Powerus Corp 8-K/A, filed Oct 16, 2026
Powerus Corp (PUSA)
About this 8-K/A
Powerus Corp filed this 8-K/A on October 16, 2026, reporting on events of October 1, 2026.
Powerus Corporation filed Amendment No. 1 to its October 1, 2026 Form 8-K to add unaudited six-months-ended-June-30-2026 financial statements of Autonomous Power Corporation and pro forma financial information, reporting a net loss of (17,341,997) and total assets of 107,733,139. AI summary
Items reported
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Amendment No. 1)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date
of Report (Date of earliest event reported):
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Explanatory Note
This Amendment No. 1 (this “Amendment”) amends the Original 8-K to include (i) the financial statements of Legacy Powerus required by Item 9.01(a) and (ii) the pro forma financial information of the Company required by Item 9.01(b). The Company previously indicated in the Original 8-K that such financial statements and pro forma information would be provided no later than 71 days from the date on which the Original 8-K was required to be filed.
Item 9.01 Financial Statements and Exhibits.
(a) Financial statements of businesses or funds acquired
The unaudited financial statements of Legacy Powerus for the six months ended June 30, 2026 and the accompanying notes are attached to this Current Report on Form 8-K as Exhibit 99.2.
(b) Pro forma financial information
In accordance with Item 9.01(b), the unaudited condensed combined financial information of AGH and Legacy Powerus for the six months ended June 30, 2026 and the related notes thereto are attached to this Current Report on Form 8-K as Exhibit 99.2.
(d) Exhibits.
The following exhibits are being filed herewith:
Exhibit No. |
Description | |
| 99.1 | Unaudited financial statements of Legacy Powerus as of and for the six months ended June 30, 2026.] | |
| 99.2 | Unaudited Pro Forma Financial Statements of Aureus Greenway Holdings and Autonomous Power Corporation as of and for the six months ended June 30, 2026. | |
| 104 | Cover Page Interactive Data File (embedded with the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: October 16, 2026
| Powerus Corporation | ||
| By: | /s/ Jim Biehl | |
| Name: | Jim Biehl | |
| Title: | Chief Legal Officer | |
Exhibit 99.1
Autonomous Power Corporation
Condensed Consolidated Financial Statements
As of and for the Six Months ended June 30, 2026 and June 30, 2025
| 1 |
AUTONOMOUS POWER CORPORATION
TABLE OF CONTENTS
| 2 |
AUTONOMOUS POWER CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in dollars, except share amounts)
(unaudited)
| Successor | Successor | Predecessor | ||||||||||
| June 30, 2026 | December 31, 2025 | December 31, 2025 | ||||||||||
| ASSETS | ||||||||||||
| Current Assets | ||||||||||||
| Cash and cash equivalents | $ | 25,007,680 | $ | 630,408 | $ | 27,352 | ||||||
| Accounts receivable | 2,652,973 | - | 78,850 | |||||||||
| Prepaid expenses and other receivables | 5,329,331 | - | - | |||||||||
| Inventory, net | 5,424,985 | - | 12,041 | |||||||||
| Investments in debt securities | 62,912,734 | - | - | |||||||||
| Other current assets | 599,075 | 12,028 | - | |||||||||
| Total current assets | 101,926,778 | 642,436 | 118,243 | |||||||||
| Property and equipment, net | 78,114 | - | - | |||||||||
| Intangible assets, net | 2,305,740 | - | - | |||||||||
| Goodwill | 3,422,507 | - | - | |||||||||
| Total assets | $ | 107,733,139 | $ | 642,436 | $ | 118,243 | ||||||
| LIABILITIES, AND STOCKHOLDERS’ EQUITY / (DEFICIT) | ||||||||||||
| Current Liabilities: | ||||||||||||
| Accounts payable and accrued expenses | 9,491,829 | 496,159 | 175,933 | |||||||||
| Treasury stock payable - related party | 2,000,000 | - | - | |||||||||
| Deferred revenue | 2,684,910 | - | 215,106 | |||||||||
| Deferred revenue - related parties | 190,000 | - | - | |||||||||
| Promissory note payable to AGH | 20,000,000 | - | - | |||||||||
| Deferred acquisition consideration - related parties | 2,000,000 | - | - | |||||||||
| Due to related parties (other) | - | 319,531 | 261,434 | |||||||||
| Line of credit, related party | - | - | 184,990 | |||||||||
| Share subscription liability | - | 635,258 | - | |||||||||
| Total current liabilities | 36,366,739 | 1,450,948 | 837,463 | |||||||||
| Warrant liability | 23,656,124 | - | - | |||||||||
| Total liabilities | $ | 60,022,863 | $ | 1,450,948 | $ | 837,463 | ||||||
| Commitments and Contingencies (Note 20) | ||||||||||||
| Stockholders’ Equity / (Deficit) | ||||||||||||
| Common stock, $0.001 par value, 250,000 shares authorized and 132,952 shares issued and outstanding at June 30, 2026; 250,000 shares authorized; 100,000 shares issued and outstanding at December 31, 2025 (Successor); 10,000,000 authorized, 5,000,000 shares issued and outstanding at December 31, 2025 (Predecessor). | 141 | 100 | 500 | |||||||||
| Additional paid-in capital | 68,020,780 | - | - | |||||||||
| Stock subscription receivable | - | (100 | ) | - | ||||||||
| Accumulated other comprehensive loss | (160,136 | ) | - | - | ||||||||
| Accumulated deficit | (18,150,509 | ) | (808,512 | ) | (719,720 | ) | ||||||
| Treasury stock | (2,000,000 | ) | - | - | ||||||||
| Total stockholders’ equity / (deficit) | 47,710,276 | (808,512 | ) | (719,220 | ) | |||||||
| Total liabilities, and stockholders’ equity / (deficit) | $ | 107,733,139 | $ | 642,436 | $ | 118,243 | ||||||
See accompanying notes to the unaudited condensed consolidated financial statements
| 3 |
AUTONOMOUS POWER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in dollars, except share amounts)
(unaudited)
| Successor | Predecessor | Predecessor | ||||||||||
| Six months ended | Period | Six months ended | ||||||||||
| June 30, 2026 | 1/1/2026-1/30/2026 | June 30, 2025 | ||||||||||
| Revenue | ||||||||||||
| Product sales | $ | 5,092,511 | $ | - | $ | 219,714 | ||||||
| Service revenue | 578,378 | - | 15,400 | |||||||||
| Total revenues | $ | 5,670,889 | $ | - | $ | 235,114 | ||||||
| Cost of revenue / cost of sales | ||||||||||||
| Product sales | 3,011,201 | - | 57,224 | |||||||||
| Service revenue | 467,811 | - | 2,920 | |||||||||
| Total cost of revenues / cost of sales | $ | 3,479,012 | $ | - | $ | 60,144 | ||||||
| Gross Profit | 2,191,877 | - | 174,970 | |||||||||
| Operating Expenses | ||||||||||||
| General and administrative | 15,936,607 | 110,913 | 336,052 | |||||||||
| Sales and marketing | 3,467,506 | 44 | 1,442 | |||||||||
| Research and development | 1,442,402 | 24,206 | - | |||||||||
| Depreciation and amortization | 62,403 | - | - | |||||||||
| Other operating expenses | 887,816 | - | 3,258 | |||||||||
| Total operating expenses | 21,796,734 | 135,163 | 340,752 | |||||||||
| Operating loss | (19,604,857 | ) | (135,163 | ) | (165,782 | ) | ||||||
| Interest expense | 920,698 | 2,966 | 1,500 | |||||||||
| Interest income | (478,021 | ) | - | - | ||||||||
| Loss on extinguishment of debt | 3,650,387 | - | - | |||||||||
| Change in fair value of warrants | (6,343,876 | ) | - | - | ||||||||
| Other (income) / expense, net | (12,048 | ) | - | - | ||||||||
| Loss before income taxes | (17,341,997 | ) | (138,129 | ) | (167,282 | ) | ||||||
| Provision for income taxes | - | - | - | |||||||||
| Net loss | $ | (17,341,997 | ) | $ | (138,129 | ) | $ | (167,282 | ) | |||
| Other comprehensive loss: | ||||||||||||
| Unrealized loss on AFS debt securities | 160,136 | - | - | |||||||||
| Comprehensive loss | $ | (17,502,133 | ) | $ | (138,129 | ) | $ | (167,282 | ) | |||
See accompanying notes to the unaudited condensed consolidated financial statements
| 4 |
AUTONOMOUS POWER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
(in dollars, except share amounts)
(unaudited)
| Common Stock | Common Stock | Stock Subscription | Additional Paid | Accumulated | Total Stockholders’ | |||||||||||||||||||
| Shares | Amount | Receivable | In Capital | Deficit | Deficit | |||||||||||||||||||
| Balance - January 1, 2025 (Predecessor) | 5,000,000 | $ | 500 | $ | - | $ | - | $ | (179,130 | ) | $ | (178,630 | ) | |||||||||||
| Net loss for the six months ended June 30,2025 | - | - | - | - | (167,282 | ) | (167,282 | ) | ||||||||||||||||
| Balance - June 30, 2025 (Predecessor) | 5,000,000 | $ | 500 | $ | - | $ | - | $ | (346,412 | ) | $ | (345,912 | ) | |||||||||||
| Common Stock | Common Stock | Stock Subscription | Additional Paid | Accumulated | Total Stockholders’ | |||||||||||||||||||
| Shares | Amount | Receivable | In Capital | Deficit | Deficit | |||||||||||||||||||
| Balance - January 1, 2026 (Predecessor) | 5,000,000 | $ | 500 | $ | - | $ | - | $ | (719,720 | ) | $ | (719,220 | ) | |||||||||||
| Net loss for the period from January 1, 2026 through January 30, 2026 | - | - | - | - | (138,129 | ) | (138,129 | ) | ||||||||||||||||
| Balance - January 30, 2026 (Predecessor) | 5,000,000 | $ | 500 | $ | - | $ | - | $ | (857,849 | ) | $ | (857,349 | ) | |||||||||||
| Common Stock | Common Stock | Stock Subscription | Additional Paid | Treasury | Accumulated Other Comprehensive Income | Accumulated | Total Stockholders’ | |||||||||||||||||||||||||
| Shares | Amount | Receivable | In Capital | Stock | (Loss) | Deficit | Deficit | |||||||||||||||||||||||||
| Balance - January 1, 2026 (Successor) | 100,000 | $ | 100 | $ | (100 | ) | $ | - | $ | - | $ | - | $ | (808,512 | ) | $ | (808,512 | ) | ||||||||||||||
| Capital contributions | 90 | - | - | 39,600 | - | - | - | 39,600 | ||||||||||||||||||||||||
| Issuance of common stock pursuant to KCGI Private Placement | 27,809 | 28 | - | 50,000,554 | - | - | - | 50,000,582 | ||||||||||||||||||||||||
| Pre-funded American Ventures Series IV Warrants issued | - | - | - | 3,650,000 | - | - | - | 3,650,000 | ||||||||||||||||||||||||
| Issuance of common stock pursuant to 2025 Subscription Agreements | 13,398 | 13 | (602,464 | ) | 6,031,145 | - | - | - | 5,428,694 | |||||||||||||||||||||||
| Stock-based compensation | - | - | - | 8,299,481 | - | - | - | 8,299,481 | ||||||||||||||||||||||||
| Treasury stock | (8,345 | ) | - | - | - | (2,000,000 | ) | - | - | (2,000,000 | ) | |||||||||||||||||||||
| Collection of subscription receivable associated with previously issued common stock | - | - | 602,564 | - | - | - | - | 602,564 | ||||||||||||||||||||||||
| Unrealized loss on AFS debt securities | - | - | - | - | - | (160,136 | ) | - | (160,136 | ) | ||||||||||||||||||||||
| Net loss for the six months ended June 30, 2026 | - | - | - | - | - | - | (17,341,997 | ) | (17,341,997 | ) | ||||||||||||||||||||||
| Balance - June 30, 2026 (Successor) | 132,952 | $ | 141 | $ | - | $ | 68,020,780 | $ | (2,000,000 | ) | $ | (160,136 | ) | $ | (18,150,509 | ) | $ | 47,710,276 | ||||||||||||||
See accompanying notes to the unaudited condensed consolidated financial statements
| 5 |
AUTONOMOUS POWER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in dollars, except share amounts)
(unaudited)
| Successor | Predecessor | Predecessor | ||||||||||
For
the Six June 30, 2026 | Period January 1, 2026 through January 30, 2026 | For
the Six June 30, 2025 | ||||||||||
| Operating Activities: | ||||||||||||
| Net loss | $ | (17,341,997 | ) | $ | (138,129 | ) | $ | (167,282 | ) | |||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||
| Depreciation and amortization | 112,736 | - | - | |||||||||
| Stock-based compensation | 8,299,481 | - | - | |||||||||
| Loss on extinguishment | 3,650,387 | - | - | |||||||||
| Interest on investments in debt securities | 317,885 | - | - | |||||||||
| Change in fair value of warrants | (6,343,876 | ) | - | - | ||||||||
| Amortization of debt discount | 187,146 | - | - | |||||||||
| Accretion of discount on deferred acquisition consideration | 117,071 | - | - | |||||||||
| Changes in operating assets and liabilities, net of acquisitions: | ||||||||||||
| Accounts receivable | (2,652,973 | ) | 78,850 | 195,245 | ||||||||
| Inventory, net | (5,424,985 | ) | - | (155,534 | ) | |||||||
| Prepaid expenses and other receivables | (5,329,331 | ) | - | 6,415 | ||||||||
| Other current assets | (302,802 | ) | - | - | ||||||||
| Accounts payable and accrued expenses | 8,366,656 | (10,627 | ) | 416 | ||||||||
| Deferred revenue | 2,467,507 | 4,640 | 25,182 | |||||||||
| Deferred revenue - related party | 190,000 | - | - | |||||||||
| Net cash (used in) operating activities | $ | (13,687,095 | ) | $ | (65,266 | ) | $ | (95,558 | ) | |||
| Investing Activities: | ||||||||||||
| Purchases of Property and Equipment | (5,884 | ) | - | - | ||||||||
| Purchases of Intangible assets | (200,000 | ) | - | - | ||||||||
| Acquisition of businesses, net of cash acquired | (2,630,307 | ) | - | - | ||||||||
| Deferred acquisition consideration paid | (656,091 | ) | - | - | ||||||||
| Investment in debt securities | (63,675,000 | ) | - | - | ||||||||
| Net cash (used in) investing activities | $ | (67,167,282 | ) | $ | - | $ | - | |||||
| Financing Activities: | ||||||||||||
| Capital contributions | 39,600 | - | - | |||||||||
| Proceeds from issuance of common stock | 54,777,018 | - | - | |||||||||
| Collection of subscription receivable | 602,564 | - | - | |||||||||
| Proceeds from note payable | 20,000,000 | - | 78,240 | |||||||||
| Proceeds from issuance of senior notes and warrants | 35,000,033 | - | - | |||||||||
| Repayment of senior note | (5,187,566 | ) | - | - | ||||||||
| Due to/from related party | - | 38,200 | (82,229 | ) | ||||||||
| Net cash proceeds provided by (used in) financing activities | $ | 105,231,649 | $ | 38,200 | $ | (3,989 | ) | |||||
| NET (DECREASE) / INCREASE IN CASH AND CASH EQUIVALENTS | 24,377,272 | (27,066 | ) | (99,547 | ) | |||||||
| CASH AND CASH EQUIVALENTS - Beginning of period | 630,408 | 27,352 | 105,026 | |||||||||
| CASH AND CASH EQUIVALENTS - End of period | $ | 25,007,680 | $ | 286 | $ | 5,479 | ||||||
See accompanying notes to the unaudited condensed consolidated financial statements
| 6 |
AUTONOMOUS POWER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in dollars, except share amounts)
(unaudited)
| Successor | Predecessor | Predecessor | ||||||||||
| June 30, 2026 | January 30, 2026 | June 30, 2025 | ||||||||||
| SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES | ||||||||||||
| Deferred acquisition consideration recognized in connection with business combinations | $ | 2,665,526 | $ | - | $ | - | ||||||
| Treasury stock payable | $ | 2,000,000 | ||||||||||
| Common stock issued as noncash consideration for an intangible asset | $ | 17,000 | $ | - | $ | - | ||||||
| SUPPLEMENTAL CASH FLOW DISCLOSURES | ||||||||||||
| Cash paid during the year for: | ||||||||||||
| Interest | $ | 100,591 | $ | - | $ | - | ||||||
| Income taxes | $ | - | $ | - | $ | - | ||||||
See accompanying notes to the unaudited condensed consolidated financial statements
| 7 |
AUTONOMOUS POWER CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2026, AND 2025
1. ORGANIZATION AND BUSINESS DESCRIPTION
Autonomous Power Corporation (the “Company” or “APC”) was incorporated in Delaware on October 8, 2025. The Company was formed to acquire, develop, and operate businesses focused on autonomous systems, unmanned platforms, and related defense and industrial technology solutions.
Prior to 2026, the Company had no revenue-generating operations, and its activities consisted primarily of formation, fundraising, business development, acquisition-related activities, and other organizational activities.
On January 15, 2026, the Company acquired Tandem Defense LLC (“Tandem”), a defense technology company engaged in the design and development of unmanned aerial systems and related tactical defense solutions. The Tandem acquisition was not material to the consolidated financial statements.
On January 30, 2026, the Company acquired Kaizen Aerospace, Inc. (“Kaizen”), which manufactures and sells drone platforms and provides related drone services.
On February 20, 2026, the Company acquired Agile Autonomy LLC (“Agile”), which provides maritime autonomy and unmanned systems integration services, including the retrofitting of manned vessels into remotely operated or autonomous surface vessels, integration of unmanned aerial systems, customer-funded special projects, and related technical support. See Note 3 for further information regarding the Company’s acquisitions.
On March 8, 2026, the Company entered into an Agreement and Plan of Merger, which was amended in July 2026, with Aureus Greenway Holding, Inc. (“AGH”). The merger closed on October 1, 2026. See Note 21 for further information regarding the merger with AGH.
The accompanying consolidated financial statements include the results of operations, cash flows, assets, and liabilities of Kaizen, Agile and Tandem from their respective acquisition dates.
Unless otherwise indicated, references in these consolidated financial statements to “Autonomous Power Corporation,” the “Company,” “we,” “us,” or “our” refer to Autonomous Power Corporation and its consolidated subsidiaries, taken as a whole.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
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”). References to applicable accounting guidance are to the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASUs”) issued by the Financial Accounting Standards Board (“FASB”). The unaudited condensed consolidated financial statements should read in conjunction with the Company’s annual financial statements as of December 31, 2025 (Successor), the period from October 8, 2025 (inception) through December 31, 2025 (Successor), for the period from January 1, 2026 through January 30, 2026 (Predecessor) and as of and for the years ended December 31, 2024 and 2023 (Predecessor).
The unaudited condensed consolidated financial statements include the accounts of Autonomous Power Corporation and its consolidated subsidiaries. The Company consolidates entities in which it has a controlling financial interest from the date control is obtained. All intercompany balances and transactions have been eliminated in consolidation.
The accompanying unaudited condensed consolidated financial statements include successor and predecessor periods. The successor periods reflect the financial position, results of operations, changes in stockholders’ equity, and cash flows of Autonomous Power Corporation and its consolidated subsidiaries (the “Successor”). The predecessor periods reflect the historical financial position, results of operations, changes in stockholders’ equity, and cash flows of Kaizen prior to its acquisition by the Company (the “Predecessor”) on January 30, 2026.
The assets acquired and liabilities assumed in business combinations are recognized at their acquisition-date fair values. The results of operations and cash flows of acquired businesses are included in the unaudited condensed consolidated financial statements beginning on the date the Company obtains control. The successor and predecessor periods are presented on different bases and are not directly comparable.
The accompanying unaudited condensed consolidated financial statements are presented in U.S. dollars, except for share, unless otherwise indicated.
| 8 |
AUTONOMOUS POWER CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2026, AND 2025
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period.
Significant estimates include, but are not limited to, estimates related to revenue recognized over time, total estimated costs to complete customer contracts, the valuation and recoverability of inventory, the useful lives and recoverability of property and equipment and intangible assets, purchase accounting estimates, goodwill, the valuation allowance recorded against deferred tax assets, stock-based compensation, and the assessment of contingencies.
On the condensed consolidated balance sheets, estimates are used in determining the valuation and recoverability of assets and in determining the reported amounts of certain liabilities, all of which also impact the condensed consolidated statements of operations. Estimates are often based on judgments and assumptions that the Company believes to be reasonable but are inherently uncertain. The Company regularly evaluates estimates and assumptions using historical experience and expectations about future events. The Company adjusts estimates and assumptions when facts and circumstances indicate the need for change. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, cash held in bank accounts, and highly liquid investments with original maturities of three months or less at the time of purchase. Due to their short-term nature, cash and cash equivalents are carried at cost, which approximates fair value.
Cash and cash equivalents are maintained with financial institutions, and amounts on deposit may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company did not have any restricted cash balances as of the condensed consolidated balance sheet dates presented.
Investment in Debt Securities
The Company invests excess cash in U.S. Treasury securities, corporate bonds and other debt securities. The Company classifies these investments as available-for-sale (AFS) debt securities and records them at fair value.
Investments in debt securities are measured at fair value, with unrealized gains and losses, net of any applicable tax effects, recorded in accumulated other comprehensive income (loss). Realized gains and losses from the sale or maturity of debt securities are recognized in earnings using the specific identification method. Interest income, including the amortization of premiums and accretion of discounts, is recognized using the effective interest method and is included within interest income in the accompanying condensed consolidated statements of operations.
The Company evaluates Investments in debt securities for impairment and expected credit losses in accordance with ASC 326, Financial Instruments – Credit Losses. For securities in an unrealized loss position, the Company assesses whether the decline in fair value is attributable to credit-related factors. Credit-related impairments are recognized through an allowance for credit losses with a corresponding charge to earnings, while non-credit-related changes in fair value are recognized in accumulated other comprehensive income (loss). Any allowance for credit losses is recorded through earnings and is limited to the amount by which amortized cost exceeds fair value. As of June 30, 2026, management concluded that no allowance for credit losses was required.
Investments in debt securities are presented within current assets as the Company manages these investments as part of its treasury and liquidity management activities.
Although certain investments have contractual maturities greater than one year, the Company classifies these investments as current assets because they are available to fund the Company’s current operations and liquidity requirements.
| 9 |
AUTONOMOUS POWER CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2026, AND 2025
Accounts Receivable and Allowance for Credit Losses
Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company evaluates the collectability of accounts receivable in accordance with ASC 326, Financial Instruments—Credit Losses (“ASC 326”). The allowance for credit losses is based on management’s estimate of expected credit losses over the contractual life of the receivables, considering customer-specific facts and circumstances, historical collection experience, current economic conditions, reasonable and supportable forecasts, and subsequent collections, as applicable. Accounts receivable are written off when deemed uncollectible. As of June 30, 2026, December 31, 2025 (Successor), and December 31, 2025 (Predecessor), no allowance for credit losses was recorded. During the six months ended June 30, 2026 (Successor) and 2025 (Predecessor), the Company did not write-off any accounts receivable.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, accounts receivable, revenue, deferred revenue, and concentration of suppliers.
The Company’s accounts receivable may be concentrated among a limited number of customers due to the nature of its operations and customer contracts. In the normal course of business, the Company provides credit terms to its customers. The Company performs ongoing credit evaluations of its customers, generally does not require collateral, and considers the credit risk profile of the customer from which the receivable is due in evaluating collection risk. The Company monitors the creditworthiness of its customers and evaluates expected credit losses in accordance with ASC 326.
Customers that accounted for 10% or greater of revenue were as follows:
| Successor | Predecessor | Predecessor | ||||||||||
Six
Months June 30, 2026 | Period
from January 1, January 30, 2026 | Six
Months June 30, 2025 | ||||||||||
| Customer A | $ | 1,810,000 | $ | - | $ | - | ||||||
| Customer B | $ | 926,994 | $ | - | $ | - | ||||||
| Customer C | $ | 889,170 | $ | - | $ | - | ||||||
| Customer D | $ | 792,460 | $ | - | $ | - | ||||||
| Customer E | $ | - | $ | - | $ | 154,000 | ||||||
| Customer F | $ | - | $ | - | $ | 65,714 | ||||||
| Total revenue | $ | 5,670,889 | $ | - | $ | 235,114 | ||||||
Customers that accounted for 10% or greater of deferred revenue were as follows:
| Successor | Successor | Predecessor | ||||||||||
| 30-Jun-26 | 31-Dec-25 | 31-Dec-25 | ||||||||||
| Customer G | $ | 1,312,500 | $ | - | $ | - | ||||||
| Customer H | $ | 644,515 | $ | - | $ | - | ||||||
| Customer I | $ | - | $ | - | $ | 164,744 | ||||||
| Customer J | $ | - | $ | - | $ | 50,362 | ||||||
| Total deferred revenue | $ | 2,684,910 | $ | - | $ | 215,106 | ||||||
| 10 |
AUTONOMOUS POWER CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2026, AND 2025
Concentration of Suppliers
The Company depends on suppliers, subcontractors, collaborators, and contract manufacturers for the supply of products, raw materials, components, technical services, and project-related support. The Company is dependent on certain suppliers, subcontractors, collaborators, and contract manufacturers that individually represent 10% or more of the Company’s cost of revenues. For the six months ended June 30, 2026, four vendors individually represented 10% or more of the Company’s total purchases, accounting for approximately 15%, 13%, 12%, and 12% respectively. For the six months ended June 30, 2025, two vendors individually represented 10% or more of the Company’s total purchases, accounting for approximately 15%, and 13%, respectively. Disruption from these suppliers, subcontractors, collaborators, or contract manufacturers could have a negative impact on the Company’s business, financial position, results of operations, or cash flows.
Prepaid Expenses and Other Receivables
Prepaid expenses and other receivables consist primarily of advance payments made to contract manufacturers, prepaid consulting and advisory services, and overpayments on vendor or credit card balances. These amounts are initially recorded as current assets on the condensed consolidated balance sheet and are subsequently expensed in the condensed consolidated statement of operations over the period in which the economic benefits are consumed or realized.
See Note 6 for further information regarding the Company’s prepaid expenses and other receivables.
Inventory, Net
Inventory consists of parts and finished goods held for customer projects. Inventory is accounted for in accordance with ASC 330, Inventory (“ASC 330”), and is stated at the lower of cost or net realizable value. Cost is determined using specific identification or another method that approximates cost the weighted-average cost method, as applicable to the related inventory category. Management evaluates inventory for excess, obsolete, or slow moving items based on expected usage, customer project requirements, physical condition, and other relevant factors. Adjustments to reduce inventory to net realizable value are recognized in cost of revenues in the period identified. See Note 7 for further information regarding the Company’s inventory.
Property and Equipment, Net
Property and equipment are recorded at cost, net of accumulated depreciation. Expenditures for additions and improvements that extend the useful lives of assets are capitalized, while maintenance and repair costs are expensed as incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in the condensed consolidated statement of operations.
The estimated useful lives of property and equipment are as follows:
| Asset category | Useful lives (years) | |
| Equipment | 3 to 5 | |
| Furniture and Fixtures | 3 to 5 |
See Note 9 for additional information regarding the Company’s property and equipment.
Intangible Assets, Net
The Company accounts for intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other (“ASC 350”). Intangible assets acquired in business combinations are recognized at their acquisition-date fair values. Intangible assets acquired in asset acquisitions are recorded based on the cost of the acquisition, including directly attributable transaction costs, and allocated to the assets acquired on a relative fair value basis in accordance with ASC 805-50, Business Combinations—Related Issues (“ASC 805-50”).
| 11 |
AUTONOMOUS POWER CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2026, AND 2025
Intangible assets with finite useful lives are amortized using the straight-line method over their estimated useful lives. Amortization of customer relationships and trade names is included in operating expenses in the condensed consolidated statements of operations. Amortization of developed technology is included in cost of sales. The Company evaluates intangible assets for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable.
Intangible assets with indefinite useful lives are not amortized but are tested for impairment annually and whenever events or changes in circumstances indicate that it is more likely than not that the asset is impaired.
The estimated useful lives of the Company’s intangible assets are as follows:
| Intangible asset category | Useful lives (years) | |
| Developed technology | 10 | |
| Tradenames and trademarks | 5-10 | |
| Website | 2 | |
| Intellectual property | Indefinite |
See Note 10 for further information regarding the Company’s intangible assets.
Goodwill
The Company accounts for goodwill in accordance with ASC 350, Intangibles—Goodwill and Other (“ASC 350”). Goodwill represents the excess of consideration transferred over the fair value of identifiable assets acquired and liabilities assumed in a business combination.
Goodwill is not amortized but is tested for impairment at least annually, or more frequently if events or changes in circumstances indicate that goodwill may be impaired. The Company evaluates goodwill for impairment at the reporting unit level. As of June 30, 2026, the Company had one reporting unit for purposes of evaluating goodwill for impairment. The Company performs its annual goodwill impairment test during the fourth quarter of each fiscal year.
The Company may first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the qualitative assessment indicates that it is more likely than not that the carrying amount of the reporting unit exceeds its fair value, or if the Company elects to bypass the qualitative assessment, the Company performs a quantitative impairment test. An impairment loss is recognized to the extent the carrying amount of a reporting unit exceeds its fair value, limited to the amount of goodwill allocated to that reporting unit. See Note 10 for further information regarding the Company’s goodwill.
Impairment of Long-lived Assets
The Company assesses long-lived assets, including property and equipment and finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable in accordance with ASC 360, Property, Plant, and Equipment (“ASC 360”).
The Company evaluates recoverability at the asset group level by comparing the carrying amount of the asset group to the undiscounted future cash flows expected to result from the use and eventual disposition of the asset group. If the carrying amount of the asset group is not recoverable, an impairment loss is recognized for the amount by which the carrying amount exceeds fair value.
Fair Value of Certain Assets and Liabilities
The Company accounts for fair value measurements in accordance with ASC 820, Fair Value Measurement (“ASC 820”). The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, and deferred acquisition consideration - related parties approximate fair value due to their short-term nature or contractual terms.
| 12 |
AUTONOMOUS POWER CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2026, AND 2025
The three levels of the fair value hierarchy are:
| ● | Level 1 – Quoted prices in active markets for identical assets or liabilities. | |
| ● | Level 2 – Observable inputs other than quoted prices included in Level 1, including quoted prices for similar assets or liabilities in active markets and other market-corroborated inputs. | |
| ● | Level 3 – Unobservable inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability. |
The fair value of the warrant liability is determined using a valuation model that incorporates assumptions including expected volatility, expected term, risk-free interest rate and other market-based inputs, as applicable. Changes in fair value are recognized in earnings in the period in which they occur.
See Note 8, Investments in Debt Securities, and Note 19, Fair Value Measurements, for additional information.
Business Combinations
The Company accounts for business combinations in accordance with ASC 805, Business Combinations (“ASC 805”). The Company recognizes identifiable assets acquired, liabilities assumed, and any noncontrolling interests in the acquiree at their acquisition-date fair values. The excess of consideration transferred over the fair value of identifiable net assets acquired is recognized as goodwill.
The operating results of acquired businesses are included in the condensed consolidated statements of operations from the date the Company obtains control. Acquisition-related costs are expensed as incurred and included in general and administrative expenses.
The Company’s acquisition accounting may be provisional during the measurement period when information necessary to complete the accounting for a business combination is not available as of the reporting date. Measurement period adjustments are recognized in the period in which the adjustment amounts are determined, as if the accounting had been completed as of the acquisition date. The measurement period may not exceed one year from the acquisition date. See Note 3 for further information regarding the Company’s acquisitions.
Asset Acquisitions
The Company accounts for asset acquisitions in accordance with ASC 805-50, Business Combinations, Related Issues (“ASC 805-50”). Assets acquired and liabilities assumed in an asset acquisition are recognized based on the cost to the Company, including consideration transferred and directly attributable transaction costs, and are allocated to the individual assets acquired and liabilities assumed on a relative fair value basis. Goodwill is not recognized in an asset acquisition.
Variable Interest Entities and Equity Method Investments
The Company evaluates its interests in legal entities to determine whether the entity is a variable interest entity (“VIE”) in accordance with ASC 810, Consolidation (“ASC 810”). The Company consolidates a VIE when it has both (i) the power to direct the activities that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.
The Company accounts for investments in entities that it does not consolidate, but over which it has the ability to exercise significant influence, under the equity method of accounting in accordance with ASC 323, Investments—Equity Method and Joint Ventures (“ASC 323”). Under the equity method, investments are initially recorded at cost and subsequently adjusted for the Company’s share of the investee’s earnings or losses, distributions received, and impairments, if any. The Company evaluates equity method investments for impairment when events or changes in circumstances indicate that the carrying amount of the investment may not be recoverable. See Note 17 for further information regarding the Company’s investments.
Related Party
The Company identifies and discloses related party transactions in accordance with ASC 850, Related Party Disclosures (“ASC 850”). Related parties include the Company’s officers, directors, principal stockholders, affiliates, and entities under common ownership or control. See Note 18 for further information regarding the Company’s related party transactions and balances.
| 13 |
AUTONOMOUS POWER CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2026, AND 2025
Debt and Notes Payable
The Company accounts for debt obligations in accordance with ASC 470, Debt (“ASC 470”). Debt obligations are initially recognized at the principal amount of proceeds received or, when issued as noncash consideration, at the fair value of the obligation incurred, net of debt discounts and debt issuance costs, as applicable. Debt issuance costs and debt discounts are presented as a direct deduction from the carrying amount of the related debt and are amortized to interest expense over the contractual term of the debt using the effective interest method.
When debt is issued with detachable instruments, the Company allocates the proceeds between the debt instrument and the detachable instruments based on the applicable accounting guidance. Amounts allocated to detachable equity-classified instruments are recorded in equity, and any resulting discount on the debt instrument is amortized to interest expense using the effective interest method.
The Company evaluates debt instruments and embedded features to determine whether any features are required to be accounted for separately as derivatives under ASC 815, Derivatives and Hedging (“ASC 815”). Embedded features that are not required to be bifurcated are accounted for together with the debt host. Debt obligations are derecognized when the obligation is extinguished, including when the Company is legally released from being the primary obligor, in accordance with ASC 405, Liabilities (“ASC 405”), and ASC 470. Gains and losses on extinguishment are recognized in the condensed consolidated statements of operations as the difference between the reacquisition price and the net carrying amount of the extinguished debt. See Note 12 for further information regarding the Company’s debt and notes payable.
Warrants
The Company accounts for warrants as either equity-classified or liability-classified instruments based on the specific terms of the warrant agreements and the applicable authoritative guidance, including ASC 480, Distinguishing Liabilities from Equity (“ASC 480”), and ASC 815, Derivatives and Hedging (“ASC 815”). Equity-classified warrants are recorded in additional paid-in capital and are not remeasured after issuance.
When warrants are issued with debt or other financing instruments, the Company allocates proceeds to the warrants based on the applicable accounting guidance. Amounts allocated to equity-classified warrants are recorded in additional paid-in capital. See Note 13 for further information regarding the Company’s warrants.
Share Subscriptions
The Company accounts for share subscription proceeds in accordance with ASC 505, Equity (“ASC 505”), and considers the liability classification guidance in ASC 480, Distinguishing Liabilities from Equity (“ASC 480”), as applicable. Cash received from investors for shares that have not been issued and remain subject to substantive closing conditions is recorded as a liability until the Company has issued the related shares and has an unconditional right to retain the proceeds. Upon issuance of the related shares, the liability is reclassified to condensed consolidated stockholders’ equity. See Note 14 for further information regarding the Company’s share subscriptions.
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). Revenue is recognized when, or as, control of promised goods or services is transferred to the customer in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.
The Company’s revenues are generated primarily from product sales of drone and related equipment and service revenue from consulting and technical support services, systems integration projects, and customer-funded special projects.
The Company’s contracts generally include fixed consideration specified in customer contracts or invoices. The Company does not have material arrangements with variable consideration, significant financing components, noncash consideration, or consideration payable to customers. Payment terms generally require customer payment within 30 days of invoice issuance, contract initiation, delivery of goods, or completion of services, depending on the terms of the underlying arrangement.
| 14 |
AUTONOMOUS POWER CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2026, AND 2025
Product sales generally consist of drone and related equipment sales. Revenue from product sales is recognized at a point in time, generally upon delivery, when control transfers to the customer. The Company generally identifies a single performance obligation to transfer the related goods to the customer. Shipping and handling activities performed after control of a product has transferred to the customer are accounted for as fulfillment activities and not as separate performance obligations.
Service revenue generally consists of consulting, technical support, systems integration, and customer-funded project arrangements. The Company generally identifies a single performance obligation consisting of an integrated service that combines multiple interdependent activities to deliver a single overall outcome. These performance obligations are generally satisfied over time because the customer simultaneously receives and consumes the benefits of the Company’s performance as the services are provided. Revenue from these arrangements is recognized over time using a cost-to-cost input method. Under this method, revenue is recognized based on costs incurred to date relative to total estimated costs expected to satisfy the performance obligation.
Accounts receivable represent unconditional rights to consideration from customers. Deferred revenue represents amounts billed to or received from customers before the related performance obligations have been satisfied. Customer deposits are recorded as deferred revenue when consideration is received before control of the related goods or services is transferred to the customer. Deferred revenue is recognized as revenue when, or as, the Company transfers control of the related goods or services to the customer in accordance with ASC 606.
The Company evaluates whether it is acting as principal or agent in arrangements that involve third-party service providers or collaborators. When the Company controls the specified goods or services before they are transferred to the customer, the Company recognizes revenue on a gross basis as principal. Amounts paid to third-party service providers or collaborators are recognized as cost of revenues or capitalized as contract costs when the criteria in ASC 340-40 are met.
Product Warranty
The Company provides standard assurance-type warranties for certain product sales. These warranties generally provide customers with protection against non-conformance to agreed product specifications for a limited period following delivery. The Company accrues estimated warranty costs, if any, at the time the related revenue is recognized based on available information, including historical warranty experience, current product sales, and known warranty claims. Product warranty reserves are included in accounts payable and accrued expenses in the condensed consolidated balance sheets. The Company did not recognize a material warranty liability as of the condensed consolidated balance sheet dates presented and did not incur material warranty expense during the periods presented. See Note 4 for further information regarding the Company’s revenue, contract balances, and contract costs.
Cost of Revenues / Cost of Sales
Cost of revenues/cost of sales consists primarily of contract labor, materials and supplies, freight and shipping costs, subcontractor costs, collaborator costs, amortization of developed technology and other direct costs incurred to fulfill customer contracts. Such costs are recognized in cost of revenues as the related goods or services are transferred to the customer or as incurred when the costs do not qualify for capitalization under ASC 340-40.
Collaborative Arrangements
The Company evaluates collaborative arrangements in accordance with ASC 808, Collaborative Arrangements (“ASC 808”). Transactions with collaborative arrangement participants are accounted for based on their nature. Amounts paid to collaborators that assist the Company in fulfilling customer contracts are recognized as cost of revenues or capitalized as contract costs when the criteria in ASC 340-40 are met. Amounts received from customers are accounted for under ASC 606 when the customer obtains goods or services that are an output of the Company’s ordinary activities. See Note 5 for further information regarding the Company’s collaborative arrangement.
General and Administrative Expenses
General and administrative expenses include consulting and contractor costs, professional fees, legal costs, software subscription costs, travel, and other costs related to the Company’s formation and general operations. General and administrative expenses are recognized as incurred.
| 15 |
AUTONOMOUS POWER CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2026, AND 2025
Sales and Marketing Expenses
Sales and marketing expenses consist primarily of advertising and promotional activities, public relations and investor awareness programs, trade show and marketing event costs, outbound shipping costs, business development activities, employee compensation and stock-based compensation associated with sales and marketing personnel, and other costs incurred to generate customer awareness and support revenue growth. Sales and marketing expenses are recognized as incurred.
Research and Development Expenses
Research and development expenses consist primarily of costs incurred in the design, development, testing and enhancement of the Company’s products, technologies and prototypes. Research and development expenses include prototype and engineering costs, materials and components used in development activities, outsourced engineering and consulting services, technology license fees, and costs associated with participation in research and development initiatives and competitions. Research and development costs are expensed as incurred.
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with ASC 718, Compensation—Stock Compensation (“ASC 718”). Stock-based compensation cost is measured based on the grant-date fair value of the award and is recognized as compensation expense over the requisite service period.
For awards with service-based vesting conditions, expense is recognized on a straight-line basis over the requisite service period unless another attribution method is required. For awards with performance-based vesting conditions, expense is recognized when achievement of the performance condition becomes probable. Forfeitures are accounted for as they occur.
The fair value of stock options is estimated on the grant date using the Black-Scholes option-pricing model, which requires management to make assumptions, including the fair value of the Company’s common stock, expected term, expected volatility, risk-free interest rate, and expected dividend yield. See Note 15 for further information regarding the Company’s stock-based compensation.
Income Taxes
The Company accounts for income taxes in accordance with ASC 740, Income Taxes (“ASC 740”). Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial statement carrying amounts and tax bases of assets and liabilities and for net operating loss carryforwards, as applicable. A valuation allowance is recorded when it is more likely than not that some portion or all of a deferred tax asset will not be realized. Interest and penalties related to uncertain tax positions, if any, are recognized as a component of income tax expense.
The Successor is a corporation subject to U.S. federal and state income taxes. The Predecessor was treated as a pass-through entity for income tax purposes and, accordingly, its taxable income or loss was passed through to its members. The condensed consolidated financial statements do not carry forward the Predecessor’s pass-through income tax treatment for periods after the Company’s acquisition of the Predecessor. See Note 16 for further information regarding the Company’s income taxes.
Commitments and Contingencies
The Company accounts for contingencies in accordance with ASC 450, Contingencies (“ASC 450”). Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties, and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. See Note 20 for additional information regarding commitments and contingencies.
Recently Adopted and Recently Issued Accounting Standards
Recently Adopted Accounting Standards
The Company considers the applicability and impact of all accounting standards updates issued by the FASB. During the six months ended June 30, 2026, the Company adopted all accounting standards that were effective and applicable to the Company. The adoption of recently effective accounting standards did not have a material impact on the Company’s condensed consolidated financial statements.
Accounting Standards Not Yet Adopted
ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, requires additional disclosures regarding certain natural expense categories included within relevant income statement captions. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of adopting this guidance on its condensed consolidated financial statement disclosures.
ASU 2025-04, Compensation — Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Clarifications to Share-Based Consideration Payable to a Customer, revises the guidance governing share-based payment awards granted to customers. The amendments (i) broaden the definition of a “performance condition” to explicitly encompass vesting conditions based on a customer’s purchases, (ii) eliminate the forfeiture-policy election for customer awards with service conditions, and (iii) clarify that the variable consideration constraint in ASC 606 does not apply to share-based consideration payable to a customer. The amendments are effective for annual reporting periods beginning after December 15, 2026, including interim periods therein. Early adoption is permitted, provided the entity applies the guidance as of the beginning of the annual period of adoption. The Company is currently evaluating the impact of this guidance and does not expect it to have a material impact on its condensed consolidated financial statements based on arrangements in effect as of June 30, 2026.
| 16 |
AUTONOMOUS POWER CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2026, AND 2025
3. BUSINESS COMBINATIONS (Successor)
Tandem acquisition
On January 15, 2026, the Company acquired all of the membership interests of Tandem for cash consideration of $500. The Tandem acquisition was not material to the condensed consolidated financial statements. The Company did not recognize any identifiable assets acquired, liabilities assumed, or goodwill in connection with the transaction, and the cash consideration was recognized in general and administrative expenses in the condensed consolidated statement of operations during the six months ended June 30, 2026.
Kaizen and Agile acquisitions
The sellers of Kaizen and Agile were related parties of the Company as a result of their indirect ownership of outstanding shares of APC prior to the respective acquisition dates. The following table summarizes the provisional consideration transferred and provisional amounts recognized for the assets acquired and liabilities assumed in connection with the Kaizen and Agile acquisitions and liabilities assumed as of the acquisition date:
| Kaizen | Agile | |||||||
| Consideration | ||||||||
| Cash | $ | 1,000,000 | $ | 2,000,000 | ||||
| Payable - seller | 759,526 | 1,906,000 | ||||||
| Fair value of total consideration transferred | $ | 1,759,526 | $ | 3,906,000 | ||||
| Recognized amounts of identifiable assets acquired and liabilities assumed | ||||||||
| Cash and cash equivalents | $ | 286 | $ | 369,407 | ||||
| Accounts receivable | - | 513,892 | ||||||
| Prepaid expenses | - | 66,521 | ||||||
| Inventory | 12,041 | 95,174 | ||||||
| Other current assets | - | 2,203 | ||||||
| Fixed assets | - | 73,308 | ||||||
| Intangible assets | 1,700,000 | 500,000 | ||||||
| Accounts payable | (7,969 | ) | - | |||||
| Accrued expenses | - | (561,616 | ) | |||||
| Deferred revenue | (217,403 | ) | (302,825 | ) | ||||
| Total identifiable net assets | 1,486,955 | 756,064 | ||||||
| Goodwill | 272,571 | 3,149,936 | ||||||
| Total consideration transferred | $ | 1,759,526 | $ | 3,906,000 | ||||
The purchase price allocations are provisional and subject to change during the measurement period as the Company finalizes the valuation of acquired assets and liabilities assumed, including intangible assets, deferred revenue, working capital, and related tax impacts, if any. Measurement period adjustments, if any, will be recognized in the period in which the adjustments are determined.
| 17 |
AUTONOMOUS POWER CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2026, AND 2025
The goodwill recognized in the Kaizen and Agile acquisitions primarily reflects the expected future benefits from the acquired workforce, expanded technology capabilities, and expected operating synergies.
The cash consideration of $1,000,000 and $2,000,000 paid upon the closings of the Kaizen and Agile acquisitions, respectively, approximated acquisition-date fair value.
The Kaizen acquisition included a contractual deferred installment of $1,000,000, payable approximately three months after closing, which was reduced by the deferred revenue assumed by the Company. The acquisition date fair value of the deferred consideration was $759,526. The Agile acquisition included a deferred installment of $2,000,000, payable approximately six months after closing, with an acquisition-date fair value of $1,906,000.
The deferred installments were valued using a present-value technique and a discount rate of 10%. The discount rate was based on an assessment of the Company’s overall risk profile and reflected implied credit risk consistent with ratings between B and CCC over the respective payment terms of approximately three months for Kaizen and six months for Agile.
The following table summarizes changes in deferred acquisition consideration during the six months ended June 30, 2026:
| Kaizen | Agile | Total | ||||||||||
| Acquisition-date balance | $ | 759,526 | $ | 1,906,000 | $ | 2,665,526 | ||||||
| Noncash settlement of seller note receivable | (126,506 | ) | - | (126,506 | ) | |||||||
| Accretion of discount | 23,071 | 94,000 | 117,071 | |||||||||
| Cash payment | (656,091 | ) | - | (656,091 | ) | |||||||
| Balance at June 30, 2026 | $ | - | $ | 2,000,000 | $ | 2,000,000 | ||||||
During the six months ended June 30, 2026, the Company settled the Kaizen deferred consideration in cash of $633,020 and a noncash settlement of a $126,506 note receivable from the Kaizen sellers to the Company, which was recognized separately from the business combination. No deferred consideration remained payable to the Kaizen sellers at June 30, 2026.
Deferred consideration of $2,000,000 remained payable to the Agile sellers at June 30, 2026 and was subsequently settled in full. See Note 21 Subsequent Events, for additional information on the payment.
The provisional identifiable intangible assets acquired in the Kaizen acquisition consist of developed technology of $1,200,000 and trade names and trademarks of $500,000. The developed technology was valued using the multi-period excess earnings method, and the trade names and trademarks were valued using the relief-from royalty method. The developed technology and trade names and trademarks are each being amortized over an estimated useful life of 10 years. The provisional identifiable intangible asset acquired in the Agile acquisition consists of trade names and trademarks of $500,000, which was valued using the relief-from-royalty method and is being amortized over an estimated useful life of 5 years. These amounts remain provisional pending completion of the related valuations. See Note 10 for additional information regarding the Company’s intangible assets.
In connection with the Kaizen acquisition, the Company paid $17,000 of transaction costs on behalf of the seller, which was included in the cash consideration transferred. The Company did not incur acquisition-related costs in connection with the Kaizen or Agile acquisitions.
4. REVENUE, AND CONTRACT BALANCES
Consolidated revenue for the six months ended June 30, 2026 (Successor) includes revenue attributable to Kaizen, Agile and Tandem beginning January 31, 2026, February 20, 2026 and January 15, 2026, respectively.
Revenue consisted of the following for the periods presented:
| Successor | Predecessor | Predecessor | ||||||||||
Six
months June 30, 2026 | Period
from January 1, 2026 through January 30, 2026 | Six
months June 30, 2025 | ||||||||||
| Product sales | $ | 5,092,511 | $ | - | $ | 219,714 | ||||||
| Service revenue | 578,378 | - | 15,400 | |||||||||
| Total revenues | $ | 5,670,889 | $ | - | $ | 235,114 | ||||||
Product sales are generally recognized at a point in time, and service revenue is generally recognized over time. See Note 2 for further information regarding the Company’s revenue recognition policies.
Accounts receivable and contract liabilities consisted of the following:
| Successor | Successor | Predecessor | ||||||||||
| June 30, 2026 | December 31, 2025 | December 31, 2025 | ||||||||||
| Accounts receivable | $ | 2,652,973 | $ | - | $ | 78,850 | ||||||
Deferred revenue | $ | 2,684,910 | $ | - | $ | 215,106 | ||||||
| Deferred revenue - related parties | $ | 190,000 | $ | - | $ | - | ||||||
Deferred revenue represents amounts billed to or received from customers before the related performance obligations have been satisfied. Deferred revenue - related parties as of June 30, 2026 (Successor) related to Worldwide Friends Foundation, a related party where a shareholder and a consultant of the Company serve on its board of directors. The Company expects to recognize substantially all of the deferred revenue balance as revenue during the year ending December 31, 2026 (Successor).
| 18 |
AUTONOMOUS POWER CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2026, AND 2025
5. COLLABORATIVE ARRANGEMENT (Successor)
On October 24, 2025, the Company entered into an arrangement with Willard Marine, Inc. (“Willard”) related to a specific U.S. government boat project. Under the arrangement, the Company serves as the prime contractor and maintains the primary customer relationship, while Willard Marine, Inc. provides vessel design, manufacturing, testing expertise, personnel, facilities, and related technical capabilities.
The collaboration agreement does not create a separate legal entity. The Company recognizes revenue from the end customer in accordance with ASC 606, and amounts incurred with Willard are recognized as cost of revenues or capitalized as contract costs when the criteria for capitalization in ASC 340-40 are met.
Under the collaboration agreement, if the arrangement is dissolved or the boat project does not continue after the initial term, the Company is entitled to receive ownership of a 7-meter rigid inflatable boat owned by Willard. As of June 30, 2026, the arrangement had not been dissolved, the boat project remained ongoing, and the Company had not recognized the 7-meter rigid inflatable boat as an asset.
During the six months ended June 30, 2026 (Successor), the Company recognized no material revenue, cost of revenues, or capitalized contract costs related to the collaboration agreement.
6. PREPAID EXPENSES AND OTHER RECEIVABLES
Prepaid expenses and other receivables consisted of the following:
| Successor | Successor | Predecessor | ||||||||||
| June 30, 2026 | December 31, 2025 | December 31, 2025 | ||||||||||
| Prepaid vendor advances | $ | 4,811,160 | $ | - | $ | - | ||||||
| Prepaid consulting and advisory services | 518,171 | - | - | |||||||||
| Total prepaid and other receivables | $ | 5,329,331 | $ | - | $ | - | ||||||
7. INVENTORY, NET (Successor)
Inventory, net consisted of the following:
| Successor | Successor | Predecessor | ||||||||||
| June 30, 2026 | December 31, 2025 | December 31, 2025 | ||||||||||
| Parts and materials | $ | 38,929 | $ | - | $ | 352 | ||||||
| Finished goods | 5,417,460 | - | 11,689 | |||||||||
| Gross inventory | 5,456,389 | - | 12,041 | |||||||||
| Inventory reserve | (31,404 | ) | - | - | ||||||||
| Total inventory, net | $ | 5,424,985 | $ | - | $ | 12,041 | ||||||
Inventory is presented net of a reserve of $31,404 as of June 30, 2026 (Successor). The inventory reserve was recognized in cost of revenues during the six months ended June 30, 2026 (Successor).
| 19 |
AUTONOMOUS POWER CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2026, AND 2025
8. INVESTMENTS IN DEBT SECURITIES (Successor)
As of June 30, 2026, the Company held investments in available-for-sale debt securities consisting primarily of U.S. Treasury securities and investment-grade corporate bonds maintained through UBS. These investments are intended to preserve capital while generating current income on excess cash balances.
The Company’s available-for-sale investments consisted of the following as of June 30, 2026:
| Amortized Cost | Gross
Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
| U.S. Treasury securities | ||||||||||||||||
| Due within one year | $ | 13,540,106 | $ | - | $ | (17,563 | ) | $ | 13,522,543 | |||||||
| Due after one year through five years | 7,521,065 | - | (17,812 | ) | 7,503,253 | |||||||||||
| U.S. Treasury securities total | 21,061,171 | - | (35,375 | ) | 21,025,796 | |||||||||||
| Corporate bonds and notes | ||||||||||||||||
| Due within one year | 4,035,067 | - | (4,175 | ) | 4,030,892 | |||||||||||
| Due after one year through five years | 37,976,632 | - | (120,586 | ) | 37,856,046 | |||||||||||
| Corporate bonds and notes total | 42,011,699 | - | (124,761 | ) | 41,886,938 | |||||||||||
| Total investments | $ | 63,072,870 | $ | - | $ | (160,136 | ) | $ | 62,912,734 | |||||||
The June 30, 2026 balances include accrued interest receivable and cash held in the UBS brokerage accounts. Management separately evaluated the debt securities portfolio for unrealized gains and losses and expected credit losses in connection with its available-for-sale classification.
During the six months ended June 30, 2026, the Company recognized realized losses of approximately $1,064 on sales of Investments in debt securities.
Aggregate unrealized losses totaled approximately $160,136 as of June 30, 2026, consisting of unrealized losses of approximately $124,761 related to corporate bonds and $35,375 related to U.S. Treasury securities. These unrealized losses were recorded in accumulated other comprehensive loss and were not recognized in earnings.
Management evaluated the portfolio for expected credit losses in accordance with ASC 326 and concluded that no allowance for credit losses was required as of June 30, 2026 because the portfolio consists primarily of U.S. Treasury securities and investment-grade debt securities. See Note 19, Fair Value Measurements, for additional information regarding the fair value hierarchy.
9. PROPERTY AND EQUIPMENT, NET (Successor)
The Company’s property and equipment consisted of the following:
| June 30, 2026 | ||||
| Equipment | $ | 65,785 | ||
| Furniture and fixtures | 13,805 | |||
| Gross property and equipment | 79,590 | |||
| Less: accumulated depreciation | (1,476 | ) | ||
| Property and equipment, net | $ | 78,114 | ||
Depreciation expense was $1,476 for the six months ended June 30, 2026, respectively.
| 20 |
AUTONOMOUS POWER CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2026, AND 2025
10. GOODWILL AND INTANGIBLE ASSETS, NET (Successor)
The Company recognized goodwill and intangible assets in connection with the acquisitions of Kaizen and Agile during the six months ended June 30, 2026. See Note 3 for further information regarding the acquisitions.
Goodwill consisted of the following:
| Amount | ||||
| Goodwill balance as on January 1, 2026 | $ | - | ||
| Add: Goodwill Acquired in connection with Kaizen acquisition | 272,571 | |||
| Add: Goodwill Acquired in connection with Agile acquisition | 3,149,936 | |||
| Goodwill balance as on June 30, 2026 | $ | 3,422,507 | ||
No goodwill impairment charges were recognized during the six months ended June 30, 2026.
The following table summarizes the gross carrying amount, accumulated amortization and net carrying amount of the Company’s intangible assets:
| June 30, 2026 | ||||
| Developed technology: | ||||
| Gross carrying amount | $ | 1,200,000 | ||
| Accumulated amortization | (50,333 | ) | ||
| Net carrying amount | 1,149,667 | |||
| Tradenames and trademarks: | ||||
| Gross carrying amount | 1,000,000 | |||
| Accumulated amortization | (57,362 | ) | ||
| Net carrying amount | 942,638 | |||
| Website: | ||||
| Gross carrying amount | 17,000 | |||
| Accumulated amortization | (3,565 | ) | ||
| Net carrying amount | 13,435 | |||
| Definite lived intangible assets, net | $ | 2,105,740 | ||
| Intellectual Property: | ||||
| Net carrying amount | $ | 200,000 | ||
| Intangible assets, net | $ | 2,305,740 | ||
The intellectual property asset is considered to have an indefinite useful life and is therefore not amortized, but is tested for impairment annually or more frequently if events or changes in circumstances indicate that it may be impaired.
| 21 |
AUTONOMOUS POWER CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2026, AND 2025
Amortization expense was $111,260 for the six months ended June 30, 2026 of which $50,333 related to developed technology utilized in customer fulfillment was classified within cost of revenues—product sales, and the remaining amortization expense was included within depreciation and amortization in the condensed consolidated statements of operations. No impairment charges related to intangible assets were recognized during the periods presented.
Estimated future amortization expense related to finite-lived intangible assets as of June 30, 2026 was as follows:
| Year ending December 31, | Amount | |||
| Remainder of 2026 | $ | 139,141 | ||
| 2027 | 278,500 | |||
| 2028 | 270,662 | |||
| 2029 | 270,000 | |||
| 2030 | 270,000 | |||
| Thereafter | 877,437 | |||
| Total future amortization expense | $ | 2,105,740 | ||
11. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consisted of the following:
| Successor | Successor | Predecessor | ||||||||||
| June 30, 2026 | December 31, 2025 | December 31, 2025 | ||||||||||
| Accounts payable | $ | 5,249,472 | $ | 392,508 | $ | 93,901 | ||||||
| Accrued expenses | 2,408,681 | 103,651 | - | |||||||||
| Accrued payroll | 99,823 | - | - | |||||||||
| Accrued inventory purchases | 1,107,693 | - | - | |||||||||
| Credit card liability | 70,374 | - | 73,931 | |||||||||
| Interest payable | 555,786 | - | 8,101 | |||||||||
| Total accounts payable and accrued expenses | $ | 9,491,829 | $ | 496,159 | $ | 175,933 | ||||||
12. DEBT AND NOTES PAYABLE
Debt and notes payable consisted of the following:
| Successor | Successor | Predecessor | ||||||||||
| June 30, 2026 | December 31, 2025 | December 31, 2025 | ||||||||||
| Promissory note payable to AGH | $ | 20,000,000 | $ | - | $ | - | ||||||
| Line of credit, related party | - | - | 184,990 | |||||||||
| Total debt and notes payable | 20,000,000 | - | 184,990 | |||||||||
| Debt and notes payable, current | $ | 20,000,000 | $ | - | $ | 184,990 | ||||||
| Debt and notes payable, non-current | $ | - | $ | - | ||||||||
| 22 |
AUTONOMOUS POWER CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2026, AND 2025
Senior notes (Successor)
On February 10, 2026, the Company issued senior notes payable to American Ventures LLC, Series IV Power US (“American Ventures Series IV”), a series of American Ventures LLC, which is a stockholder of AGH, with an original principal amount of $5,555,555. The senior notes were issued with a 10% original issue discount and had a stated maturity date of February 10, 2027. The senior notes included provisions relating to events of default, negative covenants, acceleration provisions, and default interest.
The senior notes were issued together with pre-funded common stock purchase warrants as part of a single financing transaction. The warrants were classified in stockholders’ equity as these were indexed to the Company’s common stock and met the applicable equity-classification conditions. The Company allocated the proceeds from the financing transaction between the senior notes and the warrants on a relative fair value basis. The Company received cash proceeds of $5,000,000 from the issuance of the senior notes and warrants and allocated $3,650,000 of the proceeds to the equity-classified warrants, resulting in an initial debt discount of $4,205,522. The debt discount was amortized to interest expense using the effective interest method until the senior notes were repaid. See Note 13 for further information regarding the warrants.
On March 23, 2026, the Company repaid the senior notes in full for a cash payment of $5,250,000, consisting of $5,187,595 of principal and $62,405 of accrued interest. The repayment was accounted for as a debt extinguishment. In connection with the repayment, the Company wrote off $4,018,377 of unamortized debt discount and derecognized $5,555,555 of senior notes payable and $62,405 of accrued interest payable, resulting in a loss on extinguishment of debt of $3,650,387, which is included in the condensed consolidated statement of operations.
For the six months ended June 30, 2026, the Company recognized interest expense related to the senior notes of $62,405 and amortization of debt discount of $187,145, which are included in interest expense in the condensed consolidated statements of operations.
Promissory note payable to AGH (Successor)
On March 23, 2026, the Company issued a promissory note to AGH in the principal amount of $20,000,000. The note bears simple interest at 10.0% per annum and matures on March 19, 2027. Principal, accrued interest, and any other amounts due under the note are payable at maturity, unless repaid earlier in accordance with the terms of the note. The Company may prepay the note, in whole or in part, prior to maturity.
The AGH note is a senior debt obligation of the Company and includes customary affirmative and negative covenants, events of default, acceleration provisions, and default interest provisions. Upon an event of default, interest accrues on the outstanding payment amount at a default rate of 14.0% per annum. The note also provides AGH with the right, upon an event of default, to convert all or a portion of the outstanding payment amount into shares of the Company’s common stock at a conversion price of $1,979 per share, subject to adjustment in accordance with the terms of the note.
The Company accounts for the AGH note as a debt instrument at amortized cost. As of June 30, 2026, the outstanding principal balance of the AGH note was $20,000,000, accrued interest was $547,945, and the aggregate carrying amount of the note and related accrued interest was $20,547,945. The note was classified as current debt, and no event of default had occurred as of June 30, 2026.
The Company maintains an Acquisition Bonus and Financing Bonus Policy under which certain employees and officers who source a qualifying acquisition or equity or debt financing are eligible to receive an aggregate bonus equal to 4% of the value of the applicable transaction.
The issuance of the AGH note triggered a financing bonus payable to certain employees under the Company’s compensation arrangements. The bonus is calculated based on 4% of the financing proceeds received. For the six months ended June 30, 2026, the related compensation expense was allocated based on the functional responsibilities of the eligible employees, consisting of $456,800 in general and administrative expense and $343,200 in sales and marketing expense, for total compensation expense of $800,000. The entire amount of $800,000 was paid and no amount is outstanding as on June 30, 2026.
See Note 21 for further information on the merger with AGH.
| 23 |
AUTONOMOUS POWER CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2026, AND 2025
Line of credit (Predecessor)
On June 1, 2025, the Company entered into a line of credit agreement with StoneBridge Investment Holdings, LLC that provides for borrowings of up to $250,000. Borrowings under the line of credit bear interest at 12% per annum. Interest is payable upon repayment of the outstanding principal balance. The line of credit matures on January 30, 2027, unless renewed, extended, or repaid earlier in accordance with the terms of the agreement.
As of January 30, 2026 and December 31, 2025, the Company had outstanding line of credit balances of $184,990. Accrued interest payable related to the line of credit was $8,924 as of January 30, 2026. There was no line of credit balance outstanding as of June 30, 2026.
Interest expense
Interest expense related to debt and notes payable consisted of the following:
| Successor | Predecessor | Predecessor | ||||||||||
Six
months June 30, 2026 | Period
from January 1, 2026 through January 30, 2026 | Six
months June 30, 2025 | ||||||||||
| Contractual interest expense — senior notes | $ | 62,405 | $ | - | $ | - | ||||||
| Amortization of debt discount — senior notes | 187,145 | - | - | |||||||||
| Interest expense — AGH note | 547,945 | - | - | |||||||||
| Interest expense — line of credit | - | 2,966 | 1500 | |||||||||
Accretion of discount on deferred acquisition consideration | 117,071 | - | - | |||||||||
Other | 6,132 | - | - | |||||||||
| Total interest expense | $ | 920,698 | $ | 2,966 | $ | 1,500 | ||||||
13. WARRANTS (Successor)
American Ventures Warrants
On February 10, 2026, the Company issued pre-funded common stock purchase warrants in connection with the issuance of senior notes payable to American Ventures Series IV (the “American Ventures Series IV Warrants”). See Note 12 for further information regarding the American Ventures Series IV senior notes, the allocation of proceeds, and the related debt discount.
The American Ventures Series IV Warrants provide the holder with the right to purchase 33,378 shares of the Company’s common stock at an exercise price of $0.001 per share and are exercisable upon the earlier of the registration of the Company’s common stock or the occurrence of a fundamental transaction, as defined in the warrant agreement. At any time the Company’s common stock is registered under Section 12 of the Exchange Act, the holder may not exercise any portion of the American Ventures Series IV Warrants to the extent that, after giving effect to the exercise, the holder, together with its affiliates and attribution parties, would beneficially own more than 9.99% of the Company’s outstanding common stock. The American Ventures Series IV Warrants include customary adjustment provisions for stock splits, stock dividends, recapitalizations, and similar transactions. As of June 30, 2026, all 33,378 pre-funded American Ventures Series IV Warrants remained outstanding.
The Company classified the American Ventures Series IV Warrants in stockholders’ equity and recorded $3,650,000 in additional paid-in capital.
UMAC Warrants
On June 11, 2026, the Company entered into a subscription agreement with Unusual Machines, Inc. (“UMAC”) for the issuance of 14,305 pre-funded warrants for aggregate proceeds of approximately $30,000,000 in a private placement (the “UMAC Warrants”). The subscription was approved by the Company’s Board of Directors. The Company incurred $625,000 of transaction costs in June 2026 in connection with the issuance of the pre-funded UMAC Warrants, consisting of a $600,000 placement agent fee and $25,000 of legal expenses. As the pre-funded UMAC Warrants are accounted for as liabilities, these transaction costs were expensed as incurred during the period. No financing bonus obligation arose in connection with this transaction as the Company’s Acquisition Bonus and Financing Bonus Policy had been suspended prior to the issuance of the pre-funded UMAC Warrants.
| 24 |
AUTONOMOUS POWER CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2026, AND 2025
The UMAC Warrants provide the holder with the right to purchase shares of the Company’s common stock at an exercise price of $0.001 per share upon the earlier of (i) the date the Company’s common stock becomes publicly listed, (ii) the occurrence of a fundamental transaction, as defined in the warrant agreement, or (iii) December 31, 2026. The UMAC Warrants include customary anti-dilution adjustments for stock splits, stock dividends, reorganizations and similar transactions, permit cashless exercise in certain circumstances and contain a 4.99% beneficial ownership limitation.
The Company determined that the UMAC Warrants met the definition of a derivative instrument under ASC 815 and did not qualify for equity classification under ASC 815-40 because the Fundamental Transaction provisions did not satisfy the equity classification requirements of ASC 815-40. Accordingly, the Company classified the UMAC Warrants as a derivative liability and initially recorded them at a fair value of $30,000,000 on June 11, 2026, the date of issuance. The pre-funded UMAC Warrant liability was subsequently remeasured to fair value at each reporting date, resulting in a fair value of $23,656,124 as of June 30, 2026. The change in fair value during the six months ended June 30, 2026, was recorded within statement of operations as Change in fair value of warrants. As of June 30, 2026, all 14,305 pre-funded UMAC Warrants remained outstanding.
The UMAC Warrants were amended on August 20, 2026. See Note 21 for additional information regarding the amendment of the UMAC Warrants.
14. SHARE SUBSCRIPTIONS (Successor)
During the period from October 8, 2025, through December 31, 2025 (Successor), the Company entered into subscription agreements for a private placement of common stock to accredited investors (the “2025 Subscription Agreements”). The agreements provided for a minimum aggregate subscription amount of approximately $4,000,000 at a subscription price of $450 per share, representing a minimum issuance of approximately 8,889 shares of common stock. As of December 31, 2025, investors had subscribed and paid $635,258 for shares of common stock, which had not been issued as of that date.
The subscription financing closed on January 30, 2026, and the related shares were issued. As of March 31, 2026, 13,398 shares had been issued, and $602,464 remained unpaid and was recorded as a stock subscription receivable within condensed consolidated stockholders’ equity. The issuance of these shares resulted in the recognition of approximately $6,000,000 of common stock and additional paid-in capital within stockholders’ equity. During the six months ended June 30, 2026, the Company received payment of the outstanding subscription receivable in full, and accordingly no stock subscription receivable remained outstanding as of June 30, 2026.
On June 16, 2026, the Company entered into a Repurchase and Release Agreement to repurchase 8,345 shares of common stock from a former officer and director for total consideration of $2,000,000. The 8,345 shares were legally transferred to the Company in June 2026, and as of June 30, 2026, the full $2,000,000 obligation was accrued and recognized as treasury stock payable. In July 2026, the Company paid $1,500,000 in cash, with the remaining $500,000 recorded as treasury stock payable on the earlier of June 16, 2027, or five business days following the closing of the pending business combination with AGH.
On March 5, 2026, the Company entered into a subscription agreement with two investment funds managed by KCGI Co., Ltd (“KCGI”) for the private placement of 27,809 shares of common stock at $1,798 per share, for aggregate proceeds of approximately $50,000,000 (the “KCGI Private Placement”). The subscription agreements were approved by the Company’s Board of Directors on March 5, 2026. Closing of the KCGI Private Placement was subject to the continued accuracy of the parties’ representations and warranties, performance of their respective obligations, receipt of required approvals, and the absence of any law or order prohibiting the transaction. The KCGI Private Placement closed on April 3, 2026, and the Company received aggregate gross proceeds of $50,000,582 and issued 27,809 shares of common stock. See Note 20 for information regarding an equity-based consulting agreement with AUT Holdings LLC, an affiliate of KCGI.
The closing of the KCGI Private Placement triggered a financing bonus payable to certain employees under the Company’s compensation arrangements. The bonus is calculated based on 4% of the financing proceeds received. The Company recognized compensation expense of $2,000,000 during the six months ended June 30, 2026, and allocated based on the functional responsibilities of the eligible employees, consisting of $1,143,200 recognized within general and administrative expense and $856,800 recognized within sales and marketing expense, for total compensation expense of $2,000,000.
15. STOCK-BASED COMPENSATION (Successor)
On February 5, 2026, the Company established the 2026 Stock Incentive Plan, effective January 1, 2026. The 2026 Stock Incentive Plan provides for the grant of stock-based awards, including incentive stock options, nonqualified stock options, restricted stock awards, and other equity-based awards, to employees, directors, and nonemployees.
During the six months ended June 30, 2026 (Successor), the Company granted stock options under the 2026 Stock Incentive Plan. The consulting arrangement with JHG Strategies LLC provides for restricted stock units of the combined company as described in Note 20.
The stock options granted during the Successor period have an exercise price of $450 per share and generally vest in equal quarterly installments over periods of two to three years, subject to continued service, and all awards provide for accelerated vesting upon a qualifying change in control, which includes the merger with AGH.
| 25 |
AUTONOMOUS POWER CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2026, AND 2025
Certain award agreements specify a vesting commencement date of January 1, 2026. The grant dates were determined to be March 5, 2026 and March 6, 2026, which represent the dates on which the awards were approved and the key terms of the awards were established. The stock options are equity-classified awards.
During the six month period ended June 30, 2026, the Company granted non-qualified stock option to purchase 38,621 shares of its common stock under the Company’s 2026 Stock Incentive Plan. The options have an exercise price of $450.00 per share, a contractual term of 10 years, and vests in equal quarterly installments over two years.
Stock-based compensation expense recognized in the condensed consolidated statements of operations was as follows:
| Successor | ||||
| Six
Months Ended June 30, 2026 | ||||
| General and administrative expenses | $ | 5,391,674 | ||
| Sales and marketing expenses | 2,907,807 | |||
| Total stock-based compensation expense | $ | 8,299,481 | ||
The following table summarizes stock option activity during the six months ended June 30, 2026 (Successor):
| Options | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||||||
| Outstanding as of January 1, 2026 | - | $ | - | |||||||||||||
| Granted | 38,621 | 450 | ||||||||||||||
| Exercised | - | - | ||||||||||||||
| Forfeited, expired or cancelled | (2,222 | ) | 450 | |||||||||||||
| Outstanding as of June 30, 2026 | 36,399 | $ | 450 | 9.5 years | $ | 49,065,852 | ||||||||||
| Exercisable as of June 30, 2026 | - | 450 | ||||||||||||||
The fair value of stock options granted during the six months ended June 30, 2026 was estimated using the Black-Scholes option-pricing model using the following weighted-average assumptions.
The expected term was estimated based on the anticipated timing of the merger with AGH. Expected volatility was based on the asset volatility of selected publicly traded guideline companies, adjusted to reflect the Company’s capital structure, using a lookback period commensurate with the expected term of the awards. The risk-free interest rate was based on the interpolated U.S. Treasury constant maturity yield for a term commensurate with the expected term of the awards.
| Successor | ||||
| Six
Months Ended June 30, 2026 | ||||
| Expected term | 0.8 years | |||
| Expected volatility | 118.00 | % | ||
| Risk-free interest rate | 3.60 | % | ||
| Expected dividend yield | 0.00 | % | ||
| Fair value of common stock | $ | 1,798.00 | ||
| Weighted-average grant date fair value | $ | 1,391.49 | ||
No stock options were exercised during the period. As of June 30, 2026, total unrecognized stock-based compensation cost related to unvested stock options was $42,349,364 which is expected to be recognized over a weighted-average remaining service period of 1.5 years. In connection with the merger with AGH, the outstanding stock options vested in full. See Note 21 for further information regarding the merger with AGH.
| 26 |
AUTONOMOUS POWER CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2026, AND 2025
16. INCOME TAXES
The Company recorded no provision for income taxes for the six months ended June 30, 2026 (Successor), the period from January 1, 2026 through January 30, 2026 (Predecessor), or the six months ended June 30, 2025 (Predecessor). The Company’s effective tax rate (“ETR”) for the six-months ended June 30, 2026 and 2025 was 0% and 0%, respectively. The difference between the U.S. federal statutory tax rate and the Company’s effective tax rate is primarily attributable to losses for which no tax benefit was recognized due to the establishment and maintenance of a full valuation allowance against deferred tax assets.
Accordingly, the tax benefit that would otherwise result from pretax losses was offset by a corresponding increase in the valuation allowance, resulting in no income tax provision or benefit being recognized during the periods presented
17. INVESTMENT IN POWERUS USA LLC (Successor)
On March 31, 2026, the Company and G1 Exploration LLC (“G1”) entered into agreements relating to the formation and operation of Powerus USA LLC (“Powerus USA”), an entity intended to commercialize defense and autonomous power technology products. Under the agreements, the Company holds a 51% interest in Powerus USA, and G1 holds the remaining 49% interest. The agreements contemplate that G1 will contribute certain intellectual property and that the Company will provide operational funding and access to its distribution infrastructure.
As of June 30, 2026, Powerus USA had not commenced operations, and the Company had not contributed cash or other assets to Powerus USA. The Company had no carrying amount associated with its equity-method investment and recognized no equity-method income or loss for the six months ended June 30, 2026.
18. RELATED PARTIES
The Company had amounts due to related parties consisting of shareholder loans, short-term notes payable and other related party obligations.
The balance of Due to related parties (other), presented on the condensed consolidated balance sheets consisted of the following:
| Successor | Successor | Predecessor | ||||||||||
| June 30, 2026 | December 31, 2025 | December 31, 2025 | ||||||||||
| Shareholder loan | $ | - | $ | - | $ | 167,684 | ||||||
| Related parties loan | - | - | 93,750 | |||||||||
| Consulting services accruals and reimbursable expenses | - | 319,531 | - | |||||||||
| Due to related parties (other) | $ | - | $ | 319,531 | $ | 261,434 | ||||||
The consulting services accruals and reimbursable expenses as of December 31, 2025 (Successor) related to services provided by directors of the Company and were therefore considered related parties. The related-party balances were unsecured, non-interest bearing, and due on demand. The shareholder loans as on December 31, 2025 (Predecessor) was unsecured, non-interest-bearing, and due on demand. The related parties loan as of December 31, 2025 (Predecessor) was a short-term, unsecured promissory note with affiliates, and bore interest at 5.0% per annum.
During the six months ended June 30, 2026, the Company entered into a Repurchase and Release Agreement with a former owner of Kaizen to repurchase shares of the Company’s common stock for $2.0 million. See Note 14 for additional information regarding the transaction and related treasury stock payable outstanding as of June 30, 2026.
As of June 30, 2026, deferred acquisition consideration of $2,000,000 remained payable to the sellers of Agile, who are shareholders of the Company. The balance is presented separately as deferred acquisition consideration—related parties in the condensed consolidated balance sheet. On August 20, 2026, the Company paid totaling approximately $2,000,000 to settle the obligation. See Note 3 and 21 for additional information regarding the acquisitions and deferred consideration and subsequent settlement.
In March 2026, the Company entered into an arrangement with Worldwide Friends Foundation (“Worldwide Friends”) for the sale of equipment and related accessories for $1,000,000. Worldwide Friends is a related party because a shareholder and a consultant of the Company serve on its board of directors. The Company received the full contract amount in cash during six-months ended June 30, 2026. Revenue of $810,000 was recognized from the arrangement during the six months ended June 30, 2026. The remaining $190,000 is included in Deferred revenue - related parties on the condensed consolidated balance sheet as of June 30, 2026.
19. FAIR VALUE MEASUREMENTS
The Company measures certain financial assets and liabilities at fair value in accordance with ASC 820, Fair Value Measurement. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).
| 27 |
AUTONOMOUS POWER CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2026, AND 2025
Assets measured at fair value on a recurring basis:
| June 30, 2026 | Level 1 | Level 2 | Level 3 | Total Fair Value | ||||||||||||
| U.S. Treasury securities | $ | - | $ | 21,025,796 | $ | - | $ | 21,025,796 | ||||||||
| Corporate bonds and notes | - | 41,886,938 | - | 41,886,938 | ||||||||||||
| Total | $ | - | $ | 62,912,734 | $ | - | $ | 62,912,734 | ||||||||
U.S. Treasury securities and corporate bonds are included within ‘Investments in debt securities’ in the accompanying consolidated balance sheets.
Liabilities measured at fair value on a recurring basis:
| June 30, 2026 | Level 1 | Level 2 | Level 3 | Total Fair Value | ||||||||||||
| Warrant liability | $ | - | $ | - | $ | 23,656,124 | $ | 23,656,124 | ||||||||
The warrant liability is included within ‘Warrant liability’ in the accompanying consolidated balance sheets.
Investments in Debt Securities
The Company’s Investments in debt securities consist primarily of U.S. Treasury securities and investment-grade corporate bonds and are measured at fair value on a recurring basis. Unrealized gains and losses are recorded in accumulated other comprehensive income (loss). Realized gains and losses are recognized in earnings upon sale or maturity of the securities.
The fair values of the Company’s available-for-sale debt securities are determined using quoted prices for similar instruments, broker/dealer quotations, pricing services and other observable market inputs. Accordingly, the securities are classified within Level 2 of the fair value hierarchy.
Warrant liability
The Company measures the UMAC Warrant liability at fair value on a recurring basis and classifies the liability within Level 3 of the fair value hierarchy because the valuation incorporates significant unobservable inputs. Changes in the fair value of the UMAC Warrant liability are recognized in earnings in the period in which they occur.
The following table presents the significant quantitative unobservable inputs used in the valuation of the UMAC Warrant liability as of June 30, 2026:
| 30-Jun-26 | Valuation Technique | Significant Unobservable Inputs | Input | |||
| Warrant liability | Black Scholes option pricing model | Fair value of underlying stock price | $2,390.74 | |||
| Expected volatility | 106% | |||||
| Expected term | 0.25 years |
| 28 |
AUTONOMOUS POWER CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2026, AND 2025
The fair value of the UMAC Warrant liability was determined using an Black-Scholes option pricing model, which management believes is appropriate because the UMAC Warrants contain a fixed exercise price and the valuation is based on assumptions regarding the fair value of the underlying stock, expected volatility, expected term and risk-free interest rates. Significant unobservable inputs included the estimated fair value of the Company’s common stock underlying the UMAC Warrant, expected volatility, and expected term. Expected volatility was estimated based on the historical volatility of comparable publicly traded companies, adjusted for differences in capital structure to reflect the Company’s financial leverage. Expected term was based on management’s estimate of the expected closing date of the proposed transaction. The probability of a deal close or exercise event reflected management’s assessment of the likelihood of consummation of the proposed merger and remained unchanged from the June 11, 2026 valuation.
The fair value of the Company’s common stock underlying the UMAC Warrant was determined using the market price of AGH common stock, adjusted for the Exchange Ratio (as defined in Note 21), due to the probability and expected timing of the merger with AGH. A significant increase (decrease) in the estimated stock price, expected volatility, or probability of a deal close or exercise event, in isolation, would generally result in a significantly higher (lower) fair value measurement of the UMAC Warrant liability. The effect of a change in a particular assumption may be mitigated or amplified by changes in other assumptions used in the valuation model.
Reconciliation of Level 3 Warrant liability
| Warrant liabilities | Amount | |||
| Beginning balance as on January 1, 2026 | $ | - | ||
| Initial recognition upon issuance | 30,000,000 | |||
| Change in fair value of warrants | (6,343,876 | ) | ||
| Ending balance as on June 30, 2026 | $ | 23,656,124 | ||
20. COMMITMENTS AND CONTINGENCIES
Consulting and Advisory Agreements (Successor)
The Company is party to certain consulting and advisory agreements that provide for equity-based consideration. Under a consulting agreement with JHG Strategies LLC, effective April 1, 2026, the Company agreed to grant 200,000 restricted stock units of the combined company under the equity incentive plan of the combined company, subject to consummation of the merger with AGH. The first 50,000 restricted stock units have a scheduled vesting date of August 1, 2026, four months after the April 1, 2026 Commencement Date, with the remaining restricted stock units vesting in quarterly installments of 25,000, subject to specified quarterly service requirements and the forfeiture provisions of the agreement. As of June 30, 2026, the merger had not been consummated and the related performance condition was not considered probable of achievement. Accordingly, no related stock-based compensation expense or related liability was recognized as of June 30, 2026. See Note 21 for additional information regarding the merger with AGH.
On March 5, 2026, the Company entered into an advisory services agreement with KCGI in connection with the subscription agreements described in Note 14. The agreement was subsequently assigned to its affiliate, AUT Holdings LLC, on March 26, 2026, and amended and restated effective April 27, 2026. The agreement provides for total equity-based compensation of $1,080,000 for the three-year initial term, equivalent to $90,000 per quarter over the service period, payable in shares of the combined company’s common stock. As of June 30, 2026, the Company recognized $116,703 of general and administrative expense for service period from March 5, 2026 through June 30, 2026. The amount was included in accounts payable and accrued expenses.
Other than the arrangements described above, as of the condensed consolidated balance sheet dates presented, the Company had no material purchase commitments or other contractual commitments requiring disclosure.
Legal Proceedings
The Company is not involved in any legal proceedings, claims, or litigation and is not aware of any pending or threatened matters that would have a material impact on its condensed consolidated financial position, results of operations, or cash flows. No loss contingency accruals were recorded as of the condensed consolidated balance sheet dates presented.
21. SUBSEQUENT EVENTS
Management has evaluated subsequent events and transactions occurring after June 30, 2026 through October [15] 2026, the date these condensed consolidated financial statements were available to be issued.
Agreement and Plan of Merger with Aureus Greenway Holding, Inc.
On March 8, 2026, AGH, Aureus Merger Sub Inc. (“Merger Sub”), the Company, and Andrew Fox, solely in his capacity as the Stockholder Representative, entered into an Agreement and Plan of Merger, as amended in July 2026 (the “Merger Agreement”). On October 1, 2026, the Company consummated the merger with AGH. Pursuant to the Merger Agreement with AGH:
| ● | Each share of the Company’s common stock issued and outstanding immediately prior to the consummation of the merger (other than excluded shares and dissenting shares) was automatically converted into the right to receive 599.18229 shares of AGH common stock (the “Exchange Ratio”). | |
| ● | Each outstanding stock option of the Company, which accelerated and vested in full upon consummation of the merger, was assumed by AGH and converted into a stock option exercisable for shares of AGH common stock at the Exchange Ratio. | |
| ● | Each warrant of APC was assumed by AGH and converted into a warrant exercisable for shares of AGH common stock at the Exchange Ratio. | |
| ● | Each holder of common stock of the Company became entitled to receive a portion of 55,000,000 additional shares of AGH common stock (the “Earn Out Shares”). The Earn Out Shares became fully earned, vested and non-contingent as of the closing of the merger. |
| 29 |
AUTONOMOUS POWER CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2026, AND 2025
The initial accounting for the business combination is incomplete as a result of the timing of the acquisition.
In connection with the consummation of the merger, on October 3, 2026, the combined company approved a $9,955,000 transaction completion bonus.
UMAC Warrants
On August 20, 2026, the Company amended and restated the UMAC Warrants to provide that, following a Fundamental Transaction, the warrant holder is entitled to receive the same consideration, including the same election among securities, cash, or other property, available to holders of the Company’s common stock. The amended warrants also provide that the Company is not required to net cash settle an exercise of the warrants. See Note 13 for additional information regarding the UMAC Warrants.
American Ventures Advisory Warrants
On September 1, 2026, the Company entered into a Financial Advisory Agreement with American Ventures LLC, Series LII Powerus II, pursuant to which American Ventures agreed to provide financial advisory services to the Company. As consideration for such services, the Company issued 6,675 pre-funded warrants, each exercisable for one share of the Company’s common stock at an exercise price of $0.001 per share.
Lease Agreement
On September 14, 2026, the Company entered into a lease agreement for warehouse and industrial space located in Rock Hill, South Carolina. The lease commenced on September 14, 2026, and has an initial term of 12 months, with monthly base rent of approximately $137,974. Upon execution of the lease, the Company prepaid base rent of approximately $1.7 million and paid a security deposit of approximately $0.3 million. The lease provides the Company with an option to extend the lease term for an additional five years and an option to purchase the property for $36.0 million, subject to the terms and conditions of the agreement.
Deferred Acquisition Consideration
Subsequent to June 30, 2026, the Company settled the remaining deferred acquisition consideration associated with the acquisition of Agile. On August 20, 2026, the Company paid approximately $2,000,000 to satisfy the obligation in full.
Legal Settlement
In August 2026, a former consultant asserted claims against the Company relating to the consultant’s engagement and subsequent termination. In September 2026, the Company entered into a settlement agreement pursuant to which the Company agreed to make a payment of $100,000 in full settlement of the matter. The settlement agreement resolved all claims asserted against the Company in connection with the matter.
Except as disclosed above, management determined that there were no subsequent events requiring adjustment to or disclosure in the accompanying condensed consolidated financial statements.
| 30 |
Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Defined terms used below have the same meanings ascribed to them elsewhere in this Current Report on Form 8-K.
The Merger
On March 8, 2026, Aureus Greenway Holdings Inc. (“AGH” or “Parent”), Aureus Merger Sub Inc. (“Merger Sub”), Autonomous Power Corporation (“APC” or the “Company”), and Andrew Fox, solely in his capacity as the Stockholder Representative, entered into an Agreement and Plan of Merger (the “Merger Agreement”). On October 1, 2026, following satisfaction or waiver of the applicable closing conditions, Merger Sub merged with and into APC, with APC surviving as a wholly owned subsidiary of AGH and the surviving corporation of the merger (the “Merger”). AGH, following the Merger, is referred to herein as the “Combined Company”. In connection with the Merger, AGH changed its name to “Powerus Corporation”.
At the effective time of the Merger on October 1, 2026 (the “Effective Time”):
| i. | each share of APC common stock (“APC Common Shares”) issued and outstanding immediately prior to the Effective Time (other than excluded shares and dissenting shares) was automatically converted into the right to receive 599.18229 shares of AGH common stock (the “Exchange Ratio”), subject to adjustment in accordance with the terms of the Merger Agreement. |
| ii. | each outstanding APC stock option was assumed by AGH and converted into an option to purchase shares of AGH common stock, with the number of underlying shares and the exercise price adjusted based on the Exchange Ratio, in accordance with the terms of the Merger Agreement. |
| iii. | each outstanding APC warrant was assumed by AGH and converted into a warrant to purchase shares of AGH common stock, with the number of underlying shares and the exercise price adjusted based on the Exchange Ratio, in accordance with the terms of the Merger Agreement. |
| iv. | each holder of APC Common Shares became entitled to receive a portion of 55,000,000 additional shares of AGH common stock (the “Earn Out Shares”). Pursuant to the First Amendment to the Merger Agreement (“Amendment No. 1”), the Earn Out Shares became fully earned, vested and non-contingent as of the closing of the Merger (the “Closing”). |
APC Acquisitions
Prior to 2026, APC had no revenue-generating operations, and its activities consisted primarily of formation, fundraising, business development, acquisition-related activities, and other organizational activities.
On January 15, 2026, APC acquired Tandem Defense LLC (“Powerus Defense”), a defense technology entity that had no operations at the acquisition date, for cash consideration of $500. Powerus Defense is focused on the design and development of unmanned aerial systems and related tactical defense solutions. The Powerus Defense acquisition was not material.
On January 30, 2026, APC acquired Kaizen Aerospace, Inc. (“Kaizen”), which manufactures and sells drone platforms and provides related drone services for total consideration transferred of $1.8 million, consisting of $1.0 million paid at Closing and deferred cash consideration with an acquisition-date fair value of approximately $0.8 million.
On February 20, 2026, APC acquired Agile Autonomy LLC (“Agile”), which provides maritime autonomy and unmanned systems integration services, including the retrofitting of manned vessels into remotely operated or autonomous surface vessels, integration of unmanned aerial systems, customer-funded special projects, and related technical support for total consideration transferred of $3.9 million, consisting of $2.0 million paid at Closing and deferred cash consideration with an acquisition-date fair value of approximately $1.9 million.
The acquisitions of Kaizen and Agile are collectively referred to herein as the “APC Acquisitions”.
| 1 |
Related Transactions
In addition to the Merger and the APC Acquisitions, the unaudited pro forma condensed combined financial information gives effect to the following transactions and adjustments (collectively, the “Related Transactions”):
| ● | the accelerated vesting of outstanding APC stock options upon Closing and the related estimated stock-based compensation expense; | |
| ● | the recognition of legal and other professional fees incurred by APC in connection with the Merger and not reflected in its historical financial statements; | |
| ● | the issuance of 200,000 restricted stock units (“RSUs”) of the Combined Company pursuant to the JHG Consulting Agreement, consisting of 50,000 RSUs that vest four months after April 1, 2026 commencement date and 25,000 RSUs that vest quarterly thereafter, and the related estimated stock-based compensation expense; | |
| ● | the issuance of 200,000 fully vested RSUs of the Combined Company pursuant to the Saker RSU Award upon Closing and the related stock-based compensation expense; | |
| ● | the approval of merger-related cash bonuses totaling $9,955,000 payable and the recognition of the related compensation expense; | |
| ● | the issuance of 6,675 APC pre-funded warrants to American Ventures LLC pursuant to the advisory agreement dated September 1, 2026 in exchange for financial advisory services (the “AV Advisory Warrants”) and the related compensation expense; | |
| ● | the amendment of the warrants issued in connection with the UMAC Financing (the “UMAC Warrants”) on August 20, 2026 and the resulting reclassification of the UMAC Warrants from liabilities to stockholders’ equity; and | |
| ● | the elimination on consolidation of the $20,000,000 promissory note issued by APC to AGH, including related accrued interest. |
The Merger, the APC Acquisitions and the Related Transactions are collectively referred to herein as the “Merger and Related Transactions.”
In connection with the Merger, Andrew Fox, Roman Vintfeld and Michael Sinensky acquired 50%, 25% and 25%, respectively, of AGH’s outstanding Series A preferred stock from the existing holder (the “Preferred Purchase”). The Preferred Purchase is a separate transaction between stockholders and does not result in a separate adjustment to the unaudited pro forma condensed combined financial information. However, the voting rights associated with the Series A preferred stock following the Preferred Purchase were considered in identifying APC as the accounting acquirer.
Accounting Treatment
APC’s acquisitions of Kaizen and Agile were accounted for as business combinations in accordance with ASC 805, Business Combinations (“ASC 805”). Kaizen was determined to be APC’s predecessor for financial reporting purposes. Accordingly, Kaizen’s historical results prior to its acquisition by APC on January 30, 2026 are presented as the predecessor periods in APC’s historical financial statements. The Merger will be accounted for as a reverse acquisition under U.S. GAAP, with APC determined to be the accounting acquirer and AGH determined to be the accounting acquiree. Accordingly, the historical financial statements of APC will become the historical financial statements of the Combined Company following the consummation of the Merger.
Unaudited Pro Forma Presentation
The unaudited pro forma condensed combined balance sheet as of June 30, 2026 combines the historical consolidated balance sheet of AGH and the historical consolidated balance sheet of APC, giving effect to the Merger and Related Transactions as if they had occurred on June 30, 2026. APC’s acquisitions of Kaizen and Agile are recognized in APC’s historical balance sheet as of June 30, 2026, and therefore no transaction accounting adjustments for Kaizen or Agile are presented in the unaudited pro forma condensed combined balance sheet as of June 30, 2026. The unaudited pro forma condensed combined statements of operations and comprehensive loss for the year ended December 31, 2025 and the six months ended June 30, 2026 give effect to (i) the acquisitions of Kaizen and Agile as if they had occurred on January 1, 2025, (ii) the Merger as if it had occurred on January 1, 2025, and (iii) the Related Transactions as if they had occurred on January 1, 2025. The unaudited pro forma condensed combined statements of operations and comprehensive loss combine the historical results of AGH, APC, Kaizen and Agile for the applicable periods presented and reflect the related pro forma adjustments.
| 2 |
The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X and is derived from the historical financial information of AGH, APC, Kaizen and Agile, after giving effect to the acquisitions of Kaizen and Agile, the Merger and the Related Transactions, together with the related pro forma adjustments.
The unaudited pro forma condensed combined financial information should be read in conjunction with:
| ● | the historical audited financial statements of AGH as of and for the year ended December 31, 2025 and the related notes included in AGH’s Annual Report on Form 10-K for the year ended December 31, 2025; | |
| ● | the historical unaudited interim financial statements of AGH as of and for the six months ended June 30, 2026 and the related notes included in AGH’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2026; | |
| ● | the historical audited financial statements of APC as of December 31, 2025 and for the period from October 8, 2025 (inception) through December 31, 2025, and the related notes included in this Current Report on Form 8-K; | |
| ● | the historical audited financial statements of Kaizen as of December 31, 2025 and 2024 and for the years then ended, and the related notes included in this Current Report on Form 8-K; | |
| ● | the historical unaudited condensed consolidated financial statements of APC as of and for the six months ended June 30, 2026 (Successor), and for the period from January 1, 2026 through January 30, 2026 (Predecessor), and the related notes included in this Current Report on Form 8-K; and | |
| ● | the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of AGH” included in AGH’s previously filed reports with the SEC. |
The unaudited pro forma condensed combined financial information is based upon currently available information and assumptions that management believes are reasonable under the circumstances.
The pro forma adjustments are based upon estimates and assumptions that are subject to change as additional information becomes available and additional analyses are completed. The pro forma adjustments have been made solely for purposes of providing the unaudited pro forma condensed combined financial information. Differences between these preliminary estimates, including APC’s purchase price allocations of Kaizen, Agile, and AGH and APC’s final purchase price allocations of Kaizen, Agile, AGH and Merger and Related Transactions may occur, and such differences could have a material impact on the accompanying unaudited pro forma condensed combined financial information.
The unaudited pro forma condensed combined financial information is presented for illustrative purposes only and does not purport to represent the financial position or results of operations that actually would have occurred had the Merger, APC Acquisitions and the Related Transactions been completed on the dates indicated, nor does it purport to project the future financial position or operating results of the Combined Company. The unaudited pro forma condensed combined financial information does not reflect any anticipated operating efficiencies, cost savings, revenue enhancements, integration costs, restructuring activities or other synergies or dis-synergies that may result from the Merger. Actual results following the completion of the Merger may differ materially from those reflected in the unaudited pro forma condensed combined financial information presented herein.
| 3 |
Unaudited Pro Forma Condensed Combined Balance Sheet
As of June 30, 2026
| Historical | Transaction Accounting | Pro Forma | ||||||||||||||||
| AGH | APC | Adjustments | Note | Combined | ||||||||||||||
| ASSETS | ||||||||||||||||||
| Current assets | ||||||||||||||||||
| Cash and cash equivalents | $ | 22,200,258 | $ | 25,007,680 | $ | - | $ | 47,207,938 | ||||||||||
| Accounts receivable | 68,029 | 2,652,973 | - | 2,721,002 | ||||||||||||||
| Investment in convertible note | 20,547,945 | - | (20,547,945 | ) | 5(A) | - | ||||||||||||
| Inventory, net | 31,361 | 5,424,985 | - | 5,456,346 | ||||||||||||||
| Prepaid expenses and other receivables | 203,770 | 5,329,331 | - | 5,533,101 | ||||||||||||||
| Investments in debt securities | - | 62,912,734 | - | 62,912,734 | ||||||||||||||
| Other current assets | 1,364 | 599,075 | - | 600,439 | ||||||||||||||
| Total current assets | 43,052,727 | 101,926,778 | (20,547,945 | ) | 124,431,560 | |||||||||||||
| Non-current assets | ||||||||||||||||||
| Property and equipment, net | 3,842,885 | 78,114 | 1,657,115 | 5(B) | 5,578,114 | |||||||||||||
| Intangible assets, net | - | 2,305,740 | - | 2,305,740 | ||||||||||||||
| Right-of-use assets | 803,421 | - | - | 803,421 | ||||||||||||||
| Goodwill | - | 3,422,507 | 37,416,219 | 4(C) | 40,838,726 | |||||||||||||
| Deferred tax assets | 288,315 | - | - | 288,315 | ||||||||||||||
| Prepaid expenses | 106,250 | - | - | 106,250 | ||||||||||||||
| Total non-current assets | 5,040,871 | 5,806,361 | 39,073,334 | 49,920,566 | ||||||||||||||
| Total Assets | $ | 48,093,598 | $ | 107,733,139 | $ | 18,525,389 | $ | 174,352,126 | ||||||||||
| LIABILITIES & STOCKHOLDERS’ EQUITY | ||||||||||||||||||
| Current liabilities | ||||||||||||||||||
| Accounts payable and accrued expenses | $ | 412,262 | $ | 9,491,829 | $ | 9,557,055 | 5(C) | $ | 19,461,146 | |||||||||
| Treasury stock payable - related party | - | 2,000,000 | - | 2,000,000 | ||||||||||||||
| Deferred revenue | 190,959 | 2,684,910 | - | 2,875,869 | ||||||||||||||
| Deferred revenue-related parties | - | 190,000 | - | 190,000 | ||||||||||||||
| Debt and notes payable | - | 20,000,000 | (20,000,000 | ) | 5(A) | - | ||||||||||||
| Deferred acquisition consideration - related parties | - | 2,000,000 | - | 2,000,000 | ||||||||||||||
| Operating lease liabilities – current | 218,343 | - | - | 218,343 | ||||||||||||||
| Total current liabilities | 821,564 | 36,366,739 | (10,442,945 | ) | 26,745,358 | |||||||||||||
| Non-current liabilities | ||||||||||||||||||
| Operating lease liabilities, non-current portion | 585,078 | - | - | 585,078 | ||||||||||||||
| Deferred tax liabilities | 44,936 | - | - | 44,936 | ||||||||||||||
| Warrant liability | - | 23,656,124 | (23,656,124 | ) | 5(H) | - | ||||||||||||
| Total non-current liabilities | 630,014 | 23,656,124 | (23,656,124 | ) | 630,014 | |||||||||||||
| Total Liabilities | 1,451,578 | 60,022,863 | (34,099,069 | ) | 27,375,372 | |||||||||||||
| Stockholders’ Equity | ||||||||||||||||||
| Preferred stock | 10,000 | - | - | 10,000 | ||||||||||||||
| Common stock | 26,944 | 141 | 138,521 | 5(D1) | 165,606 | |||||||||||||
| Additional Paid in Capital | 52,603,507 | 68,020,780 | 112,222,731 | 5(D3) | 232,847,018 | |||||||||||||
| Accumulated other comprehensive loss | - | (160,136 | ) | - | (160,136 | ) | ||||||||||||
| Accumulated deficit | (5,998,431 | ) | (18,150,509 | ) | (59,736,794 | ) | 5(D2) | (843,885,734 | ) | |||||||||
| Treasury stock | - | (2,000,000 | ) | - | (2,000,000 | ) | ||||||||||||
| Total Stockholders’ Equity | 46,642,020 | 47,710,276 | 52,624,458 | 146,976,754 | ||||||||||||||
| Total Liabilities and Stockholders’ Equity | $ | 48,093,598 | $ | 107,733,139 | $ | 18,525,389 | $ | 174,352,126 | ||||||||||
See Notes to the Unaudited Pro Forma Condensed Combined Financial Information.
| 4 |
Unaudited Pro Forma Condensed Combined Statement of Operations and Comprehensive Loss
For the six months ended June 30, 2026
| Historical | Transaction Accounting Adjustments | |||||||||||||||||||||||||||||||||||||
| AGH (As adjusted, Note 1) | APC | Kaizen Pre- acquisition(1) | Agile
Pre- Acquisition(2) | Kaizen Acquisition adj. | Note | Agile Acquisition adj. | Note | Merger and Related Transactions Adjustments | Note | Pro Forma Combined | ||||||||||||||||||||||||||||
| Revenues | $ | 2,177,836 | $ | 5,670,889 | $ | - | $ | 1,577,896 | $ | - | $ | - | $ | - | $ | 9,426,621 | ||||||||||||||||||||||
| Cost of revenue / cost of sales | (1,063,830 | ) | (3,479,012 | ) | - | (966,248 | ) | (9,863 | ) | 5(F) | - | (202,246 | ) | 5(B) | (5,721,199 | ) | ||||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||||||||||||||
| General and administrative | 3,336,461 | 15,936,607 | 110,913 | 37,871 | - | - | - | 19,421,852 | ||||||||||||||||||||||||||||||
| Sales and marketing | - | 3,467,506 | 44 | - | - | - | 258,000 | 5(E) | 3,725,550 | |||||||||||||||||||||||||||||
| Research and development | - | 1,442,402 | 24,206 | - | - | - | - | 1,466,608 | ||||||||||||||||||||||||||||||
| Depreciation and amortization | - | 62,403 | - | 399 | 4,110 | 5(F) | 13,973 | 5(G) | - | 80,885 | ||||||||||||||||||||||||||||
| Other operating expenses | - | 887,816 | - | - | - | - | - | 887,816 | ||||||||||||||||||||||||||||||
| Total operating expenses | 3,336,461 | 21,796,734 | 135,163 | 38,270 | 4,110 | 13,973 | 258,000 | 25,582,711 | ||||||||||||||||||||||||||||||
| (Loss)/Income from operations | (2,222,455 | ) | (19,604,857 | ) | (135,163 | ) | 573,378 | (13,973 | ) | (13,973 | ) | (460,246 | ) | (21,877,289 | ) | |||||||||||||||||||||||
| Other income (expense): | ||||||||||||||||||||||||||||||||||||||
| Interest income from convertible notes | 547,945 | - | - | - | - | - | (547,945 | ) | 5(A) | - | ||||||||||||||||||||||||||||
| Interest expense | - | (920,698 | ) | (2,966 | ) | - | - | - | 547,945 | 5(A) | (375,719 | ) | ||||||||||||||||||||||||||
| Interest income | - | 478,021 | - | - | - | - | - | 478,021 | ||||||||||||||||||||||||||||||
| Loss on extinguishment of debt | - | (3,650,387 | ) | - | - | - | - | - | (3,650,387 | ) | ||||||||||||||||||||||||||||
| Change in fair value of warrants | - | 6,343,876 | - | - | - | - | (6,343,876 | ) | 5(H) | - | ||||||||||||||||||||||||||||
| Other income / (expense), net | 390,420 | 12,048 | - | - | - | - | - | 402,468 | ||||||||||||||||||||||||||||||
| Total other income (expense), net | 938,365 | 2,262,860 | (2,966 | ) | - | - | - | (6,343,876 | ) | (3,145,617 | ) | |||||||||||||||||||||||||||
| (Loss)/Income before income taxes | (1,284,090 | ) | (17,341,997 | ) | (138,129 | ) | 573,378 | (13,973 | ) | (13,973 | ) | (6,804,122 | ) | (25,022,906 | ) | |||||||||||||||||||||||
| Provision for income taxes | 15,071 | - | - | - | - | - | - | 15,071 | ||||||||||||||||||||||||||||||
| Net (Loss)/Income | (1,299,161 | ) | (17,341,997 | ) | (138,129 | ) | 573,378 | (13,973 | ) | (13,973 | ) | (6,804,122 | ) | (25,037,977 | ) | |||||||||||||||||||||||
| Other comprehensive loss: | ||||||||||||||||||||||||||||||||||||||
| Unrealized loss on available-for-sale debt securities, net of tax | - | (160,136 | ) | - | - | - | - | - | (160,136 | ) | ||||||||||||||||||||||||||||
| Comprehensive (Loss)/Income | $ | (1,299,161 | ) | $ | (17,502,133 | ) | $ | (138,129 | ) | $ | 573,378 | $ | (13,973 | ) | $ | (13,973 | ) | $ | (6,804,122 | ) | $ | (25,198,113 | ) | |||||||||||||||
| (Loss) Earnings per share attributable to common stockholders | ||||||||||||||||||||||||||||||||||||||
| Basic and diluted loss per common share | $ | (0.03 | ) | 5(I) | $ | (0.12 | ) | |||||||||||||||||||||||||||||||
| Weighted average number of common shares outstanding, basic and diluted | 47,393,195 | 5(I) | 214,992,696 | |||||||||||||||||||||||||||||||||||
1Kaizen is presented for the period from January 1, 2026 through January 30, 2026, the date APC acquired Kaizen. The historical information has been derived from the Predecessor period included in APC’s historical June 30, 2026 unaudited interim financial statements included elsewhere in this Current Report on Form 8-K.
2Agile is presented for the period from January 1, 2026 through February 20, 2026, the date APC acquired Agile. The historical information has been derived from Agile’s historical information.
See Notes to the Unaudited Pro Forma Condensed Combined Financial Information.
| 5 |
Unaudited Pro Forma Condensed Combined Statement of Operations and Comprehensive Loss
For the year ended December 31, 2025
| Historical | Transaction Accounting Adjustments | |||||||||||||||||||||||||||||||||||||
| AGH (As adjusted, Note 1) | APC(1) | Kaizen | Agile | Kaizen Acquisition | Note | Agile Acquisition | Note | Merger and Related Transactions Adjustments | Note | Pro Forma Combined | ||||||||||||||||||||||||||||
| Revenues | $ | 2,964,377 | $ | - | $ | 675,242 | $ | 1,853,735 | $ | - | $ | - | $ | - | $ | 5,493,354 | ||||||||||||||||||||||
| Cost of revenue / cost of sales | (1,895,713 | ) | - | (329,108 | ) | (1,311,004 | ) | (120,000 | ) | 5(F) | - | (489,494 | ) | 5(B), 5(E) | (4,145,319 | ) | ||||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||||||||||||||
| General and administrative | 5,474,863 | 623,662 | 812,293 | 85,813 | - | - | 43,999,744 | 5(E) | 50,996,375 | |||||||||||||||||||||||||||||
| Sales and marketing | - | 77,478 | 3,535 | - | - | - | 21,466,621 | 5(E) | 21,547,634 | |||||||||||||||||||||||||||||
| Research and development | - | - | 48,311 | - | - | - | 23,750 | 5(E) | 72,061 | |||||||||||||||||||||||||||||
| Depreciation and amortization | - | - | - | 243,000 | 50,000 | 5(F) | 100,000 | 5(G) | - | 393,000 | ||||||||||||||||||||||||||||
| Other operating expenses | - | 3,721 | 8,996 | 1,723 | - | - | - | 14,440 | ||||||||||||||||||||||||||||||
| Total operating expenses | 5,474,863 | 704,861 | 873,135 | 330,536 | 50,000 | 100,000 | 65,490,115 | 73,023,510 | ||||||||||||||||||||||||||||||
| (Loss)/Income from operations | (4,406,199 | ) | (704,861 | ) | (527,001 | ) | 212,195 | (170,000 | ) | (100,000 | ) | (65,979,609 | ) | (71,675,475 | ) | |||||||||||||||||||||||
| Other income (expense): | ||||||||||||||||||||||||||||||||||||||
| Interest expense | (4,491 | ) | - | (13,589 | ) | (7,000 | ) | - | - | - | (25,080 | ) | ||||||||||||||||||||||||||
| Other income | 642,248 | - | - | - | - | - | 642,248 | |||||||||||||||||||||||||||||||
| Total other income (expense), net | 637,757 | - | (13,589 | ) | (7,000 | ) | - | - | - | 617,168 | ||||||||||||||||||||||||||||
| (Loss)/Income before income taxes | (3,768,442 | ) | (704,861 | ) | (540,590 | ) | 205,195 | (170,000 | ) | (100,000 | ) | (65,979,609 | ) | (71,058,309 | ) | |||||||||||||||||||||||
| Provision for income taxes | (91,412 | ) | - | - | - | - | - | - | (91,412 | ) | ||||||||||||||||||||||||||||
| Net (Loss)/Income | (3,677,030 | ) | (704,861 | ) | (540,590 | ) | 205,195 | (170,000 | ) | (100,000 | ) | (65,979,609 | ) | (70,966,895 | ) | |||||||||||||||||||||||
| Other comprehensive income (loss) | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
| Comprehensive (Loss)/Income | $ | (3,677,030 | ) | $ | (704,861 | ) | $ | (540,590 | ) | $ | 205,195 | $ | (170,000 | ) | $ | (100,000 | ) | $ | (65,979,609 | ) | $ | (70,966,895 | ) | |||||||||||||||
| (Loss) Earnings per share attributable to common stockholders | ||||||||||||||||||||||||||||||||||||||
| Basic and diluted loss per common share | $ | (0.27 | ) | 5(I) | $ | (0.39 | ) | |||||||||||||||||||||||||||||||
| Weighted average number of common shares outstanding, basic and diluted | 13,859,559 | 5(I) | 181,409,060 | |||||||||||||||||||||||||||||||||||
1APC (Successor) is presented for the period from October 8, 2025 (Inception) through December 31, 2025.
See Notes to the Unaudited Pro Forma Condensed Combined Financial Information.
| 6 |
NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION
The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X. The historical financial information of AGH, APC, Kaizen, and Agile has been adjusted in the unaudited pro forma condensed combined financial information to reflect transaction accounting adjustments related to the APC Acquisitions, Merger, and Related Transactions, based upon the assumptions and adjustments described in the accompanying notes.
Accounting for the Merger
The Merger will be accounted for as a reverse acquisition under U.S. GAAP, with APC determined to be the accounting acquirer and AGH determined to be the accounting acquiree.
The determination that APC is the accounting acquirer is based on an evaluation of the facts and circumstances surrounding the Merger and, in particular, the indicators set forth in ASC 805. Management considered, among other factors, the following:
| ● | Following the consummation of the Merger and the Preferred Purchase, former holders of APC equity interests hold a majority of the voting interests of the Combined Company. Management’s assessment of the relative voting rights in the Combined Company gives effect to the voting rights associated with AGH’s Series A preferred stock and the Preferred Purchase. |
| ● | The Combined Company is largely led by the management team of APC, including the officers responsible for the historical operations and strategic direction of APC. |
| ● | The board of directors of the Combined Company will be comprised entirely of individuals designated by APC. |
| ● | APC was determined to be larger than AGH. |
The assets acquired and liabilities assumed from AGH are recognized at their estimated acquisition-date fair values, with any excess of the consideration transferred over the identifiable net assets acquired recognized as goodwill. APC’s historical equity is recapitalized to reflect the legal capital structure of AGH.
AGH Reclassification Adjustments
During the preparation of the unaudited pro forma condensed combined financial information, management performed a preliminary analysis of AGH’s financial information to identify differences in financial statement presentation as compared to the presentation of the Combined Company. Based on a preliminary analysis performed, certain reclassification adjustments have been made to conform AGH’s historical combined financial statement presentation to the Combined Company’s condensed consolidated financial statement presentation.
| 7 |
Refer to the tables below for a summary of adjustments made to present AGH’s historical unaudited statement of operations and comprehensive loss for the six months ended June 30, 2026 and year ended December 31, 2025, to conform with the presentation of the Company’s respective historical unaudited condensed consolidated statement of operations and comprehensive loss.
| AGH Historical IS Line Items | APC Historical IS Line Items | AGH Historical June 30, 2026 | Notes | Reclassification Adjustments | Policy Conforming adjustments | Notes | AGH (As Adjusted) June 30, 2026 | |||||||||||||||||
| Total Revenue | Total Revenue | $ | (2,177,836 | ) | $ | - | $ | - | $ | (2,177,836 | ) | |||||||||||||
| Cost of Revenues / Cost of Sales | - | (A) (B) (C) | 936,244 | 127,586 | (G) | 1,063,830 | ||||||||||||||||||
| Operating Costs | ||||||||||||||||||||||||
| Golf operating costs (exclusive of depreciation and salaries and benefits shown separately below) | Cost of Revenues / Cost of Sales | 776,831 | (A) | (776,831 | ) | - | - | |||||||||||||||||
| Cost of food and beverage sales (exclusive of depreciation and salaries and benefits shown separately below) | Cost of Revenues / Cost of Sales | 114,906 | (B) | (114,906 | ) | - | - | |||||||||||||||||
| Cost of merchandise sales (exclusive of depreciation and salaries and benefits shown separately below) | Cost of Revenues / Cost of Sales | 44,507 | (C) | (44,507 | ) | - | - | |||||||||||||||||
| Salaries and benefits | General and Administrative | 1,582,778 | (D) | 1,753,683 | - | 3,336,461 | ||||||||||||||||||
| Depreciation | Cost of Revenues / Cost of Sales | 127,586 | - | (127,586 | ) | (G) | - | |||||||||||||||||
| Other general and administration expenses | General and Administrative | 1,753,683 | (D) | (1,753,683 | ) | - | - | |||||||||||||||||
| Total operating costs | Total operating expenses | 4,400,291 | (936,244 | ) | (127,586 | ) | 3,336,461 | |||||||||||||||||
| Loss from operations | Operating Loss | 2,222,455 | - | - | 2,222,455 | |||||||||||||||||||
| Other Income | ||||||||||||||||||||||||
| Interest expense | Interest Expense | - | - | - | - | |||||||||||||||||||
| Interest income from investment in convertible note | Interest Income | 547,945 | (E) | - | - | 547,945 | ||||||||||||||||||
| Other Income | 390,420 | - | - | 390,420 | ||||||||||||||||||||
| Total other income, net | Other income/ (expense), net | 938,365 | - | - | 938,365 | |||||||||||||||||||
| Loss before income tax | Loss before income taxes | 1,284,090 | - | - | 1,284,090 | |||||||||||||||||||
| Income tax expense | Provision for income taxes | 15,071 | (F) | - | - | 15,071 | ||||||||||||||||||
| Net Loss | Net Loss | 1,299,161 | - | - | 1,299,161 | |||||||||||||||||||
| Comprehensive Loss | Comprehensive Loss | $ | 1,299,161 | $ | - | $ | - | $ | 1,299,161 | |||||||||||||||
| A. | Reflects the reclassification of golf operating costs (exclusive of depreciation and salaries and benefits shown separately below) into cost of revenue / cost of sales. | |
| B. | Reflects the reclassification of cost of food and beverage sales (exclusive of depreciation and salaries and benefits shown separately below) into cost of revenue / cost of sales. | |
| C. | Reflects the reclassification of cost of merchandise sales (exclusive of depreciation and salaries and benefits shown separately below) into cost of revenue / cost of sales. | |
| D. | Reflects the reclassification of salaries and benefits expense and other general and administrative expense into general and administrative, resulting in total general and administrative expense of $3,336,461. | |
| E. | Reflects the reclassification of interest income from investment in convertible note to interest income. | |
| F. | Reflects the reclassification of income tax expense into provision for income taxes. | |
| G. | Reflects the adjustment to conform to APC’s policy of presenting depreciation in cost of revenues / cost of sales. |
| 8 |
| AGH Historical IS Line Items | APC Historical IS Line Items | AGH Historical December 31, 2025 | Notes | Reclassification Adjustments | Policy Conforming adjustments | Notes | AGH (As Adjusted) December 31, 2025 | |||||||||||||||||
| Total Revenue | Total Revenue | $ | (2,964,377 | ) | $ | - | $ | - | $ | (2,964,377 | ) | |||||||||||||
| Cost of Revenues / Cost of Sales | - | (A) (B) (C) | 1,675,213 | 220,500 | (G) | 1,895,713 | ||||||||||||||||||
| Operating Costs | ||||||||||||||||||||||||
| Golf operating costs (exclusive of depreciation and salaries and benefits shown separately below) | Cost of Revenues / Cost of Sales | 1,413,436 | (A) | (1,413,436 | ) | - | - | |||||||||||||||||
| Cost of food and beverage sales (exclusive of depreciation and salaries and benefits shown separately below) | Cost of Revenues / Cost of Sales | 204,653 | (B) | (204,653 | ) | - | - | |||||||||||||||||
| Cost of merchandise sales (exclusive of depreciation and salaries and benefits shown separately below) | Cost of Revenues / Cost of Sales | 57,124 | (C) | (57,124 | ) | - | - | |||||||||||||||||
| Salaries and benefits | General and Administrative | 3,300,897 | (D) | 2,173,966 | - | 5,474,863 | ||||||||||||||||||
| Depreciation | Cost of Revenues / Cost of Sales | 220,500 | - | (220,500 | ) | (G) | - | |||||||||||||||||
| Legal and professional fees | General and Administrative | 733,397 | (D) | (733,397 | ) | - | - | |||||||||||||||||
| Other general and administration expenses | General and Administrative | 1,440,569 | (D) | (1,440,569 | ) | - | - | |||||||||||||||||
| Total operating costs | Total operating expenses | 7,370,576 | (1,675,213 | ) | (220,500 | ) | 5,474,863 | |||||||||||||||||
| Loss from operations | Operating Loss | 4,406,199 | - | - | 4,406,199 | |||||||||||||||||||
| Other Income | ||||||||||||||||||||||||
| Interest expense | Interest Expense | (4,491 | ) | - | - | (4,491 | ) | |||||||||||||||||
| Other Income | Other income / (expense), net | 642,248 | (E) | - | - | 642,248 | ||||||||||||||||||
| Total other income, net | Other income/ (expense), net | 637,757 | - | - | 637,757 | |||||||||||||||||||
| Loss before income tax | Loss before income taxes | 3,768,442 | - | - | 3,768,442 | |||||||||||||||||||
| Income tax expense | Provision for income taxes | (91,412 | ) | (F) | - | - | (91,412 | ) | ||||||||||||||||
| Net Loss | Net Loss | 3,677,030 | - | - | 3,677,030 | |||||||||||||||||||
| Comprehensive Loss | Comprehensive Loss | $ | 3,677,030 | $ | - | $ | - | $ | 3,677,030 | |||||||||||||||
| A. | Reflects the reclassification of golf operating costs (exclusive of depreciation and salaries and benefits shown separately below) into cost of revenue / cost of sales. |
| B. | Reflects the reclassification of cost of food and beverage sales (exclusive of depreciation and salaries and benefits shown separately below) into cost of revenue / cost of sales. |
| C. | Reflects the reclassification of cost of merchandise sales (exclusive of depreciation and salaries and benefits shown separately below) into cost of revenue / cost of sales. |
| D. | Reflects the reclassification of salaries and benefits expense, legal and professional fees and other general and administrative expense into general and administrative, resulting in total general and administrative expense of $5,474,863. |
| E. | Reflects the reclassification of other income into other income / expense, net. |
| F. | Reflects the reclassification of income tax expense into provision for income taxes |
| G. | Reflects the adjustment to conform to APC’s policy of presenting depreciation in cost of revenues / cost of sales. |
| 9 |
NOTE 2. SHARES AND OTHER SECURITIES ISSUABLE UPON CLOSING OF THE MERGER
At the Closing, each outstanding share of APC Common Shares was converted into the right to receive shares of AGH common stock at the Exchange Ratio of 599.18229 pursuant to the Merger Agreement. Outstanding APC stock options and warrants were assumed by AGH and converted into replacement options and warrants, respectively, with the number of underlying shares and exercise prices adjusted based on the Exchange Ratio.
The following table summarizes the APC securities outstanding at Closing and the corresponding AGH securities issued in connection with the Merger, and the Earn Out Shares and the RSUs of AGH/Combined Company issued in connection with the Merger:
APC securities outstanding at Closing | AGH/Combined Company shares or underlying shares upon Closing | |||||||
| APC Common Shares | 132,952 | (1) | 79,662,484 | |||||
| Earn Out Shares issued at Closing | - | 55,000,000 | (2) | |||||
| APC stock options converted into replacement options | 36,399 | (3) | 21,809,640 | |||||
| APC warrants converted into replacement warrants | 54,358 | (4) | 32,570,351 | |||||
| AGH restricted stock units granted at Closing | - | 400,000 | (5) | |||||
| Total shares and shares underlying replacement awards | 223,709 | 189,442,475 | ||||||
Notes
(1) Represents APC Common Shares outstanding at Closing, exchanged for AGH common stock based on the Exchange Ratio upon Closing.
(2) Represents 55,000,000 shares of AGH common stock issued to APC stockholders at Closing.
(3) Represents outstanding APC stock options after giving effect to option forfeitures at Closing which were assumed by AGH and converted into replacement options based on the Exchange Ratio.
(4) Represents APC’s outstanding warrants, including 33,378 American Venture Series IV Warrants, 14,305 UMAC Warrants and 6,675 AV Advisory Warrants. Pursuant to the Merger Agreement, these warrants were assumed by AGH and converted into replacement warrants based on the Exchange Ratio.
(5) Represents the 200,000 restricted stock units of the Combined Company APC agreed to issue to JHG Strategies LLC pursuant to the consulting agreement effective April 1, 2026, and the Saker RSU Award of 200,000 RSUs of the Combined Company, which was approved on October 1, 2026 on consummation of the Merger. The JHG RSUs are subject to the contractual vesting schedule of which 50,000 RSUs vested upon consummation of the Merger and the remaining RSUs vest in quarterly installments of 25,000. The Saker RSUs were fully vested at Closing.
NOTE 3. PRELIMINARY PURCHASE PRICE ALLOCATION OF APC’S ACQUISITION OF KAIZEN AND AGILE
The preliminary purchase price allocation of APC’s acquisition of Kaizen and Agile is included in Note 3. Business Combinations to APC’s historical unaudited condensed consolidated financial statements as of and for the six months ended June 30, 2026 (Successor), included in this Current Report on Form 8-K.
| 10 |
NOTE 4. MERGER PRELIMINARY PURCHASE PRICE ALLOCATION
The preliminary allocation of the purchase consideration to the assets acquired and liabilities assumed is based on currently available information and estimated acquisition-date fair values. The excess of the purchase consideration over the preliminary fair value of the identifiable net assets acquired has been recorded as goodwill. The preliminary purchase price allocation, including the related income tax effects, is subject to change as additional information becomes available and the valuation analyses are finalized. Any resulting adjustments could materially affect the amounts assigned to identifiable assets, liabilities and goodwill, as well as the related depreciation and amortization expense reflected in the unaudited pro forma condensed combined financial information. The identifiable intangible assets considered in the preliminary purchase price allocation include the trade name and trademark associated with AGH’s golf course operations and an existing website. Based on market-participant assumptions, including the current and expected use of these assets following the Merger, no material separate fair value has been assigned to these assets. No related amortization expense has been reflected in the unaudited pro forma condensed combined statements of operations and comprehensive loss.
Property and equipment comprises land, buildings, recreational facilities and property improvements associated with AGH’s two golf courses, Kissimmee Bay Country Club and Remington Golf Club. The estimated aggregate fair values of these properties are $3,000,000 and $2,500,000, respectively. The combined $5,500,000 provisional fair value is allocated among the property and equipment classes presented below. Buildings and recreational facilities have an estimated remaining useful life of 39 years, and property improvements have an estimated remaining useful life of 7 years. Land is not depreciated. The fair values of the two golf courses were estimated by management using an independent third-party appraisal of the fee simple interests. The appraisal applied the sales comparison approach using comparable golf course transactions and considered factors including location, physical characteristics, overall utility, revenue potential and market positioning.
| NOTES | AGH | |||||||
| ASSETS ACQUIRED | ||||||||
| Cash | $ | 22,200,258 | ||||||
| Accounts receivable | 68,029 | |||||||
| Inventory | 31,361 | |||||||
| Prepaid expenses | 203,770 | |||||||
| Other current assets | 1,364 | |||||||
| Property and equipment | 5,500,000 | |||||||
| Right-of-use assets | 803,421 | |||||||
| Deferred tax assets | 288,315 | |||||||
| Prepaid expenses, non-current | 106,250 | |||||||
| Total Assets | 29,202,768 | |||||||
| LIABILITIES ASSUMED | ||||||||
| Accounts payable and accrued liabilities | 412,262 | |||||||
| Deferred revenue | 190,959 | |||||||
| Operating lease liabilities | 218,343 | |||||||
| Operating Lease liabilities, non-current portion | 585,078 | |||||||
| Deferred tax liabilities | 44,936 | |||||||
| Total Liabilities | 1,451,578 | |||||||
| PRELIMINARY FAIR VALUE OF IDENTIFIABLE NET ASSETS ACQUIRED | $ | 27,751,190 | ||||||
| GOODWILL ARISING ON ACQUISITION: | ||||||||
| Gross deemed equity consideration | (A) | 86,219,464 | ||||||
| Less: Pre-existing APC promissory note and related accrued interest on Closing | (B) | (21,052,055 | ) | |||||
| Preliminary purchase consideration | 65,167,409 | |||||||
| Less: preliminary fair value of identifiable net assets acquired | (27,751,190 | ) | ||||||
| Preliminary goodwill arising from the Merger | (C) | 37,416,219 | ||||||
(A) The preliminary gross deemed equity consideration was measured using the 26,943,582 shares of AGH Common Stock issued and outstanding immediately prior to Closing at $3.20 per share, representing the closing market price of AGH Common Stock on Closing.
(B) Represents the pre-existing $20,000,000 promissory note issued by APC to AGH and related accrued interest. Accrued interest was $1,052,055 at Closing. The related balances are eliminated on consolidation. Refer to Note 5 (D)(2) for $504,110 of interest accrued after June 30, 2026.
(C) Management will evaluate the goodwill recognized in connection with the Merger for impairment as of the Effective Time of the Merger Closing (the fourth quarter of the fiscal year-ended December 31, 2026).
| 11 |
NOTE 5. PRO FORMA ADJUSTMENTS
The pro forma adjustments reflect the Merger and Related Transactions. Adjustments relating to provisional fair values and related income tax effects remain subject to change as the purchase price allocations are finalized.
Pro Forma Notes:
5(A) Represents the elimination, upon consummation of the Merger, of the $20,000,000 promissory note issued by APC to AGH on March 23, 2026 and related accrued interest of $547,945 as of June 30, 2026, which became intercompany balances. The unaudited pro forma condensed combined statement of operations and comprehensive loss for the six months ended June 30, 2026 reflects the elimination of the related $547,945 of interest income recognized by AGH and interest expense recognized by APC.
5(B) Represents the provisional fair value adjustments to property and equipment described in Note 4 reflected in the unaudited pro forma condensed combined balance sheet as of June 30, 2026.
The unaudited pro forma condensed combined statements of operations and comprehensive loss reflect estimated incremental depreciation of $319,494 for the year ended December 31, 2025 and $202,246 for the six months ended June 30, 2026 related to the depreciable portion of the provisional fair value adjustment, presented within cost of revenue/cost of sales.
5(C) Represents the increase to accounts payable and accrued expenses, for the following:
| Transaction-related costs described in Note 5(E) | $ | 150,000 | ||
| Merger-related bonuses and services fees described in Note 5(E) | 9,955,000 | |||
| Elimination of accrued interest related to promissory note described in Note 5(A) | (547,945 | ) | ||
| Net transaction accounting adjustment to accounts payable and accrued expenses | $ | 9,557,055 | ||
5(D) Reflects the recapitalization of APC’s historical equity to reflect the legal capital structure of AGH following the Merger.
The estimated pro forma shares of AGH Common Stock outstanding are calculated as follows:
| Shares | ||||
| AGH Common Stock outstanding as of June 30, 2026 | 26,943,582 | |||
| AGH Common Stock issued subsequent to June 30, 2026 | - | |||
| AGH Common Stock outstanding as of October 1, 2026 | 26,943,582 | |||
| AGH Common Stock issuable to eligible APC shareholders (Note 2) | 83,662,026 | |||
| Earn Out Shares issued to former APC shareholders (Note 2) | 55,000,000 | |||
| Total AGH Common Stock issued in connection with the Merger | 138,662,026 | |||
| Estimated pro forma AGH Common Stock outstanding | 165,605,608 | |||
5(D)(1) The transaction accounting adjustment to common stock is based on the total AGH Common Stock issued in connection with Closing of 138,662,026 and AGH’s par value of $0.001 per share.
5(D)(2) The transaction accounting adjustment to accumulated deficit is calculated as follows:
| Elimination of AGH’s historical accumulated deficit | $ | 5,998,431 | ||
| Aggregate 2025 adjustments described in Note 5(E) (excluding JHG Consulting Agreement RSUs) | (64,973,115 | ) | ||
| Stock-based compensation associated with the JHG Consulting Agreement RSUs described in Note 5(E) | (258,000 | ) | ||
| Additional accrued interest on the APC promissory note through Closing described in Note 4(B) | (504,110 | ) | ||
| Net transaction accounting adjustment to accumulated deficit | $ | (59,736,794 | ) |
| 12 |
5(D)(3) The transaction accounting adjustment to additional paid-in capital is calculated as follows:
| Gross deemed equity consideration described in Note 4 | $ | 86,219,464 | ||
| Elimination of AGH’s historical additional paid-in capital | (52,603,507 | ) | ||
| Amount allocated to common and preferred stock at par value, net of historical APC common stock | (175,465 | ) | ||
| AV Advisory Warrants described in Note 5(E) | 11,878,751 | |||
| UMAC Warrant reclassification described in Note 5(H) | 23,656,124 | |||
| Saker RSU Award described in Note 5(E) | 640,000 | |||
| Stock-based compensation associated with accelerated vesting of APC stock options described in Note 5(E) | 42,349,364 | |||
| Stock-based compensation associated with the JHG Consulting Agreement RSUs described in Note 5(E) | 258,000 | |||
| Net transaction accounting adjustment to additional paid-in capital | $ | 112,222,731 |
As of June 30, 2026, AGH had 10,000,000 shares of Series A preferred stock issued and outstanding, with a par value of $0.001 per share and an aggregate carrying amount of $10,000. Each share is entitled to 20 votes and votes together with AGH Common Stock. The Series A preferred stock is nonconvertible, is not entitled to receive dividends and has no liquidation preference over AGH Common Stock. The outstanding Series A preferred stock remained outstanding following the Merger. The Preferred Purchase, as defined above, represents a transfer of the outstanding Series A preferred stock among stockholders and does not result in the issuance, cancellation or modification of the preferred shares. Accordingly, no pro forma adjustment has been recorded.
5(E) For the six months ended June 30, 2026, reflects the stock-based compensation expense associated with the RSUs granted under the JHG Consulting Agreement, described below. For the year ended December 31, 2025, represents the aggregate adjustments resulting from the Merger and the Related Transactions, consisting of the following:
Cost of revenues/ cost of sales | General and administrative expense | Sales and marketing | Research and development | Total | ||||||||||||||||
| Transaction-related costs | - | 150,000 | - | - | 150,000 | |||||||||||||||
| Merger-related bonuses and service fees | 85,000 | 5,813,500 | 4,032,750 | 23,750 | 9,955,000 | |||||||||||||||
| Pre-funded AV Advisory Warrants | - | 11,878,751 | - | - | 11,878,751 | |||||||||||||||
| Saker RSU Award | - | 640,000 | - | - | 640,000 | |||||||||||||||
| Accelerated stock options | - | 25,517,493 | 16,831,871 | - | 42,349,364 | |||||||||||||||
| JHG Consulting Agreement RSUs | - | - | 602,000 | - | 602,000 | |||||||||||||||
| Total adjustment | $ | 85,000 | $ | 43,999,744 | $ | 21,466,621 | $ | 23,750 | $ | 65,575,115 | ||||||||||
Transaction-related costs. Reflects legal and other professional fees incurred by APC after June 30, 2026 in connection with the Merger and not included in APC’s historical financial statements for the six months ended June 30, 2026.
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Merger-related bonuses and service fees. Reflects one-time cash bonuses and service fees payable to employees and executive
officers in connection with the Merger. On July 17, 2026, the AGH Board approved the creation of a bonus pool not exceeding $10,000,000,
payable to officers and employees of the Combined Company after the Closing of the Merger (the “Bonus Pool”) in order to
provide a compelling long-term financial incentive for key employees through consummation of the Merger. On October 3, 2026, the Compensation
Committee of the Combined Company approved individual allocations for the Bonus Pool totaling $9,955,000. These payments require no additional
service after Closing and were not included in APC’s historical financial statements for the six months ended June 30, 2026. The
payments are reflected as compensation expense separate from the AGH purchase price allocation. The expense is allocated based on the
recipients’ functions and the nature of the services provided as presented in the table above. As the amounts remain unpaid, the
balance sheet adjustment increases accounts payable and accrued liabilities, with a corresponding increase in accumulated deficit.
Pre-funded AV Advisory Warrants. Reflects the expense associated with 6,675 APC pre-funded AV Advisory Warrants, which were issued pursuant to the advisory agreement dated September 1, 2026. The warrants were issued in exchange for financial advisory services to be provided by American Ventures LLC, Series LII Powerus II. The pre-funded AV Advisory Warrants are not subject to an additional service or vesting requirement. The compensation cost is measured at the September 1, 2026 grant-date fair value of the AV Advisory Warrants, as determined by management using an independent valuation report. The fair value of the Company’s common stock underlying the AV Advisory Warrants was determined using the market price of AGH common stock, adjusted for the Exchange Ratio. The AV Advisory Warrants are classified in equity because they are indexed to APC’s own common stock and meet the applicable equity-classification conditions, including settlement in shares without a substantive requirement to settle the warrants in cash. Based on the Company’s preliminary conclusion, the warrants are accounted for as nonemployee share-based payment awards under ASC 718, Compensation—Stock Compensation (“ASC 718”) and are not subsequently remeasured while they remain equity-classified.
Saker RSU Award. Reflects stock-based compensation expense associated with 200,000 restricted stock units granted to Matthew J. Saker on October 1, 2026. The grant-date fair value was measured using the closing price of AGH common stock of $3.20 per share. The award was fully vested upon Closing and requires no additional service. The adjustment increases general and administrative expense and additional paid-in capital, with a corresponding increase in accumulated deficit.
Accelerated stock options. Acceleration is provided for under the existing equity incentive plan and applicable award agreements and does not constitute a modification of the awards. The adjustment represents the remaining unrecognized grant-date compensation cost associated with unvested options outstanding as of Closing, after giving effect to forfeitures through that date. The expense is allocated based on the recipients’ functional responsibilities as presented in the table above.
JHG
Consulting Agreement RSUs. Reflects stock-based compensation expense associated with the RSUs granted under the JHG Consulting Agreement.
The grant-date fair value was measured using the June 5, 2026 closing price of AGH common stock of $5.16. The adjustment reflects compensation
expense over the applicable service periods, assuming the Merger occurred on January 1, 2025. Upon consummation of the Merger, 50,000
RSUs were vested and the related compensation expense of $258,000 from service inception of April 1, 2026 through June 30, 2026
increases additional paid-in capital and accumulated deficit.
Except for compensation expense associated with the JHG Consulting Agreement RSUs, these expenses are not expected to recur beyond 12 months after the Merger. Compensation expense associated with the JHG Consulting Agreement RSUs is recognized over the applicable service periods.
5(F) Represents incremental amortization expense related to the preliminary fair values of the identifiable intangible assets recognized in APC’s acquisition of Kaizen, assuming the acquisition occurred on January 1, 2025. The identifiable intangible assets consist of developed technology with a preliminary fair value of $1,200,000 and an estimated useful life of ten years, and trademarks and trade names with a preliminary fair value of $500,000 and an estimated useful life of ten years.
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For the year ended December 31, 2025, the resulting incremental amortization expense was $170,000, of which $120,000 was presented within cost of goods and services and $50,000 was presented within depreciation and amortization expense. For the six months ended June 30, 2026, the resulting incremental amortization expense was $13,973, of which $9,863 was presented within cost of goods and services and $4,110 was presented within depreciation and amortization expense. The adjustment for the six months ended June 30, 2026 reflects amortization for the period from January 1, 2026 through January 30, 2026, because amortization following the Kaizen acquisition date is included in APC’s historical results. The fair values and estimated useful lives are preliminary and subject to change upon completion of the final valuation.
5(G) Represents incremental amortization expense related to the preliminary fair value of the identifiable intangible asset recognized in APC’s acquisition of Agile, assuming the acquisition occurred on January 1, 2025. The identifiable intangible asset consists of trademarks and trade names with a preliminary fair value of $500,000 and an estimated useful life of five years. The resulting incremental amortization expense was $100,000 for the year ended December 31, 2025 and $13,973 for the six months ended June 30, 2026. The fair value and estimated useful life are preliminary and subject to change upon completion of the final valuation.
5(H) Represents the pro forma effects of the August 20, 2026 amendment to the pre-funded UMAC Warrants. The original UMAC Financing closed in June 2026 and is reflected in APC’s historical consolidated financial statements as of and for the six months ended June 30, 2026. No adjustment has been made for the original financing proceeds. The pre-funded UMAC Warrants were accounted for as liabilities before the amendment. The amendment revised certain settlement provisions that had previously precluded equity classification under ASC 815-40. Following the amendment, the Company expects the UMAC Warrants will be classified in equity as the amended settlement provisions provide UMAC with the same consideration and settlement elections available to holders of APC Common Shares upon a Fundamental Transaction and do not require net cash settlement of a warrant exercise. The unaudited pro forma condensed combined balance sheet reflects the amendment as if it had occurred on June 30, 2026, resulting in the reclassification of the warrant liability to additional paid-in capital.
The unaudited pro forma condensed combined statement of operations and comprehensive loss for the six months ended June 30, 2026 eliminates the historical gain recognized in connection with the liability-classified warrants.
5(I) Represents the adjustment to the weighted-average number of common shares outstanding used to calculate unaudited pro forma basic and diluted net loss per share, giving effect to the Merger and Related Transactions as if they had occurred on January 1, 2025, as follows:
| Six months ended | Year ended | |||||||
| June 30, 2026 | December 31, 2025 | |||||||
| Historical AGH weighted-average common shares outstanding | 47,393,195 | 13,859,559 | ||||||
| APC Common Shares converted into AGH Common Stock (Note 2) | 79,662,484 | 79,662,484 | ||||||
| Earn Out Shares issued at Closing (Note 2) | 55,000,000 | 55,000,000 | ||||||
| Shares underlying 14,305 pre-funded UMAC Warrants (Note 2) | 8,571,303 | 8,571,303 | ||||||
| Shares underlying 33,378 pre-funded American Ventures Series IV Warrants (Note 2) | 19,999,506 | 19,999,506 | ||||||
| Shares underlying 6,675 pre-funded AV Advisory Warrants (Note 2) | 3,999,542 | 3,999,542 | ||||||
| Shares issuable upon settlement of the fully vested Saker RSUs (Note 2) | 200,000 | 200,000 | ||||||
| Shares issuable upon settlement of vested JHG RSUs (Note 2) | 166,667 | 116,667 | ||||||
| Pro forma basic and diluted weighted-average common shares outstanding | 214,992,696 | 181,409,060 | ||||||
The historical AGH weighted-average common shares outstanding for the six months ended June 30, 2026 include the shares underlying AGH’s pre-funded warrants reflected in its historical basic net loss per share calculation. Therefore, no separate pro forma adjustment has been presented for those warrants.
The pre-funded UMAC and American Venture Series IV Warrants have a nominal exercise price of $0.001 per share. As little or no additional consideration is required to exercise these warrants, the underlying shares have been included in the pro forma basic weighted-average common shares outstanding for each period presented.
Shares issuable upon settlement of vested JHG RSUs are included in pro forma basic weighted-average common shares outstanding based on the contractual vesting schedule, assuming commencement of the service period on January 1, 2025. Under this assumption, 50,000 RSUs vest after four months, with an additional 25,000 RSUs vesting quarterly thereafter.
Pro forma diluted net loss per share equals pro forma basic net loss per share as the Combined Company reports a pro forma net loss for each period presented. APC stock options, unvested RSUs issuable pursuant to the JHG Consulting Agreement, and other outstanding warrants and potential common shares not already included in basic weighted-average common shares outstanding have been excluded from pro forma diluted weighted-average common shares outstanding as their inclusion would be antidilutive.
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