suppliers fail to deliver on time or at acceptable quality levels[88]. - Ongoing industry-wide challenges, such as increased supplier lead times and semiconductor supply constraints, are expected to continue affecting the company's ability to obtain parts and may result in increased costs[90]. Regulatory and Compliance Challenges - The company is classified as a three-wheeled motorcycle and is working to comply with Federal Motor Vehicle Safety Standards[58][60]. - Regulatory compliance is a significant hurdle, with stringent standards for vehicle safety, fuel economy, and emissions control potentially delaying production launches[111]. - The company has received a subpoena from the SEC related to its securities offerings and is cooperating with the ongoing investigation[55][56]. Legal Issues and Risks - Zaptera USA, Inc. filed a complaint against Aptera Motors Corp. for design patent infringement and misappropriation of trade secrets, seeking damages and injunctive relief[53][54]. - The company is currently involved in litigation with Zaptera USA, Inc. regarding design patent infringement and misappropriation of trade secrets, which could materially harm its business[184]. - The company is currently involved in a patent infringement lawsuit, which could divert resources and delay production goals[119]. - An ongoing investigation by the Securities and Exchange Commission may lead to legal proceedings, potentially adversely affecting the company's business and financial condition[120][121]. Technological and Market Challenges - The competitive landscape includes established manufacturers with greater resources, which may hinder the company's ability to effectively compete and secure necessary capital[105]. - The company's success relies on consumer adoption of energy-efficient, solar-powered vehicles, which may be affected by developments in alternative technologies and low gasoline prices[110]. - Demand in the passenger vehicle industry is highly volatile, influenced by economic, political, and social conditions, which may adversely affect the company's financial condition[114]. - The company faces significant technological and legal barriers to entry, with uncertainties regarding whether vehicles will meet disclosed performance specifications after validation and testing[106]. Internal Control and Governance - The company identified two material weaknesses in internal control over financial reporting (ICFR) during the year ended December 31, 2023, which continued into 2024[159]. - The first material weakness involved accounting for stock-based compensation, leading to a restatement of the 2023 financial statements due to deficient controls over equity modifications[160]. - The second material weakness related to a lack of formalized accounting and financial reporting policies, contributing to inconsistent policy application and error risk[161]. - The company is developing a comprehensive accounting and financial reporting policies manual to address the identified weaknesses[161]. Stockholder and Corporate Structure - The dual class structure of the common stock results in directors, executive officers, and 5% stockholders controlling 83% of the voting power, limiting the influence of Class B common stockholders on corporate matters[139]. - As of December 31, 2025, directors and executive officers, along with holders of more than 5% of common stock, held 97% of the voting power, further concentrating control[139]. - The company has never declared or paid any cash dividends on its capital stock and does not intend to do so in the foreseeable future, which means returns on investment will depend solely on the appreciation of Class B common stock[136]. - The company anticipates retaining future earnings for business development and expansion, rather than distributing dividends to stockholders[136]. Facility and Manufacturing Plans - Aptera's Carlsbad assembly facility received foreign-trade zone designation in February 2026, allowing for deferred customs duties on imported components, enhancing gross margin potential[48]. - The principal executive office is located in Carlsbad, California, occupying approximately 77,000 square feet of leased space, with the lease expiring on March 31, 2028[179]. - The facility is designated for initial low-volume manufacturing of the Aptera vehicle, with plans to expand production capacity as market demand increases[181].

IPO and Fundraising - The company completed its IPO on October 15, 2024, raising gross proceeds of $50 million from the sale of 5,000,000 units at an offering price of $10.00 per unit[36]. - An additional $7.5 million was generated from the full exercise of the over-allotment option, bringing total proceeds to $57.5 million[36]. - A private placement of 254,375 units generated total proceeds of $2,543,750, with the sponsor agreeing to restrictions on transfer for 30 days post-initial business combination[37]. - A total of $57,787,500 from the IPO and private placement proceeds was deposited in a trust account for public shareholders, with specific conditions for fund release[38]. - The trust account initially holds $58,287,500, which includes approximately $1,868,750 for deferred underwriting discounts, assuming no redemptions occur[152]. - The company incurred $1,006,250 in underwriting discounts and $556,288 in other IPO-related costs[180]. - The underwriters are entitled to a deferred fee of 3.25% of the gross proceeds of the IPO, amounting to $1,868,750, payable upon closing of a business combination[198]. Regulatory Environment - The company has not received any regulatory objections from the China Securities Regulatory Commission (CSRC) regarding the IPO as of the report date[51]. - The company may face significant regulatory risks from the PRC government, which could impact its ability to conduct business combinations and operations in China[45]. - The company is subject to the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, which may impose additional compliance requirements[50]. - The PRC government has implemented new regulatory measures that could significantly impact business operations for companies with a majority of their operations in China, potentially leading to material changes in operations and a decline in share value[77]. - Recent regulatory actions include increased scrutiny on cybersecurity, anti-monopoly enforcement, and restrictions on foreign investments, which may adversely affect the ability to conduct business in China[78]. - The China Securities Regulatory Commission (CSRC) has introduced the Trial Administrative Measures for overseas securities offerings, which require compliance if certain criteria are met, including if 50% or more of the issuer's revenue comes from PRC domestic companies[82]. Business Combination Strategy - The merger agreement involves the acquisition of HZJL, with HZJL's shareholders receiving 35 million ordinary shares of Xpand Boom Technology, plus potential earn-out consideration of up to 20 million shares based on revenue targets[62]. - The transaction is subject to regulatory approvals and shareholder approvals, with a requirement for a registration statement to be declared effective by the SEC[63]. - The company intends to pursue targets focused on green and sustainable business, new energy, and cutting-edge technologies, primarily in North America, Europe, and the Asia Pacific regions[86]. - The target size for acquisitions is intended to be between $500 million and $2 billion, focusing on companies with significant revenue growth[98]. - The strategy includes targeting businesses in high-growth sectors such as green and sustainable businesses, new energy, and artificial intelligence applications[99]. - The initial business combination must involve target businesses with a fair market value of at least 80% of the trust account balance[112]. - The company intends to acquire 100% of the equity interest or assets of the target business, ensuring majority control[113]. Financial Performance and Concerns - For the year ended December 31, 2025, the company reported a net income of $1,573,962, primarily from interest income of $2,389,246[188]. - As of December 31, 2025, the company had cash of $37,174 and a working capital deficit of $382,105, raising substantial doubt about its ability to continue as a going concern[155]. - The company has not generated any operating revenue to date and will not until after completing its initial business combination[187]. - Management has determined substantial doubt about the company's ability to continue as a going concern through January 15, 2026, if an initial business combination is not completed[196]. - The company has no long-term debt, capital lease obligations, or operating lease obligations as of December 31, 2025[198]. Shareholder Rights and Redemption - Public shareholders will have the opportunity to redeem shares at a per-share price initially anticipated to be $10.05[132]. - Redemption rights will be limited to 20% of the shares sold in the IPO for any public shareholder acting in concert with others[134]. - Initial shareholders and officers will not have redemption rights for any ordinary shares owned by them[135]. - Shareholders may withdraw redemption requests at any time up to the vote on the proposed business combination[139]. - If the initial business combination is not approved, public shareholders who elected to redeem their shares will not be entitled to the pro rata share of the trust account[140]. - A total of 5,668,070 ordinary shares were tendered for redemption during the EGM held on November 20, 2025[142]. - The per-share redemption amount upon dissolution is estimated to be approximately $10.05, subject to claims from creditors which may reduce this amount[145]. Management and Governance - The management team has extensive experience in public companies and financial management, which is expected to aid in identifying suitable acquisition targets[69]. - The management team aims to create shareholder value by guiding emerging high-growth companies towards commercialization[106]. - The management team is well positioned to capitalize on acquisition opportunities in emerging markets driven by innovative technologies or novel business models[228]. - The audit committee is composed of three independent members, ensuring compliance with NASDAQ listing standards and SEC rules[230]. - Chengming Dou qualifies as an "audit committee financial expert" as defined by SEC rules, enhancing the committee's oversight capabilities[231]. - The audit committee is responsible for pre-approving all audit and non-audit services provided by independent registered public accounting firms[232]. - The nominating committee oversees the selection of board nominees, ensuring candidates have notable achievements and high ethical standards[233]. Due Diligence and Evaluation - The evaluation of prospective target businesses includes assessing financial performance, growth potential, and market alignment[99][102]. - The company has identified various parameters for evaluating target businesses, including innovative technologies and strong ESG standards[101][97]. - The due diligence process for evaluating HZJL included meetings with management, document reviews, and financial information assessments[104]. - The agreement's consummation is conditioned on various factors, including shareholder approval and SEC declaration of the Registration Statement as effective[122]. - HZJL's obligations to close the transaction depend on the Purchaser Parties' compliance with the agreement and no material adverse effects on them[123]. - The Purchaser Parties' obligations to close are contingent upon HZJL's compliance with the agreement and receipt of necessary governmental approvals[124].