BURUD 10-Q
Nuburu, Inc. (BURUD)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
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Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of May 15, 2025, the registrant had
NUBURU, INC.
FORM 10-Q
TABLE OF CONTENTS
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this "Quarterly Report") contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which statements involve substantial risk and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. Forward-looking statements contained in this Quarterly Report include, but are not limited to, statements about:
Forward-looking statements are not guarantees of performance. You should not put undue reliance on these statements, which speak only as of the date hereof. The forward-looking statements contained in this Quarterly Report are based on our current expectations and beliefs concerning future developments and their potential effects on our business. There can be no assurance that future developments affecting our business will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control), or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors under the heading "Risk Factors" in this Quarterly Report and in our Annual Report on Form 10-K for the year ended December 31, 2024, as amended (our "Annual Report"), as well as the following important factors:
3
Should one or more of these risks or uncertainties materialize, or should any of the assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
4
PART 1 – FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
NUBURU, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
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March 31, |
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December 31, |
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(Unaudited) |
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ASSETS |
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Current assets |
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Cash and cash equivalents |
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$ |
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$ |
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Inventories, net of reserve of $ |
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— |
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Deposit on acquisition - related party |
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— |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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— |
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Operating lease right-of-use assets |
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— |
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Convertible note receivable |
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— |
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Other assets |
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— |
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TOTAL ASSETS |
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$ |
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$ |
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LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT |
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Current liabilities |
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Accounts payable |
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$ |
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$ |
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Accrued expenses |
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Current portion of operating lease liability |
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Contract liabilities |
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Shareholder advances |
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Current portion of notes payable |
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Convertible note derivative liability |
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— |
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Preferred stock liability |
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— |
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Total current liabilities |
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Warrant liabilities |
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TOTAL LIABILITIES |
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Convertible preferred stock, $ |
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— |
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Stockholders’ Deficit |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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( |
) |
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( |
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Total Stockholders’ Deficit |
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( |
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( |
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TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT |
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$ |
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$ |
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The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
5
NUBURU, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
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Three Months Ended |
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2025 |
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2024 |
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Revenue |
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$ |
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$ |
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Cost of revenue |
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Gross margin |
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( |
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( |
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Operating expenses: |
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Research and development |
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Selling and marketing |
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General and administrative |
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Total operating expenses |
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Loss from operations |
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( |
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( |
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Non-operating expenses: |
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Interest income |
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Interest expense |
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( |
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( |
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Change in fair value of warrant liabilities |
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Change in fair value of derivative liability |
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Change in fair value of debt |
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Loss on extinguishment of debt |
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Gain on sale of intellectual property intangible assets |
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Loss on impairment of inventories, property and equipment and operating lease right-of-use asset |
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( |
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Interest expense recognized on remeasurement of preferred stock liability |
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( |
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Other loss, net |
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( |
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Loss before provision for income taxes |
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$ |
( |
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$ |
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Provision for income taxes |
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Net loss |
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( |
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$ |
( |
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Reclassification of convertible preferred stock from mezzanine equity to liability |
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Deemed dividend in connection with modification of pre-funded warrants |
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( |
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Net loss available to common shareholders |
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$ |
( |
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$ |
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Net loss per common share, basic and diluted (1) |
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$ |
( |
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$ |
( |
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Weighted-average common shares used to compute net loss per common share, basic and diluted (1)(2) |
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The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
6
NUBURU, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS DEFICIT
(UNAUDITED)
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Convertible |
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Common Stock |
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Shares |
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Amount |
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Shares |
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Amount |
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Additional |
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Accumulated |
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Total |
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Balance as of December 31, 2024 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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Reclassification of convertible preferred stock from mezzanine equity to current liabilities |
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( |
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( |
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— |
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— |
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— |
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— |
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— |
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Issuance of Common Stock to extinguish debt |
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— |
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— |
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— |
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Issuance of Common Stock upon exercise of pre-funded warrants |
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— |
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— |
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( |
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— |
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Contributions from related party |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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Deemed dividend in connection with modification of pre-funded warrants |
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— |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Reclassification of convertible preferred stock from mezzanine equity to liability |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Balance as of March 31, 2025 |
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— |
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$ |
— |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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Convertible |
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Common Stock |
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Shares(1) |
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Amount |
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Shares(1) |
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Amount(1) |
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Additional |
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Accumulated |
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Total |
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Balance as of December 31, 2023 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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Issuance of Common Stock |
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— |
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— |
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— |
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Issuance of Common Stock from releases of restricted units |
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— |
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— |
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( |
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— |
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— |
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Restricted stock units used for tax withholdings |
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— |
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— |
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( |
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( |
) |
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( |
) |
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— |
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( |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Balance as of March 31, 2024 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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(1) Periods presented have been adjusted to reflect the reverse stock split on July 23, 2024. See Note 2 – Summary of Significant Accounting Policies for additional information.
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
7
NUBURU, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
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Three Months Ended |
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2025 |
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2024 |
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Cash Flows from Operating Activities: |
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Net loss |
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$ |
( |
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$ |
( |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization |
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Stock-based compensation |
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Inventory reserve adjustments |
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— |
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Amortization of debt discount |
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— |
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Amortization of deferred financing costs |
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Operating lease right-of-use asset |
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— |
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Change in fair value of warrant liabilities |
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( |
) |
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( |
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Change in fair value of derivative liability |
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( |
) |
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— |
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Change in fair value of debt |
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( |
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— |
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Loss on extinguishment of debt |
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— |
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Gain on sale of intellectual property intangible assets |
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( |
) |
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— |
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Loss on impairment of inventories, property and equipment and operating lease right-of-use asset |
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— |
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Interest expense recognized on remeasurement of preferred stock liability |
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— |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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— |
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Inventories |
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— |
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( |
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Prepaid expenses and other current assets |
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( |
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Accounts payable |
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( |
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Accrued expenses |
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Contract liabilities |
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— |
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( |
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Operating lease liability |
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( |
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( |
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Net cash used in operating activities |
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( |
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( |
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Cash Flows from Investing Activities: |
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Payment for acquisition |
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( |
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— |
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Payments under convertible note receivable |
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( |
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— |
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Net cash used in investing activities |
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( |
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— |
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Cash Flows from Financing Activities: |
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Proceeds from debt borrowings |
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— |
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Repayments of debt |
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( |
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— |
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Payments of debt issuance costs and discounts |
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( |
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— |
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Proceeds received from settlement |
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— |
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Proceeds from issuance of common stock |
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— |
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Restricted stock units used for tax withholdings |
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— |
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( |
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Payment of deferred financing costs |
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— |
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( |
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Net cash provided by financing activities |
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NET CHANGE IN CASH DURING THE PERIOD |
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( |
) |
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( |
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CASH AND CASH EQUIVALENTS ―BEGINNING OF PERIOD |
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CASH AND CASH EQUIVALENTS ―END OF PERIOD |
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$ |
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SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES: |
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Issuance of Common Stock upon extinguishment of debt |
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$ |
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$ |
— |
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Issuance of Common Stock upon exercise of pre-funded warrants |
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$ |
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$ |
— |
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Deemed dividend in connection with modification of pre-funded warrants |
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$ |
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$ |
— |
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Shareholder advance to promissory note |
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$ |
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$ |
— |
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Conversion of debt to common stock |
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$ |
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$ |
— |
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Initial fair value of convertible note receivable over proceeds paid |
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$ |
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$ |
— |
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Transfer of property and equipment from inventory |
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$ |
— |
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$ |
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Purchase of property and equipment in accounts payable and accrued expenses |
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$ |
— |
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$ |
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Deferred financing costs included in accounts payable and accrued expenses |
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$ |
— |
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$ |
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Transaction costs related to the reverse recapitalization not yet paid |
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$ |
— |
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$ |
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The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
8
NUBURU, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. BACKGROUND AND ORGANIZATION
Nuburu, Inc. (“Nuburu” or the “Company”) was originally incorporated in Delaware on July 21, 2020 under the name Tailwind Acquisition Corp. (“Tailwind”) as a special purpose acquisition company, formed for the purpose of effecting an initial business combination with one or more target businesses. On September 9, 2020 (the “IPO Closing Date”), the Company consummated its initial public offering (the “IPO”). On January 31, 2023 (the "Closing Date"), the Company consummated a business combination with Nuburu Subsidiary, Inc. f/k/a Nuburu, Inc. (“Legacy Nuburu”), a privately held operating company which merged into the Company's subsidiary Compass Merger Sub, Inc. (the “Business Combination”) and changed its name to “Nuburu, Inc.,” and the Company became the owner, directly or indirectly, of all of the equity interests of Nuburu Subsidiary, Inc. and its subsidiaries.
Throughout the notes to the condensed consolidated financial statements, unless otherwise noted, the “Company,” “we,” “us” or “our” and similar terms refer to Legacy Nuburu prior to the consummation of the Business Combination, and Nuburu and its subsidiaries after the consummation of the Business Combination.
Going Concern and Liquidity
The Company is an emerging growth company that has not yet achieved full commercialization and is expected to incur losses until it does.
From inception through March 31, 2025, the Company has incurred operating losses and negative cash flows from operating activities. For the three months ended March 31, 2025 and 2024, the Company has incurred operating losses, including net losses of $
The Company plans to finance its operations with proceeds from the issuance and sale of equity securities or debt; however, there is no assurance that management's plans to obtain additional debt or equity financing will be successfully implemented or implemented on terms favorable to the Company. Until the Company can generate sufficient revenue to cover its operating expenses, working capital, and capital expenditures, the Company plans to rely on proceeds received from certain agreements executed subsequent to March 31, 2025, as further described herein.
Inventory, Property and Equipment and Right-of-Use Asset Impairment
The Company leases approximately
As of March 31, 2025, the Company was in default under the lease, and Centennial Tech Industrial Owner (the "Landlord") was in the process of pursuing available remedies in advance of the lease term that would otherwise expire in June 2025. In April 2025, the Landlord obtained a default judgment against the Company in the amount of $
Certain Significant Risks and Uncertainties
The Company’s future results of operations involve a number of risks and uncertainties. Factors that could affect the Company’s future operating results and cause actual results to vary materially from expectations include, but are not limited to, those summarized in the Cautionary Note Regarding Forward-Looking Statements above.
9
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results, and cash flows for the periods presented.
The results of operations for the three months ended March 31, 2025 and 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025 or any future period. These unaudited condensed consolidated financial statements and their notes should be read in conjunction with the Company’s Annual Report on Form 10-K as filed with the SEC on April 15, 2025, and as subsequently amended.
Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation.
Reverse Stock Split
Following stockholder approval on February 22, 2024, the Company effected a reverse stock split of its Common Stock at a ratio of (the “Reverse Stock Split.”) The Reverse Stock Split was effective July 23, 2024. No changes were made to the number of authorized shares. Proportional adjustments were made to the number of shares of Common Stock issuable upon exercise or conversion of the Company’s equity awards, warrants, and other equity instruments convertible into Common Stock, as well as the applicable exercise price. All share and per share amounts of our Common Stock presented have been retroactively adjusted to reflect the Reverse Stock Split, including reclassifying an amount equal to the reduction in par value of common stock to additional paid-in capital.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are not applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Significant Accounting Policies
The significant accounting policies used in preparation of these condensed consolidated financial statements are disclosed in the notes to consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as amended. Other than as noted below, the significant accounting policies have not changed significantly since that filing.
Fair value option for certain financial instruments
The Company elected the fair value option (“FVO”) for recognition of the Convertible Note Receivable (as defined and described in Note 5, Convertible Loan Receivable), as permitted under Accounting Standards Codification ("ASC") 825, Financial Instruments. Under this option, financial instruments are initially recognized at fair value as an asset or liability on the condensed consolidated balance sheets with subsequent changes in fair value, inclusive of interest, market risk, and other factors affecting valuation, reflected in the condensed consolidated statements of operations. The Company elected to recognize interest expense within the line item presented for the change in the fair value of the asset or liability. Additionally, the change in fair value of financial liabilities attributable to the change in the instrument-specific credit risk is required to be presented separately in other comprehensive income. For the three months ended March 31, 2025, the change in fair value related to a change in the instrument-specific credit risk was immaterial. All costs associated with the issuance of financial instruments accounted for using the FVO are expensed upon issuance or as incurred. See Note 5, Convertible Loan Receivable, and Note 8, Notes and Convertible Notes Payable, for additional information.
Mandatorily redeemable preferred stock
The Company accounts for mandatorily redeemable preferred stock in accordance with ASC 480, Distinguishing Liabilities from Equity. Preferred stock that is mandatorily redeemable on a fixed or determinable date, or upon the occurrence of an event certain to occur, is classified as a liability on the condensed consolidated balance sheets. Mandatorily redeemable preferred stock is initially recognized at its fair value, and subsequently measured at its redemption value.
10
Recently Issued Accounting Pronouncements
ASU 2023-09
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) – Improvements to Income Tax Disclosures. The ASU requires that an entity disclose specific categories in the effective tax rate reconciliation as well as reconciling items that meet a quantitative threshold. Further, the ASU requires additional disclosures on income tax expense and taxes paid, net of refunds received, by jurisdiction. The new standard is effective for annual periods beginning after December 15, 2024 on a prospective basis with the option to apply it retrospectively. Early adoption is permitted. The adoption of this guidance will result in the Company being required to include enhanced income tax related disclosures. The Company is currently evaluating the impact this standard will have on its consolidated financial statements.
ASU 2024-03
In November 2024, the FASB issued ASC 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which is intended to provide more detailed information about specified categories of expenses (purchases of inventory, employee compensation, depreciation and amortization) included in certain expense captions presented on the consolidated statement of operations. This new standard is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either (1) prospectively to financial statements issued for periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the consolidated financial statements. The Company is in the process of finalizing the disclosures that will be required by the adoption of the provisions of ASU 2023-09, and will adopt these amendments for annual disclosures in the Annual Report on Form 10-K for the year ending December 31, 2025.
NOTE 3. BALANCE SHEET COMPONENTS
As further described in Note 1, the Company was in default under its lease, and the Landlord was in the process of pursuing available remedies in advance of the lease term that would otherwise expire in June 2025. In April 2025, the Landlord obtained a default judgment against the Company in the amount of $
Inventories, Net
Inventories, net as of March 31, 2025 and December 31, 2024 consisted of the following:
|
|
March 31, |
|
|
December 31, |
|
||
Raw materials and supplies |
|
$ |
— |
|
|
$ |
|
|
Work-in-process |
|
|
— |
|
|
|
|
|
Finished goods |
|
|
— |
|
|
|
|
|
Inventories, gross |
|
|
— |
|
|
|
|
|
Less: inventory reserve |
|
|
— |
|
|
|
( |
) |
Inventories, net |
|
$ |
— |
|
|
$ |
|
|
During the three months ended March 31, 2025 and 2024, the Company recorded net lower of cost or net realizable value charges of
Property and Equipment, Net
Property and equipment, net as of March 31, 2025 and December 31, 2024 consisted of the following:
|
|
March 31, |
|
|
December 31, |
|
||
Machinery and equipment |
|
$ |
|
|
$ |
|
||
Leasehold improvements |
|
|
|
|
|
|
||
Furniture and office equipment |
|
|
|
|
|
|
||
Computer equipment and software |
|
|
|
|
|
|
||
Property and equipment, gross |
|
|
|
|
|
|
||
Less: accumulated depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
Less: impairment of property and equipment |
|
|
( |
) |
|
|
— |
|
Property and equipment, net |
|
$ |
|
|
$ |
|
||
Depreciation and amortization expense related to property and equipment was $
11
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets as of March 31, 2025 and December 31, 2024 consisted of the following:
|
|
March 31, |
|
|
December 31, |
|
||
Prepaid insurance |
|
$ |
|
|
$ |
|
||
Other prepaid assets |
|
|
|
|
|
|
||
Other current assets |
|
|
|
|
|
|
||
Total prepaid expenses and other current assets |
|
$ |
|
|
$ |
|
||
Accrued Expenses
Accrued expenses as of March 31, 2025 and December 31, 2024 consisted of the following:
|
|
March 31, |
|
|
December 31, |
|
||
|
|
|
|
|
|
|
||
Accrued legal, accounting and professional fees |
|
$ |
|
|
$ |
|
||
Accrued transaction costs related to the reverse recapitalization |
|
|
|
|
|
|
||
Accrued payroll and benefits |
|
|
|
|
|
|
||
Accrued lease-related payables |
|
|
|
|
|
|
||
Accrued taxes payable |
|
|
|
|
|
|
||
Accrued interest |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total accrued expenses |
|
$ |
|
|
$ |
|
||
NOTE 4. FAIR VALUE MEASUREMENTS
Assets and liabilities recorded at fair value on a recurring basis in the balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, as follows:
Level 1: Valuations based on quoted prices for identical assets and liabilities in active markets.
Level 2: Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.
Level 3: Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.
An asset's or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
The Company’s financial instruments that are carried at fair value consist of Level 1 and Level 3 assets and liabilities:
12
The following tables set forth the fair value of the Company’s financial assets and liabilities by level within the fair value hierarchy as of March 31, 2025 and December 31, 2024:
|
|
At March 31, 2025 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Convertible Note Receivable |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||
Total assets |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Junior Note Warrants |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||
Indigo Capital Convertible Notes |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Total liabilities |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||
|
|
At December 31, 2024 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Junior Note Warrants |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||
Convertible note derivative liability (1) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||
Level 3 Financial Assets
Convertible Loan Receivable
The following table sets forth a summary of the changes in fair value of the Company's Convertible Loan Receivable:
|
|
Three Months Ended March 31, |
|
|
|
|
2025 |
|
|
Fair value, beginning balance |
|
$ |
— |
|
Fair value at issuance |
|
|
|
|
|
|
— |
|
|
Fair value, ending balance |
|
$ |
|
|
The aggregate fair value of the Convertible Loan Receivable was estimated using a Monte Carlo simulation based approach, a Level 3 valuation.
|
|
Three Months Ended March 31, |
|
|
2025 |
Convertible Note Receivable |
|
|
Stock price |
£ |
|
Expected term (in years) |
|
|
Expected volatility |
|
|
Risk-free interest rate |
|
|
Expected dividend yield |
|
13
Level 3 Financial Liabilities
Junior Note Warrants
The following table sets forth a summary of the changes in fair value of the Company's Junior Note Warrants issued in November 2023:
|
|
Three Months Ended March 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Fair value, beginning balance |
|
$ |
|
|
$ |
|
||
|
|
( |
) |
|
|
( |
) |
|
Fair value, ending balance |
|
$ |
|
|
$ |
|
||
The aggregate fair value of the Junior Note Warrants was estimated using a Monte Carlo simulation based approach, a Level 3 valuation.
|
|
|
Three Months Ended March 31, |
|||
|
|
|
2025 |
|
|
2024 |
Junior Note Warrants: |
|
|
|
|
|
|
Stock price |
|
$ |
|
$ |
||
Expected term (in years) |
|
|
|
|
||
Expected volatility |
|
|
|
|
||
Risk-free interest rate |
|
|
|
|
||
Expected dividend yield |
|
|
|
|
||
Indigo Capital Convertible Notes
The following table sets forth a summary of the changes in fair value of the Company's Indigo Capital Convertible Notes:
|
|
Three Months Ended March 31, |
|
|
|
|
2025 |
|
|
Fair value, beginning balance |
|
$ |
— |
|
Fair value at issuance |
|
|
|
|
Fair value of debt converted |
|
|
( |
) |
|
|
( |
) |
|
Fair value, ending balance |
|
$ |
|
|
The aggregate fair value of the Indigo Capital Convertible Notes was estimated using a Monte Carlo simulation based approach, a Level 3 valuation.
|
|
Three Months Ended March 31, |
|
|
2025 |
Indigo Capital Convertible Notes: |
|
|
Stock price |
$ |
|
Expected term (in years) |
|
|
Expected volatility |
|
|
Risk-free interest rate |
|
|
Risk-adjusted discount rate |
|
|
Expected dividend yield |
|
August 2024 Convertible Note Derivative Liability
In March 2025, the remaining August 2024 Convertible Notes were purchased by Indigo Capital and subsequently extinguished. For additional information, see Note 8.
The following table sets forth a summary of the changes in fair value of the Company's August 2024 Convertible Note Derivative Liability:
|
|
Three Months Ended March 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Fair value, beginning balance |
|
$ |
|
|
$ |
— |
|
|
Extinguishment of August 2024 Convertible Notes |
|
|
( |
) |
|
|
— |
|
Fair value, ending balance |
|
$ |
— |
|
|
$ |
— |
|
14
NOTE 5. CONVERTIBLE NOTE RECEIVABLE
On March 14, 2025, the Company entered into a convertible facility with capacity of up to $
As of March 31, 2025, $
NOTE 6. COMMITMENTS AND CONTINGENCIES
Operating Lease
The Company leased approximately
As further described in Note 1, the Company was in default under its lease, and the Landlord was in the process of pursuing available remedies in advance of the lease term that would otherwise expire in June 2025. In April 2025, the Landlord obtained a default judgment against the Company in the amount of $
As of March 31, 2025, the Company's ROU lease liability was $
In connection with the default under the lease described above, the Company recorded an impairment to reduce the right-of-use asset to zero of $
Operating lease cost was $
Liqueous Settlement Agreement
In January 2025 and April 2025, in connection with a settlement and mutual release agreement entered into between the Company and Liqueous LP (“Liqueous”) (the "Liqueous Settlement Agreement"), as amended, the parties provided an immediate mutual release of claims and obligations through payments from Liqueous to the Company in an aggregate $
Legal Proceedings
In the normal course of business, the Company may become involved in legal proceedings. The Company will accrue a liability for legal proceedings when it is probable that a liability has been incurred and the amount can be reasonably estimated. Significant judgment is required to determine both probability and the estimated amount. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued.
During the first quarter, the Company was subject to three separate actions seeking default judgments for the alleged failure to pay amounts when due. CFGI, LLC is seeking a total judgment in the amount of $
15
Purchase Commitments
As of March 31, 2025, the Company had $
Related Party Transactions
Ron Nicol, who was the Executive Chairman of the Company’s board of directors through January 2025, paid director and officer insurance premiums of approximately $
In January 2025, the Company issued the TAG Promissory Note to The AvantGarde Group ("TAG"), which is founded and owned by the Company's Executive Chairman, as a replacement of a previously recorded shareholder advance. For additional information, see Note 8, Notes and Convertible Notes Payable.
Trumar Capital LLC Acquisition Agreement
On February 19, 2025, the Company entered into a commitment letter with Trumar Capital LLC ("TCEI") to acquire: (i) a license of certain technology that would allow the Company to expand its existing business within the defense sector; (ii) a controlling interest in a defense-tech company that specializes in the design, production, and outfitting of a diverse range of vehicles, including industrial and military applications, as well as electronic devices for defense and security, advanced telecommunications, and tracking systems; and (iii) a controlling interest in a Software as a Service (SaaS) startup focused on operational resilience. The Company’s Executive Chairperson owns a controlling interest in the SaaS target entity, and as a result, the proposed investment will be negotiated by, and authorized only with approval from, the independent board members, and will be subject to stockholder approval.
The anticipated investments will occur in stages. The first stage, which has been completed, involved the purchase of a
The second stage, which will require both stockholder and regulatory approval, will involve the investment in additional ownership interests, resulting in Nuburu (i) having a controlling interest in the target entities and (ii) issuing Common Stock in excess of
We also agreed to issue
Consummation of the full TCEI acquisition is subject to continued due diligence, receipt of an acceptable valuation from a third-party valuation firm, regulatory approvals, and stockholder consent. The Company concluded that because of these contingencies, it has not assumed the risks and rewards consistent with equity ownership at the time of the initial investment. Consequently, the Company recorded the initial payment as a deposit on the anticipated acquisition of TCEI. Similarly, the Company will not record the contingent liability for the commitment, including the notes, until it is both probable and estimable that the liability has been incurred.
On March 31, 2025, the Company also entered into a Joint Pursuit Agreement with the defense-tech company to allow both parties to jointly develop and market certain defense-related vehicles and services in advance of closing the full TCEI acquisition.
NOTE 7. REVENUE
The Company’s primary revenue-generating activity involves sales of high-powered lasers and related installation services. The Company has sales to customers throughout the U.S., Europe, and Asia. All sales are settled in U.S. dollars.
The following table presents revenue from contracts with customers disaggregated by geography:
|
|
Three Months Ended March 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
United States |
|
$ |
|
|
$ |
|
||
Asia |
|
|
|
|
|
|
||
Europe |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
The following table presents revenue from contracts with customers disaggregated by the timing of revenue recognition:
|
|
Three Months Ended March 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Revenue recognized at a point in time |
|
$ |
|
|
$ |
|
||
Revenue recognized over time |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
16
Contract liabilities consist of customer deposits that are applied to invoices as the performance obligation is performed.
|
|
Accounts Receivable |
|
|
Contract Liabilities |
|
||
January 1, 2024 |
|
$ |
|
|
$ |
|
||
December 31, 2024 |
|
|
|
|
|
|
||
March 31, 2025 |
|
|
|
|
|
|
||
During the three months ended March 31, 2025 and 2024, the Company recognized
NOTE 8. NOTES AND CONVERTIBLE NOTES PAYABLE
As of March 31, 2025 and December 31, 2024, the Company's outstanding debt consisted of the following. Please refer to the remainder of this footnote for more information on the debt issued during the periods presented.
|
|
March 31, |
|
|
December 31, |
|
||
Current portion of notes payable: |
|
|
|
|
|
|
||
Indigo Capital Convertible Notes |
|
$ |
|
|
$ |
— |
|
|
Liqueous Promissory Note |
|
|
|
|
|
|
||
TAG Promissory Note |
|
|
|
|
|
— |
|
|
Junior Notes Issued November 2023 |
|
|
— |
|
|
|
|
|
August 2024 Convertible Notes |
|
|
— |
|
|
|
|
|
Additional August 2024 Convertible Notes |
|
|
— |
|
|
|
|
|
Senior Convertible Notes Issued June 2023 |
|
|
— |
|
|
|
|
|
Unamortized debt discount and deferred financing costs |
|
|
— |
|
|
|
( |
) |
Current portion of notes payable |
|
$ |
|
|
$ |
|
||
Junior Notes Issued November 2023
On November 13, 2023, the Company entered into Note and Warrant Purchase Agreements (the "Junior Note Purchase Agreements") with the lenders identified therein (the "Lenders") providing for (i) zero-interest promissory notes, issued with a
The Junior Notes were junior and secured by the Company's patent portfolio pursuant to a security agreement among the parties (the "Security Agreement"). The terms of the Junior Notes provided that they would mature on the earlier of: (i) the Company closing a credit facility in principal amount of at least $
Refer to Note 10 for the Company's accounting for the Junior Note Warrants. As a result of that accounting, the Notes contain the original issue discount of $
Extinguishments
During the three months ended March 31, 2025, the Company issued
See Foreclosure collateral sale further below in this Note 8 for discussion of the extinguishment of the remaining Junior Notes on March 5, 2025.
17
Related Parties
The table below summarizes the outstanding principal amount of the Junior Notes to related parties:
Noteholder |
|
March 31, |
|
|
December 31, |
|
||
David Seldin(1) |
|
$ |
— |
|
|
$ |
|
|
Eunomia, LP(2) |
|
|
— |
|
|
|
|
|
Total Junior Notes - related parties |
|
$ |
— |
|
|
$ |
|
|
Junior Notes Issued August 2024 (the "August 2024 Convertible Notes")
On August 6, 2024 and August 19, 2024, the Company entered into a subordinated convertible note agreement (the "August 2024 Convertible Note Agreement") with Esousa Group Holdings LLC ("Esousa") for the sale of convertible notes (the "August 2024 Convertible Notes”) in the aggregate principal amount of $
The Company determined that the conversion and share-settled redemption features, as well as the automatic increase in interest rate upon an event of default feature, of the August 2024 Convertible Notes were embedded derivatives that were required to be bifurcated from the host instrument and accounted for as embedded derivative instruments, which the Company compounded (the "August 2024 Convertible Note Derivative Liability"). As the Company did not elect the fair value option for the August 2024 Convertible Notes, the proceeds from the August 2024 Convertible Notes were allocated to the initial fair value of the August 2024 Convertible Note Derivative Liability, which was determined to be $
The Company incurred $
Concurrent with the above, Esousa also purchased $
The August 2024 Convertible Notes and Additional August 2024 Convertible Notes were unsecured and subordinated to the Company’s outstanding Senior Convertible Notes and Junior Notes in right of payment, whether in respect to payment or redemptions, interest, damages, upon liquidation or dissolution or otherwise.
Extinguishments
During the three months ended March 31, 2025, the Company issued
In March 2025, the remaining August 2024 Convertible Notes were purchased by Indigo Capital and subsequently extinguished, as further described below. The transaction resulted in a loss on extinguishment of debt of $
Senior Convertible Notes Issued June 2023
On June 12, 2023 and June 16, 2023, the Company entered into Note and Warrant Purchase Agreements (the “Senior Convertible Note Purchase Agreements”) with certain investors (each, an “Investor”) for the sale of (i) convertible promissory notes (“Senior Convertible Notes”) in the aggregate principal amount of $
18
The Senior Convertible Notes were senior, secured obligations of the Company, which became secured by the Company's patent portfolio per the Security Agreement as of November 2023, bore interest at the rate of
As further described above, during August 2024, $
On December 16, 2024, the Lead Investor (as defined in the agreement governing the Senior Convertible Notes) issued a notice of default and acceleration, as well as a demand for payment, to the Company as a result of the failure of the Company to make certain required repayments under existing debt obligations, which constituted an event of default under the terms of the Senior Convertible Notes. The obligations under the Senior Convertible Notes were extinguished in connection with the Foreclosure (defined below).
Extinguishments
See Foreclosure collateral sale further below in this Note 8 for discussion of the extinguishment of the remaining Senior Convertible Notes on March 5, 2025.
Related Parties
The table below summarizes the outstanding principal amount of the Senior Convertible Notes to related parties:
Investor |
|
March 31, |
|
|
December 31, |
|
||
Wilson-Garling 2023 Family Trust(1) |
|
$ |
— |
|
|
$ |
|
|
Eunomia, LP(2) |
|
|
— |
|
|
|
|
|
Curtis N Maas Revocable Trust(3) |
|
|
— |
|
|
|
|
|
Total Senior Convertible Notes - related parties |
|
$ |
— |
|
|
$ |
|
|
Foreclosure Collateral Sale
On March 5, 2025, as part of the foreclosure process initiated by the Lead Investor (the “Foreclosure”), the lenders holding the outstanding Senior Convertible Notes held an auction for the sale of collateral securing the Company’s repayment obligations, which resulted in such lenders taking possession of such collateral in exchange for a full discharge and extinguishment of the Company’s $
Liqueous Promissory Note
In October 2024, the Company entered into an unsecured promissory note (the "Liqueous Promissory Note") with Liqueous for a principal amount of $
In February 2025, in connection with the Liqueous Settlement Agreement, as amended, the Company agreed to issue
19
TAG Promissory Note (Related-Party)
In January 2025, the Company issued a promissory note in a principal amount of $
Indigo Capital Convertible Notes
On March 3, 2025, the Company entered into the following transactions:
Issuances of common stock on conversion of the Indigo Capital Convertible Notes are limited to an amount equal to
The transaction documents contain customary representations, warranties, and covenants, and the notes include customary events of default including, but not limited to, failure to pay amounts due when required, default in covenants, bankruptcy events, and suspension or delisting from trading of the common stock on an eligible exchange. The Company is also obligated to register for resale the shares issuable upon conversion of the notes.
Certain conversion features of the Indigo Capital Convertible Notes would typically be considered derivatives that would require bifurcation. The Indigo Capital Convertible Notes are recorded at fair value, and the changes in the fair value are recorded within the condensed consolidated statement of operations. The excess of the initial fair value of $
In March 2025, Indigo Capital converted $
NOTE 9. CONVERTIBLE PREFERRED STOCK
Series A Preferred Stock
The Company is authorized to issue
Ranking
The Company’s Preferred Stock ranks senior to the Company’s Common Stock with respect to rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company.
Dividends
Holders of the Company’s Preferred Stock participate, on an as-converted basis (without regard to any conversion limitations) in all dividends paid to the holders of the Company’s Common Stock.
Conversion Rights
Prior to January 31, 2025, as further described under Redemption below, the Preferred Stock was convertible at any time into Common Stock at a conversion price equal to $
Mandatory Conversion
If the VWAP is greater than
20
Voting Rights
The holders of Preferred Stock are not entitled to vote at or receive notice of any meeting of stockholders, except the holders of Preferred Stock are entitled to certain consent rights on matters related to (i) the creation or authorization of the creation of any equity or debt securities of the Company that rank senior or equal to certain rights of the Preferred Stock and (ii) the authorization of any adverse change to the powers, preferences, or special rights of the Preferred Stock set forth in the Company’s Certificate of Incorporation or Bylaws, and shall have voting rights as required by law.
Redemption
On the second anniversary of the Closing Date, or January 31, 2025 (the “Test Date”), the Company is obligated to redeem the maximum portion of the Preferred Stock permitted by law in cash at an amount equal to the Original Issuance Price as of such date if the Conversion Price exceeds the VWAP. If, on the Test Date, the Conversion Price is equal to or less than the VWAP, the Company must convert all shares of Preferred Stock then outstanding into shares of the Company’s Common Stock at the then applicable Conversion Price. Notwithstanding the foregoing, the Company shall not be required to redeem any shares of Preferred Stock to the extent the Company does not have legally available funds to effect such redemption. The mandatory redemption and conversion provisions described herein are further subject to certain limitations detailed in the Certificate of Designations. As a result of such redemption feature, the Company recorded the Preferred Stock at its redemption value and classified the Preferred Stock as mezzanine equity on the consolidated balance sheet through January 31, 2025. As the Conversion Price of the Preferred Stock exceeded the VWAP on the Test Date, the Company was obligated to redeem the Preferred Stock beginning at that time and, as such, reclassified such Preferred Stock from mezzanine equity to a short-term liability on January 31, 2025. The preferred stock short-term liability was initially recorded at its fair value on January 31, 2025 of $
NOTE 10. WARRANTS
The following table provides a summary of the number of the Company's outstanding warrants:
|
|
March 31, |
|
|
December 31, |
|
||||
Liability classified warrants: |
|
|
|
|
|
|
|
|
||
Junior Note Warrants |
|
|
|
|
|
|
|
|
||
Public Warrants |
|
|
|
|
|
|
|
|
||
Total liability-classified warrants outstanding |
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
Equity classified warrants: |
|
|
|
|
|
|
|
|
||
June 2023 Senior Note Warrants |
|
|
|
|
|
|
|
|
||
Pre-Funded Warrants |
|
|
|
|
|
|
|
|
||
August 2024 Warrants Issued with Junior Notes |
|
|
|
|
|
|
|
|
||
Total equity-classified warrants outstanding |
|
|
|
|
|
|
|
|
||
Liability Classified Warrants
November 2023 Junior Note Warrants
In connection with the Junior Notes discussed in Note 8 - Notes and Convertible Notes Payable, the Company issued the Junior Note Warrants to purchase up to
Based on the terms of the Junior Note Purchase Agreements, the Junior Note Warrants were evaluated under FASB ASC 815-40 - Derivatives and Hedging-Contracts in Entity's Own Equity ("ASC 815-40") and the Company concluded they did not initially meet the criteria to be classified in stockholders' equity (deficit). Specifically, there were contingent exercise provisions and settlement provisions that existed, as described above, where the number of shares available under the Junior Note Warrants may be adjusted. Because the number of outstanding common shares was not a fair value input to a fixed-for-fixed model, the Junior Note Warrants are treated as liabilities and are remeasured at each reporting date. The proceeds of $
21
Public Warrants
In connection with the closing of the Business Combination, Nuburu assumed the
Each whole Public Warrant entitles the registered holder to purchase one share of Common Stock at a price of $
Redemptions of Public Warrants when the price of Common Stock equals or exceeds $
If and when the Public Warrants become redeemable by the Company, it may exercise its redemption right even if the Company is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
Redemption of Public Warrants when the price per share of Common Stock equals or exceeds $
Equity Classified Common Stock Warrants
June 2023 Senior Note Warrants
In connection with the issuance of Senior Convertible Notes discussed in Note 8 - Notes and Convertible Notes Payable, the Company issued the Senior Note Warrants to purchase up to
As the Senior Note Warrants were part of a bundled transaction, the gross proceeds from the issuance of $
|
|
|
Upon Issuance |
Common Stock Warrants: |
|
|
|
Expected term (in years) |
|
|
|
Expected volatility |
|
|
|
Risk-free interest rate |
|
|
|
Expected dividend yield |
|
|
The allocated proceeds from the Senior Note Warrants of $
22
Pre-Funded Warrants
On May 1, 2024, the Company entered into a Pre-Funded Warrant Purchase Program (the “Program”) with strategic investors, pursuant to which from time-to-time the Company could sell and the investors could acquire pre-funded warrants, up to a total purchase price to the Company equal to $
Pre-Funded Warrants Modification— In February 2025, in connection with the Liqueous Settlement Agreement, as amended, the Company agreed to (i) modify
The Company accounted for the Pre-Funded Warrants Modification in accordance with ASC 815, Derivatives and Hedging, where the effect of a modification shall be measured as the difference between the fair value of the modified warrant over and the fair value of the original warrant immediately before its terms are modified, with each measured on the modification date. As a result of the Pre-Funded Warrants Modification, which was not contemplated as a result of an equity or debt financing, but rather, as a settlement of any claims between the parties related to non-performance of obligations under certain previous agreements executed between the Company and Liqueous, the Company recorded (i) an increase to additional paid-in capital of $
In March 2025, the
August 2024 Warrants Issued with Junior Notes
As discussed in Note 8, in connection with the issuance of the August 2024 Convertible Notes, the Company issued an aggregate
NOTE 11. STOCK-BASED COMPENSATION
As of March 31, 2025, the Company had an active stock-based incentive compensation plan and an employee stock purchase plan: the 2022 Equity Incentive Plan (the “2022 Plan”) and the 2022 Employee Stock Purchase Plan (the “ESPP”). All new equity compensation grants are issued under these two plans; however, outstanding awards previously issued under inactive plans will continue to vest and remain exercisable in accordance with the terms of the respective plans.
The 2022 Plan provides for the grant of stock and stock-based awards including stock options, restricted stock, restricted stock units, performance awards, and stock appreciation rights. As of March 31, 2025, there were approximately
23
Stock-Based Compensation Expense
Total stock-based compensation expense recognized in the Company’s condensed consolidated statements of operations is classified as follows:
|
|
Three Months Ended March 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Cost of revenue |
|
$ |
|
|
$ |
|
||
Research and development |
|
|
|
|
|
|
||
Selling and marketing |
|
|
|
|
|
|
||
General and administrative |
|
|
|
|
|
|
||
Total stock-based compensation expense |
|
$ |
|
|
$ |
|
||
The Company’s stock-based compensation expense is based on the value of the portion of stock-based payment awards that are ultimately expected to vest. During the three months ended March 31, 2025 and 2024, stock-based compensation relating to stock-based awards granted to consultants was $
Restricted Stock Units
The Company grants Restricted Stock Units ("RSUs") to its employees for their services with a liquidity event requirement. The RSUs granted to employees vest over a period of time from the grant date and are subject to the participants continuing service to the Company over the period.
|
|
RSUs |
|
|||||
|
|
Number of Shares |
|
|
Weighted Average Grant Date Fair Value |
|
||
Unvested at December 31, 2024 |
|
|
|
|
$ |
|
||
RSUs vested (1) |
|
|
( |
) |
|
$ |
|
|
RSUs forfeited |
|
|
( |
) |
|
$ |
|
|
Unvested at March 31, 2025 |
|
|
|
|
$ |
|
||
The total grant date fair value of RSUs vested was $
As of March 31, 2025, total unrecognized stock-based compensation costs related to RSUs were $
Stock Options
The Company's outstanding stock options generally expire
|
|
Number of Stock Options Outstanding |
|
|
Weighted-Average Exercise Price |
|
|
Weighted-Average Remaining Contractual Life (Years) |
|
|
Aggregate Intrinsic Value |
|
||||
Options outstanding at December 31, 2024 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Options cancelled or forfeited |
|
|
( |
) |
|
$ |
|
|
|
|
|
|
|
|||
Options outstanding at March 31, 2025 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Options exercisable at March 31, 2025 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Options vested and expected to vest at March 31, 2025 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
The weighted-average grant date fair value of options granted to employees and consultants was and $
As of March 31, 2025, total unrecognized stock-based compensation cost related to stock options was $
24
The Company estimates the fair value of the options utilizing the Black-Scholes option pricing model, which is subjective and dependent upon several variables, including expected option term, expected volatility of the Company’s share price over the expected term, expected risk-free interest rate over the expected option term, and expected dividend yield rate over the expected option term, and actual forfeiture rates.
|
|
Three Months Ended March 31, |
|
|||
|
|
2025 |
|
2024 |
|
|
Expected term (in years) |
|
N/A |
|
|
|
|
Expected volatility |
|
N/A |
|
|
||
Risk-free interest rate |
|
N/A |
|
|
||
Expected dividend yield |
|
N/A |
|
|
||
Common Stock Issued for Services
During the three months ended March 31, 2025, the Company entered into arrangements with non-employee consultants for services to be provided in exchange for the issuance of shares of the Company's common stock. As of March 31, 2025, the Company was required to but had not yet issued a total of
Stock-based compensation expense for the equity-classified awards was recognized based on the fair value of the Company’s common stock on the date of grant over the requisite service period. For the three months ended March 31, 2025, a total of $
The liability-classified awards represented compensation for services to be provided over the term of the agreements and were measured based on a fixed monetary value to be paid to the non-employee consultants which will be settled by the issuance of a variable number of shares of common stock. As of and for three months ended March 31, 2025, the Company recorded stock-based compensation expense, along with a corresponding liability of $
NOTE 12. INCOME TAX
Due to its current operating losses, the Company recorded
Due to the Company’s history of cumulative losses and after considering all the available objective evidence, management concluded that it is not more likely than not that all of the Company’s net deferred tax assets will be realized in the future. Accordingly, the Company’s deferred tax assets, which include net operating loss (“NOL”) carryforwards and tax credits related primarily to research and development, continue to be subject to a valuation allowance as of March 31, 2025. The Company expects to continue to maintain a full valuation allowance until there is sufficient evidence to support recoverability of its deferred tax assets.
Utilization of the NOL carryforwards and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by Section 382 and Section 383 of the Internal Revenue Code of 1986, as amended, and similar state provisions. Generally, in addition to certain entity reorganizations, the limitation applies when one or more "5-percent stockholders" increase their ownership, in the aggregate, by more than
25
NOTE 13. NET LOSS PER SHARE
Diluted earnings per share ("EPS") includes the dilutive effect of Common Stock equivalents and is computed using the weighted-average number of Common Stock and Common Stock equivalents outstanding during the reporting period. Diluted EPS for the three months ended March 31, 2025 and 2024 excluded Common Stock equivalents because the effect of their inclusion would be anti-dilutive or would decrease the reported loss per share.
|
|
Three Months Ended March 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Stock options outstanding |
|
|
|
|
|
|
||
Junior Note Warrants |
|
|
|
|
|
|
||
Public Warrants |
|
|
|
|
|
|
||
June 2023 Senior Note Warrants |
|
|
|
|
|
|
||
August 2024 Warrants Issued with Junior Notes |
|
|
|
|
|
— |
|
|
Unvested restricted stock units |
|
|
|
|
|
|
||
If-converted Common Stock from Series A Preferred Stock(1) |
|
|
|
|
|
|
||
If-converted Common Stock from convertible notes |
|
|
— |
|
|
|
|
|
Total |
|
|
|
|
|
|
||
NOTE 14. SEGMENT REPORTING
Operating segments are defined as components of an entity about which discrete financial information is evaluated regularly by the Chief Operating Decision Maker ("CODM") in deciding how to allocate resources and assess performance. The Company operates and manages its business as
The following table shows a reconciliation of the Company’s net loss, including the significant expense categories regularly provided to and reviewed by the CODM, as computed under U.S. GAAP, to the Company’s total net loss in the condensed consolidated statements of operations:
|
|
Three Months Ended March 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
|
|
|
|
|
|
|
||
Revenue |
|
$ |
|
|
$ |
|
||
Cost of revenue: |
|
|
|
|
|
|
||
Materials |
|
|
|
|
|
|
||
Direct labor |
|
|
|
|
|
|
||
Direct job costs |
|
|
( |
) |
|
|
|
|
Overhead |
|
|
|
|
|
|
||
Total cost of revenue |
|
|
|
|
|
|
||
Gross margin |
|
|
( |
) |
|
|
( |
) |
Operating expenses: |
|
|
|
|
|
|
||
Research and development |
|
|
|
|
|
|
||
Selling and marketing |
|
|
|
|
|
|
||
General and administrative |
|
|
|
|
|
|
||
Total operating expenses |
|
|
|
|
|
|
||
Other segment items (1) |
|
|
( |
) |
|
|
( |
) |
Segment net loss |
|
$ |
( |
) |
|
$ |
( |
) |
(1)
26
NOTE 15. SUBSEQUENT EVENTS
May 2025 Financing Transactions
The Company entered into a Business Loan and Security Agreement with Agile Capital Funding, LLC and its affiliates (“Agile”), dated as of May 12, 2025, pursuant to which, in exchange for a capital infusion of $
The Company entered into a Securities Purchase Agreement with 1800 Diagonal Lending LLC (“Diagonal”), dated as of May 13, 2025, pursuant to which, in exchange for a capital infusion of $
The Company entered into a Securities Purchase Agreement with Boot Capital LLC (“Boot”), dated as of May 13, 2025, pursuant to which, in exchange for a capital infusion of $
The Notes are subordinate to the currently outstanding Series A Preferred Stock, solely with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution, or winding up of the Company. Issuances of common stock on conversion of the Diagonal Note and the Boot Note are limited to an amount equal to
The foregoing transaction documents contain customary representations, warranties, and covenants, including customary events of default including, but not limited to, failure to pay amounts due when required, default in covenants, and bankruptcy events.
NYSE Regulation Notice of Noncompliance
On April 29, 2025, the Company received a Notice of Noncompliance (the “Notice”) from NYSE Regulation indicating that the Company was not in compliance with Section 1003(a)(i) of the NYSE American LLC Company Guide (the “Company Guide”), which requires a company to maintain stockholders’ equity of $
As required by the Company Guide, the Company will submit a detailed plan by May 29, 2025, advising of actions it has taken or will take to regain compliance with the continued listing standards by the compliance deadline of October 29, 2026. If NYSE Regulation determines to accept the plan, the Company will be subject to periodic reviews, including quarterly monitoring for compliance. If the plan is not accepted, or the Company does not make progress under the plan during the plan period, NYSE may commence delisting proceedings. However, the Company is entitled to appeal a staff delisting determination in accordance with the Company Guide.
The Company believes that, upon consummation of certain of the transactions that it has recently announced, it will be able to regain compliance. However, such transactions are subject to regulatory approvals, stockholder approval, and other closing conditions and, as a result, may not be consummated. Even if consummated, such transactions may not achieve the anticipated results or benefits to the Company.
April 2025 Indigo Transactions
The Company entered into the following transactions on April 22, 2025:
Both notes are subordinate to the currently outstanding Series A Preferred Stock, solely with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company.
Issuances of common stock on conversion of such notes are limited to an amount equal to
The transaction documents contain customary representations, warranties, and covenants, and the notes include customary events of default including, but not limited to, failure to pay amounts due when required, default in covenants, bankruptcy events, and suspension or delisting from trading of the common stock on an eligible exchange. The Company is also obligated to register for resale the shares issuable upon conversion of the notes.
27
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The interim financial statements included in this Quarterly Report and this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the financial statements and notes thereto for the year ended December 31, 2024, and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, contained in the Annual Report filed with the SEC on April 15, 2025, as subsequently amended by the Form 10-K/A filed with the SEC on April 30, 2025 and the Form 10-K/A filed with the SEC on May 20, 2025 (as amended, the "Annual Report"). In addition to historical information, this discussion and analysis contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are subject to risks and uncertainties, including those under “Risk Factors” in this Quarterly Report and our Annual Report that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements.
Unless otherwise indicated, references in this section to “Nuburu,” “we,” “us,” “our” and the “Company” refer to Nuburu, Inc. and its consolidated subsidiary, Nuburu Subsidiary, Inc.
The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
As we have disclosed previously, we have not yet achieved commercialization and expect continued losses until we can do so. We must rely on capital from investors to support our operations. During 2024 and early 2025, management negotiated several funding agreements with multiple investors. Certain of these investors have not fully performed their obligations under such agreements and the Company’s operations have consumed more cash than it has been able to generate or raise. As a result, the Company has not received the funding necessary to maintain operations or implement its business plan. Given the lack of funding, management initiated measures designed to reduce costs, which included implementing a furlough of employees. In response to the furloughs and financing challenges, several key employees have resigned entirely.
We generated total revenue of nil and $93,549 and had net losses of $14,020,050 and $5,705,098 during the three months ended March 31, 2025 and 2024, respectively. The operating loss for the three months ended March 31, 2025 included $10,398,050 of non-cash interest expense recognized on remeasurement of preferred stock liability. For additional information on this interest expense see Note 9 to the condensed consolidated financial statements.
We expect to incur significant expenses and operating losses for the foreseeable future, as we:
Accordingly, we may seek to fund our operations through public or private equity financings, debt financings or other sources. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. Our failure to raise capital or enter into such other arrangements as and when needed would have a negative impact on our financial condition.
Recent Developments and Financing Transactions
In its Notification of Late Filing on Form 12b-25 filed on May 16, 2025, the Company indicated that it may need to issue a restatement of previously issued financial information, and such previously issued financial statements could no longer be relied upon, to account for expenses and general and administrative expenses relating to: (i) $64,800 related to finder fee payments; and (ii) $500,000 related to an engagement letter executed by the Company for professional services. Subsequently, it was determined that a restatement would not be required and these matters had been appropriately considered and accounted for in its previously issued financial statements and such previously issued financial statements can be relied upon.
Inventory, Property and Equipment and Right-of-Use Asset Impairment
The Company leased approximately 27,900 square feet of office space in Centennial, Colorado, with a lease term through June 2025. Consistent with the Company’s previously disclosed business plan for its future business, the Company does not believe that assets or equipment that remain on this leased property are critical to its new business strategy, given that it will not be conducting full-scale manufacturing or laser design or development that would involve the prior patent portfolio, which was transferred to its former secured lenders. The Company is pursuing a lease for a replacement facility that is more appropriate for the Company’s new business strategy, which will involve laser development in different verticals and outsourcing of manufacturing and inventory management. However, entering into a new lease and appropriately equipping a new facility is costly and time-consuming and may cause delays in the Company’s progress with respect to the business plan focused on building a stable foundation for its future business.
As of March 31, 2025, the Company was in default under the lease, and the Landlord was in the process of pursuing available remedies in advance of the lease term that would otherwise expire in June 2025. In April 2025, the Landlord obtained a default judgment against the Company in the amount of $409,278. The Landlord may exercise rights under the lease agreement and applicable law with respect to a lessee in default and such lessee’s assets located on the premises, including the removal and disposal of inventories and property and equipment remaining on the property. As such, as of March 31, 2025, the Company determined that, based on the assumption that the Landlord would fully exercise its rights with respect to all assets remaining on the premises, (i) it no longer had control over the inventory and that recovery was not probable, therefore, inventory was written down to a net realizable value of zero, (ii) the carrying value of its property and equipment, all of which was at the leased location, was no longer recoverable, and the assets were written down to a net book value of $0, and (iii) the right-of-use asset associated with this lease was fully impaired, as the Company could no longer use the leased premises, each of which is recorded within loss on impairment of inventories, property and equipment and operating lease right-of-use asset on the condensed consolidated statement of operations for the three months ended March 31, 2025.
28
NYSE Regulation Notice of Noncompliance
On April 29, 2025, the Company received a Notice of Noncompliance (the “Notice”) from NYSE Regulation indicating that the Company was not in compliance with Section 1003(a)(i) of the NYSE American LLC Company Guide (the “Company Guide”), which requires a company to maintain stockholders’ equity of $2.0 million or more if it has reported losses from continuing operations or net losses in two of its three most recent fiscal years. The Notice has no immediate effect on the listing or trading of the Company’s securities and the Company’s common stock will continue to trade on the NYSE American under the symbol “BURU” with the designation of “.BC” to indicate that the Company is not in compliance with the NYSE American’s continued listing standards.
As required by the Company Guide, the Company will submit a detailed plan by May 29, 2025, advising of actions it has taken or will take to regain compliance with the continued listing standards by the compliance deadline of October 29, 2026. If NYSE Regulation determines to accept the plan, the Company will be subject to periodic reviews, including quarterly monitoring for compliance. If the plan is not accepted, or the Company does not make progress under the plan during the plan period, NYSE may commence delisting proceedings. However, the Company is entitled to appeal a staff delisting determination in accordance with the Company Guide.
The Company believes that, upon consummation of certain of the transactions that it has recently announced, it will be able to regain compliance. However, such transactions are subject to regulatory approvals, stockholder approval, and other closing conditions and, as a result, may not be consummated. Even if consummated, such transactions may not achieve the anticipated results or benefits to the Company.
NYSE American Delisting and Reinstatement
On June 13, 2024, NYSE American LLC announced that it had determined to commence proceedings to delist our Common Stock. Trading of our stock on NYSE American was immediately suspended and we commenced trading on the over-the-counter market.
On July 29, 2024, we received a notification from NYSE American informing us that we had resolved the continued listing deficiency with respect to low selling price as described in Section 1003(f)(v) of the NYSE American Company Guide. As a result, the staff of NYSE Regulation withdrew its delisting determination and lifted the trading suspension on Nuburu’s Common Stock. The Common Stock re-commenced trading on NYSE American on Friday, August 2, 2024 under the symbol “BURU.”
Reverse Stock Split
On February 22, 2024, we held a special meeting of stockholders where stockholders approved proposals to authorize the Company to effect a reverse stock split of the Company's issued and outstanding Common Stock within a range from 1-for 30 to 1-for-75, with the exact ratio of the reverse stock split to be determined by the Company's board of directors. On July 23, 2024, the Company effected a 1-for-40 reverse stock split (the "Reverse Stock Split").
SFE EI Senior Note Settlement Agreement and Company Funding
On January 13, 2025, the Company entered into a letter agreement with S.F.E. Equity Investments SARL (“SFE EI”), pursuant to which SFE EI agreed to engage in efforts and commit capital to finance the operations of the Company for the next twelve months pursuant to the Transformation Plan. In connection with the Transformation Plan, the Company agreed to certain governance changes.
Trumar Commitment Letter
On February 19, 2025, the Company entered into a commitment letter with Trumar Capital LLC ("TCEI") to acquire: (i) a license of certain technology that would allow the Company to expand its existing business within the defense sector; (ii) a controlling interest in a defense-tech company that specializes in the design, production, and outfitting of a diverse range of vehicles, including industrial and military applications, as well as electronic devices for defense and security, advanced telecommunications, and tracking systems; and (iii) a controlling interest in a Software as a Service (SaaS) startup focused on operational resilience.
The anticipated investments will occur in stages. The first stage, which has been completed, involved the purchase of a 20% ownership interest in TCEI for an aggregate price of $1.5 million in cash plus $23.5 million in notes.
On March 31, 2025, the Company also entered into a Joint Pursuit Agreement with the defense-tech company to allow both parties to jointly develop and market certain defense-related vehicles and services in advance of closing the full TCEI acquisition.
For additional information, see Note 6 to the condensed consolidated financial statements.
Convertible Note Receivable
On March 14, 2025, the Company entered into a convertible facility with capacity of up to $5.15 million (the "Convertible Note Receivable") with Supply@ME Capital Plc (“SYME”), a fintech platform focused on Inventory Monetisation© solutions for manufacturing and trading companies, of which $150,000 was funded under the Convertible Note Receivable as of March 31, 2025, with full funding expected to occur by the end of the third quarter of 2025. For additional information, see Note 5 to the condensed consolidated financial statements.
Liqueous Settlement Agreement
In January 2025 and April 2025, in connection with a settlement and mutual release agreement entered into between the Company and Liqueous LP (“Liqueous”) (the "Liqueous Settlement Agreement"), as amended, the parties provided an immediate mutual release of claims and obligations through payments from Liqueous to the Company in an aggregate $1,450,000, of which $1,000,000 was paid during the first quarter of 2025. For additional information, see Note 6 to the condensed consolidated financial statements.
In February 2025, in connection with the Liqueous Settlement Agreement, as amended, the Company agreed to (i) modify 665,410 outstanding equity-classified Pre-Funded Warrants issued in connection with its Pre-Funded Warrant Purchase Program during 2024, resulting in the issuance of 3,647,416 equity-classified pre-funded warrants outstanding immediately after the modification exercisable into common stock and (ii) modify the remaining 171,706 outstanding
29
equity-classified Pre-Funded Warrants issued in connection with the Program during 2024, resulting in 9,360,888 pre-funded warrants outstanding immediately after the modification that were concurrently exercised into 9,360,888 common shares of the Company for no additional cash consideration, as the modified pre-funded warrants had a nominal exercise price (the "Pre-Funded Warrants Modification"). For additional information, see Note 10 to the condensed consolidated financial statements.
In March 2025, the 3,647,416 outstanding warrants were exercised into 3,647,416 shares of common stock for no additional cash consideration, as the pre-funded warrants had a nominal exercise price.
In February 2025, in connection with the Liqueous Settlement Agreement, as amended, the Company agreed to issue 6,406,225 pre-funded warrants exercisable into common stock, which included a nominal exercise price, to extinguish the Liqueous Promissory Note, as defined and described in Note 8 to the condensed consolidated financial statements. As the pre-funded warrants were not yet issued as of March 31, 2025, the Company continued to remain legally obligated under the terms of the Liqueous Promissory Note. In April 2025, through an additional amendment to the Liqueous Settlement Agreement, the Company settled the Liqueous Promissory Note through the issuance of 9,090,959 shares of common stock.
April 2025 Indigo Transactions
The Company entered into the following transactions on April 22, 2025:
For additional information, see Note 15 to the condensed consolidated financial statements.
May 2025 Financing Transactions
The Company entered into a Business Loan and Security Agreement with Agile Capital Funding, LLC and its affiliates (“Agile”), dated as of May 12, 2025, pursuant to which, in exchange for a capital infusion of $500,000, the Company issued to Agile a $525,000 face amount secured promissory note (the “Agile Note”). The Agile Note requires weekly repayments of $27,000 through November 2025, totaling $756,000. The Agile Note is secured by the Company’s cash and deposit accounts.
The Company entered into a Securities Purchase Agreement with 1800 Diagonal Lending LLC (“Diagonal”), dated as of May 13, 2025, pursuant to which, in exchange for a capital infusion of $188,000, the Company issued to Diagonal a $227,700 face amount convertible promissory note (the “Diagonal Note”). The Diagonal Note bears interest at 10% and has a maturity date of February 28, 2026. Beginning 180 days after the issuance date, the note may be converted into common stock for a conversion price equal to a discount of 25% to the lowest trading price during the ten days prior to the conversion date. Diagonal also agreed to provide additional tranches of financing during the next twelve months, up to an aggregate of $2,275,000, subject to further agreement between the Company and Diagonal.
The Company entered into a Securities Purchase Agreement with Boot Capital LLC (“Boot”), dated as of May 13, 2025, pursuant to which, in exchange for a capital infusion of $94,000, the Company issued to Boot a $110,000 face amount convertible promissory note (the “Boot Note” and collectively with the Agile Note and Diagonal Note, the “May 2025 Notes”). The Boot Note bears interest at 10% and has a maturity date of February 28, 2026. Beginning 180 days after the issuance date, the note may be converted into common stock for a conversion price equal to a discount of 25% to the lowest trading price during the ten days prior to the conversion date.
The May 2025 Notes are subordinate to the currently outstanding Series A Preferred Stock, solely with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution, or winding up of the Company. Issuances of common stock on conversion of the Diagonal Note and the Boot Note are limited to an amount equal to 19.9% of the outstanding common stock as of the date of execution, until such time as the transaction is approved by stockholders.
The foregoing transaction documents contain customary representations, warranties, and covenants, including customary events of default including, but not limited to, failure to pay amounts due when required, default in covenants, and bankruptcy events. For additional information, see Note 16 to the condensed consolidated financial statements.
Note Extinguishments— Junior Notes
During the three months ended March 31, 2025, the Company issued 9,186,581 shares to noteholders to extinguish an aggregate $411,865 of principal and accrued interest under the Junior Notes. The reacquisition value of the debt was higher than the related carrying value, and thus resulted in an aggregate net loss on extinguishment of debt of $1,174,519 recorded in the condensed consolidated statement of operations.
Note Extinguishments— August 2024 Convertible Notes
During the three months ended March 31, 2025, the Company issued 1,878,620 shares to Esousa to extinguish an aggregate $389,375 of principal and accrued interest under the August 2024 Convertible Notes. The reacquisition value of the debt was higher than the related carrying value, and thus resulted in an aggregate net loss on extinguishment of debt of $480,399 recorded in the condensed consolidated statement of operations.
30
Note Extinguishments— Foreclosure Collateral Sale
On March 5, 2025, as part of the Foreclosure, the lenders holding the outstanding Senior Convertible Notes held an auction for the sale of collateral securing the Company’s repayment obligations, which resulted in such lenders taking possession of such collateral in exchange for a full discharge and extinguishment of the Company’s $8,961,872 of indebtedness with respect to the Junior Notes and Senior Convertible Notes, as well as a loss on extinguishment of the Senior Convertible Notes of $1,682,641, of which $27,139 of this loss relates to related parties. The extinguishment of the Junior Notes did not result in a gain or loss on extinguishment as the proceeds deemed to be received by the holders of the Junior Notes in connection with the Foreclosure approximated the carrying value of the Junior Notes and all issuance costs were fully amortized. The loss on extinguishment of the Senior Convertible Notes is included within loss on extinguishment of debt within the condensed consolidated statement of operations for the three months ended March 31, 2025.
Indigo Capital Convertible Notes
On March 3, 2025, the Company entered into the following transactions:
Issuances of common stock on conversion of such notes are limited to an amount equal to 19.9% of the outstanding common stock as of the date of execution, until such time as the transaction is approved by stockholders.
The transaction documents contain customary representations, warranties, and covenants, and the notes include customary events of default including, but not limited to, failure to pay amounts due when required, default in covenants, bankruptcy events, and suspension or delisting from trading of the common stock on an eligible exchange. The Company is also obligated to register for resale the shares issuable upon conversion of the notes.
Master Agreement with Liqueous
On October 1, 2024, the Company entered into the Master Agreement with Liqueous pursuant to which, the Company and Liqueous established a strategic financing framework for short-term and long-term financing for the Company. The Master Agreement provided for: (i) an immediate capital infusion from Liqueous of $3.0 million at the current market price, (ii) subsequent weekly capital infusions of $1,250,000 at market price until an additional $10 million has been invested; (iii) the acquisition and conversion of certain outstanding notes, with each $1.00 of debt converted into $2.00 of common stock at market price; (iv) an adjustment to current market price of certain outstanding pre-funded warrants held by Liqueous having a current cash value of approximately $2.2 million; and (v) the implementation of a $50 million equity line of credit ("ELOC") pursuant to which the Company may require Liqueous to purchase common stock from time-to-time in the amounts and for the prices determined in accordance with the terms of the ELOC. Following the Liqueous Settlement Agreement, as amended, the ELOC will not be implemented and no additional equity will be sold to Liqueous, other than as set forth in the Liqueous Settlement Agreement, as amended.
Components of Statements of Operations
Revenue
Revenue consists of revenue recognized from sales and installation services of high-powered lasers. We have customers in the United States, Europe and Asia. In all sales arrangements, revenue is recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those goods or services.
Cost of Revenue
Cost of revenue primarily consists of the cost of materials, overhead and employee compensation associated with the manufacturing of our high-powered lasers. Product cost also includes lower of cost or net realizable value inventory (“LCNRV”) adjustments if the carrying value of the inventory is greater than its net realizable value as well as adjustments for excess or obsolete inventory.
Operating Expenses
As described above, during 2024, management initiated measures designed to reduce costs, which included implementing a furlough of employees. This significantly impacted commercialization and operations, particularly in the second half of 2024 and early 2025.
31
Research and Development
Research and development expenses consist primarily of compensation and related costs for personnel, including stock-based compensation, employee benefits, training, travel, third-party consulting services, laboratory supplies, and research and development equipment depreciation incurred to further our commercialization development efforts. We expense research and development costs as incurred. We anticipate research and development expenses to increase significantly as we expand our product portfolio.
Selling and Marketing
Selling and marketing expenses consist primarily of compensation and related costs for our direct sales force, sales management, and marketing and include stock-based compensation, employee benefits, and travel for selling and marketing employees as well as costs related to trade shows, marketing programs. third-party consulting expenses, and application lab depreciation expenses. We expense selling and marketing costs as incurred. We expect selling and marketing expenses to increase in future periods as we expand our sales force, marketing, and customer support organizations and increase our participation in trade shows and marketing programs.
General and Administrative
Our general and administrative expenses consist primarily of compensation and related costs for our finance, human resources and other administrative personnel, and include stock-based compensation, employee benefits and travel expenses. In addition, general and administrative expenses include our third-party consulting and advisory services, legal, audit, accounting services and facilities costs. We expect our general and administrative expenses to increase for the foreseeable future as we scale headcount with the growth of our business, and as a result of operating as a public company, including compliance with the rules and regulations of the SEC, legal, audit, additional insurance expenses, investor relations activities, and other administrative and professional services.
Interest Income
Interest income consists primarily of interest income received on our cash and cash equivalents.
Interest Expense
Interest expense consists primarily of interest owed on our outstanding debt and amortization of deferred financing costs, as further described in Note 8 in the condensed consolidated financial statements included in Item 1 of this Quarterly Report.
Change in Fair Value of Warrant Liabilities
Change in fair value of warrant liabilities consists of non-cash gains or losses recognized based on the change in the fair value of our liability-classified warrants, which are re-measured to fair value at each balance sheet date with the corresponding gain or loss from the adjustment. Refer to Notes 4 and 10 in the condensed consolidated financial statements included in Item 1 of this Quarterly Report for more information.
Change in Fair Value of Derivative Liability
Change in fair value of derivative liability consists of non-cash gains or losses recognized based on the change in the fair value of the embedded derivatives under the August 2024 Convertible Notes that were required to be bifurcated from the host instrument and accounted for at fair value at issuance, as well as each subsequent balance sheet date. Refer to Notes 4 and 8 in the condensed consolidated financial statements included in Item 1 of this Quarterly Report for more information.
Change in Fair Value of Debt
Change in fair value of debt relates to the unrealized gain or loss resulting from the change in fair value of debt instruments for which the fair value option has been elected. This amount reflects the remeasurement of such liabilities to their current fair value as of the reporting date.
Loss on Extinguishment of Debt
Loss on extinguishment of debt consists of losses incurred to extinguish debt during the periods presented due to (i) the reacquisition value of the debt exceeding its carrying amount and (ii) the sale of collateral. Refer to Note 8 in the condensed consolidated financial statements included in Item 1 of this Quarterly Report for more information.
Gain on Sale of Intellectual Property Intangible Assets
Gain on sale of intellectual property intangible assets primarily relates to the sale of collateral to the lenders holding both the outstanding Senior Convertible Notes and Junior Notes in exchange for a full discharge and extinguishment of the Company’s Junior Notes and Senior Convertible Notes, as further described in Note 8 in the condensed consolidated financial statements.
Loss on Impairment of Inventories, Property and Equipment and Operating Lease Right-of-Use Asset
Loss on impairment of inventories, property and equipment and operating lease right-of-use asset relates to write-downs and impairments recorded on the Company's inventories, property and equipment and right-of-use-asset in connection with the Company's default under its lease, and ultimate judgment obtained by the Landlord, in April 2025. For additional information, see Notes 1, 3 and 6 to the condensed consolidated financial statements.
Interest Expense Recognized on Remeasurement of Preferred Stock Liability
Interest expense recognized on remeasurement of preferred stock liability relates to the subsequent remeasurement of the preferred stock liability after issuance through March 31, 2025 in connection with the reclassification of the preferred stock from mezzanine equity to a short-term liability on January 31, 2025. For additional information, see Note 9.
32
Results of Operations
Comparison of the three months ended March 31, 2025 and 2024
The following table sets forth our operations for the periods presented:
|
|
Three Months Ended |
|
|
|
|
||||||
|
|
2025 |
|
|
2024 |
|
|
$ Change |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Revenue |
|
$ |
— |
|
|
$ |
93,549 |
|
|
$ |
(93,549 |
) |
Cost of revenue |
|
|
235,717 |
|
|
|
856,956 |
|
|
|
(621,239 |
) |
Gross margin |
|
|
(235,717 |
) |
|
|
(763,407 |
) |
|
|
527,690 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|||
Research and development |
|
|
184,563 |
|
|
|
766,495 |
|
|
|
(581,932 |
) |
Selling and marketing |
|
|
543,337 |
|
|
|
345,590 |
|
|
|
197,747 |
|
General and administrative |
|
|
2,078,805 |
|
|
|
2,652,795 |
|
|
|
(573,990 |
) |
Total operating expenses |
|
|
2,806,705 |
|
|
|
3,764,880 |
|
|
|
(958,175 |
) |
Loss from operations |
|
|
(3,042,422 |
) |
|
|
(4,528,287 |
) |
|
|
1,485,865 |
|
Non-operating expenses: |
|
|
|
|
|
|
|
|
|
|||
Interest income |
|
|
7,385 |
|
|
|
11,740 |
|
|
|
(4,355 |
) |
Interest expense |
|
|
(193,480 |
) |
|
|
(1,191,862 |
) |
|
|
998,382 |
|
Change in fair value of warrant liabilities |
|
|
127,300 |
|
|
|
3,311 |
|
|
|
123,989 |
|
Change in fair value of derivative liability |
|
|
37,900 |
|
|
|
— |
|
|
|
37,900 |
|
Change in fair value of debt |
|
|
28,997 |
|
|
|
— |
|
|
|
28,997 |
|
Loss on extinguishment of debt |
|
|
(3,386,416 |
) |
|
|
— |
|
|
|
(3,386,416 |
) |
Gain on sale of intellectual property intangible assets |
|
|
8,961,872 |
|
|
|
— |
|
|
|
8,961,872 |
|
Loss on impairment of inventories, property and equipment and operating lease right-of-use asset |
|
|
(6,064,823 |
) |
|
|
— |
|
|
|
(6,064,823 |
) |
Interest expense recognized on remeasurement of preferred stock liability |
|
|
(10,398,050 |
) |
|
|
— |
|
|
|
|
|
Other loss, net |
|
|
(98,313 |
) |
|
|
— |
|
|
|
(98,313 |
) |
Loss before provision for income taxes |
|
$ |
(14,020,050 |
) |
|
$ |
(5,705,098 |
) |
|
$ |
2,083,098 |
|
Provision for income taxes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Net loss |
|
$ |
(14,020,050 |
) |
|
$ |
(5,705,098 |
) |
|
$ |
2,083,098 |
|
Revenue. Revenue decreased $93,549 during the three months ended March 31, 2025 compared to the same period in 2024. This decrease is primarily due to the measures implemented by management during 2024 and continued into the first quarter of 2025, designed to reduce costs, which included implementing a furlough of employees that significantly impacted commercialization and operations.
Cost of Revenue. Cost of revenue decreased $621,239 during the three months ended March 31, 2025 compared to the same period in 2024. This decrease is primarily due to a period-over-period decrease of approximately $468,000 of direct labor and job costs and $120,000 in overhead due to decreased production of the laser systems related to the measures implemented by management during 2024 designed to reduce costs, which included implementing a furlough of employees that significantly impacted commercialization and operations and has had a continued impact into the first quarter of 2025.
Research and Development. Research and development expenses decreased $581,932 during the three months ended March 31, 2025 compared to the same period in 2024.This decrease is primarily due to (i) approximately $447,000 of lower personnel costs due to the furlough of research and development employees as part of the cost reduction measures instituted by management which primarily began during the second quarter of 2024 and (ii) approximately $89,000 of lower spend on the BLTM series.
Selling and Marketing. Selling and marketing expenses increased $197,747 during the three months ended March 31, 2025 compared to the same period in 2024. This increase is primarily due to (i) an increase in professional and consulting related expenses of $230,000, partially offset by (ii) a decrease in payroll costs of approximately $48,000, which includes a partially offsetting increase of share-based compensation expense of approximately $116,000 related primarily to shares granted to non-employee consultants for services, due to the furlough of employees as part of the cost reduction measures instituted by management which primarily began during the second quarter of 2024.
General and Administrative. General and administrative expenses decreased $573,990 during the three months ended March 31, 2025 compared to the same period in 2024. This decrease is primarily driven by (i) a decrease in payroll costs of $512,000, including a decrease of approximately $167,000 of share-based compensation expense, due to the cost reduction measures instituted by management in the second half of 2024, as well as (ii) a decrease in professional and consulting related expenses of $233,000, partially offset by (iii) an increase in depreciation expense of approximately $231,000.
Interest Expense. Interest expense decreased $998,382 during the three months ended March 31, 2025 compared to the same period in 2024 primarily due to lower debt balances between periods. Interest expense during the three months ended March 31, 2025 was comprised primarily of interest accrued on the Senior Convertible Notes, Junior Notes and August 2024 Convertible Notes. Refer to Note 8 in the consolidated financial statements included herein for more information on our debt obligations.
33
Change in Fair Value of Warrant Liabilities. We recorded a gain of $127,300 during the three months ended March 31, 2025, as compared to a gain of $3,311 for the three months ended March 31, 2024. The gain recognized during the three months ended March 31, 2025 largely resulted from a decrease in the Company's share price during the first quarter of 2025.
Change in Fair Value of Derivative Liability. We recorded a gain of $37,900 during the three months ended March 31, 2025, as the August 2024 Convertible Notes were extinguished during the three months ended March 31, 2025. For additional information, see Note 8 to the condensed consolidated financial statements. There was no derivative liability recorded during the three months ended March 31, 2024.
Change in Fair Value of Debt. We recorded a gain of $28,997 during the three months ended March 31, 2025, which resulted from the decrease in the fair value of the Indigo Capital Convertible Notes, largely due to a decrease in the Company's share price from the time of the issuance in early March 2025 through March 31, 2025.
Loss on Extinguishment of Debt. We recorded a loss on the extinguishment of debt of $3,386,416 during the three months ended March 31, 2025, which primarily comprises (i) $1,174,519 related to the issuance of 9,186,581 shares to holders of Junior Notes to extinguish an aggregate $411,865 of principal and accrued interest under the Junior Notes, (ii) $1,682,641 related to the sale of collateral, further described in Note 8 to the condensed consolidated financial statements, and (iii) $480,399 related to the issuance of 1,878,620 shares to Esousa to extinguish an aggregate $389,375 of principal and accrued interest under the August 2024 Convertible Notes. For further information, see Note 8 to the condensed consolidated financial statements.
Gain on Sale of Intellectual Property Intangible Assets. We recorded a gain on the sale of intellectual property of $8,961,872 during the three months ended March 31, 2025, which primarily related to the sale of collateral to extinguish the remaining outstanding Junior Notes and Senior Convertible Notes, as further described in Note 8 to the condensed consolidated financial statements.
Loss on Impairment of Inventories, Property and Equipment and Operating Lease Right-of-Use Asset. We recorded a loss on impairment of inventories, property and equipment and operating lease right-of-use asset of $6,064,823 related to write-downs and impairments recorded on the Company's inventories, property and equipment and right-of-use-asset in connection with the Company's default under its lease, and ultimate judgment obtained by the Landlord, in April 2025. For additional information, see Notes 1, 3 and 6 to the condensed consolidated financial statements.
Interest Expense Recognized on Remeasurement of Preferred Stock Liability. We recorded non-cash interest expense of $10,398,050 related to the subsequent remeasurement of the preferred stock liability after issuance through March 31, 2025 in connection with the reclassification of the preferred stock from mezzanine equity to a short-term liability on January 31, 2025. For additional information, see Note 9 to the condensed consolidated financial statements.
Liquidity and Capital Resources
Overview
Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business operations, including working capital needs, debt service, acquisitions, contractual obligations, and other commitments. As of the date of this Quarterly Report, we have yet to generate meaningful revenue from our business operations and have funded capital expenditure and working capital requirements through debt and equity financing.
As of March 31, 2025, we had cash and cash equivalents of $70,937 as compared to $209,337 as of December 31, 2024. During the three months ended March 31, 2025, the Company received cash of $1.5 million from the Indigo Capital Convertible Notes and $1.0 million from the Liqueous Settlement Agreement, and future liquidity may be provided from certain agreements executed subsequent to March 31, 2025, as further described in Note 15 to the condensed consolidated financial statements. Our cash flows from operations are not sufficient to fund our current operating model and expansion plans. As of January 31, 2025, the Company was also required to redeem the Preferred Stock as permitted by law in cash at an amount equal to $10.00 per share, or $23,889,050. Notwithstanding the foregoing, the Company is not required to redeem any shares of Preferred Stock to the extent the Company does not have legally available funds to effect such redemption.
From inception through March 31, 2025, we have incurred operating losses and negative cash flows from operating activities. For the three months ended March 31, 2025 and 2024, we have incurred net losses of $14,020,050 and $5,705,098, respectively, and we have an accumulated deficit of $135,428,605 as of March 31, 2025.
The Company anticipates that it will incur net losses for the foreseeable future and, even if we generate revenue, there is no guarantee that we will ever become profitable. Unless the Company is able to implement its Transformation Plan, all of the aforementioned factors raise substantial doubt about the Company's ability to continue as a going concern.
Until we can generate sufficient revenue to cover our operating expenses, working capital, and capital expenditures, we will rely on private and public capital raising efforts; however, there is no assurance that plans to obtain additional debt or equity financing will be successfully implemented or implemented on terms favorable to the Company.
The further development of our products, commencement of commercial operations and expansion of our business will require a significant amount of cash for expenditures. Our ability to successfully manage this growth will depend on many factors, including our working capital needs, the availability of equity or debt financing and, over time, our ability to generate cash flows from operations.
Given the Company’s current liquidity position, the Company will need to raise additional capital. If we raise additional funds by issuing equity securities, this would result in dilution to our stockholders. If we raise additional funds by issuing any additional preferred stock, such securities may also provide for rights, preferences, or privileges senior to those of holders of Common Stock. If we raise additional funds by issuing debt securities, such debt securities would have rights, preferences and privileges senior to those of holders of Common Stock. The terms of debt securities or borrowings could impose significant restrictions on our operations. The credit market and financial services industry have in the past, and may in the future, experience periods of uncertainty that could impact the availability and cost of equity and debt financing.
34
Cash Flows
The following table summarizes our cash flows from operating, investing and financing activities for the periods presented.
|
|
Three Months Ended |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Net cash used in operating activities |
|
$ |
(1,927,792 |
) |
|
$ |
(2,093,442 |
) |
Net cash used in investing activities |
|
|
(750,000 |
) |
|
|
— |
|
Net cash provided by financing activities |
|
|
2,539,392 |
|
|
|
176,627 |
|
Cash flows from operating activities
Our cash flows used in operating activities to date have been primarily comprised of costs related to research and development, selling and marketing, and other general and administrative activities. We expect our expenses related to personnel and general and administrative activities to increase as a result of operating as a public company.
Net cash used in operating activities was $1,927,792 and $2,093,442 for the three months ended March 31, 2025 and 2024, respectively. The decrease in net cash flows used in operating activities is primarily driven by decreased operating expenses and changes in working capital, partially offset by a decrease in revenue.
Cash flows from investing activities
Our cash flows from investing activities have historically been comprised primarily of purchases of equipment and installation of improvements to our leased facilities and headquarters.
Net cash used in investing activities was $750,000 and nil for the three months ended March 31, 2025 and 2024, respectively. The amount used in investing activities for the three months ended March 31, 2025 relates to $600,000 of cash paid for the deposit on the anticipated acquisition of TCEI, as further described in Note 6 to the condensed consolidated financial statements, and $150,000 of payments under the convertible note receivable.
Cash flows from financing activities
We have financed our operations primarily through the sale of preferred stock, common stock, convertible notes, and promissory notes.
Net cash provided by financing activities was $2,539,392 and $176,627 for the three months ended March 31, 2025 and 2024, respectively.
Net cash provided by financing in activities during the three months ended March 31, 2025 is comprised primarily of (i) $2,394,708 of proceeds from the issuance of the Indigo Capital Convertible Notes, as further described in Note 8 to the condensed consolidated financial statements, (ii) $1.0 million in proceeds from the Liqueous Settlement Agreement, as further described in Note 6 to the condensed consolidated financial statements and (iii) a payment on debt borrowings of $835,316 related to the extinguishment of the remaining August 2024 Convertible Notes.
Net cash provided by financing activities in the first quarter of 2024 is comprised of proceeds from the issuance of Common Stock, offset by payments of accrued debt issuance costs for the Junior Notes.
Key Operating and Financial Metrics (Non-GAAP Results)
We regularly review several metrics, including the metrics presented in the table below, to measure our performance, identify trends affecting our business, prepare financial projections, and make strategic decisions. We believe that these key business metrics provide meaningful supplemental information for management and investors in assessing our historical and future operating performance. The calculation of the key metrics and other measures discussed below may differ from other similarly-titled metrics used by other companies.
The following table presents our key performance indicators for the periods presented:
|
|
Three Months Ended |
|
|
|
|
||||||
|
|
2025 |
|
|
2024 |
|
|
$ Change |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Revenue |
|
$ |
— |
|
|
$ |
93,549 |
|
|
$ |
(93,549 |
) |
Total gross margin |
|
|
235,717 |
|
|
|
(763,407 |
) |
|
|
999,124 |
|
EBITDA(1) |
|
|
(13,387,506 |
) |
|
|
(4,268,081 |
) |
|
|
(9,119,425 |
) |
Capital expenditures |
|
|
(600,000 |
) |
|
|
— |
|
|
|
(600,000 |
) |
Free cash flow(1) |
|
|
(2,527,792 |
) |
|
|
(2,093,442 |
) |
|
|
(434,350 |
) |
(1) EBITDA and Free cash flow are non-GAAP financial measures. See “Non-GAAP Information” below for our definitions of, and additional information about, EBITDA and Free cash flow and for a reconciliation to the most directly comparable U.S. GAAP financial measures.
Non-GAAP Information
In addition to our results determined in accordance with GAAP, we believe the following non-GAAP measures are useful in evaluating our operational performance. We use the following non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively and in context, may be helpful to investors in assessing our operating performance and trends and in comparing our financial measures with those of comparable companies that may present similar non-GAAP financial measures.
35
EBITDA and Free Cash Flow
We define “EBITDA” as income (loss), plus (minus) depreciation and amortization expenses, plus (minus) interest, plus (minus) taxes and define “Free cash flow” as net cash from (used in) operating activities less capital expenditures. EBITDA and Free cash flow are intended as supplemental measures of our performance that are neither required by, nor presented in accordance with, GAAP and these measures should not be considered a substitute for net income (loss), and net cash used in operating activities reported in accordance with GAAP. Our computation of EBITDA and Free cash flow may not be comparable to other similarly titled measures computed by other companies, because all companies may not calculate EBITDA or Free cash flow in the same fashion.
Limitations of Non-GAAP Measures
There are a number of limitations related to EBITDA and free cash flow, including the following:
Because of these and other limitations, EBITDA and Free cash flow should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA and Free cash flow on a supplemental basis. You should review the reconciliation of our net loss to EBITDA and net loss to Free cash flow below and not rely on any single financial measure to evaluate our business.
Our presentation of EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items and our presentation of Free cash flow does not necessarily indicate whether cash flows will be sufficient to fund our cash needs.
Reconciliation
The following table reconciles our net loss (the most directly comparable GAAP measure) to EBITDA for the periods presented:
|
|
Three Months Ended |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
|
|
|
|
|
|
|
||
Net loss |
|
$ |
(14,020,050 |
) |
|
$ |
(5,705,098 |
) |
Interest expense, net |
|
|
186,095 |
|
|
|
1,180,122 |
|
Depreciation and amortization |
|
|
446,449 |
|
|
|
256,895 |
|
EBITDA |
|
$ |
(13,387,506 |
) |
|
$ |
(4,268,081 |
) |
The following table reconciles our net cash used in operating activities (the most directly comparable GAAP measure to Free cash flow) to Free cash flow for the periods presented:
|
|
Three Months Ended |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
|
|
|
|
|
|
|
||
Net cash used in operating activities |
|
$ |
(1,927,792 |
) |
|
$ |
(2,093,442 |
) |
Capital expenditures |
|
|
(600,000 |
) |
|
|
— |
|
Free cash flow |
|
$ |
(2,527,792 |
) |
|
$ |
(2,093,442 |
) |
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of March 31, 2025. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.
Contractual Obligations
For our contractual obligations that are expected to have an effect on our liquidity and cash flow, see section “Notes to Condensed Consolidated Financial Statements – Note 6 – Commitments and Contingencies” in the condensed consolidated financial statements.
Critical Accounting Estimates
Our condensed consolidated financial statements are prepared in conformity with U.S. GAAP, which requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses. We evaluate our estimates and assumptions on an ongoing basis. Our estimates and assumptions are based on historical experience and on various other factors that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates.
There have been no significant changes to our accounting policies during the three months ended March 31, 2025, as compared to the critical accounting policies described in our audited financial statements included in the Annual Report (as defined above).
36
Recently Issued and Adopted Accounting Pronouncements
We review new accounting standards to determine the expected financial impact, if any, that the adoption of each new standard will have. For the recently issued and adopted accounting standards that we believe may have an impact on our condensed consolidated financial statements, see the section entitled “Notes to Condensed Consolidated Financial Statements – Note 2 – Summary of Significant Accounting Policies” in the condensed consolidated financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
Item 4. Controls and Procedures
Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the Executive Chairman, as appropriate, to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended March 31, 2025, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial and accounting officer have concluded that during the period covered by this report, our management concluded that our internal control over financial reporting was not effective due to a material weakness in our control environment around the accounting and presentation of complex financial instrument transactions that was not effectively designed or maintained. This material weakness could result in material misstatements of the financial statements that would not be prevented or detected on a timely basis.
We plan to take steps to enhance and improve the design of our internal control over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we intend to implement the following changes during our fiscal year ending December 31, 2025: (i) hire additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out in (i) and (ii) are dependent upon our receiving additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in management's evaluation pursuant to Rules 13a-15(f) or 15d-15(f) of the Exchange Act during the period covered by this Quarterly Report that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The information under the caption “Commitments and Contingencies” in Note 6 of the unaudited condensed consolidated financial statements of this Quarterly Report is incorporated herein by reference.
In the normal course of business, the Company may become involved in legal proceedings. The Company will accrue a liability for legal proceedings when it is probable that a liability has been incurred and the amount can be reasonably estimated. Significant judgment is required to determine both probability and the estimated amount. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued. At March 31, 2025, the Company was subject to legal proceedings as described in further detail below.
During the first quarter, the Company was subject to three separate actions seeking default judgments for the alleged failure to pay amounts when due. CFGI, LLC is seeking a total judgment in the amount of $86,826 through the Superior Court of the Commonwealth of Massachusetts, FICTIV, Inc. obtained a default judgment through the Superior Court of California on January 30, 2025 in the amount $197,899, which was subsequently settled by the Company, and the Landlord sought a total judgment in the amount of $409,278 through the Arapahoe County Colorado District Court, which it obtained in April. See additional detail regarding the Landlord default judgment in Inventory, Property and Equipment and Right-of-Use Asset Impairment in Note 1.
Item 1A. Risk Factors.
In addition to the other information contained in this Quarterly Report on Form 10-Q, you should consider the following risk factor, which supplements those contained in in Part I, Item 1A. “Risk Factors” of our most recently filed Form 10-K, as amended, in evaluating our results of operations, financial condition, business and operations or an investment in the shares of our Company. There have been no material changes from the risk factors disclosed in our Form 10-K,
37
as amended. If any of the risks discussed in our Form 10-K, as amended, are realized, our business, financial condition, results of operations and prospects could be materially and adversely affected.
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities.
Descriptions of the financing transactions described above under "Recent Developments and Financing Transactions" in Part I, Item 2 in this Quarterly Report on Form 10-Q, as well as share-based compensation arrangements described in Note 11, Stock-Based Compensation, to the condensed consolidated financial statements are incorporated herein by reference. Such transactions were conducted as private placements to accredited investors exempt from registration under Section 4(a)(2) of the Securities Act.
Item 3. Defaults Upon Senior Securities.
See Note 8, Notes and Convertible Notes Payable.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
38
Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
|
|
|
Incorporated by Reference |
|||
No. |
|
Description of Exhibit |
Form |
File No. |
Exhibit No. |
Filing Date |
2.1† |
|
8-K |
001-39489 |
2.1 |
August 8, 2022 |
|
3.1 |
|
8-K |
001-39489 |
3.2 |
September 9, 2020 |
|
3.2 |
|
8-K |
001-39489 |
3.1 |
November 12, 2024 |
|
3.3 |
|
Amended and Restated Certificate of Incorporation of the Company. |
8-K |
001-39489 |
3.1 |
February 6, 2023 |
3.4 |
|
Amendment to the Amended and Restated Certificate of Incorporation of the Company |
8-K |
001-39489 |
3.1 |
June 13, 2024 |
3.5 |
|
8-K |
001-39489 |
3.3 |
February 6, 2023 |
|
10.1* |
|
|
|
|
|
|
10.2* |
|
|
|
|
|
|
10.3* |
|
|
|
|
|
|
10.4* |
|
|
|
|
|
|
10.5* |
|
|
|
|
|
|
10.6* |
|
Subordinated Convertible Note, dated March 3, 2025, between the Company and Indigo Capital LP |
|
|
|
|
10.7* |
|
|
|
|
|
|
10.8* |
|
On Demand Facility Agreement, dated March 18, 2025, between the Company and Supply@ME Capital plc |
|
|
|
|
31.1* |
|
|
|
|
|
|
31.2* |
|
|
|
|
|
|
32.1** |
|
|
|
|
|
|
32.2** |
|
|
|
|
|
|
101.INS |
|
Inline XBRL Instance Document – The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document. |
|
|
|
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
|
|
|
|
104 |
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
|
|
|
|
* Filed herewith
** Furnished herewith.
† Certain of the exhibits and schedules to these exhibits have been omitted in accordance with Regulation S-K Item 601(a)(5). The registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request.
39
SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
May 20, 2025 |
|
|
NUBURU, INC. |
|
By: |
|
|
/s/ Alessandro Zamboni |
|
|
|
|
Name: |
Alessandro Zamboni |
|
|
|
Title: |
Executive Chairman |
|
|
|
|
(Principal Executive Officer and Principal Financial and Accounting Officer) |
40