Financial Performance and Projections - As of December 31, 2025, the company had an accumulated net loss of €679.1 million and anticipates continued substantial operating losses for the next several years[31]. - The company may need to raise additional capital to fund its operations and product development, with potential impacts on its strategic ambitions if unable to do so[36]. - The company faces significant risks related to its financial position and capital needs, which could materially affect its ability to achieve profitability[30]. - Future sales of the company's products will depend on purchasing decisions from government health administration authorities, which may be affected by adverse global economic conditions[102]. - The company faces risks related to product liability claims, which could divert resources and damage its reputation[106]. - The company is exposed to risks associated with fluctuations in foreign currency exchange rates and economic instability in various markets[104]. - The U.S. Federal Reserve and European Central Bank have raised interest rates multiple times, contributing to economic uncertainty and potential volatility in the company's share price[157]. - Rising inflation may increase costs, including labor and employee benefits, potentially reducing demand for the company's products if customers are adversely affected[160]. Product Development and Regulatory Challenges - The company expects to generate revenues from the commercialization of its Lyme disease vaccine candidate VLA15, with potential approval applications in the U.S. and EU in 2026 and commercialization in 2027 or 2028[32]. - The FDA suspended the biologics license application for IXCHIQ due to serious safety concerns, including reports of over 20 serious adverse events and three deaths[49]. - The European Medicines Agency concluded that the overall benefit-risk balance of IXCHIQ remained positive, lifting temporary restrictions but requiring updated product information[50]. - Regulatory authorities may impose additional requirements or restrictions on the company's products, affecting commercialization and financial performance[46]. - The company is dependent on timely commercialization of its products, including the Lyme disease vaccine, which is contingent on successful partnerships and regulatory approvals[54]. - Clinical trials for product candidates may not yield expected results, leading to potential delays in regulatory approvals and commercialization[64]. - Delays in clinical trials or regulatory approvals could increase development costs and shorten exclusive commercialization periods, affecting competitive positioning[70]. - The approval process for marketing products in jurisdictions outside the United States and the European Union may involve additional testing and regulatory requirements[105]. - The company must ensure compliance with ongoing regulatory requirements, which may differ by country and could impact sales if significant changes occur[85]. - The company faces challenges in maintaining patent protection for its product candidates, which could allow competitors to develop similar products[190]. Strategic Partnerships and Collaborations - The company relies on strategic collaborations, such as with Pfizer for the Lyme disease vaccine, which could impact its financial condition and control over product development[72]. - The company faces risks related to strategic collaborators potentially not committing adequate resources to marketing and distribution, limiting revenue potential[82]. - The company is conducting a technology transfer for its chikungunya vaccine manufacturing process with a strategic partner in Brazil, with plans for a similar arrangement in Asia[81]. - The company faces intense competition for collaboration partners, which may lead to suboptimal terms and potential delays in product development[130]. Market and Competitive Landscape - Sales of the company's vaccines, including IXIARO and DUKORAL, significantly decreased during the COVID-19 pandemic, adversely affecting financial results[45]. - The market opportunities for the company's products may be smaller than anticipated, which could adversely affect financial performance and stock prices[63]. - The launch of competing vaccines may adversely affect the sales of the company's products, particularly in shared markets[120]. - The company may not be able to maintain or gain significant market share if competing products enter the market[121]. - The company is subject to intense competition from larger pharmaceutical companies with greater resources and experience[116]. Supply Chain and Manufacturing Risks - The company relies on single-source suppliers for critical materials, such as fetal bovine serum, which could impact production if supply issues arise[125]. - The company relies on third-party suppliers for key materials and manufacturing, which poses risks of delays in clinical development and regulatory approval processes[132]. - The company may need to increase manufacturing capacity to meet demand for approved products, but lacks experience in large-scale commercialization of vaccine candidates[175]. - The Livingston facility in Scotland is the sole source for the Japanese encephalitis vaccine IXIARO and chikungunya vaccine IXCHIQ, while the Solna facility in Sweden is the sole source for DUKORAL[174]. - The FDA issued a Form 483 letter with 11 observations following an inspection of the Livingston manufacturing site in February 2026, impacting the approval of the BLA supplement for IXIARO[183]. - The Almeida facility is currently unable to produce IXIARO doses for the U.S. market due to compliance issues, leading to potential supply constraints[185]. - Manufacturing costs may exceed current estimates, and any non-compliance could necessitate re-manufacturing, incurring additional costs and delays[186]. Legal and Intellectual Property Risks - The company may face legal proceedings related to past mergers, which could result in additional cash compensation and divert management resources[146]. - Legal proceedings may arise alleging infringement of third-party intellectual property rights, which could negatively impact the company's ability to commercialize its products[206]. - The company may struggle to enforce its intellectual property rights, especially in jurisdictions with weaker protections, which could negatively impact its business[217]. - Changes in patent laws, such as the transition to a "first-to-file" system, could increase uncertainties and costs in obtaining and enforcing patents, adversely affecting the company's operations[221]. - Recent U.S. Supreme Court rulings have narrowed patent protection, creating uncertainty regarding the validity and enforceability of patents[222]. Cybersecurity and Operational Risks - The company faces cybersecurity risks that could disrupt operations and adversely affect its financial condition, with potential significant costs associated with mitigating these risks[161]. - The company has experienced past cyberattacks and anticipates an increase in such incidents, which could materially impact its IT systems and confidential information[162]. - Business disruptions, including pandemics, could materially impact operations and financial condition, as seen with COVID-19[154]. - The ongoing military conflict between Russia and Ukraine may lead to material changes in currency valuations, adversely impacting the company's operating results[172]. Reputational and Market Access Challenges - The company may face reputational challenges due to public perception issues related to vaccines, which could hinder market access and patient enrollment in clinical trials[62]. - The company may be liable for off-label promotion or misleading marketing practices, which could result in regulatory penalties[93].

Financial Performance - In 2025, total revenue decreased by $11.0 million, or 11.1%, to $88.3 million from $99.4 million in 2024, primarily due to lower sales of germanium wafers[291]. - Total revenue for 2025 was $88.3 million, a decrease of 11.1% from $99.4 million in 2024, but an increase of 31.1% from $75.8 million in 2023[294]. - In 2024, total revenue increased by $23.6 million, or 31.1%, to $99.4 million from $75.8 million in 2023, driven by higher demand for InP and GaAs wafer substrates[293]. - Revenue from China decreased by 1.9% in 2025, primarily due to reduced sales of germanium wafer substrates, while revenue from Taiwan decreased by 7.5% due to export permit requirements[295]. - Revenue from customers in Europe decreased by 19.0% in 2025, primarily due to lower demand for GaAs wafer substrates[295]. - Revenue from customers in North America decreased by 77.5% in 2025, primarily due to export permit requirements on InP established by China[295]. - Revenue from customers in Taiwan increased by 63.0% in 2024, primarily due to higher demand for GaAs and InP wafer substrates[297]. - Gross profit for 2025 was $11.2 million, a decrease of 52.8% from $23.8 million in 2024, with a gross margin of 12.7% compared to 24.0% in 2024[298]. - Gross profit increased by $10.5 million in 2024 compared to 2023, with a gross margin of 24.0%[299]. Expenses and Losses - Selling, general and administrative expenses increased by 0.3% to $24.2 million in 2025, representing 27.4% of total revenue[300]. - Research and development expenses decreased by 37.8% to $9.0 million in 2025, accounting for 10.2% of total revenue[302]. - Other income, net decreased by $1.1 million to $0.9 million for 2025, primarily due to reduced Chinese government grants compared to 2024, representing a decrease of 54.9%[307]. - Provision for income taxes increased to $1.7 million for 2025 from $1.1 million in 2024, a change of 46.2%[309]. - Net loss attributable to noncontrolling interests increased significantly to $1.9 million for 2025 from $0.2 million in 2024, an increase of 1062.9%[311]. Cash Flow and Financing - Total cash, restricted cash, and cash equivalents increased by $94.6 million in 2025, reaching $128.4 million by year-end[314]. - Net cash used in operating activities was $12.8 million for 2025, primarily due to a net loss of $23.2 million[316]. - Net cash used in investing activities for 2025 was $6.8 million, mainly for property, plant, and equipment[319]. - Net cash provided by financing activities was $107.1 million for 2025, primarily from a public offering of 8,163,265 shares[322]. - The company recorded a valuation allowance against net deferred tax assets of $27.2 million for 2025 due to uncertainty regarding future profitability[310]. - Cash, restricted cash, and cash equivalents decreased by $16.3 million in 2024, resulting in a principal liquidity source of $33.8 million[315]. - No shares were repurchased under the stock repurchase program during 2025, 2024, and 2023, with approximately $2.7 million remaining available for future repurchases[325]. Investments and Dividends - Aggregate dividends received from PRC subsidiaries and joint ventures were approximately $4.3 million in 2023, $2.4 million in 2024, and $0.9 million in 2025[328]. - In April 2023, Xiaoyi XingAn distributed a dividend of $1.8 million, while JiYa distributed dividends totaling $2.5 million in 2023[328]. - The company has no current intentions to distribute earnings to investors under its corporate structure[329]. - AXT sold approximately 7.28% of Tongmei to private equity investors for about $49 million as part of the IPO process[330]. - Tongmei's IPO application was accepted for review by the Shanghai Stock Exchange on January 10, 2022, and approved on July 12, 2022[332]. - AXT filed a registration statement to offer up to $100 million in various securities, with a prospectus supplement for 7,098,492 shares at $12.25 per share[334]. - Net proceeds from the offering were $93.9 million, intended for increasing manufacturing capacity and R&D for new products[334]. Operational Challenges - The accrued product warranties decreased to $411,000 as of December 31, 2025, down from $451,000 in 2024, primarily due to reduced claims for quality issues[259]. - Inventory reserves for excess and obsolete inventory amounted to $28.4 million as of December 31, 2025, compared to $24.1 million in 2024, indicating a need for ongoing evaluation of inventory levels[260]. - Deferred tax assets have been reduced to zero by a valuation allowance, indicating potential challenges in realizing these assets[274]. - The company accounts for stock-based compensation using the Black-Scholes model, which requires subjective assumptions that can materially affect the estimated fair value[269]. - The company maintains a warranty reserve based on claims experience, which could impact future financial results if actual warranty costs differ from estimates[259]. - Accounts receivable are evaluated quarterly for credit losses, with a focus on balances over 90 days for U.S. customers and over 120 days for foreign customers[257]. - The company is actively monitoring the impact of export restrictions and tariffs on its operations and financial performance[280]. - The political tensions between China and the U.S. have led to fluctuating tariffs, with U.S. tariffs on imports from China increasing from 25% to 70% over a series of announcements[280]. - Wafer substrate sales decreased by $8.8 million, or 13.1%, in 2025, attributed to increased raw material costs and export permit requirements from China[291]. - Equity in income of unconsolidated joint ventures decreased by 77.8% to $0.8 million in 2025, primarily due to export restrictions from China on gallium[305]. Corporate Governance - The Board of Directors appointed Leonard J. Leblanc as a non-independent director to the Audit Committee following the passing of an independent director, ensuring compliance with Nasdaq Listing Rules[283]. - The company has a total investment commitment of approximately $90 million in Dingxing, China, which includes cash for land and buildings, equipment, and local employment[345]. - The company has a minority investment under the fair value method totaling $0 million as of December 31, 2025, down from $0.6 million in 2024[354]. - The company has a minority investment under the equity method totaling $15.0 million and $14.1 million as of December 31, 2025, and 2024, respectively[354]. - The company has no outstanding purchase orders that will incur a penalty if canceled as of December 31, 2025[346]. - The company has a hedging program in place to minimize currency fluctuation risks, particularly related to the Japanese yen[351]. - The company is subject to interest rate fluctuations, with a potential impact of a 10% change in interest rates resulting in an annual interest income change of $167 to $184[352]. - One customer accounted for more than 10% of the company's accounts receivable as of December 31, 2025, and 2024[353]. - The company has entered into a Cross License Agreement with a competitor, which requires annual payments over a 10-year period starting from 2020[344].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 March 17, 2026 Date of Report (Date of earliest event reported) CervoMed Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation) (Commission File Number) Delaware 001-37942 30-0645032 (I.R.S. Employer Identification No.) 20 Park Plaza, Suite 424 Boston, Massachusetts 02116 (Address of principa ...

Financial Results Announcement - CervoMed Inc. announced financial results for the quarter and full year ended December 31, 2025[5]. - The press release detailing these results was issued on March 17, 2026[5]. Company Information - The company is listed on the NASDAQ Capital Market under the symbol CRVO[2]. - CervoMed Inc. is not classified as an emerging growth company[3]. - The financial information is available on the company's website under the "Investors – Events and Presentations" section[6]. Reporting Obligations - The company has no obligation to publicly update or revise the information provided, except as required by law[7]. - The press release is attached as Exhibit 99.1 in the current report[10]. - The report includes a cover page interactive data file embedded within the Inline XBRL document[10]. - The Chief Financial Officer & General Counsel, William Elder, signed the report[14]. - The report was filed pursuant to the Securities Exchange Act of 1934[12].

Clinical Development - The company has developed a novel anti-cancer and anti-viral immunotherapy, with a Phase 1 clinical trial for its lead candidate, Decoy20, initiated in 2023[30]. - The company has initiated a Phase 1 clinical trial for its lead product candidate, Decoy20, targeting patients with advanced solid tumors who have exhausted approved treatment options[67]. - In the first cohort of the Phase 1 trial, four patients received a single dose of 7 x 10^7 Decoy20, experiencing transient adverse events that resolved within 30 minutes[68]. - The second cohort of the Phase 1 trial involved a reduced dose of 3 x 10^7 Decoy20, with similar adverse events observed as in the first cohort[69]. - Preclinical studies demonstrated significant anti-tumor activity and durable responses in models of non-Hodgkin's lymphoma and various carcinomas, with a wide therapeutic index of 10 to ≥33-fold[60]. - The company has successfully completed cGMP manufacturing and stability studies for Decoy20, with IND-enabling toxicology studies showing no sustained induction of cytokine release syndrome factors[62]. - The FDA allowed the company to proceed with the Phase 1 clinical trial in May 2022, focusing on safety, tolerability, and pharmacokinetics of Decoy20[67]. - As of October 2024, the company completed one month of weekly dosing in the first six participants at the 3 x 10^7 Decoy20 dose, receiving authorization for unrestricted enrollment[71]. - By May 2025, the company had enrolled 13 participants on Decoy20 as a single dose and 32 participants in the weekly dosing among two Decoy20 dose levels[71]. - In the Combination Study with BeOne Medicines, six evaluable participants were enrolled by November 2025, with one serious adverse event of cytokine release syndrome (CRS) reported[72]. - Three participants in the Combination Study experienced disease progression and had to discontinue, while three showed evidence of stable disease[72]. - One subject with pancreatic adenocarcinoma maintained stable disease for over four months before discontinuing after six months due to disease progression[72]. - The company has discontinued further enrollment in the Combination Study and currently has no plans to initiate a new clinical trial[72]. - The company must demonstrate substantial evidence of safety and efficacy to obtain regulatory approval, which may require additional studies or trials[186]. - No clinical trials have been completed that provide substantial evidence of efficacy for any product candidates, and further development is required[156]. - The company is focusing its limited resources on the development of Decoy20, potentially foregoing other product candidates with greater commercial potential[170]. - Patient enrollment challenges may arise due to competition from other pharmaceutical companies targeting the same diseases, impacting clinical trial timelines[179]. Financial Performance - The company reported a net loss of approximately $20.8 million for the year ended December 31, 2025, with an accumulated deficit of approximately $81.3 million[145]. - As of December 31, 2025, the company had approximately $8.5 million in cash and used $14.8 million of cash in operations during the twelve months ended December 31, 2025[147]. - The company expects to continue incurring significant cash outflows and additional losses, raising substantial doubt about its ability to continue as a going concern[147]. - The company has experienced significant operating losses in every reporting period since inception, indicating a lack of profitability[145]. - The company may need to raise additional capital through equity or debt financings to fund its operations and may face substantial dilution to stockholders[147]. - The company may seek financing through collaborations, strategic alliances, or license agreements, but there is no assurance that new financing will be available on commercially acceptable terms[147]. - Future capital requirements will depend on various factors, including the outcome of identifying a suitable target company for acquisition and the costs of clinical trials[152]. - The company may seek additional capital through equity and debt financings, which could lead to shareholder dilution[154]. Regulatory Environment - The FDA imposes substantial requirements on companies involved in clinical development, including safety, effectiveness, and quality control regulations[76]. - The NDA or BLA review process by the FDA typically includes a 60-day review to determine if the application is substantially complete before acceptance for filing[88]. - The FDA may grant orphan designation to drugs intended for rare diseases affecting fewer than 200,000 individuals in the U.S., providing financial incentives and exclusivity for seven years upon first approval[98]. - Fast track designation allows for expedited review of products intended to treat serious conditions, with potential for priority review and rolling review of application sections[93]. - Breakthrough therapy designation offers more intensive FDA interaction and guidance, aimed at expediting development for products showing substantial improvement over existing therapies[94]. - Priority review designation aims for FDA action on marketing applications within six months, compared to ten months under standard review, for products that significantly improve treatment[95]. - Accelerated approval may be granted based on surrogate endpoints likely to predict clinical benefit, with required confirmatory studies to verify effectiveness[96]. - The FDA requires ongoing compliance with regulations post-approval, including record-keeping and reporting of adverse experiences[101]. - Non-patent data exclusivity under the FDCA provides a five-year period for the first applicant to obtain approval of a new chemical entity, preventing approval of similar applications during this time[105]. - Pediatric exclusivity can extend existing exclusivity periods by six months if clinical trials in children are conducted in response to FDA requests[107]. - The BPCIA establishes a 12-year exclusivity period for reference products, delaying the submission of biosimilar applications until four years after the reference product's approval[109]. - The company must comply with various healthcare regulations, including anti-kickback and fraud laws, which can result in significant penalties for violations[111]. - The Affordable Care Act (ACA) increased the minimum Medicaid rebates for brand name drugs from 15.1% to 23.1% of the average manufacturer price[113]. - The American Rescue Plan Act of 2021 eliminated the statutory Medicaid drug rebate cap starting January 1, 2024, which was previously capped at 100% of a drug's average manufacturer price[114]. - The Inflation Reduction Act of 2022 requires price negotiations for certain drugs with Medicare starting in 2026, with penalties for price increases exceeding inflation[114]. Market and Competition - The company faces significant competition from larger biopharmaceutical companies, including Amgen, AstraZeneca, and Merck, which may have greater resources and faster regulatory approval processes[117]. - The potential market opportunity for the company's product candidates is difficult to estimate and may be smaller than anticipated, impacting profitability[203]. - Market acceptance of the company's product candidates among physicians, patients, and healthcare payors is uncertain and could affect revenue generation[200]. - The company may face significant competition in establishing collaboration agreements for product development and commercialization, which are complex and time-consuming[215]. - Third-party payors increasingly challenge prices for biopharmaceutical products, which may limit the company's ability to charge appropriate prices for its products[224]. - Legislative and regulatory changes in the healthcare system may increase the difficulty and cost of obtaining marketing approval and affect pricing strategies for product candidates[229]. Operational Challenges - The company relies on third-party manufacturers for the production of its product candidates, increasing the risk of supply issues and regulatory compliance failures[209]. - The company lacks long-term commitments or supply agreements with third-party manufacturers, increasing the risk of failing to obtain sufficient quantities of product candidates on acceptable terms[211]. - There is no arrangement for redundant supply or a second source for all required raw materials, which could materially impact the company's financial position if manufacturers fail to perform[212]. - The company does not have experience in sales, marketing, and distribution of pharmaceutical products, which may hinder revenue generation if product candidates are approved[218]. - Coverage and reimbursement processes are time-consuming and costly, with no uniform policy existing among third-party payors, leading to uncertainty in obtaining adequate reimbursement[226]. - The company may be subject to price controls in international markets, which could restrict revenue generation compared to the United States[227]. - Increasing efforts by payors to cap healthcare costs may limit coverage and reimbursement levels for newly approved products, creating high barriers to market entry[228]. Corporate Governance - The company has five full-time employees as of December 31, 2025, and none are represented by labor unions[125]. - The company provides competitive compensation and benefits, including incentive compensation plans and equity-based grants to retain key personnel[127]. - The conversion of Preferred Stock will result in the issuance of 111.0 million shares of common stock, representing approximately 96.4% of the total shares expected to be outstanding on a fully diluted basis[132]. - Following the conversion of Preferred Stock, Mr. Lazar will own approximately 96.4% of the total number of shares of common stock outstanding on a fully diluted basis, significantly reducing other stockholders' ownership and voting power[138]. - The company relies on trade secrets and know-how, alongside patents, to protect its proprietary technology and competitive position[123]. - Heightened governmental scrutiny over drug pricing and reimbursement methodologies may impact the company's market position and sales[115].

Expansion and Growth Strategy - The company has grown to 42 showrooms across the U.S. as of December 31, 2025, indicating significant expansion in its retail presence [131]. - The company plans to continue expanding showrooms throughout the U.S., which may expose it to significant risks related to market presence and competition [141]. - The company’s growth strategy includes increasing advertising and marketing spending, expanding product offerings, and showroom presence, which requires significant upfront investment [133]. - The company may face challenges in expanding into new geographical markets due to differing consumer characteristics and competition [141]. - The company derives a significant portion of its revenue from sales of its Design Your Own rings, and any decline in these sales could materially impact its financial condition and operating results [156]. Supply Chain and Inventory Management - Approximately 30% of the world's rough diamonds are of Russian origin, and sanctions on Russian diamonds could negatively affect the worldwide supply, impacting the company's supply chain practices [121]. - The company primarily uses repurposed precious metals in its jewelry, but limited supply of repurposed platinum may require significant cash investment and management skills to resolve supply issues [120]. - The company faces challenges in managing inventory levels, which are crucial for maintaining profitability and meeting customer demand [154]. - Volatile economic conditions and supply chain disruptions may adversely affect the timely delivery of materials, impacting the company's ability to fulfill orders [140]. - The company relies on a limited number of suppliers and third-party carriers for timely delivery of diamonds and fine jewelry, which poses risks to order fulfillment and business operations [255]. Economic and Market Risks - The company faces risks related to consumer spending influenced by economic conditions, which could affect demand for its products [124]. - Increased labor costs and inflationary pressures may reduce profitability, as the company may struggle to reflect these costs in product pricing [122]. - The introduction of tariffs and international trade restrictions has increased uncertainty in the market and could raise material costs, impacting gross margins [140]. - Changes in credit markets could limit consumer financing options, adversely affecting the company's sales [194]. - The company is affected by seasonality, with a significant portion of annual revenue occurring in the fourth quarter, making it vulnerable to changes in consumer spending during peak shopping periods [195]. Technology and Cybersecurity - The company is focusing on enhancing customer experience through machine learning models and new technologies, such as virtual try-ons and optimized payment processing [127]. - The company relies heavily on IT systems for critical operations, and any significant failure or security breach could adversely affect its financial condition [160]. - Cybersecurity risks are increasing, with potential impacts from data breaches leading to legal claims, regulatory investigations, and significant costs [166]. - The company faces uncertainties related to technology platforms, including potential website downtime and security breaches, which could adversely affect operations [179]. - The company collects a wide variety of personal data, and failure to comply with privacy laws could result in significant fines and penalties [228]. Regulatory and Compliance Challenges - The company is subject to various ESG-related regulations, which may increase compliance costs and impact business operations [175]. - The regulatory environment surrounding cybersecurity and data protection is becoming more demanding, with potential fines and liabilities for non-compliance [169]. - Compliance with rapidly changing privacy and data protection laws could lead to significant liabilities and affect the company's operations and financial performance [222]. - The California Consumer Privacy Act (CCPA) and similar laws in other states may increase compliance costs and potential liabilities, particularly in the event of a data breach [224]. - The company is subject to various limitations and restrictions regarding distributions from Brilliant Earth, LLC, which may impact its ability to pay taxes and operating expenses [264]. Financial and Operational Risks - The company has a short operating history at scale, making it difficult to predict future operating results and sustain profitability [157]. - The company may require additional capital to support business growth, which might not be available on acceptable terms [201]. - The company funds operations primarily through revenue from products and services and equity financings, raising concerns about cash generation sufficiency [201]. - The company’s insurance coverage may be insufficient, and any failure of insurance providers to meet obligations could lead to significant financial losses [262]. - The company may face significant costs and resource diversion if involved in securities litigation due to stock price volatility [283]. Intellectual Property and Competitive Landscape - The company may face significant expenses in defending intellectual property rights, which could divert management attention [213]. - The company faces potential intellectual property claims that could adversely impact its business and financial condition [217]. - Increasing competition raises the likelihood of intellectual property rights claims, which may involve rights holders with no relevant product revenue [219]. - The company is subject to competitive pressures from larger retailers with greater resources, which may affect its pricing and market share [144]. - The concentration of voting power with Continuing Equity Owners may adversely impact the price of Class A common stock [281]. Internal Control and Governance - The company identified a material weakness in internal control over financial reporting related to ineffective information technology general controls, which has been remediated as of December 31, 2025 [312]. - The company expects to incur ongoing costs related to implementing an internal audit function and additional controls in the upcoming years to improve the internal control environment [313]. - If the company cannot assert the effectiveness of its internal control over financial reporting, it may face restricted access to capital markets and a negative impact on stock price [313]. - The company is classified as a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk [429]. - The company qualifies as a "controlled company" under Nasdaq rules, exempting it from certain corporate governance requirements, which may affect investor protections [286].

Customer Acquisition and Marketing - The company has recently faced challenges in acquiring new customers cost-efficiently, leading to increased customer acquisition costs and lower levels of customer acquisition [33]. - Significant investments have been made to enhance brand awareness and attract new customers, but marketing campaigns have not reliably resulted in increased sales [33]. - The company expects an adverse impact on results of operations for the fiscal year ending December 31, 2026, primarily in the first half due to increased customer acquisition costs [34]. - The company relies on social media platforms for marketing, and changes in algorithms have negatively impacted customer acquisition costs and effectiveness [39]. - Maintaining relationships with content creators is critical for brand promotion, and difficulties in this area could adversely affect customer engagement and brand awareness [38]. Revenue and Customer Dependence - A significant portion of revenue is generated from existing customers, and any decline in their spending or repeat purchases could adversely affect business performance [36]. - The company faces risks related to consumer spending, which can decline during economic downturns, affecting revenue and profitability [67]. - Seasonal fluctuations in revenue are expected, with the highest revenue typically occurring in the first quarter, and disruptions during peak seasons could negatively impact financial results [84]. Supply Chain and Operational Risks - The company relies on single source suppliers for certain component materials, which poses risks of supply shortages or disruptions that could adversely affect its business and financial condition [47]. - The majority of raw material suppliers are located outside the United States and Israel, exposing the company to risks such as regulatory restrictions, natural disasters, and political unrest [51]. - Shipping disruptions due to port congestion, labor disputes, and other factors could significantly impact the company's ability to deliver products and maintain customer satisfaction [63]. - The company may need to reformulate or substitute ingredients in its products due to shortages of specific raw materials, which could affect product quality and customer satisfaction [49]. Competition and Market Position - The company faces competition from larger multinational consumer product companies, which may have greater resources and capabilities [57]. - Increased competition in the beauty and wellness industry may lead to pricing pressures, affecting sales and gross profit margins [106]. Financial and Capital Management - The company may require additional capital in the future, and obtaining financing on favorable terms is uncertain, which could impair business growth and operational capabilities [114]. - The conditional exchange feature of the Exchangeable Notes could adversely affect the company's liquidity and financial condition if triggered [116]. - The company’s marketable securities totaled $374 million as of December 31, 2025, exposing it to market and interest rate risks [97]. Regulatory and Compliance Challenges - The company faces significant challenges in establishing and managing international operations, including increased costs for travel, infrastructure, and legal compliance [16]. - Compliance with ethical business practices and product safety regulations is essential to protect the company’s reputation and avoid legal issues [103]. - The evolving regulatory framework for AI technology may impose additional compliance requirements, potentially increasing costs and restricting opportunities for the company [127]. - The company must comply with anti-corruption and trade compliance laws globally, with violations leading to significant penalties and reputational harm [159]. - The company is subject to evolving data privacy and security laws, which could lead to significant liabilities if compliance is perceived as inadequate [165]. Intellectual Property and Technology Risks - The company relies on a combination of intellectual property laws and contractual provisions to protect its proprietary technology, but there is no guarantee that these protections will be effective [199]. - The company has applied for patent protection for certain technologies, but there is no assurance that these applications will be granted or that existing patents will not be challenged [200]. - The company faces risks in protecting its trade secrets and intellectual property, which could adversely affect its competitive position if competitors lawfully obtain or independently develop its technology [208]. Cybersecurity and Data Protection - Cybersecurity incidents, including ransomware attacks, pose significant risks to the company's operations and could result in substantial costs and reputational harm [188]. - The company maintains cybersecurity insurance, but there is no assurance that coverage will be adequate or available on acceptable terms [189]. - Non-compliance with data privacy laws could result in regulatory investigations, fines, and reputational damage, adversely affecting the company's financial condition [180]. Growth and Expansion Challenges - The company has expanded operations rapidly since its founding and must effectively manage growth, including employee base and hiring needs, to avoid harming its business and financial condition [65]. - The company plans to continue expanding into international markets, which presents new risks and challenges, including regulatory environments and cultural differences [87]. - The company must continue to expand and scale its information technology systems to support growth, which involves inherent costs and risks that could disrupt operations [213].

Economic Conditions and Market Risks - Adverse economic conditions in Mexico may negatively impact the company's financial condition and results of operations[104] - The performance of the real estate markets is cyclical and closely tied to the U.S. and Mexican economies, which may affect the company's financial and operating performance[108] - The Mexican GDP growth rates were 0.8% in 2025, 4.2% in 2024, and 4.7% in 2023, indicating fluctuating economic conditions[205] - The annual inflation rate in Mexico was reported at 4.7%, 4.2%, and 3.7% for the years ending December 31, 2023, 2024, and 2025, respectively[231] - The U.S. government imposed a 25% additional tariff on imports from Mexico effective February 1, 2025, contributing to market volatility and economic uncertainty[234] - Changes in international trade policies could adversely affect the competitive position of Mexico as a manufacturing hub, impacting demand for the company's properties[235] - Political developments in Mexico, including the dominance of the Morena party, could impact the business environment and economic stability[210] - The Mexican government's concentration of power poses challenges for the business sector, leading to decisions driven by electoral priorities rather than economic considerations[218] - Security violence risks in Mexico could negatively impact the company's operations and financial results[237] Tenant and Revenue Risks - The company is dependent on tenants for a substantial portion of its revenues, and defaults by major tenants could materially affect its business[105] - The company derives a significant portion of its rental income from a limited number of customers, increasing its vulnerability to sector-specific downturns[105] - The company’s tenant base is concentrated, with the top 10 tenants accounting for approximately 27.5% of total GLA and 30.0% of rents as of 2025, with Mercado Libre being the largest customer[135] - Economic downturns affecting tenants could lead to defaults, impacting rental income and financial stability[139] - The company may need to modify lease terms to accommodate tenants facing financial difficulties, which could reduce rental income[134] Competition and Market Position - The company may face increased competition leading to lower occupancy rates and rental income, impacting its growth strategy[105] - The company faces significant competition from major players like Prologis and Fibra Uno, which could lead to lower occupancy rates and rental income[142] - The company operates in specific industrial sectors, with 32.2% of leased GLA from the automotive sector, exposing it to economic downturns in these industries[140] Financial Condition and Debt Management - The volatility of financial markets may adversely affect the company's financial condition and the availability of credit[116] - The company may not be able to recover the current carrying value of its properties, land, or investments, which could impair its ability to repay or refinance debt[117] - As of December 31, 2025, the company's total outstanding debt was US$1,275.2 million, with US$100.6 million in secured loans[147] - The company has a debt cap of US$1.8 billion, increased by shareholders in March 2023, which may affect its ability to service debt if additional indebtedness is incurred[147] - 88% of the company's outstanding indebtedness bore fixed interest rates as of December 31, 2025, indicating a significant exposure to interest rate fluctuations[151] - The ability to raise capital is crucial for future growth, and unfavorable market conditions could hinder access to financing[144] - The company’s credit ratings are vital for obtaining favorable financing terms, and any deterioration could increase borrowing costs and limit capital access[145] Development and Operational Risks - The company is subject to risks related to the development of new properties, including rising construction costs and supply chain issues[105] - The company may incur additional costs if tenants fail to maintain adequate insurance coverage, impacting financial performance[158] - The company is subject to various governmental regulations that may delay obtaining necessary approvals, licenses, and permits, impacting operations[164] - The company carries insurance coverage for property damage, but certain risks, such as acts of war or pandemics, may not be fully insured, potentially leading to significant financial losses[154] - The company regularly reviews its real estate assets for impairment, which could materially affect its financial condition and market price of its ADSs[160] Environmental and Regulatory Risks - The company is subject to numerous environmental laws and regulations, which may lead to significant additional costs and liabilities that could adversely affect its financial condition[169] - The company anticipates that the regulation of its business operations under Mexican environmental laws will become more stringent over time, potentially impacting cash flows and compliance costs[170] - The company is jointly liable with its tenants for soil pollution remediation costs, which could lead to substantial financial liabilities if tenants fail to meet their obligations[171] - Under the General Law on Climate Change, the company faces various environmental obligations that may impact its financial performance, including potential costs for greenhouse gas emissions compliance[172] - The company is exposed to physical risks from climate change, which could affect tenant operations and their ability to pay rent, potentially impacting the company's financial condition[173] - The company may face adverse impacts from stricter energy efficiency standards and greenhouse gas regulations, which could increase operating costs and affect tenant financial conditions[174] Legal and Compliance Risks - The company may face legal and administrative proceedings that could harm its reputation and financial condition[178] - The company is subject to anti-corruption and anti-bribery laws, and violations could have a material adverse effect on its financial condition and operations[179] - The company identified material weaknesses in internal controls over financial reporting, which could lead to material misstatements if not remediated[194] - The company has taken steps to strengthen its internal control environment but cannot assure that all material weaknesses will be fully addressed in a timely manner[198] - Compliance with the Sarbanes-Oxley Act is expected to increase legal and financial compliance costs[251] Shareholder and Governance Issues - The protections for minority shareholders in Mexico are less developed compared to other jurisdictions, making enforcement of rights more difficult[260] - The company's bylaws restrict certain transfers of common shares, which could impede changes in control or management[241] - Any acquisition resulting in beneficial ownership of 20.0% or more of common shares requires a public tender offer at a specified price[242] - The exclusive jurisdiction of federal courts in Mexico City for disputes may limit shareholders' ability to obtain favorable judicial forums[255] - The company may not be able to offer preemptive rights to ADS holders or non-Mexican shareholders during future common share issuances, potentially leading to dilution of their ownership stakes[261] - If additional equity securities are issued, existing shareholders may experience dilution, and the market price of the ADSs or common shares could decline[264] Corporate Structure and Financial Strategy - The company is a holding entity that relies on dividends from subsidiaries to meet debt obligations and distribute to shareholders[271] - A dividend policy approved on March 23, 2021, allows for the distribution of up to 75% of distributable profit each year from 2021 to 2026[273] - Dividends will be paid in pesos, and fluctuations in the exchange rate between pesos and U.S. dollars could adversely affect the value received by shareholders[276] - The company follows home country practices for corporate governance, which may afford less protection to holders of common shares compared to U.S. issuers[283] - The trading market for the company's shares may decline if analysts publish negative reports or cease coverage[285] Company Growth and Development - The company completed a $445.6 million initial public offering of 14,375,000 ADSs on July 5, 2023, and a $148.8 million follow-on offering of 4,250,000 ADSs on December 13, 2023[295] - As of December 31, 2025, the company's portfolio comprised 231 buildings with a total GLA of 42,954,022 square feet and a stabilized occupancy rate of 93.6%[297] - The company's GLA has grown 77.2 times since operations began in 1998, representing a compound annual growth rate (CAGR) of 17.5%[297] - The company operates in strategic locations across sixteen Mexican states, focusing on light-manufacturing and logistics[297] - The company has significant development experience and capabilities in the industrial real estate segment in Mexico[297] - The company aims to generate efficient and sustainable investments through eco-efficient standards in its developments[297] Foreign Investment and Taxation - The company’s future operations may be affected by its potential classification as a passive foreign investment company (PFIC), which could have adverse tax consequences for U.S. investors[287] - The company’s PFIC status is uncertain and depends on the classification of its income and assets, particularly regarding lease revenue[287] - Legislative changes in tax laws could increase the company's tax liability, impacting financial conditions and cash available for dividends[221] - The company faces risks from potential foreign exchange controls if Mexico experiences balance of payment difficulties in the future[226]

Financial Performance - Total revenue for the fiscal year ended January 31, 2026, was $955.2 million, representing a growth rate of 26% compared to $759.2 million in the previous year[95]. - The total number of Base Customers increased to 10,682 as of January 31, 2026, up from 9,893 as of January 31, 2025[93]. - The company incurred net losses of approximately $56.0 million, $6.3 million, and $425.7 million in fiscal years 2026, 2025, and 2024, respectively, with an accumulated deficit of approximately $1.2 billion as of January 31, 2026[100]. - As of January 31, 2026, the company had $1,259.9 million in cash, cash equivalents, and short-term investments, up from $992.4 million as of January 31, 2025, indicating a growth of approximately 27%[384]. - The company's cash equivalents and short-term investments primarily consist of money market funds, treasuries, agency securities, corporate debt securities, and commercial paper, totaling $1,183.1 million as of January 31, 2026, compared to $898.3 million in the previous year[384]. Growth and Investment Strategies - The company plans to continue investing in product development, including enhancements related to artificial intelligence, and expanding its sales and marketing efforts[101]. - The company anticipates that its operating expenses will increase as it invests in growth opportunities and infrastructure[100]. - The company plans to expand its marketing and sales capabilities to attract larger organizations, but success is not guaranteed and may divert resources from existing customer maintenance[163]. - The company aims to convert users of free products into paying customers, but this may require sophisticated sales efforts and could be impacted by general economic conditions[162]. - The company may need to change its subscription-based revenue model to remain competitive, which could impact financial stability[136]. Market and Competitive Risks - Future revenue growth may be impacted by factors such as increased competition, changes in technology, and global economic conditions[97]. - Intense competition in the software market could lead to a loss of market share, adversely affecting the company's business and financial condition[115]. - The company competes with well-established providers like Microsoft and Atlassian, which have greater resources and larger customer bases[117]. - The introduction of new services by competitors could make the company's solutions obsolete, impacting its business and financial condition[123]. - The market for the company's services is rapidly evolving, making it difficult to predict customer adoption and demand, which could adversely affect future results[133]. Operational and Compliance Challenges - Significant legal, accounting, and operational expenses are expected as the company continues to operate as a public entity[102]. - The company faces heightened security risks due to the nature of its platform, which allows code execution, increasing the potential attack surface[108]. - Security breaches could lead to litigation, reputational harm, and significant financial liabilities for the company[112]. - The company is subject to evolving privacy laws, including GDPR and CCPA, which impose significant compliance obligations and potential penalties[201][202]. - Compliance with privacy legislation may require additional resources and incur costs, affecting financial condition and operational results[201]. Customer and Revenue Dynamics - The company relies on sales and marketing strategies to drive revenue growth, and any decline in customer renewals could harm future operating results[134]. - Customer renewal rates may fluctuate due to dissatisfaction with pricing or services, which could adversely affect revenue if customers opt for free versions or discontinue use[147]. - A significant portion of annual orders typically comes from new and existing customer renewals in the last two fiscal quarters, influenced by the annual budget approval process[142]. - The company faces potential fluctuations in customer expansions and renewals, which may decline due to factors such as customer satisfaction, pricing, and macroeconomic conditions[139]. - The length of the sales cycle can be unpredictable, particularly for large customers, affecting revenue timing and operational adjustments[222]. Financial and Tax Considerations - The company may need to raise additional capital to support growth and respond to business challenges, which could adversely affect operating results if capital is not raised on acceptable terms[253]. - The company faces potential increases in effective tax rates due to changes in tax laws, including the One Big Beautiful Bill Act, which implements significant corporate tax reforms[257]. - The company is exposed to greater than anticipated tax liabilities due to aggressive interpretations of tax laws by jurisdictions in which it operates[261]. - The company may experience volatility in the market price of its Class A common stock, influenced by factors such as operating results and industry developments[266]. - The company may face dilution of existing stockholders' equity if additional funds are raised through equity or convertible debt issuances[255]. Strategic Risks and Future Outlook - The ability to forecast future results is subject to uncertainties, including the effectiveness of growth management and billing models[99]. - The company faces challenges in transitioning users from free to paid versions of its services, affecting revenue growth[118]. - The company must continuously enhance its services to integrate with various technologies, which requires significant resources and could impact revenue growth if not managed effectively[168]. - The company may engage in merger and acquisition activities, which could disrupt business and dilute stockholder value[185]. - Risks associated with acquisitions include management distraction, integration challenges, and potential negative perceptions from users or investors[186]. Regulatory and Compliance Risks - The company is subject to the reporting requirements of the Exchange Act and the Sarbanes-Oxley Act, as well as Nasdaq listing standards[247]. - The company incurs significant costs related to compliance with the Sarbanes-Oxley Act, including accounting and management oversight expenses[248]. - The company has faced regulatory scrutiny regarding export controls, particularly concerning software exports to countries like Russia and Belarus, which may require licenses[208]. - Any failure to comply with anti-bribery and anti-corruption laws could result in significant penalties and adversely affect the company's reputation and operations[212]. - The company is transitioning certain users in China to its JiHu entity to comply with the Personal Information Protection Law[202]. Human Resources and Culture - The company faces intense competition for highly skilled personnel, particularly in AI and machine learning, which may hinder its ability to hire and retain qualified team members[225]. - The company’s corporate culture is a key contributor to its success, and failure to maintain this culture as it grows could harm innovation and teamwork[228]. - Customization demands from customers may increase upfront investment without guaranteed subscription growth, affecting overall business performance[166]. - The reliance on channel partners for sales and support poses risks, as poor performance from these partners could harm the company's brand and growth[170]. - The company tracks performance metrics using internal tools, which may be subject to inaccuracies, potentially harming reputation and business[173].

Financial Performance - The company incurred a net loss of approximately $29.6 million and used cash in operations of approximately $19.9 million during the nine months ended January 31, 2026[141]. - Revenues for the three months ended January 31, 2026, were approximately $0.5 million, a decline from $0.8 million in the same period of 2025, primarily due to timing impacts from the U.S. federal government shutdown[167]. - Revenues for the nine months ended January 31, 2026, were approximately $2.1 million, down from $4.5 million in 2025, primarily due to the timing of deliveries on current year projects[177]. - Net loss for the three months ended January 31, 2026, was $11.4 million, compared to a net loss of $6.7 million in 2025[166]. - Operating expenses rose to $8.4 million for the three months ended January 31, 2026, compared to $6.1 million in 2025, driven by a $1.8 million increase in share-based compensation[169]. - Operating expenses for the nine months ended January 31, 2026, were $24.2 million, up from $15.7 million in 2025, reflecting a significant increase in share-based compensation[179]. - Cost of revenues increased to $1.3 million for the three months ended January 31, 2026, from $0.6 million in 2025, mainly due to full recognition of losses associated with contracts in strategically important markets[168]. - Cost of revenues for the nine months ended January 31, 2026, increased to $4.3 million from $3.1 million in 2025, related to full recognition of one-time losses associated with contracts[178]. - Net cash used in operating activities for the nine months ended January 31, 2026, was $19.9 million, an increase of $5.3 million compared to $14.6 million in 2025[186]. Revenue Breakdown - Revenue from North America and South America decreased to 16% for the three months ended January 31, 2026, down from 39% in the same period of 2025[156]. - EMEA revenue contribution increased to 26% for the three months ended January 31, 2026, compared to 61% in the same period of 2025[156]. - Asia and Australia accounted for 58% of revenue for the three months ended January 31, 2026, marking a new revenue stream as there was no contribution in the same period of 2025[156]. Backlog and Future Expectations - As of January 31, 2026, the backlog was $19.9 million, compared to $7.5 million at January 31, 2025, indicating a significant increase in unfulfilled purchase orders[147]. - The company expects to convert all current backlog into revenue within the next 12 to 36 months, although the timing is subject to change[147]. Funding and Financial Stability - The company issued an additional $6.5 million of convertible notes to institutional investors, increasing its total convertible notes issued to $16.5 million[140][146]. - The company has entered into an At Market Issuance Sales Agreement to offer shares of common stock with an aggregate gross sales price of up to $40.0 million for general corporate purposes[144]. - As of January 31, 2026, the company had cash and cash equivalents of $7.2 million, which may not be sufficient to fund planned expenditures through March 2027[191]. - The company faces substantial doubt about its ability to continue as a going concern for at least one year from the issuance of its consolidated financial statements[192]. - The company expects to continue operating losses in the short-term and possibly longer[192]. - The company is dependent on obtaining additional funding, which is subject to market conditions and its financial performance[192]. Risks and Challenges - The company faces significant risks and uncertainties that could materially affect its future operating results, including product performance and access to capital[141]. - The company must improve, market, and commercialize its products to achieve and sustain profitability[192]. - The company must manage risks associated with internal cybersecurity protocols and data protection[192]. - The company is challenged by potential inflation related to the U.S. dollar impacting its operations and costs[192]. - The company must effectively respond to competition in its targeted markets[192]. - The company is affected by geopolitical uncertainties, including tariffs and conflicts that may impact its operations[192]. - The company has not engaged in any off-balance sheet financing activities since inception[194]. - The company is evaluating the impact of several recently issued Accounting Standards Updates (ASUs) on its financial reporting, including ASU 2023-09 and ASU 2024-3[150][151].